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Conflict of Interest: It’s a Battlefield for a Small Business

published on June 10, 2010

Government contracting can be an exciting and lucrative revenue stream for a small business. The federal market can validate and lift a small business above its competitors. But for all the glitz and glamour, the federal market place has its fair share of problems. One problem that frequently visits a small business is the potential for a Conflict of Interest. The Federal Acquisitions Regulation (FAR) Part 3 defines a Conflict of Interest as a situation where a contractor may have or has received an unfair advantage over competitors in the procurement process.
What is it?
There are two types of conflict: Personal and Organizational. A Personal Conflict of Interest occurs when a government official influences recommendations or outcomes of the procurement process. In order to affect the outcome, the official must “participate personally and substantially in the Federal procurement process” (FAR 3.104-1).
The Organizational Conflict of Interest occurs when an agency or contractor has an unfair competitive advantage. This can occur due to the contractor’s relationship with contracting officials or due to the receipt of information not available to the general public.
Am I in Conflict?
To be in conflict you need the following things:
• The ability to access publicly unavailable pricing or proprietary information from your competitors.
• The ability to influence the outcome of the procurement process through a government official who participated personally and substantially in the procurement process.
• To have given a monetary or material gift to a contracting official.
• To have or have the potential to exercise supervisory or evaluator powers over a contract you are currently working on.
I am not in Conflict, but I’ve been disqualified. What can I do?
You have a range of options and the most successful path will depend on how adept the contracting office is at handling conflicts. According to the FAR, if a conflict is found the contracting officer is supposed to notify the contractor and allow for the contractor to respond prior to disqualification. I can tell you from personal experience, this doesn’t happen.
The Contracting Officer-Your first stop.
In spite of what you may think most contracting offices want to avoid having contractor lodge a GAO protest, which temporarily suspends the delivery of services and leaves the purchasing agency in a bind. Talk to the contracting official and find out the exact nature of the conflict and why it resulted in a disqualification. It is important to note that the contracting official can disqualify a contractor based on the appearance of the situation with no tangible evidence. The FAR provides for the use of a waiver and if you can provide a mitigation plan you may be successful in getting one.
Chief Contracting Officer
If you are unable to get a reasonable resolution, you may want to talk with the Chief Contracting Officer or the Commander if you are bidding for a DOD contract. Again you should be able to plead your case and try for a more lenient solution. I should warn you though, that most Contracting Chiefs or Commanders will back the initial decision of the contracting officer. By the time the situation reaches this level, the contracting agency may have gone too far forward with their decision to reverse it.
This is where you can take an appeal in an arbitration format. You can plead your case to the ombudsmen, but bear in mind they cannot force the agency to do anything. They can however make a recommendation and be a neutral third party allowing for you to build a mitigation plan that will eliminate the conflict. If you chose to go to the Ombudsman it will not affect your ability to file a protest with the U.S. Government Accountability Office (GAO). I would recommend that you file a protest anyway as it can be rescinded if a favorable resolution is reached.
File a Protest with the GAO
If all else fails you are always able to file a protest with the GAO. You must file a protest within 10 days of the incident, but you can file via e-mail, fax or mail. For your protest to be successful in getting heard, you must be an interested party, have a legitimate legal basis and have submitted your bid in a timely manner. The GAO website posts a list of the protest issues that they will not consider, so be sure to check this list prior to the filing of your protest. A decision on the matter will be rendered no more than 100 days from the time you filed your protest.

As with most processes, the Conflict of Interest process is only as good as the office using it. Open communication and a spirit of resolution allow the FAR to shine, it’s unfortunate that small businesses will not often encounter that atmosphere. For more information on this and the bid process visit these websites:
Defense Procurement and Acquisition Policy
US Government Accountability Office

published on June 10, 2010


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