Understanding Organizational Conflict of Interest in Professional Services Acquisition

1. The Professional Services Category of the Acquisition Gateway Introduces A Spotlight Presentation Organizational Conflict of Interest 201Sponsored by GSA and NASA

2. Housekeeping • To Download Presentation and other files • Click on the file you’d like to download. Make sure that it’s highlighted in blue after click the file to download • Then select “Download File(s)”

3. Housekeeping – Have Questions? Click in the “Q&A” section on the right side of your screen Type your question into the comment box Click send

4. Housekeeping – Webinar Materials • Webinar materials will be emailed to attendees, within the next 2 weeks, including: • Presentation slides • Q&As • CLP certificate (if you registered) • All questions may not be answered during the session, if this is the case, we will provide these Q&A responses in the email to you. • A copy of the presentation will be on the Acquisition Gateway (https://hallways.cap.gsa.gov), Professional Services Hallway once it has been made 508 compliant.

5. HOUSEKEEPING - CLP To Receive CLP Enter your email address Registered users will receive a certificate within two weeks of training via email

6. OCI201Strategic Planning Eve Lyon NASA HQ

7. Background • Created as policy by DoD in 1963; essential same since 1968 • Places all duties on the CO to protect Government • Changed landscape • Purchasing more services than supplies • Relying more on outside expertise • Consolidating among companies reduces number of contractors • Used as a means to overturn award since 1990’s • Created case law different from 9.5 and is ever evolving • Turned OCI into popular grounds for protest • Treat primarily as a potential protest issue

8. Agenda • Advanced planning • Upfront decisions • Ground rules • OCI provision & clauses • Waiver

9. Gathering Facts • Is there an OCI? • Biased ground rules (Serious; Government controls) • Impaired objectivity (Garden variety) • Unequal Access to Information (Ubiquitous) • How difficult will it be to resolve OCI? • Will OCI affect competition? • How many offerors? • Will OCI principles limit competition? • How will a limitation on future contracting affect competition?

10. How to Evaluate OCI • Issues including as part of evaluation criteria? • Not every offeror has same conflict • Requirement there be no unacceptable conflict. • Guarantees discussions if mitigation plan needs to be modified • Better practice to treat as matter of eligibility/responsibility • Exchanges allowed any time in procurement prior to award • Exception: Discussions are triggered when changes involve more than mitigation plan

11. When to Evaluate Mitigation Plans • Continuum: Begin with receipt of proposals (mitigation plans could be submitted early) to when apparent successful offeror selected • Evaluating mitigations plans takes time • Remember deliverable will become a requirement of contract and should be easy to administer • Dictated by FAR requirements: • Award when conflicts are reasonably resolved • Permit apparent successful offeror a reasonable opportunity to respond when award cannot be made due to conflict • Involves number of likely offerors and complexity of OCI • Start early: Few offerors and/or complex OCI. • Start later: Many offerors and/or simple OCI to resolve. (Perhaps apparent successful offeror)

12. Taking Early Action: Avoidance • Remove elements of PWS regarding use of subjective judgment (impaired objectivity) • Use FFRDC to perform work • Have Government perform • Have a nonconflicted contractor perform • Ensure more than one contractor assisted with specifications. (Biased ground rules) • Disseminate information. (Unfair access to information; Biased ground rules) • Prohibit certain individuals from participating in preparing proposal. (Unfair access to source selection information)

13. Ground Rules • Thwarts protests • Protester must file when proposals are due if: • Aware of operative facts regarding actual or potential OCI, and • Agency has advised protester of its position • Reason: Improprieties in solicitation going to heart of the ground rules by which a competition is conducted should be resolved as early as practicable • Enhances communicate with industry • Should avoid needless B&P costs • Include in solicitation • Put in writing when not in solicitation, e.g., answers to RFP

14. Ground Rules • Explain measures taken to mitigate or eliminate OCI and that it resolves the issue • Identify assistance received preparing solicitation or evaluating proposal • Explain what measures taken to resolve OCI, and • Explain whether the Government believes OCI still exists. • Explain clauses in an earlier contract imposing barrier to use of contractor proprietary data or sensitive information prevents OCI based on unequal access to information • DOD and NASA have clauses in supplement • Clauses are exception to 9.505-4 • Explain whether OCI results from interrelated contracts

15. Ground Rules • Require certain resolutions: Limitation on future contracting • Limit available technique to modify mitigation plan after submitting proposal, e.g. proposing new nonconflicting party • Allows for award on initials without triggering requirement for discussions • Retains reasonable opportunity for apparently successful offeror to respond to the OCI • Restrict prime from resolving its OCI by having nonconflicted subcontractor perform the work • Done when healthy competition exists with restriction • Ensures prime retains complete oversight of subcontractors • Notify offerors that no former Government employee with access to sensitive information directly or indirectly may prepare the proposal

16. Model Provision and Clauses • FAR 9.507 requires provision when OCI is identified • States the nature of the potential conflict as seen by the contracting officer; • States the nature of the proposed restraint upon future contractor activities; (done when resulting contract would create OCI) • May state whether or not the terms of any proposed clause and the application are subject to negotiation. • Rarely done because “new” and “original” provision must be written for each solicitation • No standard provision possible given the fact intense nature of OCI

17. Model Provision and Clauses • NASA OCI Guide contains model provision and clauses found using a google search: NASA OCI Guide • Model provision meets requirements of FAR 9.507 by • Identifies part of requirement that may create OCI • Requires offeror to identify conflicts to best of its ability • Requires offeror to propose strategy for resolution • Envisions dialogue • Ensures contracting officer retains final word on identification and resolution of OCI

18. Data Deliverable • NASA OCI Guide has a model requirement for data deliverable • Compliments provision on OCI • Intended to result in a plan that can be attached to resulting contract • Ensure the plan is clear • Ensure plan can be administered easily • Model DRD • Requires offeror identify conflict • Requires offeror propose methods to resolve • Requires offeror do same with subcontractors and affiliates • Requires information elements of plan • Update • Screening • Training of employees • Sanctions for violation • Records

19. Clause: Mitigation • Used only when mitigation is part of the resolution • Incorporates mitigation plan in contract making it a contract requirement • Establishes procedures on changing mitigation plan • Envisions mutually agreement • Allows unilateral change when mutual agreement not reached • Done by amendment to contract • Requires report on violations to contracting officer • Both contractor and contracting officer to agree on corrective action • Addresses breach of clause with t4d or other remedies available • Requires flowdown

20. Clause Limitation on Future Contracting • NFS 1809-71 requires description of the conflict/limitation • NFS 1809-71 requires length of the limitation in be in the clause • Most limitations are time limited. Often best if limitation is event based. • Included only when Limitation on Future Contracting is part of the acceptable resolution

21. Clause: Identify New Conflicts Included in most contracts Requires contractor report new conflicts which arise after contract award, e.g., mergers Requires contractor describe action intends to take Includes reporting on conflicts at the sub level Requires flowdown Could be merged with mitigation plan 9.5 stops at award. Does not address contract administration.

22. IDIQ • OCI principles from 60’s; IDIQ contracts created in 1994 • Apparent conflict with requirement to resolve all conflicts at award since scope of task unknown at time of contract award • Difference between single award and multiple award IDIQ contract • Multiple award (fair opportunity to be considered) • Single award could be only source for the service or supply

23. Single Award IDIQ Contracts • Address future tasks in mitigation plan using a waterfall approach to resolution: • Requires contractor screen all orders for conflicts • Requires contractor suggest resolution for orders with OCIs • Requires contractor obtain contracting officer’s agreement on: • Identification of conflict • Resolution of conflict • Include a waterfall of resolution from the least onerous to the most onerous in mitigation plan, e.g., starts with a firewall and ends with Limitation on Future Contracting when no other options is available • Ensure waterfall includes Limitation on Future Contracting to make it bullet proof in case of protest.

24. Multiple Award IDIQ • Fair Opportunity for Consideration provides another method to resolve conflicts in orders • Procedures for Fair Opportunity could allow contract holders not to propose when task creates conflict • Procedure not to propose more difficult when single award IDIQ contract; agency loses source of supply • Use waterfall approach in multiple award contracts? • Facilitates issuing task to one contractor holder

25. Waiver • Section 9.503 allows agency to waive any general rule in 9.5 determining 9.5 is not in Government’s interest in a particular situation. • Must be in writing, • Shall set forth the extent of the conflict, • Official must knowingly make waiver • Requires approval by the agency head on lower than HCA • Waivers can involve procedures as well as conflicts • Done by the Government; should not be suggested by offeror as method to resolve OCI

26. Waiver • Interest of the Government implicitly requires balance between protection afforded by 9.5 and other needs of the agency • Other needs of the agency: only source, harm is remote, harm is acceptable • Best practice is to take corrective action and waive residual OCI • Example: Firewalls do not completely resolve OCIs involving bias • Easier to balance other needs of the agency with 9.5 if firewall in place • GAO reads “best” into Government’s interest • Upheld by GAO and court • Allowed after protest is filed, • But protester can challenge reasonableness and completeness of waiver • Waiver can be written without conceding conflict exists as long as it also explains why waiving in Government’s interest

27. Waiver challenge • Does the waiver set forth extent of potential conflict? • Copying protest allegation was sufficient • Is wavier unreasonable because relies on conclusions in protest? • Waiver cannot merely waive protest allegations; waiver needs to set forth why it is in best interest to waive. • Is the waiver in the best interest of the Government? • Disagreements do not provide basis agency exceeded or abused its discretion • Can existing Limitations on Future Contracting be waived? • Yes, within authority of 9.503 • Can agencies waive after competitive harm has occurred? • Yes, 9.503 does not contain a time by which waiver must occur • Example: Harm with unequal access to information occurs with evaluation/award

28. Waiver • Can be challenged on grounds of reasonableness and completeness; not a silver bullet • Best used for impaired objectivity which involves only Government’s interest, but is available for all OCIs • Take mitigation measures and include in those in waiver • Waive residual conflicts • Changes focus of protest from fact intense and subjective judgement • Whether OCI exists and was acceptably resolved • To completeness and reasonableness of waiver

29. Investigations • Contracting officers may investigate the allegation providing information and analysis about the existence of an OCI any time during the course of a protest. • GAO will review the OCI investigation for reasonableness and will not substitute its judgment absent clear evidence that the conclusion is unreasonable and that the agency gave meaningful consideration to whether a significant conflict of interest existed. • Contracting officers have ability to couple waiver with OCI investigation • Includes investigations finding no OCI. • Waiver still must explain why it is in Government’s interest to waive 9.5

30. Take aways • Strategic Planning is key • Control the facts; don’t let them control you • Numerous decisions to make • Decisions should be communicated as ground rules in solicitation • Fair to industry while blunting OCI as a protest allegation • Models of OCI provision and clauses exist in NASA OCI Guide • Models make it easier to comply with 9.507 • Models must be tailored to each procurement • Waivers are an important tool • Blunts OCI as sword to overturn award, but can be challenged • Waive residual conflicts and include mitigations in waiver • Fully articulate scope of conflict and reasoning why in Government’s interest

31. Backup

32. NASA OCI Guide Found at https://www.hq.nasa.gov/office/procurement/OCIGuide.pdf Explains principles on identification and resolution Discusses best practices Contains model provisions, clauses, and DRD requirements Written in 2008

33. Case Law • Turner Construction Company, Inc. v. United States, 645 F.3d 1377 (Fed. Cir. 2011) • Effects identification • Requires conflicts be based on hard facts not inferences/suspicion and innuendo • Changes the FAR regarding conflicts based on appearance • Difference between appearance and a potential conflict • 9.5 designed to prevent actual and potential conflicts • Provides that agency's post-protest investigation and analysis of an OCI must be considered

34. Case Law • A Squared Joint Venture, B-413139; B-413139.2, August 23, 2016, 2016 CPD ¶ 243 • States decisions on OCI are ground rules of a competition • Applies 10 day timeliness rule regarding knowledge of OCI ground rules • Fosters early communication with industry about OCI decisions • Enjoins issue early, limiting use of OCI as a sword to challenge selection • Examples: • Determination why an contractor’s early involvement does not constitute bias ground rules, e.g., early study • Determination why work on another related contract does (or does not) create OCI regarding impaired objectivity

35. Case Law • Health Net Federal Services, B-401652.3, B-401652.5, November 4, 2009, 2009 CPD ¶ 220 • Involves section 3.101-1 not FAR 9.5 • Involves former Government employee • Obtained valuable Source Selection information while government employee • Was in a position to use nonpublic information while contractor employee, i.e., working on proposal • Held knowledge is presumed used, i.e., cannot erect a firewall in one’s brain • Acts as restriction on post-employment • Conflates with but different than Unequal Access to Information

36. Case Law • Overlook Systems Technology, B-298099.4, B-298099.5, November 28, 2006, 2006 CPD ¶ 185 • Holds communications about a mitigation plan are not discussions when exchanges did not result in a change to other parts of proposal. Exchanges may be held before the submission of proposals or after evaluations are completed. Mixed basis for decision: • OCI characterized as responsibility when not an evaluation criteria • Agency advised offerors how OCI would be treated • Exchange did not affect cost or technical proposals except for mitigation plan

37. Case Law • Concurrent Technologies Corp., B-412795.2, B-412795.3, Jan.17, 2017, 2016 CPD ¶ 15  • Case upholds validity of waivers consistent with the FAR.  • Case does excellent job of explaining the requirements for waiver to 9.5 • CACI, Inc.- Federal; General Dynamics One Source, LLC, B-413860.4; B-413860.5; B-413860.6; B-413860.7; B-413860.8, Jan. 5, 2018, 2017 CPD ¶ 17 • Case examines five separate challenges to the reasonableness of waiver

38. Case Law • Northrop Grumman Systems Corporation, B-412278.7, B-412278.8, October 4, 2017, 2017 CPD ¶ 299 • Holds agencies cannot use waiver situations involving a competitive advantage by a former Government employee. Section 3.101 does not contain a waiver provision like subpart 9.5. • Case explains how earlier GAO cases treated situations involving former Government employees as if they were OCIs covered by subpart 9.5.

39. Case Law • Systems Made Simple, Inc. B-412948.2, July 20, 2016, 2016 CPD ¶ 207. • “Textbook” analysis by contracting officer  • Excellent example when contractor’s early involvement in a study does not constitute an OCI based on biased ground rules    • Reaffirms using two sources for recommendations can be basis to deny allegations of OCI based on biased ground rules 

40. Case Law • Alion Science & Technology Corp., B-297342, Jan. 9, 2006, 2006 CPD ¶ 6 • States subjective judgment involves the exercise of independent judgment which could affect other financial interests of the company to include affiliates. • Questioned resolution by a “firewalled” subcontractor as part of use of nonconflicted party was appropriate resolution given the interrelated nature of the activities in the IDIQ contract. Note: GAO backed away in a subsequent decision on the same procurement. • Sustained protest where record does not support the agency’s conclusion that awardee’s conflicts of interest will be minimal. Agency failed to consider parts of the SOW regarding formulation of policies and regulations regarding use of subjective judgment.