1. Contracting Officer Podcast Slides Knowledge & Insights From Contracting Officers 1

2. Episode 055 What is an Organizational Conflict of Interest? Original Air Date: November 30, 2015 Hosts: Kevin Jans & Paul Schauer 2

3. Formatting notes Hyperlinks: Blue font indicates hyperlinks – presentation must be in ‘Slide Show’ mode to activate the linkBlue Red bold font indicates a point of emphasis Green bold font indicates CO’s personal comment or perspective 3

4. Introduction Purpose of this podcast: To discuss Organizational Conflict of Interest (OCI) Conflicts of Interest can be a mess. It's important to understand why the Government cares about OCI and the impact it can have on Industry 4

5. When does OCI happen? Acquisition Time Zones (from Podcast Episode 003)Episode 003 Requirements Zone Market Research Zone RFP Zone Source Selection Zone (or sole source) 5

6. FAR Part 2 – Definitions OCI means: Because of other activities or relationships with other persons, a given person is: Unable or potentially unable to render impartial assistance or advice to the Government Unable to objectively perform the contract work Benefitting from an unfair competitive advantage 6

7. FAR Part 9.505FAR Part 9.505 – General Rules (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 -- (1) Proprietary information that was obtained from a Government official without proper authorization; or (2) Source selection information (as defined in 2.101) that is relevant to the contract but is not available to all competitors, and such information would assist that contractor in obtaining the contract.2.101 7

8. FAR Part 9.502(b)FAR Part 9.502(b) – Applicability OCI is most likely to occur with: (1) Management support services; (2) Consultant or other professional services; (3) Contractor performance of or assistance in technical evaluations; or (4) Systems engineering and technical direction work performed by a contractor that does not have overall contractual responsibility for development or production. 8

9. FAR Part 9.502(c)FAR Part 9.502(c) – Applicability An organizational conflict of interest may result when: Factors create an actual or potential conflict of interest on an instant contract The nature of the work to be performed on the instant contract creates an actual or potential conflict of interest on a future acquisition. Some restrictions on future activities of the contractor may be required. Example: Government awards a contract to write a requirement or specification for a future contract to deliver something that meets that specification 9

10. FAR Part 9.504FAR Part 9.504 – CO Responsibilities Contracting officers shall analyze planned acquisitions in order to -- (1) Identify and evaluate potential organizational conflicts of interest as early in the acquisition process as possible; and (2) Avoid, neutralize, or mitigate significant potential conflicts before contract award. Avoid - Only allow OCI-free bidders? Neutralize - Government oversight? Mitigate - Firewalls? 10

11. FAR Part 9.504FAR Part 9.504 – CO Responsibilities CO should talk to counsel and technical experts to evaluate potential conflicts and write provisions and clauses In fulfilling their responsibilities for identifying and resolving potential conflicts, COs should avoid creating unnecessary delays, burdensome information requirements, and excessive documentation. The CO’s judgment need be formally documented only when a substantive issue concerning potential organizational conflict of interest exists. 11

12. The Usual Suspects…. Providing Systems Engineering and Technical Direction (Assistance) SETA: Performing important technical functions and staff assistance But not overall responsibility for development or production Cannot: Be awarded contract to provide system or its major components Be a sub-contractor 12

13. Systems Engineering & Technical Assistance What is Systems Engineering: Determining specifications, Testing & Validation Contractor occupies a highly influential and responsible position Assists in determining a system’s basic concepts Assists in supervising execution by other contractors Therefore this contractor should not be in a position to make decisions favoring its own products or capabilities. 13

14. SETA in Product Development Prepare and furnish complete specs for a non-developmental item Cannot provide the actual product In development work, it is normal to select firms that have done the most advanced work in the field. Thus, while the development contractor has a competitive advantage, it is an unavoidable one that is not considered unfair; hence no prohibition should be imposed. 14

15. SETA Limitations SETA helps prepare work statement? Then cannot do the production work, UNLESS: That firm did the design/development, OR More than one contractor prepared the work statement) Provide evaluation services? Cannot evaluate your own offers 15

16. SETA Limitations Access to proprietary info? A contractor with access to other companies’ proprietary information, in performing advisory and assistance services for the Government, must agree with the other companies to protect their information from unauthorized use or disclosure for as long as it remains proprietary and refrain from using the information for any purpose other than that for which it was furnished SEE EXAMPLES: FAR 9.508FAR 9.508 Some companies stay on one side or the other. Walking the line can be frustrating and costly (you can be barred from competing for work). 16

17. Why is OCI important? Creates serious limitations on what a single company can and cannot do Caused massive restructuring in the Defense industry in the last 5-6 years For good reasons (sometimes) “Bad actor” rule For not so good reasons (when Government hasn't thought through the real implications and when Industry hasn't helped to clarify) 17

18. Why Should Government Care? If not addressed, could lead to charges of bias that derail future acquisitions Some agencies now have an OCI Volume as a standard part of source selections More work to evaluate (and for contractors to propose) Industry doesn't necessarily care, they just want clear direction Don't waffle, tell them plainly what you will and won't accept To bid on some contracts, offerors must recuse themselves from others Like an ‘All or None’ rule - Yikes! listen to feedback from industry 52% of contracts are for services. Many of these services create an OCI situation. 18

19. Why Should Industry Care? Large businesses are generally impacted more because of diversification (involved in many types of business - cannot choose one side or the other) Sometimes large businesses spin off (or sell) their OCI-heavy parts May prevent you from winning new work May completely change your bid strategy Can make seemingly simple proposals a nightmare If you're a small business that only does SETA (or development) work, OCI restrictions can be your friend - you should be actively lobbying your customers to insert "OCI-free only" language in RFPs 19

20. Summary OCI must be tackled early in the acquisition process This can be really complicated Don’t underestimate the headaches Decide early that you want to structure an acquisition that will have a heavy OCI element to it (and get industry input so they can jump in or jump out early) 20

21. Contact us We are on LinkedIn, Twitter and FacebookLinkedInTwitterFacebook We also started the Government Contracting Network Group on Facebook. Join us there! Send your topics to paul@Contractingofficerpodcast.compaul@Contractingofficerpodcast.com For Community support, contact Shelley Hall at shelley.hall@skywayacquisition.com shelley.hall@skywayacquisition.com 21