Government Contracts Monitor

Government Matchmaking Is Not "Government Involvement"

June 14, 2018

By: Eric Whytsell and Judith Araujo

Disappointed bidders seeking to challenge an award decision naturally often look to precedent to guide their arguments. When available precedent is ambiguous, however, they may resort to crafting particularly creative arguments. While this strategy makes sense in most cases, the recent Government Accounting Office (GAO) decision in Management Sciences for Health, B-416041; B-416041.2 (May 25, 2018), highlights a potential outcome of such an approach: the ambiguous rule that inspired the offerors’ wily argument may be clarified in a way that forecloses that argument altogether.

Management Sciences concerned a United States Agency for International Development (USAID) award under a request for proposals (RFP) for integrated health services in the Democratic Republic of the Congo (DRC). The USAID’s decision was to be based on a best-value tradeoff, considering cost and non-cost factors, where, taken together, the non-cost factors were significantly more important than the cost in the decision.

Ultimately, after evaluating Final Proposal Revisions of Management Sciences for Health (MSH) and Abt Associates (Abt), the USAID determined an overall non-cost evaluation rating of Satisfactory for MSH and Very Good for Abt. Pursuant to its best value analysis, even though MSH’s proposal had a lower associated cost, USAID determined the cost premium for Abt’s technically superior proposal was found to be justified and selected Abt for award. Following a debriefing from the agency, MSH filed this protest with the GAO. Among other things, MSH argued that the award to Abt was improper because of an unequal access to information organizational conflict of interest (OCI).

Situations in which OCIs arise fall into three broad categories: unequal access to information, biased ground rules, and impaired objectivity. OCIs can be a powerful tool for protestors, since the existence of an OCI can render an offeror ineligible for award.

Here, from 2010 to 2015, MSH had performed similar integrated health services for USAID in DRC. When it recognized that its cooperative agreement with MSH was reaching its cost ceiling and could not be extended, USAID searched for another existing cooperative agreement sufficiently broad to accommodate the relevant scope of work. Ultimately, USAID identified a cooperative agreement managed by another contractor, Pathfinder. The agency then initiated discussions between the MSH and Pathfinder and suggested terms for a subagreement that would allow for the continued provision of integrated health services in the DRC. The negotiations culminated in an agreement whereby MSH would direct the integrated health services in the DRC and Pathfinder would serve as the primary point of contact with the USAID regarding administrative and financial management matters. Thus, by its terms, the subagreement required MSH to provide Pathfinder with proprietary information that Pathfinder then provided to the government.

By the time this RFP was issued relations between MSH and Pathfinder had apparently soured because Pathfinder partnered with Abt instead of MSH to pursue the work. According to MSH, Abt’s proposal benefited from proprietary information about MSH obtained from Pathfinder, which gave an unfair competitive advantage to Abt.

Considering this aspect of MSH’ protest, the GAO noted, “an unequal access to information OCI exists where a firm has access to nonpublic information as part of its performance of a government contract and where that information may provide the firm a competitive advantage in a later competition.” It then explained, however, that “where information is obtained by one firm directly from another firm . . . this essentially amounts to a private dispute between private parties that we will not consider absent evidence of government involvement.” (Emphasis added). Thus, this protest ground boils down to the question of how much Government involvement is enough.

MSH argued that, while a voluntary relationship between a prime- and subcontractor ordinarily would not give rise to an unequal access to information OCI, its relationship with Pathfinder was not voluntary because it was arranged by the government. MSH claimed that USAID’s involvement in the subagreement was so pervasive as to constitute an action “by and for the government” that gave rise to an unequal access OCI that is subject to the GAO’s review. USAID argued the dispute between MSH and Pathfinder was a private matter, noting that despite USAID’s involvement in identifying the subagreement and participating in negotiations, MSH was not compelled, directed, or required by the agency to pursue the subagreement.

The GAO agreed with the agency, and took the opportunity to clarify its rule and make clear that the mere presence of government involvement-- including involvement as a “matchmaker”--is not sufficient. Instead, the phrase “government involvement” must be read in reference to the specific provisions in the FAR on the concepts and scenarios that may give rise to unequal access to information OCIs. These provisions, FAR 9.505(b), 9.505-4(a), and 9.505-4(b), contain numerous guidelines. For example, the proprietary information in question must be either obtained from a government official without proper authorization or source selection information that would assist that contractor in obtaining the contract. In addition, the OCI restrictions protect the owner of proprietary information needed for contract performance when the contractor can use the leverage of the contract to obtain that information. Finally, a contractor that gains access to the proprietary information of another must agree to protect that information from unauthorized use or disclosure—and the contracting officer must obtain copies of such agreements.

Here, the GAO found that the government’s matchmaking did not amount to any of the actions or scenarios contemplated by the FAR. According to the GAO, MSH voluntarily entered into an arms-length business agreement, making this a clearly private dispute not subject to GAO jurisdiction. For this reason, the GAO denied the protest.

What does all this mean? Determining whether or not an unequal access OCI exists requires a highly fact-specific analysis that must take into account specific FAR OCI provisions. If you’re thinking about protesting based on an unequal access OCI, make sure that your facts and circumstances fit into the parameters set forth in the FAR.

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