have an additional incentive to award its $300 million hospital automation contract to a non-MUMPS contractor such as EDS.
A second conflict of interest identified by plaintiffs involves EDS' status as the incumbent contractor for the DOD Defense Enrollment Eligibility Reporting System (DEERS). The DEERS contract is scheduled to be recompeted this summer, and the draft CHCS RFP requires CHCS bidders to explain how their systems will function compatibly with the DEERS system. Plaintiff alleges that EDS' interest in maintaining its DEERS contract may lead it improperly to take advantage of its access to proposed CHCS proposals. Indeed, plaintiff alleges generally that plaintiff's access to technical information concerning competitors' products creates a significant conflict of interest that will deter competition for the CHCS contract.
As the foregoing summary and common sense suggest, it is indisputable that the letting of the SETAC contract to a hospital automation systems vendor raised potential conflict of interest problems.
That, however, is only the beginning of the analysis required under the FAR. The critical question is whether DOD identified those potential conflicts and took adequate measures to eliminate or minimize them prior to negotiating the SETAC contract.
In considering the adequacy of DOD's negotiation of the contract the Court must, of course, undertake its analysis cognizant of the great discretion accorded to procurement officials and the plaintiff's heavy burden of demonstrating that the challenged action (1) lacked a rational basis or (2) clearly and prejudicially violated applicable statutes and regulations.
After considering carefully the submissions of the parties, the Court concludes that plaintiff has failed to carry its burden.
The original SETAC solicitation, promulgated last fall, explicitly included provisions designed to eliminate or minimize conflicts of interest that might arise if the SETAC contract were awarded to a contractor that was also a hospital automation systems provider. Clause H-5 of the SETAC solicitation barred the successful SETAC contractor from competing for, or serving as a subcontractor on, CHCS contracts for three years.
Clause H-12 specifically prohibited the SETAC contractor from misusing proprietary information to which access was gained in performance of the SETAC contract.
The inclusion of these clauses clearly gave notice to SETAC bidders, including plaintiff, that DOD anticipated the possibility that the SETAC contract might be awarded to a hospital automation systems provider. Yet none of the SETAC bidders, including plaintiff, complained that the draft SETAC contract inadequately mitigated potential conflicts of interest.
In addition to including specific pre-award conflict limitation provisions in the SETAC contract, DOD has also exercised its contractual right to modify the terms of the contract to avoid potential conflicts identified after the contract was awarded. Specifically, DOD has taken advantage of a contract provision permitting it to consult the SETAC contractor on a "task oriented" basis to exclude EDS from the process of evaluating the technical adequacy of the CHCS proposals submitted by various bidders. In this way DOD has obviated any potential conflict -- and any potential chilling of CHCS competition -- that might arise from EDS having access to potential competitors' proprietary information.
To be sure, this modification of the SETAC contract took place after the contract was awarded to EDS. But DOD included the modification provision in the contract prior to the award, thereby providing needed flexibility in resolving potential conflicts as they might arise. It cannot seriously be argued that such an approach is inconsistent with the FAR conflict mitigation provisions, which require only that contracts include provisions designed to obviate or mitigate potential conflicts, not that agency contract officers be clairvoyant.
It is also clear that any remaining unresolved potential conflicts of interest are insubstantial or speculative. Both the VA and DEERS conflict allegations assume that EDS will have controlling authority both in drafting the CHCS RFP and in ultimately awarding the CHCS contract. However, both the SETAC contract and the affidavits submitted by DOD TRIMIS employees clearly indicate that the SETAC contractor is to serve as a consultant only, and that ultimate decisions are to be made by DOD personnel. Beyond that, the VA and DEERS compatibility requirements do not mandate the use in CHCS of systems identical to those presently used for those systems; they require only that the CHCS system ultimately adopted be compatible with those systems, and vice versa. Thus, plaintiff's intimations to the contrary notwithstanding, the CHCS award will by no means dictate the outcome of the VA and DEERS competitions, and these alleged conflicts must be considered speculative at best. Such speculative conflicts of interest do not amount to violations of the FAR, which requires only that agencies avoid or mitigate " significant potential conflicts," 48 C.F.R. § 9.504(a)(2) (emphasis added), not that all conceivable conflicts be avoided.
The speculative character of the conflicts identified by plaintiff suggests the fatal underlying defect in its argument. In identifying conflicts implicitly created by EDS' provision of other computer systems under other contracts to DOD or to other agencies (such as the VA), plaintiff is implicitly arguing that vendors can never serve as contract consultants to government agencies, even where they are prohibited from competing for the contract on which they consult and subjected to other appropriate restrictions. The attraction of such an argument for plaintiff, a consulting firm that is not a vendor of computer systems, is obvious: the rule eliminates much of the potential competition. It is equally obvious that the cost of such a rule to the government, and to the public, in terms of the decrease in competition and, in this case, the loss of superior technical expertise, would be substantial. Nothing in the FAR, which permits potential conflicts to be mitigated where they cannot be eliminated,
and which directs procurement officers to avoid the adoption of cumbersome information and documentation requirements in evaluating and resolving conflicts,
mandates the adoption of a principle that would achieve such perverse results.
The Court of Appeals has repeatedly indicated that principles of judicial restraint are particularly important in government contract cases, which typically involve complicated decisions best left to the expertise of the contracting agency.
Plaintiff has failed to establish that the SETAC contracting procedure violated the FAR or any other applicable federal law.
There is therefore no basis whatever for overturning the contract award; nor, obviously, given the lack of merit in plaintiff's case, is there any warrant for the issuance of an injunction suspending performance of the SETAC contract.
Accordingly, it is this 28th day of June, 1985
ORDERED that plaintiff's motion for a preliminary injunction be and it is hereby denied; and it is further
ORDERED that defendant's motion for summary judgment be and it is hereby granted; and it is further
ORDERED that this action be and it is hereby dismissed with prejudice.