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Decision on Geo Protest Re Conflict of Interest 2011

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Accountability

Integrity

Comptroller General
of the United States

Reliability

United States Government Accountability Office
Washington, DC 20548

DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a
GAO Protective Order. This redacted version has been
approved for public release.

Decision
Matter of:

The GEO Group, Inc

File:

B-405012

Date:

July 26, 2011

Caroline M. Mew, Esq., Joseph P. Dirik, Esq., and Matthew H. Kirtland, Esq.,
Fulbright & Jaworski, LLP, for the protester.
John S. Pachter, Esq., Jonathan D. Shaffer, Esq., Mary Pat Buckenmeyer, Esq., and
Richard H. Snyder, Smith Pachter McWhorter PLC, and Michael D. Brown, Esq., Paul
A. Kemnitzer, Esq. and Matthew Bryant, Esq., Ohrenstein & Brown, LLP, for the
intervenor.
William D. Robinson, Esq., and Christine M. Ciccotti, Esq., Department of Justice,
Bureau of Prisons, for the agency.
Eric M. Ransom, Esq., and Edward Goldstein, Esq., Office of the General Counsel,
GAO, participated in the preparation of the decision.
DIGEST
1. Protest based on an alleged violation of the Procurement Integrity Act and alleged
conflicts of interest is denied where the record does not support the protester’s
allegations.
2. Protest challenging contracting officer’s affirmative determination of
responsibility is dismissed where the assertion on which the protest is based does
not constitute the type of allegation that triggers Government Accountability Office
(GAO) review of affirmative responsibility determinations under GAO’s Bid Protest
Regulations.
DECISION
The GEO Group, Inc., of Boca Raton, Florida, protests the award of a contract to
Community First Services, Inc. (CFS), of New York, New York, by the Department of
Justice, Bureau of Prisons (BOP), under request for proposals (RFP) No. 200-1042NE, for residential reentry center (RRC) services. In its protest, GEO alleges that
CFS violated the Procurement Integrity Act, 41 U.S.C. § 423(a) (2006), CFS had an
improper, unmitigated, unequal access to information organizational conflict of
interest, and the agency should have found CFS nonresponsible.

We deny the protest in part and dismiss it in part.
BACKGROUND
The agency issued the RFP on January 16, 2009, seeking a contractor to provide
community-based residential and non-residential correctional services. GEO, the
incumbent contractor, and CFS submitted proposals by the March 16 closing date.
With the submission of its proposal, GEO included a letter to the agency alleging that
its vice president for community corrections, who had directed its incumbent
contract efforts, resigned suddenly on March 13 after transmitting copies of
confidential GEO information to his private email account. Apparently,
unbeknownst to GEO group at the time, its former vice president was also the CEO
and sole owner of CFS, which he had founded in New York in 2005. Upon receiving
the GEO letter, the contracting officer recognized that GEO’s former vice president
was the CEO of CFS, and noted similarly drafted passages in the GEO and CFS
proposals. Based on these facts, the contracting officer recommended to the
contracting section chief that the procurement be put on hold and that the issues
presented in the GEO letter be investigated as a potential violation of the
Procurement Integrity Act (PIA), 41 U.S.C. § 423(a) (2006).
Two special agents from the Department of Justice, Office of Inspector General (DOJ
OIG), were assigned to conduct the investigation. At the BOP, the special agents
interviewed the contracting officer, contracting section chief, and chief of the
acquisitions branch, to discuss the allegations. Additionally, the special agents
interviewed GEO’s former vice president (hereafter referred to as the CFS CEO),
CFS’s proposal writer, and GEO’s business manager, among others. They also took
possession of the office computer used by the CFS CEO during his employment with
GEO.
The special agents completed their investigation in November 2009 and reported to
the BOP contracting staff that based on a review of the interviews and relevant
records, the DOJ OIG “could not substantiate bid rigging or procurement integrity
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violations.” DOJ OIG Abbreviated Report, at 3. In this regard, the DOJ OIG did not
find any evidence that elements of CFS’s proposal had been derived from any of
GEO’s information. Specifically, it found that CFS’s proposal had been prepared by
a third-party private proposal writer, [DELETED]. Id. at 2-3. The DOJ OIG also

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The results of the DOJ OIG investigation were discussed with the BOP orally in
November 2009. The DOJ OIG Abbreviated Report for the record was prepared by
the DOJ in January and February 2010.

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relied on statements by the Business Manager for GEO’s New York City RRC
2
properties indicating that she did not share any pricing materials with the CFS CEO.
Id. [DELETED]. Id. at 3. Based on these findings, the BOP directed the
procurement to continue.
The agency engaged in three rounds of discussion with the offerors before
requesting revised final proposals. [DELETED] offerors timely submitted revised
final proposals in October 2010. After evaluation of [DELETED] proposals, the
contracting officer found that CFS’s proposal represented the best value to the
government. The contracting officer then completed a certification of procurement
integrity stating that, to the best of his knowledge, he was not aware of any violation
of the procurement integrity act. The contracting officer also documented his
affirmative responsibility determination. Notice of award to CFS was issued to the
offerors on February 16, 2011.
GEO received a debriefing on February 18, and timely filed a bid protest with the
BOP agency protest official (APO) on February 28, alleging that CFS violated the
PIA, had an improper organizational conflict of interest, and was not a responsible
contractor. The APO reviewed the pre- and post-award contract file, the DOJ OIG
abbreviated report, and supplemental information provided by GEO. The APO also
contacted the lead DOJ OIG special agent on this matter, to discuss whether any
supplemental information obtained since the time of the DOJ OIG report would have
changed the report’s conclusions. The special agent indicated that the supplemental
information would not have changed the report. The BOP APO denied GEO’s agency
protest on April 8. This protest followed.
PROCUREMENT INTEGRITY ACT
GEO again alleges that CFS violated the PIA, asserting that it is implausible that CFS
did not utilize confidential GEO information obtained by the CFS CEO in preparing
its proposal, and that the agency erred in ignoring this PIA violation. However, our
review of the record demonstrates that the agency acted in accordance with
applicable regulations in reviewing the alleged PIA violation, reasonably concluded
that no violation occurred, and properly determined to continue with the
procurement.
The PIA provides that “[a] person shall not, other than as provided by law, knowingly
obtain contractor bid or proposal information or source selection information before
the award of a Federal agency procurement contract to which the information
2

The DOJ OIG report states that “OIG interviewed . . . the Business Manager for
GEO’s New York City RRC properties” and “[The business manager] stated she did
not share any pricing materials with [the CFS CEO].” DOJ OIG Abbreviated Report,
at 3.

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relates.” 41 U.S.C. § 423(b). FAR § 3.104-3(a) dictates that a contracting officer who
receives or obtains information of a possible violation of the PIA must determine if
the possible violation has any impact on the pending award or selection of the
contractor. If the contracting officer concludes that a violation may impact the
procurement, the contracting officer is required to report the matter to the head of
the contracting activity (HCA). FAR § 3.104-7(b). The HCA must review the
information and take appropriate action, which includes either: 1) advising the
contracting officer to proceed with the procurement; 2) beginning an investigation;
3) referring information to appropriate criminal investigative agencies; 4) concluding
that a violation occurred; or 5) recommend to the agency head that a violation has
occurred and void or rescind the contract. Id. In the case of the BOP, the Justice
Acquisition Regulation (JAR) further directs the contracting officer to refer possible
violations of the PIA to the DOJ OIG. JAR § 2803.104-10.
Here, the agency followed exactly the procedures set forth above in investigating the
alleged violation. Upon receiving information concerning a potential PIA violation
from GEO, the contracting officer referred the matter to the HCA and the DOJ OIG.
The DOJ OIG then thoroughly investigated the record, conducted interviews, and
analyzed GEO computers before concluding that there was no indication of theft of
GEO property or proprietary information, and no information to substantiate a PIA
violation. On the basis of the investigation results, the HCA directed the contracting
officer to proceed with the procurement. On this record, we see no basis to
conclude that a PIA violation occurred, or that the agency’s actions were
unreasonable.
GEO alleges that the DOJ OIG and BOP investigations failed to reasonably consider
declarations of GEO’s business manager stating that the CFS CEO requested, and
was provided with, a draft of GEO’s price proposal for this procurement prior to his
3
resignation. In its rejection of this allegation, the agency reasonably questioned the
credibility of GEO’s allegations given that they were inconsistent with previous
statements made by GEO’s business manager to the DOJ OIG. As noted above, the
DOJ OIG report states that “OIG interviewed . . . the Business Manager for GEO’s
New York City RRC properties” and “[The business manager] stated she did not
share any pricing materials with [the CFS CEO].” DOJ OIG Abbreviated Report, at 3.
In any event, the agency argues, and we agree, that any protected pricing materials
obtained by the CFS CEO in this manner are covered by the PIA’s “savings clause,”
which provides in relevant part that “[t]his section does not . . . restrict a contractor

3

We have also reviewed all other documents allegedly obtained by the CFS CEO
prior to his resignation and previously considered by the DOJ OIG and BOP. We
agree with the agency that none of these documents constitute “bid or proposal
information” or “source selection information,” as defined by the PIA. See 41 U.S.C.
§ 423(f).

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from disclosing its own bid or proposal information or the recipient from receiving
4
that information.” 41 U.S.C. § 423(h)(2).
GEO objects to the application of the PIA savings clause in this context. GEO argues
that where the CFS CEO failed to disclose his interest in CFS to GEO, and
purposefully lied to GEO in breach of his fiduciary duties and GEO’s code of ethics,
the savings clause protections of the PIA have been waived. We disagree. We have
repeatedly determined that the PIA’s savings provisions apply notwithstanding the
fact that the voluntarily provided information is subsequently misused or not
properly safeguarded. See, e.g., Telephonics Corp., B-401647, B-401647.2, Oct. 16,
2009, 2009 CPD ¶ 215 at 6; Pemco Aeroplex, Inc., B-310372, Dec. 27, 2007, 2008 CPD
¶ 2, at 12. Here, GEO voluntarily provided its confidential information to the CFS
CEO in the course of his employment with GEO. The CFS CEO’s alleged misuse of
that information in transferring it to CFS, breach of his fiduciary duties to GEO, or
breach of GEO’s corporate code of ethics, are matters of a private dispute not for
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resolution by our Office. Id.
ORGANIZATIONAL CONFLICT OF INTEREST
GEO also alleges that, based on the same facts underlying its PIA allegation, CFS has
an improper, unmitigated, unequal access to information OCI. More specifically,
GEO states that CFS obtained nonpublic, procurement-related information as a
result of the CFS CEO’s participation in GEO’s management of the incumbent
contract for these services. We conclude that GEO misunderstands the
circumstances under which an unequal access to information OCI occurs, and that
GEO’s allegations are without merit.
An unequal access to information OCI exists where a firm has access to nonpublic
information as part of its performance of a government contract and where that
information may provide the firm a competitive advantage in a later competition.
FAR §§ 9.505(b), 9.505-4; Maden Techs., B-298543.2, Oct. 30, 2006, 2006 CPD ¶ 167
at 8; see also McCarthy/Hunt, JV, B-402229.2, Feb. 16, 2010, 2010 CPD ¶ 68 at 5. As
the FAR makes clear, the concern regarding this category of OCI is that a firm may
4

Additionally, the agency did not find any credible evidence to support a conclusion
that elements of CFS’s proposal were derived from GEO’s confidential information.
As noted above, the DOJ OIG investigation found that CFS had contracted with a
private proposal writer for the development of its proposal. [DELETED]. The DOJ
OIG investigated this matter and found that the proposal submitted by the proposal
writer to the CFS CEO was identical to the proposal CFS submitted to the BOP. DOJ
OIG Abbreviated Report, at 2-3.
5

We note that this dispute is the subject of litigation at the United States District
Court for the Eastern District of New York, Docket No. 11-CV-1711.

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gain a competitive advantage based on its possession of “[p]roprietary information
that was obtained from a Government official without proper authorization,” or
“[s]ource selection information . . . that is relevant to the contract but is not available
to all competitors, and such information would assist that contractor in obtaining
the contract.” FAR § 9.505(b).
As an initial matter, the agency reasonably found the protester’s allegations to be
unsubstantiated. In this regard, the agency relied on the findings of the DOJ OIG
investigation, which found that CFS’s proposal had been prepared by a third-party
proposal writer, CFS’s CEO did not alter the proposal in any way, and there was no
credible evidence of the CFS CEO of having obtained GEO’s pricing information.
Moreover, as discussed in the context of the alleged PIA violation, above, the CFS
CEO’s alleged misuse of GEO’s confidential information amounts to a private
dispute not for resolution by our Office. In the OCI area, our Office has held that
“where information is obtained by one firm directly from another firm--by, for
example, dissemination of information by former employees--this essentially
amounts to a private dispute between private parties that we will not consider
absent evidence of government involvement.” Ellwood Nat’l Forge Co., B-402089.3,
Oct. 22, 2010, 2010 CPD ¶ 250 at 3.
RESPONSIBILITY DETERMINATION
Finally, GEO alleges that the contracting officer’s affirmative determination of
responsibility was arbitrary and capricious, for failure to consider evidence that the
CFS CEO: held undisclosed concurrent executive positions with GEO and CFS,
violated GEO’s code of ethics, and breached his fiduciary duties. GEO argues that
proper consideration of these issues could only support a determination that CFS
did not meet the “ethics and integrity” requirements for an affirmative responsibility
determination, and that the affirmative determination of responsibility must be
rescinded. FAR § 9.104-1(d).
There is no requirement that contracting officers explain the basis for an affirmative
responsibility determination, FN Mfg., Inc., B-297172, B-297172.2, Dec. 1, 2005, 2005
CPD ¶ 212 at 7-8; a written explanation is only required when a CO makes a
determination of nonresponsibility. FAR § 9.105-2(a)(1). Since an affirmative
determination of responsibility is largely a matter within a CO’s discretion and need
not be documented, our Office, as a general matter, will not consider a protest
challenging an affirmative determination of responsibility except under limited
exceptions. 4 C.F.R. § 21.5.
Our Office will consider a protest of an affirmative determination of responsibility
where the protest identifies evidence raising serious concerns that, in reaching the
responsibility determination, the contracting officer unreasonably failed to consider
available relevant information or otherwise violated statute or regulation. 4 C.F.R.
§ 21.5(c); T. F. Boyle Transp., Inc., B-310708, B-310708.2, Jan. 29, 2008, 2008 CPD ¶ 52
at 5. In that context, we will review a challenge to an agency’s affirmative

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responsibility determination where the protester presents specific evidence that the
contracting officer may have ignored information that, by its nature, would be
expected to have a strong bearing on whether the awardee should be found
responsible. Verestar Gov’t Servs. Group, B-291854, B-291854.2, Apr. 3, 2003, 2003
CPD ¶ 68 at 4-5.
This basis of GEO’s protest fails to meet the threshold for our review, and must be
dismissed. The allegations that our Office has reviewed in the context of an
affirmative determination of responsibility generally pertain to very serious matters
such as potential criminal activity; not disputes between private parties. For
example, in FN Mfg., Inc., our Office reviewed an allegation that the agency failed to
consider an ongoing investigation into whether the awardee defrauded the
government on a prior contract for the same requirement. In Southwestern Bell Tel.
Co., we reviewed an allegation that the agency failed to consider that the awardee’s
CEO had been indicted for conspiracy and fraud by the U.S. Attorney for Southern
New York. In Verestar Gov’t Servs. Group, we reviewed an allegation that the
agency had failed to consider that the awardee was embroiled in a massive public
accounting scandal and had vastly misstated its earnings.
In contrast, the only allegation in this case that rises to the level of involvement in
potential criminal activity relates to the PIA, an issue which was investigated by the
DOJ OIG and ultimately not substantiated. The remaining allegations, that the CFS
CEO improperly failed to disclose work for a competing firm in violation of his
fiduciary duties and the GEO code of ethics, as previously discussed, amount to a
private dispute between private parties. These matters do not meet the standard of
review for our Office’s consideration of an affirmative responsibility determination.
See Hendry Corp., B-400224.2, Aug. 25, 2008, 2008 CPD ¶ 164 at 3-4 (existence of an
applicable nondisclosure agreement and alleged violations of such an agreement by
the awardee are matters of a private dispute between private parties and do not meet
the threshold for our Office’s review in the context of an affirmative determination
of responsibility). Moreover, our review of the record demonstrates that the
contracting officer was well aware of the allegations concerning the CFS CEO when
making his affirmative responsibility determination. This aspect of GEO’s protest is
therefore dismissed.
The protest is denied in part and dismissed.
Lynn H. Gibson
General Counsel

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