[Federal Register: April 26, 2011 (Volume 76, Number 80)]
[Proposed Rules]
[Page 23236-23254]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26ap11-22]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 2, 3, 4, 7, 9, 11, 12, 13, 14, 15, 16, 18, 37, 42, 52,
and 53
[FAR Case 2011-001; Docket 2011-0001; Sequence 1]
RIN 9000-AL82
Federal Acquisition Regulation; Organizational Conflicts of
Interest
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule.
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SUMMARY: DoD, GSA, and NASA are proposing to amend the Federal
Acquisition Regulation (FAR) to provide revised regulatory coverage on
organizational conflicts of interest (OCIs), provide additional
coverage regarding contractor access to nonpublic information, and add
related provisions and clauses. Section 841 of the Duncan Hunter
National Defense Authorization Act for Fiscal Year 2009 required a
review of the FAR coverage on OCIs. This proposed rule was developed as
a result of a review conducted in accordance with Section 841 by the
Civilian Agency Acquisition Council and the Defense Acquisition
Regulations Council (the Councils) and the Office of Federal
Procurement Policy (OFPP), in consultation with the Office of
Government Ethics (OGE). This proposed rule was preceded by an Advance
Notice of Proposed Rulemaking (ANPR), under FAR Case 2007-018 (73 FR
15962), to gather comments from the public with regard to whether and
how to improve the FAR coverage on OCIs.
[[Page 23237]]
DATES: Interested parties should submit written comments to the
Regulatory Secretariat at one of the addressees shown below on or
before June 27, 2011 to be considered in the formation of the final
rule.
ADDRESSES: Submit comments in response to FAR case 2011-001 by any of
the following methods:
Regulations.gov: http://www.regulations.gov. Submit
comments via the Federal eRulemaking portal by inputting ``FAR Case
2011-001'' under the heading ``Enter Keyword or ID'' and selecting
``Search.'' Select the link ``Submit a Comment'' that corresponds with
``FAR Case 2011-001.'' Follow the instructions provided at the ``Submit
a Comment'' screen. Please include your name, company name (if any),
and ``FAR Case 2011-001'' on your attached document.
Fax: (202) 501-4067.
Mail: General Services Administration, Regulatory
Secretariat (MVCB), Attn: Hada Flowers, 1275 First Street, NE., 7th
Floor, Washington, DC 20417.
Instructions: Please submit comments only and cite FAR Case 2011-001,
in all correspondence related to this case. All comments received will
be posted without change to http://www.regulations.gov, including any
personal and/or business confidential information provided.
FOR FURTHER INFORMATION CONTACT: Mr. Anthony Robinson, Procurement
Analyst, at (202) 501-2658, for clarification of content. For
information pertaining to status or publication schedules, contact the
Regulatory Secretariat at (202) 501-4755. Please cite FAR Case 2011-
001.
SUPPLEMENTARY INFORMATION:
I. Background
A. Current FAR Subpart 9.5, Organizational and Consultant Conflicts of
Interest
The integrity of the Federal acquisition process is protected, in
part, by OCI rules currently found in FAR subpart 9.5. These rules are
designed to help the Government in identifying and addressing
circumstances in which a Government contractor may be unable to render
impartial assistance or advice to the Government or might have an
unfair competitive advantage based on unequal access to information or
prior involvement in setting the ground rules for an acquisition. FAR
9.504 directs contracting agencies to ``identify and evaluate potential
OCIs as early in the acquisition process as possible'' and ``avoid,
neutralize, or mitigate significant potential conflicts before contract
award.''
FAR coverage on OCIs has remained largely unchanged since the
initial publication of the FAR in 1984. The FAR coverage was adapted
from an appendix to the Defense Acquisition Regulation, which dated
back to the 1960s.
B. Origins of This Case
1. Changes in Government and Industry. In recent years, a number of
trends in acquisition and industry have led to the increased potential
for OCIs, including--
Industry consolidation;
Agencies' growing reliance on contractors for services,
especially where the contractor is tasked with providing advice to the
Government; and
The use of multiple-award task- and delivery-order
contracts, which permit large amounts of work to be awarded among a
limited pool of contractors.
2. SARA Panel. In its 2007 report, the Acquisition Advisory Panel
(established pursuant to section 1423 of the Services Acquisition
Reform Act of 2003) (SARA Panel) concluded that the FAR does not
adequately address ``the range of possible conflicts that can arise in
modern Government contracting.'' The SARA Panel observed that the FAR
provides no detailed guidance to contracting officers regarding how
they should detect and mitigate actual and potential OCIs and called
for improved guidance, to possibly include a standard OCI clause or set
of clauses. See Report of the Acquisition Advisory Panel (January
2007), available at https://www.acquisition.gov/comp/aap/24102_
GSA.pdf, at pp. 405-407, 417, 422.
3. Duncan Hunter National Defense Authorization Act for Fiscal Year
2009. Congress subsequently directed, in Section 841 of the Duncan
Hunter National Defense Authorization Act for Fiscal Year 2009 (Pub. L.
110-417), a review of the conflicts of interest provisions in the FAR.
Section 841 required that appropriate revisions, including contract
clauses, be developed as necessary, pursuant to that review.
C. Evaluation of FAR Subpart 9.5
The Councils have worked with OFPP and consulted with OGE to
evaluate FAR subpart 9.5. This evaluation was informed, in part, by the
following:
1. A review of recent case law and opinions from the Government
Accountability Office (GAO) and Court of Federal Claims (CoFC).
Collectively, this review indicated that, when addressing OCIs,
agencies do not always perform adequate, case-by-case, fact-specific
analysis.
2. The findings of the SARA Panel, which concluded that contracting
officers and agencies have encountered difficulties implementing
appropriate OCI avoidance and mitigation measures.
3. Responses to a 2008 ANPR which sought comment on whether the
current guidance on OCIs adequately addresses the current needs of the
acquisition community or whether providing standard provisions and/or
clauses might be beneficial. The ten respondents to the ANPR offered a
range of views, from the complete rewrite of FAR subpart 9.5, to
maintaining the current coverage largely as is. Several respondents
encouraged the Councils to adopt already-existing agency-level
regulations, while two respondents stated that the regulations should
consider providing Governmentwide standard clauses that allow agencies
to add more stringent requirements, if needed, on a procurement-
specific basis. One respondent suggested that any change to FAR subpart
9.5 should be consistent with existing case law on OCIs, as developed
by GAO and the CoFC. Copies of all responses may be obtained at http://
www.regulations.gov.
4. Public comments provided in response to Defense Federal
Acquisition Regulation Supplement (DFARS) Proposed Rule 2009-D015,
published in the Federal Register on April 22, 2010 (see 75 FR 20954-
20965). DFARS Proposed Rule 2009-D015 was designed to implement section
207 of the Weapons System Acquisition Reform Act of 2009 (WSARA) (Pub.
L. 111-23), which requires DoD to revise the DFARS to provide uniform
guidance and tighten existing rules regarding OCIs concerning major
defense acquisition programs. To implement section 207 in the most
effective manner possible, DoD concluded that the basic principles,
policies, and practices governing OCIs must be clearly understood. DoD
reviewed the FAR coverage and issued the proposed rule that clarified
the prescribed general rules and procedures for identifying,
evaluating, and resolving OCIs. As with the ANPR, respondents to the
DFARS proposed rule provided a range of views regarding the proposed
coverage.
II. Overview
Based on their review, the Councils and OFPP reached the following
main conclusions regarding OCIs:
[[Page 23238]]
A. Opportunity for Public Comment on Two Alternative OCI Frameworks
Because the proposed DFARS rule (2009-D015) not only addressed the
requirements of the WSARA but also contained a comprehensive OCI
framework, the public now has a unique opportunity to comment on two
distinct options for revising the regulatory coverage on OCIs. To this
end, this proposed rule diverges substantially from the framework
presented in the proposed DFARS rule, and we are seeking specific
feedback regarding which course of action, or whether some combination
of the two, is preferable.
B. OCI Case Law
The fundamental approach provided in the proposed DFARS rule is
sound and provides a regulatory framework that thoroughly implements
the established OCI case law. However, the fact that the OCI
regulations are not primarily based in statute means that revisions to
the regulations need not conform with existing case law. Rather,
substantive departures from the case law should be considered if such
changes will produce an OCI framework that is clearer, easier to
implement, and better suited to protecting the interests of the
Government.
C. Similarities of Proposed FAR Rule to Proposed DFARS Rule
Both this proposed FAR rule and the proposed DFARS rule propose
coverage that recognizes the present-day challenges faced by
acquisition officials in identifying and addressing OCIs in the
procurement of products and services to satisfy agency requirements. In
particular, both this proposed rule and the proposed DFARS framework--
1. Reorganize and move OCI coverage to FAR part 3, so that OCIs are
addressed along with related issues, namely other business practices
and personal conflicts of interest (on which final coverage is pending
under FAR Case 2008-025);
2. Clarify key terms and provide more detailed guidance regarding
how contracting officers should identify and address OCIs while
emphasizing that each OCI case may be unique and therefore must be
approached with thoughtful consideration;
3. Provide standard OCI clauses, coupled with the opportunity for
contracting officers to tailor the clauses as appropriate for
particular circumstances; and
4. Address unique policy issues and contracting officer
responsibilities associated with OCIs arising in the context of task-
and delivery-order contracts.
D. Differences Between Proposed FAR Rule and Proposed DFARS Rule
The coverage in this proposed rule differs from that provided by
the framework presented in the DFARS rule by--
1. Providing an analysis of the risks posed by OCIs, and the two
types of harm that can come from them, i.e.,--
Harm to the integrity of the competitive acquisition
system; and
Harm to the Government's business interests;
2. Recognizing that harm to the integrity of the competitive
acquisition system affects not only the Government, but also other
vendors, in addition to damaging the public trust in the acquisition
system. The risk of such harm must be substantially reduced or
eliminated. In contrast, the risk of harm to the Government's business
interests may sometimes be assessed as an acceptable performance risk;
3. Moving coverage of unequal access to nonpublic information and
the requirement for resolving any resulting unfair competitive
advantage out of the domain of OCIs and treating it separately in FAR
part 4. Competitive integrity issues caused by unequal access to
nonpublic information are often unrelated to OCIs. Therefore, treating
this topic independently will allow for more targeted coverage that
properly addresses the specific concerns involved in such cases; and
4. Adding broad coverage regarding contractor access to nonpublic
information, to provide a more detailed framework in which to address
the topic of unequal access to nonpublic information.
III. Proposed OCI Coverage
The Councils propose the following FAR coverage on OCIs:
A. Placement of Coverage in the FAR
As noted above, OCIs are currently addressed in FAR subpart 9.5,
which deals with contractor qualifications. While the ability to
provide impartial advice and assistance is an important qualification
of a Government contractor, the larger issues that underlie efforts to
identify and address OCIs are more directly associated with some of the
business practices issues discussed in FAR part 3. For this reason, the
Councils propose to relocate the FAR coverage on OCIs from FAR subpart
9.5 to a new FAR subpart 3.12.
B. Changes To Provide Greater Clarity of Purpose and Policy
This proposed rule makes the following changes to clarify OCI
policy:
1. Definitions
a. Organizational Conflict of Interest. The proposed FAR rule
establishes a clearer definition for ``organizational conflict of
interest'' (which is included in FAR part 2 and applies throughout the
FAR). The definition of ``organizational conflict of interest'' is
refined to reflect the two types of situations that give rise to OCI
concerns.
b. Address. The verb ``address'' is defined in FAR subpart 3.12,
for the purposes of the subpart, to provide a summary term for the
various approaches for dealing with the risks and preventing the harms
that may be caused by OCIs; each of those approaches is then explained
in more detail in FAR 3.1204.
c. Marketing consultant. In addition, the existing definition of
``marketing consultant'' in FAR subpart 9.5 is removed as unnecessary
because the proposed coverage is expanded beyond contracts for these
entities.
2. Policy. Within the new policy section at FAR 3.1203, the
proposed rule explains the harm OCIs can cause and the actions the
Government must take to address the risks of such harm. This involves
an expanded discussion of the two types of harm that OCIs cause to the
procurement system--harm to the integrity of the competitive
acquisition process and harm to the Government's business interests.
a. Harm to the Integrity of the Competitive Acquisition Process. In
cases where there is a risk of harm to the integrity of a competitive
acquisition process, both the Government's interests and the public
interest in fair competitions are at risk. For this reason, such risks
must be eliminated to the maximum extent possible. In the extremely
rare case that such a risk cannot be eliminated, but award is
nonetheless necessary to meet the Government's needs, a waiver
provision that requires approval at the head of the contracting
activity level or above is provided.
b. Harm to the Government's Business Interests. In cases where the
potential harm from an OCI threatens only the Government's business
interests, it may be appropriate to accept this potential harm as a
performance risk. Acceptance of performance risk represents a novel
means of addressing OCIs and will often only be appropriate after other
steps to reduce the risk have been taken, either by the contractor
(e.g., implementation of a mitigation plan) or by the Government (e.g.,
additional contract management steps or oversight).
[[Page 23239]]
C. Changes To Improve Policy Implementation
This proposed rule assists contracting officers in implementing the
Government's OCI policy by amending existing FAR coverage in two ways:
consolidating the contracting officer's responsibilities regarding
OCIs; and providing standard, but customizable, solicitation provisions
and contract clauses related to OCIs.
1. Consolidated Discussion of Contracting Officer Responsibilities.
This proposed rule creates a new section FAR 3.1206 that provides a
consolidated discussion of contracting officer responsibilities,
including the steps a contracting officer must take during the
different phases of an acquisition to identify and address OCIs.
FAR section 3.1206-2 addresses OCI-related
responsibilities associated with presolicitation activities and
requires the contracting officer to determine whether an acquisition
has the potential to give rise to an OCI early enough in the
acquisition process to include an appropriate provision in the
solicitation, if necessary.
FAR section 3.1206-3 provides guidance related to
evaluating information from the offeror and other sources to determine
if an OCI is present during the evaluation phase and to then address or
waive any OCI before making a contract award.
FAR section 3.1206-4 addresses OCI-related
responsibilities associated with contract award.
FAR section 3.1206-5 addresses task- and delivery-order
contracts, and requires the contracting officer to consider OCIs both
at the time of award and at the time of issuance of each order.
[cir] For interagency acquisitions where the ordering (customer)
agency places orders directly under another agency's contract (a
``direct acquisition''), the ordering agency would be responsible for
addressing OCIs.
[cir] For interagency acquisitions where the servicing agency
performs acquisition activities on the requesting agency's behalf (an
``assisted acquisition''), the interagency agreement entered into
between the servicing and requesting agency to establish the terms and
conditions of the assisted acquisition would need to identify which
party is responsible for carrying out these responsibilities.
By providing a more complete description of the steps involved in
addressing OCIs, the rule will better equip contracting officers to
identify conflicts and work with contractors to address them. This
approach should also help to address the criticism with current FAR
coverage that describing OCIs only through examples misleads
contracting officers to believe that OCIs do not exist in contract
actions that do not fall within the scope of an identified example.
2. New Solicitation Provision and Contract Clauses Related to OCIs.
This proposed rule contains a new solicitation provision and three new
contract clauses related to OCIs. Existing FAR coverage anticipates
appropriate handling of OCI issues through solicitation provisions and
contract clauses, but does not provide a standard format (see FAR
9.507). The Councils determined that it was desirable to provide
contracting officers with standard language that can be used or
tailored as appropriate. The Councils used the requirements currently
in FAR 9.506 and 9.507 as the basis for the proposed provision and
clauses on OCI, providing specific fill-ins the contracting officer
must complete, and language that incorporates any mitigation plan by
reference.
The proposed solicitation provision and clauses are as follows:
FAR 52.203-XX, Notice of Potential Organizational Conflict
of Interest. This provision--
[cir] References the definition of ``organizational conflict of
interest;''
[cir] Provides notice to offerors that the contracting officer has
determined that the nature of the work is such that OCIs may result
from contract performance;
[cir] Requires an offeror to disclose all relevant information
regarding any OCI (including active limitations on future contracting),
and to represent, to the best of its knowledge and belief, that it has
disclosed all relevant information regarding any OCI;
[cir] Requires an offeror to explain the actions it intends to use
to address any OCI, e.g., submit a mitigation plan if it believes an
OCI may exist or agree to a limitation on future contracting; and
[cir] Identifies the clauses that may be included in the resultant
contract, depending upon the manner in which the OCI is addressed
(i.e., FAR 52.203-YY or 52.203-YZ, described below);
FAR 52.203-ZZ, Disclosure of Organizational Conflict of
Interest After Contract Award. The Councils recognize that events may
occur during the performance of a contract that give rise to a new
conflict, or that a conflict might be discovered only after award has
been made. This clause, which is included in solicitations and
contracts when the solicitation includes the provision FAR 52.203-XX,
Notice of Potential Organizational Conflicts of Interest, includes by
reference the definition of ``organizational conflict of interest'' and
requires the contractor to make a prompt and full disclosure of any new
or newly discovered OCI.
FAR 52.203-YY, Mitigation of Organizational Conflicts of
Interest. This clause is generally intended to be used when the
contract may involve an OCI that can be addressed by an acceptable
contractor-submitted mitigation plan prior to contract award. The
clause--
[cir] Includes a reference to the definition of ``organizational
conflict of interest;''
[cir] Incorporates the mitigation plan in the contract;
[cir] Addresses changes to the mitigation plan;
[cir] Addresses noncompliance with the clause or with the
mitigation plan; and
[cir] Requires flowdown of the clause.
FAR 52.203-YZ, Limitation of Future Contracting. This
clause is intended for use when the contracting officer decides to
address a potential conflict of interest through a limitation on future
contracting. The contracting officer must fill in the nature of the
limitation on future contractor activities and the length of any such
limitation.
D. Other Remarks
In addition to the changes described above, the Councils note the
following proposed coverage:
This rule continues to apply to contracts with both profit
and non-profit organizations (current FAR 9.502(a)).
This rule does not exclude the acquisition of commercial
items, including commercially available off-the-shelf (COTS) items.
This proposed rule only requires use of the provision and clauses in
solicitations when the contracting officer determines that the work to
be performed has the potential to give rise to an OCI. Therefore, use
in acquisitions of commercial items, especially COTS items, will
probably not be frequent. The Councils decided that allowing this
discretion to the contracting officer is better than an outright
exclusion of applicability to contracts for the acquisition of
commercial items.
This rule applies to contract modifications that add
additional work. The Councils recognize that contracting officers may
not be able to identify conflicts arising from all future modifications
to a contract at the time of contract award.
This rule adds a requirement at FAR 7.105(b)(18) to
consider OCIs when preparing acquisition plans.
IV. Access to Nonpublic Information
FAR subpart 9.5 and the GAO and CoFC cases interpreting the subpart
[[Page 23240]]
currently treat situations involving contractors having an unfair
competitive advantage based on unequal access to nonpublic information
as OCIs. However, the Councils recognized that these situations do not
actually involve conflicts of interest at all, and may arise from
circumstances unrelated to conflicts of interest, such as where a
former Government employee (who has had access to competitively useful
nonpublic information) has been hired by a vendor. Further, the
Councils observed that the methods available to resolve situations
involving unequal access to information differ from those available to
address actual OCIs. For these reasons, the Councils determined that
separating the coverage of unfair competitive advantage based on
unequal access to nonpublic information from the general coverage of
OCIs is a desirable outcome, as it will remove some of the confusion
often associated with identifying and addressing OCIs.
In developing coverage to treat situations involving unfair
competitive advantage based on unequal access to information, the
Councils recognized that much of such access comes from performance on
other Government contracts. Accordingly, if appropriate contractual
safeguards are established prior to, or at the time of, such access,
the number of situations where unequal access to information will taint
a competition can be minimized. For this reason, this proposed rule
provides a new uniform Governmentwide policy regarding the disclosure
and protection of nonpublic information to which contractors may gain
access during contract performance. This coverage provides substantial
safeguards designed to address some of the concerns created by unequal
access to nonpublic information, while leaving it to the contracting
officer to determine, for any given acquisition, whether the
protections are adequate, or if a situation involving an unfair
competitive advantage remains to be resolved. Because protection and
release of information are administrative matters, this coverage has
been placed in FAR part 4.
The coverage provides--
A definition of ``nonpublic information'' to clearly
identify the scope of information covered;
Coverage of contractor access to nonpublic information
during the course of contract performance;
Specific coverage for situations involving unfair
competitive advantage based on unequal access to nonpublic information;
and
Appropriate solicitation provisions and contract clauses.
A. Definition
The definition of ``nonpublic information'' provided by this
proposed rule includes information belonging to either the Government
or a third party that is not generally made publicly available, i.e.,
information that cannot be released under the Freedom of Information
Act, or information for which a determination has not yet been made
regarding ability to release.
B. Contractor Access to Nonpublic Information
The SARA Panel recommended that the Federal Acquisition Regulatory
(FAR) Council review existing rules and regulations and, to the extent
necessary, create uniform, Governmentwide policy and clauses dealing
with protection of nonpublic information. Additionally, a recent GAO
report, ``Contractor Integrity: Stronger Safeguards Needed for
Contractor Access to Sensitive Information'' (GAO-10-693), recommended
that OFPP act with the FAR Council to provide more thorough protections
when contractors are allowed access to sensitive information. These
recommendations, combined with the need to provide preventive
protections in dealing with cases of unfair competitive advantage based
on unequal access to information, have prompted the Councils to develop
the coverage in this section.
Traditionally, the Government has relied primarily on civil
servants to perform the functions that require access to third-party
contract information and other information in the Government's
possession that requires protection from unauthorized use and
disclosure. However, in recent years, the Government has significantly
increased its use of contractors to assist in performing many such
functions. In addition, some agencies now utilize contractors to
perform research studies that require the contractors to access third-
party information. With the increasing need for contractor access to
nonpublic information, this rule seeks to establish a uniform, and more
streamlined and efficient approach.
The Councils are proposing that contractors should be contractually
obligated to protect all nonpublic information to which they obtain
access by means of contract performance (whether information from the
Government or a third party), with certain exceptions (e.g., the
information was already in the contractor's possession) (see FAR
52.204-XX(c)). Further, the Councils are proposing that contractors
should require all employees who may access nonpublic information to
sign nondisclosure agreements and that the obligations arising from
these agreements will be enforceable by both the Government and third-
party information owners. By implementing these protections as the
default position, the proposed approach substantially enhances the
protection for third-party and Government information provided by the
FAR.
Many contracts of the type described above involve not only
multiple subcontractors, but also many lower-tier subcontracts. The
current ad hoc approach employed by Government agencies for ensuring
that all of these contractors have properly executed nondisclosure
agreements among themselves has resulted in the existence of a
substantial number of overlapping, but not necessarily uniform,
agreements--and oftentimes confusion and misunderstandings between the
Government and its contractors. The Councils have determined that the
approach of requiring inclusion of an ``access'' clause to protect
information disclosed to a contractor, and a ``release'' clause to
notify third-party information owners of their rights when their
information is improperly used or disclosed should provide thorough
protection while eliminating the need for many interconnecting
nondisclosure agreements.
1. Access Clause. The first element of this new approach is the
proposed Access clause at FAR 52.204-XX, Access to Nonpublic
Information. The purpose of the Access clause is to preclude
contractors from using Government or third-party information for any
purpose unrelated to contract performance. This clause requires that
contractors receiving access to nonpublic information must limit the
use of such nonpublic information to the purposes specified in the
contract, safeguard the nonpublic information from unauthorized outside
disclosure, and inform employees of their obligations and obtain
written nondisclosure agreements consistent with those obligations. The
clause also sets forth certain exceptions (relating to the
applicability of the contractor's obligations), but the exceptions do
not apply unless the contractor can demonstrate to the contracting
officer that an exception is applicable.
The Access clause is subordinate to all other contract clauses or
requirements that specifically address the access, use, handling, or
disclosure of nonpublic information. If any restrictions or
authorizations in the clause are inconsistent with any other clause or
requirement of the contract,
[[Page 23241]]
the other clause or requirement takes precedence.
This rule proposes, as the default position, mandatory use of the
Access clause in solicitations and contracts when contract performance
may involve contractor access to nonpublic information. However, the
prescription allows agencies to provide otherwise in their procedures.
The Access clause is prescribed on the same basis for use in
solicitations and contracts for the acquisition of commercial items and
in simplified acquisitions.
2. Alternate to the Access Clause
a. Alternate I. Alternate I is prescribed for use if the
contracting officer anticipates that there may be a need for executing
confidentiality agreements between the contractor and one or more third
parties that have provided nonpublic information to the Government.
This alternate requires the contractor, if requested by the contracting
officer, to negotiate and sign an agreement identical, in all material
respects, to the restrictions on use and disclosure of nonpublic
information in the Access clause, with each entity that has provided
the Government nonpublic information to which the contractor must now
have access to perform its obligations under the contract.
b. Alternate II. Alternate II is for use if the contracting officer
anticipates that the contractor may require access to a third party's
facilities or nonpublic information that is not in the Government's
possession. This alternate requires the contractor, if requested by the
contracting officer, to execute a Government-approved agreement with
any party to whose facilities or nonpublic information it is given
access, restricting the contractor's use of the nonpublic information
to performance of the contract.
3. Release Clause. The purpose of the Release clause at FAR 52.204-
YY, Release of Nonpublic Information, is to obtain the consent of the
original owners of third-party nonpublic information for the Government
to release such information to those contractors who need access to it
for purposes of contract performance and who have signed up to the
conditions of the Access clause.
Unless agency procedures provide otherwise, the contracting officer
must use the Release clauses in all solicitations and contracts,
including solicitations and contracts for the acquisition of commercial
items and below the simplified acquisition threshold.
A solicitation provision at FAR 52.204-XY, Release of Nonpublic
Information, that provides similar coverage is prescribed for all
solicitations.
C. Unequal Access to Nonpublic Information
1. Policy. FAR section 4.402 addresses situations in which access
to nonpublic information constitutes a risk to the competitive
integrity of the acquisition process. It includes a policy section,
expressing the Government's policy that contracting officers must take
action to resolve situations where one or more offerors hold an unfair
competitive advantage. The policy section also states that
disqualification of an offeror is the least-favored approach and should
only be adopted if no other method of resolution will adequately
protect the integrity of the competition.
2. General Principles. FAR subsection 4.402-3 contains general
principles for determining when access to nonpublic information
requires resolution. Specifically, the access must be Government-
provided, the access must be unequal (that is, not all of the
prospective offerors have access), the information must be
competitively useful, and the competitive advantage must be unfair.
3. Contracting Officer Responsibilities. FAR subsection 4.402-4
contains details covering contracting officer responsibilities. This
begins with requirements to collect information regarding unequal
access to nonpublic information, both from within the Government and
from offerors. If the contracting officer becomes aware that an offeror
may have unequal access to nonpublic information, the rule requires
that the contracting officer conduct an analysis, consistent with the
general principles discussed above, to determine whether resolution is
required. If resolution is not required, the contracting officer simply
documents the file. If resolution is required, the contracting officer
must take action consistent with the section detailing appropriate
resolution techniques, which consist of information sharing, mitigation
through the use of a firewall, or disqualification.
4. Solicitation Provision. FAR subsection 4.402-5 prescribes a
solicitation provision, FAR 52.204-YZ, Unequal Access to Nonpublic
Information, that requires offerors to identify, early in the
solicitation process, whether it or any of its affiliates possesses any
nonpublic information relevant to the solicitation and provided by the
Government. It also requires that the contractor certify by submission
of its offer that, where a mitigation plan involving a firewall is
already in place (addressing nonpublic information relevant to the
current competition), the offeror knows of no breaches of that
firewall.
V. Solicitation of Public Comment
When commenting on the proposed rule, respondents are encouraged to
offer their views on the following questions:
A. Do the policy and associated principles set forth in the
proposed rule provide an effective framework for evaluating and
addressing conflicts of interest?
B. Is the definition of ``organizational conflict of interest''
sufficiently comprehensive to address all potential forms of such
conflicts?
C. Do the enumerated techniques for addressing OCIs adequately
address the Government's interests? Are any too weak or overbroad? Are
there other techniques that should be addressed?
D. Does the rule adequately address the potential conflicts that
may arise for companies that have both advisory and production
capabilities? What, if any, improvements might be made?
E. Do the proposed solicitation provisions and contract clauses
adequately implement the policy framework set forth in the proposed
rule? For example, is a clause limiting future contracting an
operationally feasible means of resolving a conflict? Would it be
beneficial and appropriate for this information generally to be made
publicly available, such as through a notice on FedBizOpps? Do the
solicitation provisions and contract clauses afford sufficient
flexibility to help an agency meet its individual needs regarding a
prospective or actual conflict?
F. Is there a need for additional guidance to supplement the
proposed FAR coverage of OCIs (e.g., guidance addressing the management
of OCI responsibilities)? If so, what points should the guidance make?
G. Is the framework presented by this proposed rule preferable to
the framework presented in the DFARS Proposed Rule 2009-D015 published
in the Federal Register on April 22, 2010 (75 FR 20954-20965)? Why or
why not? Would some hybrid of the two proposed rules be preferable?
H. Does the proposed rule strike the right balance between
providing detailed guidance for contracting officers and allowing
appropriate flexibility for dealing with the variety of forms that
organizational conflicts of interest take and the variety of
circumstances under which they arise?
Are there certain types of contracts, or contracts for certain
types of services,
[[Page 23242]]
that warrant coverage that is more strict than that provided by the
proposed rule?
VI. Executive Orders 12866 and 13563
This is a significant regulatory action and, therefore, was subject
to Office of Management and Budget review under Section 6(b) of
Executive Order 12866, Regulatory Planning and Review, dated September
30, 1993. This rule is not a major rule under 5 U.S.C. 804.
In accordance with Executive Order 13563, Improving Regulation and
Regulatory Review, dated January 18, 2011, DoD, GSA, and NASA
determined that this rule is not excessively burdensome on the public,
and is consistent with Section 841 of the Duncan Hunter National
Defense Authorization Act for Fiscal Year 2009, which required a review
of the FAR coverage on OCIs.
VII. Regulatory Flexibility Act
A. The proposed changes are not expected to result in a significant
economic impact on a substantial number of small entities within the
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.,
because--
1. The requirements of FAR subpart 3.12 do not differ from the
burden currently imposed on offerors and contractors by FAR subpart 9.5
and the requirements of subpart 3.12 are not significantly burdensome.
It is good business practice to have procedures in place to identify
potential organizational conflicts of interest and to have prepared
mitigation plans for obvious conflicts. This proposed rule has also
reduced the potential burden by--
a. Not including a certification requirement; and
b. Providing for avoidance, neutralization, or mitigation of
organizational conflicts or interest or, under exceptional
circumstances, waiver of the requirement for resolution.
2. Unless the Access clause is used with Alternate I or Alternate
II, this approach standardizes and simplifies the current system of
third-party agreements envisioned by FAR 9.505-4. Having each
contractor implement specific safeguards and procedures should offer
the same or better protection for information belonging to small
business entities. Moreover, this rule should ease the burden on most
small business entities by not requiring them to enter multiple,
interrelated third-party agreements with numerous service contractors.
If the Access clause is used with Alternate I or Alternate II, then
that is no more burdensome than the current requirements of FAR 9.505-
4.
B. However, an Initial Regulatory Flexibility Analysis has
nevertheless been prepared and is summarized as follows:
This proposed rule implements Section 841 of the Duncan Hunter
National Defense Authorization Act for Fiscal Year 2009 (Pub. L. 110-
417) by providing revised regulatory coverage on organizational
conflicts of interest (OCIs) and unequal access to information. The
rule also provides additional coverage regarding contractor access to
nonpublic information, and adds related provisions and clauses.
The objective of the rule is to help the Government in identifying
and addressing circumstances in which a Government contractor may be
unable to render impartial assistance or advice to the Government or
might have an unfair competitive advantage based on unequal access to
information or prior involvement in setting the ground rules for an
acquisition.
In recent years, a number of trends in acquisition and industry
have led to the increased potential for OCIs, including--
Industry consolidation;
Agencies' growing reliance on contractors for services,
especially where the contractor is tasked with providing advice to the
Government; and
The use of multiple-award task- and delivery-order
contracts, which permit large amounts of work to be awarded among a
limited pool of contractors.
Section 841 of the Duncan Hunter National Defense Authorization Act
for Fiscal Year 2009 (Pub. L. 110-417) directed a review of the
conflicts of interest provisions in the FAR. Section 841 required that
appropriate revisions, including contract clauses, be developed as
necessary, pursuant to that review.
Competitive integrity issues caused by unequal access to nonpublic
information are often unrelated to OCIs. Therefore, treating this topic
independently will allow for more targeted coverage that properly
addresses the specific concerns involved in such cases; and including
broad coverage of contractor access to nonpublic information will
provide a framework for the topic of unequal access to nonpublic
information.
An OCI is defined as a situation in which a Government contract
requires a contractor to exercise judgment to assist the Government in
a matter (such as in drafting specifications or assessing another
contractor's proposal or performance) and the contractor or its
affiliates have financial or other interests at stake in the matter, so
that a reasonable person might have concern that when performing work
under the contract, the contractor may be improperly influenced by its
own interests rather than the best interests of the Government; or a
contractor could be viewed as having an unfair competitive advantage in
an acquisition as a result of having previously performed work on a
Government contract, under circumstances such as those just described,
that put the contractor in a position to influence the acquisition. The
circumstances that lead to OCIs are most likely to occur in large
businesses that have diverse capacity to provide both upfront advice
and also a capacity for production. Although a small business might
become involved in OCIs through its affiliates, we estimate that the
proposed rules on OCIs would not impact a significant number of small
entities. Furthermore, this rule is not adding burdens relating to OCIs
that are beyond the current expectations of FAR subpart 9.5. It is just
providing standard procedures and clauses, rather than requiring each
contracting officer to craft unique provisions and clauses appropriate
to the situation.
With regard to contractor access to information, the rule will
impact entities that have access to nonpublic information in
performance of a Government contract. We estimate that about half of
the entities impacted will be small entities (estimated at 25,000 small
entities). Typical contracts that may provide access to nonpublic
information include services contracts such as professional,
administrative, or management support or special studies and analyses.
Furthermore, small entities that are submitting offers to the
Government must inform the Government, prior to submission of offers,
if they possess any nonpublic information relevant to the current
solicitation (estimated at 5,750 small entities).
This rule requires the following projected reporting burdens for
access to information:
a. Provide copy of nondisclosure agreement upon request (6,250
respondents x .5 hours per response = 3,125 hours).
b. Notify contracting officer of violation (250 respondents x 4
hours per response = 1,000 hours).
c. Notify contracting officer if access information that should not
have access to (125 respondents x 1 hour per response = 125 hours).
d. Explain in solicitation any unequal access to nonpublic
information (5,750
[[Page 23243]]
respondents x 3 hours per response = 17,250).
e. Explain if firewall was not implemented, or breached (rare) (10
respondent x 5 hours per response = 50 hours).
We estimate that the respondents will be administrative employees
earning approximately $75 per hour (+ .3285 overhead).
This rule overlaps, with other Federal rules: FAR Cases 2007-018,
2007-019, 2008-025, 2009-022, and 2009-030; and DFARS Case 2009-D015.
The Councils identified a significant alternative that would
accomplish the objectives of the statute and the policies. See the
discussion in the rule preamble about DFARS case 2009-D015.
DoD, GSA, and NASA invite comments from small business concerns and
other interested parties on the expected impact of this rule on small
entities.
DoD, GSA, and NASA will also consider comments from small entities
concerning the existing regulations in subparts affected by the rule in
accordance with 5 U.S.C. 610. Interested parties must submit such
comments separately and should cite 5 U.S.C. 610 (FAR Case 2011-001),
in correspondence.
VIII. Paperwork Reduction Act
The proposed changes to the FAR impose a new information collection
requirement that requires the approval of the Office of Management and
Budget under 44 U.S.C. chapter 35, et seq. Under this proposed rule, an
offeror may be required to submit information to identify an OCI and
propose a resolution, such as a mitigation plan submitted by the
offeror with its proposal. While this requirement existed informally
since 1984 in FAR subpart 9.5, it is only now being formalized via the
new contract provision and clause at FAR 52.203-XX and FAR 52.203-YY.
A. Annual Reporting Burden:
Public reporting burden for this collection of information is
estimated to average approximately 4.6 hours per response, including
the time for reviewing instructions, searching existing data sources,
gathering and maintaining the data needed, and completing and reviewing
the collection of information.
The annual reporting burden is estimated as follows:
1. Organizational Conflicts of Interest.
Respondents: 30,930.
Responses per respondent: 1.0.
Total annual responses: 30,930.
Preparation hours per response: 6.96.
Total response burden hours: 215,273.
2. Contractor Access to Nonpublic Information.
Respondents: 24,760.
Responses per respondent: 1.
Total annual responses: 24,760.
Preparation hours per response: 2.
Total response burden hours: 49,520.
3. Total.
Respondents: 55,690.
Responses per respondent: 1.
Total annual responses: 55,690.
Preparation hours per response: 4.755.
Total response burden hours: 264,793.
B. Request for Comments Regarding Paperwork Burden
Submit comments, including suggestions for reducing this burden,
not later than June 27, 2011 to: FAR Desk Officer, OMB, Room 10102,
NEOB, Washington, DC 20503, and a copy to the General Services
Administration, Regulatory Secretariat (MVCB), Attn: Hada Flowers, 1275
First Street, NE., 7th Floor, Washington, DC 20417.
Public comments are particularly invited on: Whether this
collection of information is necessary for the proper performance of
functions of the FAR, and will have practical utility; whether our
estimate of the public burden of this collection of information is
accurate, and based on valid assumptions and methodology; ways to
enhance the quality, utility, and clarity of the information to be
collected; and ways in which we can minimize the burden of the
collection of information on those who are to respond, through the use
of appropriate technological collection techniques or other forms of
information technology.
Requester may obtain a copy of the supporting statement from the
General Services Administration, Regulatory Secretariat (MVCB), 1275
First Street, NE., 7th Floor, Washington, DC 20417. Please cite OMB
Control Number 9000-0178, Organizational Conflicts of Interest, in
correspondence.
List of Subjects in 48 CFR Parts 2, 3, 4, 7, 9, 11, 12, 13, 14, 15,
16, 18, 37, 42, 52, and 53
Government procurement.
Dated: April 13, 2011.
Millisa Gary,
Acting Director, Office of Governmentwide Acquisition Policy.
Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 2, 3,
4, 7, 9, 11, 12, 13, 14, 15, 16, 18, 37, 42, 52, and 53 as set forth
below:
1. The authority citation for 48 CFR parts 2, 3, 4, 7, 9, 11, 12,
13, 14, 15, 16, 18, 37, 42, 52, and 53 continues to read as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 2--DEFINITIONS OF WORDS AND TERMS
2. Amend section 2.101 in paragraph (b)(2) by--
a. Removing from paragraph (3) in the definition ``Advisory and
assistance services'' ``(see 9.505-1(b))'';
b. Adding, in alphabetical order, the definition ``Nonpublic
information''; and
c. Revising ``Organizational conflict of interest.''
The added and revised text to read as follows:
Sec. 2.101 Definitions.
* * * * *
(b) * * *
(2) * * *
Nonpublic information means any Government or third-party
information that--
(1) Is exempt from disclosure under the Freedom of Information Act
(5 U.S.C. 552) or otherwise protected from disclosure by statute,
Executive order, or regulation; or
(2) Has not been disseminated to the general public, and the
Government has not yet determined whether the information can or will
be made available to the public.
* * * * *
Organizational conflict of interest means a situation in which--
(1) A Government contract requires a contractor to exercise
judgment to assist the Government in a matter (such as in drafting
specifications or assessing another contractor's proposal or
performance) and the contractor or its affiliates have financial or
other interests at stake in the matter, so that a reasonable person
might have concern that when performing work under the contract, the
contractor may be improperly influenced by its own interests rather
than the best interests of the Government; or
(2) A contractor could have an unfair competitive advantage in an
acquisition as a result of having performed work on a Government
contract, under circumstances such as those described in paragraph (1)
of this definition, that put the contractor in a position to influence
the acquisition.
* * * * *
PART 3--BUSINESS ETHICS AND CONFLICTS OF INTEREST
3. Revise part 3 heading to read as set forth above.
4. Revise section 3.000 to read as follows:
[[Page 23244]]
Sec. 3.000 Scope of part.
This part prescribes policies and procedures for addressing issues
regarding business ethics and conflicts of interest.
Sec. 3.603 [Amended]
5. Amend section 3.603 by removing from paragraph (b) ``subpart
9.5'' and adding ``subpart 3.12'' in its place.
6. Add subpart 3.12 to read as follows:
Subpart 3.12--Organizational Conflicts of Interest
Sec.
3.1200 Scope of subpart.
3.1201 Definition.
3.1202 Applicability.
3.1203 Policy.
3.1204 Methods of addressing organizational conflicts of interest.
3.1204-1 Avoidance.
3.1204-2 Limitation on future contracting (neutralization).
3.1204-3 Mitigation.
3.1204-4 Assessment that risk is acceptable.
3.1205 Waiver.
3.1206 Contracting officer responsibilities.
3.1206-1 General.
3.1206-2 Pre-solicitation responsibilities.
3.1206-3 Addressing organizational conflicts of interest during
evaluation of offers.
3.1206-4 Contract award.
3.1206-5 Issuance of task or delivery orders or blank purchase
agreement calls.
3.1207 Solicitation provision and contract clauses.
Subpart 3.12--Organizational Conflicts of Interest
Sec. 3.1200 Scope of subpart.
(a) This subpart prescribes policies and procedures for
identifying, analyzing, and addressing organizational conflicts of
interest (as defined in 2.101). It implements 41 U.S.C. 2304 and
section 841(b)(2) of Public Law 110-417.
(b) This subpart does not address unequal access to nonpublic
information, which is addressed in 4.402.
Sec. 3.1201 Definition.
``To address,'' as used in this subpart, means to protect the
integrity of the competitive acquisition process, as well as the
Government's business interests (see 3.1203(a)(2)), by one or more of
the following methods:
(1) Avoidance.
(2) Neutralization through limitations on future contracting.
(3) Mitigation of the risks involved.
(4) Assessment that the risk inherent in the conflict is acceptable
(either without further action or in conjunction with application of
one or more of the other methods listed in paragraphs (a) through (c)
of this definition). (See 3.1204.)
Sec. 3.1202 Applicability.
(a) This subpart--
(1) Applies to contracts and subcontracts with both profit and
nonprofit organizations, including nonprofit organizations created
largely or wholly with Government funds. Contracts include task and
delivery orders and modifications that add work; and
(2) Applies to the acquisition of commercial items, including
commercially available off-the-shelf items (see 12.301(d)(3)) if the
contracting officer determines that contractor performance of the work
may give rise to an organizational conflict of interest.
(b) Although this subpart applies to every type of acquisition,
organizational conflicts of interest are more likely to arise when at
least one of the contracts involved is for acquisition support services
or advisory and assistance services.
(c) Application of this subpart is independent of coverage
concerning unequal access to nonpublic information (see 4.402).
Contracting officers must consider each issue separately in determining
whether steps must be taken to protect the interests of the Government.
(d) This subpart shall not be applied in any manner that conflicts
with an agency-specific conflict of interest statute.
Sec. 3.1203 Policy.
(a) The Government's interests. It is the Government's policy to
identify, analyze, and address organizational conflicts of interest
that might otherwise exist or arise in acquisitions in order to
maintain the public's trust in the integrity and fairness of the
Federal acquisition system. Organizational conflicts of interest have
the potential to undermine the public's trust in the Federal
acquisition system because they can impair--
(1) The integrity of the competitive acquisition process. The
Government has an interest in preserving its ability to solicit
competitive proposals and affording prospective offerors an opportunity
to compete for Government requirements on a level playing field. In
some cases, an organizational conflict of interest will be accompanied
by a risk that the conflicted contractor will create for itself, or
obtain, whether intentionally or not, an unfair advantage in competing
for a future Government requirement. The result may be a seriously
flawed competition, which is unacceptable in terms of good governance,
fairness, and maintenance of the public trust; and
(2) The Government's business interests. As a steward of public
funds, the Government has an interest in ensuring both that it acquires
products and services that provide the best value to the Government and
that the contractor's performance in fulfilling the Government's
requirements is consistent with contractual expectations. In many
cases, an organizational conflict of interest will be accompanied by a
risk that the conflict will affect the contractor's judgment during
performance in a way that degrades the value of its services to the
Government. This type of risk is most likely to appear when the
exercise of judgment is a key aspect of the service that the contractor
will be providing.
(b) Addressing organizational conflicts of interest. (1) Agencies
must examine and address organizational conflicts of interest on a
case-by-case basis, because such conflicts arise in various, and often
unique, factual settings. Contracting officers shall consider both the
specific facts and circumstances of the contracting situation and the
nature and potential extent of the risks associated with an
organizational conflict of interest when determining what method or
methods of addressing the conflict will be appropriate.
(2) If an organizational conflict of interest is such that it risks
impairing the integrity of the competitive acquisition process, then
the contracting officer must take action to substantially reduce or
eliminate this risk.
(3) If the only risk created by an organizational conflict of
interest is a performance risk relating to the Government's business
interests, then the contracting officer has broad discretion to select
the appropriate method for addressing the conflict, including the
discretion to conclude that the Government can accept some or all of
the performance risk.
(c) Waiver. It is the policy of the Government to minimize the use
of waivers of organizational conflicts of interest. However, in
exceptional circumstances, the agency may grant a waiver in accordance
with 3.1205.
Sec. 3.1204 Methods of addressing organizational conflicts of
interest.
Organizational conflicts of interest may be addressed by means of
avoidance, limitations on future contracting, mitigation, or the
Government's assessment that the risk inherent in the conflict is
acceptable. In
[[Page 23245]]
some cases, a combination of methods may be appropriate.
Sec. 3.1204-1 Avoidance.
Avoidance consists of Government action taken in one acquisition
that is intended to prevent organizational conflicts of interest from
arising in that acquisition or in a future acquisition. In order to
successfully implement an avoidance strategy, the contracting officer
should work with the program office or requiring activity early in the
acquisition process. Methods of avoiding organizational conflicts of
interest include, but are not limited to, the following:
(a) Drafting the statement of work to exclude tasks that require
contractors to utilize subjective judgment. This strategy may be used
to avoid or prevent organizational conflicts of interest both in the
instant contract and in future acquisitions. Tasks requiring subjective
judgment include--
(1) Making recommendations;
(2) Providing analysis, evaluation, planning, or studies; and
(3) Preparing statements of work or other requirements and
solicitation documents.
(b) Requiring the contractor (and its affiliates, as appropriate)
to implement structural barriers, internal corporate controls, or both,
in order to forestall organizational conflicts of interest that could
arise because, for example, the contractor will be participating in
preparing specifications or work statements in the performance of the
immediate contract. This avoidance method differs from mitigation in
that it is used to prevent organizational conflicts of interest from
arising in future acquisitions, rather than addressing organizational
conflicts of interest in the instant contract.
(c) Excluding an offeror or offerors from participation in a
procurement. (1) Use of this method may be appropriate when the
contracting officer concludes that--
(i) The offeror will have an unfair advantage in the competition
because of its prior involvement (or an affiliate's prior involvement)
in developing the ground rules for the procurement; or
(ii) The risk that the offeror's judgment or objectivity in
performing the proposed work will be impaired because the substance of
the work has the potential to affect other of the offeror's (or its
affiliates') current or future activities or interests is more
significant than the Government is willing to accept.
(2) This approach may be used only if the contracting officer has
determined that no less restrictive method for addressing the conflict
will adequately protect the Government's interest. This determination
must be documented in the contract file.
(3) Before excluding an offeror from participation in a procurement
on the basis of an organizational conflict of interest that arises
because of work done by an affiliate of the offeror (creating an unfair
competitive advantage), the contracting officer shall identify and
analyze the corporate and business relationship between the offeror and
the affiliate. The contracting officer's efforts should be directed
toward understanding the nature of the relationship between the
entities and determining whether the risk associated with the
organizational conflict of interest can be addressed through mitigation
(see 3.1204-3). The contracting officer should, at a minimum, examine
whether--
(i) The offeror and affiliate are controlled by a common corporate
headquarters;
(ii) The overall corporate organization has established internal
barriers, such as corporate resolutions, management agreements, or
restrictions on personnel transfers, that limit the flow of
information, personnel, and other resources between the relevant
entities;
(iii) The offeror and affiliates are separate legal entities and
are managed by separate boards of directors;
(iv) The corporate organization has instituted recurring training
on organizational conflicts of interest and protections against
organizational conflicts of interest; and
(v) The affiliate can influence the offeror's performance of its
contractual requirements.
Sec. 3.1204-2 Limitation on future contracting (neutralization).
(a) A limitation on future contracting allows a contractor to
perform on the instant contract but precludes the contractor from
submitting offers for (or participating as a subcontractor in) future
contracts where the contractor would have an unfair advantage in
competing for award (or could provide the prime contractor with such an
advantage). The limitation on future contracting effectively
``neutralizes'' the organizational conflict of interest.
(b) Limitations on future contracting shall be restricted to a
fixed term of reasonable duration that is sufficient to neutralize the
organizational conflict of interest. The restriction shall end on a
specific date or upon the occurrence of an identifiable event.
Sec. 3.1204-3 Mitigation.
(a)(1) Mitigation is any action taken to reduce the risk that an
organizational conflict of interest will undermine the public's trust
in the Federal acquisition system.
(2) Mitigation may require Government action, contractor action, or
a combination of both.
(b) When this approach is utilized, a Government-approved
mitigation plan, reflecting the actions a contractor has agreed to take
to mitigate a conflict, shall be incorporated into the contract. The
required complexity of the mitigation plan is related to the complexity
of the organizational conflict of interest and the size of the
acquisition. While implementation of a mitigation plan may rest largely
with a contractor, the Government bears responsibility for ensuring
that mitigation plans are properly implemented, and the Government must
not leave enforcement to the contractor.
(c) Ways of mitigating organizational conflicts of interest
include, but are not limited to, the following:
(1) Requiring a subcontractor or team member that is conflict-free
to perform the conflicted portion of the work on the instant contract.
This technique will not be effective in reducing the risk associated
with a conflict unless it is utilized in conjunction with a system of
controls that can ensure that the conflicted entity has no input or
influence on the work of the subcontractor or team member performing
the conflicted portion of the work.
(2) Requiring the contractor to implement structural or behavioral
barriers, internal controls, or both. (i) This method can be used to
lessen the risk that the potentially conflicting financial interests of
an affiliate will influence the contractor's exercise of judgment
during contract performance. The choice of specific barriers or
controls should be based on an analysis of the facts and circumstances
of each case. Examples of such methods include, but are not limited
to--
(A) An agreement that the contractor's board of directors will
adopt a binding resolution prohibiting certain directors, officers, or
employees, or parts of the company from any involvement with contract
performance;
(B) A condition for a nondisclosure agreement between the
contractor performing the contract and all of its affiliates;
(C) A condition that the contractor's board of directors include
one or more independent directors who have no prior relationship with
the contractor; and
(D) Creation of a corporate organizational conflict of interest
compliance official at a senior level to
[[Page 23246]]
oversee implementation of any mitigation plan.
(ii) A firewall will often be necessary to implement the controls
in the previous paragraph (c)(2)(i) of this subsection. However, a
firewall that serves only to limit the sharing of information, by
itself, is generally not effective in addressing an organizational
conflict of interest.
(3) Obtaining advice from more than one source on a particular
issue, so that the Government is not relying solely on the advice of
any one of the sources.
3.1204-4 Assessment that risk is acceptable.
(a) The contracting officer shall not use this method of assessment
that the risk is acceptable to address conflicts when the conflict
could impair the competitive acquisition process (see 3.1203).
(b) The contracting officer may assess that the risk associated
with an organizational conflict of interest is acceptable when--
(1) The only risk created by the conflict is a performance risk
relating to the business interests of the Government;
(2) The risk is manageable; and
(3) The potential harm to the Government's interest is outweighed
by the expected benefit from having the conflicted offeror perform the
contract.
(c) This method of addressing conflicts should generally be
combined with other methods, particularly mitigation. For example, the
contracting officer may require a mitigation plan, and elect to accept
the remaining risk if the contracting officer concludes that the
mitigation plan does not remove all of the performance risk associated
with the conflict.
(d) The contracting officer shall consider all readily available
information (see 3.1206-3) before concluding that the risk of harm is
acceptable.
(e) All assessments that the risk is acceptable must be in writing,
setting forth the extent of the conflict and explaining why it is in
the best interest of the Government to accept the risk associated with
the conflict.
3.1205 Waiver.
(a) Authority. (1) In exceptional circumstances, the agency head
may waive the requirement to address an organizational conflict of
interest in a particular acquisition, but only if the agency head first
determines that--
(i) Mitigation or other means of addressing the organizational
conflict of interest are not feasible (e.g., the agency cannot assess
the risk as acceptable because the organizational conflict of interest
involves an unfair competitive advantage); and
(ii) The waiver is necessary to accomplish the agency's mission.
(2) The agency head shall not delegate this waiver authority below
the head of a contracting activity.
(b) Requirements. (1) Any waiver shall--
(i) Be in writing;
(ii) Cover only one contract action;
(iii) Describe the extent of the organizational conflict of
interest;
(iv) Explain why the waiver is necessary to accomplish the agency's
mission; and
(v) Be approved by the appropriate official.
(2) The contracting officer shall include the waiver documentation
and decision in the contract file.
3.1206 Contracting officer responsibilities.
3.1206-1 General.
(a) The contracting officer shall assess early in the acquisition
process whether contractor performance of the contemplated work is
likely to create any organizational conflicts of interest (see 3.1206-2
and 7.105(b)(18)).
(b) The contracting officer shall exercise common sense, good
judgment, and sound discretion--
(1) In deciding whether an acquisition may give rise to an
organizational conflict of interest; and
(2) In developing an appropriate means for addressing any such
conflicts.
3.1206-2 Pre-solicitation responsibilities.
(a) Initial assessment. (1) The contracting officer shall review
the nature of the work to be performed to decide whether performance by
a contractor has the potential to create an organizational conflict of
interest (see 3.1202(b)). In addition to evaluating the nature of the
work to be performed on the immediate contract, the contracting officer
should also consider whether performance of the present contract could
cause the contractor to have an organizational conflict of interest in
a foreseeable future contract.
(2) As appropriate to the circumstances, the contracting officer
should obtain the assistance of the program office, appropriate
technical specialists, and legal counsel in identifying the potential
for organizational conflicts of interest.
(3) If the contracting officer decides that contractor performance
of the contemplated work does not have the potential to create an
organizational conflict of interest, the contracting officer shall
document in the contract file the rationale supporting the decision.
(4) If the contracting officer decides that contractor performance
of the contemplated work has the potential to create an organizational
conflict of interest, the contracting officer should consult with the
program office or requiring activity to determine whether any
organizational conflicts of interest could be avoided by drafting the
requirements documents to exclude tasks that require the contractor to
exercise subjective judgment during contract performance. If avoiding
organizational conflicts of interest is not feasible at this stage,
then the contracting officer shall proceed with the pre-solicitation
actions described in paragraph (b) of this subsection.
(b) Pre-solicitation actions. (1) When assessing the nature and
scope of any organizational conflicts of interest that may arise during
contract performance and preliminarily considering how best to address
any such conflicts, the contracting officer should weigh the following
factors to the extent feasible at this pre-solicitation phase:
(i) The extent to which the contract calls for the contractor to
exercise subjective judgment and provide advice.
(ii) The extent and severity of the expected impact of the
organizational conflict of interest (for example, whether it is
expected to occur only once or twice during performance or to impact
performance of the entire contract).
(iii) The extent to which the agency has effective oversight
controls to ensure that the contractor's actions are unaffected by an
organizational conflict of interest during performance.
(iv) Whether the organizational conflict of interest risks creation
of an unfair competitive advantage.
(v) The degree to which any impairment of the contractor's
objectivity may reduce the value of its services to the agency, and the
agency's willingness to accept the performance risk of that impairment.
(2) If the contracting officer concludes that the only risk
associated with organizational conflicts of interest is a risk to the
Government's business interests, the contracting officer may choose one
of the following approaches:
(i) Include consideration of potential risks associated with
organizational conflicts of interest as an evaluation factor in the
technical rating. If the Government determines that treatment of
organizational conflicts of interest through use of an evaluation
factor is appropriate, an appropriate evaluation factor must be
included in the solicitation.
[[Page 23247]]
(ii) Do not include consideration of potential risks associated
with organizational conflicts of interest as an evaluation factor in
the technical rating. In this case, the Government will address the
performance risks associated with any organizational conflicts of
interest outside of the evaluation process and may engage in exchanges
with offerors in order to understand the conflicts and assess the
feasibility of addressing the risks (see 3.1206-3(b)(2)(ii)). Prior to
contract award, the source selection team will select the apparent
successful offeror independent of any organizational conflict of
interest. The contracting officer will then assess whether or not to
proceed with award, based on whether any organizational conflict of
interest can be addressed (see 3.1206-4(a)). Award to the apparent
successful offeror will not be made if any organizational conflict of
interest cannot be addressed.
(3) If the contracting officer has decided that contractor
performance of the contemplated work has the potential to create an
organizational conflict of interest, the contracting officer shall
select the appropriate solicitation provisions and contract clauses for
the resulting solicitation in accordance with 3.1207.
(i) The contracting officer shall require the program office or
requiring activity to identify any contractor(s) that participated in
preparation of the statement of work or other requirements documents,
including cost or budget estimates. The contracting officer shall
review this list to identify the nature and scope of any conflict. The
solicitation should, if appropriate, include a provision identifying
contractors prohibited from competing as a prime contractor or a
subcontractor due to any applicable pre-existing limitations on future
contracting.
(ii) The contracting officer shall include in the solicitation a
provision and clause as prescribed in 3.1207(a) and 3.1207(b).
(iii) If the contracting officer anticipates that the parties will
use a mitigation plan to address an organizational conflict of interest
in whole or in part, the contracting officer shall include in the
solicitation a clause as prescribed in 3.1207(c).
(iv) When the contemplated work calls for the contractor to
exercise subjective judgment or provide advice which may create an
unfair competitive advantage, the contracting officer shall include in
the solicitation an appropriate limitation on future contracting as
prescribed in 3.1207(d).
3.1206-3 Addressing organizational conflicts of interest during
evaluation of offers.
(a) Sources of Information--(1) Information from offerors. The
contracting officer shall use information provided by the offerors (see
52.203-XX, Notice of Potential Organizational Conflict of Interest) to
identify organizational conflicts of interest. However, the contracting
officer should not rely solely on this contractor-provided information.
(2) Other sources of information. The contracting officer should
seek readily available information about the financial interests of the
offerors, affiliates of the offerors, and prospective subcontractors
from within the Government or from other sources and compare this
information against information provided by the offeror.
(i) Government sources. Government sources include the files and
the knowledge of personnel within--
(A) The contracting office;
(B) Other contracting offices;
(C) The cognizant contract administration, finance, and audit
activities; and
(D) The requiring activity.
(ii) Non-Government sources. Non-Government sources include, but
are not limited to--
(A) Offeror's Web sites;
(B) Trade and financial journals;
(C) Business directories and registers; and
(D) Annual corporate shareholder reports.
(b) Actions to address organizational conflicts of interest. (1)
Consistent with 3.1206-3(a), the contracting officer should analyze
both contractor-provided and otherwise available information in
determining how to address any organizational conflicts of interest.
(2) If the acquisition involves contractor-submitted mitigation
plans, then the contracting officer shall analyze the feasibility of
mitigation of the organizational conflict of interest, including both
the expected effectiveness of the conflicted entity's proposed
mitigation plan and the Government's ability to monitor and enforce the
provisions of the plan.
(i) If organizational conflicts of interest were included as an
evaluation factor, then communications between the Government and an
offeror that could result in changes to the offeror's mitigation plan
will constitute discussions. Changes to an offeror's mitigation plan
will likely also lead the Government to reassess the technical rating
assigned to the offeror.
(ii) If organizational conflicts of interest were not included as
an evaluation factor, then communications between the Government and an
offeror regarding the offeror's mitigation plan, will not constitute
discussions, unless the communications result in changes to evaluated
aspects of the offeror's proposal.
3.1206-4 Contract award.
(a) If organizational conflicts of interest were not considered as
an evaluation factor, before withholding award from the apparent
successful offeror based on conflict of interest considerations, the
contracting officer shall--
(1) Notify the contractor in writing;
(2) Provide the reasons therefore; and
(3) Allow the contractor a reasonable opportunity to respond.
(b) Except as provided in paragraphs (c) and (d) of this
subsection, the contracting officer shall award the contract to the
apparent successful offeror only if all organizational conflicts of
interest have been addressed.
(c) If the contracting officer finds that it is in the best
interest of the Government to award the contract notwithstanding an
unaddressed conflict of interest, a request for waiver shall be
submitted in accordance with 3.1205.
(d) For task- or delivery-order contracts or blanket purchase
agreements, the contracting officer shall attempt to identify all
organizational conflict of interest issues at the time of award of the
basic task- or delivery-order contract or blanket purchase agreement.
To the extent an organizational conflict of interest can be identified
at the time of award of the underlying vehicle, the contracting officer
shall include a mitigation plan or limitation on future contracting in
the basic contract or agreement, unless the contracting officer decides
to accept the risk associated with the conflict without any such
actions.
3.1206-5 Issuance of task or delivery orders or blanket purchase
agreement calls.
(a) The contracting officer shall consider organizational conflicts
of interest at the time of issuance of each order (going through the
steps comparable to those in 3.1206-2, except that there is no
solicitation involved in issuance of orders). If procedures for
addressing an organizational conflict of interest are in the basic
task- or delivery-order contract or blanket purchase agreement at the
time of its award, the contracting officer may need to appropriately
tailor the procedures when issuing an order.
(b) For interagency acquisitions that are facilitated through task-
or delivery-
[[Page 23248]]
order contracts, including the Federal Supply Schedules--
(1) If the order is placed as a direct acquisition, the contracting
officer for the ordering agency is responsible for determining if a
mitigation plan is required, developing a Government-approved plan, if
necessary, and administering the plan, if one is developed; or
(2) If the order is placed as an assisted acquisition, the
servicing agency and requesting agency shall identify which agency is
responsible for the actions identified in paragraph (a) of this section
and reflect this understanding in their interagency agreement.
3.1207 Solicitation provision and contract clauses.
(a)(1) The contracting officer shall include a solicitation
provision substantially the same as 52.203-XX, Notice of Potential
Organizational Conflict of Interest, upon determining that contractor
performance of the work may give rise to organizational conflicts of
interest.
(2) The contracting officer shall fill in paragraph (b)(2) of the
provision, if the program office or requiring activity has identified
any contractors that participated in preparation of the statement of
work or other requirements documents, including cost or budget
estimates.
(b) The contracting officer shall include in solicitation and
contracts a clause substantially the same as 52.203-ZZ, Disclosure of
Organizational Conflict of Interest after Contract Award, when the
solicitation includes the provision 52.203-XX, Notice of Potential
Organizational Conflict of Interest.
(c) The contracting officer shall include in solicitations and
contracts a clause substantially the same as 52.203-YY, Mitigation of
Organizational Conflicts of Interest, when the contract may involve an
organizational conflict of interest that can be addressed by an
acceptable contractor-submitted mitigation plan prior to contract
award.
(d) The contracting officer shall include in solicitations and
contracts a clause substantially the same as 52.203-YZ, Limitation on
Future Contracting, when the method of addressing the organizational
conflict of interest will involve a limitation on future contracting.
(1) The contracting officer shall fill in the nature and duration
of the limitation on future contractor activities in paragraph (a) of
the clause.
(2) The contracting officer shall ensure that the duration of the
limitation is sufficient to neutralize any unfair competitive
advantage.
PART 4--ADMINISTRATIVE MATTERS
7. Revise the heading of subpart 4.4 to read as follows:
Subpart 4.4--Safeguarding Information Within Industry
8. Add sections 4.401 through 4.401-4 to read as follows:
4.401 Contractor access to nonpublic information.
4.401-1 Scope.
This section prescribes policies and procedures applicable to
contracts that may require, authorize, or permit contractor access to
nonpublic information during contract performance.
4.401-2 Policy.
It is the Government's policy--
(a) To preclude contractor use or disclosure of nonpublic
information for any purpose unrelated to contract performance;
(b) To ensure that the contractor does not obtain any unfair
competitive advantage by virtue of its access to nonpublic information
(see 4.402); and
(c) To allow agencies discretion to prescribe more restrictive
policies and regulations regarding the release and disclosure of
nonpublic information than are established in this subpart (e.g.,
limitations on reassignment of personnel, more stringent notification
requirements in cases of unauthorized disclosure, etc.).
4.401-3 Restrictions on access to nonpublic information.
(a) The contracting officer shall not permit contractor access to
nonpublic information unless--
(1) The Government is authorized to permit such access, e.g., under
subpart 24.2.
(2) The access is necessary for performance of the contract; and
(3) Access is limited to persons who require access to that
information to perform the contract.
(b) If a contractor reports an unauthorized disclosure or misuse of
information in accordance with paragraph (b)(2)(vii) of 52.204-XX,
Access to Nonpublic Information, the contracting officer shall--
(1) Review the actions taken by the contractor;
(2) Determine whether any action taken by the contractor has
addressed the situation satisfactorily; and
(3) If the contracting officer determines that the contractor has
not addressed the situation satisfactorily, take any appropriate action
in consultation with agency legal counsel.
4.401-4 Solicitation provision and contract clauses.
Unless agency procedures provide otherwise--
(a)(1) The contracting officer shall insert the clause at 52.204-
XX, Access to Nonpublic Information, in solicitations and contracts
when the contractor (or its subcontractors) may have access to
nonpublic information.
(2) If the contracting officer decides that due to the contract
requirements--
(i) There may be a need for executing confidentiality agreements
between the contractor and one or more third parties that have provided
information to the Government, insert the clause with its Alternate I.
(ii) The contractor may require access to a third party's
facilities or proprietary information that is not in the Government's
possession, insert the clause with its Alternate II.
(b) The contracting officer shall insert the provision at 52.204-
XY, Release of Pre-Award Information, in all solicitations.
(c) The contracting officer shall insert the clause at 52.204-YY,
Release of Nonpublic Information, in all solicitations and contracts.
4.402 through 4.404 [Redesignated as 4.403-1 through 4.403-3]
9a. Redesignate sections 4.402 through 4.404 as sections 4.403-1
through 4.403-3, respectively.
9b. Add new sections 4.402 and 4.403 to read as follows:
4.402 Unequal access to nonpublic information.
4.402-1 Scope.
This section prescribes policies and procedures for identifying and
resolving situations in which an offeror's access to nonpublic
information provides the offeror with an unfair competitive advantage.
4.402-2 Policy.
(a) Because an unfair competitive advantage held by one or more
offerors risks tainting the integrity of the competitive acquisition
process, the Government must take action to resolve any situations in
which an offeror has obtained an unfair competitive advantage because
of its unequal access to nonpublic information.
(b) When an offeror has an unfair competitive advantage because of
unequal access to nonpublic information, the Government shall
disqualify the offeror from a
[[Page 23249]]
competition only when no other method of resolution is appropriate (see
4.402-4(c)).
(c) In competing for follow-on requirements, incumbent contractors
will often have a natural advantage that is based on their experience,
insights, and expertise rather than any unequal access to nonpublic
information. This type of competitive advantage is not considered
unfair. This situation must be distinguished from situations in which
an incumbent contractor also had access to nonpublic information that
could provide it, in a future acquisition, a competitive advantage that
is unfair.
4.402-3 General principles.
An offeror's unequal access to nonpublic information may give it an
unfair competitive advantage with respect to a particular acquisition.
However, not all access to nonpublic information is unequal and, even
where access may be unequal, such access will not always result in the
offeror obtaining an unfair competitive advantage. Contracting officers
shall consider the following factors when determining whether a
particular situation involving offeror access to nonpublic information
requires resolution:
(a) Whether access to the nonpublic information was provided by the
Government. (1) Nonpublic information can come to an offeror from the
Government either--
(i) Directly, through, or in connection with, performance on
another Government contract; or
(ii) Indirectly, through sources such as former Government
employees or employees of other contractors or subcontractors who
received the nonpublic information from the Government.
(2) The Government has not provided access to nonpublic
information, even indirectly, when an offeror gains access to nonpublic
information through market research efforts or by way of private-sector
business contacts.
(3) If an offeror gained access to the nonpublic information at
issue in a particular situation through a source other than the
Government, then the contracting officer need not take steps to resolve
the situation.
(b) Whether the nonpublic information (although provided by the
Government) is available to all potential offerors. If the nonpublic
information is otherwise available to all potential offerors, then--
(1) The offeror's access to the information is not unequal; and
(2) The contracting officer need not take steps (other than
potentially sharing the information with all offerors, see 4.402-4(c))
to resolve the situation.
(c) Whether having unequal access to the nonpublic information
would be competitively useful to an offeror responding to a
solicitation. (1) In assessing whether nonpublic information would be
competitively useful to an offeror, the contracting officer should make
a reasonable effort to consult with people with knowledge of the market
and the industry.
(2) If the nonpublic information to which an offeror has or had
access is not competitively useful, then the contracting officer need
not take steps to resolve the situation.
4.402-4 Contracting officer responsibilities.
(a) Sources of information. (1) During acquisition planning, the
contracting officer shall ask the relevant contracting activity and
requiring activity (as appropriate) to examine whether any potential
offerors may have had Government-provided access (see 4.402-3(a)) to
nonpublic information relevant to the acquisition.
(2) When initially announcing an acquisition, the contracting
officer shall include a statement asking that potential offerors
indicate, as early as possible, if they have or had Government-provided
access (see 4.402-3(a)) to any nonpublic information relevant to the
acquisition.
(i) For contract actions, this statement shall be included in the
sources sought notification.
(ii) For orders placed against multiple-award task- and delivery-
order contracts or blanket purchase agreements, this statement shall be
included in the first announcement to contract-holders regarding the
order.
(iii) For Federal Supply Schedule orders, this statement shall be
included in the request for quote.
(3) As prescribed at 4.402-5, the contracting officer shall include
in the solicitation the provision requiring offerors to state whether
they are aware of anyone in their corporate organization, including
affiliates, who has gained access to nonpublic information relevant to
the acquisition that was made available by the Government.
(b) Analysis. (1) If the Contracting Officer is aware that one or
more offerors have or had access to nonpublic information provided by
the Government, the contracting officer shall determine whether
resolution is required. Consistent with the general principles provided
in 4.402-3, the contracting officer must resolve the situation (taking
into consideration the policy at 4.402-2(b)) if--
(i) The nonpublic information is available to some, but not all,
potential offerors;
(ii) The nonpublic information would be competitively useful in
responding to a solicitation; and
(iii) The advantage afforded to the contractor by its access to the
nonpublic information is unfair.
(2) If resolution is not required, the Contracting Officer shall
document the file.
(c) Resolution. Unfair competitive advantage resulting from unequal
access to nonpublic information may be resolved by information sharing,
mitigation through use of a firewall, or exclusion. In some cases, a
combination of methods may be appropriate.
(1) Information sharing. Information sharing consists of
disseminating the information in question to all potential offerors,
either in the solicitation, in a solicitation amendment, or through
some other method, such as posting it online.
(i) This method is generally available when the relevant
information is Government information. In situations where the
information belongs to another party (for instance, a contractor for
whom a potential offeror worked as a subcontractor), appropriate
permission must be obtained before such information can be shared with
other parties, and appropriate protections must be implemented with
respect to the shared information.
(ii) For this method to be effective, information must be shared
with potential offerors early enough in the acquisition process to
allow those offerors to effectively utilize the information.
(2) Mitigation through use of a firewall. In cases where only some
of an offeror's employees have or had access to the relevant
information, it may be possible for the offeror to create an internal
barrier (often called a firewall) to prevent those employees from
sharing that information with others. The contracting officer may
conclude that this is an acceptable resolution if the result is that
none of the offeror's employees who are involved in the competition has
access to the nonpublic information.
(i) The contracting officer may determine that the requirements and
protections of clause 52.204-XX, Access to Nonpublic Information,
constitute an adequate firewall, if nonpublic information was gained
directly through performance on another Government contract that
included the clause.
[[Page 23250]]
(ii) Creation of a firewall may be proposed by a potential offeror,
or it may be proposed by the agency. The contracting officer retains
discretion to approve or reject the proposed firewall. Firewalls can
consist of a variety of elements, including organizational and physical
separation; facility and workspace access restrictions; information
system access restrictions; independent compensation systems; and
individual and organizational nondisclosure agreements.
(iii) In cases involving mitigation through use of a firewall, the
offeror's proposal must include a representation that, to the best of
its knowledge and belief, there were no breaches of the firewall during
preparation of the proposal or must explain any breach that occurred.
(See paragraph (c) of provision 52.204-YZ.)
(3) Disqualification. The contracting officer must disqualify the
offeror from consideration for the contract if the contracting officer
determines that--
(i) A potential offeror has, or has had, unequal, Government-
provided access to nonpublic information;
(ii) The information would provide the potential offeror with an
unfair competitive advantage; and
(iii) Neither information sharing nor mitigation through use of a
firewall will serve to protect the fairness of the competition.
(d) Multiple-award contracts. In addition to complying with the
requirements outlined in paragraphs (a) through (c) when placing orders
under multiple-award contract vehicles (including multiple-award
indefinite-delivery/indefinite quantity contracts and multiple-award
blanket purchase agreements), contracting officers must take additional
steps when awarding such contracts and blanket purchase agreements. The
contracting officer shall ensure that the ordering procedures clause
requires the inclusion of terms similar to those found in the provision
at 52.204-YZ, Unequal Access to Nonpublic Information, in any order
competed under the multiple-award contract or blanket purchase
agreement (see 16.505(b)).
4.402-5 Solicitation provision.
The contracting officer shall include in all solicitations that
exceed the simplified acquisition threshold a provision substantially
the same as 52.204-YZ, Unequal Access to Nonpublic Information.
4.403 Safeguarding Classified Information.
4.403-2 [Amended]
9c. In newly redesignated section 4.403-2, remove from paragraph
(b) ``(see 4.404)'' and add ``(see 4.403-3)'' in its place.
PART 7--ACQUISITION PLANNING
10. Amend section 7.105 by redesignating paragraphs (b)(18) through
(b)(22) as paragraphs (b)(19) through (b)(23), respectively; and adding
a new paragraph (b)(18) to read as follows:
7.105 Contents of written acquisition plans.
* * * * *
(b) * * *
(18) Organizational conflicts of interest. Describe any significant
potential organizational conflicts of interest (see subpart 3.12) that
may exist at time of contract award or may arise during contract
performance and explain the proposed method of addressing these
conflicts. Briefly identify any solicitation provisions and contract
clauses that would be used.
* * * * *
7.503 [Amended]
11. Amend section 7.503 by removing from paragraph (d)(11)
``4.402(b)'' and adding ``4.403-1(b)'' in its place.
PART 9--CONTRACTOR QUALIFICATIONS
12. Revise section 9.000 to read as follows:
9.000 Scope of part.
This part prescribes policies, standards, and procedures pertaining
to prospective contractors' responsibility; debarment, suspension, and
ineligibility; qualified products; first article testing and approval;
contractor team arrangements; and defense production pools and research
and development pools.
Subpart 9.5 [Removed and Reserved]
13. Remove and reserve subpart 9.5.
PART 11--DESCRIBING AGENCY NEEDS
11.000 [Amended]
14. Amend section 11.002 by removing from paragraph (c) ``Subpart
9.5'' and adding ``subpart 3.12'' in its place.
PART 12--ACQUISITION OF COMMERCIAL ITEMS
15. Amend section 12.301 in paragraph (d) by revising paragraph
(2); redesignating paragraphs (3) and (4) as (4) and (5), respectively;
and adding new paragraphs (3) and (6) to read as follows:
(d) * * *
(2) Insert the provision and clauses relating to Organizational
Conflicts of Interest as prescribed at 3.1207 when applicable.
(3) Insert the provision 52.204-XY, Release of Pre-Award
Information, and clauses at 52.204-XX, Access to Nonpublic Information,
and 52.204-YY, Release of Nonpublic Information, as prescribed at
4.401-4. Insert a provision substantially the same as 52.204-YZ,
Unequal Access to Nonpublic Information, as prescribed in 4.402-5.
* * * * *
(6) Insert the clause at 52.225-19, Contractor Personnel in a
Designated Operational Area or Supporting a Diplomatic or Consular
Mission outside the United States, as prescribed in 25.301-4.
* * * * *
PART 13--SIMPLIFIED ACQUISITION PROCEDURES
16. Amend section 13.302-5 by adding paragraph (e) to read as
follows:
13.302-5 Clauses.
* * * * *
(e) Insert the provision at 52.204-XY, Release of Pre-Award
Information, and the clauses at 52.204-XX, Access to Nonpublic
Information, and 52.204-YY, Release of Nonpublic Information, as
prescribed at 4.401-4. Insert a provision substantially the same as
52.204-YZ, Unequal Access to Non-Public Information, as prescribed in
4.402-5. Insert the provision and clauses relating to Organizational
Conflicts of Interest as prescribed at 3.1207 when applicable.
PART 14--SEALED BIDDING
17. Amend section 14.201-6 by adding paragraph (y) to read as
follows:
14.201-6 Solicitation provisions.
* * * * *
(y) See the prescription at 4.401-4(b) for use of the provision at
52.204-XY, Release of Pre-Award Information.
18. Amend section 14.201-7 by adding paragraph (e) to read as
follows:
14.201-7 Contract clauses.
* * * * *
(e) See the clause prescription at 4.401-4(c) for use of the clause
at 52.204-YY, Release of Nonpublic Information.
PART 15--CONTRACTING BY NEGOTIATION
19. Amend section 15.209 by adding paragraph (i) to read as
follows:
[[Page 23251]]
15.209 Solicitation provisions and contract clauses.
* * * * *
(i)(1) See the prescription at 4.401-4(b) for use of the provision
at 52.204-XY, Release of Pre-Award Information.
(2) See the clause prescription at 4.401-4(c) for use of the clause
at 52.204-YY, Release of Nonpublic Information.
20. Amend section 15.604 by revising paragraph (a)(2) to read as
follows:
15.604 Agency points of contact.
(a) * * *
(2) Requirements concerning responsible prospective contractors
(see subpart 9.1).
* * * * *
PART 16--TYPES OF CONTRACTS
21. Amend section 16.505 by revising paragraph (b)(1)(ii)(C) to
read as follows:
16.505 Ordering.
* * * * *
(b) * * *
(1) * * *
(ii) * * *
(C) Tailor the procedures to each acquisition, including
appropriate procedures for addressing unequal access to nonpublic
information (see 4.402);
* * * * *
PART 18--EMERGENCY ACQUISITIONS
22. Amend section 18.000 by revising paragraph (b) to read as
follows:
18.000 Scope of part.
* * * * *
(b) The acquisition flexibilities in this part are not exempt from
the requirements and limitations set forth in Part 3, Business Ethics
and Conflicts of Interest.
* * * * *
PART 37--SERVICE CONTRACTING
23. Amend section 37.110 by revising paragraph (d) to read as
follows:
* * * * *
(d) See subpart 3.12 regarding the use of an appropriate provision
and clause concerning organizational conflicts of interest, which may
at times be significant in solicitations and contracts for services.
* * * * *
PART 42--CONTRACT ADMINISTRATION AND AUDIT SERVICES
24. Amend section 42.1204 by revising paragraph (d) to read as
follows:
42.1204 Applicability of novation agreements.
* * * * *
(d) When considering whether to recognize a third party as a
successor in interest to Government contracts, the responsible
contracting officer shall identify and evaluate any significant
organizational conflicts of interest in accordance with subpart 3.12.
If the responsible contracting officer determines that a conflict of
interest cannot be addressed, but that it is in the best interest of
the Government to approve the novation request, a request for a waiver
may be submitted in accordance with the procedures at 3.1205.
* * * * *
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
25. Add sections 52.203-XX, 52.203-ZZ, 52.203-YY, and 52.203-YZ to
read as follows:
52.203-XX, Notice of Potential Organizational Conflict of Interest.
As prescribed in 3.1207(a), insert a provision substantially the
same as the following:
Notice of Potential Organizational Conflict of Interest (Date)
(a) Definition. Organizational conflict of interest, as used in
this provision, is defined in 52.203-ZZ, Disclosure of
Organizational Conflict of Interest after Contract Award.
(b) Notice. (1) The Contracting Officer has determined that the
nature of the work to be performed in the contract resulting from
this solicitation is such that it may give rise to organizational
conflicts of interest (see subpart 3.12, Organizational Conflicts of
Interest).
(2) The following contractors participated in the preparation of
the statement of work or other requirements documents, including
cost or budget estimates:
-----------------------------------------------------------------------
[Contracting Officer to fill in, if any.]
(c) Proposal requirements. (1) Assessment. Applying the
principles of subpart 3.12, the offeror shall assess whether there
is an organizational conflict of interest associated with the offer
it plans to submit, including any potential subcontracts.
(2) Disclosure. The offeror shall--
(i) Disclose all relevant information regarding any
organizational conflicts of interest, including information about
potential subcontracts; and
(ii) Describe any relevant limitations on future contracting,
the term of which has not yet expired, to which the offeror or
potential subcontractor agreed.
(3) Representation. The offeror represents, by submission of its
offer, that to the best of its knowledge and belief it has disclosed
all relevant information regarding any organizational conflicts of
interest as required in paragraph (c)(2) of this provision.
(4) To the extent that either the offeror or the Government
identifies any organizational conflicts of interest on the current
contract, the offeror shall explain the actions it intends to use to
address such conflicts, e.g., by submitting a mitigation plan and/or
accepting a limitation on future contracting.
(5) The Contracting Officer is the final authority in
determining whether an organizational conflict of interest exists
and whether the organizational conflict of interest has been
adequately addressed.
(d) Resultant contract. (1) If the offeror submits an
organizational conflict of interest mitigation plan, the resultant
contract will include the Government-approved Mitigation Plan and a
clause substantially the same as 52.203-YY, Mitigation of
Organizational Conflicts of Interest.
(2) If the resolution of the organizational conflict of interest
involves a limitation on future contracting, the resultant contract
will include a clause substantially the same as 52.203-YZ,
Limitation on Future Contracting.
(End of provision)
52.203-ZZ, Disclosure of Organizational Conflict of Interest After
Contract Award.
As prescribed in 3.1207(b), insert the following clause:
Disclosure of Organizational Conflict of Interest After Contract Award
(Date)
(a) Definition. Organizational conflict of interest, as used in
this clause, means a situation in which--
(1) A Government contract requires a contractor to exercise
judgment to assist the Government in a matter (such as in drafting
specifications or assessing another contractor's proposal or
performance) and the contractor or its affiliates have financial or
other interests at stake in the matter, so that a reasonable person
might have concern that when performing work under the contract, the
contractor may be improperly influenced by its own interests rather
than the best interests of the Government; or
(2) A contractor could have an unfair competitive advantage in
an acquisition as a result of having performed work on a Government
contract, under circumstances such as those described in paragraph
(1) of this definition, that put the contractor in a position to
influence the acquisition.
(b) If the Contractor identifies an organizational conflict of
interest that was not previously addressed and for which a waiver
has not been granted, or a change to any relevant facts relating to
a previously identified organizational conflict of interest, the
Contractor shall make a prompt and full disclosure in writing to the
Contracting Officer. Organizational conflicts of interest that arise
during performance of the contract, as well as newly discovered
conflicts that existed before contract award, shall be disclosed.
This disclosure shall include a description of--
(1) The organizational conflict of interest; and
(2) Actions to address the conflict that--
(i) The Contractor has taken or proposes to take; or
[[Page 23252]]
(ii) The Contractor recommends that the Government take.
(c) If, in compliance with this clause, the Contractor
identifies and promptly reports an organizational conflict of
interest that cannot be addressed in a manner acceptable to the
Government, the Contracting Officer may terminate for the
convenience of the Government--
(1) This contract, except as provided in paragraph (c)(2) of
this clause;
(2) If this is a task- or delivery-order contract, the task or
delivery order; or
(3) If this is a blanket purchase agreement, the blanket
purchase agreement call.
(d) Subcontracts. The Contractor shall include the substance of
this clause, including this paragraph (d), in subcontracts where the
work includes or may include tasks that may create a potential for
an organizational conflict of interest. The terms ``Contractor'' and
``Contracting Officer'' shall be appropriately modified to reflect
the change in parties.
(End of clause)
52.203-YY, Mitigation of Organizational Conflicts of Interest.
As prescribed in 3.1207(c), insert a clause substantially the same
as the following:
Mitigation of Organizational Conflicts of Interest (Date)
(a) Definition. Organizational conflict of interest, as used in
this clause, is defined in the clause 52.203-ZZ, Disclosure of
Organizational Conflict of Interest after Contract Award.
(b) Mitigation plan. The Government-approved Organizational
Conflict of Interest Mitigation Plan (Mitigation Plan) and its
obligations are hereby incorporated in the contract by reference.
(c) Changes. (1) Either the Contractor or the Government may
propose changes to the Mitigation Plan. Such changes are subject to
the mutual agreement of the parties and will become effective only
upon written approval of the revised Mitigation Plan by the
Contracting Officer.
(2) The Contractor shall update the mitigation plan within 30
days of any changes to the legal construct of its organization, any
subcontractor changes, or any significant management or ownership
changes.
(d) Noncompliance. (1) The Contractor shall report to the
Contracting Officer any noncompliance with this clause or with the
Mitigation Plan, whether by its own personnel or those of the
Government or other contractors.
(2) The report shall describe the noncompliance and the actions
the Contractor has taken or proposes to take to mitigate and avoid
repetition of the noncompliance.
(3) After conducting such further inquiries and discussions as
may be necessary, the Contracting Officer and the Contractor shall
agree on appropriate corrective action, if any, or the Contracting
Officer shall direct corrective action, subject to the terms of this
contract.
(e) Subcontracts. The Contractor shall include the substance of
this clause, including this paragraph (e), in subcontracts where the
work includes or may include tasks related to the organizational
conflict of interest. The terms ``Contractor'' and ``Contracting
Officer'' shall be appropriately modified to reflect the change in
parties.
(End of clause)
52.203-YZ, Limitation on Future Contracting.
As prescribed in 3.1207(d), insert a clause substantially the same
as the following:
Limitation on Future Contracting (Date)
(a) Limitation. The Contractor and any of its affiliates, shall
be ineligible to perform -------------------- [Contracting Officer
to describe the work that the Contractor will be ineligible to
perform] as a contractor or as a subcontractor for a period of ----
--------. [Contracting Officer to determine appropriate length of
prohibition.]
(b) Subcontracts. The Contractor shall include the substance of
this clause, including this paragraph (b), in subcontracts where the
work includes tasks which result in an organizational conflict of
interest. The terms ``Contractor'' and ``Contracting Officer'' shall
be appropriately modified to reflect the change in parties.
(End of clause)
26. Amend section 52.204-2 by removing from the introductory
paragraph ``4.404(a)'' and adding ``4.403-3(a)'' in its place; and
revising the introductory texts of Alternate I and Alternate II to read
as follows:
52.204-2 Security requirements.
* * * * *
Alternate I (Apr 1984). As prescribed in 4.403-3(b), add the
following paragraphs (e), (f), and (g) to the basic clause:
* * * * *
Alternate II (Apr 1984). As prescribed in 4.403-3(c), add the
following paragraph (e) to the basic clause:
* * * * *
27. Add sections 52.204-XX, 52.204-XY, 52.204-YY, and 52.204-YZ to
read as follows:
52.204-XX, Access to Nonpublic Information.
As prescribed in 4.401-4(a), insert the following clause:
Access to Nonpublic Information (Date)
(a) Definition. Nonpublic information, as used in this clause,
means any Government or third-party information that--
(1) Is exempt from disclosure under the Freedom of Information
Act (5 U.S.C. 552) or otherwise protected from disclosure by
statute, Executive order, or regulation; or
(2) Has not been disseminated to the general public, and the
Government has not yet determined whether the information can or
will be made available to the public.
(b) Restrictions on use and disclosure of nonpublic information.
(1) The restrictions provided in this clause are intended to protect
both the Government and third-party owners of nonpublic information
from unauthorized use or disclosure of such information.
(i) The Contractor shall indemnify and hold harmless the
Government, its agents, and employees from every claim or liability,
including attorneys fees, court costs, and expenses arising out of,
or in any way related to, the misuse or unauthorized modification,
reproduction, release, performance, display, or disclosure of any
nonpublic information to which it is given access during performance
of this contract.
(ii) Third-party owners of nonpublic information to which the
Contractor may have access during performance of this contract are
third-party beneficiaries with respect to the terms of this clause
who, in addition to any other rights they may have, may have the
right of direct action against the Contractor to seek damages from
any violation of the terms of this clause or to otherwise enforce
the terms of this clause.
(2) With regard to any nonpublic information to which the
Contractor is given access in performance of this contract, whether
the information comes from the Government or from third parties, the
Contractor shall--
(i) Utilize the nonpublic information only for the purposes of
performing the services specified in this contract, and not for any
other purposes;
(ii) Safeguard the nonpublic information from unauthorized use
and disclosure;
(iii) Limit access to the nonpublic information to only those
persons who need it to perform services under this contract;
(iv) Inform persons who may have access to nonpublic information
about their obligations to utilize it only to perform the services
specified in this contract and to safeguard it from unauthorized use
and disclosure;
(v) Obtain a signed nondisclosure agreement, which at a minimum
includes language substantially the same as that found in paragraph
(b)(1) and (b)(2)(i) through (iv) of this clause, from each person
who may have access to the nonpublic information;
(vi) Provide a copy of any such nondisclosure agreement to the
contracting officer upon request; and
(vii) Report to the contracting officer any violations of
requirements (i) through (vi) of this paragraph as soon as the
violation is identified. This report shall include a description of
the violation and the proposed actions to be taken by the contractor
in response to the violation, with follow-up reports of corrective
actions taken as necessary.
(3) If the Contractor receives information that is marked in a
way that indicates the Contractor should not receive this
information, the Contractor shall--
(i) Notify the Contracting Officer;
(ii) Use the information only in accordance with the
instructions of the Contracting Officer; and
[[Page 23253]]
(iii) Comply with any other notification provisions contained in
this contract.
(c) Applicability. (1) The obligations and prohibitions of
paragraph (b) do not apply if the Contractor can demonstrate to the
Contracting Officer that the information--
(i) Was in the public domain at the time the information was
accessed by the Contractor;
(ii) Was published, after having been accessed by the
Contractor, or otherwise becomes part of the public domain through
no fault of the Contractor;
(iii) Was lawfully in the Contractor's possession at the time
the Contractor accessed it and was not acquired directly or
indirectly--
(A) From the Government; or
(B) Under another Government contract;
(iv) Was received by the Contractor from a party, other than the
information owner, who has the authority to release the information
and did not require the Contractor to hold it in confidence.
(v) Is or becomes available, on an unrestricted basis in a
lawful manner, to a third party from the information owner or
someone acting under the control of the information owner;
(vi) Is developed by or for the Contractor independently of the
information received from the Government or the information owner
and such independent development can be shown;
(vii) Becomes available to the Contractor by wholly lawful
inspection or analysis of products offered for sale by the
information owner or someone acting under the information owner's
control, or an authorized third-party reseller or distributor; or
(viii) Is provided to a third party by the Contractor with the
prior written approval of the information owner.
(2) The Contractor may release nonpublic information to which
the Contractor is given access in performance of this contract to a
third party pursuant to the lawful order or rules of a United States
Court or Federal administrative tribunal or body of competent
jurisdiction, provided that the Contractor gives to the information
owner prior written notice of such obligation and the opportunity to
oppose such disclosure. The Contractor shall provide a copy of the
notice to the Contracting Officer at the same time as notice is
given to the information owner.
(d) Other contractual restrictions on information. This clause
is subordinate to all other contract clauses or requirements that
specifically address the access, use, handling, or disclosure of
information. If any restrictions or authorizations in this clause
are inconsistent with a requirement of any other clause of this
contract, the requirement of the other clause shall take precedence
over the requirement of this clause.
(e) Remedies available to a third-party information owner. The
Contractor's failure to comply with the requirements of this clause
may provide grounds for independent legal action or other remedies
available to a third-party information owner based on the
protections of paragraph (b)(1) of this clause (third-party
beneficiary).
(f) Subcontracts. The Contractor shall include this clause,
including this paragraph (f), in subcontracts under which a
subcontractor may have access to nonpublic information, The terms
``contract,'' ``contractor,'' and ``contracting officer'' shall be
appropriately modified to preserve the Government's rights.
(End of clause)
Alternate I (Date). As prescribed in 4.401-4(a)(2)(i), add the
following paragraph (c)(3) to the basic clause:
(c)(3) The Contractor shall, if requested by the Contracting
Officer--
(i) Negotiate and sign an agreement identical, in all material
respects, to paragraphs (b)(2) and (c) of this clause, with each
entity identified by the Contracting Officer that has provided the
Government nonpublic information to which the Contractor must now
have access to perform its obligations under this contract; and
(ii) Supply a copy of the executed agreement(s) to the
Contracting Officer [within 30 days].
Alternate II (Date). As prescribed in 4.401-4(a)(2)(ii), add the
following paragraph (c)(3) to the basic clause (if Alternate I is
also used, redesignate the following paragraph as (c)(4)):
(c)(3) The Contractor shall, if requested by the Contracting
Officer--
(i) Execute a Government-approved agreement with each entity
identified by the Contracting Officer to whose facilities or
nonpublic information the Contractor is given access; and
(ii) Supply a copy of the executed agreement(s) to the
Contracting Officer.
52.204-XY, Release of Pre-Award Information.
As prescribed in 4.401-4(b), insert the following provision:
Release of Pre-Award Information (Date)
(a) Definition. Nonpublic information, as used in this
provision, means any Government or third-party information that--
(1) Is exempt from disclosure under the Freedom of Information
Act (5 U.S.C. 552) or otherwise protected from disclosure by
statute, Executive order, or regulation; or
(2) Has not been disseminated to the general public, and the
Government has not yet determined whether the information can or
will be made available to the public.
(b) The Government may need to release some of the nonpublic
information submitted by the offeror in connection with this
solicitation. By submission of its offer, the offeror agrees that
the Government may, in appropriate circumstances, release to its
contractors, their subcontractors, and their individual employees,
such nonpublic information, subject to the protections referenced at
paragraph (d) of this provision.
(c) This provision does not affect the agency's responsibilities
under the Freedom of Information Act or the Procurement Integrity
Act.
(d) To receive access to nonpublic information needed to assist
in accomplishing agency functions, the contractor that will receive
access to the information must be operating under a contract that
contains the clause at 52.204-XX, Access to Nonpublic Information,
which obligates the contractor to do the following:
(1) Utilize the nonpublic information only for the purposes of
performing the services specified in this contract, and not for any
other purposes;
(2) Safeguard nonpublic information from unauthorized use and
disclosure;
(3) Limit access to the nonpublic information to only those
persons who need it to perform services under this contract;
(4) Inform persons who may have access to nonpublic information
about their obligations to utilize it only to perform the services
specified in this contract and to safeguard that information from
unauthorized use and disclosure;
(5) Obtain a signed nondisclosure agreement from each person who
may have access to the nonpublic information; and
(6) Report to the Contracting Officer any violations of
requirements (1) through (5) of this paragraph as soon as the
violation is identified. This report shall include a description of
the violation and the proposed actions to be taken by the Contractor
in response to the violation, with follow-up reports of corrective
actions taken as necessary.
(e) Paragraph (e) of the clause at 52.204-XX, Access to
Nonpublic Information, included in the contract of the contractor
with access to the nonpublic information provides that the third-
party information owner may have the right to pursue third-party
beneficiary rights against the contractor with access to the
information for breaches of the requirements of that clause.
(End of provision)
52.204-YY, Release of Nonpublic Information.
As prescribed in 4.401-4(c) insert the following clause:
Release of Nonpublic Information (Date)
(a) Definition. Nonpublic information, as used in this clause,
means any Government or third-party information that--
(1) Is exempt from disclosure under the Freedom of Information
Act (5 U.S.C. 552) or otherwise protected from disclosure by
statute, Executive order, or regulation; or
(2) Has not been disseminated to the general public, and the
Government has not yet determined whether the information can or
will be made available to the public.
(b) The Contractor agrees that the Government may, in
appropriate circumstances, release to its contractors, their
subcontractors, and their individual employees, nonpublic
information provided by the Contractor in the performance of this
contract, subject to the protections referenced at paragraph (d) of
this clause.
(c) This clause does not affect the agency's responsibilities
under the Freedom of Information Act or the Procurement Integrity
Act.
(d) To receive access to nonpublic information needed to assist
in accomplishing agency functions, the
[[Page 23254]]
contractor that will receive access to the nonpublic information
must be operating under a contract that contains the clause at
52.204-XX, Access to Nonpublic Information, which obligates the
contractor to do the following:
(1) Utilize the nonpublic information only for the purposes of
performing the services specified in this contract, and not for any
other purposes;
(2) Safeguard nonpublic information from unauthorized use and
disclosure;
(3) Limit access to the nonpublic information to only those
persons who need it to perform services under this contract;
(4) Inform persons who may access nonpublic information about
their obligations to utilize it only to perform the services
specified in this contract and to safeguard that information from
unauthorized use and disclosure;
(5) Obtain a signed nondisclosure agreement from each person who
may have access to the nonpublic information; and
(6) Report to the Contracting Officer any violations of
requirements (1) through (5) of this paragraph as soon as the
violation is identified. This report shall include a description of
the violation and the proposed actions to be taken by the contractor
in response to the violation, with follow-up reports of corrective
actions taken as necessary.
(e) Paragraph (e) of the clause at 52.204-XX, Access to
Nonpublic Information, included in the contract of the contractor
with access to the nonpublic information provides that the third-
party information owner may have the right to pursue third-party
beneficiary rights against the contractor with access to the
nonpublic information for breaches of the requirements of that
clause.
(f) Subcontracts. The Contractor shall insert this clause,
including this paragraph (f), suitably modified to reflect the
relationship of the parties, in all subcontracts that may require
the furnishing of nonpublic information to this agency under the
subcontract.
(End of clause)
52.204-YZ, Unequal Access to Nonpublic Information.
As prescribed in 4.402-5, insert a provision substantially the same
as the following:
Unequal Access to Nonpublic Information (Date)
(a) Definition. Nonpublic information, as used in this
provision, means any Government or third-party information that--
(1) Is exempt from disclosure under the Freedom of Information
Act (5 U.S.C. 552) or otherwise protected from disclosure by
statute, Executive order, or regulation; or
(2) Has not been disseminated to the general public, and the
Government has not yet determined whether the information can or
will be made available to the public.
(b) Pre-proposal requirements. Applying the principles of 4.402,
the offeror shall inform the Contracting Officer, prior to the
submission of its offer, if it or any of its affiliates possesses
any nonpublic information relevant to the current solicitation and
provided by the Government, either directly or indirectly; the
offeror should also advise the Contracting Officer of any actions
that the offeror proposes to take to resolve the situation.
(c) Proposal requirements. If a firewall has been used to
mitigate the impact of access to nonpublic information, the offeror
represents, to the best of its knowledge and belief, that the
firewall was implemented as agreed, and was not breached during the
preparation of this offer; or, by checking this box [ ], that the
firewall was not implemented or was breached, and additional
explanatory information is attached.
(End of provision)
PART 53--FORMS
53.204-1 [Amended]
28. Amend section 53.204-1 by removing from paragraph (a) ``(see
4.403(c)(1).)'' and adding ``(see 4.403-2(c)(1).)'' in its place.
[FR Doc. 2011-9415 Filed 4-25-11; 8:45 am]
BILLING CODE 6820-EP-P