Organizational Conflicts of Interest

Posted by Administrator on January 10th, 2008

In recent years, the Government Accountability Office has increased focus on organizational conflicts of interest with government contractors. Government contractors should keep a close eye on potential conflicts of interest. If the agency discovers an organizational conflict of interest (COI) that the contractor hasn’t disclosed, it could delay the award while the COI is investigated – or worse, disqualify the contractor for the award altogether. It’s not enough to gloss over potential areas of COI in hopes the agency doesn’t notice; in this information age it’s easier than ever for your competitors to investigate possible conflicts of interest and protest the awarded contract should they find one.

Part 9.5 of the FAR covers conflicts of interest. From part 9.505:

“Each individual contracting situation should be examined on the basis of its particular facts and the nature of the proposed contract. The exercise of common sense, good judgment, and sound discretion is required in both the decision on whether a significant potential conflict exists and, if it does, the development of an appropriate means for resolving it. The two underlying principles are—

(a)Preventing the existence of conflicting roles that might bias a contractor’s judgment; and

(b) Preventing unfair competitive advantage. In addition to the other situations described in this subpart, an unfair competitive advantage exists where a contractor competing for award of any Federal contract possesses—

Proprietary information that was obtained from a Government official without proper authorization; or
Source selection information (as defined in 2.101) that is relevant to the contract but is not available to all competitors, and such information as would assist that contractor in obtaining the contract.”

Examples of Possible Conflicts of Interest

Competing for a management/services contract that might require the contracting company to evaluate its own or its competitors’ products for use by the government
Competing to supply products/services for which you have designed the specifications
Access to other companies’ proprietary information that has not been authorized for use in landing/performing the contract
Access to other companies’ proprietary information obtained by leveraging the contract in question, which might provide an unfair competitive advantage

What to Do about Conflicts of Interest

If a legitimate conflict of interests exists, it’s probably in everyone’s best interest to withdraw from the contract. However, if you feel it’s possible for your company to complete the contract without running afoul of a potential COI, there are avenues to pursue. It’s important to be honest and up-front about COIs in your initial proposal response. If it’s informational in nature, go into detail about what restrictions will be placed on the information’s use in the contract, and explain how an unfair competitive advantage has been avoided.

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