Organization Conflict of Interest
(OCI) under FAR
March 2012
Briefing Contents
• OCI: Defined
• Background
– Why are OCIs increasing in frequency?
• Future Direction
– Full Disclosure by Contractors
– OCI Mitigation Plans
– Annual Contractor Certification
• Conclusion
OCI: Defined
FAR Provisions
• FAR 2.101: “Organizational Conflict of Interest” means that
because of other activities or relationships with other persons, a
person is unable or potentially unable to render impartial
assistance or advise to the Government, or the person’s
objectivity in performing the contract work is or might be
otherwise impaired, or a person has an unfair competitive
advantage.
• FAR 9.505: Prescribes limitations on contracting as the means
of avoiding, neutralizing, or mitigating OCIs arising from:
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Providing systems engineering and technical direction
Preparing specifications or work statements
Providing evaluation services
Obtaining access to proprietary information
OCI: Defined
Types of OCIs
• Types of OCIs:
– Unequal Access to Information
– Biased Ground Rules
– Impaired Objectivity
OCI: Background
• Why are OCIs increasing in frequency?
– Industry consolidation – firms combining supplies and
services (e.g. mergers and acquisitions)
– Government utilizing more services that involve the
exercise of judgment (e.g. advisory and assistance
contracts)
– Use of contract vehicles that encourage marketing by
the Contractor (IDIQ)
– Shrinking budgets and opportunities heightens
awareness
OCI: Background
• Due to the increased potential for OCIs:
– It is becoming more important than ever that actual, potential, or
perceived OCIs are communicated by the Contractor to the
Government as early as possible during both the solicitation phase
and execution phase, to protect both the Contractor and the
Government.
• Impact associated with non-compliance:
– The cost to the Government associated with resolving potential
OCIs after the fact adversely affects the Government’s financial
resources and mission
– There may be severe consequences to the Contractor for failure to
report an OCI
2011 Updates
Addition of Personal Conflict of Interest Rules:
A personal conflict of interest (PCI) is not an OCI,
but the two are related. In December 2011 several
rules concerning PCI were added to the FAR.
Basically, the new rules impose responsibilities for
screening, oversight, and remediation of PCIs for
contractor employees on both the Government and
the Contractor.
2011 Updates Federal Register
• Relocate OCI coverage from FAR subpart 9.5 to
a new FAR subpart 3.12
• Focus on two types of OCI that harm the
procurement system:
– Harm to the integrity of the competitive acquisition
process (less CO discretion)
– Harm to the Government’s business interests
(greater CO discretion to identify and mitigate)
2011 Updates
• New solicitation provision: require offerors to
disclose data about existing or potential OCIs
and represent that they have disclosed all
relevant data
• New contract clauses to require OCI Mitigation
Plans be incorporated into contracts, COs to
consider limitations on future contracting at the
outset of a contract and contrators to promptly
disclose any OCIs that arise after award
OCI: Future Direction
Full Disclosure by Contractors
• Contractors will need to make an immediate and
full disclosure in writing, within a specified
timeframe, whenever corporate, contractual, or
personnel changes create or appear to create new
OCI concerns.
– Obligation is on the part of the Contractor to provide
notification to the Government, including prior to
contract award
– Possible Termination for Default, if the successful
Offeror was aware, or should have been aware, of an
OCI before the award and DID NOT notify the
Government
OCI: Future Direction –
OCI Mitigation Plans
• Submission of OCI Mitigation Plans with a
proposal, not after contract award
• Government – provided OCI Mitigation Plan
Checklist to ensure the Plan is thorough and
compete
OCI: Potential Future Direction –
Annual Contractor Certification
• Contractor Annual Certification of Compliance
with the Terms of the Approved OCI
Mitigation Plan
– Certification by a Senior Company official
– Certify at contract award, annually for the duration
of the contract, and at the conclusion of the
contract
OCI: Conclusion
• Area of Intense Interest to DoD and IC
• Potential Legislation may force Contractors to
choose between SETA Support or
Development/Production efforts
• Key is to avoid actual or perceived unfairness or
inequity and to enhance and preserve
competition