Congress and Contractor Personal Conflicts of Interest May 21, 2008 Jon Etherton Etherton and Associates, Inc.

Legislation S. 680 – Accountability in Government Contracting Act of 2007 S. 680 – Accountability in Government Contracting Act of 2007 Section 209 (b) Personal Conflicts of Interest - The Administrator for Federal Procurement Policy shall create new, uniform, government-wide policies aimed at preventing personal conflicts of interest by contractor employees in Federal contracting, including-- Section 209 (b) Personal Conflicts of Interest - The Administrator for Federal Procurement Policy shall create new, uniform, government-wide policies aimed at preventing personal conflicts of interest by contractor employees in Federal contracting, including-- (1) determining whether greater disclosure, specific prohibitions, or reliance on specified principles will accomplish the end objective of ethical behavior; (2) identifying types of contracts that raise heightened concerns for potential conflicts of interest; (3) considering the development of a standard ethics clause or a set of standard ethics clauses that set forth the contractor's responsibility for inclusion in solicitations and contracts; and (4) maintaining a repository of best practices relating to the prevention of personal conflicts of interest. Passed the Senate on November 7, Passed the Senate on November 7, 2007.

Legislation S – National Defense Authorization Act for Fiscal Year 2009 S – National Defense Authorization Act for Fiscal Year 2009 SEC ETHICS SAFEGUARDS FOR EMPLOYEES UNDER CERTAIN CONTRACTS FOR THE PERFORMANCE OF ACQUISITION FUNCTIONS CLOSELY ASSOCIATED WITH INHERENTLY GOVERNMENTAL FUNCTIONS. SEC ETHICS SAFEGUARDS FOR EMPLOYEES UNDER CERTAIN CONTRACTS FOR THE PERFORMANCE OF ACQUISITION FUNCTIONS CLOSELY ASSOCIATED WITH INHERENTLY GOVERNMENTAL FUNCTIONS. Each contract (or task or delivery order) over $500K for the performance of acquisition functions closely associated with inherently governmental functions for DoD shall include a contract clause addressing financial conflicts of interests of contractor employees. Each contract (or task or delivery order) over $500K for the performance of acquisition functions closely associated with inherently governmental functions for DoD shall include a contract clause addressing financial conflicts of interests of contractor employees. Contents of Contract Clause- Contents of Contract Clause- Prohibit ion of any contractor employee performing any functions under the contract relating to a program, company, contract, or other matter in which the employee (or a member of the employee's immediate family) has a financial interest without the express written approval of the contracting officer; Prohibit ion of any contractor employee performing any functions under the contract relating to a program, company, contract, or other matter in which the employee (or a member of the employee's immediate family) has a financial interest without the express written approval of the contracting officer; Requirement for the contractor to obtain, review, update, and maintain a financial disclosure statement from each employee under the contract is sufficient to enable the contractor to ensure compliance with the prohibition on financial interest; Requirement for the contractor to obtain, review, update, and maintain a financial disclosure statement from each employee under the contract is sufficient to enable the contractor to ensure compliance with the prohibition on financial interest; Prohibition on acceptance of a gift from the affected company or from an individual or entity that has a financial interest in the program, contract, or other matter; Prohibition on acceptance of a gift from the affected company or from an individual or entity that has a financial interest in the program, contract, or other matter;

Legislation S – Section 832 cont’d. S – Section 832 cont’d. Prohibition of contractor personnel who have access to non-public government information obtained while performing work on such a contract using such information for personal gain; Prohibition of contractor personnel who have access to non-public government information obtained while performing work on such a contract using such information for personal gain; Requirement for contractor to take appropriate disciplinary action in the case of employees who fail to comply with prohibitions; Requirement for contractor to take appropriate disciplinary action in the case of employees who fail to comply with prohibitions; Requirement for the contractor to promptly report any failure to comply with the prohibitions to the contracting officer; Requirement for the contractor to promptly report any failure to comply with the prohibitions to the contracting officer; Requirement for SecDef to define `financial interest' and `gift' in a manner similar to the definitions applicable to Federal employees; Requirement for SecDef to define `financial interest' and `gift' in a manner similar to the definitions applicable to Federal employees; Requirement for SecDef to establish appropriate contractual penalties for failures to comply. Requirement for SecDef to establish appropriate contractual penalties for failures to comply. Effective Date- 30 days after the date of the enactment Effective Date- 30 days after the date of the enactment

Functions closely associated with inherently governmental functions FAR 7.503(d) FAR 7.503(d) (1) Services that involve or relate to budget preparation, including workload modeling, fact finding, efficiency studies, and should-cost analyses, etc. (1) Services that involve or relate to budget preparation, including workload modeling, fact finding, efficiency studies, and should-cost analyses, etc. (2) Services that involve or relate to reorganization and planning activities. (2) Services that involve or relate to reorganization and planning activities. (3) Services that involve or relate to analyses, feasibility studies, and strategy options to be used by agency personnel in developing policy. (3) Services that involve or relate to analyses, feasibility studies, and strategy options to be used by agency personnel in developing policy. (4) Services that involve or relate to the development of regulations. (4) Services that involve or relate to the development of regulations. (5) Services that involve or relate to the evaluation of another contractor’s performance. (5) Services that involve or relate to the evaluation of another contractor’s performance. (6) Services in support of acquisition planning. (6) Services in support of acquisition planning. (7) Contractors providing assistance in contract management (such as where the contractor might influence official evaluations of other contractors). (7) Contractors providing assistance in contract management (such as where the contractor might influence official evaluations of other contractors). (8) Contractors providing technical evaluation of contract proposals. (8) Contractors providing technical evaluation of contract proposals.

Functions closely associated with inherently governmental functions FAR 7.503(d) Cont’d. FAR 7.503(d) Cont’d. (9) Contractors providing assistance in the development of statements of work. (9) Contractors providing assistance in the development of statements of work. (10) Contractors providing support in preparing responses to Freedom of Information Act requests. (10) Contractors providing support in preparing responses to Freedom of Information Act requests. (11) Contractors working in any situation that permits or might permit them to gain access to confidential business information and/or any other sensitive information (other than situations covered by the National Industrial Security Program described in 4.402(b)). (11) Contractors working in any situation that permits or might permit them to gain access to confidential business information and/or any other sensitive information (other than situations covered by the National Industrial Security Program described in 4.402(b)) (12) Contractors providing information regarding agency policies or regulations, such as attending conferences on behalf of an agency, conducting community relations campaigns, or conducting agency training courses. (12) Contractors providing information regarding agency policies or regulations, such as attending conferences on behalf of an agency, conducting community relations campaigns, or conducting agency training courses. (13) Contractors participating in any situation where it might be assumed that they are agency employees or representatives. (13) Contractors participating in any situation where it might be assumed that they are agency employees or representatives.

Functions closely associated with inherently governmental functions FAR 7.503(d) Cont’d. FAR 7.503(d) Cont’d. (14) Contractors participating as technical advisors to a source selection board or participating as voting or nonvoting members of a source evaluation board. (14) Contractors participating as technical advisors to a source selection board or participating as voting or nonvoting members of a source evaluation board. (15) Contractors serving as arbitrators or providing alternative methods of dispute resolution. (15) Contractors serving as arbitrators or providing alternative methods of dispute resolution. (16) Contractors constructing buildings or structures intended to be secure from electronic eavesdropping or other penetration by foreign governments. (16) Contractors constructing buildings or structures intended to be secure from electronic eavesdropping or other penetration by foreign governments. (17) Contractors providing inspection services. (17) Contractors providing inspection services. (18) Contractors providing legal advice and interpretations of regulations and statutes to Government officials. (18) Contractors providing legal advice and interpretations of regulations and statutes to Government officials. (19) Contractors providing special non-law enforcement, security activities that do not directly involve criminal investigations, such as prisoner detention or transport and non-military national security details. (19) Contractors providing special non-law enforcement, security activities that do not directly involve criminal investigations, such as prisoner detention or transport and non-military national security details.

Legislation HR 5658 – Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 HR 5658 – Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 SEC POLICY ON PERSONAL CONFLICTS OF INTEREST BY EMPLOYEES OF DEPARTMENT OF DEFENSE CONTRACTORS. SEC POLICY ON PERSONAL CONFLICTS OF INTEREST BY EMPLOYEES OF DEPARTMENT OF DEFENSE CONTRACTORS. SecDef required to develop standard policy 180 days after enactment aimed at preventing personal conflicts of interest by DoD contractor employees that is similar to the DoD policy aimed at preventing such conflicts by Department of Defense civilian employees. SecDef required to develop standard policy 180 days after enactment aimed at preventing personal conflicts of interest by DoD contractor employees that is similar to the DoD policy aimed at preventing such conflicts by Department of Defense civilian employees. provide a definition of the term `personal conflict of interest‘ ; provide a definition of the term `personal conflict of interest‘ ; identify types of contracts that raise heightened concerns for potential personal conflicts of interest; and identify types of contracts that raise heightened concerns for potential personal conflicts of interest; and

Legislation HR 5658 – Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 HR 5658 – Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 SEC Cont’d SEC Cont’d Require each contractor that participates in the Department's decision-making in such mission-critical areas as the development, award, and administration of Government contracts, and each contractor that is closely supporting inherently governmental functions, to-- Require each contractor that participates in the Department's decision-making in such mission-critical areas as the development, award, and administration of Government contracts, and each contractor that is closely supporting inherently governmental functions, to-- (1) identify and prevent personal conflicts of interest for employees of the contractor who are performing such functions; (1) identify and prevent personal conflicts of interest for employees of the contractor who are performing such functions; (2) report any personal conflict-of-interest violation to the applicable contracting officer or contracting officer's representative as soon as it is identified; (2) report any personal conflict-of-interest violation to the applicable contracting officer or contracting officer's representative as soon as it is identified; (3) maintain effective oversight to verify compliance with personal conflict-of-interest safeguards; and (3) maintain effective oversight to verify compliance with personal conflict-of-interest safeguards; and (4) have procedures in place to screen for potential conflicts of interest for all employees in a position to make or materially influence findings, recommendations, and decisions regarding Department of Defense contracts and other advisory and assistance functions, either by screening on a task-by-task basis or on an annual basis. (4) have procedures in place to screen for potential conflicts of interest for all employees in a position to make or materially influence findings, recommendations, and decisions regarding Department of Defense contracts and other advisory and assistance functions, either by screening on a task-by-task basis or on an annual basis. Contract clause required. Contract clause required.

Legislation HR 5658 – Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 HR 5658 – Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 SEC Cont’d. SEC Cont’d. Panel on Contracting Integrity Recommendations- The Department of Defense Panel on Contracting Integrity, established by the section 813 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Public Law ), shall consider and make recommendations on the feasibility of applying certain procurement integrity rules to employees of Department of Defense contractors to include such rules related to-- Panel on Contracting Integrity Recommendations- The Department of Defense Panel on Contracting Integrity, established by the section 813 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Public Law ), shall consider and make recommendations on the feasibility of applying certain procurement integrity rules to employees of Department of Defense contractors to include such rules related to-- (1) improper business practices and personal conflicts of interest under Federal Acquisition Regulations 3.104; (1) improper business practices and personal conflicts of interest under Federal Acquisition Regulations 3.104; (2) public corruption; (2) public corruption; (3) financial conflicts of interest; (3) financial conflicts of interest; (4) seeking other employment conflicts of interest; (4) seeking other employment conflicts of interest; (5) gifts and travel; and (5) gifts and travel; and (6) misuse of position or endorsement. (6) misuse of position or endorsement.