New rule proposed for organizational conflicts of interest.

• Author: D'Agostino, L. James
• Position: Ethics Corner

On April 26, the government proposed major changes to rules concerning organizational conflicts of interest under the Federal Acquisition Regulation. Key among those changes is that the contractor access to nonpublic information would be covered under a separate FAR section.

The proposed rule has few, if any, exceptions to applicability. It will apply to both for-profit and non-profit organizations, to task and delivery orders and contracts for commercial items. The rule does note that it rarely will apply to commercial items, especially commercial-off-the-shelf procurements. Conflicts relating to major defense acquisition programs are covered under separate rules in the Defense Federal Acquisition Regulation Supplement (DFARS).

The proposed FAR rule defines conflicts as situations where contractors with financial or other vested interests exercise judgment in assisting the government, or have an unfair competitive advantage stemming from previous work that allows the contractor to influence the acquisition. This new definition thus focuses on the so-called "impaired objectivity" and "biased ground rules" type conflicts.

"Unequal access to information" situations, previously deemed a conflict, will now be treated under a separate FAR section.

If the contracting officer determines that a contractor's performance may give rise to a conflict, the proposed rule requires a solicitation clause giving notice of the potential conflict, and the agency must identify those contractors who helped prepare the statement of work or other requirements documents. Those making offers responding to such a solicitation must identify and disclose all information relevant to any potential conflict, and submitting an offer constitutes that contractor's representation of compliance.

The proposed rule recognizes that later enforceable contractor-submitted mitigation plans may effectively address conflicts. Conflicts to be addressed with restrictions on future contracting require the officer to insert a clause specifically describing the restriction. Conflicts that first surface post-award will require a prompt and full written disclosure to the contracting officer. The contracting officer is empowered to terminate the contract if any post-award conflict cannot be adequately remedied.

The proposed rule separately covers unfair competitive advantage based on unequal access to nonpublic information. Such information includes information belonging either to the...