By Alan Chvotkin on June 6, 2022.

The Federal Acquisition Regulation (FAR) has included coverage on organizational conflicts of interest (OCI) since its inception. Today, an OCI is defined in FAR 2.101 by three prongs: a situation where (1) “because of other activities or relationships with other persons, a person is unable or potentially unable to render impartial assistance or advice to the Government,” or (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.” The first prong of this definition requires that the agency define the nature of the activities or relationship that will impinge on the performance required by the instant (or group of) contract(s). It is only this first prong of the definition that is the subject of this commentary.

FAR coverage

Several pages of coverage in FAR Subpart 9.5 outline the general rules and procedures for agencies to identify, evaluate and resolve an OCI. However, while FAR 9.5 addresses creating solicitation provisions and contract clauses to highlight and address potential issues appropriate to the nature of the actual or perceived OCI, the FAR has never, appropriately in my view, had a standard (FAR Part 52) solicitation provision or contract clause because the nature of the OCI is dependent on the facts and circumstances of each agency procurement. When a buying agency is concerned about a potential conflict of interest, it is required to tailor a specific solicitation and contract clause appropriate to the work at hand.

Thus, FAR 9.507-1 (relating to solicitation provisions) and FAR 9.507-2 (relating to contract clauses) put the responsibility on the buying agency to identify what work called for under the current solicitation (and resulting contract) would give rise to a current or future (but never a past) conflict of interest. It is only after the agency has made that identification can the solicitation then require a bidding contractor to identify whether their “other activities or relationships” preclude the bidder from rendering impartial assistance or advice and, if desired by the agency, to propose a mitigation/avoidance plan for such potential conflict of interest. If the contractor does have an OCI that cannot be mitigated or avoided, the government may choose to waive the identified conflict.

FAR 9.508 provides eight non-exclusive examples of situations in which questions concerning OCI may arise “to help the contracting officer apply the general rules to individual contract situations.” There is an extensive litany of Government Accountability Office (GAO) decisions interpreting and applying the FAR OCI provisions. Many of the early GAO decisions addressed the contours of the three prongs in the definition. More recently, many of these GAO OCI cases properly focused on the buying agency’s behavior. If the agency had a concern about a potential OCI, did the agency follow the dictate of FAR 9-507-1 and “invite offerors’ attention to this concern?” Did the agency state the nature of the potential conflict as seen by the contracting officer? Did the agency state the nature of the proposed restraint on future contractor activities? If presented with a mitigation plan from an offeror, did the agency evaluate that plan? If the agency evaluated the plan, and the offeror was the successful offeror, did the agency incorporate the mitigation plan into the resultant contract and monitor compliance with it?

There have been very few regulatory initiatives to further address these matters in the FAR. The most significant was a FAR proposed rule, published on April 26, 2011 (eleven years ago!); in it, DoD, GSA, and NASA proposed to amend the FAR to revise regulatory coverage on organizational conflicts of interest (OCI) and provide additional coverage regarding contractor access to nonpublic information. But on March 19, 2022, the FAR Council withdrew the proposed rule without further action.[1]

Pending Legislation

The application of the OCI rules is also highlighted in pending legislation. On March 23, 2022, four United States Senators – two Democrats and two Republicans – introduced S. 3905, the “Preventing Organizational Conflicts of Interest in Federal Acquisition Act.”[2] The legislation was introduced “to help identify and mitigate potential conflicts of interest between taxpayer-funded projects and government contractors’ other business opportunities,” the sponsors said in a March 28, 2022 press release.[3]  One of the concerns behind the legislation was the “danger that conflicts of interest can pose in government contracting, such as when the consulting firm McKinsey worked for opioid manufacturers at the same time it was working for the FDA (Food and Drug Administration) on opioid-related projects,” according to Senator Charles Grassley (R-IA), a cosponsor of the bill. On May 27, 2022, an identical bill was introduced in the U.S. House of Representatives by Congresswoman Carolyn Maloney (D-NY), chair of the House Oversight Committee;[4] there has been no further action on this House legislation.

The Senate bill was amended and approved by the Senate Homeland Security and Governmental Affairs at its business meeting on May 25, 2022;[5] the amended version is an improvement over the introduced version although it is still vague on the outcomes to be achieved. It is awaiting future action by the United States Senate and additional amendments to the committee-reported are likely to be offered; one such amendment may be offered by Senator Hassan (D-NH) relating to company compliance actions and penalties for non-compliance, as she previewed during the committee markup.

In addition, on April 13, 2022, the House Oversight Committee released a 52-page interim majority staff report titled “The Firm and the FDA: McKinsey & Company’s Conflicts of Interest at the Heart of the Opioid Epidemic.”[6] The report asserts that “McKinsey had significant and long-running conflicts of interest due to its overlapping and conflicting work for FDA and opioid manufacturers,”[7] and that McKinsey’s conduct raises significant questions about the lack of regulation over consulting companies that advise both the federal government and private sector clients.”[8]  The report addresses the FAR provisions on OCI, and acknowledges that the FDA included a generic OCI clause in many of the McKinsey contracts,[9] but faulted McKinsey for failing to make disclosures to the FDA regarding these “conflicting activities.”

So What?

Appropriately, the FAR has placed the initial responsibility on the buying activity and its purchasing contracting officer to identify what areas of contractor activity would give rise to the agency’s concern about an organizational conflict of interest. Once the contractor responds to that concern, it is incumbent on the agency to evaluate the risk and offered mitigation factors before making a source selection decision. Suggestions that agencies skip that first step – or shift the responsibility to future offerors or to current contractors to speculate on whether its actions do, or should, raise a concern with an agency – create untenable positions for both agencies and contractors.

Improvements can certainly be made in the current FAR coverage. For example, the acquisition community would benefit from updated FAR OCI examples based on what the government now buys (e.g. solutions, not simply products or services) and how the government now buys (e.g. through multiple-award IDIQ contracts). But before launching into unchartered territory, it is worth Congress and the FAR principals, including the Office of Federal Procurement Policy, engage contracting agencies, contractor representatives, and the legal community in a robust discussion of the FAR’s current and future OCI policy and practice.


***** an “excerpt” was published by Executive Mosaic*****


[1]Federal Acquisition Regulation Case 2011-001, “Withdrawal of Organizational Conflicts of Interest,” March 19, 2022, available at (concluding that “given the amount of time that has passed since publication of the proposed rule, and potential changed circumstances, a decision has been made not to proceed with finalization of the FAR rule”).

[2] S. 3905, introduced March 23, 2022, available at

[3] See press release from the Senate Homeland Security and Governmental Affairs Committee, March 28, 2022, available at

[4] HR 7602, introduced April 27, 2022, available at

[5] See press release from the Senate Homeland Security and Governmental Affairs Committee, May 25, 2022, available at

[6] See Majority Interim Staff Report by House Committee on Oversight and Reform  (“Majority Interim Staff Report”), available at

[7] Majority Interim Staff Report at 52

[8] Majority Interim Staff Report at 53

[9] Majority Interim Staff Report at 34-36