Did the Marriage of a Proposed Key Person and the COR Create an Irredeemable Conflict of Interest?

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One of the awardee’s key individuals, who had helped draft the winning proposal, was married to a COR on the protester’s incumbent contract. The protester contended this relationship created an incurable conflict of interest. GAO disagreed. While the COR had worked on the incumbent contract, there was no evidence she had access to competitively sensitive materials for this procurement. Additionally, there was no evidence the COR had disclosed any information to her spouse. Even if she had, GAO concluded, it would not have been particularly helpful.

KOAM Engineering Systems, Inc., GAO B-410157.2

Background

The Navy posted an RFP seeking engineering support services. The incumbent, KOAM Engineering Services Systems, and another company, McKean Defense Group, submitted proposals. The Navy awarded the contract to McKean. KOAM protested.

Analysis

Conflict of Interest

KOAM alleged that the procurement was irredeemably tainted by a conflict of. KOAM One of McKean’s employees—who had worked on McKean proposal and was proposed as a key person—was married to a Navy employee who had served as the contracting officer’s representative on KOAM’s incumbent contract and had access to KOAM’s cost information. KOAM alleged their marriage created an irrefutable presumption of impropriety that could not be overcome with an investigation.

But GAO found that the marriage did not create a conflict. First, while the Navy employee had worked as a COR on KOAM’s contract, she had not been involved in this procurement and had no role in acquisition planning. Also, while KOAN contended that the GAO should assume competitively useful had been disclosed, there was no evidence such a disclosure had occurred. The couple both provided sworn declarations, stating they had never received information from each other. In any event, GAO reasoned, even if they had exchanged information, it was unlikely to have caused competitive harm. The solicitation contemplated a cost-reimbursement contract but required offerors to propose staffing consistent with the labor hours set forth in the solicitation. With the labor categories and level of effort set by the solicitation, access to KOAM’s cost information on the incumbent contract would not have been helpful.

Cost Realism

KOAM objecting to the cost realism analysis, alleging that the rate the Air Force used to upwardly adjust McKean’s labor rates did not comport with the solicitation. The solicitation stated that most of the work on the contract was going to be performed in San Diego. McKean had proposed staff who did not live in San Diego. The agency adjusted the rates for those non-San Diego staff based on the average San Diego rates for their labor categories. KOAM contended that the Navy should have used higher Economic Research Institute (ERI) rates to identify the RFP.

GAO rejected the augment, finding that the RFP was silent as to how the agency was supposed to adjust rates for specifically identified personnel. The ERI rates in the proposal were required for rates that weren’t based on actual labor rates. But here, the Navy based its rates on the actual rates for work performed in San Diego. Cost realism need not achieve scientific certainty. GAO found the adjustment based on San Diego rates was reasonable.

KOAM further alleged that the Navy should have reevaluated McKean’s technical proposal in light of the cost adjustment. KOAM believed that McKean’s proposed use of personnel outside of San Diego indicated a lack of understanding of where the contract was going to be performed. GAO found that while McKean had proposed some people outside of San Diego, this did not indicate a lack of understanding of where performance was to occur.

KOAM is represented by Richard P. Rector, C. Bradford Jorgensen, and Thomas E. Daley of DLA Piper. The intervenor, McKean, is represented by J. Scott Hommer, III, Rebecca E. Pearson, Taylor A. Hillman, and Lindsay A. Reed of the Venable LLP. The agency is represented by Tracey L. Ferguson of the Navy. GAO attorneys Michael P. Grogan and Evan D. Wesser participated in the preparation of the decision.

GAO - KOAM Engineering Systems