Government Contractors:

Selected Agencies' Efforts to Identify Organizational Conflicts of Interest

GGD-96-15: Published: Oct 25, 1995. Publicly Released: Nov 29, 1995.

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Pursuant to a legislative requirement and a congressional request, GAO reviewed three federal agencies' implementation of the Office of Management and Budget's (OMB) policies on conflicts of interest, focusing on: (1) whether the agencies have complied with existing requirements to identify and evaluate potential organization conflicts of interest (OCI); and (2) ways that agencies could improve their screening for such conflicts.

GAO found that: (1) although the Environmental Protection Agency (EPA) and the Department of Energy (DOE) obtained contractors' OCI certifications in almost all of the cases reviewed, the Navy failed to obtain OCI certifications in most cases, mainly because contracting officers did not request or require them; (2) the Navy has since stressed the importance of obtaining OCI certifications; (3) a 1993 Presidential council report showed that only 9 of 19 agencies reviewed obtained OCI certifications; (4) many agency officials did not believe the certifications were an effective deterrent; (5) self-certifications have limitations because differences of opinion or interpretation cause potential OCI underreporting; (6) the OMB requirement that agencies evaluate the potential for OCI is an important supplemental control; (7) DOE and EPA have conducted preaward evaluations for potential OCI; (8) although the Navy has not routinely conducted required preaward OCI evaluations, it has tried to prevent future conflicts of interests; and (9) agencies could improve their screening for OCI by ensuring that all responsible officials receive OCI training to avoid misinterpretation.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Following the report, the Director of OMB advised GAO by letter dated January 4, 1996, that she agreed with the findings, and she directed the Administrator, Office of Federal Procurement Policy, to send a memorandum to senior agency procurement executives emphasizing the need for training in this area. The Administrator, by memorandum dated February 12, 1996, to senior agency procurement executives and to the Deputy Under Secretary of Defense for Acquisition Reform, brought this matter to the attention of all federal agencies for their information and action.

    Recommendation: The Director, OMB, should emphasize to heads of agencies the importance of ensuring that contracting officials receive sufficient training to help them to identify and to avoid and mitigate OCI situations.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  2. Status: Closed - Implemented

    Comments: The Director of OMB advised GAO by letter dated January 4, 1996, that she agreed with the findings, and she directed the Administrator, Office of Federal Procurement Policy, to send a memorandum to senior agency procurement executives emphasizing the need for addressing the possible misinterpretation in the federal acquisition regulations. The Administrator, by memorandum dated February 12, 1996, to senior agency procurement executives and to the Deputy Under Secretary of Defense for Acquisition Reform, brought this matter to the attention of all federal agencies for their information and action.

    Recommendation: The Director, OMB, should take steps to avoid the possibility that the federal acquisition regulations might be interpreted to imply that if certificates have been obtained from contractors, agencies should not obtain other information in conducting an evaluation of the potential for conflicts of interest.

    Agency Affected: Executive Office of the President: Office of Management and Budget

 

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