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Posted on Wednesday, March 13, 2019

Subcontractor Employee’s Alleged Disclosure Of Proprietary Bid And Proposal Information To A Competitor Is Not A Procurement Integrity Act Violation

The Procurement Integrity Act (PIA) restricts the disclosure and knowing obtainment of proprietary bid or proposal information before the award of a procurement to which the information relates. In a recent protest decision, GAO affirmed that the PIA applies only when the government is involved in the alleged misconduct, and does not cover the disclosure of such bid or proposal information by incumbent contractor employees with access to that information by virtue of their employment on a government contract.

Incumbent contractor IBM Corporation protested the TSA’s award of an IT services task order to Accenture Federal Services, LLC, alleging that Accenture violated the Procurement Integrity Act. IBM alleged that one of IBM’s subcontractor employees on the incumbent effort obtained IBM’s proprietary bid and proposal information from restricted government server, and then provided that proprietary information to Accenture. The employee had access to that restricted government server in performance of his contractual responsibilities.

IBM alleges that Accenture knew or should have known that the employee was prohibited from disclosing confidential IBM information to competitors, and based on its receipt of this information, Accenture violated the PIA’s prohibition on knowingly obtaining contractor bid or proposal information.

After IBM first filed a GAO protest raising these allegations, TSA conducted an investigation in which it conducted interviews with several relevant persons, reviewed data from the employee’s TSA-issued laptop, and reviewed Accenture’s proposal to determine whether the allegedly misappropriated information was incorporated into Accenture’s proposal. Additionally, the U.S. Attorney’s Office requested a written investigative report, but declined to take prosecutorial action.

The contracting officer reviewed the information gathered in the investigation, concluded that the evidence did not establish that a PIA violation occurred, and affirmed the award to Accenture. IBM protested again, alleging that TSA’s investigation was inadequate and challenging the reasonableness of the agency’s decision to proceed with its award to Accenture.

TSA and Accenture requested dismissal of IBM’s protest, arguing that IBM’s allegations, even if true, are insufficient to establish a PIA violation because IBM did not allege any improper conduct on the part of the government. GAO agreed.

GAO found that IBM’s allegations did not allege government misconduct, but rather involved a private dispute between private parties. GAO found that the employee obtained access to IBM’s bid and proposal information solely by virtue of his employment with IBM’s subcontractor. Finding that an alleged PIA violation that fails to identify any government misconduct is legally insufficient, GAO held that IBM’s claim that there was a PIA violation was factually insufficient to establish a violation of law by the agency.

IBM also argued that TSA should have excluded Accenture from competition to protect the integrity of the procurement system. GAO determined that this claim was a challenge to the contracting officer’s affirmative responsibility determination. GAO found that the contracting officer had reasonably considered the information before it regarding the employee’s alleged misconduct before he affirmed the award to Accenture, the agency met its obligation in assessing Accenture’s responsibility.

IBM Corporation, B-415798.2 (Feb. 14, 2019)

Berenzweig Leonard is teaming up with Red Team Consulting for a monthly newsletter featuring upcoming contracts, key protest decisions, events, and more. This post was published in the March 2019 Monthly Insights newsletter. To sign up for Monthly Insights, please click here.

Stephanie Wilson is a Partner at Berenzweig Leonard. Stephanie and Terry O’Connor  lead the firm’s Government Contracts practice. Terry can be reached at swilson@berenzweiglaw.com.