08Dec Industry Day OCI Brief_09MDA4147.pdf

Organizational Conflicts of Interest (OCIs)

December 18, 2008

Mr. Tom Duffy Deputy General Counsel Missile Defense Agency

Distribution Statement A:

Approved for public release;

distribution is unlimited

Approved for Public Release

09-MDA-4147 (08 JAN 09)

09-MDA-4147 (08 JAN 09)

Purposes of OCIs

• Per FAR Parts 2 and 9.5:

- OCIs can occur when a contractor may be unable to provide impartial advice or assistance, its objectivity in performing a contract is impaired, or it may obtain an unfair competitive advantage.

09-MDA-4147 (08 JAN 09)

Purposes of OCIs

• GAO has addressed OCIs in the following situations:

- Informational advantages obtained through access to nonpublic information (e.g., acquisition strategy and proprietary information).

- “Biased ground rules”: In performance of another contract, the contractor was in a position to favor its own products and services (e.g., drafting SOWs).

- “Impaired objectivity”: The contractor evaluates its own products and services or those of its competitors.

09-MDA-4147 (08 JAN 09)

Protecting Nonpublic Information

• Contractors with access to nonpublic (e.g., acquisition sensitive and proprietary) information must be firewalled.

• Employees must be trained and sign nondisclosure agreements.

• Contractor employees will be identified at all times.

• Offsite storage of nonpublic information must be approved in advance.

• Nonpublic information must be returned/destroyed at contract termination.

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Bias-Type OCIs

• Triggered by a contractor’s ability to favor its products and services

A) Through preparation of specifications or material leading to an SOW. Exceptions:

– Contractor develops the product

– More than one contractor prepares the SOW

B) When the contractor provides system engineering or technical direction of a system but has no overall responsibility for its development or integration

– These activities can include directing other contractors or resolving technical controversies

09-MDA-4147 (08 JAN 09)

Impaired Objectivity OCI

• This is the primary OCI issue for most MiDAESS competitions.

• Why: Because our advisory and assistance contractors assist us in providing oversight over our major developmental contractors and their subs.

• An “impaired objectivity” OCI issue arises when a contractor is placed in the position of evaluating its own services/products (or those of another corporate division), or those of its prime or of its competitors.

09-MDA-4147 (08 JAN 09)

Impaired Objectivity OCI

• In the past: Companies attempted to mitigate “impaired objectivity” through firewalls, separate corporate divisions and separate reporting chains.

• Reality: Per GAO, “impaired objectivity” OCIs generally cannot be mitigated by firewalls or separate corporate divisions.

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NCLASSIFIED

Impaired Objectivity OCI

• Result: Primes and even subs (in many instances) executing the agency’s major developmental programs will be unable to participate in MiDAESS procurements in the quality, acquisition support, and engineering support functional areas.

- Possible exception: Subcontracting opportunities (see later discussion)

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Impaired Objectivity OCI

• MDA will not favorably consider biased-type and impaired objectivity OCIs in most instances.

- Waivers will not be granted; or if granted, only sparingly and in our best interest

• Preferred Approach: Contractors and subcontractors decide which type of work to perform either:

- Support major developmental programs; or

- Provide advisory and assistance services to the agency

09-MDA-4147 (08 JAN 09)

Impaired Objectivity OCI

• Quality Functional Area:

- No MiDAESS awards will be made in the quality area to contractors and subcontractors which are executing the agency’s major developmental programs.

- Impaired objectivity mitigation extremely unlikely.

Unlikely that any mitigation plan can resolve all OCIs.

09-MDA-4147 (08 JAN 09)

Impaired Objectivity OCI

• Acquisition Support and Engineering Support Functional Areas:

- No MiDAESS prime contract awards will be made to the prime contractors executing the agency’s major developmental programs.

- Mitigation of impaired objectivity is virtually impossible.

Mitigation plan probably cannot resolve all OCIs.

- Unlikely that prime contractors executing the agency’s major developmental programs can participate as MiDAESS subcontractors.

- Mitigation of impaired objectivity is extremely unlikely.

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Impaired Objectivity OCI

• Acquisition Support and Engineering Support Functional Areas:

- MiDAESS prime’s mitigation plan would have to eliminate all instances in which the sub would have any oversight over its developmental programs.

- Developmental subcontractor may be able to participate as a MiDAESS subcontractor (with some difficulty).

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Impaired Objectivity OCI

• Examples of Caveats for Subcontract Participation:

- The MiDAESS prime contractor itself has no conflicts.

- The prime assembles a pool of unconflicted subs to address OCIs on a task order basis.

- Note: The evaluation of the team’s overall quality may be impacted by the overall quality of the unconflicted and conflicted subs.

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Impaired Objectivity OCI

• Other MiDAESS Functional Areas:

- Subject to FAR Part 9.5 and GAO analysis

- Dependent on the extent to which the primes and subs evaluate their performance in other MDA developmental and MiDAESS contracts.

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OCI Reviews

• We plan to thoroughly review OCI plans when a company or team has been selected for award

• OCI plans must be updated and may be reviewed as part of the task order award process.

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MiDAESS OCI Engagement Practices

• Contractors are urged to meet with the MiDAESS Contracting and Legal Team to discuss OCIs issues before the draft and final RFPs are issued.

• Introduce the MiDAESS Team

09-MDA-4147 (08 JAN 09)