LaRC Office of Chief Counsel (OCC) Provides legal support, advice, representation to LaRC personnel on wide range of legal matters Business Law (Contracts, Grants, Fiscal Law, Agreements) Human Relations & Ethics Law (HR, Non-contract claims, Stds of Conduct) Intellectual Property Law (Patents, Licensing, Copyright, Software, IP) 1

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Organizational Conflicts of Interest (OCI) LaRC Office of Chief Counsel NOTE: This presentation is for informational purposes only and does not constitute legal advice to the recipients, who should consult with their counsel on OCI issues. 3

4 What is an OCI? OCIs are a subset or type of a Conflict of Interest (COI) The conflicted party is an organization – not an individual The conflict relates to the organization’s competing interests (Corporation’s first interest: To enhance its current and future business opportunities) There are two important assumptions: 1)Organizations want to further their own interests 2)All people and bodies associated with an organization will treat the organizations interests as their own and want to further them Useful reference – Dan Gordon article, “Organizational Conflicts of Interest: A Growing Integrity Challenge”, 35 Public Contract Law Journal 25 (Fall 2005)

5 What is an OCI? OCIs are distinct from personal conflicts of interest (PCIs) PCIs involve personal motives (acting in the best interests of self or certain family members and not one’s employer) E.g., stock ownership, spouse’s employer PCIs for contractors are not covered by the FAR…..yet FAR Case (Nov. 2009) “Preventing Personal Conflicts of Interest” (Comments due Jan. 12, 2010) New FAR Clause will require Contractors to identify and prevents PCIs of “covered employees” Contractors must develop procedures to screen employees at least annually “Covered employees” includes employees that perform “acquisition function[s] closely associated with inherently governmental functions” Waiver by HCA (non-delegable) and flow down to subs (Ks >100K)

6 Why are OCIs increasing? Increased use of contractors Consolidation within industry Types of services increasingly entail the exercise of judgment Increase in the use of umbrella (IDIQ) contracts

7 OCIs - Regulatory Guidance FAR Part 9.5 (Organizational and Consultant Conflicts of Interest) Government Accountability Office/Court of Federal Claims case law on OCIs

8 OCI – FAR Requirements FAR Part (General Rules) Multiple examples of OCIs…however, the list is not exhaustive, and the FAR requires that each situation be examined on the particular facts and the nature of the proposed contract. 2 underlying principles –Preventing conflicting roles that could bias a contractor’s judgment; and –Preventing an unfair competitive advantage

9 OCI – FAR Requirements FAR Part (CO Responsibilities) The contracting officer shall: –Identify and evaluate potential OCIs as early as possible… –Avoid, neutralize or mitigate potential OCIs before contract award –Recommend a course of action to the HCA before issuing a solicitation that may involve a significant potential conflict

10 Biased Ground Rules Refers to situations where a company sets the ground rules for a future competition ex: Writing specifications –Nature of the conflict is setting the best ground rules for Agency’s future requirement versus winning the future requirement Harm: Future competition may be unfair Future competition reflects best solution for contractor’s business opportunities and not best solution for NASA Potential Solutions: Bundle requirements development and delivery of the “end item” Have multiple contractors develop requirements documents Disqualify the contractor that prepared the specifications from the future competition (Limitation of Future Contracting)

11 Unequal Access to Information Refers to situations where a company has access to nonpublic information that gives it an unfair advantage relative to a future competition ex: Program configuration management, scheduling and database administrative support – Nature of the conflict is performing with access to non-public information versus obtaining a competitive advantage for a future requirement. Harm: Access to information not readily available to competitors Use of non-public information for competitive advantage in violation of Procurement Integrity Act, Trade Secrets Act, other laws/regulations Potential Solutions: Disseminate the non-public information before the competition Establish a firewall so contractor cannot use data in future competitions Prevent contractor from using sensitive information in future related competitions (Limitation of Future Contracting)

12 Impaired Objectivity Refers to situations where a company performs evaluations and assessments of the work/proposals/performance of itself or its competitors ex: Contractor submits a proposal in a competition where it is also assisting with evaluation of proposals Harm: Evaluations and recommendations may be flawed inadvertently reflecting contractor’s method of performance or recommending its services over those proposed by others Potential Solutions: Disqualify contractor that performs the evaluation/assessments from performing future work (Limitation of Future Contracting) Establish a process for limited reviews/assessments Establish “firewalled” subcontractors

13 Addressing OCIs in the Contract NFS Clauses Limitation of Future Contracting (NFS ) Access to Sensitive Information (NFS ) OCI Avoidance Plan Requirement triggered by Access to Sensitive Information clause Requires the contractor to explain how it will address OCIs during performance Specially Drafted OCI Clauses LaRC Unique Clauses (IDIQ Contracts) Specific OCI Issues/concerns (impaired objectivity) Certification of “no OCIs” by contractor (ex: NRC Contract)

14 Additional Thoughts Contractors are increasingly used in roles traditionally performed by civil servants- this increased influence in agency decision-making presents challenges Increased access to information Opportunities to affect agency procurements or gain a competitive edge Ultimately Contractors have best information as to OCIs they may encounter – critical they do the investigations and inform CO ASAP OCI Avoidance Plan is key method to ensure a process is in place We risk programs and LaRC/NASA reputation if we fail to identify and mitigate OCIs