Conflicts in contracting

'You have to trust the integrity of the contractor' to do the right thing in conflict-of-interest situations, GSA's Don Heffernan says.

David S. Spence

Enterprise architecture deals spark concerns about fairness

As agencies across government try to flesh out enterprise architectures, they've hit a sticky wicket: How can they hire the most qualified contractor to plan their systems blueprint without excluding the best vendor from implementing the underpinning systems?

Although the Federal Acquisition Regulation makes it clear that the same vendor cannot plan and implement a system, many CIOs are struggling with this issue as they try to develop and put in place enterprise architectures.

For many agencies and vendors, the line between planning and implementation has become hazy.
Agencies face situations where one part of a company helped plan the modernization blueprint and another part of the company wants to bid on building the systems.

And agencies are coming under fire from industry and government observers because there is at least a perception of a conflict of interest.

'There seems to be an increase in the activity of people doing original analysis and also doing the implementation work,' said Chip Mather, senior vice president of Acquisition Solutions Inc. of Chantilly, Va.

'There seems to be a lack of emphasis on the part of the FAR because agencies like the solution one company proposed and they want the same company to implement it.'

The area of enterprise architecture is especially ripe with these concerns, federal observers said.

IT vendors see a gold mine in planning and implementing architectures, which further complicates agency efforts to assure their procurement practices are legal, Mather and others said. Agencies are being bombarded with proposals from companies that had primarily planned systems, but now implement them as well, and from IT integrators that now are offering planning and consulting services, too.

'This makes the situation more complex for us,' said a GSA official, who requested anonymity. 'We have to make vendors aware that we are concerned about the potential conflicts of interest by putting mechanisms in place in the requests for proposals.'

The General Services Administration's Federal Supply Service, the Health and Human Services Department, the Housing and Urban Development Department, the Office of Management and Budget, and Treasury's Bureau of the Public Debt have all issued enterprise architecture RFPs in the last two months.

OMB's plans to procure support services for the Federal Enterprise Architecture Program Management Office have created the most buzz within federal and industry IT circles.

Booz Allen Hamilton Inc. won the original contract to support OMB nearly two years ago. And some in industry said there is an impression that the McLean, Va., consulting firm has used its position and knowledge of working for OMB to win work at other agencies.

'The original contract with Booz Allen was not rigorous in dealing with conflict issues, and there is a perception that they played it pretty well over the last few years,' said an industry executive, who requested anonymity. 'To what extent they have done it unfairly depends on who is looking at it. But OMB has heard industry complaints and has assured industry it will be a fair competition.'

George Farrar, a Booz Allen Hamilton spokesman, said the company works hard to avoid any appearance of a conflict.

'It's difficult to manage the perceptions of competitors,' Farrar said. 'But the facts speak for themselves. The facts are that the EA work we have done for OMB has been totally transparent and has made the process even more competitive because there is more clarity for all competitors. All firms who wish to compete on federal EA contracts have equal access to the OMB products.'

OMB officials would not comment on the procurement. 'There is an active procurement in process, and it is inappropriate to comment on the nature of that process until it is completed,' an OMB official said.

Nondisclosure agreement

Sources said OMB is requiring the winning vendor to sign a nondisclosure agreement, which would compel contractors working on planning, implementation and support of the Federal Enterprise Architecture to keep all information secret.

OMB said in its RFP that the contractor must treat information 'as confidential and agree not to appropriate such information to its own use or to disclose such information to third parties.'

The use of nondisclosure agreements and segregating the contract employees working on a project from the rest of their company are fairly common practices to help assuage conflict-of-interest concerns. But not everyone believes such approaches work well enough.

Stephen Ryan, a partner with the Washington law firm of Manatt, Phelps and Phillips, said he is skeptical whether such agreements sufficiently protect the government's interests. 'The nondisclosure agreement does not set up a process to evaluate the conflicts,' he said. 'This is a festering area of concern that companies are setting themselves up for follow-on work through consulting and advisory assistance work.'

Ryan said contracting officers must let vendors know in advance what limitations they will come under if they win a planning contract.

Others, including John Weiler, executive director and chief technology officer for the nonprofit Interoperability Clearinghouse of Alexandria, Va., said the problem with nondisclosure agreements is that they don't take into account human nature.

'You can't firewall off stock interest or dedication to your company,' Weiler said. 'You can protect against specific information being shared internally, but you can't limit a person from keeping their company's best interests in mind.'

Acquisition Solutions' Mather agreed that it would be tempting to push the planning toward the expertise of one's own company.

Don Heffernan, CIO of GSA's Federal Supply Service, however, disagreed with the notion that staffing firewalls and nondisclosure agreements don't work. He said he is comfortable when contractors promise to segregate employees working on specific projects. 'You have to trust the integrity of the contractor,' he said.

Even so, Heffernan said that it was understood that FSS implementation contractor Unisys Corp. would not be bidding on the enterprise architecture support contract FSS awarded late last month to Logistics Management Institute of McLean, Va.

'We didn't feel we had to bar Unisys, but there was an expectation they would not bid,' he said. 'It is an issue, and we may have to tackle it during the follow-on contracts.'

The topic is perhaps a good candidate for review by or guidance from the CIO Council, Heffernan said, because so many agencies are planning and implementing enterprise architectures.

HHS CIO Melissa Chapman said her agency is relying on a contract clause to deal with potential conflict issues for her department's procurement of enterprise architecture support.

By having something in writing, both the agency and its contractor know how a problem will be mitigated should a conflict arise, she said.

The GSA official who would not give his name said agencies are handling conflict-of-interest issues pretty well across the board, but it has become more visible because enterprise architecture efforts are giving vendors detailed views of agencies' inner workings.

'This is mostly an acquisition planning issue,' the official said. 'Agencies need to look at the downstream implications of the work they are doing and deal with those potential conflict-of-interest issues so companies can be selective and decide up front what to bid on.' n
GCN staff writer Mary Mosquera contributed to this story.

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