DOD ethics rule short on mitigation, industry complains

Proposed policy will push acquisition officials to rule against any appearance of conflict, many commenters say


Defense officials may prefer mitigation as the best path for dealing with organizational conflicts of interest, but the Defense Department's proposed ethics regulations have left the defense industry feeling shortchanged.

The proposal offers few details about mitigation and its use. Instead, it encourages contracting officers to avoid all appearances of an organizational conflict of interest (OCI), according to several comments on the proposed policy.


DOD proposes new conflict of interest rules

To protect the image of federal contracting, the government must avoid the appearance of impropriety, which taints the public view of it, according to the proposed policy, which was released in April. Comments were due July 21.

“Organizational conflicts of interest, by their mere appearance, call into question the integrity and fairness of the competitive procurement process,” it states.

That language seems to rule out mitigation as a method for dealing with a conflict or even a potential conflict, experts say.

“Contracting officers may err on the side of avoiding even the appearance of an OCI and reject workable OCI mitigation plans, to the collective detriment of DOD, the public and the contractor community,” the American Bar Association wrote in its response to the proposed policy.

Industry experts said mitigation offers DOD access to more companies with expertise. It keeps competition in the acquisition process and promotes transparency. Moreover, mitigation allows contracting officers to use their expertise and experience to make decisions about the conflict, according to the Coalition for Government Procurement.

In the proposed policy, officials define mitigation as a means to minimize an OCI to an “acceptable level.” The contracting officer can use a firewall to reassign company employees who may have had access to certain information or keeping a company’s supervisors from influencing an acquisition, the policy states. The contracting officer could also release the information to the rest of the bidders. Finally, a company could be required to have a subcontractor carry out the conflicted portion of the work. But the details basically end there.

Moreover, the proposal “fails to provide contracting officers with any meaningful guidance to encourage contracting officers to use any other mitigation technique,” according to a joint statement by the Coalition of Defense and Space Industry Associations and Professional Services Council.

TechAmerica wrote in its comments that the other provisions in the proposal may not suit mitigation as a preferred path. The policy broadly defines the term contractor to the point it could encompass every affiliate. It also has narrow definitions of terms like firewall, which could set up unneeded preventive measures to stop the circulation of sensitive information, according to the group’s comments.

In addition, mitigation plans could add more work to the already overburdened contracting officer, if there are additional obligations when dealing with conflicts at the task- and delivery-order level, the group added.

“These conflicting aspects of the proposed rule are likely to confuse contracting officers and lead them to disfavor mitigation,” TechAmerica wrote. They then may choose the supposedly less preferable options of avoidance and limitations on future contracting.

As for avoidance, a contracting officer could exclude a company overall from bidding on a contract. Avoidance is the least preferable method of dealing with an OCI, according to the proposal. In limitation, a company could perform the contract but be blocked from future work in areas where the company may have an unfair advantage.

DOD officials began to review the conflict of interest rules because of the Weapons System Acquisition Reform Act, which became law in 2009. It required officials to create uniform guidance and tighten existing requirements on OCIs.

The Project on Government Oversight, a watchdog group, said it supported the proposal and saw it as a step in the right direction. "This move will hopefully reduce biased decisions and level the playing field. The current situation works against the public interest," said the group's general counsel Scott Amey.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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