The Power of the OCI Waiver

Organizational Conflicts of Interest (“OCIs”) in government contracting create an unfair competitive advantage. The FAR requires contracting officers to identify and mitigate potential conflicts before awarding any contracts. See FAR 9.504. However, the FAR also provides that an agency may waive conflicts of interest if it is in the Government’s best interest. See FAR 9.503. Two government contractors recently discovered the power of the OCI waiver.

CACI, Inc. and General Dynamics One Source, LLC (“protesters”) protested the issuance of a task order to Jacobs Technology, Inc. (“Jacobs”). The task order at issue dealt with special operations forces information technology enterprise contract (SITEC) services. Previously, the U.S. Special Operations Command (“agency”) used a series of contracts (known as SITEC I) which were divided into functional areas called towers. The protestors and Jacobs all held SITEC I contracts performing a separate tower. In this procurement, the agency consolidated most of the SITEC I requirements into a single task order known as SITEC II. Under the incumbent contract, Jacobs had access to performance information for the other SITEC I contractors.

Surely it is a competitive advantage when one of the offerors knows the details of its competitors’ performance on relevant, incumbent contracts. That seems to be the exact type of competitive issue the FAR seeks to prevent. Even the government agreed -- Jacobs’ SITEC I incumbent contract contained a clause that applied uniquely to Jacobs stating that its access to information created an OCI under FAR Subpart 9.5, and that Jacobs would be ineligible for further SITEC awards for an identified subset of SITEC towers.

In response to the protests, the agency conducted an OCI investigation and determined that no OCIs existed. The agency argued that previous SITEC I requirements and the current SITEC II requirements were different and that Jacobs’ access to nonpublic information from the SITEC I contract would not have provided an unfair competitive advantage. Further, the head of contracting activity waived the applicability of the OCI rules to the procurement.

GAO concluded that the agency’s waiver was consistent with the requirements of FAR 9.503 and also the SITEC I contract clause (which stated that the clause could be waived if it was in the government’s best interest to do so). GAO determined that regardless of the agency’s assessment of the merits of the OCI allegations, it was in the best interests of the government to waive the application of the FAR OCI provisions because the waiver opened the procurement to additional competition (GAO noted that the FAR commits a determination of the government’s best interest to the agency’s discretion). We wouldn't be surprised if we see future waivers challenged at the COFC rather than at GAO. The case is CACI, Inc. - Federal; General Dynamics One Source, LLC, B-413860.4 et al. (Jan. 5, 2018). Find the decision here.