WilmerHale Government Contracts Team Wins Landmark GAO Bid Protest

WilmerHale Government Contracts Team Wins Landmark GAO Bid Protest

Client Alert


On September 24, 2020, the Government Accountability Office (GAO) sustained a protest brought by Teledyne Brown Engineering Inc. (Teledyne) against the $651.6 million National Aeronautics and Space Administration (NASA) Marshall Space Flight Center operations, systems, services and integration contract (MOSSI). The decision is important for agencies and contractors because it confirms the continued validity of Satellite Tracking of People, B-411845, Nov. 6, 2015, 2015 CPD ¶ 347, in which prejudice was presumed because the agency knowingly failed to investigate or resolve an actual or apparent conflict of interest involving a current government official. Most GAO decisions addressing “the appearance of impropriety” involve contractors that hire former government officials with actual or potential access to competitively useful, nonpublic information. Here, the awardee argued that because the protest challenged the conduct of a current government employee, Teledyne had to prove actual bias, as government officials are presumed to act in good faith. GAO disagreed.

The facts are as follows. On June 4, 2020, NASA announced the award of the MOSSI contract to SGT LLC, a business unit of KBRwyle. Teledyne challenged NASA’s award to SGT on several grounds, but the decisive factor, and the only factor GAO determined it needed to address in order to sustain the protest, was the actual or apparent conflict of interest held by a senior procurement official with NASA (whom GAO referred to as Mr. X) and NASA’s failure to adequately investigate and mitigate that conflict.

Mr. X served as a voting member of NASA’s Source Evaluation Board (SEB) for the MOSSI procurement. He also served as chair of its Procurement Development Team. As GAO observed, Mr. X had “an ongoing, continuous leadership role in the development of virtually every aspect of the agency’s acquisition, from formulating procurement strategy, contracting approaches, and cost estimates, to evaluating risks, to developing the central acquisition documents, such as the RFP and source selection plan.” Mr. X was also a longtime friend of a high-level employee for one of the awardee’s major subcontractors, with whom he met every week throughout the procurement process for dinner, foosball and “camaraderie.” A KBRwyle employee also participated in these weekly dinners.

Mr. X brought these weekly gatherings to the attention of agency officials on multiple occasions. NASA’s ethics counsel recommended that NASA remove Mr. X from the SEB or, alternatively, that he refrain from participating in the dinners until after the SEB completed its work. Mr. X, however, refused to stop attending the dinners, and NASA refused to remove Mr. X from the SEB. Instead, NASA implemented mitigation measures that Teledyne argued were inadequate, as they allowed Mr. X to, among other things, evaluate Teledyne’s proposal and score all the offerors’ proposals, including that of the eventual awardee. GAO agreed with Teledyne that NASA’s mitigation measures were inadequate.

GAO noted that the Federal Acquisition Regulations make it clear that the “general rule is to avoid strictly any conflict of interest or even the appearance of a conflict of interest in Government-contractor relationships.” FAR 3.101-1. Accordingly, GAO explained that “where an agency knowingly fails to investigate and resolve a question concerning whether an agency employee who actively and extensively engaged in procurement-related activities should have been recused from those activities, the existence of an actual or apparent conflict of interest is sufficient to taint the procurement.” (emphasis added). Given this presumption of prejudice, GAO found no need to determine whether “Mr. X’s participation in the acquisition resulted in actual prejudice against the other offerors, or in favor of SGT. . . . [W]here, as here, the record establishes that a conflict or apparent conflict of interest exists, and the agency did not resolve the issue, to maintain the integrity of the procurement process, we will presume that the protester was prejudiced, unless the record includes clear evidence establishing the absence of prejudice.”

GAO sustained the protest and recommended that NASA terminate the contract awarded to SGT, cancel the RFP and begin the MOSSI acquisition anew “without the involvement of individuals who have a conflict of interest.”

Key Takeaways for Potential Protesters

  • Agencies are obligated to avoid even the appearance of impropriety. While contractors may have a legitimate need to interact with agency officials for administrative and programmatic purposes relating to the performance of already awarded contracts, social meetings—especially ones that take place during an active procurement—may create an actual or apparent conflict of interest that could undermine the integrity of any resulting award.
  • Agencies are obligated to meaningfully investigate and mitigate conflicts of interest. While Mr. X appropriately notified NASA of his potential conflict of interest, the agency’s failure to investigate the facts or take meaningful steps to protect the integrity of the procurement led to the unwinding of the entire procurement process.
  • It is not the case that protesters must always prove actual bias when the alleged conflict of interest involves a current government official. An agency’s obligation to avoid even the appearance of impropriety may mean that prejudice will be presumed. As GAO explained in its decision, quoting from Satellite Tracking of People, B-411845, Nov. 6, 2015, 2015 CPD ¶ 347, “[t]he potential harm flowing from an actual or apparent conflict of interest is, by its nature, not susceptible to demonstrable proof of bias or prejudice.”

Associates Chanda L. Brown and Jessica S. Aldrich were part of the WilmerHale team that represented Teledyne in this protest, along with Partner Andrew E. Shipley and Senior Associate Philip E. Beshara.



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