Organization Conflict of Interest Unreasonable: Protest Sustained

In Guidehouse LLP, 2022 CPD 197, 2022 WL 3357260 (6/6/22) (GH), the GAO sustained a post award protest, ruling that the Agency’s analysis of the awardee’s potential OCI was unreasonable. It also ruled that the Agency’s “best value” tradeoff assessment was inadequately documented and sustained the protest on this basis as well.

Nature of the Procurement and the Protest

The Department of Homeland Security, U.S. Secret Service (Agency) issued an RFQ to holders of a GSA IDIQ contract to provide IT financial management (“CFO”) support services. The RFQ contemplated the award of a fixed price task order for a base year plus option years based on a “best value” tradeoff that would consider three evaluation factors in descending order of importance: technical, past performance and price. Four vendors, including future protester GH and future awardee Deloitte, submitted quotations. At this time, Deloitte was also performing other IT support services for the Agency on various administrative systems (“TOPS”) and for its financial repository of enterprise data application (“FRED”).

The Agency awarded the new task order to Deloitte. GH protested the award to the GAO, contending, among other things, that the Agency failed to make a reasonable assessment of a Deloitte OCI regarding its oversight obligations under the new task order and the review of its own work under the TOPS/FRED applications.

The Agency told the GAO that it would take corrective action, and GAO dismissed the protest. The Agency amended the RFQ and new quotations were submitted.  After Agency review of these quotations it concluded, in a conclusory fashion, that Deloitte’s higher technical rated/higher priced quotation was the “best value” for the government. As for the OCI issue, the Agency concluded that no OCI was created. Deloitte’s performance on the TOPS/FRED applications did not prevent Deloitte from receiving this award insofar as the two IT requirements were not similar in size or scope. GH was debriefed on the award, and again filed a protest with GAO.

The GAO Rules

First, the GAO found that the protest was timely. It then addressed the nature of the OCI claim, known as an “impaired objectivity organizational conflict of interest” (“IO/OCI”). An IO/OCI arises when a contractor cannot perform its obligations in an objective and unbiased manner because of countervailing obligatory interests. See FAR 9.505(a). Here, the GAO agreed with the protester that the Agency failed to meaningfully consider the extent to which there existed a real IO/OIC between Deloitte’s dual obligatory interests, i.e., between its pre-existing support services under the TOPS/FRED applications and the CFO support services under the new task order. That the two efforts were not similar in size or scope, as the Agency contended, was irrelevant. What was relevant was whether the new awardee would be placed in a position of reviewing its own work. The GAO noted that the Statement of Work under the new CFO task order included various tasks involving TOPS/FRED systems and data. The Agency failed to meaningfully evaluate these tasks from an OCI perspective. The GAO held that the Agency’s OCI assessment lacked a reasonable foundation and sustained the protest.

The GAO also held that the Agency’s “best value” tradeoff decision was not adequately documented. The Agency failed to adequately identify the basis for its conclusion that the technical advantages of the Deloitte quote outweighed its associated price premium. It sustained the protest on this basis as well. GAO recommended a new OCI assessment; a new “best value” tradeoff analysis and a new source selection decision. It also recommended reimbursement of GH’s costs, plus reasonable attorney’s fees.

Lessons Learned

This case reminds the government of the risks that flow from conclusory and perfunctory procurement assessments. While tribunals typically will not “second guess” discretionary Agency assessments, these evaluations must be meaningful and documented to allow for judicial review and to ensure that this discretion is not abused.