Organizational Conflicts of Interest arise when a contractor’s work on one government contract gives it an unfair advantage in competing for a second contract or when it impairs the contractor’s ability to give impartial advice to the government.  Although FAR 9.5 offers general guidance on OCIs, GAO guidance on the issue is not currently reflected there.  In April 2010, the Defense Department proposed sweeping revisions to the DOD FAR Supplement to incorporate GAO caselaw addressing OCIs and to make it clear that the new OCI rules would apply to all DOD procurements. 75 Fed. Reg. 20954 (Apr. 22, 2010).  Final regulations were published December 29.  75 Fed. Reg. 81908 (Dec. 29, 2010).

In response to industry comments, DOD decided to limit the application of the new OCI regulations to major defense acquisition programs.  Their primary impact will be on Systems Engineering and Technical Assistance (SETA) contractors who perform inspection and verification services for DOD. But it is likely that the FAR and DFARS regulations will be amended in the future to reflect GAO’s developing OCI caselaw.

An unresolved OCI may lead to a protest of a contract award and other allegations of impropriety.  To avoid these problems, we advise contractors to take special care to identify potential OCIs early in the procurement process, to discuss them in their proposal and, when appropriate, to suggest a mitigation plan for consideration by the Contracting Officer.