While most of our get-togethers these days involve mask wearing, social distancing, and even virtual happy hours, spending time with friends is a great way to keep spirits light. Unfortunately for one group of friends, their weekly hangouts led GAO to conclude in its recent decision, Teledyne Brown Engineering, Inc., B-418835 (Sept. 25, 2020), that NASA had to cancel a more than $650 million deal and start the procurement process all over.
Teledyne Brown Engineering, Inc. and SGT, LLC both responded to NASA’s RFP No. 80MSFC19R0033, which was issued to acquire ground systems and operations services at Marshall Space Flight Center in Huntsville, Alabama. The resulting contract was to be relatively long term, with “a base period of one year and six option periods spanning an additional 7-year interval.”
Ultimately, SGT received the award, valued at over $650 Million, but this didn’t sit well with Teledyne. Teledyne protested, arguing that “a current NASA employee who participated in the acquisition had an improper personal conflict of interest that tainted the acquisition.” Ultimately, GAO agreed.
Throughout its decision, GAO refers to this NASA employee as “Mr. X” (an appropriate name for a James Bond villain, in my opinion). Despite the sinister sounding pseudonym, Mr. X’s potential conflict of interest arose from his passion for a nostalgic table game. No, it wasn’t blackjack or baccarat: it was foosball.
As it turns out, Mr. X is heavily involved in NASA’s acquisition activities as part of NASA’s procurement development team (or PDT). He is also long-time friends with a higher-up of the incumbent contractor, COLSA Corp., which SGT also proposed as one of its major subcontractors on the current procurement. As Mr. X explained, he had even attended a social gathering with the COLSA official every week “for the past 10 years” for “camaraderie, friendship, dinner, and to engage in competitive foosball.”
Mr. X, however, is not really to blame: he told agency officials about these weekly foosball forays “on multiple occasions.” The agency simply advised him to “be careful and not to have the appearance of a conflict” but “took no action, either to investigate, or to address, the possible conflict arising out of these circumstances.”
Later, however, NASA’s ethics counsel advised that the ongoing relationship might lead a reasonable person to question Mr. X’s objectivity and recommended that he be removed from the procurement’s source evaluation board. Notwithstanding the recommendation, NASA decided to keep Mr. X where he was because, in part, his continuation was “deemed vital to the successful completion of this procurement.”
In the face of Teledyne’s protest, NASA argued that it had taken the appropriate steps to mitigate any conflict and “eliminated the possibility of prejudice either in favor of SGT or against the other offerors.” In particular, NASA’s mitigation plan required Mr. X to adhere to the “procurement integrity regulations as well as standards of ethical conduct,” to agree not to discussion source evaluation board matters outside of board controlled access areas, and to not take part in evaluation of any proposal involving COLSA.
These efforts, however, were not enough for GAO, which concluded that because “Mr. X exercised an ongoing, continuous leadership role in the development of virtually every aspect of the agency’s acquisition,” a conflict of interest likely existed.
Citing FAR 3.101-1, GAO raised several of its primary concerns. First, it pointed to the agency’s decision to ignore the opinion of its own ethics attorney, which plainly asserted that NASA should remove Mr. X from the source selection board. Next, it found that “none of the agency’s ethics review activities or deliberations considered [Mr. X]’s extensive, ongoing participation in the agency’s acquisition activities.” Third, GAO determined that NASA also failed to look into another potential conflict involving Mr. X and another participant in the weekly foosball get-together.
In the end, GAO held that “although the agency did adopt some mitigation measures, it is not evident how those measures could be adequate in light of the totality of the circumstances.” As a result, GAO recommended that NASA not only cancel its award to SGT, but cancel the RFP in its entirety and start over from square one in order to most effectively avoid a conflict. It also recommended that NASA reimburse Teledyne for its filing costs.
In the end, this decision provides a stark warning to agencies to avoid even the appearance of a conflict of interest. If you have concerns about a potential conflict of interest, we are here to help! You can reach us here.