Fewer Contracts Subject to Tighter DoD Conflict-of-interest Rule

by

WASHINGTON — The U.S. Department of Defense (DoD) has significantly narrowed the scope of contracts it will subject to a tighter conflict-of-interest rule.

In a final rule published Dec. 29 in the Federal Register, the Pentagon said it will exempt information technology and professional services contracts from being subject to the new rule. Only contracts relating to major weapon systems, systems engineering and technical assistance will be subject.

The rule aims to prevent contractors from taking government work that could benefit their financial interests or those of their corporate partners. For example, the rule tries to prevent a company from providing consulting services that could favor that company’s products or services or those of a corporate partner.

DoD said extending coverage of the rule to all types of acquisitions would have created confusion and delayed the release of a final rule because it would have required possible modifications to the Federal Acquisition Regulation in addition to the Defense Federal Acquisition Regulation Supplement.

Stan Soloway, president and CEO of the Professional Services Council (PSC), commended DoD’s decision not to take a “one-size-fits-all approach.” The final rule preserves “opportunities for PSC professional and technical services companies to aggressively compete for appropriate work supporting the department’s important war-fighting missions,” he said.

The rule requires that program officers overseeing major defense programs address the risk of conflicts of interest, especially when considering subcontracts for software integration or the development of proprietary systems.

Companies are not able to perform systems engineering or technical assistance work while also working as a prime contractor or major subcontractor on the project. This prohibits advising DoD and even directing other contractors’ operations, excluding subcontractors.

But the rule allows for exceptions if the contracting officer determines that DoD needs the expertise and the contractor will be able to provide unbiased advice.

Under the rule, contracting officers are instructed not to use across-the-board approaches to resolve possible conflicts of interest.

It also says that if a conflict of interest cannot be mitigated by the contractor or DoD, the contracting officer should use another approach, choose another contractor or request a waiver.