DOD gives clearer picture on conflicts of interest
In a major revision, the new rule on organizational conflicts of interest tells contracting officers to minimize the risk of conflicts in a variety of ways, but in doing so, not limit the pool of potential advisors with broad restrictions.
Contractors now have a clearer picture of how Defense Department officials plan to reduce the risk of organizational conflicts of interest involving the companies that advise DOD on defense programs.
In a major revision, the final rule on organizational conflicts of interest tells contracting officers to minimize the risk of conflicts in a variety of ways, but in doing so, do not limit the pool of potential advisors with broad restrictions. As defense agencies protect themselves, DOD wants them to solve those predicaments in ways that promote competition and preserve access to expertise among the contractors.
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It’s a change from the initial proposal, which was released in April. In its draft proposal, DOD wanted contracting officers to use mitigation to resolve conflicts. But after comments on its proposal, defense officials said a formal preference for mitigation may not have been the best strategy. It could have had unintentionally encouraged contracting officers to make resolution decisions without considering all the facts and information. Industry groups and other experts also complained that the proposal was not clear enough and didn't meet Congress’ intent for protecting the government.
The Professional Services Council said government officials would not have supported mitigation strategies that companies proposed.
After finishing revisions of DOD’s Federal Acquisition Regulation Supplement, DOD’s rules on organizational conflicts of interest went into effect last week.
In the 2009 Weapons System Acquisition Reform Act Congress required DOD to create uniform guidance on conflicts of interest and also to tighten existing requirements. Officials reviewed rules in DOD’s acquisition regulation, but they also reviewed the Federal Acquisition Regulation, because the FAR is basically unchanged from the days when the conflict regulations were in the appendix of the Defense Acquisition Regulation.
A number of comments on the proposed rule brought up the issue of where to place the regulatory language in DOD's supplement. Experts questioned whether the language should be in the section on improper business practices. Several experts said the language fits best in the contractor qualifications section. One comment on the rule said DOD should put it in the qualifications section because it deals with a company’s responsibilities as a business partner with the government.
The government decided to place the regulatory language in the qualifications section. However, DOD officials disagreed with the comments, saying the placement does not lend credence to the idea that a conflict of interest is in the same category as criminal conduct.
Officials warned though that another proposed rule regarding personal employee conflicts of interest may require them to relocate this rule.