The Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) have issued a proposed rule amending the Federal Acquisition Regulations (FAR) to extend the limitations on contractor employee personal conflicts of interest.  The proposed rule will extend those limitations to the performance of all functions that are closely associated with inherently governmental functions and contracts for personal services.  Functions closely associated with inherently governmental functions include services that involve or relate to budget preparation, feasibility studies, and the evaluation of another contractor’s performance.  They also include contractors providing assistance in the development of statements of work or participating in any activities or functions that could lead to the assumption that they are agency employees or representatives.

The current rule requires contractors and subcontractors to identify and prevent personal conflicts of interest of covered employees.  Under the proposed rule, “covered employees” would be expanded to include those employees who perform functions closely associated with inherently governmental functions or perform under a personal services contract.  The definition of “employees” includes individual sub-contractors of contractors because they do not have an employer to whom they could submit the required disclosures.  The policy also requires contractors and subcontractors to prohibit covered employees who have access to non-public information through their performance on a government contract from using such information for personal gain.

The current regulations require contractors to obtain information from each covered employee on an “as required basis.”  Therefore, a contractor must obtain information from a covered employee when the employee is initially assigned to a task that requires a disclosure of interests that might be affected by the task to which the employee has been assigned.  The contractor must also obtain information whenever the employee’s personal or financial circumstances change in such a way that a new personal conflict of interest might occur.  In addition, the contractor must report to the contracting officer any personal conflict of interest violation by a covered employee as soon as it is identified.  In exceptional circumstances, the contractor must also submit a request, through the contracting officer, for the head of the contracting activity to agree to a plan to mitigate the personal contract of interest, or waive the requirement to prevent the personal conflict of interest.

The current limitations on contractor employee personal conflicts of interest do not apply below the simplified acquisition threshold and do not apply to acquisitions of commercial items.  The proposed rule will not change this limitation.

Comments on the proposed rule are due June 2, 2014.