Defense industry teams must consider conflict-of-interest concerns.

• Author: Stafford, John
• Position: ETHICS CORNER

Contractor teaming arrangements, long a defense industry fixture, have become even more popular in recent years.

These arrangements can provide significant business benefits to the teaming partners, such as enhanced system and subsystem capabilities, a more substantial and relevant past performance record, and greater diversity and ability to meet small business preferences and goals. Companies need to be aware, however, of the Organizational Conflicts of Interest (OCI) policies that govern contractor-teaming arrangements.

Three distinct OCI situations have been recognized under Federal Acquisition Regulations and various legal decisions:

Unequal Access to Information. In these cases, a competing firm having access to nonpublic information as part of its government contract performance gains a competitive advantage in a subsequent government contract competition not available to other competitors.

Biased Ground Rules. This is where a firm, in performing a government contract, sets the ground rules for a subsequent government contract (e.g., authoring the statement of work or the specifications), thereby "wiring" the later competition to fit or favor award to itself.

Impaired Objectivity. In this case, a firm's work under one government contract could entail self-evaluation of the firm or its affiliate, either by assessing performance under another contract or by evaluating proposals, thereby creating the appearance, if not the reality of undermining the firm's ability to render impartial advice to the Government.

The FAR ground rules for identifying, evaluating, and resolving OCIs charge the contracting officer with analyzing planned acquisitions to identify and thereby avoid, neutralize, or at least mitigate potential OCIs in advance. Once an OCI is identified, the contractor is to be given a reasonable opportunity to address it before contract award can be denied.

OCIs also may be waived when in the best interest of the government. OCIs render contractors ineligible for award if the conflict cannot be mitigated, in some situations, by imposing a restraint, such as a "Chinese Wall" or ineligibility for specified future contract awards.

FAR Subpart 9.6 notes that contractor team arrangements can benefit the government by enhancing capabilities, performance, cost, and delivery factors. In short, the FAR recognizes teaming as a positive industry practice, and in most circumstances, simply requires advance disclosure of teaming arrangements to...