CONGRESS PASSES LEGISLATION ON CONTRACTOR CONFLICT OF INTEREST REQUIREMENTS

Contractors will have to disclose when business relationships come into conflict with awarded federal contract work, or when there is a potential for conflict, under legislation signed by President Biden before Christmas.  The new measure, the “Preventing Organizational Conflicts of Interest in Federal Acquisition Act”, or S. 3905, will result in new procurement rules designed to better identify, prevent, and manage potential conflicts of interest.  The final bill even contains a requirement for an “illustrative example” to be included in the FAR.  The example must define a company’s conflict of interest based on a contractor providing consulting services to a regulatory agency that also has employees simultaneously working for a private sector client under the regulatory purview of that agency.  This language was added in specific reaction to an incident where McKinsey and Company provided consulting services for both the FDA and a pharmaceutical company at the same time.  S. 3905 also covers “unequal access to information, impaired objectivity, and biased ground rules”, as well as requiring the development of “definitions, guidance, and illustrative examples related to relationships of contractors with public, private, domestic, and foreign entities that may cause contract support to be subject to potential organizational conflicts of interest, including undue influence.”  The FAR Council will write the actual specific requirements that will make their way into government contracts.  Contractors should watch for the release of a proposed rule in the first three months of 2023, plan to submit comments, and ensure that their conflict-of-interest policies are up to date.