Proposed FAR Rule: A New Regulatory Framework For Organizational Conflicts Of Interest And Unequal Access To Nonpublic Information

On April 26, 2011, the Department of Defense (“DoD”), General Services Administration (“GSA”), and National Aeronautics and Space administration (“NASA”) published a proposed rule to amend the Federal Acquisition Regulation (“FAR”) coverage of organizational conflicts of interest (“OCIs”). See 76 Fed. Reg. 23236 (Apr. 26, 2011). In addition to transferring the regulatory coverage of OCIs from FAR Part 9, “Contractor Qualifications,” to FAR Part 3, “Improper Business Practices and Personal Conflicts of Interest,” the proposed rule departs from existing FAR coverage of OCIs, as well as longstanding Government Accountability Office (“GAO”) precedent, in several important respects. Comments on the proposed rule are due by June 27, 2011.

The proposed rule distinguishes between two categories of OCIs: (1) those that risk impairing the integrity of the competitive acquisition process by creating an unfair advantage in competing for a future requirement and (2) those that impact the Government’s business interest by potentially compromising the objectivity of a contractor’s judgment during performance. These categories of OCIs correspond to what GAO commonly refers to as “biased ground rules” OCIs and “impaired objectivity” OCIs, respectively. The third category of OCIs identified by GAO, “unequal access to nonpublic information,” would be removed from the OCI context, but still addressed, just separately in FAR Part 4.

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