On January 30, the U.S. Government Accountability Office (GAO) issued its decision denying Concurrent Technologies Corp.’s (CTC) protest of the U.S. Navy’s award of a support contract for the Navy Manufacturing Technology Metalworking Center of Excellence program to Advanced Technology International (ATI). CTC alleged that ATI had an organizational conflict of interest (OCI) which stemmed from ATI’s role as a contractor providing procurement support services for the Department of Defense. CTC argued that as part of ATI’s procurement support work, it had access to CTC’s proprietary information resulting in ATI having an unfair competitive advantage in the procurement.
GAO denied CTC’s protest, finding that the Navy’s actions were reasonable and the award to ATI was proper. However, it is the lengths taken by the Navy, and upheld by GAO, which makes this protest interesting and potentially dangerous to contractors.
CTC first protested the award to ATI in February 2016, raising the issue of ATI’s purported OCI giving it a competitive advantage. The Navy elected to take corrective action in response to the protest, amending the solicitation to require all offerors to provide a statement addressing any actual or potential OCIs or personal conflicts of interest (PCI). After receiving OCI statements from the offerors, the Navy concluded that neither ATI nor CTC had any OCIs or PCIs that would eliminate either offeror from consideration for award.
Despite the fact that no OCIs or PCIs were identified, the contracting officer requested that the Navy’s head of contracting activity (HCA) waive the applicability of OCI rules for the procurement. The HCA reviewed the contracting officer’s OCI investigation report, and granted the waiver request. In so doing, the HCA stated that it was in the government’s interest to waive the application of any OCI rules for the procurement. Subsequently, the Navy again awarded the contract to ATI.
Following the second award to ATI, CTC again filed a protest with GAO. CTC’s second protest raised three separate arguments against the award to ATI centering on the purported OCIs. CTC argued that ATI had a competitive advantage based on its access to CTC proprietary data, including its proposal information. Next, CTC argued that the agency’s failure to investigate ATI’s access to CTC information was a violation of the Procurement Integrity Act (PIA). Finally, CTC claimed that ATI’s failure to initially disclose these conflicts should have lowered the agency’s responsibility rating for ATI.
The Navy moved to dismiss CTC’s protest based on the fact that the HCA waived all application of OCI rules for the procurement. GAO declined to dismiss the protest because it read CTC’s protest as a challenge to the waiver itself. Shortly after GAO declined to dismiss the protest, the HCA issued a second OCI waiver, stating “it is not in the Government’s interest to apply such OCI rules and procedures to any, each, every, and all actual, potential, or alleged [OCIs] that do or might exist.” The HCA also stated that he had considered both the risks of waiving the OCI rules on the procurement, as well as all of the OCI-related arguments raised by CTC in its protest.
In its denial of this protest, GAO held that despite CTC’s allegations, the agency chose to waive conflicts of interests for this procurement and its decision to do so was reasonable and permitted under the Federal Acquisition Regulation. In reviewing the HCA’s waiver, GAO held that the second waiver properly considered all of CTC’s allegations and therefore GAO had no basis to find that the HCA’s waiver was unreasonable. GAO similarly dismissed the claim of PIA violations, holding that the Navy followed proper procedures. The evidence demonstrated that the chief contracting officer was briefed on PIA allegations and investigated whether the OCIs violate the PIA. Finally, GAO dismissed the claims that ATI’s failure to disclose potential OCIs should have lowered its responsibility rating, finding that the agency amended the solicitation and ultimately did consider the effect of ATI’s access to CTC information for this procurement.
In sum, GAO’s dismissal of the protest demonstrates its deference to agency rationale – even in the face of a potential conflict of interest. This raises a question about how far contracting agencies will be allowed to push that deference. In this case, it appears the second waiver, made after the HCA had an opportunity to consider the arguments raised by CTC in the protest, was a primary element in GAO determining that the agency’s actions were reasonable. Would GAO still have deferred to the agency’s rationale in waiving the application of OCI rules had the contracting officer found that there was an OCI? If so, this decision presents the chilling proposition that OCI waivers can be somewhat protest proof. Even in cases where an OCI exists, it appears that in order to overcome a protest an agency need simply to execute a post-protest waiver that gives consideration to the OCI arguments made in the protest. That would be an unwelcome development for contractors seeking an even playing field.