1. Organizational Conflicts of Interest (OCI) New Developments in the U.S. and Abroad A Panel Discussion including:
Richard C. Bean, Attorney at Law Peter J. Camp, Counsel, U.S. Air Force ESC Joseph J. Kelley, Senior Counsel, Raytheon

2. On The Regulatory Front- OCI:
FAR Case : where are we now?
Public comments from December 2010 still under review by FAR Acquisition Ethics and International Law Team
Team tasked September 1, 2011 with drafting final rule by October 26, 2011
Second extension of due date has been issued: March 28, 2012 2

3. On The Regulatory Front – PCI:
Another related area in the regulatory arena has been personal conflicts of interest (PCI) for contractor employees performing acquisition functions
FAR Case , effective December 2, 2011, see 76 Fed. Reg , November 2, 2011 3

4. On the Regulatory Front – PCI:
Some companies are merging OCI and PCI policies (and awaiting new OCI final rules)
May be appropriate for contractors providing support services, but maybe not for systems or supply contractors
However, inclusion of both OCI and PCI compliance processes in an OCI mitigation plan may show an agency that the company has both areas addressed and resolved!

5. On the Regulatory Front – PCI:
Final rule makes contractors responsible for:
Having procedures to screen for potential PCI
Informing covered employees of their obligations with regard to these policies
Maintaining effective oversight to verify compliance
Reporting any PCI violations to the contracting officer
Taking appropriate disciplinary action with employees who fail to comply with these policies

6. On the Regulatory Front – PCI:
Affects contractor employees supporting an “acquisition function closely associated with inherently governmental functions” means providing advice or recommendations with regard to:
Planning acquisitions, evaluating proposals
Developing SOWs, evaluation criteria
See FAR for comprehensive listing of affected efforts and FAR for new mandatory clause for acquisitions exceeding the simplified acquisition threshold for services

7. On the Regulatory Front – PCI:
PCI - a situation in which a covered employee has a financial interest, personal activity or relationship that could impair the ability to act impartially and in the best interest of the Government when performing under the contract
Contractors must prohibit covered employees from using non-public information for personal gain

8. On the Regulatory Front – PCI:
Requires use of nondisclosure agreement
Violations will require not just reporting of the incident but also the proposed actions to be taken (implying contracting officer input into those proposed actions) and follow-up reports of corrective actions
If contracting officer determines matter not resolved, must consult with agency legal counsel and take “appropriate” action

9. On the Regulatory Front – PCI:
PCI policies are yet another compliance issue for contractors which will require:
Workforce training
Implementing clearly understood PCI policies
Tracking of executed NDAs of covered employees
Tracking of disciplinary actions to establish proportionality and reasonableness of actions taken (to persuade contracting officer)

10. GAO Decisions
AdvanceMed Corporation; TrustSolutions, LLC B ; B ; B ; B ; B January 17, Protest that the award was tainted by an impaired objectivity OCI is denied where the record showed that the agency reasonably concluded that the potential areas of concern either did not constitute significant conflicts that warranted disqualification of the awardee, or were significant conflicts that were adequately mitigated. 10

11. AdvancedMed Decision
HHS acquisition for Medicaid/Medicare fraud prevention support; best value award
Corrective action taken on first protest which alleged OCI concerns – awardee was wholly owned subsidiary of BC/BS
Plan for divestiture was sufficiently detailed to satisfy GAO that agency acceptance was not arbitrary (26 page GAO decision)

12. GAO Decisions
TriCenturion, Inc.; SafeGuard Services, LLC B ; B ; B ; B January 25, Protest that the award was tainted by organizational conflicts of interest was denied where the record shows that the agency reasonably concluded that the potential areas of concern were adequately mitigated.

13. TriCenturion Decision
Another HHS acquisition for similar services in a different geographical region
The protest was sustained on other grounds involving the evaluation process (recommended reading!)
Complex and detailed divesture process contingent on contract award was identical to that set forth in AdvancedMed decision

14. GAO Decisions
Raytheon Technical Services Company LLC B ; B ; B , October 11, Protest that awardee had “unequal access to information” type of organizational conflict of interest is denied where allegations were based upon suspicion and not “hard facts,” agency’s investigation was meaningful, and agency reasonably concluded that awardee did not have access to nonpublic information that would provide firm a competitive advantage in procurement.

15. Raytheon Decision
Protest was sustained on other grounds (and a prior protest resulted in corrective action)
The Department of State contracting officer conducted a post-protest investigation which concluded that certain named individuals did not have access to any current nonpublic information
Rare GAO support for post-protest agency investigation

16. GAO Decisions
Enterprise Information Services, Inc. B ; B ; B September 2, Protest that the awardee’s subcontractor had an unmitigated “unequal access” OCI arising from its contract with the procuring agency is denied where the contracting officer investigated the matter and determined that the subcontractor’s work under its contract did not directly involve the subject matter implicated by the protested procurement and NDAs were used in any event.

17. Enterprise Decision
Air Force contracting officer concluded that a subcontractor of the awardee was working in a separate support area and even if it may have had access to protester’s labor information, each employee executed an NDA
GAO held that while the NDA was not “company-to-company,” this error was not sufficient to sustain this issue without more facts

18. GAO Decisions
PCCP Constructors, JV; Bechtel Infrastructure Corporation B ; B ; B ; B ; B ; B August 4, An agency’s investigation of the awardee’s alleged unequal access to information organizational conflict of interest was unreasonable, where the agency concluded that the awardee’s hiring of a high-level government employee from the office responsible for the project being procured created a potential conflict, but limited its review to what responsibility and role the government employee had in the procurement prior to his retirement without any consideration of the employee’s access to non-public, source selection information, and where the record establishes the employee’s continued daily contact with members of the source selection team and access to inside information concerning the agency’s build-to-budget concept.

19. PCCP Decision
Army Corps of Engineers acquisition; protest sustained on several grounds
Agency investigation overlooked some aspects of Corps former employee’s access to source selection information
Testimony of other Corps employees showed his access to SSI outside of the source selection in management meetings

20. GAO Decisions
Unisys Corporation B February 8, Protest that awardee's use of a former government employee in the preparation of its proposal provided the firm with an unfair competitive advantage due to the employee's access to proprietary information of the protester is denied where the record reflected that the information at issue was not competitively useful

21. Unisys Decision
Prior protest alleging OCI resulted in corrective action being taken – investigation
DISA contracting officer investigation concluded that former employee had only limited (1/3 of total requirement) and outdated labor rate information and no access to evaluation plans
GAO found OCI allegation too speculative

22. GAO Decisions
QinetiQ North America, Inc. B ; B July 27, Protest that awardee has “biased ground rules” type organizational conflict of interest (OCI) is denied where record does not establish that awardee’s prior contract performance put awardee in position to materially affect competition. Allegation that awardee has “unequal access to information” type OCI is denied where record reflects that any advantage arising from awardee’s prior contract performance was normally occurring incumbent advantage.

23. QinetiQ Decision DoT acquisition for IT services
Technical Evaluation Team chair testified that neither awardee or any other contractor had involvement in requirements definition based upon prior contract effort
Great reliance by the GAO on two-day hearing process with testimony by contracting officer and other Government personnel

24. GAO Decisions
The Analysis Group, LLC B April 18, Protest that agency failed to give adequate consideration to awardee’s potential impaired objectivity OCI is denied, where record shows that agency extensively investigated potential OCIs and, after completing its investigation and concluding that there was a remote possibility of an OCI, properly executed a waiver of the residual OCI

25. Analysis Group Decision
Prior sustained protest on multiple grounds resulted in corrective action and OCI investigation by GSA and Air Force
Awardee was involved in selling certain technology which would be evaluated to some degree under proposed new support contract
Increased agency oversight was deemed sufficient as mitigation

26. Some Industry Perspectives
Management support of OCI avoidance/mitigation (and PCI as appropriate) through educational awareness. Everyone in contracts, business development, sales, engineering, administration, etc. can benefit from OCI training (note - especially new hires!).
Make training attendance 'MANDATORY‘
For those who are on travel or at remote locations, provide an alternate date or also consider a web-based training process.
Establish realistic deadlines for the OCI sweep process so organizational POCs have time for an appropriate review and allow time for comprehensive OCI mitigation plan preparation

27. Some Industry Perspectives
OCI sweep process and internal OCI training should be addressed in the OCI mitigation plan to give the government agency assurance of thoughtful, ingrained OCI compliance
Success or failure of OCI training (and new PCI training?) may mean the difference between being able to sustain a defense to a protest allegation or jeopardize a contract award!

28. ERS

29. Turner v. United States GAO Court of Federal Claims
Litigation History
Turner v. United States
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) 

30. Business Relationships in Turner
AECOM
FINAL DESIGN &
CONSTRUCTION CONTRACT
PRELIMINARY DESIGN
CONTRACT
Turner Construction
Business Relationship
Negotiations
Sub K
HSMM
Joint Venture
Partner
Ellerbe Becket
Joint Venture
Partner 30

31. GAO Decisions 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.

32. COFC Decision 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”

33. Federal Circuit Decision
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.

35. Netstar-1 Gov’t Consulting, Inc.
__ Fed. Cl. __, NO C (Oct. 17, 2011)
Allegation: awardee used its previous access to agency data – including Protester’s labor categories, job categories, and labor rates – to improperly craft a winning proposal
Deficient mitigation/corrective action
CO failed to enforce FAR mitigation procedures
Mitigation plan grossly inadequate
Plain error in CO investigation
Awardee’s “willful blindness” + CO’s “blithe assumptions”

36. OCI is a Way to Become Unpopular at Work
PIA
PGE

37. OCI is a Way to Become Unpopular at Work
ALLEGATIONS (case is not yet proved/decided)
Lt Col M, USAF Dep. Chief, IT Division, AF Medical Support Agency
Retires, hired by BAH 4 Apr 11 (Sr. Associate); orientation 4-8 Apr 11
11 Apr 11: First day of work, meets his 2 bosses & 2 coworkers
BAH interested in IT Modernization Services (ITMS) Contract
12 Apr 12: s boss incumbent’s contract (CLIN pricing, labor mix, labor rates by labor category)
Boss’ Reaction: forwards , promotes Mr. M to ITMS Capture Lead
BAH Pricing Department Reports Incident, BAH Self Reports
SAF Suspends BAH’s San Antonio Office, Proposes for Debarment

38. OCI is a Way to Become Unpopular at Work
San Antonio, TX Office
OCI
PIA
PGE

39. OCI is a Way to Become Unpopular at Work
Take Away:
OCI & Ethics Plans, Superficial Compliance with Revolving Door Restrictions are Insufficient
Ensure New Employee is not an SSI Typhoid Mary!!!

40. OCI Mitigation at ESC Electronic Systems Center
Office of the Staff Judge Advocate
Hanscom AFB, MA
I know none of you came here to see my briefing today. ESC policy requires this briefing, and I’ve delivered it enough to know many people think of it the same way I think of my commute—you’ve got to endure it in order to get to work. And, many people figure there are too many immediate problems to worry about, like competing for award and getting on contract, and that Organizational Conflicts of Interest can be left as an issue to resolve once it arises.
That’s the wrong approach!
That’s a lot like putting up a building without testing the soil first. No alarm goes off to stop you from doing it, but you set yourself up for failure because you can’t wish away what’s inevitable. And like a building project, this sort of failure usually occurs at the worst time; in a very public way; and leaves spectacular ruins that people will wonder over for years.
So, this presentation briefly reacquaints you with the concept of Organizational Conflicts of Interest, but my focus is the unique processes we have in place here at the ESC to identify and mitigate OCIs associated with our contracts.

41. ESC OCI Review Panel ESC/CC Policy Memo #08-005, 16 Jun 08
- Established ESC OCI Review Panel to ensure
ESC OCI policy is consistently applied throughout
the Center
- Chaired by Senior members of
Contracting (ESC/PK), the Legal Office (ESC/JA),
the Acquisition Center of Excellence (ESC/AE), and
the Chief of Contracting for Plans and Programs
(ESC/XPK)

42. OCI Mitigation OCI Firewalls (5 Factor Mitigation) Chains
- Isolate Work in Separate Business Unit
- Geographic & Physical Separation
- Independent Management & Reporting
Chains
- Prohibition Against Transfer of Personnel
- Prohibition Against Transfer of Information

43. Common Elements of OCI Plan
Non-Disclosure agreements
Controlled access to sensitive information
Establishment of an employee OCI awareness/compliance program
Physical separation of contract employees from sensitive data
Organizational separation
Management separation
Limitation on personnel transfers

44. OCI Mitigation at ESC

46. ESC OCI Review Process OCI Plan from prime contractor to
Contracting Officer (prime contractor
incorporates all subcontractor OCI plans)
Contracting Officer to program team
Those inputs go to Program Attorney
Consolidated comments go to
ESC OCI Review Panel

49. OCI Mitigation Organization Charts (Prime & Subcontractors)
- One chart showing current organization and
reporting chain up through parent company
- Second chart showing new corporate structure
and reporting chain if restructure of Organization
is proposed as mitigation
- Organization chart needed for each member of your
team (Prime & Subcontractors)

50. OCI Mitigation Plans Administrative Section - Definitions
- OCI Training for new and existing employees
- Employee Transfer Rules
- Information Transfer Rules
- OCI Enforcement
Employee OCI reporting requirements
Consequences for OCI violations
Disclosure of violations to Government
- OCI Certification
- Nondisclosure Agreement

51. OCI Mitigation Plans OCI Mitigation Section
- Separate Section for Prime and each Subcontractor
- Organization Chart
- Agree to Adopt Administrative Section
(or explain any deviations)
- Identify and Mitigate Potential OCIs

52. Identify & Mitigate Potential OCIs
Identify All Divisions or Business Units
(Combine within by Systems / A&AS Contracts)
- Location
- Explain the Management and Reporting Chain
- Identify & Explain Contracts in the Division or
Business Unit with Potential OCIs

53. Identify & Mitigate Potential OCIs
Identify the Potential OCIs
- Analyze work under specific contracts for actual
or potential conflicts of interest and conclude
whether a conflict of interest exists

54. Identify & Mitigate Potential OCIs
Propose Mitigation Strategies
- Propose concrete solutions for mitigating any
conflicts of interest that have been identified
Firewalls (5 Factor Mitigation Analysis)
Restructure of organization and reporting chains
Other steps the contractor will take to preclude
the perception that it will favor its own products
or services

55. OCI Summary OCI = Show Stopper
Important to avoid, neutralize, and/or mitigate OCIs before contract award
Start early with discussion of OCI at industry day
See new ESC Policy 14 June 2008

56. OCI in the International Arena

57. Conceptual Basis of Understanding International Law
Common Misconceptions
“Our” rules apply everywhere – in exactly the same way as they do here
No other country is sophisticated enough to have similar rules to ours
A Better Approach
“Our” rules were developed to solve a problem. Other nations have likely developed similar, but not necessarily the same rules.

58. Sources of International Law
Understanding international law requires knowledge of the sources of the law, rules
The “tier” concept
Primary law - Generally treaties and overarching laws
WTO GPA, Free Trade Agreements, UN Conventions etc.
Secondary law – Constitutions, Statutes
Tertiary – Regulations, Directives
Qaternary – Contract provisions, Advisory letters

59. Origins of OCI Rules
OCI rules have developed out of a desire to keep procurement fair, transparent and impartial.
3 basic types of OCI
Biased Ground Rules Cases, where the primary concern is that a government contractor could have an opportunity to skew a competition in favor of itself. ie; “You prepared the specs so you cant build the system” In Europe these are sometimes called “Distortion” cases.
This is the type most focused on outside of the USA.
Unequal Access to Information Cases, where the primary concern is that a government contractor has access to nonpublic information that would give it an unfair competitive advantage in a competition for another contract.
This is an emerging concept in international law.
Impaired Objectivity Cases, where the primary concern is that a government contractor would be in a position of evaluating itself or a related entity (either through an assessment of performance under a contract or an evaluation of proposals in a competition), which would cast doubt on the contractor’s ability to render impartial advice to the government.

60. WTO Agreement on Government Procurement (GPA)
The GPA is based on the principles of openness, transparency and non-discrimination, which apply to Parties' procurement covered by the Agreement
OCI RULE - (GPA) - Article VI “4.      Entities shall not seek or accept, in a manner which would have the effect of precluding competition, advice which may be used in the preparation of specifications for a specific procurement from a firm that may have a commercial interest in the procurement.”
Adopted by 15 Parties, 22 Observers, 4 international org observers

61. The European Union OCI Laws
Directive 2009/81/EC (Defense works)
(49) Before launching a procedure for the award of a contract, contracting authorities/entities may, using a technical dialogue, seek or accept advice which may be used in the preparation of specifications, provided, however, that such advice does not have the effect of precluding competition.
Directive 2004/18/EC (Public Works - general procurement) – Same provision

62. Fabricom “Fabricom” is the leading European case on OCI.
Belgian law provided that firm involved in preparatory work on a contract, such as by assisting in preparing specifications (called the “technical dialogue”) may not compete for awarded contract to provide the work (“inflexible approach”).
ECJ ruled that Belgian rule was too restrictive. Said agency must give bidder chance to explain why there is no bias “flexible approach”.
The burden of proof of no distortion of competition is generally on the bidder. Possibility of using firewalls as part of argument.

63. NATO 3. 7. ORGANIZATIONAL CONFLICTS OF INTEREST
An organizational conflict of interest may exist, in the realm of the private sector providing services to NATO, where the same corporation may provide two types of services to the Organization that have conflicting interest or appear objectionable (i.e.: manufacturing parts and then participating on a evaluation team comparing parts manufacturers).
Organizational conflicts of interest implications are not limited to any particular kind of procurement action. However, organizational conflicts of interest are more likely to occur in contracts involving:
Management support services;
Consultant or other professional services;
Contractor performance or assistance in technical evaluations; or
Systems engineering and technical direction work performed by a contractor that does not have overall contractual responsibility for development or production.
An organizational conflict of interest may result when factors create an actual or potential conflict of interest on an instant contract, or when the nature of the work to be performed on the instant contract creates an actual or potential conflict of interest on a future procurement. In the latter case, some restrictions on future activities of the contractor may be required.

64. Canada
Sources of Law: Treasury Board Manual, Financial Administration Act and Government Contracts Regulations; Department of Public Works and Government Services Act, Defence Production Act, Court Precedence.
Common theme of ensuring open fair and honest procurement.
Department of Public Works and Government Services Canada
Canadian national procurement agency

65. DPWG - Standard Acquisition Clause
Conflict of Interest - Unfair Advantage
1. In order to protect the integrity of the procurement process, bidders are advised that Canada may reject a bid in the following circumstances:
(a) if the Bidder, any of its subcontractors, any of their respective employees or former employees was involved in any manner in the preparation of the bid solicitation;
(b) if the Bidder, any of its subcontractors, any of their respective employees or former employees had access to information related to the bid solicitation that was not available to other bidders and that would, in Canada's opinion, give the Bidder an unfair advantage.
2. The experience acquired by a bidder who is providing or has provided the goods and services described in the bid solicitation (or similar goods or services) will not, in itself, be considered by Canada as conferring an unfair advantage or creating a conflict of interest. This bidder remains however subject to the criteria established above.
3. Where Canada intends to reject a bid under this section, the Contracting Authority will inform the Bidder and provide the Bidder an opportunity to make representations before making a final decision. Bidders who are in doubt about a particular situation should contact the Contracting Authority before bid closing. By submitting a bid, the Bidder represents that it does not consider itself to be in conflict of interest nor to have an unfair advantage. The Bidder acknowledges that it is within Canada's sole discretion to determine whether a conflict of interest or unfair advantage exists.

66. Mexico Article 50, Section VIII of Mexican Procurement Law
Government Agencies and entities may not receive bids from, or award contracts to a person or entity if:
(a) That person or entity directly or indirectly participated, pursuant to another contract, in preparing the following documents for the current contracting procedure
(i) analytical and quality control works;
(ii) specification drafting; or
(iii) budgets preparation; AND
(b) the bidder in question obtained privileged information from the Prior Engagement; AND
(c) the Government Agency or entity does not share such privileged information with other bidders with respect to the preparation of their proposals/bids.

67. Singapore
Government Procurement Regulations (under the Govt Procurement Act) -
Regulation 5(4) - A contracting authority shall not seek or accept, in a manner which will have the effect of precluding competition, advice which may be used in preparing technical specifications, from a person who has or who is likely to have a commercial interest in the procurement in question.
Regulation 5(5) - In this regulation — "technical specifications" means technical requirements of a procurement and includes —
(a) the quality, performance, safety requirements, dimensions, symbols, terminology, packaging, marking and labeling of the goods or service to be procured;
(b) the production processes or methods of the goods or service; and
(c) any requirement relating to any conformity assessment procedures for the goods or service;
Regulation 9 - Prohibition against preclusion of competition
A contracting authority shall not provide a supplier any information regarding a particular procurement where such provision will or is likely to have the effect of precluding competition.

68. Citations
WTO
Agreement on Government Procurement EU
Directive 2009/81/EC (Defense works)
NATO
Staff Procurement Manual
Canada
Mexico
En Espanol

69. Citations (continued)
Singapore
Government Procurement Act
Germany
Articles
Arrowhead – EC Procurement law
The Draft OCI Rule - New Directions and the History of Fear
CONFLICT AND INTRIGUE IN GOVERNMENT CONTRACTS: A GUIDE TO IDENTIFYING AND MITIGATING ORGANIZATIONAL CONFLICTS OF INTEREST
Guide to Procurement Law

70. Conclusion Thank you for your participation today!
Time for any questions for the panel members (time permitting)?
Also, talk with us later in the day as well!