The Interior Department must pay Viderity Inc.'s attorneys' fees after the Government Accountability Office found the agency botched its own investigation into whether a technical evaluator had secret business ties to the company that beat Viderity for a communications infrastructure contract. In a decision dated September 1, 2026 (B-424422.5), GAO ruled that Interior unduly delayed corrective action on a protest ground the agency should have recognized as clearly meritorious from the outset, and recommended that Interior reimburse Viderity's protest costs, including its legal bills.
The underlying dispute traces to RFQ No. 140D0426Q0016, issued by Interior on behalf of the Department of Health and Human Services for communications infrastructure support. Interior selected Bixal Solutions Inc. over small business Viderity, which then protested, alleging that an agency evaluator identified in the decision only as "Ms. X" had an undisclosed personal conflict of interest connected to Bixal.
An Evaluator Who Denied Ever Working With Bixal
Interior's initial response was to ask Ms. X directly whether she had ever been employed by or consulted for Bixal. She said no, and the agency closed the inquiry there, concluding no conflict existed. On that basis, Interior filed an agency report with GAO denying any conflict of interest tainted the evaluation.
Bixal, participating in the case as an intervenor, then disclosed what the agency's one-sided inquiry had missed: the company had executed a purchase order with Ms. X on May 1, 2025, for "subject matter expertise and expert insights" tied to the very same recompete she later helped evaluate. The disclosure directly contradicted the official position Interior had just submitted to GAO.
GAO's decision was blunt about the gap in Interior's fact-finding. "Notably absent from the agency's initial investigation was an inquiry with Bixal as to whether it had any records of a business relationship with Ms. X," the decision states, adding that "a reasonable inquiry into Viderity's allegations would have included communication with Bixal regarding its business relationship with Ms. X" — a step Interior never took before telling GAO no conflict existed.
Why GAO Called the Protest 'Clearly Meritorious'
Once Bixal's purchase order surfaced, Interior reversed course: it withdrew its denial, launched a new technical evaluation and issued a new source-selection decision, prompting GAO to dismiss Viderity's underlying protest as academic. That should have ended the matter, except Viderity then filed a separate request asking GAO to make Interior pay for the fight — arguing the agency had unduly delayed corrective action on a protest ground that was clearly meritorious from the start, and that the delay forced Viderity to spend money litigating a conflict the agency could have confirmed itself weeks earlier with one phone call to Bixal.
GAO agreed. Under its long-standing cost-reimbursement standard, a protest ground is "clearly meritorious" when a reasonable agency inquiry would have surfaced facts showing the agency had no defensible legal position — and GAO found that standard met here, since Interior could have learned of the Bixal purchase order simply by asking. Interior's own words undercut its defense. In a July 20, 2026 filing quoted in the decision, the agency conceded that "the fact that the Agency discovered the relationship after the submission of the Agency Report may confirm unreasonable delay." GAO took Interior at its word, recommending that Viderity recover its reasonable protest costs, including attorneys' fees, with a certified claim for the amount due to the agency within 60 days.
A One-Sided Conflict Check That Cost the Agency
The decision turns on a narrow but consequential point: an agency cannot clear an evaluator of a conflict-of-interest allegation by asking only the evaluator. Ms. X's denial, taken alone, was not a reasonable basis for Interior to certify to GAO that no conflict existed, because the other party to the alleged relationship — Bixal — held the records that would prove or disprove it. GAO's opinion makes clear that a "reasonable agency inquiry" in a personal-conflict case involving a named awardee requires reaching out to that awardee, not just the person accused of the conflict.
That omission is what converted an ordinary corrective action into a costs case. Agencies routinely take corrective action mid-protest without being on the hook for the protester's legal fees; GAO reserves fee-shifting for situations where the agency dragged its feet on a ground it should have caught immediately. Here, the timeline shows Interior filing a formal denial with GAO, only to have the intervenor it was defending against blow up that denial with a document the agency never asked to see. The sequence — evaluator denial, agency report, intervenor disclosure, corrective action — is what GAO pointed to in finding the delay unreasonable rather than merely regrettable.
What It Means for Contractors
The decision hands protesters a usable template for conflict-of-interest allegations against a named awardee: if the record shows the agency only interviewed the accused employee and never contacted the company on the other side of the alleged relationship, that gap alone can support both a protest and, later, a costs claim if the agency delays fixing it. Contractors litigating personal-conflict allegations should document early requests that the agency canvass all parties to an alleged relationship — including the awardee — so that any subsequent one-sided agency report becomes evidence of an unreasonable inquiry rather than a dead end.
For agencies and intervenors, the case is a reminder that an intervenor's own disclosures during a protest can turn against the government that is nominally defending the same award. Bixal was defending its contract when it produced the purchase order that sank Interior's agency report; the disclosure protected Bixal's own credibility in the proceeding but left Interior exposed to a costs award. Agencies drafting agency reports that rely on an accused employee's own denial, without corroboration from the other named party, should treat that as a red flag before certifying the report to GAO — the fee exposure in this case flowed directly from skipping that step.
Viderity's certified claim for costs is now due to Interior within 60 days of the September 1 decision, giving both sides a fixed deadline to resolve what GAO already found the agency conceded in its own July filing: it should have called Bixal.
