Managing organizational conflicts of interest: keep your organization competitive by understanding and managing organizational conflicts of interest.

The government relies heavily on contractors to get much of its work done, and outsourcing is a trend that appears to be continuing. Given the number of mergers, acquisitions, and consolidations that have taken place in the defense industry in recent years, contractors face being told they are ineligible to compete for a contract because they--or their predecessors--have an unfair competitive advantage over other firms. This article provides not only a background of the issues and regulations surrounding "organizational conflicts of interest" (OCI) but also some tools to manage a conflict.

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Background on the Regulations

A summary of the guidance governing organizational conflicts of interests from Subpart 9.5 of the Federal Acquisition Regulation (FAR) states the two underlying principles as follows: (1) preventing the existence of conflicting roles that might bias a contractor's judgment, and (2) preventing an unfair competitive advantage. The situations in which organizational conflicts of interest arise, as addressed in both the FAR and GAO decisions, can be broadly categorized into three groups:

* unequal access to information,

* biased ground rules, and

* impaired objectivity.

Unequal access to information cases arise when a firm has access to nonpublic information as part of its performance of a government contract, and that information may provide the firm with an advantage in a later competition for a government contract. The concern in such situations is generally limited to the risk of the firm gaining an unfair competitive advantage in the later competition; the issue of the firm's objectivity or ability to render impartial assistance is usually not an issue.

Biased ground rules are situations in which a firm, as part of its performance of a government contract, has in some sense set the ground rules for another government contract by, for example, writing the statement of work or the specifications for that other contract. The primary concern in such …