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DoD Scales Back Conflict-of-interest Rules

Photo: defense.gov

The Defense Department is scaling back a tough, new conflict-of-interest rule for some contracts, including those for IT and professional services.

According to a final rule, published in the Federal Register, only major weapons systems contracts and systems engineering and technical assistance will be subject to stricter standards.

Those new regulations prevent contractors from accepting a work order that would also financially benefit them or their corporate partners.

What would that look like, in practice? “The rules [would] try to prevent a company from providing consulting services that could favor that company’s products or services or those of a corporate partner,” Federal Times notes.

But, the final rule essentially carves out exceptions for IT and professional services, because expanding the rules would have “created confusion,” Federal Times reports. It might also have delayed the unveiling of a final rule because it would have required amending the Federal Acquisition Regulation.

The modified rule seems to be a scaling back of across-the-board determinations on conflict of interest, in favor of a more agile approach.

New Requirements:

  • Programs officers should address conflict of interest, especially software integration subcontracts.
  • Companies can no longer execute systems engineering or technical assistance if they are also a prime contractor or subcontractor on the same project.

This isn’t the first time DoD has amended a stringent, new rule governing contractors, lately.

Late last month, the Pentagon announced it would amend its plan to take 10 percent off payments to contractors for deficient business systems. The withholding amount was reduced to 5 percent after significant industry outcry.

Federal Times reports the private sector also voiced a chorus of disapproval toward the original conflict-of-interest rules.

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