New Rule Addresses Personal Conflicts of Interest for Contractor Employees Performing Acquisition Functions for Federal Agencies

A new “personal conflicts” Federal Acquisition Regulation (FAR) rule located at FAR 3.11 (76 Federal Register 68017, issued on November 2, 2011) requires a contractor to take steps necessary to identify and prevent personal conflicts of interest for employees that perform acquisition functions closely associated with inherently governmental functions.  This rule implements a requirement in the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 that the Office of Federal Procurement Policy develop a policy to prevent personal conflicts of interest by contractor employees performing acquisition functions closely associated with inherently governmental functions for, or on behalf of, a Federal agency or department.

This regulation defines acquisition functions as those supporting or providing advice or recommendations with regard to agency activities like planning acquisitions, determining what supplies or services are to be acquired by the Government, including statements of work, developing or approving contract documents, evaluating contract proposals, awarding Government contracts and performing contract administration duties such as terminating contracts.

The intent of the regulation is to require Government contractors to identify and address situations where an employee performing acquisition functions under a contract has a financial interest or other personal activity or relationship that impairs the employee’s ability to act impartially and in the best interest of the Government under that contract.  FAR 3.1101 Definitions.  The rule is effective for all non-commercial item contracts including task and delivery orders, issued on or after December 2, 2011.

The rule includes a specific contract clause at 52.203-16, which implements the requirements in a particular contract. Contracting officers are required to include the clause implementing this rule in solicitations and contracts that include a requirement for services by contractor employee(s) that involve performance of acquisition functions closely associated with inherently governmental functions for, or on behalf of, a Federal agency or department.

Going forward, a contractor should review the solicitation and contract to determine if the clause implementing the rule is in the contract.  Prior to bidding on a contract, the company itself should assess the work it will perform for the Government to determine if FAR 3.11 applies to the work under the contract in whole or part.  As detailed in the rule, if the rule applies to a contract, the contractor is required to establish screening, disclosure, oversight, disciplinary  and reporting procedures designed to identify and prevent employee personal conflicts of interest.

The requirements under these rules are not insubstantial and failure to adhere to the requirements could be costly to contractors.

This entry was posted in FAR, Federal Acquisition Regulation, Inherently Governmental Functions, Office of Federal Procurement Policy and tagged , , , , , , , . Bookmark the permalink.

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