New Proposed Organizational Conflicts of Interest ("OCI") Rules Published Today

4.26.2011 - Posted in E&B Alerts - Government Contracts

Today, the Department of Defense, General Services Administration, and National Aeronautics and Space Administration, acting as the FAR Council, published a proposed rule to amend the Federal Acquisition Regulation ("FAR") Organizational Conflicts of Interest ("OCI") provisions.Today's proposed regulatory revisions differ from the proposed DFARS OCI revisions (2009-D015) and thereby provide the public with an opportunity to compare the two options and provide comments on which proposal is preferable.Comments are due by June 27, 2011.

The purpose of OCI regulations is to identify and address those situations in which a Government contractor may not be able to objectively performits duties or may have an unfair advantage as a result of unequal access to information or prior involvement in the particular acquisition.Despite the substantial changes to the acquisition process and participants in the past few decades, the FAR's OCI provisions have remained essentially unchanged since the FAR's initial publication in 1984.Today's proposed revisions include substantial changes to the existing OCI rules. Among these important changes are the following:

  • Relocating the OCI provisions to FAR Subpart 3.12.Concluding that OCI issues are more closely related to business practices issues than contractor qualifications, the Council proposes moving the OCI provisions from FAR Subpart 9.5 to new FAR Subpart 3.12, Organizational Conflicts of Interest.
  • Extracting regulations governing the unequal access to nonpublic information from the OCI provisions. Concluding that the issue of unequal access to nonpublic information and any advantage arising out of that access is often unrelated to OCIs, the Council proposes extracting this issue from the OCI regulations and addressing it separately in FAR Subpart 4.4 which will be re-titled "Safeguarding Information Within Industry."
  • Introducing new solicitation provisions and contract clauses.Determining that it would be beneficial to have standard language that could be tailored if appropriate, the Councils propose revising the requirements of FAR § 9.506 and FAR § 9.507 to include specific fill-in provisions for Contracting Officers to complete and appropriately tailor the clauses.

The proposed revisions to the OCI regulations will be applicable to profit and non-profit organizations. However, these regulations will not be applied across the board to all contracts. Instead, the proposed rule gives the Contracting Officer discretion to use the OCI clauses only in those solicitations where there is the potential for an OCI issue to arise. Accordingly, while acquisitions of COTS items are not categorically excluded from the OCI regulations, the FAR Council does not foresee frequent application of the OCI regulations to contracts for COTS items.

For more information about the substantial changes proposed to the OCI regulations and how to submit comments regarding the FAR Council's proposal - or the DFARs proposed changes to the OCI regulations - please contact us at (612) 236-0160.