Tuesday, June 15, 2010

Organizational Conflicts of Interst (OCI)

Last December, we reported on proposed regulations from DoD regarding Personnel Conflicts of Interest (PCI). DoD is also proposing revised regulations regarding Organizational Conflicts of Interest (OCI). The comment period for responding to these proposed regulations was recently extended to July 21, 2010. The Weapons System Acquisition Reform Act of 2009 requires DoD to revise its regulations to provide uniform guidance and tighten existing requirements for OCIs by contractors in major defense acquisition programs. The law set out situations that must be addressed and allows DoD to establish some "exceptions" to ensure that it has continued access to advice on systems architecture and systems engineering matters from highly qualified contractors, while ensuring that such advice comes from sources that are objective and unbiased. This seems like a very tall order.

Under the proposed regulations, there are three types of OCI
  • Impaired objectivity
  • Unfair access to non-public information
  • Biased ground rules
In the solicitation phase of the procurement process, contracting officers must examine the nature of the work to determine whether it may create a conflict. The contracting officer will obtain the assistance of the program office, appropriate technical specialists and legal counsel to identify potential conflicts of interest. His determination must be written and included as part of the contract file. The guidance also cautions the contracting officer from relying only on information provided by the contractor. The regulations provide a listing of other sources of information.

If there is a determination of a potential conflict of interest, things get interesting from a contractor's perspective. The contractor must come up with a formal mitigation plan and submit it for approval to the contracting officer. A mitigation plan could include any number of actions including firewalls that prevent contractor personnel knowing what other contractor personnel are doing to an agreement to limit contracting for some future period. Given the well documented cases of OCIs, we suspect that review and approval of mitigation plans will be anything but perfunctory.

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