Protester Claimed a Merger Involving the Awardee Created an OCI. Should the Agency Have Investigated Before Making Award?

A week before award, the eventual awardee announced a merger. The protester claimed this merger created an OCI, and that the agency erred in not meaningfully investigating the transaction. But GAO opined that an agency only has to investigate the impact of a corporate transaction when the transaction is imminent. Here, the transaction was not imminent. It had only been announced a week before award and would not be finalized for some time. Given the timing, the agency had no obligation to go looking for possible conflicts.

WHR Group, Inc., GAO B-420776, B-420776.2

Background

The FBI issued an RFQ seeking employee relocation services. The RFQ contemplated the establishment of one or more blanket purchase agreements. Award would be made based on a best-value tradeoff between technical approach, past performance, and price. The non-price factors, individually and combined, were more important than price.

Six vendors submitted quotations. After a review, the SSA concluded that due to similarities in ratings under the non-price factors, award would be made ot the three lowest-priced vendors: BGRS Relocations, RELO Direct, INdle, and Allegiant Government Relocation.

An unsuccessful vendor, WHR Group, protested, challenging the evaluation of its technical proposal and the best value-tradeoff.  Those protest grounds were sustained. WHR also alleged that announcement of a recent merger gave rise to an OCI. That argument was less successful.

Analysis

One of the awardees, BGRS, was a subsidiary of Relo Group Inc. In May 2022, one week before award, Relo Group announced that it was merging with another company SIRVA, Inc.  The newly merged company would became BGRS’s parent. 

WHR believed this merger created an impaired objectivity OCI for BGRS. The RFQ allowed awardees to use affiliated moving companies on a GSA-approved list. Many of the companies on the list were part of SIRVA’s “family of brands.” WHR reasoned that with the merger, BGRS would have a financial incentive to select SIRVA-affiliated companies to keep revenue in the family, and that BRGS would end up evaluating the performance of its own affiliated moving companies. WHR maintained the FBI had failed to meaningfully investigate this OCI.

But an agency’s obligation to consider the effects of a corporate transaction, including OCI’s, arises only when the agency becomes aware of an imminent and essentially certain transaction prior to award. Here, the FBI was unaware of the transaction at the time of award. In fact, the merger was only announced a week before award and thus was not imminent. The FBI had no obligation to consider the transaction. Moreover,  even if the merger had occurred, the involvement of affiliated companies would only be an issue once individual orders were placed under BGRS’s BPA. Until an order was placed, it was not clear that any of the BGRS’s affiliates would be providing services

WHR is represented by Frank S. Murray, David T. Ralston, Jr., Julia Di Vito, and Megan Chester of Foley & Lardner LLP. Intervenor BGRS is represented by Seamus Curley and Chelsea L. Goulet of Stroock & Stroock & Lavan LLP. Intervenor RELO is represented by William F. Savarino, John J. O’Brien, and Rhina Cardenal of Cordatis LLP. The agency is represented by Marcela A. Liddick and Carlos S. Pedraza of the Department of Justice. GAO attorneys Louis A. Chiarella and Peter H. Tran participated in the preparation of the decision.

–Case summary by Craig Lachance, Senior Editor

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