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
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
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 the contracting agency. The
government policy is to recognize the integrity and validity of
contractor team arrangements and not normally require their dissolution.
Contractors, however, increasingly are encountering specific limitations
on teaming and even outright bars in certain solicitations, often
described as “prohibitions on cross-teaming.” Cross-teaming
generally entails one company participating on multiple teams in
competing for a contract or task order under a multiple award contract.
An offeror may, for example, compete to be the prime for one team
and a subcontractor for another team. Limitations on teaming and
cross-teaming do not derive from FAR policies or FAR provisions
The rationale for barring such arrangements, often expressed in
the language of the clause itself, appears to be that they minimize
the potential for OCIs and otherwise promote competition. Such clauses
essentially presume existence of an OCI that cannot effectively
be mitigated. These clauses provide a contractor no opportunity
to counter with a proposed mitigation plan as contemplated by the
The FAR provides a few examples where OCIs, if they exist, cannot
be mitigated. The comptroller general, in deciding bid protests,
also has determined that certain OCIs are “unmitigatible”—most
often in the context of “impaired objectivity” cases.
In all other circumstances, the FAR requires that the contractor
be given at least some reasonable opportunity to make its best case
as to how a potential OCI can be avoided or an actual OCI can be
mitigated or neutralized. An outright, or per se prohibition, therefore,
appears to reach too far in most cases.
In some instances, contracting officers extended the cross-teaming
prohibition to affiliates, requiring withdrawal from at least one
team when affiliates participate on two different teams in the same
acquisition. If a prospective contractor is given an opportunity
to offer an effective mitigation plan, however, the result in most
cases should be to avoid all potential and actual OCIs, and eliminate
all concerns about decreased task order competition after award.
Features of an effective plan likely will include separate physical
locations, separate work forces, separate management, separate computer
systems, and a representation that there will be no “cross-talk”
or information shared between the two affiliates in connection with
all future task orders and task order proposals.
A mitigation plan should address all the concerns reflected in
cross-teaming clauses while still providing the flexibility espoused
by the relevant acquisition regulations. In contrast, per se prohibitions
on affiliates participating on more than one team provide no flexibility
either to the contracting officer or to the contractor.
OCIs are a real concern for those involved in formulating the acquisition
strategy and evaluating proposals in a particular procurement or
program. Teaming arrangements, nonetheless, do provide legitimate
tangible benefits to contractors and agencies alike. One variation,
cross-teaming, actually could enhance those benefits by offering
the government more choices and potentially a better value.
John Stafford and Dave Hickey are attorneys with the Greenberg Traurig
law firm. The opinions expressed here are solely those of the authors
and are not intended to provide legal advice or represent the view
of NDIA or the NDIA Ethics Committee.