On December 2, 2011, the new Personal Conflicts of Interest (“PCI”) rules in the FAR took effect. These new rules apply to a contractor’s “covered employees” who perform “acquisition functions closely associated with inherently governmental functions.” FAR 3.1103. For such covered employees, government contractors must take steps to identify and prevent personal conflicts of interest. Contractors who fail to meet these new requirements risk suspension and debarment, and therefore should take steps now to ensure compliance.

The new regulations apply to those employees who perform activities such as: planning acquisitions; determining what supplies or services are to be acquired by the Government (including developing statements of work); developing or approving any contractual documents; evaluating contract proposals; awarding Government contracts; administering Government contracts; terminating contracts; or determining whether contract costs are reasonable, allocable and allowable. FAR 3.1101.

Contractors with covered employees are required have procedures in place to screen for potential PCIs, including obtaining and updating disclosure of interest statements from covered employees. FAR 3.1103(a)(1). Contractors must not assign covered employees to perform tasks for which a PCI has been identified and must obtain non-disclosure agreements from covered employees. FAR 3.1103(a)(2). Contractors must also maintain effective oversight of covered employees, take appropriate disciplinary action for failure to comply with PCI policies, and report any PCI violations to the contracting officer. FAR 3.1103(a)(4)-(6).

To meet these new PCI requirements, government contractors should consider taking these practical steps immediately...

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