Government Contracts Monitor

Conflicts of Interest: “No Man Can Serve Two Masters”

September 24, 2013

A conflict of interest is a personal interest or relationship that is at odds with the faithful performance of an official duty. With respect to federal procurement activities, there are numerous statutes and regulations governing official’s behavior in order to avoid such conflicts. As the Supreme Court has stated, these conflict of interest laws “attempt to prevent honest government agents from succumbing to temptation by making it illegal for them to enter into relationships that are fraught with temptation.” United States v. Mississippi Valley Generating Co., 364 U.S. 520, 550 (1961). Among the myriad of regulations regarding conflicts, the Federal Acquisition Regulation (FAR) stands tall, requiring that the Government's business be conducted "in a manner above reproach" and that, except as authorized by statute or regulation, government officials act with complete impartiality. FAR 3.104-4; see also, 5 C.F.R. § 2635.702. No bidder/offeror/contractor is permitted to receive preferential treatment.

We all know that transactions relating to the expenditure of public funds require the highest degree of public trust and, therefore, demand the highest standard of conduct by government officials. Regretfully, however, government officials do not always conduct the government’s business in accordance with these high standards. Conflicts of interest, bias, favoritism and partiality can and do creep into the government’s decision-making. And just the appearance of impropriety is often sufficient to disturb a procurement.

What does this mean? It means, for example, that if a reasonable person, with knowledge of the relevant facts, could question a government official’s impartiality in conducting official business regarding a matter involving a specific party with a financial interest (e.g., a competitor in a procurement) because of the official’s relationship with that party, the government official should recuse him/herself from all involvement in the procurement. Friendships alone can and do sometimes raise legitimate concerns and questions about impartiality.

Many protests are lodged based upon conflicts of interest that allegedly skewed the award decision. Interestingly enough, while in most protests the protestor is required to demonstrate that it was prejudiced by the government’s actions (see our previous article), in situations where there is a conflict of interest, the General Accountability Office and the federal courts take the position that a conflict taints the entire procurement process and accordingly that, absent an express demonstration by the agency that the protestor was not prejudiced, the protest should be sustained. See, e.g., Express One Intern, Inc. v. U.S. Postal Service, 814 F. Supp. 93 (1992).

Contractors should be on the lookout for conflicts of interest – or even the appearance of a conflict of interest – with agency personnel, and should take steps to mitigate or eliminate any potential conflicts before working with that agency. Given the applicable standard, conflicts of interest can be an easy way to lose an award in the event of a protest.

Lindsay Simmons is the attorney responsible for the content of this article.

Attorneys

Lindsay Simmons