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TITLE VIII--ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED MATTERS

Subtitle E Department of Defense Contractor Matters

DHNDAA Section

Senate Armed Services Report 110-335

SEC. 841. ETHICS SAFEGUARDS RELATED TO CONTRACTOR CONFLICTS OF INTEREST.

(a) Policy on Personal Conflicts of Interest by Employees of Federal Government Contractors- Not later than 270 days after the date of the enactment of this Act, the Administrator for Federal Procurement Policy shall develop and issue a standard policy to prevent personal conflicts of interest by contractor employees performing acquisition functions closely associated with inherently governmental functions (including the development, award, and administration of Government contracts) for or on behalf of a Federal agency or department.

(1) ELEMENTS OF POLICY- The policy required under subsection (a) shall--

(A) provide a definition of the term `personal conflict of interest' as it relates to contractor employees performing acquisition functions closely associated with inherently governmental functions; and

(B) require each contractor whose employees perform acquisition functions closely associated with inherently governmental functions to--

(i) identify and prevent personal conflicts of interest for employees of the contractor who are performing such functions;

(ii) prohibit contractor employees who have access to non-public government information obtained while performing such functions from using such information for personal gain;

(iii) report any personal conflict-of-interest violation by such an employee to the applicable contracting officer or contracting officer's representative as soon as it is identified;

(iv) maintain effective oversight to verify compliance with personal conflict-of-interest safeguards;

(v) have procedures in place to screen for potential conflicts of interest for all employees performing such functions; and

(vi) take appropriate disciplinary action in the case of employees who fail to comply with policies established pursuant to this section.

(2) CONTRACT CLAUSE-

(A) The Administrator shall develop a personal conflicts-of-interest clause or a set of clauses for inclusion in solicitations and contracts (and task or delivery orders) for the performance of acquisition functions closely associated with inherently governmental functions that sets forth the personal conflicts-of-interest policy developed under this subsection and that sets forth the contractor's responsibilities under such policy.

(B) Subparagraph (A) shall take effect 300 days after the date of the enactment of this Act and shall apply to--

(i) contracts entered into on or after that effective date; and

(ii) task or delivery orders awarded on or after that effective date, regardless of whether the contracts pursuant to which such task or delivery orders are awarded are entered before, on, or after the date of the enactment of this Act.

(3) APPLICABILITY-

(A) Except as provided in subparagraph (B), this subsection shall apply to any contract for an amount in excess of the simplified acquisition threshold (as defined in section 4(11) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(11)) if the contract is for the performance of acquisition functions closely associated with inherently governmental functions.

(B) If only a portion of a contract described in subparagraph (A) is for the performance of acquisition functions described in that subparagraph, then this subsection applies only to that portion of the contract.

(b) Review of Federal Acquisition Regulation Relating to Conflicts of Interest-

(1) REVIEW- Not later than 12 months after the date of the enactment of this Act, the Administrator for Federal Procurement Policy, in consultation with the Director of the Office of Government Ethics, shall review the Federal Acquisition Regulation to--

(A) identify contracting methods, types and services that raise heightened concerns for potential personal and organizational conflicts of interest; and

(B) determine whether revisions to the Federal Acquisition Regulation are necessary to--

(i) address personal conflicts of interest by contractor employees with respect to functions other than those described in subsection (a); or

(ii) achieve sufficiently rigorous, comprehensive, and uniform government-wide policies to prevent and mitigate organizational conflicts of interest in Federal contracting.

(2) REGULATORY REVISIONS- If the Administrator determines pursuant to the review under paragraph (1)(B) that revisions to the Federal Acquisition Regulation are necessary, the Administrator shall work with the Federal Acquisition Regulatory Council to prescribe appropriate revisions to the regulations, including the development of appropriate contract clauses.

(3) REPORT- Not later than March 1, 2010, the Administrator shall submit to the Committees on Armed Services of the Senate and House of Representatives, the Committee on Homeland Security and Governmental Affairs in the Senate, and the Committee on Oversight and Government Reform of the House of Representatives a report setting forth such findings and determinations under subparagraphs (A) and (B) of paragraph (1), together with an assessment of any revisions to the Federal Acquisition Regulation that may be necessary.

(c) Best Practices- The Administrator for Federal Procurement Policy shall, in consultation with the Director of the Office Government Ethics, develop and maintain a repository of best practices relating to the prevention and mitigation of organizational and personal conflicts of interest in Federal contracting.

Ethics safeguards for employees under certain contracts for the performance of acquisition functions closely associated with inherently governmental functions (sec. 832)

The committee recommends a provision that would require that each Department of Defense (DOD) contract (or task or delivery order) in excess of $500,000 that calls for the performance of acquisition functions closely associated with inherently governmental functions include a contract clause addressing potential personal conflicts of interests of contractor employees who will be responsible for the performance of such functions.

The required contract clause would require covered contractors to prohibit employees from conducting work for DOD with respect to a program, company, contractor, or other matter in which the employees have a financial interest; obtain and review financial disclosure statements from employees; prohibit employees from accepting gifts from companies affected by work that they are performing for DOD; prohibit employees from using non-public government information for personal gain; take appropriate steps to enforce these requirements; and promptly report any violations to the appropriate contracting officer.

The provision requires DOD to develop an appropriate definition of the term `financial interest' that is similar to the definition in statutes and regulations applicable to federal employees. The committee expects the implementing regulations to encompass both direct and indirect financial interests, as well as both actual and apparent conflicts of interest.

In March 2008, the Government Accountability Office (GAO) issued a report entitled `Additional Personal Conflict of Interest Safeguards Needed for Certain DOD Contractor Employees.' GAO determined that contractor employees often work alongside DOD employees and perform critical acquisition tasks, such as the development of contract requirements, advising or assisting on source selection, and making award-fee determinations.

Yet, DOD lacks a Department-wide policy requiring safeguards against personal conflicts of interest by such contractor employees. GAO recommended that DOD institute such safeguards and reported that this recommendation was supported by DOD oversight officials, officials of the Office of Government Ethics, members of an expert panel on contracting, and many program managers. The provision recommended by the committee would require DOD to implement the GAO recommendation.

House Armed Services Report 110-652

SECTION 821--POLICY ON PERSONAL CONFLICTS OF INTEREST BY EMPLOYEES OF DEPARTMENT OF DEFENSE CONTRACTORS

This section would require the Secretary of Defense to develop a policy to prevent personal conflicts of interest in defense contracts. This section also would require a standard contract clause for inclusion in all solicitations and contracts to implement such policy. The committee is concerned that contractor employees who work side-by-side with government employees are not subject to the same conflict of interest provisions as government employees. In the current environment of increased reliance on contractors to meet mission requirements for the Department of Defense, the committee finds this situation problematic. Both the Acquisition Advisory Panel, established under section 1423 of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136), and the Government Accountability Office recommended the development of policies to address personal conflicts of interest. Furthermore, this section would require the Department's Panel on Contracting Integrity, established by the section 813 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Public Law 109-364), to consider and make recommendations on the feasibility of applying federal procurement integrity regulations to contractor personnel.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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