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GAO eyes corporate conflicts of interest.

The Government Accountability Office The Government Accountability Office (GAO) is the audit, evaluation, and investigative arm of the United States Congress, and thus an agency in the Legislative Branch of the United States Government.  has recommended that a contract award to a division of ITT ITT Initial Teacher Training (UK)
ITT I Think That
ITT Invitation To Tender
ITT Individual Time Trial (professional cycling)
ITT Intention-To-Treat
ITT In This Thread (forums) 
 Industries Inc. be overturned because of organizational conflict of interest.

The decision reflects a heightened concern among procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases.  watchdogs and in Congress about large diversified companies diversified company

A company engaged in varied business operations not directly related to one another. A diversified company is less likely to suffer either a collapse or a spectacular gain in earnings compared with a firm concentrating its operations in a
 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 Alion Science and Technology (pronounced: ah-LYE-un) is an employee-owned technology solutions company delivering technical expertise and operational support to the Department of Defense, civilian government agencies and commercial customers.  Corp., protested the award. In its decision, announced Jan. 9, GAO recommended that DISA 1. (body) DISA - Defense Information Systems Agency.
2. (standard) DISA - Data Interchange Standards Association.
 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 im·pair  
tr.v. im·paired, im·pair·ing, im·pairs
To cause to diminish, as in strength, value, or quality: an injury that impaired my hearing; a severe storm impairing communications.
 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
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Publication:Set-Aside Alert
Date:Jan 27, 2006
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