J.4 FAR 9.506 Written Analysis.pdf

To: Michael Capobianco From: Brian LeCuyer Date: Oct 26, 2022 Subject: FAR 9.506 Written Analysis of Organization Conflict of Interest

This memo spells out the conflict of interest issues identified in my analysis of the Local Partner Capacity Strengthening procurement. Consistent with FAR 9.506, this includes my written analysis of the situation and draft provisions/clauses to be included in the award.

(1) A written analysis, including a recommended course of action for avoiding, neutralizing, or mitigating the conflict, based on the general rules in 9.505 or on another basis not expressly stated in that section

FAR 9.505 provides two principles that underlie Contracting Officer efforts to avoid, neutralize, or mitigate organizational conflicts of interest (OCI):

(a) Preventing the existence of conflicting roles that might bias a contractor’s judgment; and

(b) Preventing unfair competitive advantage.

Both of these two principles are valid areas of concern in order to avoid OCI, and this analysis demonstrates that impaired objectivity will exist for the Contractor that cannot be avoided, mitigated or neutralized.

Impaired objectivity OCI cannot be avoided and will exist with the Contractor who receives this award. Specifically, the Contractor will be required to provide capacity strengthening to local organizations who will, in turn, be potential competitors on future procurements coming out of USAID/Zambia, either as prime or subcontractors. As such, there will always be a tension that exists between the ability of the Contractor to perform under its contract and its desire to win new awards, increase business, and expand activities. In addition, the Contractor under the award will be providing advice, input, and opinions – directly and indirectly – on the capacity of the local organizations to perform work and succeed under USAID/Zambia contracts. Its guidance will not be trusted if there exists a real or perceived belief that the guidance is given in the best interest of the Contractor and not in the best interests of USAID/Zambia. In addition, if this guidance relates to whether an award can be restricted to local organizations or the process for selecting local organizations for contracts, there is also a biased ground rules OCI.

Specific examples of the OCI demonstrate that no mitigation or neutralization measures would be sufficient to remove the OCI. In the case of a future procurement at USAID/Zambia, the local partners the contract supports will compete for these opportunities, either as prime or sub contractors, regardless of whether or not the competition is restricted to local or a full-and-open competition. As such, all procurements are likely to have an impaired objectivity and/or a biased https://www.acquisition.gov/far/part-9#FAR_9_505 ground rules OCI. In these situations, the Contractor would not be able to put in adequate mitigation measures to remove the OCI. For example, a firewall between staff preparing a proposal and staff implementing the contract would ensure that the Contract staff were not involved or engaged in preparing the proposal or quote, but it would not remove the impaired objectivity. Staff under the contract would still be an aware and interested party to the procurement as it would guide the local organizations work under component two (enhancing resource mobilization). This awareness and interest, in turn, would potentially influence their ability to perform under all components of the contract. Under component one, the type and strength of the capacity strengthening interventions they provide may be compromised to allow for preferred local organizations to receive greater support. Under component two, the types of resource mobilization and funding opportunities that the Contractor promotes to local organizations could shift to remove the Contractor’s competition. Under component 3, the timing of type of networking activities may be changed to allow for the Contractor to promote or limit relationships to its benefit.

In addition, the fact that the Contractor will be providing capacity building under component one and resource mobilization planning under component two represents an inherent conflict of interest even if local organizations choose not to compete for a contract. In this case, the impaired objectivity comes from Contractor staff being responsible for providing significant inputs into this decision-making for the local partners. Knowing that a local organization was gaining capacity to become a rival or competitor to the Contractor, the Contractor’s interventions and advice may be guided by the interest of the Contractor instead of the interest of the local organization. For example, the Contractor may suggest that the local organization pursue non-USG funding opportunities not because funding diversification is in best interest of the local organization but because it is in the best interest of the Contractor to not have the local organization pursue USG funding.

Lastly, even if the Contractor could establish strong and effective mitigation measures, the Contractor would still be perceived to have impaired objectivity, and the Contract would fail.

Specifically, the local partners the Contractor would be supporting would question if the support they received was genuine and real. In consultations with USAID/Zambia’s local partners, one of the concerns they expressed was if they would be receiving support from an organization that would become their competitor and stated a clear preference to receive support from a neutral, USAID-experienced, international organization. Local partners expressed skepticism and potential unwillingness to open their financial, HR, procurement, governance, and other systems to review and feedback to an organization that they could later be a potential competitor. Put simply, it is a matter of trust and transparency. USAID/Zambia and its local partners would perceive impaired objectivity in the support and analysis provided by the Contractor, whether it exists or not. The only way for trust to exist and this Contract to succeed is for the Contractor to be precluded from future procurements in Zambia for the duration of the award.

Recommendation for Action: Based on this, the contract should contain a clause that restricts the Contractor from participating in any future procurement in Zambia for the duration of the period of performance.

(2) draft solicitation provision (see 9.507-1)

N/A - The analysis and draft provision language are in a separate document.

(3) proposed contract clause (see 9.507-2).

H.X Preclusion on Future Work in Zambia In accordance with FAR 9.506, a written analysis has been made of the potential for organizational conflicts of interest (OCI) related to this procurement. Based on this analysis and consistent with the requirements of 9.507-2, the Contracting Officer has identified potential OCI related to the implementation of the award. Specifically, the Contracting Officer has determined that the Contractor has real or perceived conflicts on any future procurements that have Zambia as its Place of Performance that cannot be avoided, mitigated or neutralized. As such the Contractor, its affiliates, subsidiaries, and/or parent companies are precluded from submitting quotes, bids, proposals or responding to any solicitation as a prime or subcontractor for any future solicitation issued by the Office of Acquisition and Assistance in Zambia or that has Zambia or any regional/locale in Zambia as its place of performance. This preclusion is in effect for the duration of the period of performance of the contract.

Approved:

Michael Capobianco Supervisory Contracting Officer Chief of the Contracting Office

/s/ https://www.acquisition.gov/far/9.507-1#FAR_9_507_1 https://www.acquisition.gov/far/part-9#FAR_9_507_2