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Unfair Competitive Advantages From Former Agency Employees
When you were bidding a federal project, did you ever feel like the “fix was in” or the “deck was stacked against you” because another bidder had former government employees on the payroll? Well, the Government Accountability Office (“GAO”) might agree with you and it might be grounds for a protest. In Matter of: Serco Inc., B-419617.2 (Dec. 6, 2021) the GAO sustained a protest holding that the awardee gained an unfair competitive advantage in preparing its proposal by using information provided by former high-level agency officials.
Serco protested the Department of the Navy’s award of a task order to Booz Allen Hamilton, Inc. (BAH), to provide professional support services for the Deputy Commander for Surface Warfare. Serco challenged the award on the basis that BAH and/or its teaming partners employed two recently-retired Navy captains who had been program managers for two of the program offices supported by the task order, and that these and other Navy personnel improperly provided material assistance to BAH in preparing its proposal by giving BAH access to non-public competitively useful information. Serco contended that BAH’s proposal should have been disqualified from the competition.
The facts demonstrated that Serco, as the incumbent contractor, was required to submit monthly reports documenting various aspects of its performance including the labor rates (both burdened and unburdened), names, positions, and number of hours worked, for each employee who had performed under the task order during the reporting period. Further, the two former program managers who were now employed by teaming members of BAH had access to these reports. In addition to the monthly reports, Serco participated in weekly meetings with the program managers to discuss matters relevant to ongoing contract performance. The former program managers also had access to Serco’s past performance information in the contractor performance assessment reporting system. The two former officers did in fact participate and provide information in the bidding process. Moreover, the evidence showed that the contracting officer’s representative (COR) for the prior task order met with BAH representatives and provided information to BAH regarding the agency’s independent government cost estimate. BAH and/or its teaming members contacted all of the current agency employees, who would be on the selection committee, about Serco’s performance.
FAR subparts 9.5 and 3.1 prohibit conflicts of interest in the government’s procurements, directing agencies to “avoid strictly any conflict of interest or even the appearance of a conflict of interest in Government-contractor relationships.” FAR 3.101-1; see VSE Corp., B-404833.4, Nov. 21, 2011, 2011 CPD ¶ 268 at 7. The GAO stated “[i]n this context, where it can be demonstrated that a former government official had access to competitively useful information, the awardee will be found to have benefited from that information if the former government official participated in the proposal preparation effort.” See, e.g., Dell Servs. Fed. Gov’t, Inc., B-414461.3 et al., June 19, 2018, 2018 CPD ¶ 213 at 6-7; International Resources Grp., B-409346.2 et al., Dec. 11, 2014, 2014 CPD ¶ 369 at 9-10. The GAO further held that “where an offeror chooses to hire a former government official who has had recent access to competitively useful information, and uses that official to help prepare the offeror’s proposal, the proposal may be properly disqualified based on the appearance of an unfair competitive advantage.” (emphasis added), citing Health Net Fed. Servs., LLC, supra.; NKF Eng’g, Inc. v. U.S., 805 F.2d 372 (Fed. Cir. 1986).
As the Serco bid protest decision demonstrates, if the deck is stacked against you, you might be able to get the deck thrown out or at least reshuffled. Of course, many companies have hired former government employees in part for their expertise and knowledge of the operation of the agency and the Serco decision does not prohibit such practices. Government contractors can avoid disqualification of their bids by isolating the former employees from the bidding team.
If you have any questions about government contracting issues, please contact any of our attorneys in the Government Contracting Practice Group.