Comments on Draft Segment of Federal Acquisition Regulation

GAO commented on a draft segment of the Federal Acquisition Regulation which covers organizational conflicts of interest. The bill requires all contractors bidding on federal contracts to disclose all relevant facts relating to an existing or potential organizational conflict and requires agencies to take certain steps to protect the government's best interest before and after the contract is awarded. GAO supported the enactment of this section of the regulation for a 2-year period at selected agencies due to the uncertain impact it would have on the government's ability to obtain private sector experience. GAO recommended that the Office of Management and Budget monitor the agencies' experience and report to Congress on whether the legislation should be applied government-wide. The scope of the disclosure requirement should be changed from all contracts to just those categories of contracts where the potential for conflict is greatest, such as consulting services and management support contracts. Contractors should be required by solicitations to submit information regarding potential conflicts of interest when they submit their offers. Contracting officers could seek additional information from sources within the government. GAO does not believe that this change would result in excessive paperwork or slowing down of the procurement process. The majority of federal contracts would not be affected since they fall outside of the categories of contracts identified. The regulation should be revised to provide that refusal shall constitute grounds for denial of award unless the agency determines that immediate award is necessary and the services or supplies cannot be obtained from another source. The regulation does not provide for disclosure of possible conflicts which arise after the initial contract award. A disclosure requirement for this situation is necessary to ensure contractor objectivity, particularly when the federal contract involves regulations that will impact on a regulated industry. GAO recommends that agencies be required to closely monitor implementation of the proposed regulation and report on problems and possible improvements.