FA8650-16-R-4103-OCI.pdf

DEPARTMENT OF THE AIR FORCE

AIR FORCE RESEARCH LABORATORY

WRIGHT-PATTERSON AIR FORCE BASE OHIO 45433

22 July 2016

MEMORANDUM FOR: POTENTIAL OFFERORS

FROM: AFRL/RQKE

SUBJECT: Organizational Conflict of Interest (OCI) Mitigation Plans; Request for Proposal

(RFP) for FA8650-16-R-4103

1. An organizational conflict of interest (OCI) issue is a significant consideration that can prevent the Government from awarding a contract to an offerer. It is possible through the submission of an acceptable mitigation plan, however, for an offerer to sufficiently reduce the risks associated with an OCI such that contract award can occur. Accordingly, industry is encouraged to discuss OCI issues as early as possible in the acquisition cycle. Based on information an offerer provides in response to a potential OCI situation, AFRL/RQKE, will advise the company what actions, if any, the company might want to take to ensure that it will be eligible for contract award. Hopefully, such advice will assist companies when deciding whether to participate in an acquisition.

2. When it is determined that an OCI is present, only companies submitting acceptable mitigation plans will be eligible for award. Therefore, every company that expects to submit an offer as a prime contractor or as a member of a contractor teaming arrangement for any AFLCMC/ H IBK acquisition should review the OCI discussion found at Federal Acquisition Regulation (FAR)

Subpart 9.5 and determine the potential for an OCI. If a company determines that there is the potential for an OCI, it should next analyze the situation and decide whether the potential OCI can be mitigated through a particular course of action as stipulated in a mitigation plan. If so, such a mitigation plan should be drafted and submitted to the Contracting Officer (CO) who will review the proposed plan and assess its risk and content. AFLCMC/HIBK expects such plans to address in detail the matter discussed below in a thoughtful and comprehensive manner.

3. An OCI mitigation plan should be based on the requirements of FAR Subpart 9.5, Organizational and Consultant Conflicts of Interest, clauses found in the Request for Proposal

(RFP), and the language that is used in the evaluation criteria. When drafting a mitigation plan, please consider information provided in the paragraphs below.

4. The FAR directs Contracting Officer’s to examine each potential OCI situation individually on the basis of its particular facts and the nature of the proposed contract to determine whether an

OCI exists. See FAR 9.505; Aetna Government Health Plans, Inc.; Foundation Health Fed. Servs.

Inc., B- 254397. 15 et al., July 27, 1995, 95-2 CPD 129. In performing this role, a CO must have sufficient facts to determine whether an OCI is present. Accordingly, the CO cannot evaluate unspecified future efforts, and he or she cannot approve an OCI mitigation plan that is so prospective in nature as to be vague.

5. An OCI mitigation plan should be written to specifically address performance issues on a particular program or group of programs, as necessary. Since companies have unique corporate structures and different existing contracts, mitigation plans should not be done in a boilerplate fashion. Instead, they should address all aspects of potential OCI issues related to an acquisition so that objectivity and integrity are preserved.

6. As discussed above, FAR Subpart 9.5 sets forth regulatory guidance governing OCI(s). Per this subpart, a conflict of interest arises when, due to other activities or relationships with other persons, "[A] person is unable or potentially unable to render impartial assistance or advice to the

Government, or the person's objectivity in performing the contract work is or might be otherwise impaired, or a person has an unfair competitive advantage." FAR 2. 101. The two underlying policies of the FAR OCI rules are: (1) to prevent conflicting roles that might bias a contractor's judgment, and (2) to prevent w1fair competitive advantage. See FAR 9.505. Accordingly, contracting officials are to avoid, neutralize or mitigate potential significant conflicts of interest so as to prevent unfair competitive advantage or the existence of conflicting roles that might impair a contractor's objectivity. See FAR 9.504(a), 9.505.

7. The responsibility for determining whether an actual or apparent conflict of interest will arise and to what extent a firm should be excluded from a competition rests with AFRL/RQKE. In response to such a situation, AFRL/RQKE may impose a variety of restrictions -- whether or not explicitly provided for in applicable procurement regulations -- where the needs of AFRL/RQKE or the nature of the procurement dictates the use of such restrictions. Nelson Erection Company, Inc. B-217556, April 29, 1985, 85-1 CPD 482. Such restrictions must be reasonable, however, and only will be imposed after a sufficient analysis of the facts. Aetna Government Health Plans, Inc.; Foundation Health Fed. Servs. Inc., B-254397 .15 et al., July 27, 1995, 95-2 CPD 129.

8. The situations in which OCI(s) arise can be broadly categorized into three groups. The first group consists of situations in which 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 for a Government contract. See FAR 9.505-4. In these "unequal access to information" cases, the concern is limited to the risk of the firm gaining a competitive advantage.

9. The second group consists of situations in which a firm, as part of its performance of a

Government contract, has in some sense set the ground rules for another Government contract.

An example of this situation occurs where a firm provides systems engineering and technical direction for a system without having overall contractual responsibility for its development, its integration, assembly, and checkout, or its production. In these "biased ground rules" cases, the primary concern is that the firm could skew the competition, whether intentionally or not, in favor of itself. See FAR 9.505-1, 9.505-2. With regard to this matter, FAR 9.505-1 states:

In performing these activities, a contractor occupies a highly influential and responsible position in determining a system 's basic concepts and supervising their execution by other contractors. Therefore this contractor should not be in a position to make decisions favoring its own products or capabilities.

These situations may also involve a concern that the firm, by virtue of its special knowledge of the Government's future requirements, would have an unfair advantage in the competition for those requirements. The Pragma Corp., B-255236, Feb. 18, 1994, 94-1 CPD 124.

10. The third group comprises cases where a firm's work under one Government contract could entail its evaluating itself, either through an assessment of performance under another contract or an evaluation of proposals. FAR 9.505-3. In these "impaired objectivity" cases, the concern is that the firm's ability to render impartial advice to the Government could appear to be undermined by its relationship with the entity whose work product is being evaluated. Id.; see also FAR 2.10l (definition of organizational conflict of interest).

11. While FAR 9.5 does not explicitly address the role of affiliates in the various types of OCI(s), there is no basis to distinguish between a firn1and its affiliates, at least where concerns about potentially biased ground rules and impaired objectivity are at issue. In addition, please note that while a firewall arrangement may resolve an "unfair access to information" conflict of interest, it is virtually irrelevant to an organizational conflict of interest involving potentially impaired objectivity or biased ground rules. See Aetna Government Health Plans, Inc.,-Foundation Health

Fed. Servs. Inc., B-254397.15 et al., July 27, 1995, 95-2 CPD 129. Therefore, a mitigation plan needs to address how the contractor will overcome these concerns.

12. As mentioned earlier, the FAR requires the CO to avoid, neutralize, or mitigate significant conflicts of interest before contract award. See FAR 9.504(a) (2). In order to fulfill this requirement, it is the CO's responsibility to seek an OCI mitigation plan that addresses a multitude of concerns. As applicable, the CO expects a mitigation plan to contain the following.

a. Comparative organizational charts that show: the previous corporate structure, those elements of the company participating in the contract, where these elements will be transferred in the proposed new corporate structure, and how such elements will be isolated, if necessary.

b. A clear discussion of how the contractor would propose to mitigate any perception that it would favor its own products or services.

c. A clear discussion of how the contractor would preclude a perception of impaired objectivity by prohibiting transfer of existing personnel performing the existing contract to the division planned to support the proposed effort (precluding transfer of information).

d. A clear discussion of how the contractor would counter an assertion that there would be unfair access to information by prohibiting transfer of personnel performing the existing contract to the division planned to support the new proposed effort (precluding transfer of infom1ation).

e. A clear explanation of how management reporting chains will be restructured so that work is isolated in different elements of the company (precluding transfer of information).

f. A clear explanation of how the Contractor intends to organize itself such that all new work under the proposed new contract effort will be performed by a division that has no contract responsibilities or management of the existing contract that is causing the OCI (to assure objectivity).

13. The Government will treat all OCI submissions as proprietary under 18 U.S.C. §1905 and protect the proposed information accordingly. The CO of record on a particular contract action should be contacted for any questions on this letter.

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NICHOLAS KYRIAKIDIS

Contracting Officer, AFRL/RQKE

Signed by: KYRIAKIDIS.NICHOLAS.C.1369702455