On January 15, the Department of Defense, GSA, and NASA published proposed rules that would implement the Preventing Organizational Conflicts of Interest in Federal Acquisition Act. The Act was enacted on December 27, 2022. It directs the Federal Acquisition Regulatory (FAR) Council to:

    • update regulatory definitions related to specific types of organizational conflicts of interest (OCIs), including unequal access to information, impaired objectivity, and biased ground rules;
    • provide updated guidance and illustrative examples related to relationships of contractors with public, private, domestic, and foreign entities that may result in OCIs; and
    • provide illustrative examples of situations related to the potential for OCIs.

The proposed changes implement the Act by moving OCI regulations to a new subpart, FAR part 3, and substantially revising and clarifying current OCI regulations.

The focus of the proposed rule is to update and strengthen policies to prevent OCIs in federal contracting. The FAR Council’s stated goal is to safeguard the integrity and impartiality of the procurement process by ensuring contractors do not have conflicting business practices or relationships that could compromise their objectivity.

    • Expanded Definition of OCI

The proposed rule clarifies the definition of an OCI by broadening its scope to include both direct and indirect conflicts. It identifies scenarios—such as when contractors influence contract requirements or have access to sensitive information from multiple roles—that might impair a contractor’s ability to perform impartially.

To assist contracting officers and contractors, the proposed rule includes a variety of examples of both OCIs and mitigation measures.

    • Disclosure Requirements

Contractors will be required to proactively disclose any potential or actual OCI.

    • Mitigation Measures

For cases where an OCI is identified, the rule outlines a range of mitigation strategies. These include:

      • Implementing firewall procedures to separate conflicting functions
      • Structurally separating business units
      • Divesting conflicting interests, if necessary

The proposed rule includes helpful clarification as to what qualifies as an acceptable firewall and other OCI mitigation efforts, which should assist contractors in managing their OCI issues.

    • Agency Review and Enforcement

The rule sets out revised procedures for federal agencies to evaluate contractor proposals. Agencies will review disclosed conflicts and assess whether adequate safeguards are in place, to ensure only contractors with effective OCI mitigation strategies are awarded contracts.

    • Implementation

It includes detailed timelines and guidelines for implementation by contracting officers.

Comments on the proposed regulations are due March 17, 2025.

The following is a detailed summary of the proposed rule.

Organizational Conflicts of Interest

An OCI under the Federal Acquisition Regulations refers to a situation in which a contractor’s business practices, structure, or relationships create circumstances that could impair its ability to act impartially on a government contract. A conflict could arise when the contractor’s other activities or interests might affect, or appear to affect, its performance on a contract. Here are some key points:

    • Impaired Objectivity: The contractor might be in a position where its judgment could be biased by other interests or responsibilities—such as simultaneously performing advisory services and competing for contract awards.
    • Biased Ground Rules: When a contractor influences the development of evaluation or performance standards in a way that gives it an unfair competitive advantage in subsequent contracting activities.
    • Unequal Access to Information: The contractor might have access to proprietary or confidential information from one engagement that could be improperly used to benefit another contract or business interest.

The FARs require agencies to identify, evaluate, and address OCIs. Mitigation strategies include:

    • Disclosure of the potential conflict
    • Structural safeguards such as firewalls or organizational separations
    • Divestiture of conflicting interests, if necessary

The OCI rules apply broadly to all federal agencies and any contractors engaged in federal acquisitions subject to OCI regulations. This includes firms that may be simultaneously involved in advisory, design, or execution roles in related contracts. It also covers not only direct conflicts but also indirect ones—situations where ancillary business interests or affiliations might impair an organization’s ability to perform impartially.

A federal contractor whose OCI is not mitigated to the satisfaction of the applicable agency may be barred from competing for a federal contracting opportunity.

Revisions to the OCI Rules

FAR 2.101, Revised Definition of “Organizational Conflicts of Interest.” The proposed rule extends the traditional boundaries of OCIs by defining an OCI as including scenarios when:

    • A contractor’s access to proprietary or confidential information from one contract could ‎be exploited to gain an unfair advantage in another
    • There is a potential for influencing contract requirements or evaluation standards, thus ‎undermining impartiality
    • Overlapping business interests or affiliations create a risk of biased decision-making ‎during contract performance

The new definition of an OCI is:

Organizational conflict of interest means that an entity or its affiliate(s) has impaired objectivity or an unfair competitive advantage as a result of other activities or relationships with other entities or their affiliates, including with public, private, domestic, and foreign entities. An entity or its affiliate may have an unfair competitive advantage as a result of biased ground rules or through unequal access to information. As used in this definition—

(1) Biased ground rules means a situation in which an entity or its affiliate, as part of its performance of a Government contract, has or may have materially influenced the development of the requirement, evaluation criteria, or other source selection procedures for another Government contract. The primary concern is that the entity could skew the future competition, whether intentionally or not, in favor of itself;

(2) Entity means an individual, corporation, or other organization;

(3) Impaired objectivity means a situation in which an entity or its affiliate has or may have financial or other interests or an incentive to provide other than impartial advice to the Government, or the entity or its affiliate’s objectivity in performing the contract work is or might be otherwise impaired; and

(4) Unequal access to information means a situation in which an entity or its affiliate has or may have an unfair competitive advantage because—

(i)     Access to the information was provided to the entity or its affiliate by the Government. Such information may include proprietary and source selection information, e.g., proposals, financial information;

(ii)    The information is not available to all potential offerors; and

(iii)   Having access to the information would assist the entity in obtaining the contract.

 

The FAR Council explained the intent of this revision was to:

    • Clearly reflect the two types of situations that result in OCI concerns: impaired objectivity and unfair competitive advantage
    • Add a new definition of “impaired objectivity”
    • Add a new definition of “biased ground rules” to address a concern that “the entity could skew the future competition, whether intentionally or not, in favor of itself”
    • Add a new definition of “unequal access to information,” which is concerned with entities that may have unfair access to information that may assist the entity in obtaining the contract
    • Clarify that “[i]n the context of these definitions related to OCIs, ‘entity’ can mean an individual, a corporation or other organization”

FAR 3.1203 – General Policy. The new regulations do not materially change the prior concerns with OCIs, but instead attempt to clarify them. The FAR Council explained that their new “policy” section at FAR 3.1203 “explains the two types of harm that OCIs may cause to the procurement system: harm from impaired objectivity and harm to the integrity of the competitive acquisition process. The discussion provides the actions that the Government and agency contracting officers should take to address or prevent harm.”

Notably, the proposed regulations in FAR 3.1203 recognize what GAO and the Court of Federal Claims has historically held: “the mere fact that a contractor has a competitive advantage in an acquisition on the basis of having previously performed work for the Government (i.e., “natural advantage”) does not mean that the contractor has an OCI or that the contractor’s advantage is unfair.” Proposed FAR 3.1203(b) states:

(b) Contractor advantage. (1) The fact that a contractor may, on the basis of work previously performed, have a natural advantage in competing for a particular Government requirement does not necessarily mean that the advantage is unfair or that it creates an organizational conflict of interest. Although incumbent contractors will often have a natural advantage based on their experience, insights, and expertise, this situation must be distinguished from situations in which an incumbent contractor also has had access to information that could provide an unfair competitive advantage. For example—

(i) Incumbent contractors may have a natural advantage that is not unfair when competing for follow-on contracts because of knowledge and expertise developed during contract performance; and

(ii) Development contractors may have a natural advantage that is not unfair when they have done the most advanced work in a field and may be able to start production earlier, or offer products of a higher quality.

The proposed rules also provide guidance to contracting officers that “hard facts [are] needed (vs. innuendo and supposition) to determine the presence of OCIs in a procurement,” stating:

A contracting officer should not disqualify a contractor based on mere innuendo and supposition unsupported by the record (i.e., no hard facts), or when the contractor’s advantage is speculative and too remote from the present procurement to establish an organizational conflict of interest. Additionally, any allegation that a contractor could theoretically act in bad faith while performing on a contract is not a basis for a finding of a conflict of interest and therefore not a basis to disqualify an offeror from a competition.

These policy guides should be helpful to both contracting officers and contractors by limiting the use of supposition and speculation in bid protests in an attempt to disqualify a competitor based on spurious, or at least unsupported, accusations that there is an OCI.

Finally, the revised policy section directs contracting officers to “explore all available methods to address an OCI based upon unequal access to information before selecting disqualification of an offeror to alleviate unfair competitive advantage.”

FAR 3.1204, Examples. As required by the Preventing Organizational Conflicts of Interest in Federal Acquisition Act, the proposed rule includes nine examples of “impaired objectivity” OCIs and six examples of “unfair competitive advantage” OCIs. Although the examples are short and non-exhaustive, they do provide a helpful guide to evaluating potential OCIs.

The following are some of the examples:

Impaired Objectivity Examples

    • A contractor is reviewing or evaluating, for Government approval, the delivery of products or performance of services under an existing contract, when the products or services are its own products or services or those of an affiliate or of a competitor.
    • A contractor is providing systems engineering or technical direction involving a major system or components thereof when the same contractor or one of its affiliates will be furnishing the same major system or components (or will be a subcontractor or consultant to the contractor furnishing the major system or component).
    • A contractor is providing systems engineering or technical direction involving a major system or components thereof when the same contractor or one of its affiliates will be testing or verifying the system or a component (or will be a subcontractor or consultant to the contractor furnishing or testing the major system or component).
    • A contractor is assisting an agency in developing policies or regulatory procedures and the contractor or one of its affiliates may, at some future point, be governed by or subject to (or be a subcontractor or consultant to an entity governed by or subject to) such policies or regulatory procedures.

Unequal Competitive Advantage Examples

    • A contractor is writing specifications, preparing the Government estimate of cost, or providing draft evaluation criteria or a draft evaluation plan for a competitive solicitation, and it or one of its affiliates may be in a position to compete (or perform as a subcontractor) for the relevant requirement.
    • A contractor is assisting the Government with acquisition planning activities, and the contractor or one of its affiliates or clients may be in a position to compete (or perform as a subcontractor) for the future requirement.
    • A contractor is assisting the Government in evaluating technical proposals submitted in response to a competitive solicitation, and one of the contractor’s affiliates or clients is among the competitors.

 

For “unequal access to information,” the example provided suggests an OCI may exist if an employee of a contractor:

    • is a former government employee and obtained information while working for the Government;
    • the information is contractor-proprietary information or source-selection information; and
    • the employee is in a position in which use of the information could provide an unfair competitive advantage to an offeror—e.g., working on or being a consultant to a team preparing a proposal in response to a competitive solicitation.

FAR 3.1205, Methods of Addressing OCIs

The proposed rule identifies five different approaches that agencies may take with regards to OCI issues:

FAR 3.1205-1 – Avoidance

FAR 3.1205-2 – Limitations on Future Contracting

FAR 3.1205-3 – Mitigation

FAR 3.1205-4 – Acceptance of OCI After Risk Evaluation

FAR 3.1207-4 – Combining any of the prior four approaches.

FAR 3.1205-1, Avoidance

The proposed rule advises contracting officers to identify potential OCIs early in the acquisition process to successfully implement an avoidance strategy. Similar to current FAR 9.505-2 language, the rule lists techniques for avoidance such as:

    • Developing statements of work and performance work statements that do not require contractors to utilize subjective judgment; and
    • Obtaining advice from more than one contractor, so the Government does not rely solely on the advice of any one contractor.

FAR 3.1205-1 also recognizes that disqualification of a contractor may be required in some cases, and that disqualification of a contractor could arise because an affiliate of that contractor has an OCI:

(i) The offeror could have an unfair competitive advantage because of an affiliate’s—

(A) Prior involvement in acquisition planning for the procurement (e.g., developing the solicitation); or

(B) Work on a Government contract that places the affiliate in a position to influence the acquisition

(ii) In such cases, the contracting officer should consider the relationship between the offeror and the affiliate in determining whether disqualification of the offeror is appropriate (see 3.1207-4(c)(2) and (d)(2)).

FAR 3.1205-2, Limitations on Future Contracting

The proposed rule also permits agencies to include a provision in a current contract that precludes a contractor and its affiliates from entering into certain future contracts, either as a prime contractor or subcontractor. The proposed rule explains that:

This method applies when the contractor’s work on the current contract could be impaired by virtue of its expectation of future work or could jeopardize the integrity of the competitive process. Use this method to address an unfair competitive advantage or to address the risk to the Government’s interest posed by impaired objectivity when the risk is greater than the Government is willing to accept.

The proposed rule states that such future restrictions must be “a reasonable duration that is sufficient to neutralize the organizational conflict of interest” and “shall end on a specific date or upon the occurrence of an identifiable event.” Therefore, prospective restrictions cannot be for an unlimited time; they must have a defined end date.

Proposed FAR 3.1207-4 provides that affiliates of a contractor that are subject to a limitation on future contracting as an OCI mitigation measure may request for that limitation to be waived. In evaluating that waiver request, the proposed rule requires the contracting officer to consider “the nature of the relationship between the entities to determine whether the risk associated with the organizational conflict of interest should preclude the affiliate from competing.” The factors to be addressed include:

    • Controls put in place, either as the result of other Government contracts or the offeror’s own initiative
    • The financial relationships, or lack thereof, between the two entities
    • The information sharing framework, or barriers to information sharing, between the two entities
    • The work performed by the two entities, and whether there is overlap in the areas in which they work
    • The general corporate and control structure between the two entities

FAR 3.1205-3, Mitigation of OCIs

The FAR Council recognized that OCIs can be mitigated, thereby avoiding the need to disqualify an otherwise eligible contractor from competing for a procurement. When an OCI is identified, the rule mandates the implementation of effective mitigation strategies, which may include:

    • Firewall Procedures: Establishing strict informational and operational barriers within the organization to isolate conflicting functions.
    • Organizational Separation: Structuring the business in a way that separates conflicting units, thereby minimizing the risk of sensitive information crossover.
    • Divestiture: In cases where mitigation is insufficient, the contractor may be required to divest the conflicting interest altogether.

Federal agencies will be responsible for reviewing the mitigation strategies proposed by contractors and determining whether they adequately neutralize any potential conflict.

To provide additional regulatory clarity, the FAR Council included a new definition of a “firewall” in the proposed regulations:

Firewall means a barrier against the unauthorized flow of information. Firewalls may consist of a variety of elements, including organizational and physical separation; facility and workspace access restrictions; information system access restrictions; independent compensation systems; and individual and organizational nondisclosure agreements.

The proposed regulations recognize a firewall can be an appropriate OCI mitigation tool, while also granting contracting officers the discretion to determine whether a firewall will be or is sufficient:

Use of a firewall. When some of an offeror’s employees or an affiliate had access to the relevant information, the contracting officer may consider the use of a firewall to prevent those employees from sharing that information with employees involved in the competition.

(A) The contracting officer has discretion to approve or reject an offeror’s proposed firewall.

(B) If an offeror’s proposal includes use of a preexisting firewall as mitigation, the contracting officer shall require the offeror to—

(1) Provide a representation that, to the best of its knowledge and belief, there were no breaches of the firewall during preparation of the proposal; or

(2) Explain any breach that occurred (provided in paragraph (b) at 52.203-AA, Unequal Access to Information-Representation).

A firewall is most often a written affirmation and agreement from the impacted employees that they will not participate in the development of a proposal or share information with the proposal team. Firewalls can also include written internal procedures that restrict access to certain materials or file systems, and in all cases should be extensively documented.

The proposed rule requires OCI mitigation measures to be incorporated into the applicable contract with a government-approved mitigation plan “that reflects the actions an offeror has agreed to take to mitigate an organizational conflict of interest.”

The mitigation plan must be appropriately detailed, based on the “complexity of the organizational conflict of interest and the value of the acquisition,” and the government “retains the right to review implementation of the plan.”

The proposed FAR 3.1205-3 includes examples of potential OCI mitigation techniques:

    • Requiring a subcontractor or member of a contractor team arrangement that is free of an organizational conflict of interest to perform the portion of the work that involves an organizational conflict of interest on the current contract
    • Requiring the contractor to implement structural or behavioral barriers, internal controls, or both
    • Requiring barriers and controls to prevent corporate officials with a direct interest in an affiliate’s performance from participating in or influencing contract performance; contracting officers should select specific barriers or controls based on an analysis of the facts and circumstances of each case
    • Disseminating the information to all potential offerors when there is an organizational conflict of interest as a result of unequal access to information

FAR 1205-4, Determination of Acceptable Risk

Recognizing that not all OCIs require a mitigation plan or disqualification, proposed FAR 1205-4 permits agencies to “determine that some or all of the performance risk associated with an organizational conflict of interest resulting from impaired objectivity is acceptable.” The proposed rule explains that an OCI resulting from impaired objectivity may be acceptable if:

(i) The risk is outweighed by the expected benefit from having the offeror with an organizational conflict of interest perform the contract; and

(ii) The performance risk is manageable, i.e.,

(A) The performance risk after implementing mitigation measures is minimal; or

(B) The agency has sufficient oversight controls (see 3.1207-3(b)(3)).

FAR 1205-4 also provides that contracting officers cannot determine that an OCI risk arising out of a “unfair competitive advantage” is acceptable. The risk analysis is only available for OCIs arising from impaired objectivity issues.

FAR 1206, Waiver

FAR 1206, Waiver, authorizes the “agency head,” or a designee (and such designee cannot be below the “head of the contracting activity”) to waive any OCI “if methods of addressing the organizational conflict of interest are not adequate or feasible.” Any waiver must:

    • Be in writing
    • Not include a class of contracts
    • Describe the extent of the organizational conflict of interest
    • Explain why other methods of addressing the organizational conflict of interest are not feasible or not adequate
    • Explain why the waiver is in the Government’s interest

FAR 3.1207, Contracting Officer Responsibilities

FAR 3.1207 reinforces the role of contracting officers as gatekeepers who must proactively identify, evaluate, document, and mitigate organizational conflicts of interest. These steps are designed to preserve the integrity of the federal acquisition process and ensure a level playing field for all contractors.

The proposed rule requires contracting officers to do the following:

    • Review Contractor Disclosures: Carefully examine all disclosures submitted by contractors regarding potential OCI.
    • Identify OCI Risks: Identify any situations where a contractor’s multiple roles or relationships might compromise its impartiality in performing federal contracts.
    • Evaluate Proposed Safeguards: Assess the adequacy and feasibility of the mitigation measures proposed by contractors—such as firewall procedures, structural separation, or divestiture—to ensure any identified conflict is effectively managed.
    • Ensure Compliance: Verify that the mitigation strategies align with the expanded criteria for OCI as defined in the proposed rule.
    • Maintain Detailed Records: Document the entire OCI evaluation process. This includes the analysis of disclosures, the rationale for determining whether a conflict exists, and the evaluation of the proposed mitigation measures. Documentation should clearly justify the decisions made, to ensure transparency and accountability in the contracting process.
    • Periodic Review: Once a contract is awarded, contracting officers must continue to monitor the contractor’s performance to ensure the mitigation strategies remain effective throughout the contract’s duration.
    • Take Corrective Action: If new information arises or the mitigation measures prove insufficient, contracting officers are responsible for initiating corrective actions, which may include revising the contract requirements or, in extreme cases, disqualifying the contractor.

Proposed FAR 3.1207-4 also provides clarity regarding several issues that arise when a contracting officer is addressing an OCI, or potential OCI:

    • Exchanges between the agency and an offeror regarding OCI issues or an OCI mitigation are not considered “discussions” that trigger a requirement for the agency to have discussions with all offerors.
        • But if the OCI exchanges result in a change in the offeror’s technical or cost proposal, the contracting officer must either open discussions with all offerors, reopen discussions with all offerors, or eliminate the offeror from further consideration.
    • A contracting officer must prepare a written determination that less restrictive techniques for addressing the organizational conflict of interest will not adequately protect the Government’s interests before disqualifying an offeror.
    • Contracting officers may use information sharing to avoid an unfair competitive advantage which results from unequal access to information. Information sharing consists of disseminating the information in question to all potential offerors, either in the solicitation, in a solicitation amendment, or through some other method, such as posting it online.
    • For affiliates that may be impacted by a limitation on future contracting due an OCI, contracting officers may negotiate a mitigation plan, which requires the contractor and its affiliates to implement structural or behavioral barriers, internal controls, or a combination of methods. The contracting officer of the future contract shall consider the decisions of the contracting officer for the earlier contract when determining whether the risk associated with the organizational conflict of interest has been effectively reduced or eliminated. If the contracting officer determines that the earlier mitigation measures are sufficient to allow the affiliate to participate, then the contracting officer shall prepare a written determination to that effect.

FAR 3.1207-5, Award Requirements

Contracting officers may only award contracts “after all organizational conflicts of interest have been addressed or the requirement to address the organizational conflict of interest has been waived in writing in accordance with 3.1206.”

If a contracting officer is withholding an award due to an OCI, the contracting officer must:

    • Notify the offeror in writing
    • Provide the reasons for withholding award
    • Allow the offeror a reasonable opportunity to respond

FAR 3.1207-6, Task Orders and Delivery Orders

The OCI rules apply to task order and delivery orders, and contracting officers should address OCI mitigation plans in the “base contract or agreement, to the extent that an organizational conflict of interest can be identified prior to award….”

FAR 3.1208, Contract Clauses

The proposed rule includes a new OCI contract clause that is to be included in contracts “[i]f the contracting officer has identified the likelihood of an organization conflict of interest.”

For solicitations, the following clause will have to be included in solicitations that exceed the simplified acquisition threshold, except those for commercial products:

Potential Organizational Conflict of Interest—Disclosure and Representation (Date)

(a) Definition. “Organizational conflict of interest,” as used in this provision, is defined in Federal Acquisition Regulation (FAR) clause 52.203-DD, Postaward Disclosure of Organizational Conflict of Interest.

(b) Notice. (1) The Contracting Officer has determined that the nature of the work to be performed under the contract resulting from this solicitation is such that it may result in organizational conflicts of interest (see FAR section 3.1204, Examples).

(2) The following entities are disqualified from competing as a prime contractor or a subcontractor, due to an applicable preexisting limitation on future contracting (see FAR 3.1205-2):

[Contracting Officer shall insert entity name(s), if applicable.]

(3) The following entities do not have an applicable preexisting limitation on future contracting. However, they participated in the preparation of the statement of work or other requirements documents, including cost or budget estimates, or otherwise participated in development of the solicitation. These prior activities result in an organizational conflict of interest due to an unfair competitive advantage. As a result, the Contracting Officer has determined the following entities are disqualified from competing as a prime contractor or a subcontractor:

[Contracting Officer shall insert entity name(s), if applicable.]

(c) Proposal requirements —(1) Disclosure. The Offeror shall—

(i) Describe any relevant limitations on future contracting, the term of which has not yet expired, to which the Offeror or potential subcontractor(s) agreed;

(ii) Disclose all relevant information of which the Offeror is aware regarding past (within the past twelve months), present, or currently planned financial or other interests that could result in an organizational conflict of interest, including information about affiliates, clients, and potential subcontracts, except where such disclosure would constitute a violation of law (e.g., the Securities Exchange Act of 1934, 15 U.S.C. 78a et seq.). At a minimum, such disclosure must include—

(A) The name of the client(s) and a description of the services rendered or planned to be rendered;

(B) Specific client and industry relationships, if identified by the Contracting Officer, that may present a conflict with the work to be performed:

[Contracting Officer shall insert entity name(s) and relationship(s), if applicable]; and

(C) The nature and extent of the financial or other interest and any entity or entities involved in the relationship;

(iii) Disclose information withheld pursuant to paragraph (c)(1)(ii) of this provision as soon as the law no longer prohibits disclosure; and

(iv) Describe any professional standards to which the Offeror is subject, or any procedures the Offeror has in place, to prevent organizational conflicts of interest.

(2) Representation. The Offeror represents, by submission of its offer, that to the best of its knowledge and belief it has disclosed all relevant information of which the Offeror is aware regarding any organizational conflicts of interest as required in paragraph (c)(1) of this provision.

(3) To the extent that either the Offeror or the Government identifies any financial or other interests that could result in an organizational conflict of interest on the contract resulting from this solicitation, the Offeror shall explain the actions it intends to take to address such organizational conflicts of interest, e.g., by submitting a mitigation plan and/or accepting a limitation on future contracting. The Offeror shall include information on planned flowdown to subcontracts of clauses 52.203-MM, Mitigation of Organizational Conflicts of Interest, or 52.203-LL, Limitation on Future Contracting.

(4) The Contracting Officer will determine whether an organizational conflict of interest exists and whether the organizational conflict of interest has been adequately addressed. The Contracting Officer may withhold award if an organizational conflict of interest cannot be adequately addressed.

(d) Disclosure update. The Offeror shall make a full disclosure in writing to the Contracting Officer within 5 days, if the Offeror identifies, after receipt of proposals but before contract award—

(1) Financial or other interests that could result in an organizational conflict of interest that was not previously disclosed in its proposal in accordance with paragraph (c) of this provision; or

(2) A change to any relevant facts relating to a previously disclosed organizational conflict of interest.

(e) Resulting contract. (1) If the Offeror submits a mitigation plan, the Contracting Officer will include the Government-approved mitigation plan and a clause substantially the same as 52.203-MM, Mitigation of Organizational Conflicts of Interest, in the contract resulting from this solicitation.

(2) If a limitation on future contracting is used, the Contracting Officer will include a clause substantially the same as 52.203-LL, Limitation on Future Contracting in the resultant contract.

The contracting officer must also include the following post-award clause in all contracts:

Postaward Disclosure of Organizational Conflict of Interest (Date)

(a) Definition. “Organizational conflict of interest,” as used in this clause, means that an entity or its affiliate(s) has impaired objectivity or an unfair competitive advantage as a result of other activities or relationships with other entities or their affiliates, including with public, private, domestic, and foreign entities. An entity or its affiliate may have an unfair competitive advantage as a result of biased ground rules or through unequal access to information. As used in this definition—

(1) “Biased ground rules” means a situation in which an entity or its affiliate, as part of its performance of a Government contract, has or may have materially influenced the development of the requirement, evaluation criteria, or other source selection procedures for another Government contract. The primary concern is that the entity could skew the future competition, whether intentionally or not, in favor of itself;

(2) “Entity” means an individual, corporation, or other organization;

(3) “Impaired objectivity” means a situation in which an entity or its affiliate has or may have financial or other interests or an incentive to provide other than impartial advice to the Government, or the entity or its affiliate’s objectivity in performing the contract work is or might be otherwise impaired; and

(4) “Unequal access to information” means a situation in which an entity or its affiliate has or may have an unfair competitive advantage because—

(i) Access to the information was provided to the entity or its affiliate by the Government. Such information may include proprietary and source selection information, e.g., proposals, financial information;

(ii) The information is not available to all potential offerors; and

(iii) Having access to the information would assist the entity in obtaining the contract.

(b) Disclosures. (1) Except as provided in paragraph (b)(3) of this clause, the Contractor shall provide the Contracting Officer a full disclosure in writing within 5 days if the Contractor identifies—

(i) Financial or other interests that could result in an organizational conflict of interest that was not previously addressed and for which a waiver has not been granted;

(ii) A change to any relevant facts relating to a previously identified organizational conflict of interest; or

(iii) Specific client and industry relationships, if identified by the Contracting Officer, that may present a conflict with the work to be performed:

[Contracting Officer shall insert entity name(s), if applicable].

(2) The Contractor shall disclose organizational conflicts of interest identified during performance of the contract, as well as newly discovered organizational conflicts of interest that existed before contract award. This disclosure shall include a description of—

(i) The organizational conflict(s) of interest in sufficient detail for agency evaluation; and

(ii) Actions to address the organizational conflict(s) of interest that—

(A) The Contractor has taken or proposes to take; or

(B) The Contractor recommends that the Government take.

(3) Where such disclosure would constitute a violation of law (e.g., the Securities Exchange Act of 1934, 15 U.S.C. 78a et seq.), the Contractor shall withhold information only until the law no longer prohibits disclosure.

(c) Termination. If, in compliance with this clause, the Contractor reports financial or other interests that the Contracting Officer identifies as an organizational conflict of interest that cannot be addressed in a manner acceptable to the Government, the Contracting Officer may terminate the contract, one or more orders, the blanket purchase agreement, or the basic ordering agreement.

(d) Subcontracts. The Contractor shall include the substance of this clause, including this paragraph (d), in subcontracts exceeding the simplified acquisition threshold where the work includes or may include tasks that may result in an organizational conflict of interest, other than subcontracts for commercial products, commercial services, and commercially available off-the-shelf items. The Contractor shall modify the terms “Contractor” and “Contracting Officer” appropriately to reflect the change in parties.

For contractors that have an approved OCI mitigation plan, the following clause must be included:

Mitigation of Organizational Conflicts of Interest (Date)

(a) Definition. “Organizational conflict of interest,” as used in this clause, is defined in the clause 52.203-DD, Postaward Disclosure of Organizational Conflict of Interest.

(b) Mitigation plan. The Government-approved organizational conflict of interest mitigation plan (mitigation plan) and its obligations are hereby incorporated as an attachment to the contract. While implementation of a mitigation plan is the Contractor’s responsibility, the Government retains the right to review implementation of the plan.

(c) Changes. (1) Either the Contractor or the Government may propose changes to the mitigation plan. Such changes are subject to the mutual agreement of the parties and will become effective only upon written approval of the revised mitigation plan by the Contracting Officer and incorporation into the contract.

(2) The Contractor shall propose an update to the mitigation plan within 30 days of—

(i) Any changes to the legal construct of its organization, any subcontractor changes, or any significant management or ownership changes that impact the mitigation plan; or

(ii) A change to the contract requirements that impacts the mitigation plan.

(d) Noncompliance. (1) The Contractor shall report to the Contracting Officer any noncompliance with this clause or with the mitigation plan, whether by its own personnel, those of the Government, other contractors, or subcontractors.

(2) The report shall describe the noncompliance and the actions the Contractor has taken or proposes to take to cure and mitigate such noncompliance and avoid repetition of the noncompliance.

(3) After conducting such further inquiries and communications as may be necessary, the Contracting Officer and the Contractor shall agree on appropriate corrective action, if any, or the Contracting Officer will direct corrective action, subject to the terms of this contract.

(e) Subcontracts. (1) The Contractor shall include the substance of this clause, including this paragraph (e), in subcontracts exceeding the simplified acquisition threshold where the subcontract work is addressed in the mitigation plan, other than subcontracts for commercial products, commercial services, and commercially available off-the-shelf items.

(2) The Contractor shall modify the terms “Contractor” and “Contracting Officer” appropriately to reflect the change in parties.

(3) The Contractor shall provide the Contracting Officer with information on the flowdown of this clause upon request.

If a contractor is subject to a limitation on future contracting as an OCI mitigation plan, the following clause be included:

Limitation on Future Contracting (Date)

(a) Limitation. The Contractor and any of its affiliates shall be disqualified from performing ___ [Before contract award, Contracting Officer to describe the work that the Contractor will be disqualified from performing] as a contractor or as a subcontractor. The disqualification will last until ___. [Before contract award, Contracting Officer to determine appropriate length of prohibition or identify the appropriate ending event for the limitation on future contracting.]

(b) Subcontracts. (1) The Contractor shall include the substance of this clause, including this paragraph (b), in subcontracts exceeding the simplified acquisition threshold where the work includes tasks that are encompassed by the description of work provided in paragraph (a) of this clause, other than subcontracts for commercial products, commercial services, and commercially available off-the-shelf items. The Contractor shall modify the terms “Contractor” and “Contracting Officer” appropriately to reflect the change in parties.

(2) Upon request, the Contractor shall provide information to the Contracting Officer with regard to flowdown of this clause.

Finally, if solicitations that exceed the simplified acquisition threshold, except for solicitations for commercial products, must include the following Unequal Access to Information—Representation clause:

Unequal Access to Information—Representation (Date)

(a) Preproposal requirements. The Offeror shall determine, to the best of its knowledge and belief, whether it or any of its affiliates had unequal access to any information that could provide an unfair competitive advantage as described in Federal Acquisition Regulation (FAR) 3.1204(b)(2). If so, the Offeror shall inform the Contracting Officer of such access prior to the submission of its offer. The Offeror shall also advise the Contracting Officer of any actions that the Offeror proposes to take to address the situation pursuant to FAR 3.1207-4(d).

(b) Representation. (1) By submission of its offer, the Offeror represents, to the best of its knowledge and belief, that—

(i) No firewall was necessary because the Offeror did not have an unfair competitive advantage due to unequal access to information; or

(ii) If a firewall was planned to mitigate the impact of an unfair competitive advantage due to unequal access to information, the firewall was implemented and was not breached during the preparation of this offer; or

(2) By checking this box □, the Offeror represents, to the best of its knowledge and belief, that the planned firewall was not implemented or was breached, and additional explanatory information is attached.

Conclusion

The proposed rule “Preventing Organizational Conflicts of Interest in Federal Acquisition” published on January 15, 2025, seeks to broaden the definition of OCI to encompass both direct and indirect conflicts that could compromise impartiality in contract performance. It requires contractors to proactively disclose any potential or actual conflicts at multiple stages and mandates robust mitigation measures—such as implementing firewalls, organizational separation, or divestiture—to prevent the misuse of sensitive information or undue influence on contract specifications. Federal agencies are charged with thoroughly reviewing these disclosures, documenting their assessments, and ensuring ongoing monitoring and enforcement throughout contract execution.

This article summarizes aspects of the law and does not constitute legal advice. For legal advice with regard to your situation, you should contact an attorney.

Related Industries

Related Services

Related Resources

Sign up

Ideas & Insights