White House says companies must police employee conflicts of interest

Contractors would be responsible for screening possible employee conflicts of interest and report violations to the department’s contracting officer, the proposal states.

The Obama administration plans to give companies the duty of checking up on personal conflicts of interest of their employees who work in federal acquisition shops, according to a new proposal.

The proposed change to the Federal Acquisition Regulation would require contractors to prevent any conflicts of interest for employees who are performing acquisition jobs that are closely associated with inherently governmental functions, or work that only a federal employee may do. Companies also would have to keep employees who have access to certain proprietary government information from using it for personal gain, according to the proposed rule outlined in the Nov. 13 Federal Register.

Contractors would be responsible for screening possible conflicts and telling employees about their obligations. The companies also would have to verify compliance and then report violations to a department’s contracting officer. If a violation occurs, the company would have to discipline the employee, according to the proposal. But if a contractor doesn't report a known conflict, an agency may suspend payments to the company that violated the provision, terminate the contract, or go so far as barring the company from federal contracting, the proposal stated.

The policy extends to subcontractors whose employees may advise agencies regarding acquisitions, the proposal states.

The Office of Federal Procurement Policy (OFPP), the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council drafted the proposal, and they determined that a contractor employee who supports or advises agency officials with regard to any acquisition function is performing an acquisition function closely associated with inherently governmental functions.

In the proposal, OFPP and the acquisition councils warn that the definition may change. Office of Management and Budget officials are working on defining inherently governmental functions and how agencies identify the critical functions that federal employees perform.

The proposal is limited to service contractors. OFPP and the councils said, “This class is a minority of government contractors and is becoming smaller as government agencies bring more such functions back in house.”

The rule doesn’t address personal conflicts regarding functions other than acquisition. Officials are dealing with those functions in other proposed rule changes. The personal conflict-of-interest proposal is based on the fiscal 2009 National Defense Authorization Act. Congress wants a standard policy to prevent personal conflicts as related specifically to acquisition functions.

OFPP and the councils are accepting comments on the proposal and its remedies for contractors who don't comply with the rule through next Jan. 12.

Reader Comments

Tue, Nov 17, 2009 Peter G. Tuttle, CPCM

Reducing OCI and PCI in the acquisition process, which is supposed to be designed to promote fairness (as opposed to efficiency and speed), is philosophically a really good idea. Naturally, the more responsibilities you place on industry to police up problems like this which may or may not be created by industry, the higher the prices they charge will be. As a minimum, I suspect that most ocompany overhead rates will be increased to accomodate the development and sustainment of internal programs required to manage this initiative. "Voter" had a great comment - my question is - will industry really be able to mitigate PCI and OCI when Congress or senior-level federal leadership is involved in questionable decisions/situations? In the long-run, I don't think this will work very well due to powers outside of industry's control. At best, it may - repeat may - only provide a partial solution to the PCI/OCI problem.

Tue, Nov 17, 2009 Voters Bridgeport CT

Does this include Congress, The Senate, The House of Representatives, The Judicial Branch, And THE WHITE HOUSE? yeah I thought not!

Mon, Nov 16, 2009 ADF

Inherently government functions are usually used to get feds jobs and fed budgets. Foreign aid was five year sustainable budgets for inherently government functions like health care.

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