TITLE: B-400216, AT&T Government Solutions, Inc., August 28, 2008
BNUMBER: B-400216
DATE: August 28, 2008
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B-400216, AT&T Government Solutions, Inc., August 28, 2008

   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: AT&T Government Solutions, Inc.

   File: B-400216

   Date: August 28, 2008

   David Z. Bodenheimer, Esq., James J. Regan, Esq., and James Peyster, Esq.,
   Crowell & Moring LLP, for the protester.

   Davis Young, Esq., Department of the Navy, Fleet and Industrial Supply
   Center, for the agency.

   Susan K. McAuliffe, Esq., and Christine S. Melody, Esq., Office of the
   General Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Protest of firm's elimination from competition due to perceived
   organizational conflict of interest (OCI) is sustained where agency failed
   to evaluate protester's proposed mitigation plan, failed to consider
   whether protester would actually be in a position to evaluate its own
   products, and did not give protester notice of and an opportunity to
   respond to OCI findings prior to firm's disqualification.

   DECISION

   AT&T Government Solutions, Inc. protests its disqualification, due to a
   perceived organizational conflict of interest (OCI), under request for
   proposals (RFP) No. N00189-08-R-0003, issued by the Department of the Navy
   for information operations (IO) support services, including analysis of
   computer network security systems. AT&T contends that the agency
   improperly failed to consider the OCI mitigation plan included in its
   proposal; unreasonably concluded that the firm would evaluate its own
   products, given that the agency does not subscribe to the firm's network's
   products and services; and improperly failed to give the firm notice of
   and an opportunity to respond to the agency's OCI concerns before being
   disqualified.

   We sustain the protest.

   The RFP, issued on January 2, 2008, sought proposals for the award of an
   indefinite-delivery/indefinite-quantity contract for a 1-year base period
   and 4 option periods for IO support services related to the following 11
   performance tasks: fleet training; computer network operations; strategic,
   operational and tactical planning; operational support; functional data
   management; IO requirements; experimentation, tactics evaluation and
   doctrine development; systems assessment; information technology
   management and administration; engineering and technical services; and IO
   management and professional support services. RFP at 14-17. Award is to be
   made to the firm that submits the proposal deemed to represent the best
   value to the agency considering technical factors and price. Id. at 83-84.

   The RFP advised that the contracting officer would evaluate all proposals
   to determine whether a prime contractor or subcontractor had an actual or
   apparent OCI in performing the RFP's tasks. Id. at 38. To help offerors
   determine if they had an OCI, the RFP listed various computer-related
   products and equipment used for the operations to be supported under the
   RFP; while not intended as an exhaustive listing of all possible areas of
   conflict, the list nevertheless did not identify any AT&T products or
   equipment. Id. at attach. 4. The RFP stated that, in accordance with the
   agency's interpretation of the rules set out in Federal Acquisition
   Regulation (FAR) sect. 3.101 (providing for OCIs to be strictly avoided),
   sect. 1.602-2 (providing for the nation's interests to be safeguarded in
   its contractual relationships), and FAR subpart 9.5 (regarding the use of
   limits on a contractor's activities if appropriate to avoid, neutralize,
   or mitigate OCIs in order to prevent bias and unfair advantage), firms
   with even an appearance of an OCI "will be disqualified and eliminated."
   Id. at 38. The RFP, under a heading entitled "contracting restrictions,"
   referenced several FAR subpart 9.5 provisions that permit participation in
   a procurement and the award of a contract where appropriate actions are
   taken, and safeguards are put in place, that resolve perceived conflicts
   of interest. Id. at 39-41. The RFP specifically provided, for instance,
   that "[t]o the extent work to be performed . . . requires evaluation of
   offers for products or services, a contract will not be awarded to a
   contractor that will evaluate its own offers for products or services,
   without proper safeguards to ensure objectivity . . . ." Id. at 40 (citing
   FAR sect. 9.505-3). Similarly, the RFP stated that "[t]o the extent work
   to be performed under this contract requires access to proprietary data of
   other companies, the contractor must enter into agreements with such other
   companies . . . to protect such data . . .," id. (citing FAR sect.
   9.505-4(b)), and that "[i]f the contractor provides [advisory and
   assistance services] . . . it shall be ineligible thereafter to
   participate in any . . . contractual efforts [other than follow-on
   contracts for advisory and assistance services]. . . which stem directly
   from the work, . . . [and] unless so directed . . . the contractor shall
   not perform any such work under this contract on any of its products or
   services." Id.

   AT&T, among other firms, submitted its proposal by the scheduled closing
   date. The agency reports that, without evaluating the firm's proposal
   (including its OCI mitigation plan), the contracting officer conducted an
   OCI assessment for the firm and determined that, since one of the firm's
   business operations and affiliates provides IO products and services
   similar to the types of products in use by the Navy and to be evaluated
   under the RFP, AT&T would be "in a position to favor its own products and
   capabilities . . . (and disfavor its competitor's products)." OCI
   Assessment at 31. The contracting officer concluded that the firm had an
   "impaired objectivity" OCI[1] and informed AT&T that the terms of the
   solicitation required its disqualification from the procurement. This
   protest followed.

   AT&T challenges its elimination from the competition. The protester
   contends that, contrary to the RFP's terms, the agency failed to consider
   the firm's proposal--which included an OCI mitigation plan--and improperly
   failed to give the firm notice of any OCI concerns or an opportunity to
   respond to such concerns prior to the agency's decision to exclude AT&T
   from the competition. AT&T contends that the agency unreasonably
   determined that the firm would be evaluating its own products under the
   contract without confirming whether AT&T's products are even available to
   the agency, which is not a subscriber to its network services, and failed
   to recognize that, even if the firm would be required to evaluate its own
   or others' products in providing advice and assistance services under the
   terms of the RFP, the RFP itself set out contracting limitations that
   could have resolved the perceived OCI without requiring its
   disqualification from the competition.

   The agency responds only generally to the protester's allegations, stating
   that disqualification of a firm constitutes "strict avoidance" of a
   possible OCI within the meaning of the FAR, and it intended the RFP to
   require such disqualification without consideration of the firm's response
   or any potential mitigation plan. The agency's legal support for its
   position is limited to general contentions that it reviewed previous
   decisions of our Office discussing OCIs (without detailing what aspect of
   the cases it relied on as support for its determination that
   disqualification of the protester was required here); another agency's OCI
   assessment of a different firm in an unrelated protest where, unlike here,
   mitigation of an apparent OCI was pursued, accepted, and considered
   unobjectionable by our Office (without discussing the applicability, if
   any, of that assessment to the facts of the current case); a law review
   article discussing different types of OCIs (without stating which portions
   of the article the agency found instructive on the facts here); and the
   guidance provided in FAR subpart 9.5 for resolution of OCIs (without
   citing the specific regulatory provisions it believes support its
   actions). See Agency Report at 3. As discussed further below, under the
   circumstances here, we conclude that it was unreasonable for the agency to
   disqualify AT&T without allowing the firm to respond to the agency's
   concerns or propose a plan to mitigate any perceived OCI.

   Contracting officers are required to identify potential conflicts of
   interest as early in the acquisition process as possible, and to avoid,
   neutralize, or mitigate such conflicts to prevent the existence of
   conflicting roles that might impair a contractor's objectivity, such as
   where contract performance entails evaluating itself or its own products,
   since the firm's ability to render impartial advice may be undermined. See
   FAR sections 9.505, 9.508; PURVIS Sys., Inc., B-293807.3, B-290807.4, Aug.
   16, 2004, 2004 CPD para. 177 at 7. In assessing potential OCIs, the FAR
   directs the contracting officer to examine each contracting situation
   individually on the basis of its particular facts and the nature of the
   proposed contract; using sound judgment, the contracting officer is to
   determine not only whether a conflict exists, but, if so, the appropriate
   means for resolving it, consistent with the terms of the solicitation and
   applicable procurement rules. See Alion Sci. & Tech. Corp., B-297022.4,
   B-297022.5, Sept. 26, 2006, 2006 CPD para. 146 at 8; Lucent Techs. World
   Servs. Inc., B-295462, Mar. 2, 2005, 2005 CPD para. 55 at 10. Our review
   of the record here supports the protester's contention that the agency's
   OCI assessment of AT&T, as well as the agency's disqualification of the
   firm without considering its ability to avoid, neutralize, or mitigate the
   alleged conflict, or otherwise allowing the firm to respond to the reasons
   cited for its adverse OCI assessment, were unreasonable.

   First, although the RFP required the contracting officer to evaluate all
   proposals to determine whether an apparent OCI exists, the agency here
   concedes that AT&T's proposal, which included a proposed OCI mitigation
   plan, was not evaluated prior to the firm's disqualification; the OCI
   assessment, therefore, clearly was not conducted in accordance with the
   terms of the RFP, which called for such an evaluation. Second, as the
   protester points out, and as stated above, the solicitation here included
   provisions (referencing the general rules of FAR sect. 9.505) for
   limitations on contracting as a means of avoiding, neutralizing, or
   mitigating perceived OCIs, but there is no indication in the record that
   the agency considered their application to AT&T prior to deciding to
   disqualify the firm. While the agency suggests that, since the RFP did not
   specifically request a mitigation plan from the offerors and advised that
   firms with an actual or apparent OCI would be disqualified, offerors
   should have known that plans to avoid, neutralize, or mitigate an OCI
   would not be considered by the agency, our review of the solicitation does
   not support the agency's position. Rather, our review shows that the RFP
   contemplated that the agency would attempt to avoid, neutralize, or
   mitigate perceived OCIs, at least to the extent of applying the
   "contracting restrictions" provisions of the RFP. These provisions, as
   stated above, allow participation in the procurement with some performance
   limitations or where other safeguards are in place to ensure objectivity;
   we therefore agree with the protester that a reasonable interpretation of
   the RFP is that disqualification was a determination to be made after
   consideration of whether or not a perceived OCI could be resolved short of
   eliminating the firm from the competition. See RFP at 39-41. The agency,
   however, failed to conduct the required review of whether or not the
   perceived OCI attributed to AT&T could be resolved, i.e., avoided,
   neutralized or mitigated, without the need to disqualify the firm.

   Third, the agency provides no support for its conclusion that AT&T would
   be evaluating its own IO security products in performance of the tasks
   identified in the RFP, such as the required analysis of the agency's
   current IO systems. According to AT&T, its IO security products are not
   part of the Navy's IO systems to be supported here; rather, AT&T's IO
   products are only available to its network subscribers and the Navy does
   not subscribe to that network. The OCI determination, therefore, appears
   to be based more on unsupported inference than fact.[2] See NES Gov't
   Servs., Inc.; Urgent Care, Inc., B-242358.4; B-242358.6, Oct. 4, 1991,
   91-2 CPD para. 291 at 6. We think it was unreasonable for the agency to
   have assessed an OCI in this regard without first resolving the
   implications of the subscription-only limitation associated with the use
   of the firm's products and services before concluding that those products
   and services would be evaluated by the firm during its performance of the
   RFP's tasks.[3] Under these circumstances, we think that the agency's
   failure to communicate its OCI concerns to AT&T and provide an opportunity
   for a response from the protester for consideration in the OCI assessment
   of the firm, was unreasonable. See FAR sect. 9.504(e) (providing that
   before determining to withhold an award based on conflict of interest
   considerations, the contracting officer is to notify the contractor of the
   reasons supporting proposed exclusion of the firm and allow the contractor
   a reasonable opportunity to respond); sect. 9.506(d)(2) (requiring the
   contracting officer to consider additional information provided by
   prospective contractors in response to the solicitation or during
   negotiations in review of perceived OCIs); Lucent Techs. World Servs. Inc,
   supra, at 11.

   In light of the lack of support for the agency's OCI assessment of AT&T,
   and the failure to give AT&T an opportunity to respond to the agency's
   perceived OCI, we recommend that the agency give the firm notice of the
   reasons for its OCI concerns and an opportunity to respond. The agency's
   new OCI assessment for the firm should also include, consistent with the
   solicitation, consideration of the firm's proposal (including its proposed
   OCI mitigation plan). To the extent a perceived OCI is found, the agency
   should then consider the applicability of the "contracting restrictions"
   provided in the solicitation to resolve any OCI concerns, if appropriate
   (i.e., prior to a disqualification determination, if any). We also
   recommend that AT&T be reimbursed the costs of filing and pursuing the
   protest, including reasonable attorneys' fees. 4 C.F.R. sect. 21.8(d)(1)
   (2008). AT&T should submit its certified claim for costs, detailing the
   time expended and costs incurred, directly to the contracting agency
   within 60 days after receipt of this decision. 4 C.F.R. sect. 21.8(f)(1).

   The protest is sustained.

   Gary L. Kepplinger
   General Counsel

   ------------------------

   [1] OCIs, as addressed in FAR subpart 9.5 and the decisions of our Office,
   can be broadly categorized into three groups. The first group consists of
   situations in which a firm, as part of its performance of a government
   contract, has in some sense set the ground rules for the competition for
   another government contract by, for example, writing the statement of work
   or the specifications. FAR sect. 9.505-2; Aetna Gov't Health Plans, Inc.;
   Found. Health Fed. Servs., Inc., B-254397.15 et al., July 27, 1995, 95-2
   CPD para. 129 at 13. The second group consists of "unequal access to
   information" situations in which a firm has access to nonpublic
   information as part of its performance of a government contract and where
   that information may provide the firm an unfair competitive advantage in a
   later competition for a government contract. FAR sect. 9.505-4; Aetna
   Gov't Health Plans, Inc.; Found. Health Fed. Servs., Inc., at 12. The
   third group, which the agency refers to here, reflects concerns about a
   firm's "impaired objectivity" and comprises cases where a firm's work
   under one government contract could entail its evaluating itself or a
   related entity, thus undermining the firm's ability to render impartial
   advice to the government. FAR sect. 9.505-3; Aetna Gov't Health Plans,
   Inc.; Found. Health Fed. Servs., Inc., at 13.

   [2] The OCI assessment itself states only that "[deleted]." OCI Assessment
   at 31.

   [3] Whether or not AT&T would be evaluating its own products would affect
   not only the agency's conclusion that AT&T might favor its own products,
   but also its determination that, in favoring its own products, the firm
   would be biased against other firms' products.