GAO eyes corporate conflicts of interest.

The Government Accountability Office has recommended that a contract award to a division of ITT Industries Inc. be overturned because of organizational conflict of interest.

The decision reflects a heightened concern among procurement watchdogs and in Congress about large diversified companies managing government programs in which they may have conflicting interests.

The Defense Information Systems Agency chose the ITT division, Advanced Engineering & Sciences of Reston, VA, for a $33 million-a-year contract to provide engineering support for the Defense Department's Joint Spectrum Center in Annapolis, MD. The center oversees the military's use of radio frequencies, or spectrum, and also evaluates radio equipment for possible purchase. ITT manufactures radio equipment.

The incumbent contractor, Alion Science and Technology Corp., protested the award. In its decision, announced Jan. 9, GAO recommended that DISA re-evaluate ITT's potential conflicts and make a new source selection.

"It is clear that DOD's policies, strategies, regulations and procedures regarding contentious spectrum-related issues are likely to affect the sales or use of spectrum-dependent products manufactured by ITT or ITT's competitors," GAO said.

GAO agreed with Alion's contention that DISA "failed to reasonably recognize the extent of conflicts that will impair ITT's objectivity in performing the contract requirements."

ITT said it would use "firewalled" subcontractors to perform sensitive work. GAO called that proposal "unrealistic."

The decision indicates GAO is looking closely at an agency's or a contractor's claim that conflicts are insignificant.

The Washington Post reported that Daniel Gordon, head of GAO's Procurement Law Division, called attention to organizational conflicts of interest in a recent article. He declared that they "present an integrity challenge and merit attention."

The decision is case number B-297342, available at www.gao.gov.