First of all, I think that the decision to outsource to this university just because a team member has connections there is a poor decision. In a best case scenario (which is probably what was assumed when making this decision), the team member will have more leverage with the lab to make sure they run the test exactly as planned and on time. However, this can also work in the other direction, since there is a conflict of interest. If something does go wrong, such as an unexpected result in the test, or a delay in the test, what may happen during the resolution of the problem is more of “how do I smooth this over to maintain a good relationship with this lab, since they are my former colleagues,” instead of “what exactly went wrong, who is responsible, how can it be resolved and how will it impact the project?” So in the case of something going wrong in the test, which is probably a more likely situation than everything running exactly as planned, it can lead to compromises being made by the company since the team member feels bad for his colleagues, and in general it can lead to a messy situation where it is difficult to reach a resolution due to the conflict of interest. However, if this lab was selected not only because of connections, but because of having a good reputation and past history, and reasonable pricing and timing, a precaution that a company can take to avoid this situation is to not have the team member who has the connection to be leading this effort, and to keep his involvement in the interactions with this lab to a minimum.