US Army Corps of Engineers BUILDING STRONG ® Thumbs Off the Scales: Identifying and Addressing Organizational Conflicts of Interest in Today’s Acquisition Environment Mr. Earl Stockdale Chief Counsel U.S. Army Corps of Engineers 2 November 2011

BUILDING STRONG ® OCI Trends Contractor Consolidation. Contractor Consolidation. Use of Contractors in the Federal Workplace. Use of Contractors in the Federal Workplace. Use of Broadly-Scoped Multiple Award ID/IQ Contracts. Use of Broadly-Scoped Multiple Award ID/IQ Contracts. 2

BUILDING STRONG ® OCIs Affect Contractors…. “It reflects Northrop Grumman’s desire to align quickly with the government’s new organizational conflict of interest standards, while preserving TASC’s unique organizational culture and its status as the advisory services employer of choice.” -Ronald D. Sugar, former Northrop Grumman chairman and CEO 3

BUILDING STRONG ® …and Contracting Activities  Fort Benning Military Hospital Litigation  PCCP Constructors, JV 4

BUILDING STRONG ® 5 Organizational Conflict of Interest An OCI arises when “because of other activities or relationships with other persons, a person is unable or potentially unable to render impartial assistance or advice to the Government, or the person’s objectivity in performing the contract work is or might be otherwise impaired, or a person has an unfair competitive advantage.”FAR § Organizational Conflicts of Interest call into question the integrity of the competitive procurement process.

BUILDING STRONG ® Biased Ground Rules Through its performance of a government contract, is a contractor in a position to: ►set the ground rules for a subsequent government procurement such that it could compete more favorably and skew the competition in its favor. 6

BUILDING STRONG ® Impaired Objectivity Through its performance of a government contract, is a contractor in a position to: ►evaluate itself, its affiliates, or its competitors through assessment of proposals or performance on another government contract. 7

BUILDING STRONG ® Unequal Access to Information* Through its performance of a government contract, is a contractor in a position to: ►have access to nonpublic information which may provide it an unfair competitive advantage in a subsequent government procurement. 8

BUILDING STRONG ® 9 A Contracting Officer must: (1) Identify and evaluate potential organizational conflicts of interest (OCI) as early in the acquisition process as possible; and (2)Avoid, neutralize, or mitigate significant potential conflicts before contract award. Underlying Principles:  Prevent the existence of conflicting roles that might bias a contractor’s judgment; and  Prevent unfair competitive advantage.  FAR § – Contracting Officer Responsibilities. Contracting Officer Responsibilities

BUILDING STRONG ® Fort Benning Hospital Litigation  GAO B.L. Harbert-Brasfield & Gorrie, JV, B , February 16, 2010, 2010 CPD 69. McCarthy/Hunt, JV, B , February 16, 2010, 2010 CPD ¶ 68.  Court of Federal Claims Turner Const. Co. v. U.S., 94 Fed. Cl. 561 (Fed. Cl. 2010)  Court of Appeals for the Federal Circuit Turner Const. Co. v. U.S., 645 F.3d 1377 (Fed. Cir. 2011) 10

BUILDING STRONG ® Two Phase Design-Build  FAR Subpart 36.3 Design-BuildDesign-Build - “The scope of work may include criteria and preliminary design, budget parameters, and schedule or delivery requirements.” Two PhaseTwo Phase - “Proposals will be evaluated in Phase One to determine which offerors will submit proposals for Phase Two.” 11

BUILDING STRONG ® 12 Business Relationships in Turner AECOM HSMM Turner Construction Joint Venture Partner Ellerbe Becket Joint Venture Partner PRELIMINARY DESIGN CONTRACT FINAL DESIGN & CONSTRUCTION CONTRACT Business Relationship Negotiations Sub K

BUILDING STRONG ® 13  Ellerbe-Becket & AECOM interests aligned in August 08  Sustained “unequal access” OCI. No mitigation plan.  Sustained “biased ground rules” OCI. Prejudice presumed.  Denied “impaired objectivity.” Record established lack of prejudice.  Footnote noted Agency’s authority to waive OCIs. GAO Decisions

BUILDING STRONG ® 14  Standard of Review: Agency decision irrational if GAO decision irrational.  Findings: Actual or potential OCI must be established by “hard facts.” Contracting Officer’s duty is to evaluate OCIs “as early as possible” …but the earliest time might be post award. GAO should have considered post-protest representations when looking for “hard facts.” GAO finding of alignment of interests was cursory and not based on “hard facts.” GAO finding of “unequal access” and “biased ground rules” not based on “hard facts.”  Remedy: ”Agency ordered to “restore the Hospital contract to Turner” COFC Decision

BUILDING STRONG ® 15  CAFC held: Standard of review used by COFC was correct. COFC did not conduct de novo review but gave proper deference to the Contracting Officer’s judgment. Post award investigation can remove “any OCI taint” if no significant OCI found. GAO should have assessed the reasonableness of the investigation. Affirmed application of “hard facts” requirement. Challenge to COFC remedy could only be raised by the Government. Federal Circuit Decision

BUILDING STRONG ® Corps’ Perspective  The Corps did not believe there was an OCI.  The Corps was not willing to waive the OCI pursuant to FAR §  Final Result: Original contractor, same project scope, approx. 11 months of delay. 16

BUILDING STRONG ® PCCP Constructors, JV  PCCP Constructors, JV; Bechtel Infrastructure Corporation, B ; B ; B ; B ; B ; B , August 4, 2011, 2011 CPD ¶

BUILDING STRONG ® The Five “Ds”  Disclose  Due Diligence  Discover  Document  Determine Course of Action 18

BUILDING STRONG ® Takeaways  Contractors should be upfront and honest about potential conflicts of interest.  Contracting Officers should be alert. Look for potential conflicts at acquisition milestones. Seek legal counsel if questions. 19

BUILDING STRONG ® FAR Case  75 Fed. Reg  Affects 16 FAR Parts.  Expands and Clarifies Contracting Officer’s OCI-related responsibilities.  Separates Access to Information responsibilities from the OCI inquiry.  Adds new FAR clauses addressing OCIs and Access to Non-public Information. 20

US Army Corps of Engineers BUILDING STRONG ® 21 Mr. Earl Stockdale Chief Counsel U.S. Army Corps of Engineers For additional information: CPT Grant L. Arnold