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.

GAO’s decision in Satellite Tracking of People, LLC, B-411845 et. al. (Nov. 6, 2015) involved a RFQ to provide the Court Services and Offender Supervision Agency for the District of Columbia  (“CSOSA”) with GPS equipment and monitoring services for the purpose of tracking offenders. The resulting award was to be issued as a task order under the successful offeror’s Federal Supply Schedule contract.

Three companies submitted quotations. One of the offerors was BI Incorporated, Inc., the incumbent contractor.

After evaluating competitive quotations, the agency made award to BI. Satellite Tracking of Peopple, LLC (“STOP”), an unsuccessful competitor, subsequently filed a GAO bid protest. During the protest process, STOP alleged that CSOSA’s program manager had an impermissible conflict of interest that had not been mitigated. Specifically, STOP argued that the program manager was a disgruntled former STOP employee with an “ax to grind” against STOP, and that the program manager had actively worked to prevent award to STOP.

In reviewing the protest, the GAO determined that the program manager was a former STOP employee and had, in fact, been significantly involved in the procurement process. Additionally, although the contracting officer stated that everyone who worked on the procurement had been asked to sign a non-disclosure/conflict of interest statement, the program manager had not submitted one. Nevertheless, the contracting officer became aware that the program manager had worked at STOP previously from a confidential ethics and financial disclosure form. However, after becoming aware of the apparent conflict, the agency took no action, and permitted the program manager to continue working on the procurement.

The GAO wrote that the agency’s failure to timely obtain a non-disclosure/conflict of interest statement from the program manager “is–standing alone–a matter of concern.” GAO continued:

We need not resolve the question of whether the program manager’s participation in the acquisition favored, disfavored, or had no impact on STOP.  Here, the record shows that the contracting officer identified a conflict of interest issue, but undertook no actions to safeguard the procurement process.  As stated above, the general rule is “to avoid strictly any conflict of interest or even the appearance of a conflict of interest . . . .”  These strict limitations reflect the reality that the potential harm flowing from such situations frequently is, by its nature, not susceptible to demonstrable proof of bias or prejudice.  Thus, where, as here, the record establishes that a conflict or apparent conflict of interest exists, and the agency did not resolve the issue, to maintain the integrity of the procurement process, we will presume that the protester was prejudiced, unless the record includes clear evidence establishing the absence of prejudice.   We see no such evidence here.

GAO sustained the protest.

Agencies have broad discretion when it comes to addressing actual, potential or apparent conflicts of interest. But as the Satellite Tracking of People decision demonstrates, that broad discretion does not allow an agency to simply ignore an apparent conflict of which it is aware.

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