A contract award may be successfully protested if a significant organizational conflict of interest (OCI) exists that cannot be avoided, neutralized, or otherwise mitigated. The Federal Acquisition Regulation (FAR) 9.5 categorizes OCI into three broad categories, (1) impaired objectivity, (2) biased ground rules, and (3) unequal access to information. An impaired objectivity OCI exists when a contractor’s work under one government contract involves or potentially involves evaluating its own performance under another contract or involves an evaluation of its own or competing proposals. An impaired objectivity OCI undermines the contractor’s ability to render impartial advice to the government as the contractor is deemed to have competing interests in another contract. When reviewing allegations of impaired objectivity OCI in the context of bid protests, adjudicative forums, such as the Government Accountability Office (GAO), review the reasonableness of the government’s OCI investigation. If the government has meaningfully considered whether an impaired objectivity OCI exists, the GAO will not typically substitute its own judgment for that of the government unless clear evidence is presented demonstrating that the government’s conclusion was unreasonable. Additionally, in cases where the government adopts a mitigation strategy to resolve the impaired objectivity OCI, the GAO considers the effectiveness and adequacy of the proposed strategy to mitigate the impaired objectivity OCI.
In B-421792.2, B-421792.3, issued on June 13, 2024, the GAO sustained such a post-award bid protest where the government failed to reasonably consider whether the awardee’s proposed impaired objectivity OCI mitigation strategy was effective in completely resolving the OCI. The underlying contract award was issued by the Center for Medicare and Medicaid Services (CMS) for conducting health insurance marketplace and financial management operational analytics (OA). The best value award was made to the awardee after several rounds of revised quotation submissions and exchanges. In reviewing the eventual awardee’s quotation, the CMS technical evaluation panel (TEP) identified a potential impaired objectivity OCI concerning one of the awardee’s proposed subcontractors. Specifically, the subcontractor held a separate contract to support the operation of the Federally Facilitated Exchange (FFE), which is operated by CMS pursuant to the Affordable Care Act (ACA), and the public facing component of which is the Healthcare.gov website. The concern regarding an impaired objectivity OCI arose because as the awardee’s teammate on the subject contract, the subcontractor would be responsible for validating the data the subcontractor produced under its FFE contract. Consequently, the CMS TEP requested the awardee to explain its proposed strategy to mitigate the impaired objectivity OCI issue posed by its subcontractor’s performance of data and runs processes on the separately held FFE contract. The awardee’s proposed solution was a firewall of subcontractor personnel from reviewing or validating “payment data” generated by subcontractor personnel under the FFE contract. In addition to the firewall, the awardee proposed that its personnel would provide strict oversight of the data validation process to ensure it was free from any conflict of interest. The TEP found the awardee’s mitigation approach to be adequate and awarded the contract.
The protestor challenged the TEP’s review of the OCI. In response, the contracting officer (CO) prepared a memorandum in which she wrote that it was her belief that the awardee had effectively mitigated the impaired objectivity OCI through its proposed firewall, which prevented subcontractor personnel from validating the “payment data” produced under the subcontractor’s FFE contract. Notably, the CO wrote that according to her understanding of the awardee’s proposed mitigation strategy, subcontractor personnel would be firewalled from all contributing data used to derive the “payment data,” including any “enrollment data” arising from the subcontractor’s FFE contract. In her memorandum, the CO also noted that the awardee proposed its own employee as a business analyst lead responsible for the validation of the “payment data.” However, the CO failed to address that the business analyst lead responsible for the validation of the “enrollment data” was an employee of the subcontractor. CMS also took the position that since “payment data” and “enrollment data” were terms that were often used interchangeably, firewalling of the subcontractor’s personnel from the “payment data” adequately mitigated the impaired objectivity OCI because subcontractor personnel would also be effectively firewalled from the “enrollment data.” In response, the protestor maintained that CMS failed to meaningfully review the impaired objectivity OCI because the “payment data” was only a subset of the “enrollment data” produced under the subcontractor’s FFE contract. The protestor also asserted that CMS failed to recognize that the awardee’s proposed OCI mitigation approach was logistically unworkable because it was inconsistent with its own technical approach, which remained unchanged in response to the awardee’s later proposed OCI mitigation plan.
In agreeing with the protestor, the GAO ruled that CMS’ position regarding the “payment data” and “enrollment data” as being interchangeable or equivalent was unreasonable and not supported by the record. Specifically, the GAO pointed out that the subject contract’s statement of work (SOW) treated the two terms differently and indicated that “payment data” was only a subset of “enrollment data.” The GAO also pointed to the awardee’s technical approach, which treated “payment data” differently from “enrollment data.” Additionally, the awardee had proposed different business analyst leads for “payment data” and “enrollment data,” which further demonstrated that the two terms were not interchangeable. Therefore, the GAO rejected CMS’ assertion that by committing to firewalling subcontractor personnel from “payment data,” the awardee was also committing to firewalling subcontractor personnel from validating “enrollment data” generated on the subcontractor’s FFE contract. In sustaining the protest, the GAO concluded that since the awardee’s proposed mitigation approach did not address the entirety of the scope of work giving rise to the impaired objectivity OCI concerns, it was unreasonable for CMS to determine that the OCI issue had been effectively mitigated. The GAO also noted that while the awardee had updated its OCI approach in response to CMS enquiries regarding its subcontractor potentially posing an impaired objectivity OCI, there was no evidence in the record indicating that the awardee had also updated its staffing approach to remove subcontractor personnel from supporting the conflicted tasks. Therefore, the GAO also sustained the protest on the grounds that CMS failed to meaningfully consider the impact of the awardee’s impaired objectivity OCI mitigation strategy on its technical approach.
The identification of potential OCIs, including the impaired objectivity OCI, is typically a fact-specific inquiry, which requires the government to exercise considerable discretion in investigating and mitigating the OCI. However, protest adjudicative forums nevertheless review the government’s determinations to ensure they are reasonable in the context of the facts at issue. As demonstrated in B-421792.2, B-421792.3, when faced with mitigating impaired objectivity OCIs, government agencies must not only ensure that the awardee’s OCI mitigation approach adequately addresses the entire scope of work giving rise to the OCI, but also make sure that the OCI mitigation approach is compatible with the awardee’ proposed technical solution. Therefore, post-award protestors in situations involving facts giving rise to potential impaired objectivity OCIs, should carefully review the record to ensure the awardee’s proposed OCI mitigation plan completely resolves the OCI. Additionally, the awardee’s proposed technical approach, including any proposed staffing mix, should be thoroughly reviewed to ensure it is consistent with the awardee’s OCI mitigation plan. If the two approaches are incompatible with each other, the protestor will likely succeed in its challenge calling into question the government’s evaluation conclusions concerning the merits of the awardee’s proposed technical approach.
This Bid Protests Insight provides a general summary of the applicable law in the practice area and does not constitute legal advice. Contractors wishing to learn more are encouraged to consult the TILLIT LAW PLLC Client Portal or Contact Us to determine how the law would apply in a specific situation.
