President Biden Signs New Legislation to Identify and Mitigate Organizational Conflicts of Interest in Federal Acquisition

On December 27, 2022, President Biden signed into law the Preventing Organizational Conflicts of Interest in Federal Acquisition Act (S.3905) to strengthen the current rules relating to identification and mitigation of organizational conflicts of interest (OCIs) in federal acquisition. The Act focuses on updating the current FAR provision, Subpart 9.5, to provide clear definitions, examples, and guidance on potential OCIs and to consider expanding the Subpart to cover certain commercial and foreign relationships.

As currently drafted, FAR Subpart 9.5 provides general rules governing OCIs. Case law at the Court of Federal Claims and the Government Accountability Office have further identified three types of OCIs, “biased ground rules,” “impaired objectivity,” and “unequal access to information.” Under the Act, the FAR Council is meant to provide specific definitions and examples of the three types of OCIs.

The Act also instructs the FAR Council to provide executive agencies with standard solicitation provisions and contract clauses to address OCIs. Executive agencies will be able to tailor the solicitation provisions and contract clauses as necessary to address concerns associated with conflicts of interest and any considerations unique to the executive agency.

The Act directs the FAR Council to update the FAR’s OCI provisions in the next 18 months.  We are expecting the FAR Council to issue proposed regulations, and contractors should be prepared to review the proposed changes and modify practices if needed once the final rules are issued.