Protest alleging a conflict of interest is sustained. Shortly after the solicitation was issued, an agency employee took a job with the eventual awardee. This individual had worked with offeror on prior development contracts and had developed specifications for the solicitation. GAO found that this individual’s work on the procurement created an apparent biased grounds rules conflict of interest, which the agency failed to reasonably consider.
In 2018, the Navy entered into development of existing technology (DET) contracts with Northrop Grumman and L3 Technologies to develop an aircraft mounted radar jamming system. The Navy used the data gathered from those DET contracts to develop specifications for a new radar jamming RFP, which the Navy issued in 2019. The RFP sought a contractor to develop, build, integrate and maintain a prototype radar jamming system.
Northrop Grumman and L3 submitted proposals in response to the new RFP. The Navy awarded the contract to L3. Northrop Grumman protested, arguing that L3 had a disqualifying conflict of interest. Northrop Grumman alleged that L3 had hired a Navy employee who had worked on the prior DET contracts and development of the RFP’s specifications.
The Navy took corrective action to investigate the alleged conflict. Following the investigation, the Navy reaffirmed the award to L3. Northrop Grumman filed a second protest, asserting that Navy had still failed to reasonably consider the conflict.
GAO noted that FAR 3.104-2 prohibits an agency official from participating in a procurement when they are negotiating employment with a potential offeror. GAO has recognized that personal conflicts of interest under FAR 3.104-2 can ben analogized to organizational conflicts of interest under FAR subpart 9.5. Conflicts under FAR subpart 9.5 fall into three groups: biased ground rules, unequal access to information, and impaired objectivity. This case broached a biased grounds rules conflict—i.e., where a firm, as part of its performance on one government contract, has set the ground rules for the competition of another government contract.
Here, the record showed that between August and October, one of the Navy employees working on the radar jamming procurement had been negotiating a job with L3. This employee had worked with Northrop Grumman and L3 during the DET contracts. He was familiar with both companies’ designs and attended work group meetings with both contractors. What’s more, this individual was part of the team that used the information form the DET contracts to develop the specifications for the subsequent RFP. The record showed that he drafted government responses to industry questions, developed the RFP’s instructions, and developed the statement of work. This Navy employee accepted a job with L3 about a week after the RFP was issued.
GAO concluded that this individuals’ actions created a biased ground rules conflict of interest. He participated in the execution of development contracts and in the development of the specifications for the RFP. He effectively set the ground rules for the RFP.
The Navy argued that this individual lacked meaningful authority while working on the specifications, and that any changes he had made to requirements had to be approved at least two levels above him. Thus, the employee’s actions could not have had an impact on the procurement. GAO reasoned that where, has here, a conflict is established by undisputed facts, there is a presumption of prejudice. The Navy’s assertions were insufficient to overcome the presumption of harm caused by the employee’s conduct.
The Navy also noted that Northrop Grumman’s proposal received low evaluation ratings. Thus, the Navy maintained, the employee’s actions could not harmed the Northrop Grumman’s competitive standing.
GAO noted that the harm flowing from conflicts is often difficult to prove, and the failure to find harm does not suggest a harmless conflict. A protester need only demonstrate the existence of a conflict; it does not need to show the specific impact of that conflict.
GAO reasoned that normally, it would recommend that the conflicted company be excluded from the competition. But GAO opined that was not feasible in this situation. Instead, GAO directed the Navy to engage individuals with the necessary technical expertise to review the actions of the former Navy employee to determine if the specifications he developed were consistent with the Navy’s requirements. If the Navy concluded that the specifications reflected it needs, it should reopen discussion and request revised proposals.
Northrop Grumman is represented by Jason A Carey, Kayleigh Scalzo, J. Hunter Bennett, Peter B. Terenzio III, and Paul Rowley of Covington & Burling, LLP. The intervenor, L3 Technologies, is represented by Craig A. Holman, Mark D. Colley, Kara L. Daniels, Michael McGill, Thomas A. Petit, and Trevor Schmitt of Arnold & Porter Kaye Scholer LLP. The agency is represented by Theresa M. Francis, Patrick R. Vanderpool, Talor Marie Rudolph, and Thy Nguyen of the Navy. GAO attorneys Sarah T. Zaffina and Edward Goldstein participated in the preparation of the decision.
