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Failure to Address OCI Was Arbitrary and Capricious

A post-award protester's motion for judgment on the administrative record was granted by the Court of Federal Claims because the government's failure to address the awardee's organizational conflicts of interest properly was arbitrary and capricious. The protester contended the award of a blanket purchase agreement to provide program management support services was flawed by an unmitigated OCI that stemmed from the awardee's access to information obtained during its performance of other government contracts. The record showed the awardee's unequal access to information provided it with a competitive advantage in obtaining the BPA.

Competitive Advantage

At least four awardee employees had access to the government's budget execution plan and regularly used information from that plan in providing the government's support services. The execution plan included information regarding the protester's prior performance and labor rates. The protester did not have comparable access to the awardee's proprietary information and the awardee stood to gain a competitive advantage if it used its competitor's labor rates in crafting its own bid because the cost evaluation model used to award the BPA was based solely on the offerors' fully loaded labor rates. The resulting OCI was significant, therefore, because the awardee received the BPA on the basis of its lower price. The award was also flawed because the contracting officer failed to determine the existence of an OCI "as early in the acquisition process as possible" as required by FAR 9.504 (a). Although the CO knew or should have known the awardee was performing advisory and assistance services that raised serious questions regarding its participation in other procurements, she did not address the OCI issue until after the protester challenged the award before the Government Accountability Office.

Grossly Inadequate

In addition, a review of the record "confirmed the gross inadequacy of the [CO's mitigation] plan." In particular, the CO relied on the awardee's representations and promises without verification and despite indications the awardee had not strictly followed procedures for protecting proprietary information in the past. There also were problems with nondisclosure agreements signed by the awardee's employees. Finally, the protester was prejudiced by the government's actions because, when a potential significant OCI is identified, prejudice stemming from the OCI is presumed, unless compelling evidence indicates otherwise. The court granted the protester's request for an injunction because the protester would suffer irreparable injury, a balancing of the hardships favored the protester, and granting the injunction was in the public interest. ( NetStar-1 Government Consulting, Inc. v. U.S., et al., FedCl, 55 CCF ¶79,683)

(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )

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