ORGANIZATIONAL CONFLICTS: THE HARD FACTS RULE

GAO has clearly articulated its standard for review of organizational conflicts of interest determinations and made sure it is in sync with the Court of Appeals for the Federal Circuit (CAFC).  The offending company must have had access to information that provided it with an unfair competitive advantage.  And a determination that an organization conflict of interest exists must be based on hard facts.  Having nonpublic information is not enough standing alone.  And mere inference or suspicion of conflict is not enough.  The determination must be based solid evidence.

The protester participated in the preparation of the procurement implementation plan and knew the agency's estimate for the price of the software to be purchased.  But GAO said there is no evidence in the record that this information provided the protester with an unfair competitive advantage.  The agency failed to demonstrate hard facts in support of its determination to exclude the protester.  Protest sustained.

In the decision, GAO said:

The situations in which OCIs arise, as addressed in FAR subpart 9.5 and the decisions of our Office, can be broadly categorized into three groups:  biased ground rules, unequal access to non-public information, and impaired objectivity.  The FAR identifies general rules and cites examples of types of OCIs that may arise, and ways to avoid, neutralize, or mitigate those OCIs.  FAR 9.505.

GAO will review the reasonableness of the contracting officer's investigation and where an agency has given meaningful consideration to whether a conflict of interest exists, GAO will not substitute its judgment for the agency's, absent clear evidence that the agency's conclusion is unreasonable.  In this regard, GAO says it "mirrors" the standard required by the CAFC in Axiom and Turner.

An agency's decision to exclude a contractor from the competition based on a conflict of interest arising from unequal access to information must be based on hard facts, meaning the agency must specifically identify competitively useful, non-public information to which the contractor had access.  And then the agency must demonstrate how this information conferred an unfair competitive advantage.

Lest there be any doubt, GAO and the CAFC seem to be together on this and as we have said before, we wonder why it is necessary to do any more monkeying around with the law on this subject, by regulation change or otherwise.

bill@spriggslawgroup.com