Three reasons why organizational conflicts of interest are back in the spotlight

Concerns about organizational conflicts of interest between vendors providing, for example, technology planning services and technology implementation services, are as old as federal procurement itself.

But over the past few weeks, OCI has received more attention and consideration among agencies, and this should be taken as a warning sign to close those OCI trapdoors.

First, members of the Senate Homeland Security and Governmental Affairs Committee introduced the Prevention of Organizational Conflict of Interest in Federal Procurement Act…

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Concerns about organizational conflicts of interest between vendors providing, for example, technology planning services and technology implementation services, are as old as federal procurement itself.

But over the past few weeks, OCI has received more attention and consideration among agencies, and this should be taken as a warning sign to close those OCI trapdoors.

First, members of the Senate Homeland Security and Governmental Affairs Committee introduced the Prevention of Organizational Conflict of Interest in Federal Procurement Act and it was passed by the full Senate on August 2. development companies and the Food and Drug Administration – more on that later.

A day later, the Defense Health Agency issued a notice as part of its Military Health System Enterprise Information Technology Geographic Service Provider (GSP) requirement that calls on seven conflicting companies not to bid on the potential $1.5 billion contract.

Federal procurement experts and lawyers say an advisory like this has rarely been seen publicly and has given DHA a lot of credit for taking such public action.

The third example of an OCI issue impacting the federal procurement community came on August 12 when the Government Accountability Office backed a Guidehouse protest against a Secret Service and Department of Homeland Security award to Deloitte. .

The $20 million work order through the OASIS vehicle managed by the General Services Administration focused on support services to the Chief Financial Officer, including conducting budget and financial management operations.

Guidehouse alleged that the Secret Service made several errors, but the GAO upheld two of the complaints, the most significant involving the OCI.

Duty to Disclose Potential Conflicts

The three of them taken separately do not really amount to much – a single piece of legislation which may not make it a law; a special case of contract notice; and a random decision from the GAO.

But when you put the different pieces together, it starts to create a picture of OCI issues that get more attention in the federal sector.

“Companies that receive taxpayers’ money from federal contracts should not turn around and advise their customers to take actions contrary to the interests of the American people,” said Sen. Gary Peters (D-Minn.), Chairman of the committee and one of the main sponsors of the bill, in a statement. “This bipartisan, common-sense legislation will require federal contractors to disclose any potential conflicts of interest before being awarded a federal contract to ensure they effectively serve taxpayers.”

Rep. Carolyn Maloney (DN.Y.), chair of the Oversight and Reform Committee, introduced a companion bill in April. The committee approved a substitute amendment in July that matches the Senate version of the bill, clearing the way for a full vote by the House.

“It’s especially important to avoid OCI for consulting contracts where the government is paying for expert advice on sensitive issues,” Malone said during the July 14 markup. “This bill would make long-awaited revisions to strengthen the rules on OCI. The rules on OCI have not changed significantly since their publication in the early 1990s, despite many major changes in the public procurement landscape.

Maloney added that regulations vary from government to government and the bill would help standardize how agencies apply OIC principles.

Specifically, the Prevention of Organizational Conflicts of Interest in Federal Procurement Act would require agencies to identify potential conflicts for specific contracts early in the process.

Federal contractors should disclose other business relationships with entities that conflict with the specific work for which an agency has hired them and should also disclose potential new business that conflicts with the ongoing services they are providing to agencies.

The legislation would also require federal agencies to assess and update their procedures for determining whether contractors might have a conflict of interest.

DHA reviews of seven vendors

This is only the latest attempt by Congress to address the challenges of the OIC.

Law firm Miller & Chevalier wrote in April about offers to improve the way agencies handle disputes. The company wrote that in 2007, the Acquisition Advisory Committee issued a report which stated that “the potential for OCI has increased significantly in recent years” and “[t]he contracting community needs more extensive and detailed guidance to identify, assess and mitigate OCI.

Then, in the Defense Authorization Bill of 2009, lawmakers called on the Federal Acquisition Regulations Council to review conflict of interest rules and contract clauses. This led to a proposed rule to address OCI issues in 2011.

Miller & Chevalier said the proposed rule was withdrawn in March 2021 due to the “time that has elapsed since the proposed rule was published and potential changed circumstances”.

Now, although that rule never materialized, DHA has taken steps to address any potential conflict with its mega IT services contract.

The reason DHA brought in companies such as Perspecta Enterprise Solutions, Capgemini Government Solutions, Guidehouse and Tenacity Solutions was because the team won the MHS Enterprise IT Services Integrator (EITSI) Global Purchase Agreement (BPA) from $2 billion, where they provide support services to program managers. and working on the government side to help DHA manage tracking contracts for geographic service providers.

The DHA says these companies would be in conflict not to bid on any “work during the term of the BPA and for 18 months after the last day of performance under the BPA or any call order under it.” “.

For these companies, the OIC advisory was probably not surprising, but the fact that the DHA released it publicly certainly raised a few eyebrows in a good way.

Secret Service award protest confirmed

The third piece of this puzzle came on August 12 when the GAO backed the Guidehouse protest.

The GAO’s lawyers did not hold back on the mediocrity of the secret services in solving the potential problems of the OIC.

“First, the record reflects a fundamental misunderstanding on the part of the contracting officer regarding the legal standards associated with impaired objectivity CLBs. Moreover, contrary to the arguments of counsel for the agency, the record indicates that the contracting officer did not in fact “examine closely” or carefully consider whether Deloitte’s ability to provide impartial advice to the agency under the CFO Support Services Mission Order be undermined by competing interests of the company under the TOPS/FRED Mission Order,” the GAO wrote. “The analysis demonstrates that the agency has not meaningfully considered whether a material organizational conflict of interest exists here.”

Deloitte also holds the TOPS/FRED work order, which relates to financial data and reports used for the agency’s budget analysis and management functions, as well as services such as program management; operations and production support; software and hardware performance; support to the information systems security manager; system use/performance/improvement; software maintenance; coaching; and improvements.

The GAO found that the contracting officer failed to properly consider whether Deloitte could objectively perform the work under the CFO Support Services contract given his work on TOPS/FRED.

“For the purposes of an analysis of OIC with impaired objectivity, however, it is entirely irrelevant whether the two efforts are identical or similar in scope or size; what matters instead is whether whether the contractor would be able to review its own work or otherwise be unable to discharge its obligations impartially.Therefore, we conclude that the contracting officer incorrectly substituted the similarity (or lack of similarity) between the two efforts to reasonably determine whether Deloitte’s work on the CFO Support Services work order could be performed objectively in light of its work on the TOPS/FRED work order,” said writes GAO, “Furthermore, the record does not support the agency’s assertion that the contracting officer conducted a detailed review of the requirements for both efforts. To the contrary, the record indicates that the contracting officer’s assessment was limited to reviewing the higher level/overarching objectives of the CFO’s support services without any analysis or consideration of the hundreds of work activities required for the two efforts. In the absence of an examination of these requirements here, the agency’s OCI analysis lacked a reasonable basis.

Those are pretty strong words from the GAO.

Although the bill is far from guaranteed, the fact is that Congress is paying more attention to the OIC and this will have a ripple effect on agencies and vendors. Given the DHA advisory and the latest GAO protest decision, it seems logical for agencies to ensure that the procurement officer determines how best to determine the OIC and that vendors do more what to say that they have set up a “firewall”.

Aubrey L. Morgan