TITLE: B-310100, VRC, Inc., November 2, 2007
BNUMBER: B-310100
DATE: November 2, 2007
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B-310100, VRC, Inc., November 2, 2007
DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective
Order. This redacted version has been approved for public release.
Decision
Matter of: VRC, Inc.
File: B-310100
Date: November 2, 2007
Bryant S. Banes, Esq., and Sean D. Forbes, Esq., Neel, Hooper & Banes, PC,
for the protester.
Capt. Marlin D. Paschal, Department of the Army, for the agency.
Kenneth Kilgour, Esq., and Christine S. Melody, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest that contracting agency should not have disqualified the protester
because of an organizational conflict of interest (OCI) is denied where
the agency reasonably found that an OCI existed based on the fact that an
individual employed by a company with ownership ties to the protester was
assigned to work in the agency's contracting office in connection with the
procurement at issue.
DECISION
VRC, Inc. protests the rejection of its proposal under request for
proposals (RFP) No. W9133L-07-R-0031, issued by the National Guard Bureau
(NGB) for personnel services in support of the Joint Combined State
Strategic Plan. VRC alleges that the agency improperly disqualified it
based on an organizational conflict of interest (OCI).
We deny the protest.
BACKGROUND
VRC is the incumbent contractor providing the services called for under
the RFP. Military Personnel Services Corporation (MPSC) is a subcontractor
to VRC on the incumbent contract and would continue in that role if VRC
retained the contract. The sole owner of Taylor Consultants, Inc. (TCI)
owns [DELETED] percent of the total issued and outstanding stock of MPSC.
Protest at 2 n.1. TCI is a company currently under contract with NGB to
provide personnel-related services and placed one of its employees in
NGB's contracting division. That TCI employee was assigned to assist the
contracting officer with this procurement and had direct access to source
selection information unique to the procurement, including the source
selection plan. Agency Report (AR), Memorandum of Law at 2. She also was
expected to assist evaluators with evaluating competing offers.[1]
On May 8, 2007, NGB issued the RFP, followed by two amendments, with a
June 12 proposal due date. The RFP included the following language:
Offerors are advised that employees of the firm identified below may
serve as advisors to Source Selection Evaluation Board members in the
source selection process. These individuals will be authorized access to
only those portions of the proposal data and discussions that are
necessary to enable them to perform their respective duties. Such firms
are expressly prohibited from competing on the subject acquisition and
from rating proposals or recommending a selection.
Firm: Taylor Consultants, Inc.
Contact Name: [TCI employee]
RFP sect. L. para. 1.4. According to the protester, companies interested
in competing under this solicitation began contacting TCI, requesting that
TCI execute non-disclosure agreements with those companies because a TCI
employee would be working on this procurement. The protester asserts that
TCI then attempted, unsuccessfully, to contact the contracting officer.[2]
On June 4, the contracting officer's supervisor, the Chief of the
Operational Contracting Division, recused himself from all matters that
might affect MPSC or its related companies. Prior to his recusal, the
Chief spoke with the owner of TCI and expressed his "opinion that [the
relationship between TCI, MPSC, and VCR] should not lead to an OCI." AR,
Tab E, Decl. of Chief of Operational Contracting Division at 1. The
protester asserts that the Chief "approved TCI's measures designed to
mitigate any perceived conflict." Protest at 3. The Chief states, however,
that he does not recall seeing a written mitigation plan and that the
agency has no record of a mitigation plan having been submitted, let alone
reviewed and approved, AR, Tab E, Decl. of Chief of Operational
Contracting Division at 2; the protester has offered no record of any such
plan.
Five proposals, including the protester's, were received on the due date.
The agency's intent was to make a single award to the offeror whose
proposal represented the best value to the government.
Two days after receipt of proposals, on June 14, the contracting officer
learned of the relationship between TCI, MPSC, and VRC and removed the TCI
employee from further work on this procurement. By letter dated June 19,
the contracting officer provided notice to VRC that the contracting
officer was considering rejecting VRC's proposal due to a conflict of
interest and invited VRC's response. The protester responded by letter
dated June 21; the contracting officer considered the response inadequate
and rejected the protester's proposal on July 21.
DISCUSSION
The protester alleges that there was no OCI here and that the agency
improperly rejected its proposal.
The Federal Acquisition Regulation (FAR) states that an "organizational
conflict of interest may result when factors create an actual or potential
conflict of interest on an instant contract." FAR sect. 9.502(c).
Contracting officers are to avoid, neutralize or mitigate potential
significant conflicts of interest so as to prevent unfair competitive
advantage or the existence of conflicting roles that might impair a
contractor's objectivity. FAR sections 9.504, 9.505; Snell Enters., Inc.,
B-290113, B-290113.2, June 10, 2002, 2002 CPD para. 115 at 3. Contracting
officers must exercise "common sense, good judgment, and sound discretion"
in assessing whether a potential conflict exists. FAR sect. 9.505. Once an
agency has given meaningful consideration to potential conflicts of
interest, our Office will not sustain a protest challenging a
determination in this area unless the determination is unreasonable or
unsupported by the record. Science Applications Int'l Corp., B-293601.5,
Sept. 21, 2004, 2004 CPD para. 201 at 4.
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:
"unequal access to information" cases; "biased ground rules" cases; and
"impaired objectivity" cases. See Aetna Gov't Health Plans, Inc.;
Foundation Health Fed. Servs., Inc., B-254397.15 et al., July 27, 1995,
95-2 CPD para. 129 at 12-13. This protest concerns the first type, unequal
access to information.
The record shows that an employee of TCI had access to source selection
information, including the independent government estimate, the source
selection plan, and other offerors' proposals. The owner of TCI, as noted,
owns [DELETED] percent of the stock of MPSC, Protest at 2 n.1, a
subcontractor of VRC under the current contract and a proposed
subcontractor under the current solicitation. In our view, these
relationships, considered together, indicate that VRC was in a position to
benefit competitively as a result of the TCI employee's position in NGB's
contracting office, which gave her access to source selection information
regarding this procurement. Contracting agencies are admonished to avoid
any conflict of interest, even the appearance of a conflict of interest,
in government procurements, FAR sect. 3.101-1; see Lancaster & Co.,
B-254418, Dec. 14, 1993, 93-2 CPD para. 319; on the record here, we find
reasonable the agency's conclusion that VRC had a conflict of interest.
The protester asserts that, regardless of the business relationships among
the three companies, the Chief of the Operational Contracting Division
(the contracting officer's supervisor) had the authority to decide whether
the relationships in question constituted an OCI, and the agency was bound
by the Chief's opinion that they posed no conflict of interest. We
disagree. With regard to conflicts of interest, the FAR assigns certain
duties and responsibilities specifically to the contracting officer, some
of which are noted above. The FAR, without exception, places
responsibility for determining the existence of an OCI on the contracting
officer and makes no provision for the contracting officer to delegate her
authority. Here, the contracting officer simply exercised her authority
under the FAR, notwithstanding the Chief's apparent view of the matter.[3]
The protester also asserts that there was no conflict of interest because
the agency has not shown "hard facts," that is, that VRC was in possession
of source selection information as a result of the TCI's employee's work
for the agency. We disagree. It is true that a determination to exclude an
offeror must be based on facts, rather than mere suspicion. Clement Int'l
Corp., B-255304.2, Apr. 5, 1994, 94-1 CPD para. 228 at 4; see also CACI,
Inc.-Fed. v. United States, 719 F.2d 1567 (Fed.Cir. 1983). The facts that
are required, however, are those which establish the existence of the OCI,
not the specific impact of the conflict. Aetna Gov't Health Plans, Inc.;
Foundation Health Fed. Servs., Inc., supra, at 18. Once the facts
establishing the existence of an OCI are present, reasonable steps to
avoid, mitigate, or neutralize the conflict are required without further
need for "hard facts" to prove the conflict's impact on the competition.
Where, as here, the facts demonstrate that an OCI exists, the harm from
that conflict, unless it is avoided or adequately mitigated, is presumed
to occur. Id.
The protester asserts that it had measures in place, in the form of
"firewall arrangements" between the TCI employee and TCI and between TCI
and MPSC/VRC, that the contracting officer should have found sufficient to
mitigate any OCI. Protest at 6-7. The contracting officer states that, had
TCI made her aware of the ownership relationships earlier in the
procurement process, mitigation of the potential conflict of interest
might have been possible. AR, Contracting Officer's Statement of Facts
at 4. Because the relationships were not brought to her attention until 2
days after proposals had been received, the contracting officer saw no way
to successfully mitigate the actual OCI and instead chose to avoid the OCI
altogether by rejecting VRC's proposal. Again, we see no basis in the
record to question the reasonableness of the contracting officer's
decision.
In sum, even the appearance of an unfair competitive advantage may
compromise the integrity of the procurement process, thus justifying a
contracting officer's decision to err, if at all, on the side of avoiding
the appearance of a tainted competition. Lucent Techs. World Servs. Inc.,
B-295462, Mar. 2, 2005, 2005 CPD para. 55 at 10. Here, the fact that an
individual employed by TCI, a company with ownership ties to the
protester, was assigned to work in the agency's contracting office,
together with the fact that the agency was not notified of those ownership
relationships until after receipt of proposals, created a conflict of
interest that the contracting officer reasonably determined could only be
avoided by rejecting the protester's proposal.[4]
The protest is denied.
Gary L. Kepplinger
General Counsel
------------------------
[1] The protester asserts that the "only contact" between TCI and the TCI
employee in NGB's contracting division has been that the employee receives
her paycheck from TCI. Protest at 3. In addition to paying the employee,
the protester states that if there were performance issues with this
employee, TCI would counsel her. Id. at 2.
[2] Besides this assertion, the record lacks any evidence that the
protester or TCI attempted to contact the contracting officer. Indeed, the
agency challenges that assertion, noting that, although the contracting
officer and TCI's owner had communicated numerous times by e-mail, the
protester has produced no e-mail messages suggesting that TCI attempted to
contact the contracting officer by e-mail concerning the conflict of
interest issue. The record shows that TCI's owner, in communications with
the contracting officer, used an e-mail address of the subcontractor,
MPSC.
[3] In any event, it is well-settled that the government is not bound
beyond the actual authority conferred upon its agents. Federal Crop Ins.
Corp. v. Merril, 332 U.S. 380, 384 (1947); DBA Sys., Inc.--Recon.,
B-212101, B-212101.2, Aug. 23, 1983, 83-2 CPD para. 244 at 1.
[4] On August 14, the agency awarded a contract under the RFP to
Engineering Systems Consultants, Inc. In its protest, VRC challenged the
award without offering any elaboration. This unsupported challenge fails
to state a valid basis of protest. See Bid Protest Regulations, 4 C.F.R.
sect. 21.1(c)(4) and (f) (2007).