New Personal Conflicts of Interest Rules

By Connolly, Sean M. | National Defense, February 2010 | Go to article overview

New Personal Conflicts of Interest Rules


Connolly, Sean M., National Defense


Proposed Federal Acquisition Regulations call for contractors to police their employees' personal conflicts of interest or face serious disciplinary action.

The proposed rule was issued on Nov. 13 by the office of federal procurement policy, along with the civilian agency acquisition council and the defense acquisition regulations council.

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It responds to Congress' fiscal year 2009 mandate to address contractor employee personal conflicts of interest. It can be found under FAR Case 2008-025, Preventing Personal Conflicts of Interest for Contractor Employees Performing Acquisition Functions, at 74 Fed. Reg. 58584.

Comments on the proposed rule were due by Jan. 12.

This directive followed a March 2008 Government Accountability Office report on the same subject that recommended new personal conflicts of interest safeguards. Specifically, Congress required the office of federal procurement policy administrator to develop a standard policy to prevent such conflicts.

The proposed rule would require a new standard contract clause, "Preventing Personal Conflicts of Interest," for any contract post-dating the final rule's effective date, and apply to procurements that exceed the simplified acquisition threshold, and require services for "acquisition functions closely associated with inherently governmental functions for or on behalf of a federal agency or department."

After the effective date, the final rule's application would extend to all task and delivery orders even if the underlying contract does not contain the new contract clause.

The new clause also applies to subcontractors. By its own terms, the clause will flow down to those subcontracts above $100,000 where subcontractor employees perform acquisition functions associated with inherently governmental functions.

As Congress required in the 2009 National Defense Authorization Act, the proposed rule and contract clause define "personal conflict of interest," which includes situations where "covered employees" have a competing "financial interest, personal activity, or relationship" that affects their ability to act impartially and in the government's best interest.

The rule defines "covered employees" as employees of contractor or subcontractor employees, as well as consultants, partners, or sole proprietors who perform an "acquisition function closely associated with inherently government functions."

Finally, while the office of management and budget is now reviewing the definition of "inherently governmental functions," the proposed rule defines "acquisition function closely associated with inherently governmental functions" as those "supporting or providing advice or recommendations" as to federal procurement activities, including planning acquisitions, awarding and administering contracts, and terminating contracts. …

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