Conflict of interest because of participation in peer review. In the Matter of HBI-GF, J.V. United States Government Accountability Office (2017), by Hugh Anderson

Summary: In March 2016, the Corps of Engineers retained Gannett Fleming to conduct an external peer review of the design of a six-mile cutoff wall project at the Herbert Hoover Dike embankment, at Lake Okeechobee, Florida. Gannett Fleming’s personnel, including a geotechnical engineer, reviewed project design documents, submitted more than 80 comments, and prepared findings and lessons learned based on the review. Its peer review work was completed in September 2016.

In June 2017 a joint venture comprised of Hayward Baker and Gannett Fleming submitted a proposal in response to a Corps request for proposals for construction of the cutoff walls. The Corps contracting officer identified a potential organizational conflict of interest because of the peer review, investigated, and ultimately excluded the Hayward Baker—Gannett Fleming joint venture from consideration. The specific category of conflict was stated to be “biased ground rules.” Such a conflict of interest arises when a firm, as part of its performance of a government contract, has in some sense set the ground rules for the competition for another government contract, for example by writing or providing input into the specifications. The primary concern is that the firm could skew the competition, whether intentionally or not, in favor of itself.

In this case, the contracting officer’s investigation determined that the Gannett Fleming geotechnical engineer who had worked on the peer review was also heavily involved in the preparation of the joint-venture proposal. The peer review comments had influenced changes in the design, and perhaps gave Gannett Fleming special knowledge of the Corps’ requirements, thus skewing competition. The contracting officer also noted the obligation to avoid even the appearance of a conflict, because of the possible adverse impact on competition.

The Hayward Baker—Gannett Fleming joint venture appealed the adverse conflict of interest ruling to the Government Accountability Office (GAO).

Decision: The GAO affirmed the Corps contracting officer’s decision. The review by GAO is based on a reasonableness standard, such that the GAO will not substitute its judgment for that of the underlying agency, absent clear evidence of unreasonableness. The GAO held that it could not “conclude that the contracting officer’s OCI [organizational conflict of interest] determination was unreasonable.” In doing so it emphasized that not only was there an appearance of a conflict (itself sufficient to support a finding of a conflict of interest) but that there were “hard facts” showing that Gannett Fleming, as peer reviewer, had assisted in the preparation of specifications, thereby putting itself in a position to skew the competition.

Comment: The federal government conflict of interest provisions are stringent, but provide a starting point for analysis of potential conflicts of interest in a variety of settings, including engineering services, design-builder selection, and special circumstances such as a CM’s competition for construction bid packages that it has helped prepare.

EJCDC publishes a peer review services document, EJCDC E-581, Agreement between Owner, Design Engineer, and Peer Reviewers for Peer Review of Design. The document expressly requires disclosure of relevant past or existing relationships, and bars the peer reviewer from any future involvement on the project: No Peer Reviewer shall solicit, accept, or perform any Project-related services for Owner other than those set forth in this Agreement.