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: – 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