Protest Alleging Awardee Has Potential Conflict of Interest

A firm protested the decision of the Minority Business Development Agency (MBDA) to award a grant to a competing firm. The grantee would operate as a business development organization providing management and technical services to minority business firms in the New York City area. The protester contended that MBDA improperly awarded the contract to the grantee firm because its president was selected as the regional director of the MBDA New York office. According to the protester, the potential for a conflict of interest required that the firm's president remove himself from consideration of the MBDA position. It contended that acceptance of the position should have disqualified the firm from being eligible for award. The protester also challenged the adequacy of the grant application evaluation process. MBDA conceded that a possible conflict of interest existed. It, therefore, had Washington, rather than New York, area personnel evaluate the grant applications. In addition, it contended that, although the president of the awardee firm was selected as the leading candidate for the MBDA position, the individual in question had not been formally offered the position. Because it was not the intent of GAO to interfere with the functions and responsibilities of grantor agencies in making and administering grants, it declined to review the protester's challenge as to the adequacy of the MBDA evaluation process. However, GAO held that it was consistent with its statutory obligation to investigate the receipt, disbursement, and application of public funds to consider the conflict of interest allegation. GAO held that MBDA took adequate measures to shield the evaluators from any undue influence that the awardee might had. Moreover, MBDA stated that if the awardee's president was eventually hired, it would take appropriate measures to avoid any actual or apparent conflicts of interest. Accordingly, the protest was denied in part and dismissed in part.