Yesterday, the FAR Council issued a proposed rule that would update the U.S. Government’s approach to organizational conflicts of interest (OCIs). While the proposed rule is not finalized and may change in response to forthcoming comments from interested parties, the proposed rule contemplates major changes to the FAR’s existing framework in this area. In this post, we summarize the background leading up to the proposed rule and highlight key areas of proposed change.
Background
The proposed rule is the latest installment in a years-long effort by Congress, GAO, and the FAR Council to update the OCI guidance in the FAR. Many years ago, in 2011, the FAR Council issued a proposed rule to amend the FAR’s guidance on OCIs with a particular focus on OCIs related to unequal access to nonpublic information. The 2011 proposed rule was motivated in part by a GAO report recommending that the FAR Council provide additional protections for contractors accessing sensitive information.
The 2011 proposed rule was never finalized and was ultimately withdrawn in 2021. Many of the key changes in the most recent proposed rule, however, were foreshadowed by the 2011 proposed rule. For example, the 2011 proposed rule would have moved OCI guidance to FAR Part 3, allowed agencies to determine that a risk is acceptable in the context of impaired objectivity OCIs (without requiring a formal waiver), and provided standard solicitation provisions and contract clauses.
As previously discussed on this blog, in December 2022 Congress passed the ‘‘Preventing Organizational Conflicts of Interest in Federal Acquisition Act” (the Act), which directed the FAR Council to issue new rules for OCIs. The Act itself did not establish any new OCI standards but directed the FAR Council to: (1) provide definitions of the different types of OCIs; (2) provide illustrative examples of OCIs, including in situations where contractors’ other clients may have interests that potentially conflict with those of the contracting agency; and (3) provide solicitation provisions and contract clauses, but allow executive agencies to tailor them. The proposed rule gives effect to each of these three mandates, and makes other significant changes as well.Continue Reading The Proposed FAR Rule on OCIs: Big Changes May Be Coming