Joint Ventures & OCIs: A Cautionary Tale

For small government contractors, joint ventures can be an important vehicle for successfully pursuing larger and more complex opportunities.  As the SBA’s All Small Mentor-Protege Program enters its second full year, the popularity of joint ventures seems to be increasing significantly.

But joint ventures aren’t immune from the FAR’s rules governing organizational conflicts of interest. In a recent decision, the GAO held that an agency properly excluded a joint venture from competition where one of the joint venture’s members–through its involvement in a second joint venture–had assisted in the preparation of the solicitation’s specifications.

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GAO Finds Offeror’s Protest of OCI Exclusion Untimely

To be timely, a GAO bid protest challenging the terms of the solicitation must be filed no later than the proposal submission deadline.

A recent GAO decision affirmed that, at least in some cases, this deadline applies to an offeror’s elimination from competition based on an organizational conflict of interest. Because the offeror knew of its potential conflict and the agency’s position on its eligibility before its proposal was submitted, its post-evaluation protest was untimely. GAO dismissed its protest.

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GAO: Agency Cannot Ignore Apparent Conflict

When a procuring agency knows of an apparent organizational conflict of interest, but makes no effort to resolve the issue, the resulting award is improper.

In a recent GAO bid protest decision, GAO held that it is impermissible for an agency to simply ignore a known conflict (or apparent conflict).  Interestingly, GAO never determined whether the conflict helped or hurt the business’s efforts at winning the award. It said essentially that it did not matter. Because a conflict existed, the agency knew about it, and did nothing, the award was flawed.

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GAO: No OCI Where Information Wasn’t Competitively Useful

Access to corporate information on another contract will not result in an information organizational conflict of interest when the information accessed is not competitively useful to the present solicitation.

As a bid protester recently discovered in DV United, LLC, B-411620, B-411620.2 (Sept. 16, 2015), the mere fact that the successful offeror had access to one of its team member’s information on another government contract did not result in an information organizational conflict of interest because the information was not competitively useful.

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VA CVE SDVOSB Verification Contractor Eliminated For OCI

An incumbent contractor performing VA CVE SDVOSB verification functions was ineligible to be be re-awarded an order for those services because of an unmitigated organizational conflict of interest.

In a recent decision, the U.S. Court of Federal Claims upheld the VA’s decision to cancel the award to the incumbent contractor and exclude that contractor from the follow-on order.

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Mystery, Intrigue and OCIs: Anonymous Source Sinks Contractor’s Bid

It sounds more like a scene from “All the President’s Men” than the factual background of a GAO bid protest.  In McTech Corporation, B-406100, B-406100.2 (Feb. 8, 2012), an anonymous caller tipped off a procuring agency that McTech had an apparent organizational conflict of interest, leading to McTech’s exclusion from the competition.  The resulting GAO bid protest didn’t bring down a presidential administration, but it does provide a cautionary tale on the intersection of SBA mentor-protégé agreements and OCIs.

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OCIs and Former Government Employees: GAO Finds Agency Properly Excluded Contractor

When it comes to hiring former government employees, criminal law prohibits certain conduct (like attempting to hire a contracting officer who is currently evaluating your proposal).  But just because a hire meets the letter of the law does not mean that it won’t cause an organizational conflict of interest, or OCI.

That’s exactly what happened in the GAO’s decision in GAO Protest of TeleCommunication Systems, Inc., B-404496.3 (Oct. 26, 2011)–and it cost a contractor an award.

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