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AIA Submits Comments on Organizational Conflicts of Interest

The government is concerned that contractors hired to provide support are too often leading to actual and potential organizational conflicts of interest (OCIs) in which a contractor derives an unfair advantage over other contractors in relation to government work.

The seeds for concern regarding OCIs were planted during the 1990s when the number of defense programs was reduced and the consolidation resulted in fewer companies with the technical expertise needed by government. The effect of this reduction was amplified by the government’s downsizing of its acquisition workforce, leading to a loss of “in-house” technical expertise and experience and the resulting need to supplement the government workforce by contracting for needed skills and knowledge. Finally, the increasing complexity of modern systems that combine weapons, information technology and command and control in a “system of systems” requires equally complex integration capability.

Reflecting the government’s concern with OCI, Section 207 of the Weapon Systems Acquisition Reform Act of 2009 requires the Secretary of Defense to revise the Defense Federal Acquisition Regulation Supplement (DFARS) to tighten the existing requirements for OCIs and to provide uniform guidance to contracting officers buying major defense acquisition programs. DOD responded to this statutory direction by issuing a proposed DFARS rule that defines OCIs as arising from impaired objectivity, unfair access to non-public information, and biased ground rules; and that provides for resolution of conflicts through mitigation or by not permitting contractors to bid on current or future contracts.

In commenting on the proposed DFARS rule, AIA agreed that there are instances where actual or potential OCIs may arise. AIA recognizes that the goal of any support contract should be for the government to obtain the best technical, objective assistance it can in order to meet its needs. However, AIA also said that any proposed rule should reflect three critical elements.

First, an OCI rule should be flexibly implemented. Often, the best technical assistance must come from a company where a potential OCI could occur. In those cases, a well thought-out, well-executed mitigation plan should be used. Not allowing a contractor to bid on a contract has the very negative effect of limiting competition, so it should be used sparingly and only after senior level review.

Second, an OCI rule should be narrowly constructed. Congress directed application to major defense acquisition programs. The proposed DFARS rule went much further. AIA would return to the congressional intent and focus the restrictions in the proposed rule only to source selection and testing activities, while keeping the current rules in place for other OCIs. Further, AIA would limit the scope of the rule to corporate entities directly controlling the unit executing the contract with an actual or potential conflict, not all corporate units and affiliates as the DFARS rule proposes and would exempt commercial companies.

Finally, an OCI rule should be consistently applied. The proposed DFARS rule leaves determination of a conflict and the decision on how to resolve the conflict to each contracting officer. Without uniform guidance, a contracting officer-by-contracting officer approach to resolving OCIs could drive companies to multiple solutions, potentially driving up costs through inefficiencies at exactly the time that DOD is trying to reduce inefficiencies and increase productivity.

The Federal Acquisition Regulatory Council is working on developing a government-wide OCI rule. We expect that the DFARS rule will be incorporated into the FAR rule, rather than being issued separately.

AIA Source: richard.sylvester[at]aia-aerospace.org