Last Friday, the Department of Defense (DoD), General Services Administration (GSA) and the National Aeronautics and Space Administration (NASA) proposed a new rule in the Federal Register to prevent personal conflicts of interest by contractors performing acquisition functions.

For those who thought that only federal employees conduct federal contracting and acquisitions, don't be fooled by the civilian attire. In many cases, it's a contractor working in hard-to-fill federal contracting and acquisition positions within the federal government. And while they can't represent the government or make decisions, many are concerned by the amount of information to which they have access. 

To prevent potential insider influence, the Duncan Hunter National Defense Authorization Act (NDAA) for Fiscal Year 2009, section 841(a), requires that the Office of Federal Procurement Policy (OFPP) develop regulatory guidance, including a new subpart under FAR part 3, and a new clause for contracting officers to use in contracts to prevent  personal conflicts of interest for contractor employees performing  acquisition functions for or on behalf of a Federal agency or department. It also requires a personal conflicts-of-interest clause(s) for inclusion in solicitations, contracts, task orders, and delivery orders.

The problem of little to no government oversight, however, continues. The burden for enforcing the rule is placed almost exclusively on the contractor, according to the proposed rule.

Specifically, the proposed rule states, "It is Government policy to require contractors to: (a) Identify and prevent personal conflicts of interest of their covered employees; and (b) Prohibit covered employees who have access to non-public Government information from using such information for personal gain."

Not only would the contacting company need to identify personal conflicts and prevent them, but the company would also be required to inform covered employees of their duty to disclose and prevent "even the appearance of personal conflicts of interest."

To enforce the rule, it would be necessary for the contractor to annually obtain, maintain and update financial disclosure statements from each covered employee assigned to a task under the contract.

It also appears that the requirement to prohibit the use of "nonpublic government information" for personal gain may be difficult to enforce.

Regardless, contractors that do not comply with the rule would face possible loss of payments or award fees, contract termination, suspension or debarment.

However, the rule is not final until the fat government lady sings. Comments on the rule are due by Jan. 12, 2010.