Government Contracts Monitor

Proposed Rule Would Expand Personal Conflicts of Interest Limitations

April 29, 2014

By: Eric Whytsell

On April 2, 2014, the FAR Councils issued a proposed rule implementing a section of the FY2013 National Defense Authorization Act (NDAA) by expanding the limitations on contractor employee personal conflicts of interest to apply to contractor employees performing all functions that are closely associated with inherently governmental functions(not just acquisition functions) and to contracts for personal services.

The existing limitations had their genesis in Section 841 of the FY2008 NDAA, which required the Administrator for Federal Procurement Policy to develop and issue a policy to address personal conflicts of interest for contractor employees who perform acquisition functions closely associated with inherently governmental functions. That effort resulted in the policies and procedures reflected in FAR 3.11, Preventing Personal Conflicts of Interest for Contractor Employees Performing Acquisition Functions, and FAR clause 52.203–16, Preventing Personal Conflicts of Interest.

The current regulations focus on “covered employees,” who are essentially defined as a contractor’s employees or self-employed consultants that perform “an acquisition function closely associated with inherently governmental functions.” They expressly do not apply to contracts for commercial items and those below the simplified acquisition threshold.

Section 829 of the FY2013 NDAA required the Secretary of Defense to review the existing guidance issued under Section 841 of the FY2008 NDAA and determine whether it should be extended to cover contractor employees and consultants performing all functions closely associated with inherently governmental functions (not just acquisition) and to personal service contracts (to the extent such contracts are allowed by law).

Following analysis of input received from 23 military departments, the Secretary of Defense determined that extending the personal conflicts of interest limitations to additional functions and contract types may be in the best interest of the DoD and the taxpayers and initiated the process that led to this proposed rule. The proposed rule would not change the regulations’ inapplicability to commercial items and below the simplified acquisition threshold.

Comments should be submitted in response to FAR Case 2013-002 by June 2, 2014 via the federal eRulemaking portal at http://www.regulation.gov, fax to (202) 501-4067, or mail to General Services Administration, Regulatory Secretariat (MVCB), ATTN: Hada Flowers, 1800 F Street NW., 2nd Floor, Washington, DC 20405.

Eric Whytsell is the attorney responsible for the content of this article.

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