Olivia LynchDaniel WierzbaPayal Nanavati

In the face of an actual or potential organizational conflict of interest (OCI), the potential solutions are often limited. There are several options for contractors and the government that are broadly categorized as mitigation, avoidance, neutralization, limitations on future contracting, and exclusion. Although used sparingly, the FAR also provides that the government can “waive” actual or potential OCIs. Specifically, FAR 9.503 states: “The agency head or a designee may waive any general rule or procedure of this subpart by determining that its application in a particular situation would not be in the Government’s interest.”

A recent GAO decision sheds light on how contractors and agencies should think about OCI waivers. CACI, Inc.-Federal; General Dynamics One Source, LLC, B-413860.4, et al., Jan. 5, 2018.

The Setup

The procurement at issue was for a task order issued by the U.S. Special Operations Command (USSOCOM) for special operations forces information technology enterprise contract (SITEC) requirements. In supporting the agency’s information technology enterprise, the selected contractor’s support services would enable special operations forces to “conduct operations worldwide across Department of Defense (DoD) and other U.S. and foreign government organizational boundaries.” Of note, several contracts currently support the agency’s information technology enterprise (collectively known as SITEC I). The awardee (Jacobs Technology Inc.) and two protesters (CACI, Inc.-Federal and General Dynamics One Source, LLC (GDOS)) each hold a contract with responsibility for requirements that will be consolidated into the protested task order (called SITEC II).

These protests arose out of USSOCOM’s second attempt to award the SITEC II contract to Jacobs. USSOCOM’s first announcement of award to Jacobs was promptly protested by CACI and GDOS, who alleged that Jacobs had disqualifying OCIs. The agency took corrective action and, based on an investigation, concluded that Jacobs had no disqualifying OCI. Despite the agency’s conclusion, the contracting officer requested waiver of the applicability of the OCI rules to any residual OCI in the government’s best interest, which was granted.

Following the corrective action, USSOCOM re-awarded to Jacobs on August 29th and both protesters re-filed. USSOCOM shared the initial OCI waiver with the protesters who filed supplemental protest grounds challenging the reasonableness of the waiver. Prior to submitting the agency report, the contracting officer submitted a supplemental waiver request to waive any residual OCIs that might exist to facilitate full and open competition and the acquisition of the solution that offers the best value to the Government.

Among their arguments, the protesters claimed that Jacobs had disqualifying OCIs from its performance of other contracts (including SITEC I) and the agency’s waiver was not reasonable. The protesters alleged all three categories of OCI:

  • Impaired Objectivity. This argument was tied to Jacobs’ advice to USSOCOM concerning the performance of other SITEC contractors.
  • Biased Ground Rules. The Protesters reasoned that Jacobs provided advice to the Agency that may have affected how the Agency prepared the solicitation for the instant SITEC procurement.
  • Unequal Access to Information. Jacobs’ work on the prior SITEC contract purportedly provided it access to confidential cost and price information for the other contractors as well as USSOCOM’s requirements for the instant SITEC procurement.  GAO rejected each of the Protesters’ challenges to the reasonableness of the OCI waivers, finding that the OCI waivers were consistent with FAR 9.503 and reasonably supported by the record. GAO denied every avenue of attack:

GAO’s Decision

GAO rejected each of the Protesters’ challenges to the reasonableness of the OCI waivers, finding that the OCI waivers were consistent with FAR 9.503 and reasonably supported by the record. GAO denied every avenue of attack:

  • No Need to Concede an OCI to Waive It. GAO found nothing problematic with the agency waiving application of FAR subpart 9.5 despite finding that no OCIs exist.
  • OCI Waiver Not Dependent on a Reasonable OCI Investigation. Notwithstanding the fact that the OCI waivers discussed the fact that no OCIs had been identified, GAO ruled that the OCI waiver was not reliant on the OCI investigation results, but rather the agency’s independent finding that the waiver was in the Government’s best interests.
  • Mere Disagreement with the Government’s Determination of What is in its Best Interests Insufficient. This is really the crux of the challenge to the waiver. The protesters argued that the rationales set forth in the waivers are (1) not sufficient to constitute the best interests of the Government, or (2) are in fact contrary to the Government’s best interests.  GAO rejected these arguments because the FAR provides for agency discretion in determining the Government’s best interest. The protesters’ disagreement with the Agency’s assessment was not a basis to determine that the Agency exceeded its authority or abused its discretion.
  • Waiver of a Contract-Specific OCI Clause Possible. The protesters argued that an OCI clause from Jacobs’ earlier contract rendered it ineligible for the current award.  That contract contained an OCI clause noting that the contractor and its subcontractors would be ineligible for award of SITEC contracts because Jacobs had access to performance information regarding other SITEC I contractors. But even though the OCI clause expressly stated that the work performed under the earlier contract would create an OCI and that the awardee shall be ineligible for award of SITEC services, GAO found that the Agency was entitled to waive the OCI clause (and did so).
  • Waiver Need Not Occur within a Specified Time Frame. One protester argued that the Agency’s waiver was improper because it occurred after the protesters suffered competitive harm and was not conducted within the time set forth in FAR subpart 9.5.  GAO rejected this argument, finding that the FAR provides the agency the authority to issue a waiver but does not set forth a time in which the waiver must occur.  This is entirely consistent with prior GAO cases on the issue of timing. In no case was this more apparent than AT&T Gov’t Solutions, Inc., B‑407720, B‑407720.2, Jan. 30, 2013, 2013 CPD ¶ 45, where GAO relied on a waiver issued on the 97th day of the protest period to dismiss as academic a protest challenging the agency’s evaluation of two types of OCIs, which had not only been fully briefed but that GAO had indicated during outcome prediction it was likely to sustain.