The following is an installment in Crowell & Moring’s 2023 Bid Protest Sustain of the Month Series. All through 2023, Crowell’s Government Contracts Practice will keep you up to date with a summary of the most notable bid protest sustain decision each month. Below, Crowell Partner Cherie Owen and Senior Law Clerk Emily Golchini discuss Guidehouse, Inc., B‑421740, B-421740.2, Sept. 18, 2023, 2023 CPD ¶ 217, which provides helpful insight regarding what an agency must demonstrate to support an adequate personal conflict of interest investigation.
In Guidehouse, Inc., the Department of Defense, Washington Headquarters Services conducted a procurement to acquire audit remediation and sustainment services for the Office of the Under Secretary of Defense (Comptroller). In this procurement, the agency awarded the contract to Deloitte & Touche, LLP (Deloitte)—where the chair of the agency’s technical evaluation board (TEB) previously worked as a senior consultant. After the chair learned that Deloitte might respond to the solicitation, she notified the agency of her former employment. Subsequently, the agency’s ethics attorneys conducted an internal investigation to determine whether the TEB chair had a disqualifying financial interest in Deloitte.
The contracting officers (COs) – there were two contracting officers assigned to the acquisition – ultimately allowed the chair to serve on the TEB. The COs based their decision solely upon the findings of agency counsel. However, instead of producing these findings to support its determination, the agency invoked attorney-client privilege and “declined to provide any of the underlying contemporaneous documentation relating to its limited investigation.” As a result of the agency’s refusal to provide any information or analysis to support its conclusions, GAO had to resolve the protest based only upon two conflicting statements from the TEB chair: one, stating that she has a 401(k) account and a possible pension from Deloitte; and another, denying any direct or indirect financial interest in the firm.
In sustaining the protest, GAO noted that, “while it is the agency’s prerogative to advance the attorney-client privilege in these circumstances . . . such limited document production may preclude our ability to determine that an agency’s actions were reasonable.” Specifically, GAO highlighted three fatal flaws in the record: (1) the COs did not independently investigate the potential conflict and, thus, could not support the reasonableness of their determination while simultaneously invoking privilege to withhold counsel’s analysis; (2) the TEB chair potentially participated in the acquisition before she sought guidance from agency counsel on the potential conflict; and (3) there was no evidence to suggest that the agency considered mitigation measures in light of the TEB chair’s prior employment.
In light of this lack of documentation, GAO stated that it had no basis to conclude that the agency’s determination was reasonable or that the agency considered whether the TEB chair potentially participated in other acquisition-related activities, given the potential conflict. Therefore, GAO sustained the protest and recommended that the agency pursue one of the following: (a) terminate the task order, cancel the current solicitation, and restart the acquisition; (b) recuse the TEB chair, re-evaluate quotations, and issue a new source selection decision; or (c) affirm the agency’s original evaluation and source selection decision after the agency determines that the TEB had no apparent or actual financial conflict. The Guidehouse decision serves as an important reminder that, even though an agency may invoke attorney-client privilege, it still must otherwise produce enough documentation to substantiate the reasonableness of its determination. Contractors who become aware of potential conflicts with respect to a procurement – whether organizational conflicts of interest, personal conflicts, or unfair competitive advantages of other offerors – should consult with their counsel as soon as they become aware of the facts giving rise to the potential