New Rule Proposed for Organizational Conflicts of Interest

By McQuade, Paul F.; Jack, William M. | National Defense, August 2010 | Go to article overview

New Rule Proposed for Organizational Conflicts of Interest


McQuade, Paul F., Jack, William M., National Defense


The Defense Department issued a proposed rule on April 22 to amend the Defense Federal Acquisition Regulation Supplement to impose uniform guidance and tighten existing regulations on organizational conflicts of interest (DFARS Case 2009-D015).

The proposed rule requires contractors to disclose facts bearing on the existence of conflicts both prior to award and during contract performance. Any identified conflicts must be resolved by avoidance, mitigation or a limitation on future contracting. Unlike the present FAR rule, which is also being revised under FAR Case 2007-018, the department explicitly states a preference for using mitigation to resolve conflicts. The proposed rule also recognizes that some conflicts cannot be mitigated, requiring the contracting officer to select another offerer or request a waiver.

The proposed rule would apply to most Defense Department contracts, task and delivery orders, and modifications for both profit and nonprofit organizations. It would not apply to the purchase of commercial-off-the-shelf items, but would apply to other commercial items.

The rule defines three types of conflicts: Impaired objectivity, unfair access to nonpublic information, and biased ground rules. These types of conflicts may arise, for example, when contractors provide pre-solicitation acquisition support services, offer advisory assistance or services to the department or access nonpublic information while working at a government facility.

Contracting officers must consider potential conflicts during preparation of the solicitation and during the evaluation of offers. If a conflict is identified during preparation of the solicitation, the contracting officer must include a clause requiring offerers to make disclosures and representations and to explain plans to resolve conflicts. During the evaluation of offerers, the contracting officer must determine if there are conflicts by reviewing information from the offerer and other sources, such as other contracting offices, credit rating services and trade journals.

If conflicts are found, they may be resolved by avoidance, limitation of future contracting, mitigation, or some combination of these methods. Avoidance generally involves a contractor foregoing a contracting opportunity in order remain eligible for future work. A limitation on future contracting allows the contractor to perform the initial contract, but precludes the contractor from submitting offers on future contracts. Mitigation, the department's preferred method of resolution, involves actions by a contractor to mitigate a conflict by implementing firewalls, giving nonpublic information to other offerers or using a conflict-free subcontractor or team member to perform the work. The head of an agency may waive the requirement to resolve a conflict if the agency determines that resolution is not feasible or is not in the best interests of the government.

Except when a waiver is requested or in the case of task and delivery order contracts, the contracting officer must award the contract to the apparent successful offerer only if all conflicts are resolved. The contracting officer will not withhold award from an offerer without first explaining its reasons in writing and giving the contractor an opportunity to respond. …

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New Rule Proposed for Organizational Conflicts of Interest
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