The Defense Department loosened its restrictions on conflicts of interest for its contractors by removing a number of controversial provisions from the new conflict-of-interest rules.
In the final rule, the conflict-of-interest guidelines significantly narrow the scope of contracting oversight to only contracts relating to major weapon systems, systems engineering and technical assistance. The Pentagon will exempt information technology and professional services contracts from being subject to the new rules.
The new rules require defense program officers that oversee major defense programs to identify potential risks of conflicts of interest, especially when considering subcontracts for software integration or the development of proprietary software systems. The rule also requires companies to voluntarily disclose potential organizational conflicts of interest before bidding on projects, as well as implement several recommended industry.
“The department’s final rule provides much-needed clarity and focus,” said Stan Soloway, president of the Professional Services Council, which has been highly critical of the previously proposed rule.
The rule has been controversial in the contracting industry, as Congress has pushed for stricter regulations while contracting companies have objected to requirements they claimed were burdensome. Industry groups objected to the original version of the rules that identified the “preferred method” of conflict of interest resolution to be handled by contracting officers.
Under the new rules, contracting officers are instructed to use “across-the-board” approaches to resolve possible conflicts of interest. 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.
The final ruling recognizes that it’s in the government’s best interest to “to retain the discretion of contracting officers to deal appropriately with particular procurements,” said Thomas Papson, a partner at the Washington law firm of McKenna Long & Aldridge.
“Over time, companies have taken a more sophisticated approach to conflicts of interest,” Papson said. “They understand it’s short-sighted not to put these issues on the table upfront and bring them to government’s attention rather than hoping no one will notice them.”
