Posted on 11/11/2011 9:26 AM

APPEARANCE OF IMPROPRIETY: WHEN IN DOUBT, THROW OUT?

We just can’t help but applaud any decision which upholds the very highest of ethical standards.  But do OCI's really turn on the appearance of impropriety?  See the postscript below.

GAO recently reiterated as “one of the guiding principles” the obligation of contracting agencies to avoid the appearance of impropriety in government procurements. The purpose of the procurement was to provide internet protocol communications as part of the Defense Information Systems Agency (DISA) Satellite Communications (SATCOM) program. One of the bidders had hired the agency’s former SATCOM Special Interest Program Manager. The contracting officer determined that although there may not have been an actual impropriety, there was an appearance of impropriety which could not be avoided, neutralized or mitigated. The contracting officer found that documentary evidence showed the Program Manager had access to source selection information and provided advice to the bidder in preparation of its proposal.
In addition to relying on several of its own decisions, GAO referred to an opinion by the Court of Appeals for the Federal Circuit (COFC) which overturned the lower court’s opinion that the appearance of an impropriety, alone, is not a sufficient basis to disqualify an offeror. GAO also pointed out that an unfair competitive advantage is presumed to arise where an offeror possesses competitively useful non-public information without the need to inquire as to whether the information was actually used.
GAO is synchronizing its decisions in this area with the opinions of the COFC. GAO went on to cite COFC opinions that “hard facts” of the existence or potential existence of a conflict are necessary and the mere inference or suspicion of an actual or potential conflict is not enough. Based on the COFC precedent, GAO will review the reasonableness of the contracting officer’s investigation and not overturn the contracting officer’s decision unless there is clear evidence it was unreasonable. 
The protester complained that the SATCOM PM’s participation in the procurement was very limited and that the PM was “walled off” from the proposal effort. GAO was impressed with the contracting officer’s thorough investigation. The facts showed that the PM was not really walled off and that the PM was very much involved in the proposal effort. The PM also had access to and received acquisition sensitive non-public information while working at SATCOM. GAO concluded: “These facts, as identified by the contracting officer, created the presumption that an unfair competitive advantage has arisen, without the need to inquire as to whether the information was actually used by [the offending offeror] in the preparation of its proposal.” (Emphasis added.) 
IMPORTANT POSTSCRIPT:  Reconciling the OCI opinions of the COFC and the decisions of GAO is somewhat daunting.  And just what are "hard facts" and whether they support the contracting officer's decision that those "hard facts" create an appearance of impropriety certainly is in the eye of the beholder.  So what is the rule?  It appears that whatever the contracting officer decides probably will be supported by either the court or the GAO provided the decision is based on a thorough investigation of the hard facts.  If, however, that investigation falls short, the court or GAO must substitute its judgment and the result probably will be based on a view of the hard facts which avoids speculative appearances.
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