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$675 Million Bid Protest Upheld in Favor of Maryland Construction Company

The United States Government Accountability Office (“GAO”) recently upheld a bid protest for a Maryland construction company in a $675-million design-build contract for upgrades to the flood control system in New Orleans, Louisiana. Bechtel Infrastructure Corporation, based out of Frederick, Maryland, lost its bid for the Permanent Canal Closures and Pump Stations (“PCCP”) to CBY Design Builders, a joint venture of CDM, Brasfield & Gorrie, and Yates Construction. The GAO determined, however, that the U.S. Army Corps of Engineers (“Corps”) filed to comply with statutory and regulatory requirements in its award.

Specifically, the GAO found that the Corps failed to properly investigate and mitigate the organizational conflict of interest resulting from the hiring by CBY of the top civilian employee of the Corps office responsible for the solicitation. The hiring of the former Corps employee occurred during the solicitation process. The Corps acknowledged that CBY employed a former high-level executive who previously was employed by the office responsible for the project, but noted that the employee’s prior role did not create a conflict of interest. The Corps failed to consider the employee’s previous access to non-public information and budget requirements on the project, as well as, other factors including contact with members of the source selection team. This created an unfair advantage for CBY based on the fact that the former employee previously served as the chief of program execution of the Hurricane Protection Office and had full authority for managements decisions related to the programs and projects of the office.

As a result of the failure to comply with the statutory and regulatory requirements, the recommendation by the GAO includes investigation by the Corp to determine the CBY’s potential conflict of interest and whether any potential conflict can be mitigated. CBY, however, will lose the contract if a conflict cannot be mitigated.

For more information on this case, bid protests, or construction law-related matters, contact Michael Siri at 410-583-2400 or siri@bowie-jensen.com.

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