The US Government is a unique customer. To maintain the public’s confidence, the Government mandates at FAR 3.101-1 that its business be conducted “with complete impartiality and with preferential treatment for none.” At the same time, the FAR based approach that drives most Government purchasing decisions tends to reward offerors possessing the deepest understanding of the Government’s requirement. This makes sense; the more you understand your customer’s needs, the more likely you are to deliver a solution reflecting your customer’s best interests. An unintended consequence in this process is that it can lead to activities and relationships that impair a company’s ability to remain objective while providing that solution. The fulcrum that balances the risks of impaired objectivity and providing solutions in the best interests of the Government is known, formally, as Organizational Conflicts of Interest.
Organizational Conflicts of Interest are defined in FAR 2.101 and included in the Definitions clause in all solicitations over the simplified acquisition threshold. FAR 9.5 provides the responsibilities, general rules, and procedures for identifying and addressing OCIs. The Government Accountability Office has categorized OCIs into three categories:
- Unequal access to information. This category arises when a company has access to nonpublic information obtained in support of a government contract and that information may give the company a competitive advantage in future contracts. Take, for example, the Joint Enterprise Defense Infrastructure (JEDI) program, the DOD’s $10 billion effort to modernize the military’s IT systems using cloud integration. The award of the contract has been delayed several months because an employee of an offeror in the competitive range had conflicts falling into the unequal access to information category.
- Biased ground rules. A biased ground rules OCI occurs when a contractor’s performance under one government contract, sets the rules for another government contract for which the contractor has an interest. This category includes situations where contractors are engaged in the requirement specifications development and, based on the intimate understanding acquired, sways the competition in its favor.
- Impaired objectivity: When a contractor’s work under one contract requires them to oversee itself in some legally recognized way under another contract, most would question if the contractor could maintain both the practice and appearance of rending impartial service to the government. For that reason, impaired objectivity comprises the third category of OCI.
While the FAR places the onus of OCI avoidance on the Contracting Officer, contractors have a vested interest in avoiding OCIs as well. There are proactive measures any company can take to mitigate conflicts in a manner that protects of the government’s interests and allows the company to acquire a fair competitive advantage. Here are a few examples:
- Foster a culture that takes OCI serious by incorporating OCI risk mitigation into the performance plans of leadership within the organization.
- Develop a comprehensive OCI Mitigation Plan that demonstrates to the government how conflicts will be addressed. The plan should be consistent with the characteristics of an OCI from the Government’s perspective and: (1) Be specific to the Acquisition; (2) Consider the subjective nature of OCI interpretation and consider how all potential conflicts appear to observers outside the company; and (3) Reflect openness on the company’s part regarding any known OCIs, the risk they pose, and the company’s plan to avoid, mitigate, or neutralize them.
- Be sure to review all solicitations for disclosure penalties. Some agencies, like HUD, have clauses that put termination for default on the table if a contractor fails to disclose a conflict prior to award.
These measures are in no way all-inclusive and, ultimately, plans cannot account for every potentiality. Still, much can be said of the firm that recognizes the challenges the Government faces with maintaining public trust and proposes solutions for keeping it. Assuming performance has been acceptable, incumbents enjoy an almost automatic advantage because of their pre-established requirement understanding. To some extent, however, this advantage can be neutralized by a transparent contractor that not only provides innovative solutions to the Government’s need, but does so while reducing the Government’s exposure to the risk inherent with OCIs.