HSE University Anti-Corruption Portal
The United States to Change the Conflict-of-Interest Prevention Rules for Public Contractors

The Unites States has adopted an act providing for a number of amendments to the regulations on the conflicts of interest of organisations participating in federal procurement or the organizational conflicts of interest (OCI).

Besides the conventional management of conflicts of interest of natural persons, the United States uses this notion with regard to legal persons in the context of public procurement.

In particular, under the Federal Acquisition Regulation (FAR) the OCI means that because of other activities or relationships with other persons 1) a person is unable to render impartial assistance or advice to the Government, 2) the person’s objectivity in performing the contract work is or might be otherwise impaired, or 3) a person has an unfair competitive advantage (FAR 2.101).

However, in spite of the fact that these requirements to the OCI regulation have been in place since 1960s, the FAR did not provide for the issuance of guidance for contractors to better navigate the issue of conflict-of-interest prevention in the context of contracting, which, some experts believe, impaired their effectiveness.

From now on, as per the Preventing Organizational Conflicts of Interest in Federal Acquisition Act of 27 December 2022 No. 117-324, the Federal Acquisition Regulatory Council (FARC) is to make amendments to part 9, subpart 9.5 of the FAR that provide for:

1. Developing and/or updating:

  • definitions of specific types of OCI, including situations where some individuals or groups have unequal access to information, objectivity is impaired (if the execution of a public contract allows benefitting from other public contracts), and the rules or conditions for making decisions are biased (where the contractor provided services on the development of procurement documentation and subsequently bid for the tender);
  • definitions, guidance and representative examples of conflicts of interest that may arise from contractors’ relationships with public, private, domestic or foreign entities, including where contractors may be unduly influenced by these relationships;
  • representative examples of conflicts of interest, such as when a federal agency awards a consultancy contract to a contractor while the contractor’s employees are also working on a contract for a private sector client that is regulated by the same agency;

2. Providing executive agencies with contract clauses and provisions requiring contractors to disclose information about potential OCI and limiting future contracting with respect to potential conflicts of interest in the work to be performed under awarded contracts. The documents may be tailored by the agency to address specific risks unique to their agency.

3. Requiring agencies to establish or update procedures for managing conflicts of interest to ensure that they are in line with the envisaged changes in the FAR and periodically assess and update them as needed;

4. Updating the provisions of subpart 9.506 of the FAR to allow contactors to consider standards and procedures that prevent conflicts of interest when evaluating offers and contracts.

The agency is to revise the FAR within 18 months from the date of publication of the Act.

Conflict of interest
Corruption in public procurement

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