23236 Federal Register / Vol. 76, No. 80 / Tuesday, April 26, 2011 / Proposed Rules 

(e)(1) The Bureau of Land 

Management may segregate, if it finds it 

to be necessary for the orderly 

administration of the public lands, 

lands included in a right-of-way 

application for the generation of 

electrical energy under 43 CFR subpart 

2804 from wind or solar sources. In 

addition, the Bureau of Land 

Management may also segregate public 

lands that it identifies for potential 

rights-of-way for electricity generation 

from wind or solar sources. Upon 

segregation, such lands will not be 

subject to appropriation under the 

public lands laws, including location 

under the General Mining Law, but not 

the Mineral Leasing Act of 1920 (30 

U.S.C. 181 et seq.) or the Materials Act 

of 1947 (30 U.S.C. 601 et seq.). The 

Bureau of Land Management will effect 

such segregation by publishing a 

Federal Register notice that includes a 

description of the lands covered by the 

segregation. The Bureau of Land 

Management may impose a segregation 

in this way on both pending and new 

right-of-way applications. 

(2) The effective date of segregation is 

the date of publication of the notice in 

the Federal Register and the date of 

termination of the segregation is the 

date that is the earliest of the following: 

(i) Upon issuance of a decision by the 

authorized officer granting, granting 

with modifications, or denying the 

application for a right-of-way; 

(ii) Automatically at the end of the 

segregation period provided for in the 

Federal Register notice initiating the 

segregation, without further action by 

the authorized officer; or 

(iii) Upon publication of a Federal 

Register notice of termination of the 

segregation. 

(3) The segregation period may not 

exceed 2 years from the date of 

publication of the Federal Register 

notice initiating the segregation unless, 

on a case-by-case basis, the Bureau of 

Land Management State Director 

determines and documents in writing, 

prior to the expiration of the segregation 

period, that an extension is necessary 

for the orderly administration of the 

public lands. If an extension is 

determined to be necessary, the Bureau 

of Land Management will publish a 

notice in the Federal Register, prior to 

expiration of the initial segregation 

period that the segregation is being 

extended for up to 2 years. Only one 

extension may be authorized; the total 

segregation period therefore cannot 

exceed 4 years. 

PART 2800—RIGHTS-OF-WAY UNDER 

THE FEDERAL LAND POLICY AND 

MANAGEMENT ACT 

3. The authority citation for part 2800 

continues to read as follows: 

Authority: 43 U.S.C. 1733, 1740, 1763, and 

1764. 

Subpart 2804—Applying for FLPMA 

Grants 

4. Amend § 2804.25 by adding a new 

paragraph (e) to read as follows: 

§ 2804.25 How will BLM process my 

application? 

* * * * * 

(e)(1) The BLM may segregate, if it 

finds it to be necessary for the orderly 

administration of the public lands, 

lands included within a right-of-way 

application under 43 CFR subpart 2804 

for the generation of electricity from 

wind or solar sources. In addition, the 

BLM may segregate public lands that it 

identifies for potential rights-of-way for 

electricity generation from wind or solar 

sources under the BLM’s right-of-way 

regulations. Upon segregation, such 

lands will not be subject to 

appropriation under the public land 

laws, including location under the 

General Mining Law, but not from the 

Mineral Leasing Act of 1920 (30 U.S.C. 

181 et seq.) or the Materials Act of 1947 

(30 U.S.C. 601 et seq.). The BLM will 

effect such segregation by publishing a 

Federal Register notice that includes a 

description of the lands covered by the 

segregation. The Bureau of Land 

Management may impose a segregation 

in this way on both pending and new 

right-of-way applications. 

(2) The segregative effect of the 

Federal Register notice terminates on 

the date that is the earliest of the 

following: 

(i) Upon issuance of a decision by the 

authorized officer granting, granting 

with modifications, or denying the 

application for a right-of-way; 

(ii) Automatically at the end of the 

segregation period provided for in the 

Federal Register notice initiating the 

segregation, without further action by 

the authorized officer; or 

(iii) Upon publication of a Federal 

Register notice of termination of the 

segregation. 

(3) The segregation period may not 

exceed 2 years from the date of 

publication of the Federal Register 

notice initiating the segregation unless, 

on a case by case basis, the BLM State 

Director determines and documents in 

writing, prior to the expiration of the 

segregation period, that an extension is 

necessary for the orderly administration 

of the public lands. If an extension is 

determined to be necessary, the BLM 

will publish a notice in the Federal 

Register, prior to expiration of the 

initial segregation period that the 

segregation is being extended for up to 

2 years. Only one extension may be 

authorized; the total segregation period 

therefore cannot exceed 4 years. 

Dated: April 6, 2011. 

Wilma A. Lewis, 

Assistant Secretary of the Interior, Land and 

Minerals Management. 

[FR Doc. 2011–10017 Filed 4–25–11; 8:45 am] 

BILLING CODE 4310–84–P 

DEPARTMENT OF DEFENSE 

GENERAL SERVICES 

ADMINISTRATION 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

48 CFR Parts 2, 3, 4, 7, 9, 11, 12, 13, 

14, 15, 16, 18, 37, 42, 52, and 53 

[FAR Case 2011–001; Docket 2011–0001; 

Sequence 1] 

RIN 9000–AL82 

Federal Acquisition Regulation; 

Organizational Conflicts of Interest 

AGENCIES: Department of Defense (DoD), 

General Services Administration (GSA), 

and National Aeronautics and Space 

Administration (NASA). 

ACTION: Proposed rule. 

SUMMARY: DoD, GSA, and NASA are 

proposing to amend the Federal 

Acquisition Regulation (FAR) to provide 

revised regulatory coverage on 

organizational conflicts of interest 

(OCIs), provide additional coverage 

regarding contractor access to nonpublic 

information, and add related provisions 

and clauses. Section 841 of the Duncan 

Hunter National Defense Authorization 

Act for Fiscal Year 2009 required a 

review of the FAR coverage on OCIs. 

This proposed rule was developed as a 

result of a review conducted in 

accordance with Section 841 by the 

Civilian Agency Acquisition Council 

and the Defense Acquisition Regulations 

Council (the Councils) and the Office of 

Federal Procurement Policy (OFPP), in 

consultation with the Office of 

Government Ethics (OGE). This 

proposed rule was preceded by an 

Advance Notice of Proposed 

Rulemaking (ANPR), under FAR Case 

2007–018 (73 FR 15962), to gather 

comments from the public with regard 

to whether and how to improve the FAR 

coverage on OCIs. 


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DATES: Interested parties should submit 

written comments to the Regulatory 

Secretariat at one of the addressees 

shown below on or before June 27, 2011 

to be considered in the formation of the 

final rule. 

ADDRESSES: Submit comments in 

response to FAR case 2011–001 by any 

of the following methods: 

• Regulations.gov: http:// 

www.regulations.gov. Submit comments 

via the Federal eRulemaking portal by 

inputting ‘‘FAR Case 2011–001’’ under 

the heading ‘‘Enter Keyword or ID’’ and 

selecting ‘‘Search.’’ Select the link 

‘‘Submit a Comment’’ that corresponds 

with ‘‘FAR Case 2011–001.’’ Follow the 

instructions provided at the ‘‘Submit a 

Comment’’ screen. Please include your 

name, company name (if any), and ‘‘FAR 

Case 2011–001’’ on your attached 

document. 

• Fax: (202) 501–4067. 

• Mail: General Services 

Administration, Regulatory Secretariat 

(MVCB), Attn: Hada Flowers, 1275 First 

Street, NE., 7th Floor, Washington, DC 

20417. 

Instructions: Please submit comments 

only and cite FAR Case 2011–001, in all 

correspondence related to this case. All 

comments received will be posted 

without change to http:// 

www.regulations.gov, including any 

personal and/or business confidential 

information provided. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Anthony Robinson, Procurement 

Analyst, at (202) 501–2658, for 

clarification of content. For information 

pertaining to status or publication 

schedules, contact the Regulatory 

Secretariat at (202) 501–4755. Please 

cite FAR Case 2011–001. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Current FAR Subpart 9.5, 

Organizational and Consultant Conflicts 

of Interest 

The integrity of the Federal 

acquisition process is protected, in part, 

by OCI rules currently found in FAR 

subpart 9.5. These rules are designed to 

help the Government in identifying and 

addressing circumstances in which a 

Government contractor may be unable 

to render impartial assistance or advice 

to the Government or might have an 

unfair competitive advantage based on 

unequal access to information or prior 

involvement in setting the ground rules 

for an acquisition. FAR 9.504 directs 

contracting agencies to ‘‘identify and 

evaluate potential OCIs as early in the 

acquisition process as possible’’ and 

‘‘avoid, neutralize, or mitigate 

significant potential conflicts before 

contract award.’’ 

FAR coverage on OCIs has remained 

largely unchanged since the initial 

publication of the FAR in 1984. The 

FAR coverage was adapted from an 

appendix to the Defense Acquisition 

Regulation, which dated back to the 

1960s. 

B. Origins of This Case 

1. Changes in Government and 

Industry. In recent years, a number of 

trends in acquisition and industry have 

led to the increased potential for OCIs, 

including— 

• Industry consolidation; 

• Agencies’ growing reliance on 

contractors for services, especially 

where the contractor is tasked with 

providing advice to the Government; 

and 

• The use of multiple-award task- and 

delivery-order contracts, which permit 

large amounts of work to be awarded 

among a limited pool of contractors. 

2. SARA Panel. In its 2007 report, the 

Acquisition Advisory Panel (established 

pursuant to section 1423 of the Services 

Acquisition Reform Act of 2003) (SARA 

Panel) concluded that the FAR does not 

adequately address ‘‘the range of 

possible conflicts that can arise in 

modern Government contracting.’’ The 

SARA Panel observed that the FAR 

provides no detailed guidance to 

contracting officers regarding how they 

should detect and mitigate actual and 

potential OCIs and called for improved 

guidance, to possibly include a standard 

OCI clause or set of clauses. See Report 

of the Acquisition Advisory Panel 

(January 2007), available at https:// 

www.acquisition.gov/comp/aap/ 

24102_GSA.pdf, at pp. 405–407, 417, 

422. 

3. Duncan Hunter National Defense 

Authorization Act for Fiscal Year 2009. 

Congress subsequently directed, in 

Section 841 of the Duncan Hunter 

National Defense Authorization Act for 

Fiscal Year 2009 (Pub. L. 110–417), a 

review of the conflicts of interest 

provisions in the FAR. Section 841 

required that appropriate revisions, 

including contract clauses, be 

developed as necessary, pursuant to that 

review. 

C. Evaluation of FAR Subpart 9.5 

The Councils have worked with OFPP 

and consulted with OGE to evaluate 

FAR subpart 9.5. This evaluation was 

informed, in part, by the following: 

1. A review of recent case law and 

opinions from the Government 

Accountability Office (GAO) and Court 

of Federal Claims (CoFC). Collectively, 

this review indicated that, when 

addressing OCIs, agencies do not always 

perform adequate, case-by-case, factspecific analysis. 

2. The findings of the SARA Panel, 

which concluded that contracting 

officers and agencies have encountered 

difficulties implementing appropriate 

OCI avoidance and mitigation measures. 

3. Responses to a 2008 ANPR which 

sought comment on whether the current 

guidance on OCIs adequately addresses 

the current needs of the acquisition 

community or whether providing 

standard provisions and/or clauses 

might be beneficial. The ten 

respondents to the ANPR offered a range 

of views, from the complete rewrite of 

FAR subpart 9.5, to maintaining the 

current coverage largely as is. Several 

respondents encouraged the Councils to 

adopt already-existing agency-level 

regulations, while two respondents 

stated that the regulations should 

consider providing Governmentwide 

standard clauses that allow agencies to 

add more stringent requirements, if 

needed, on a procurement-specific 

basis. One respondent suggested that 

any change to FAR subpart 9.5 should 

be consistent with existing case law on 

OCIs, as developed by GAO and the 

CoFC. Copies of all responses may be 

obtained at http://www.regulations.gov. 

4. Public comments provided in 

response to Defense Federal Acquisition 

Regulation Supplement (DFARS) 

Proposed Rule 2009–D015, published in 

the Federal Register on April 22, 2010 

(see 75 FR 20954–20965). DFARS 

Proposed Rule 2009–D015 was designed 

to implement section 207 of the 

Weapons System Acquisition Reform 

Act of 2009 (WSARA) (Pub. L. 111–23), 

which requires DoD to revise the 

DFARS to provide uniform guidance 

and tighten existing rules regarding 

OCIs concerning major defense 

acquisition programs. To implement 

section 207 in the most effective manner 

possible, DoD concluded that the basic 

principles, policies, and practices 

governing OCIs must be clearly 

understood. DoD reviewed the FAR 

coverage and issued the proposed rule 

that clarified the prescribed general 

rules and procedures for identifying, 

evaluating, and resolving OCIs. As with 

the ANPR, respondents to the DFARS 

proposed rule provided a range of views 

regarding the proposed coverage. 

II. Overview 

Based on their review, the Councils 

and OFPP reached the following main 

conclusions regarding OCIs: 


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A. Opportunity for Public Comment on 

Two Alternative OCI Frameworks 

Because the proposed DFARS rule 

(2009–D015) not only addressed the 

requirements of the WSARA but also 

contained a comprehensive OCI 

framework, the public now has a unique 

opportunity to comment on two distinct 

options for revising the regulatory 

coverage on OCIs. To this end, this 

proposed rule diverges substantially 

from the framework presented in the 

proposed DFARS rule, and we are 

seeking specific feedback regarding 

which course of action, or whether some 

combination of the two, is preferable. 

B. OCI Case Law 

The fundamental approach provided 

in the proposed DFARS rule is sound 

and provides a regulatory framework 

that thoroughly implements the 

established OCI case law. However, the 

fact that the OCI regulations are not 

primarily based in statute means that 

revisions to the regulations need not 

conform with existing case law. Rather, 

substantive departures from the case 

law should be considered if such 

changes will produce an OCI framework 

that is clearer, easier to implement, and 

better suited to protecting the interests 

of the Government. 

C. Similarities of Proposed FAR Rule to 

Proposed DFARS Rule 

Both this proposed FAR rule and the 

proposed DFARS rule propose coverage 

that recognizes the present-day 

challenges faced by acquisition officials 

in identifying and addressing OCIs in 

the procurement of products and 

services to satisfy agency requirements. 

In particular, both this proposed rule 

and the proposed DFARS framework— 

1. Reorganize and move OCI coverage 

to FAR part 3, so that OCIs are 

addressed along with related issues, 

namely other business practices and 

personal conflicts of interest (on which 

final coverage is pending under FAR 

Case 2008–025); 

2. Clarify key terms and provide more 

detailed guidance regarding how 

contracting officers should identify and 

address OCIs while emphasizing that 

each OCI case may be unique and 

therefore must be approached with 

thoughtful consideration; 

3. Provide standard OCI clauses, 

coupled with the opportunity for 

contracting officers to tailor the clauses 

as appropriate for particular 

circumstances; and 

4. Address unique policy issues and 

contracting officer responsibilities 

associated with OCIs arising in the 

context of task- and delivery-order 

contracts. 

D. Differences Between Proposed FAR 

Rule and Proposed DFARS Rule 

The coverage in this proposed rule 

differs from that provided by the 

framework presented in the DFARS rule 

by— 

1. Providing an analysis of the risks 

posed by OCIs, and the two types of 

harm that can come from them, i.e.,— 

• Harm to the integrity of the 

competitive acquisition system; and 

• Harm to the Government’s business 

interests; 

2. Recognizing that harm to the 

integrity of the competitive acquisition 

system affects not only the Government, 

but also other vendors, in addition to 

damaging the public trust in the 

acquisition system. The risk of such 

harm must be substantially reduced or 

eliminated. In contrast, the risk of harm 

to the Government’s business interests 

may sometimes be assessed as an 

acceptable performance risk; 

3. Moving coverage of unequal access 

to nonpublic information and the 

requirement for resolving any resulting 

unfair competitive advantage out of the 

domain of OCIs and treating it 

separately in FAR part 4. Competitive 

integrity issues caused by unequal 

access to nonpublic information are 

often unrelated to OCIs. Therefore, 

treating this topic independently will 

allow for more targeted coverage that 

properly addresses the specific concerns 

involved in such cases; and 

4. Adding broad coverage regarding 

contractor access to nonpublic 

information, to provide a more detailed 

framework in which to address the topic 

of unequal access to nonpublic 

information. 

III. Proposed OCI Coverage 

The Councils propose the following 

FAR coverage on OCIs: 

A. Placement of Coverage in the FAR 

As noted above, OCIs are currently 

addressed in FAR subpart 9.5, which 

deals with contractor qualifications. 

While the ability to provide impartial 

advice and assistance is an important 

qualification of a Government 

contractor, the larger issues that 

underlie efforts to identify and address 

OCIs are more directly associated with 

some of the business practices issues 

discussed in FAR part 3. For this reason, 

the Councils propose to relocate the 

FAR coverage on OCIs from FAR 

subpart 9.5 to a new FAR subpart 3.12. 

B. Changes To Provide Greater Clarity of 

Purpose and Policy 

This proposed rule makes the 

following changes to clarify OCI policy: 

1. Definitions 

a. Organizational Conflict of Interest. 

The proposed FAR rule establishes a 

clearer definition for ‘‘organizational 

conflict of interest’’ (which is included 

in FAR part 2 and applies throughout 

the FAR). The definition of 

‘‘organizational conflict of interest’’ is 

refined to reflect the two types of 

situations that give rise to OCI concerns. 

b. Address. The verb ‘‘address’’ is 

defined in FAR subpart 3.12, for the 

purposes of the subpart, to provide a 

summary term for the various 

approaches for dealing with the risks 

and preventing the harms that may be 

caused by OCIs; each of those 

approaches is then explained in more 

detail in FAR 3.1204. 

c. Marketing consultant. In addition, 

the existing definition of ‘‘marketing 

consultant’’ in FAR subpart 9.5 is 

removed as unnecessary because the 

proposed coverage is expanded beyond 

contracts for these entities. 

2. Policy. Within the new policy 

section at FAR 3.1203, the proposed 

rule explains the harm OCIs can cause 

and the actions the Government must 

take to address the risks of such harm. 

This involves an expanded discussion 

of the two types of harm that OCIs cause 

to the procurement system—harm to the 

integrity of the competitive acquisition 

process and harm to the Government’s 

business interests. 

a. Harm to the Integrity of the 

Competitive Acquisition Process. In 

cases where there is a risk of harm to the 

integrity of a competitive acquisition 

process, both the Government’s interests 

and the public interest in fair 

competitions are at risk. For this reason, 

such risks must be eliminated to the 

maximum extent possible. In the 

extremely rare case that such a risk 

cannot be eliminated, but award is 

nonetheless necessary to meet the 

Government’s needs, a waiver provision 

that requires approval at the head of the 

contracting activity level or above is 

provided. 

b. Harm to the Government’s Business 

Interests. In cases where the potential 

harm from an OCI threatens only the 

Government’s business interests, it may 

be appropriate to accept this potential 

harm as a performance risk. Acceptance 

of performance risk represents a novel 

means of addressing OCIs and will often 

only be appropriate after other steps to 

reduce the risk have been taken, either 

by the contractor (e.g., implementation 

of a mitigation plan) or by the 

Government (e.g., additional contract 

management steps or oversight). 


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C. Changes To Improve Policy 

Implementation 

This proposed rule assists contracting 

officers in implementing the 

Government’s OCI policy by amending 

existing FAR coverage in two ways: 

consolidating the contracting officer’s 

responsibilities regarding OCIs; and 

providing standard, but customizable, 

solicitation provisions and contract 

clauses related to OCIs. 

1. Consolidated Discussion of 

Contracting Officer Responsibilities. 

This proposed rule creates a new 

section FAR 3.1206 that provides a 

consolidated discussion of contracting 

officer responsibilities, including the 

steps a contracting officer must take 

during the different phases of an 

acquisition to identify and address 

OCIs. 

• FAR section 3.1206–2 addresses 

OCI-related responsibilities associated 

with presolicitation activities and 

requires the contracting officer to 

determine whether an acquisition has 

the potential to give rise to an OCI early 

enough in the acquisition process to 

include an appropriate provision in the 

solicitation, if necessary. 

• FAR section 3.1206–3 provides 

guidance related to evaluating 

information from the offeror and other 

sources to determine if an OCI is present 

during the evaluation phase and to then 

address or waive any OCI before making 

a contract award. 

• FAR section 3.1206–4 addresses 

OCI-related responsibilities associated 

with contract award. 

• FAR section 3.1206–5 addresses 

task- and delivery-order contracts, and 

requires the contracting officer to 

consider OCIs both at the time of award 

and at the time of issuance of each 

order. 

Æ For interagency acquisitions where 

the ordering (customer) agency places 

orders directly under another agency’s 

contract (a ‘‘direct acquisition’’), the 

ordering agency would be responsible 

for addressing OCIs. 

Æ For interagency acquisitions where 

the servicing agency performs 

acquisition activities on the requesting 

agency’s behalf (an ‘‘assisted 

acquisition’’), the interagency agreement 

entered into between the servicing and 

requesting agency to establish the terms 

and conditions of the assisted 

acquisition would need to identify 

which party is responsible for carrying 

out these responsibilities. 

By providing a more complete 

description of the steps involved in 

addressing OCIs, the rule will better 

equip contracting officers to identify 

conflicts and work with contractors to 

address them. This approach should 

also help to address the criticism with 

current FAR coverage that describing 

OCIs only through examples misleads 

contracting officers to believe that OCIs 

do not exist in contract actions that do 

not fall within the scope of an identified 

example. 

2. New Solicitation Provision and 

Contract Clauses Related to OCIs. This 

proposed rule contains a new 

solicitation provision and three new 

contract clauses related to OCIs. 

Existing FAR coverage anticipates 

appropriate handling of OCI issues 

through solicitation provisions and 

contract clauses, but does not provide a 

standard format (see FAR 9.507). The 

Councils determined that it was 

desirable to provide contracting officers 

with standard language that can be used 

or tailored as appropriate. The Councils 

used the requirements currently in FAR 

9.506 and 9.507 as the basis for the 

proposed provision and clauses on OCI, 

providing specific fill-ins the 

contracting officer must complete, and 

language that incorporates any 

mitigation plan by reference. 

The proposed solicitation provision 

and clauses are as follows: 

• FAR 52.203–XX, Notice of Potential 

Organizational Conflict of Interest. This 

provision— 

Æ References the definition of 

‘‘organizational conflict of interest;’’ 

Æ Provides notice to offerors that the 

contracting officer has determined that 

the nature of the work is such that OCIs 

may result from contract performance; 

Æ Requires an offeror to disclose all 

relevant information regarding any OCI 

(including active limitations on future 

contracting), and to represent, to the 

best of its knowledge and belief, that it 

has disclosed all relevant information 

regarding any OCI; 

Æ Requires an offeror to explain the 

actions it intends to use to address any 

OCI, e.g., submit a mitigation plan if it 

believes an OCI may exist or agree to a 

limitation on future contracting; and 

Æ Identifies the clauses that may be 

included in the resultant contract, 

depending upon the manner in which 

the OCI is addressed (i.e., FAR 52.203– 

YY or 52.203–YZ, described below); 

• FAR 52.203–ZZ, Disclosure of 

Organizational Conflict of Interest After 

Contract Award. The Councils recognize 

that events may occur during the 

performance of a contract that give rise 

to a new conflict, or that a conflict 

might be discovered only after award 

has been made. This clause, which is 

included in solicitations and contracts 

when the solicitation includes the 

provision FAR 52.203–XX, Notice of 

Potential Organizational Conflicts of 

Interest, includes by reference the 

definition of ‘‘organizational conflict of 

interest’’ and requires the contractor to 

make a prompt and full disclosure of 

any new or newly discovered OCI. 

• FAR 52.203–YY, Mitigation of 

Organizational Conflicts of Interest. This 

clause is generally intended to be used 

when the contract may involve an OCI 

that can be addressed by an acceptable 

contractor-submitted mitigation plan 

prior to contract award. The clause— 

Æ Includes a reference to the 

definition of ‘‘organizational conflict of 

interest;’’ 

Æ Incorporates the mitigation plan in 

the contract; 

Æ Addresses changes to the mitigation 

plan; 

Æ Addresses noncompliance with the 

clause or with the mitigation plan; and 

Æ Requires flowdown of the clause. 

• FAR 52.203–YZ, Limitation of 

Future Contracting. This clause is 

intended for use when the contracting 

officer decides to address a potential 

conflict of interest through a limitation 

on future contracting. The contracting 

officer must fill in the nature of the 

limitation on future contractor activities 

and the length of any such limitation. 

D. Other Remarks 

In addition to the changes described 

above, the Councils note the following 

proposed coverage: 

• This rule continues to apply to 

contracts with both profit and non-profit 

organizations (current FAR 9.502(a)). 

• This rule does not exclude the 

acquisition of commercial items, 

including commercially available offthe-shelf (COTS) items. This proposed 

rule only requires use of the provision 

and clauses in solicitations when the 

contracting officer determines that the 

work to be performed has the potential 

to give rise to an OCI. Therefore, use in 

acquisitions of commercial items, 

especially COTS items, will probably 

not be frequent. The Councils decided 

that allowing this discretion to the 

contracting officer is better than an 

outright exclusion of applicability to 

contracts for the acquisition of 

commercial items. 

• This rule applies to contract 

modifications that add additional work. 

The Councils recognize that contracting 

officers may not be able to identify 

conflicts arising from all future 

modifications to a contract at the time 

of contract award. 

• This rule adds a requirement at 

FAR 7.105(b)(18) to consider OCIs when 

preparing acquisition plans. 

IV. Access to Nonpublic Information 

FAR subpart 9.5 and the GAO and 

CoFC cases interpreting the subpart 


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currently treat situations involving 

contractors having an unfair competitive 

advantage based on unequal access to 

nonpublic information as OCIs. 

However, the Councils recognized that 

these situations do not actually involve 

conflicts of interest at all, and may arise 

from circumstances unrelated to 

conflicts of interest, such as where a 

former Government employee (who has 

had access to competitively useful 

nonpublic information) has been hired 

by a vendor. Further, the Councils 

observed that the methods available to 

resolve situations involving unequal 

access to information differ from those 

available to address actual OCIs. For 

these reasons, the Councils determined 

that separating the coverage of unfair 

competitive advantage based on unequal 

access to nonpublic information from 

the general coverage of OCIs is a 

desirable outcome, as it will remove 

some of the confusion often associated 

with identifying and addressing OCIs. 

In developing coverage to treat 

situations involving unfair competitive 

advantage based on unequal access to 

information, the Councils recognized 

that much of such access comes from 

performance on other Government 

contracts. Accordingly, if appropriate 

contractual safeguards are established 

prior to, or at the time of, such access, 

the number of situations where unequal 

access to information will taint a 

competition can be minimized. For this 

reason, this proposed rule provides a 

new uniform Governmentwide policy 

regarding the disclosure and protection 

of nonpublic information to which 

contractors may gain access during 

contract performance. This coverage 

provides substantial safeguards 

designed to address some of the 

concerns created by unequal access to 

nonpublic information, while leaving it 

to the contracting officer to determine, 

for any given acquisition, whether the 

protections are adequate, or if a 

situation involving an unfair 

competitive advantage remains to be 

resolved. Because protection and release 

of information are administrative 

matters, this coverage has been placed 

in FAR part 4. 

The coverage provides— 

• A definition of ‘‘nonpublic 

information’’ to clearly identify the 

scope of information covered; 

• Coverage of contractor access to 

nonpublic information during the 

course of contract performance; 

• Specific coverage for situations 

involving unfair competitive advantage 

based on unequal access to nonpublic 

information; and 

• Appropriate solicitation provisions 

and contract clauses. 

A. Definition 

The definition of ‘‘nonpublic 

information’’ provided by this proposed 

rule includes information belonging to 

either the Government or a third party 

that is not generally made publicly 

available, i.e., information that cannot 

be released under the Freedom of 

Information Act, or information for 

which a determination has not yet been 

made regarding ability to release. 

B. Contractor Access to Nonpublic 

Information 

The SARA Panel recommended that 

the Federal Acquisition Regulatory 

(FAR) Council review existing rules and 

regulations and, to the extent necessary, 

create uniform, Governmentwide policy 

and clauses dealing with protection of 

nonpublic information. Additionally, a 

recent GAO report, ‘‘Contractor Integrity: 

Stronger Safeguards Needed for 

Contractor Access to Sensitive 

Information’’ (GAO–10–693), 

recommended that OFPP act with the 

FAR Council to provide more thorough 

protections when contractors are 

allowed access to sensitive information. 

These recommendations, combined 

with the need to provide preventive 

protections in dealing with cases of 

unfair competitive advantage based on 

unequal access to information, have 

prompted the Councils to develop the 

coverage in this section. 

Traditionally, the Government has 

relied primarily on civil servants to 

perform the functions that require 

access to third-party contract 

information and other information in 

the Government’s possession that 

requires protection from unauthorized 

use and disclosure. However, in recent 

years, the Government has significantly 

increased its use of contractors to assist 

in performing many such functions. In 

addition, some agencies now utilize 

contractors to perform research studies 

that require the contractors to access 

third-party information. With the 

increasing need for contractor access to 

nonpublic information, this rule seeks 

to establish a uniform, and more 

streamlined and efficient approach. 

The Councils are proposing that 

contractors should be contractually 

obligated to protect all nonpublic 

information to which they obtain access 

by means of contract performance 

(whether information from the 

Government or a third party), with 

certain exceptions (e.g., the information 

was already in the contractor’s 

possession) (see FAR 52.204–XX(c)). 

Further, the Councils are proposing that 

contractors should require all 

employees who may access nonpublic 

information to sign nondisclosure 

agreements and that the obligations 

arising from these agreements will be 

enforceable by both the Government and 

third-party information owners. By 

implementing these protections as the 

default position, the proposed approach 

substantially enhances the protection 

for third-party and Government 

information provided by the FAR. 

Many contracts of the type described 

above involve not only multiple 

subcontractors, but also many lower-tier 

subcontracts. The current ad hoc 

approach employed by Government 

agencies for ensuring that all of these 

contractors have properly executed 

nondisclosure agreements among 

themselves has resulted in the existence 

of a substantial number of overlapping, 

but not necessarily uniform, 

agreements—and oftentimes confusion 

and misunderstandings between the 

Government and its contractors. The 

Councils have determined that the 

approach of requiring inclusion of an 

‘‘access’’ clause to protect information 

disclosed to a contractor, and a ‘‘release’’ 

clause to notify third-party information 

owners of their rights when their 

information is improperly used or 

disclosed should provide thorough 

protection while eliminating the need 

for many interconnecting nondisclosure 

agreements. 

1. Access Clause. The first element of 

this new approach is the proposed 

Access clause at FAR 52.204–XX, 

Access to Nonpublic Information. The 

purpose of the Access clause is to 

preclude contractors from using 

Government or third-party information 

for any purpose unrelated to contract 

performance. This clause requires that 

contractors receiving access to 

nonpublic information must limit the 

use of such nonpublic information to 

the purposes specified in the contract, 

safeguard the nonpublic information 

from unauthorized outside disclosure, 

and inform employees of their 

obligations and obtain written 

nondisclosure agreements consistent 

with those obligations. The clause also 

sets forth certain exceptions (relating to 

the applicability of the contractor’s 

obligations), but the exceptions do not 

apply unless the contractor can 

demonstrate to the contracting officer 

that an exception is applicable. 

The Access clause is subordinate to 

all other contract clauses or 

requirements that specifically address 

the access, use, handling, or disclosure 

of nonpublic information. If any 

restrictions or authorizations in the 

clause are inconsistent with any other 

clause or requirement of the contract, 


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the other clause or requirement takes 

precedence. 

This rule proposes, as the default 

position, mandatory use of the Access 

clause in solicitations and contracts 

when contract performance may involve 

contractor access to nonpublic 

information. However, the prescription 

allows agencies to provide otherwise in 

their procedures. The Access clause is 

prescribed on the same basis for use in 

solicitations and contracts for the 

acquisition of commercial items and in 

simplified acquisitions. 

2. Alternate to the Access Clause 

a. Alternate I. Alternate I is prescribed 

for use if the contracting officer 

anticipates that there may be a need for 

executing confidentiality agreements 

between the contractor and one or more 

third parties that have provided 

nonpublic information to the 

Government. This alternate requires the 

contractor, if requested by the 

contracting officer, to negotiate and sign 

an agreement identical, in all material 

respects, to the restrictions on use and 

disclosure of nonpublic information in 

the Access clause, with each entity that 

has provided the Government nonpublic 

information to which the contractor 

must now have access to perform its 

obligations under the contract. 

b. Alternate II. Alternate II is for use 

if the contracting officer anticipates that 

the contractor may require access to a 

third party’s facilities or nonpublic 

information that is not in the 

Government’s possession. This alternate 

requires the contractor, if requested by 

the contracting officer, to execute a 

Government-approved agreement with 

any party to whose facilities or 

nonpublic information it is given access, 

restricting the contractor’s use of the 

nonpublic information to performance 

of the contract. 

3. Release Clause. The purpose of the 

Release clause at FAR 52.204–YY, 

Release of Nonpublic Information, is to 

obtain the consent of the original 

owners of third-party nonpublic 

information for the Government to 

release such information to those 

contractors who need access to it for 

purposes of contract performance and 

who have signed up to the conditions of 

the Access clause. 

Unless agency procedures provide 

otherwise, the contracting officer must 

use the Release clauses in all 

solicitations and contracts, including 

solicitations and contracts for the 

acquisition of commercial items and 

below the simplified acquisition 

threshold. 

A solicitation provision at FAR 

52.204–XY, Release of Nonpublic 

Information, that provides similar 

coverage is prescribed for all 

solicitations. 

C. Unequal Access to Nonpublic 

Information 

1. Policy. FAR section 4.402 addresses 

situations in which access to nonpublic 

information constitutes a risk to the 

competitive integrity of the acquisition 

process. It includes a policy section, 

expressing the Government’s policy that 

contracting officers must take action to 

resolve situations where one or more 

offerors hold an unfair competitive 

advantage. The policy section also states 

that disqualification of an offeror is the 

least-favored approach and should only 

be adopted if no other method of 

resolution will adequately protect the 

integrity of the competition. 

2. General Principles. FAR subsection 

4.402–3 contains general principles for 

determining when access to nonpublic 

information requires resolution. 

Specifically, the access must be 

Government-provided, the access must 

be unequal (that is, not all of the 

prospective offerors have access), the 

information must be competitively 

useful, and the competitive advantage 

must be unfair. 

3. Contracting Officer 

Responsibilities. FAR subsection 4.402– 

4 contains details covering contracting 

officer responsibilities. This begins with 

requirements to collect information 

regarding unequal access to nonpublic 

information, both from within the 

Government and from offerors. If the 

contracting officer becomes aware that 

an offeror may have unequal access to 

nonpublic information, the rule requires 

that the contracting officer conduct an 

analysis, consistent with the general 

principles discussed above, to 

determine whether resolution is 

required. If resolution is not required, 

the contracting officer simply 

documents the file. If resolution is 

required, the contracting officer must 

take action consistent with the section 

detailing appropriate resolution 

techniques, which consist of 

information sharing, mitigation through 

the use of a firewall, or disqualification. 

4. Solicitation Provision. FAR 

subsection 4.402–5 prescribes a 

solicitation provision, FAR 52.204–YZ, 

Unequal Access to Nonpublic 

Information, that requires offerors to 

identify, early in the solicitation 

process, whether it or any of its affiliates 

possesses any nonpublic information 

relevant to the solicitation and provided 

by the Government. It also requires that 

the contractor certify by submission of 

its offer that, where a mitigation plan 

involving a firewall is already in place 

(addressing nonpublic information 

relevant to the current competition), the 

offeror knows of no breaches of that 

firewall. 

V. Solicitation of Public Comment 

When commenting on the proposed 

rule, respondents are encouraged to 

offer their views on the following 

questions: 

A. Do the policy and associated 

principles set forth in the proposed rule 

provide an effective framework for 

evaluating and addressing conflicts of 

interest? 

B. Is the definition of ‘‘organizational 

conflict of interest’’ sufficiently 

comprehensive to address all potential 

forms of such conflicts? 

C. Do the enumerated techniques for 

addressing OCIs adequately address the 

Government’s interests? Are any too 

weak or overbroad? Are there other 

techniques that should be addressed? 

D. Does the rule adequately address 

the potential conflicts that may arise for 

companies that have both advisory and 

production capabilities? What, if any, 

improvements might be made? 

E. Do the proposed solicitation 

provisions and contract clauses 

adequately implement the policy 

framework set forth in the proposed 

rule? For example, is a clause limiting 

future contracting an operationally 

feasible means of resolving a conflict? 

Would it be beneficial and appropriate 

for this information generally to be 

made publicly available, such as 

through a notice on FedBizOpps? Do the 

solicitation provisions and contract 

clauses afford sufficient flexibility to 

help an agency meet its individual 

needs regarding a prospective or actual 

conflict? 

F. Is there a need for additional 

guidance to supplement the proposed 

FAR coverage of OCIs (e.g., guidance 

addressing the management of OCI 

responsibilities)? If so, what points 

should the guidance make? 

G. Is the framework presented by this 

proposed rule preferable to the 

framework presented in the DFARS 

Proposed Rule 2009–D015 published in 

the Federal Register on April 22, 2010 

(75 FR 20954–20965)? Why or why not? 

Would some hybrid of the two proposed 

rules be preferable? 

H. Does the proposed rule strike the 

right balance between providing 

detailed guidance for contracting 

officers and allowing appropriate 

flexibility for dealing with the variety of 

forms that organizational conflicts of 

interest take and the variety of 

circumstances under which they arise? 

Are there certain types of contracts, or 

contracts for certain types of services, 


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23242 Federal Register / Vol. 76, No. 80 / Tuesday, April 26, 2011 / Proposed Rules 

that warrant coverage that is more strict 

than that provided by the proposed 

rule? 

VI. Executive Orders 12866 and 13563 

This is a significant regulatory action 

and, therefore, was subject to Office of 

Management and Budget review under 

Section 6(b) of Executive Order 12866, 

Regulatory Planning and Review, dated 

September 30, 1993. This rule is not a 

major rule under 5 U.S.C. 804. 

In accordance with Executive Order 

13563, Improving Regulation and 

Regulatory Review, dated January 18, 

2011, DoD, GSA, and NASA determined 

that this rule is not excessively 

burdensome on the public, and is 

consistent with Section 841 of the 

Duncan Hunter National Defense 

Authorization Act for Fiscal Year 2009, 

which required a review of the FAR 

coverage on OCIs. 

VII. Regulatory Flexibility Act 

A. The proposed changes are not 

expected to result in a significant 

economic impact on a substantial 

number of small entities within the 

meaning of the Regulatory Flexibility 

Act, 5 U.S.C. 601, et seq., because— 

1. The requirements of FAR subpart 

3.12 do not differ from the burden 

currently imposed on offerors and 

contractors by FAR subpart 9.5 and the 

requirements of subpart 3.12 are not 

significantly burdensome. It is good 

business practice to have procedures in 

place to identify potential 

organizational conflicts of interest and 

to have prepared mitigation plans for 

obvious conflicts. This proposed rule 

has also reduced the potential burden 

by— 

a. Not including a certification 

requirement; and 

b. Providing for avoidance, 

neutralization, or mitigation of 

organizational conflicts or interest or, 

under exceptional circumstances, 

waiver of the requirement for resolution. 

2. Unless the Access clause is used 

with Alternate I or Alternate II, this 

approach standardizes and simplifies 

the current system of third-party 

agreements envisioned by FAR 9.505–4. 

Having each contractor implement 

specific safeguards and procedures 

should offer the same or better 

protection for information belonging to 

small business entities. Moreover, this 

rule should ease the burden on most 

small business entities by not requiring 

them to enter multiple, interrelated 

third-party agreements with numerous 

service contractors. If the Access clause 

is used with Alternate I or Alternate II, 

then that is no more burdensome than 

the current requirements of FAR 9.505– 

4. 

B. However, an Initial Regulatory 

Flexibility Analysis has nevertheless 

been prepared and is summarized as 

follows: 

This proposed rule implements 

Section 841 of the Duncan Hunter 

National Defense Authorization Act for 

Fiscal Year 2009 (Pub. L. 110–417) by 

providing revised regulatory coverage 

on organizational conflicts of interest 

(OCIs) and unequal access to 

information. The rule also provides 

additional coverage regarding contractor 

access to nonpublic information, and 

adds related provisions and clauses. 

The objective of the rule is to help the 

Government in identifying and 

addressing circumstances in which a 

Government contractor may be unable 

to render impartial assistance or advice 

to the Government or might have an 

unfair competitive advantage based on 

unequal access to information or prior 

involvement in setting the ground rules 

for an acquisition. 

In recent years, a number of trends in 

acquisition and industry have led to the 

increased potential for OCIs, 

including— 

• Industry consolidation; 

• Agencies’ growing reliance on 

contractors for services, especially 

where the contractor is tasked with 

providing advice to the Government; 

and 

• The use of multiple-award task- and 

delivery-order contracts, which permit 

large amounts of work to be awarded 

among a limited pool of contractors. 

Section 841 of the Duncan Hunter 

National Defense Authorization Act for 

Fiscal Year 2009 (Pub. L. 110–417) 

directed a review of the conflicts of 

interest provisions in the FAR. Section 

841 required that appropriate revisions, 

including contract clauses, be 

developed as necessary, pursuant to that 

review. 

Competitive integrity issues caused by 

unequal access to nonpublic 

information are often unrelated to OCIs. 

Therefore, treating this topic 

independently will allow for more 

targeted coverage that properly 

addresses the specific concerns 

involved in such cases; and including 

broad coverage of contractor access to 

nonpublic information will provide a 

framework for the topic of unequal 

access to nonpublic information. 

An OCI is defined as a situation in 

which a Government contract requires a 

contractor to exercise judgment to assist 

the Government in a matter (such as in 

drafting specifications or assessing 

another contractor’s proposal or 

performance) and the contractor or its 

affiliates have financial or other 

interests at stake in the matter, so that 

a reasonable person might have concern 

that when performing work under the 

contract, the contractor may be 

improperly influenced by its own 

interests rather than the best interests of 

the Government; or a contractor could 

be viewed as having an unfair 

competitive advantage in an acquisition 

as a result of having previously 

performed work on a Government 

contract, under circumstances such as 

those just described, that put the 

contractor in a position to influence the 

acquisition. The circumstances that lead 

to OCIs are most likely to occur in large 

businesses that have diverse capacity to 

provide both upfront advice and also a 

capacity for production. Although a 

small business might become involved 

in OCIs through its affiliates, we 

estimate that the proposed rules on OCIs 

would not impact a significant number 

of small entities. Furthermore, this rule 

is not adding burdens relating to OCIs 

that are beyond the current expectations 

of FAR subpart 9.5. It is just providing 

standard procedures and clauses, rather 

than requiring each contracting officer 

to craft unique provisions and clauses 

appropriate to the situation. 

With regard to contractor access to 

information, the rule will impact 

entities that have access to nonpublic 

information in performance of a 

Government contract. We estimate that 

about half of the entities impacted will 

be small entities (estimated at 25,000 

small entities). Typical contracts that 

may provide access to nonpublic 

information include services contracts 

such as professional, administrative, or 

management support or special studies 

and analyses. Furthermore, small 

entities that are submitting offers to the 

Government must inform the 

Government, prior to submission of 

offers, if they possess any nonpublic 

information relevant to the current 

solicitation (estimated at 5,750 small 

entities). 

This rule requires the following 

projected reporting burdens for access to 

information: 

a. Provide copy of nondisclosure 

agreement upon request (6,250 

respondents × .5 hours per response = 

3,125 hours). 

b. Notify contracting officer of 

violation (250 respondents × 4 hours per 

response = 1,000 hours). 

c. Notify contracting officer if access 

information that should not have access 

to (125 respondents × 1 hour per 

response = 125 hours). 

d. Explain in solicitation any unequal 

access to nonpublic information (5,750 


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respondents × 3 hours per response = 

17,250). 

e. Explain if firewall was not 

implemented, or breached (rare) (10 

respondent × 5 hours per response = 50 

hours). 

We estimate that the respondents will 

be administrative employees earning 

approximately $75 per hour (+ .3285 

overhead). 

This rule overlaps, with other Federal 

rules: FAR Cases 2007–018, 2007–019, 

2008–025, 2009–022, and 2009–030; 

and DFARS Case 2009–D015. 

The Councils identified a significant 

alternative that would accomplish the 

objectives of the statute and the policies. 

See the discussion in the rule preamble 

about DFARS case 2009–D015. 

DoD, GSA, and NASA invite 

comments from small business concerns 

and other interested parties on the 

expected impact of this rule on small 

entities. 

DoD, GSA, and NASA will also 

consider comments from small entities 

concerning the existing regulations in 

subparts affected by the rule in 

accordance with 5 U.S.C. 610. Interested 

parties must submit such comments 

separately and should cite 5 U.S.C. 610 

(FAR Case 2011–001), in 

correspondence. 

VIII. Paperwork Reduction Act 

The proposed changes to the FAR 

impose a new information collection 

requirement that requires the approval 

of the Office of Management and Budget 

under 44 U.S.C. chapter 35, et seq. 

Under this proposed rule, an offeror 

may be required to submit information 

to identify an OCI and propose a 

resolution, such as a mitigation plan 

submitted by the offeror with its 

proposal. While this requirement 

existed informally since 1984 in FAR 

subpart 9.5, it is only now being 

formalized via the new contract 

provision and clause at FAR 52.203–XX 

and FAR 52.203–YY. 

A. Annual Reporting Burden: 

Public reporting burden for this 

collection of information is estimated to 

average approximately 4.6 hours per 

response, including the time for 

reviewing instructions, searching 

existing data sources, gathering and 

maintaining the data needed, and 

completing and reviewing the collection 

of information. 

The annual reporting burden is 

estimated as follows: 

1. Organizational Conflicts of Interest. 

Respondents: 30,930. 

Responses per respondent: 1.0. 

Total annual responses: 30,930. 

Preparation hours per response: 6.96. 

Total response burden hours: 215,273. 

2. Contractor Access to Nonpublic 

Information. 

Respondents: 24,760. 

Responses per respondent: 1. 

Total annual responses: 24,760. 

Preparation hours per response: 2. 

Total response burden hours: 49,520. 

3. Total. 

Respondents: 55,690. 

Responses per respondent: 1. 

Total annual responses: 55,690. 

Preparation hours per response: 

4.755. 

Total response burden hours: 264,793. 

B. Request for Comments Regarding 

Paperwork Burden 

Submit comments, including 

suggestions for reducing this burden, 

not later than June 27, 2011 to: FAR 

Desk Officer, OMB, Room 10102, NEOB, 

Washington, DC 20503, and a copy to 

the General Services Administration, 

Regulatory Secretariat (MVCB), Attn: 

Hada Flowers, 1275 First Street, NE., 

7th Floor, Washington, DC 20417. 

Public comments are particularly 

invited on: Whether this collection of 

information is necessary for the proper 

performance of functions of the FAR, 

and will have practical utility; whether 

our estimate of the public burden of this 

collection of information is accurate, 

and based on valid assumptions and 

methodology; ways to enhance the 

quality, utility, and clarity of the 

information to be collected; and ways in 

which we can minimize the burden of 

the collection of information on those 

who are to respond, through the use of 

appropriate technological collection 

techniques or other forms of information 

technology. 

Requester may obtain a copy of the 

supporting statement from the General 

Services Administration, Regulatory 

Secretariat (MVCB), 1275 First Street, 

NE., 7th Floor, Washington, DC 20417. 

Please cite OMB Control Number 9000– 

0178, Organizational Conflicts of 

Interest, in correspondence. 

List of Subjects in 48 CFR Parts 2, 3, 4, 

7, 9, 11, 12, 13, 14, 15, 16, 18, 37, 42, 

52, and 53 

Government procurement. 

Dated: April 13, 2011. 

Millisa Gary, 

Acting Director, Office of Governmentwide 

Acquisition Policy. 

Therefore, DoD, GSA, and NASA 

propose amending 48 CFR parts 2, 3, 4, 

7, 9, 11, 12, 13, 14, 15, 16, 18, 37, 42, 

52, and 53 as set forth below: 

1. The authority citation for 48 CFR 

parts 2, 3, 4, 7, 9, 11, 12, 13, 14, 15, 16, 

18, 37, 42, 52, and 53 continues to read 

as follows: 

Authority: 40 U.S.C. 121(c); 10 U.S.C. 

chapter 137; and 42 U.S.C. 2473(c). 

PART 2—DEFINITIONS OF WORDS 

AND TERMS 

2. Amend section 2.101 in paragraph 

(b)(2) by— 

a. Removing from paragraph (3) in the 

definition ‘‘Advisory and assistance 

services’’ ‘‘(see 9.505–1(b))’’; 

b. Adding, in alphabetical order, the 

definition ‘‘Nonpublic information’’; and 

c. Revising ‘‘Organizational conflict of 

interest.’’ 

The added and revised text to read as 

follows: 

§ 2.101 Definitions. 

* * * * * 

(b) * * * 

(2) * * * 

Nonpublic information means any 

Government or third-party information 

that— 

(1) Is exempt from disclosure under 

the Freedom of Information Act (5 

U.S.C. 552) or otherwise protected from 

disclosure by statute, Executive order, 

or regulation; or 

(2) Has not been disseminated to the 

general public, and the Government has 

not yet determined whether the 

information can or will be made 

available to the public. 

* * * * * 

Organizational conflict of interest 

means a situation in which— 

(1) A Government contract requires a 

contractor to exercise judgment to assist 

the Government in a matter (such as in 

drafting specifications or assessing 

another contractor’s proposal or 

performance) and the contractor or its 

affiliates have financial or other 

interests at stake in the matter, so that 

a reasonable person might have concern 

that when performing work under the 

contract, the contractor may be 

improperly influenced by its own 

interests rather than the best interests of 

the Government; or 

(2) A contractor could have an unfair 

competitive advantage in an acquisition 

as a result of having performed work on 

a Government contract, under 

circumstances such as those described 

in paragraph (1) of this definition, that 

put the contractor in a position to 

influence the acquisition. 

* * * * * 

PART 3—BUSINESS ETHICS AND 

CONFLICTS OF INTEREST 

3. Revise part 3 heading to read as set 

forth above. 

4. Revise section 3.000 to read as 

follows: 


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23244 Federal Register / Vol. 76, No. 80 / Tuesday, April 26, 2011 / Proposed Rules 

§ 3.000 Scope of part. 

This part prescribes policies and 

procedures for addressing issues 

regarding business ethics and conflicts 

of interest. 

§ 3.603 [Amended] 

5. Amend section 3.603 by removing 

from paragraph (b) ‘‘subpart 9.5’’ and 

adding ‘‘subpart 3.12’’ in its place. 

6. Add subpart 3.12 to read as follows: 

Subpart 3.12—Organizational Conflicts of 

Interest 

Sec. 

3.1200 Scope of subpart. 

3.1201 Definition. 

3.1202 Applicability. 

3.1203 Policy. 

3.1204 Methods of addressing 

organizational conflicts of interest. 

3.1204–1 Avoidance. 

3.1204–2 Limitation on future contracting 

(neutralization). 

3.1204–3 Mitigation. 

3.1204–4 Assessment that risk is 

acceptable. 

3.1205 Waiver. 

3.1206 Contracting officer responsibilities. 

3.1206–1 General. 

3.1206–2 Pre-solicitation responsibilities. 

3.1206–3 Addressing organizational 

conflicts of interest during evaluation of 

offers. 

3.1206–4 Contract award. 

3.1206–5 Issuance of task or delivery orders 

or blank purchase agreement calls. 

3.1207 Solicitation provision and contract 

clauses. 

Subpart 3.12—Organizational Conflicts 

of Interest 

§ 3.1200 Scope of subpart. 

(a) This subpart prescribes policies 

and procedures for identifying, 

analyzing, and addressing 

organizational conflicts of interest (as 

defined in 2.101). It implements 41 

U.S.C. 2304 and section 841(b)(2) of 

Public Law 110–417. 

(b) This subpart does not address 

unequal access to nonpublic 

information, which is addressed in 

4.402. 

§ 3.1201 Definition. 

‘‘To address,’’ as used in this subpart, 

means to protect the integrity of the 

competitive acquisition process, as well 

as the Government’s business interests 

(see 3.1203(a)(2)), by one or more of the 

following methods: 

(1) Avoidance. 

(2) Neutralization through limitations 

on future contracting. 

(3) Mitigation of the risks involved. 

(4) Assessment that the risk inherent 

in the conflict is acceptable (either 

without further action or in conjunction 

with application of one or more of the 

other methods listed in paragraphs (a) 

through (c) of this definition). (See 

3.1204.) 

§ 3.1202 Applicability. 

(a) This subpart— 

(1) Applies to contracts and 

subcontracts with both profit and 

nonprofit organizations, including 

nonprofit organizations created largely 

or wholly with Government funds. 

Contracts include task and delivery 

orders and modifications that add work; 

and 

(2) Applies to the acquisition of 

commercial items, including 

commercially available off-the-shelf 

items (see 12.301(d)(3)) if the 

contracting officer determines that 

contractor performance of the work may 

give rise to an organizational conflict of 

interest. 

(b) Although this subpart applies to 

every type of acquisition, organizational 

conflicts of interest are more likely to 

arise when at least one of the contracts 

involved is for acquisition support 

services or advisory and assistance 

services. 

(c) Application of this subpart is 

independent of coverage concerning 

unequal access to nonpublic 

information (see 4.402). Contracting 

officers must consider each issue 

separately in determining whether steps 

must be taken to protect the interests of 

the Government. 

(d) This subpart shall not be applied 

in any manner that conflicts with an 

agency-specific conflict of interest 

statute. 

§ 3.1203 Policy. 

(a) The Government’s interests. It is 

the Government’s policy to identify, 

analyze, and address organizational 

conflicts of interest that might otherwise 

exist or arise in acquisitions in order to 

maintain the public’s trust in the 

integrity and fairness of the Federal 

acquisition system. Organizational 

conflicts of interest have the potential to 

undermine the public’s trust in the 

Federal acquisition system because they 

can impair— 

(1) The integrity of the competitive 

acquisition process. The Government 

has an interest in preserving its ability 

to solicit competitive proposals and 

affording prospective offerors an 

opportunity to compete for Government 

requirements on a level playing field. In 

some cases, an organizational conflict of 

interest will be accompanied by a risk 

that the conflicted contractor will create 

for itself, or obtain, whether 

intentionally or not, an unfair advantage 

in competing for a future Government 

requirement. The result may be a 

seriously flawed competition, which is 

unacceptable in terms of good 

governance, fairness, and maintenance 

of the public trust; and 

(2) The Government’s business 

interests. As a steward of public funds, 

the Government has an interest in 

ensuring both that it acquires products 

and services that provide the best value 

to the Government and that the 

contractor’s performance in fulfilling 

the Government’s requirements is 

consistent with contractual 

expectations. In many cases, an 

organizational conflict of interest will be 

accompanied by a risk that the conflict 

will affect the contractor’s judgment 

during performance in a way that 

degrades the value of its services to the 

Government. This type of risk is most 

likely to appear when the exercise of 

judgment is a key aspect of the service 

that the contractor will be providing. 

(b) Addressing organizational 

conflicts of interest. (1) Agencies must 

examine and address organizational 

conflicts of interest on a case-by-case 

basis, because such conflicts arise in 

various, and often unique, factual 

settings. Contracting officers shall 

consider both the specific facts and 

circumstances of the contracting 

situation and the nature and potential 

extent of the risks associated with an 

organizational conflict of interest when 

determining what method or methods of 

addressing the conflict will be 

appropriate. 

(2) If an organizational conflict of 

interest is such that it risks impairing 

the integrity of the competitive 

acquisition process, then the contracting 

officer must take action to substantially 

reduce or eliminate this risk. 

(3) If the only risk created by an 

organizational conflict of interest is a 

performance risk relating to the 

Government’s business interests, then 

the contracting officer has broad 

discretion to select the appropriate 

method for addressing the conflict, 

including the discretion to conclude 

that the Government can accept some or 

all of the performance risk. 

(c) Waiver. It is the policy of the 

Government to minimize the use of 

waivers of organizational conflicts of 

interest. However, in exceptional 

circumstances, the agency may grant a 

waiver in accordance with 3.1205. 

§ 3.1204 Methods of addressing 

organizational conflicts of interest. 

Organizational conflicts of interest 

may be addressed by means of 

avoidance, limitations on future 

contracting, mitigation, or the 

Government’s assessment that the risk 

inherent in the conflict is acceptable. In 


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some cases, a combination of methods 

may be appropriate. 

§ 3.1204–1 Avoidance. 

Avoidance consists of Government 

action taken in one acquisition that is 

intended to prevent organizational 

conflicts of interest from arising in that 

acquisition or in a future acquisition. In 

order to successfully implement an 

avoidance strategy, the contracting 

officer should work with the program 

office or requiring activity early in the 

acquisition process. Methods of 

avoiding organizational conflicts of 

interest include, but are not limited to, 

the following: 

(a) Drafting the statement of work to 

exclude tasks that require contractors to 

utilize subjective judgment. This 

strategy may be used to avoid or prevent 

organizational conflicts of interest both 

in the instant contract and in future 

acquisitions. Tasks requiring subjective 

judgment include— 

(1) Making recommendations; 

(2) Providing analysis, evaluation, 

planning, or studies; and 

(3) Preparing statements of work or 

other requirements and solicitation 

documents. 

(b) Requiring the contractor (and its 

affiliates, as appropriate) to implement 

structural barriers, internal corporate 

controls, or both, in order to forestall 

organizational conflicts of interest that 

could arise because, for example, the 

contractor will be participating in 

preparing specifications or work 

statements in the performance of the 

immediate contract. This avoidance 

method differs from mitigation in that it 

is used to prevent organizational 

conflicts of interest from arising in 

future acquisitions, rather than 

addressing organizational conflicts of 

interest in the instant contract. 

(c) Excluding an offeror or offerors 

from participation in a procurement. (1) 

Use of this method may be appropriate 

when the contracting officer concludes 

that— 

(i) The offeror will have an unfair 

advantage in the competition because of 

its prior involvement (or an affiliate’s 

prior involvement) in developing the 

ground rules for the procurement; or 

(ii) The risk that the offeror’s 

judgment or objectivity in performing 

the proposed work will be impaired 

because the substance of the work has 

the potential to affect other of the 

offeror’s (or its affiliates’) current or 

future activities or interests is more 

significant than the Government is 

willing to accept. 

(2) This approach may be used only 

if the contracting officer has determined 

that no less restrictive method for 

addressing the conflict will adequately 

protect the Government’s interest. This 

determination must be documented in 

the contract file. 

(3) Before excluding an offeror from 

participation in a procurement on the 

basis of an organizational conflict of 

interest that arises because of work done 

by an affiliate of the offeror (creating an 

unfair competitive advantage), the 

contracting officer shall identify and 

analyze the corporate and business 

relationship between the offeror and the 

affiliate. The contracting officer’s efforts 

should be directed toward 

understanding the nature of the 

relationship between the entities and 

determining whether the risk associated 

with the organizational conflict of 

interest can be addressed through 

mitigation (see 3.1204–3). The 

contracting officer should, at a 

minimum, examine whether— 

(i) The offeror and affiliate are 

controlled by a common corporate 

headquarters; 

(ii) The overall corporate organization 

has established internal barriers, such as 

corporate resolutions, management 

agreements, or restrictions on personnel 

transfers, that limit the flow of 

information, personnel, and other 

resources between the relevant entities; 

(iii) The offeror and affiliates are 

separate legal entities and are managed 

by separate boards of directors; 

(iv) The corporate organization has 

instituted recurring training on 

organizational conflicts of interest and 

protections against organizational 

conflicts of interest; and 

(v) The affiliate can influence the 

offeror’s performance of its contractual 

requirements. 

§ 3.1204–2 Limitation on future contracting 

(neutralization). 

(a) A limitation on future contracting 

allows a contractor to perform on the 

instant contract but precludes the 

contractor from submitting offers for (or 

participating as a subcontractor in) 

future contracts where the contractor 

would have an unfair advantage in 

competing for award (or could provide 

the prime contractor with such an 

advantage). The limitation on future 

contracting effectively ‘‘neutralizes’’ the 

organizational conflict of interest. 

(b) Limitations on future contracting 

shall be restricted to a fixed term of 

reasonable duration that is sufficient to 

neutralize the organizational conflict of 

interest. The restriction shall end on a 

specific date or upon the occurrence of 

an identifiable event. 

§ 3.1204–3 Mitigation. 

(a)(1) Mitigation is any action taken to 

reduce the risk that an organizational 

conflict of interest will undermine the 

public’s trust in the Federal acquisition 

system. 

(2) Mitigation may require 

Government action, contractor action, or 

a combination of both. 

(b) When this approach is utilized, a 

Government-approved mitigation plan, 

reflecting the actions a contractor has 

agreed to take to mitigate a conflict, 

shall be incorporated into the contract. 

The required complexity of the 

mitigation plan is related to the 

complexity of the organizational conflict 

of interest and the size of the 

acquisition. While implementation of a 

mitigation plan may rest largely with a 

contractor, the Government bears 

responsibility for ensuring that 

mitigation plans are properly 

implemented, and the Government must 

not leave enforcement to the contractor. 

(c) Ways of mitigating organizational 

conflicts of interest include, but are not 

limited to, the following: 

(1) Requiring a subcontractor or team 

member that is conflict-free to perform 

the conflicted portion of the work on the 

instant contract. This technique will not 

be effective in reducing the risk 

associated with a conflict unless it is 

utilized in conjunction with a system of 

controls that can ensure that the 

conflicted entity has no input or 

influence on the work of the 

subcontractor or team member 

performing the conflicted portion of the 

work. 

(2) Requiring the contractor to 

implement structural or behavioral 

barriers, internal controls, or both. (i) 

This method can be used to lessen the 

risk that the potentially conflicting 

financial interests of an affiliate will 

influence the contractor’s exercise of 

judgment during contract performance. 

The choice of specific barriers or 

controls should be based on an analysis 

of the facts and circumstances of each 

case. Examples of such methods 

include, but are not limited to— 

(A) An agreement that the contractor’s 

board of directors will adopt a binding 

resolution prohibiting certain directors, 

officers, or employees, or parts of the 

company from any involvement with 

contract performance; 

(B) A condition for a nondisclosure 

agreement between the contractor 

performing the contract and all of its 

affiliates; 

(C) A condition that the contractor’s 

board of directors include one or more 

independent directors who have no 

prior relationship with the contractor; 

and 

(D) Creation of a corporate 

organizational conflict of interest 

compliance official at a senior level to 


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oversee implementation of any 

mitigation plan. 

(ii) A firewall will often be necessary 

to implement the controls in the 

previous paragraph (c)(2)(i) of this 

subsection. However, a firewall that 

serves only to limit the sharing of 

information, by itself, is generally not 

effective in addressing an organizational 

conflict of interest. 

(3) Obtaining advice from more than 

one source on a particular issue, so that 

the Government is not relying solely on 

the advice of any one of the sources. 

3.1204–4 Assessment that risk is 

acceptable. 

(a) The contracting officer shall not 

use this method of assessment that the 

risk is acceptable to address conflicts 

when the conflict could impair the 

competitive acquisition process (see 

3.1203). 

(b) The contracting officer may assess 

that the risk associated with an 

organizational conflict of interest is 

acceptable when— 

(1) The only risk created by the 

conflict is a performance risk relating to 

the business interests of the 

Government; 

(2) The risk is manageable; and 

(3) The potential harm to the 

Government’s interest is outweighed by 

the expected benefit from having the 

conflicted offeror perform the contract. 

(c) This method of addressing 

conflicts should generally be combined 

with other methods, particularly 

mitigation. For example, the contracting 

officer may require a mitigation plan, 

and elect to accept the remaining risk if 

the contracting officer concludes that 

the mitigation plan does not remove all 

of the performance risk associated with 

the conflict. 

(d) The contracting officer shall 

consider all readily available 

information (see 3.1206–3) before 

concluding that the risk of harm is 

acceptable. 

(e) All assessments that the risk is 

acceptable must be in writing, setting 

forth the extent of the conflict and 

explaining why it is in the best interest 

of the Government to accept the risk 

associated with the conflict. 

3.1205 Waiver. 

(a) Authority. (1) In exceptional 

circumstances, the agency head may 

waive the requirement to address an 

organizational conflict of interest in a 

particular acquisition, but only if the 

agency head first determines that— 

(i) Mitigation or other means of 

addressing the organizational conflict of 

interest are not feasible (e.g., the agency 

cannot assess the risk as acceptable 

because the organizational conflict of 

interest involves an unfair competitive 

advantage); and 

(ii) The waiver is necessary to 

accomplish the agency’s mission. 

(2) The agency head shall not delegate 

this waiver authority below the head of 

a contracting activity. 

(b) Requirements. (1) Any waiver 

shall— 

(i) Be in writing; 

(ii) Cover only one contract action; 

(iii) Describe the extent of the 

organizational conflict of interest; 

(iv) Explain why the waiver is 

necessary to accomplish the agency’s 

mission; and 

(v) Be approved by the appropriate 

official. 

(2) The contracting officer shall 

include the waiver documentation and 

decision in the contract file. 

3.1206 Contracting officer responsibilities. 

3.1206–1 General. 

(a) The contracting officer shall assess 

early in the acquisition process whether 

contractor performance of the 

contemplated work is likely to create 

any organizational conflicts of interest 

(see 3.1206–2 and 7.105(b)(18)). 

(b) The contracting officer shall 

exercise common sense, good judgment, 

and sound discretion— 

(1) In deciding whether an acquisition 

may give rise to an organizational 

conflict of interest; and 

(2) In developing an appropriate 

means for addressing any such conflicts. 

3.1206–2 Pre-solicitation responsibilities. 

(a) Initial assessment. (1) The 

contracting officer shall review the 

nature of the work to be performed to 

decide whether performance by a 

contractor has the potential to create an 

organizational conflict of interest (see 

3.1202(b)). In addition to evaluating the 

nature of the work to be performed on 

the immediate contract, the contracting 

officer should also consider whether 

performance of the present contract 

could cause the contractor to have an 

organizational conflict of interest in a 

foreseeable future contract. 

(2) As appropriate to the 

circumstances, the contracting officer 

should obtain the assistance of the 

program office, appropriate technical 

specialists, and legal counsel in 

identifying the potential for 

organizational conflicts of interest. 

(3) If the contracting officer decides 

that contractor performance of the 

contemplated work does not have the 

potential to create an organizational 

conflict of interest, the contracting 

officer shall document in the contract 

file the rationale supporting the 

decision. 

(4) If the contracting officer decides 

that contractor performance of the 

contemplated work has the potential to 

create an organizational conflict of 

interest, the contracting officer should 

consult with the program office or 

requiring activity to determine whether 

any organizational conflicts of interest 

could be avoided by drafting the 

requirements documents to exclude 

tasks that require the contractor to 

exercise subjective judgment during 

contract performance. If avoiding 

organizational conflicts of interest is not 

feasible at this stage, then the 

contracting officer shall proceed with 

the pre-solicitation actions described in 

paragraph (b) of this subsection. 

(b) Pre-solicitation actions. (1) When 

assessing the nature and scope of any 

organizational conflicts of interest that 

may arise during contract performance 

and preliminarily considering how best 

to address any such conflicts, the 

contracting officer should weigh the 

following factors to the extent feasible at 

this pre-solicitation phase: 

(i) The extent to which the contract 

calls for the contractor to exercise 

subjective judgment and provide advice. 

(ii) The extent and severity of the 

expected impact of the organizational 

conflict of interest (for example, 

whether it is expected to occur only 

once or twice during performance or to 

impact performance of the entire 

contract). 

(iii) The extent to which the agency 

has effective oversight controls to 

ensure that the contractor’s actions are 

unaffected by an organizational conflict 

of interest during performance. 

(iv) Whether the organizational 

conflict of interest risks creation of an 

unfair competitive advantage. 

(v) The degree to which any 

impairment of the contractor’s 

objectivity may reduce the value of its 

services to the agency, and the agency’s 

willingness to accept the performance 

risk of that impairment. 

(2) If the contracting officer concludes 

that the only risk associated with 

organizational conflicts of interest is a 

risk to the Government’s business 

interests, the contracting officer may 

choose one of the following approaches: 

(i) Include consideration of potential 

risks associated with organizational 

conflicts of interest as an evaluation 

factor in the technical rating. If the 

Government determines that treatment 

of organizational conflicts of interest 

through use of an evaluation factor is 

appropriate, an appropriate evaluation 

factor must be included in the 

solicitation. 


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(ii) Do not include consideration of 

potential risks associated with 

organizational conflicts of interest as an 

evaluation factor in the technical rating. 

In this case, the Government will 

address the performance risks 

associated with any organizational 

conflicts of interest outside of the 

evaluation process and may engage in 

exchanges with offerors in order to 

understand the conflicts and assess the 

feasibility of addressing the risks (see 

3.1206–3(b)(2)(ii)). Prior to contract 

award, the source selection team will 

select the apparent successful offeror 

independent of any organizational 

conflict of interest. The contracting 

officer will then assess whether or not 

to proceed with award, based on 

whether any organizational conflict of 

interest can be addressed (see 3.1206– 

4(a)). Award to the apparent successful 

offeror will not be made if any 

organizational conflict of interest cannot 

be addressed. 

(3) If the contracting officer has 

decided that contractor performance of 

the contemplated work has the potential 

to create an organizational conflict of 

interest, the contracting officer shall 

select the appropriate solicitation 

provisions and contract clauses for the 

resulting solicitation in accordance with 

3.1207. 

(i) The contracting officer shall 

require the program office or requiring 

activity to identify any contractor(s) that 

participated in preparation of the 

statement of work or other requirements 

documents, including cost or budget 

estimates. The contracting officer shall 

review this list to identify the nature 

and scope of any conflict. The 

solicitation should, if appropriate, 

include a provision identifying 

contractors prohibited from competing 

as a prime contractor or a subcontractor 

due to any applicable pre-existing 

limitations on future contracting. 

(ii) The contracting officer shall 

include in the solicitation a provision 

and clause as prescribed in 3.1207(a) 

and 3.1207(b). 

(iii) If the contracting officer 

anticipates that the parties will use a 

mitigation plan to address an 

organizational conflict of interest in 

whole or in part, the contracting officer 

shall include in the solicitation a clause 

as prescribed in 3.1207(c). 

(iv) When the contemplated work 

calls for the contractor to exercise 

subjective judgment or provide advice 

which may create an unfair competitive 

advantage, the contracting officer shall 

include in the solicitation an 

appropriate limitation on future 

contracting as prescribed in 3.1207(d). 

3.1206–3 Addressing organizational 

conflicts of interest during evaluation of 

offers. 

(a) Sources of Information—(1) 

Information from offerors. The 

contracting officer shall use information 

provided by the offerors (see 52.203– 

XX, Notice of Potential Organizational 

Conflict of Interest) to identify 

organizational conflicts of interest. 

However, the contracting officer should 

not rely solely on this contractorprovided information. 

(2) Other sources of information. The 

contracting officer should seek readily 

available information about the 

financial interests of the offerors, 

affiliates of the offerors, and prospective 

subcontractors from within the 

Government or from other sources and 

compare this information against 

information provided by the offeror. 

(i) Government sources. Government 

sources include the files and the 

knowledge of personnel within— 

(A) The contracting office; 

(B) Other contracting offices; 

(C) The cognizant contract 

administration, finance, and audit 

activities; and 

(D) The requiring activity. 

(ii) Non-Government sources. NonGovernment sources include, but are not 

limited to— 

(A) Offeror’s Web sites; 

(B) Trade and financial journals; 

(C) Business directories and registers; 

and 

(D) Annual corporate shareholder 

reports. 

(b) Actions to address organizational 

conflicts of interest. (1) Consistent with 

3.1206–3(a), the contracting officer 

should analyze both contractorprovided and otherwise available 

information in determining how to 

address any organizational conflicts of 

interest. 

(2) If the acquisition involves 

contractor-submitted mitigation plans, 

then the contracting officer shall 

analyze the feasibility of mitigation of 

the organizational conflict of interest, 

including both the expected 

effectiveness of the conflicted entity’s 

proposed mitigation plan and the 

Government’s ability to monitor and 

enforce the provisions of the plan. 

(i) If organizational conflicts of 

interest were included as an evaluation 

factor, then communications between 

the Government and an offeror that 

could result in changes to the offeror’s 

mitigation plan will constitute 

discussions. Changes to an offeror’s 

mitigation plan will likely also lead the 

Government to reassess the technical 

rating assigned to the offeror. 

(ii) If organizational conflicts of 

interest were not included as an 

evaluation factor, then communications 

between the Government and an offeror 

regarding the offeror’s mitigation plan, 

will not constitute discussions, unless 

the communications result in changes to 

evaluated aspects of the offeror’s 

proposal. 

3.1206–4 Contract award. 

(a) If organizational conflicts of 

interest were not considered as an 

evaluation factor, before withholding 

award from the apparent successful 

offeror based on conflict of interest 

considerations, the contracting officer 

shall— 

(1) Notify the contractor in writing; 

(2) Provide the reasons therefore; and 

(3) Allow the contractor a reasonable 

opportunity to respond. 

(b) Except as provided in paragraphs 

(c) and (d) of this subsection, the 

contracting officer shall award the 

contract to the apparent successful 

offeror only if all organizational 

conflicts of interest have been 

addressed. 

(c) If the contracting officer finds that 

it is in the best interest of the 

Government to award the contract 

notwithstanding an unaddressed 

conflict of interest, a request for waiver 

shall be submitted in accordance with 

3.1205. 

(d) For task- or delivery-order 

contracts or blanket purchase 

agreements, the contracting officer shall 

attempt to identify all organizational 

conflict of interest issues at the time of 

award of the basic task- or deliveryorder contract or blanket purchase 

agreement. To the extent an 

organizational conflict of interest can be 

identified at the time of award of the 

underlying vehicle, the contracting 

officer shall include a mitigation plan or 

limitation on future contracting in the 

basic contract or agreement, unless the 

contracting officer decides to accept the 

risk associated with the conflict without 

any such actions. 

3.1206–5 Issuance of task or delivery 

orders or blanket purchase agreement calls. 

(a) The contracting officer shall 

consider organizational conflicts of 

interest at the time of issuance of each 

order (going through the steps 

comparable to those in 3.1206–2, except 

that there is no solicitation involved in 

issuance of orders). If procedures for 

addressing an organizational conflict of 

interest are in the basic task- or 

delivery-order contract or blanket 

purchase agreement at the time of its 

award, the contracting officer may need 

to appropriately tailor the procedures 

when issuing an order. 

(b) For interagency acquisitions that 

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23248 Federal Register / Vol. 76, No. 80 / Tuesday, April 26, 2011 / Proposed Rules 

order contracts, including the Federal 

Supply Schedules— 

(1) If the order is placed as a direct 

acquisition, the contracting officer for 

the ordering agency is responsible for 

determining if a mitigation plan is 

required, developing a Governmentapproved plan, if necessary, and 

administering the plan, if one is 

developed; or 

(2) If the order is placed as an assisted 

acquisition, the servicing agency and 

requesting agency shall identify which 

agency is responsible for the actions 

identified in paragraph (a) of this 

section and reflect this understanding in 

their interagency agreement. 

3.1207 Solicitation provision and contract 

clauses. 

(a)(1) The contracting officer shall 

include a solicitation provision 

substantially the same as 52.203–XX, 

Notice of Potential Organizational 

Conflict of Interest, upon determining 

that contractor performance of the work 

may give rise to organizational conflicts 

of interest. 

(2) The contracting officer shall fill in 

paragraph (b)(2) of the provision, if the 

program office or requiring activity has 

identified any contractors that 

participated in preparation of the 

statement of work or other requirements 

documents, including cost or budget 

estimates. 

(b) The contracting officer shall 

include in solicitation and contracts a 

clause substantially the same as 52.203– 

ZZ, Disclosure of Organizational 

Conflict of Interest after Contract 

Award, when the solicitation includes 

the provision 52.203–XX, Notice of 

Potential Organizational Conflict of 

Interest. 

(c) The contracting officer shall 

include in solicitations and contracts a 

clause substantially the same as 52.203– 

YY, Mitigation of Organizational 

Conflicts of Interest, when the contract 

may involve an organizational conflict 

of interest that can be addressed by an 

acceptable contractor-submitted 

mitigation plan prior to contract award. 

(d) The contracting officer shall 

include in solicitations and contracts a 

clause substantially the same as 52.203– 

YZ, Limitation on Future Contracting, 

when the method of addressing the 

organizational conflict of interest will 

involve a limitation on future 

contracting. 

(1) The contracting officer shall fill in 

the nature and duration of the limitation 

on future contractor activities in 

paragraph (a) of the clause. 

(2) The contracting officer shall 

ensure that the duration of the 

limitation is sufficient to neutralize any 

unfair competitive advantage. 

PART 4—ADMINISTRATIVE MATTERS 

7. Revise the heading of subpart 4.4 to 

read as follows: 

Subpart 4.4—Safeguarding Information 

Within Industry 

8. Add sections 4.401 through 4.401– 

4 to read as follows: 

4.401 Contractor access to nonpublic 

information. 

4.401–1 Scope. 

This section prescribes policies and 

procedures applicable to contracts that 

may require, authorize, or permit 

contractor access to nonpublic 

information during contract 

performance. 

4.401–2 Policy. 

It is the Government’s policy— 

(a) To preclude contractor use or 

disclosure of nonpublic information for 

any purpose unrelated to contract 

performance; 

(b) To ensure that the contractor does 

not obtain any unfair competitive 

advantage by virtue of its access to 

nonpublic information (see 4.402); and 

(c) To allow agencies discretion to 

prescribe more restrictive policies and 

regulations regarding the release and 

disclosure of nonpublic information 

than are established in this subpart (e.g., 

limitations on reassignment of 

personnel, more stringent notification 

requirements in cases of unauthorized 

disclosure, etc.). 

4.401–3 Restrictions on access to 

nonpublic information. 

(a) The contracting officer shall not 

permit contractor access to nonpublic 

information unless— 

(1) The Government is authorized to 

permit such access, e.g., under subpart 

24.2. 

(2) The access is necessary for 

performance of the contract; and 

(3) Access is limited to persons who 

require access to that information to 

perform the contract. 

(b) If a contractor reports an 

unauthorized disclosure or misuse of 

information in accordance with 

paragraph (b)(2)(vii) of 52.204–XX, 

Access to Nonpublic Information, the 

contracting officer shall— 

(1) Review the actions taken by the 

contractor; 

(2) Determine whether any action 

taken by the contractor has addressed 

the situation satisfactorily; and 

(3) If the contracting officer 

determines that the contractor has not 

addressed the situation satisfactorily, 

take any appropriate action in 

consultation with agency legal counsel. 

4.401–4 Solicitation provision and 

contract clauses. 

Unless agency procedures provide 

otherwise— 

(a)(1) The contracting officer shall 

insert the clause at 52.204–XX, Access 

to Nonpublic Information, in 

solicitations and contracts when the 

contractor (or its subcontractors) may 

have access to nonpublic information. 

(2) If the contracting officer decides 

that due to the contract requirements— 

(i) There may be a need for executing 

confidentiality agreements between the 

contractor and one or more third parties 

that have provided information to the 

Government, insert the clause with its 

Alternate I. 

(ii) The contractor may require access 

to a third party’s facilities or proprietary 

information that is not in the 

Government’s possession, insert the 

clause with its Alternate II. 

(b) The contracting officer shall insert 

the provision at 52.204–XY, Release of 

Pre-Award Information, in all 

solicitations. 

(c) The contracting officer shall insert 

the clause at 52.204–YY, Release of 

Nonpublic Information, in all 

solicitations and contracts. 

4.402 through 4.404 [Redesignated as 

4.403–1 through 4.403–3] 

9a. Redesignate sections 4.402 

through 4.404 as sections 4.403–1 

through 4.403–3, respectively. 

9b. Add new sections 4.402 and 4.403 

to read as follows: 

4.402 Unequal access to nonpublic 

information. 

4.402–1 Scope. 

This section prescribes policies and 

procedures for identifying and resolving 

situations in which an offeror’s access to 

nonpublic information provides the 

offeror with an unfair competitive 

advantage. 

4.402–2 Policy. 

(a) Because an unfair competitive 

advantage held by one or more offerors 

risks tainting the integrity of the 

competitive acquisition process, the 

Government must take action to resolve 

any situations in which an offeror has 

obtained an unfair competitive 

advantage because of its unequal access 

to nonpublic information. 

(b) When an offeror has an unfair 

competitive advantage because of 

unequal access to nonpublic 

information, the Government shall 

disqualify the offeror from a 


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competition only when no other method 

of resolution is appropriate (see 4.402– 

4(c)). 

(c) In competing for follow-on 

requirements, incumbent contractors 

will often have a natural advantage that 

is based on their experience, insights, 

and expertise rather than any unequal 

access to nonpublic information. This 

type of competitive advantage is not 

considered unfair. This situation must 

be distinguished from situations in 

which an incumbent contractor also had 

access to nonpublic information that 

could provide it, in a future acquisition, 

a competitive advantage that is unfair. 

4.402–3 General principles. 

An offeror’s unequal access to 

nonpublic information may give it an 

unfair competitive advantage with 

respect to a particular acquisition. 

However, not all access to nonpublic 

information is unequal and, even where 

access may be unequal, such access will 

not always result in the offeror 

obtaining an unfair competitive 

advantage. Contracting officers shall 

consider the following factors when 

determining whether a particular 

situation involving offeror access to 

nonpublic information requires 

resolution: 

(a) Whether access to the nonpublic 

information was provided by the 

Government. (1) Nonpublic information 

can come to an offeror from the 

Government either— 

(i) Directly, through, or in connection 

with, performance on another 

Government contract; or 

(ii) Indirectly, through sources such as 

former Government employees or 

employees of other contractors or 

subcontractors who received the 

nonpublic information from the 

Government. 

(2) The Government has not provided 

access to nonpublic information, even 

indirectly, when an offeror gains access 

to nonpublic information through 

market research efforts or by way of 

private-sector business contacts. 

(3) If an offeror gained access to the 

nonpublic information at issue in a 

particular situation through a source 

other than the Government, then the 

contracting officer need not take steps to 

resolve the situation. 

(b) Whether the nonpublic 

information (although provided by the 

Government) is available to all potential 

offerors. If the nonpublic information is 

otherwise available to all potential 

offerors, then— 

(1) The offeror’s access to the 

information is not unequal; and 

(2) The contracting officer need not 

take steps (other than potentially 

sharing the information with all 

offerors, see 4.402–4(c)) to resolve the 

situation. 

(c) Whether having unequal access to 

the nonpublic information would be 

competitively useful to an offeror 

responding to a solicitation. (1) In 

assessing whether nonpublic 

information would be competitively 

useful to an offeror, the contracting 

officer should make a reasonable effort 

to consult with people with knowledge 

of the market and the industry. 

(2) If the nonpublic information to 

which an offeror has or had access is not 

competitively useful, then the 

contracting officer need not take steps to 

resolve the situation. 

4.402–4 Contracting officer 

responsibilities. 

(a) Sources of information. (1) During 

acquisition planning, the contracting 

officer shall ask the relevant contracting 

activity and requiring activity (as 

appropriate) to examine whether any 

potential offerors may have had 

Government-provided access (see 

4.402–3(a)) to nonpublic information 

relevant to the acquisition. 

(2) When initially announcing an 

acquisition, the contracting officer shall 

include a statement asking that potential 

offerors indicate, as early as possible, if 

they have or had Government-provided 

access (see 4.402–3(a)) to any nonpublic 

information relevant to the acquisition. 

(i) For contract actions, this statement 

shall be included in the sources sought 

notification. 

(ii) For orders placed against 

multiple-award task- and delivery-order 

contracts or blanket purchase 

agreements, this statement shall be 

included in the first announcement to 

contract-holders regarding the order. 

(iii) For Federal Supply Schedule 

orders, this statement shall be included 

in the request for quote. 

(3) As prescribed at 4.402–5, the 

contracting officer shall include in the 

solicitation the provision requiring 

offerors to state whether they are aware 

of anyone in their corporate 

organization, including affiliates, who 

has gained access to nonpublic 

information relevant to the acquisition 

that was made available by the 

Government. 

(b) Analysis. (1) If the Contracting 

Officer is aware that one or more 

offerors have or had access to nonpublic 

information provided by the 

Government, the contracting officer 

shall determine whether resolution is 

required. Consistent with the general 

principles provided in 4.402–3, the 

contracting officer must resolve the 

situation (taking into consideration the 

policy at 4.402–2(b)) if— 

(i) The nonpublic information is 

available to some, but not all, potential 

offerors; 

(ii) The nonpublic information would 

be competitively useful in responding to 

a solicitation; and 

(iii) The advantage afforded to the 

contractor by its access to the nonpublic 

information is unfair. 

(2) If resolution is not required, the 

Contracting Officer shall document the 

file. 

(c) Resolution. Unfair competitive 

advantage resulting from unequal access 

to nonpublic information may be 

resolved by information sharing, 

mitigation through use of a firewall, or 

exclusion. In some cases, a combination 

of methods may be appropriate. 

(1) Information sharing. Information 

sharing consists of disseminating the 

information in question to all potential 

offerors, either in the solicitation, in a 

solicitation amendment, or through 

some other method, such as posting it 

online. 

(i) This method is generally available 

when the relevant information is 

Government information. In situations 

where the information belongs to 

another party (for instance, a contractor 

for whom a potential offeror worked as 

a subcontractor), appropriate permission 

must be obtained before such 

information can be shared with other 

parties, and appropriate protections 

must be implemented with respect to 

the shared information. 

(ii) For this method to be effective, 

information must be shared with 

potential offerors early enough in the 

acquisition process to allow those 

offerors to effectively utilize the 

information. 

(2) Mitigation through use of a 

firewall. In cases where only some of an 

offeror’s employees have or had access 

to the relevant information, it may be 

possible for the offeror to create an 

internal barrier (often called a firewall) 

to prevent those employees from sharing 

that information with others. The 

contracting officer may conclude that 

this is an acceptable resolution if the 

result is that none of the offeror’s 

employees who are involved in the 

competition has access to the nonpublic 

information. 

(i) The contracting officer may 

determine that the requirements and 

protections of clause 52.204–XX, Access 

to Nonpublic Information, constitute an 

adequate firewall, if nonpublic 

information was gained directly through 

performance on another Government 

contract that included the clause. 


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(ii) Creation of a firewall may be 

proposed by a potential offeror, or it 

may be proposed by the agency. The 

contracting officer retains discretion to 

approve or reject the proposed firewall. 

Firewalls can consist of a variety of 

elements, including organizational and 

physical separation; facility and 

workspace access restrictions; 

information system access restrictions; 

independent compensation systems; 

and individual and organizational 

nondisclosure agreements. 

(iii) In cases involving mitigation 

through use of a firewall, the offeror’s 

proposal must include a representation 

that, to the best of its knowledge and 

belief, there were no breaches of the 

firewall during preparation of the 

proposal or must explain any breach 

that occurred. (See paragraph (c) of 

provision 52.204–YZ.) 

(3) Disqualification. The contracting 

officer must disqualify the offeror from 

consideration for the contract if the 

contracting officer determines that— 

(i) A potential offeror has, or has had, 

unequal, Government-provided access 

to nonpublic information; 

(ii) The information would provide 

the potential offeror with an unfair 

competitive advantage; and 

(iii) Neither information sharing nor 

mitigation through use of a firewall will 

serve to protect the fairness of the 

competition. 

(d) Multiple-award contracts. In 

addition to complying with the 

requirements outlined in paragraphs (a) 

through (c) when placing orders under 

multiple-award contract vehicles 

(including multiple-award indefinitedelivery/indefinite quantity contracts 

and multiple-award blanket purchase 

agreements), contracting officers must 

take additional steps when awarding 

such contracts and blanket purchase 

agreements. The contracting officer shall 

ensure that the ordering procedures 

clause requires the inclusion of terms 

similar to those found in the provision 

at 52.204–YZ, Unequal Access to 

Nonpublic Information, in any order 

competed under the multiple-award 

contract or blanket purchase agreement 

(see 16.505(b)). 

4.402–5 Solicitation provision. 

The contracting officer shall include 

in all solicitations that exceed the 

simplified acquisition threshold a 

provision substantially the same as 

52.204–YZ, Unequal Access to 

Nonpublic Information. 

4.403 Safeguarding Classified Information. 

4.403–2 [Amended] 

9c. In newly redesignated section 

4.403–2, remove from paragraph (b) 

‘‘(see 4.404)’’ and add ‘‘(see 4.403–3)’’ in 

its place. 

PART 7—ACQUISITION PLANNING 

10. Amend section 7.105 by 

redesignating paragraphs (b)(18) through 

(b)(22) as paragraphs (b)(19) through 

(b)(23), respectively; and adding a new 

paragraph (b)(18) to read as follows: 

7.105 Contents of written acquisition 

plans. 

* * * * * 

(b) * * * 

(18) Organizational conflicts of 

interest. Describe any significant 

potential organizational conflicts of 

interest (see subpart 3.12) that may exist 

at time of contract award or may arise 

during contract performance and 

explain the proposed method of 

addressing these conflicts. Briefly 

identify any solicitation provisions and 

contract clauses that would be used. 

* * * * * 

7.503 [Amended] 

11. Amend section 7.503 by removing 

from paragraph (d)(11) ‘‘4.402(b)’’ and 

adding ‘‘4.403–1(b)’’ in its place. 

PART 9—CONTRACTOR 

QUALIFICATIONS 

12. Revise section 9.000 to read as 

follows: 

9.000 Scope of part. 

This part prescribes policies, 

standards, and procedures pertaining to 

prospective contractors’ responsibility; 

debarment, suspension, and 

ineligibility; qualified products; first 

article testing and approval; contractor 

team arrangements; and defense 

production pools and research and 

development pools. 

Subpart 9.5 [Removed and Reserved] 

13. Remove and reserve subpart 9.5. 

PART 11—DESCRIBING AGENCY 

NEEDS 

11.000 [Amended] 

14. Amend section 11.002 by 

removing from paragraph (c) ‘‘Subpart 

9.5’’ and adding ‘‘subpart 3.12’’ in its 

place. 

PART 12—ACQUISITION OF 

COMMERCIAL ITEMS 

15. Amend section 12.301 in 

paragraph (d) by revising paragraph (2); 

redesignating paragraphs (3) and (4) as 

(4) and (5), respectively; and adding 

new paragraphs (3) and (6) to read as 

follows: 

(d) * * * 

(2) Insert the provision and clauses 

relating to Organizational Conflicts of 

Interest as prescribed at 3.1207 when 

applicable. 

(3) Insert the provision 52.204–XY, 

Release of Pre-Award Information, and 

clauses at 52.204–XX, Access to 

Nonpublic Information, and 52.204–YY, 

Release of Nonpublic Information, as 

prescribed at 4.401–4. Insert a provision 

substantially the same as 52.204–YZ, 

Unequal Access to Nonpublic 

Information, as prescribed in 4.402–5. 

* * * * * 

(6) Insert the clause at 52.225–19, 

Contractor Personnel in a Designated 

Operational Area or Supporting a 

Diplomatic or Consular Mission outside 

the United States, as prescribed in 

25.301–4. 

* * * * * 

PART 13—SIMPLIFIED ACQUISITION 

PROCEDURES 

16. Amend section 13.302–5 by 

adding paragraph (e) to read as follows: 

13.302–5 Clauses. 

* * * * * 

(e) Insert the provision at 52.204–XY, 

Release of Pre-Award Information, and 

the clauses at 52.204–XX, Access to 

Nonpublic Information, and 52.204–YY, 

Release of Nonpublic Information, as 

prescribed at 4.401–4. Insert a provision 

substantially the same as 52.204–YZ, 

Unequal Access to Non-Public 

Information, as prescribed in 4.402–5. 

Insert the provision and clauses relating 

to Organizational Conflicts of Interest as 

prescribed at 3.1207 when applicable. 

PART 14—SEALED BIDDING 

17. Amend section 14.201–6 by 

adding paragraph (y) to read as follows: 

14.201–6 Solicitation provisions. 

* * * * * 

(y) See the prescription at 4.401–4(b) 

for use of the provision at 52.204–XY, 

Release of Pre-Award Information. 

18. Amend section 14.201–7 by 

adding paragraph (e) to read as follows: 

14.201–7 Contract clauses. 

* * * * * 

(e) See the clause prescription at 

4.401–4(c) for use of the clause at 

52.204–YY, Release of Nonpublic 

Information. 

PART 15—CONTRACTING BY 

NEGOTIATION 

19. Amend section 15.209 by adding 

paragraph (i) to read as follows: 


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15.209 Solicitation provisions and 

contract clauses. 

* * * * * 

(i)(1) See the prescription at 4.401– 

4(b) for use of the provision at 52.204– 

XY, Release of Pre-Award Information. 

(2) See the clause prescription at 

4.401–4(c) for use of the clause at 

52.204–YY, Release of Nonpublic 

Information. 

20. Amend section 15.604 by revising 

paragraph (a)(2) to read as follows: 

15.604 Agency points of contact. 

(a) * * * 

(2) Requirements concerning 

responsible prospective contractors (see 

subpart 9.1). 

* * * * * 

PART 16—TYPES OF CONTRACTS 

21. Amend section 16.505 by revising 

paragraph (b)(1)(ii)(C) to read as follows: 

16.505 Ordering. 

* * * * * 

(b) * * * 

(1) * * * 

(ii) * * * 

(C) Tailor the procedures to each 

acquisition, including appropriate 

procedures for addressing unequal 

access to nonpublic information (see 

4.402); 

* * * * * 

PART 18—EMERGENCY 

ACQUISITIONS 

22. Amend section 18.000 by revising 

paragraph (b) to read as follows: 

18.000 Scope of part. 

* * * * * 

(b) The acquisition flexibilities in this 

part are not exempt from the 

requirements and limitations set forth in 

Part 3, Business Ethics and Conflicts of 

Interest. 

* * * * * 

PART 37—SERVICE CONTRACTING 

23. Amend section 37.110 by revising 

paragraph (d) to read as follows: 

* * * * * 

(d) See subpart 3.12 regarding the use 

of an appropriate provision and clause 

concerning organizational conflicts of 

interest, which may at times be 

significant in solicitations and contracts 

for services. 

* * * * * 

PART 42—CONTRACT 

ADMINISTRATION AND AUDIT 

SERVICES 

24. Amend section 42.1204 by 

revising paragraph (d) to read as 

follows: 

42.1204 Applicability of novation 

agreements. 

* * * * * 

(d) When considering whether to 

recognize a third party as a successor in 

interest to Government contracts, the 

responsible contracting officer shall 

identify and evaluate any significant 

organizational conflicts of interest in 

accordance with subpart 3.12. If the 

responsible contracting officer 

determines that a conflict of interest 

cannot be addressed, but that it is in the 

best interest of the Government to 

approve the novation request, a request 

for a waiver may be submitted in 

accordance with the procedures at 

3.1205. 

* * * * * 

PART 52—SOLICITATION PROVISIONS 

AND CONTRACT CLAUSES 

25. Add sections 52.203–XX, 52.203– 

ZZ, 52.203–YY, and 52.203–YZ to read 

as follows: 

52.203–XX, Notice of Potential 

Organizational Conflict of Interest. 

As prescribed in 3.1207(a), insert a 

provision substantially the same as the 

following: 

Notice of Potential Organizational 

Conflict of Interest (Date) 

(a) Definition. Organizational conflict of 

interest, as used in this provision, is defined 

in 52.203–ZZ, Disclosure of Organizational 

Conflict of Interest after Contract Award. 

(b) Notice. (1) The Contracting Officer has 

determined that the nature of the work to be 

performed in the contract resulting from this 

solicitation is such that it may give rise to 

organizational conflicts of interest (see 

subpart 3.12, Organizational Conflicts of 

Interest). 

(2) The following contractors participated 

in the preparation of the statement of work 

or other requirements documents, including 

cost or budget estimates: 

lllllllllllllllllllll

[Contracting Officer to fill in, if any.] 

(c) Proposal requirements. (1) Assessment. 

Applying the principles of subpart 3.12, the 

offeror shall assess whether there is an 

organizational conflict of interest associated 

with the offer it plans to submit, including 

any potential subcontracts. 

(2) Disclosure. The offeror shall— 

(i) Disclose all relevant information 

regarding any organizational conflicts of 

interest, including information about 

potential subcontracts; and 

(ii) Describe any relevant limitations on 

future contracting, the term of which has not 

yet expired, to which the offeror or potential 

subcontractor agreed. 

(3) Representation. The offeror represents, 

by submission of its offer, that to the best of 

its knowledge and belief it has disclosed all 

relevant information regarding any 

organizational conflicts of interest as 

required in paragraph (c)(2) of this provision. 

(4) To the extent that either the offeror or 

the Government identifies any organizational 

conflicts of interest on the current contract, 

the offeror shall explain the actions it intends 

to use to address such conflicts, e.g., by 

submitting a mitigation plan and/or 

accepting a limitation on future contracting. 

(5) The Contracting Officer is the final 

authority in determining whether an 

organizational conflict of interest exists and 

whether the organizational conflict of interest 

has been adequately addressed. 

(d) Resultant contract. (1) If the offeror 

submits an organizational conflict of interest 

mitigation plan, the resultant contract will 

include the Government-approved Mitigation 

Plan and a clause substantially the same as 

52.203–YY, Mitigation of Organizational 

Conflicts of Interest. 

(2) If the resolution of the organizational 

conflict of interest involves a limitation on 

future contracting, the resultant contract will 

include a clause substantially the same as 

52.203–YZ, Limitation on Future 

Contracting. 

(End of provision) 

52.203–ZZ, Disclosure of Organizational 

Conflict of Interest After Contract Award. 

As prescribed in 3.1207(b), insert the 

following clause: 

Disclosure of Organizational Conflict of 

Interest After Contract Award (Date) 

(a) Definition. Organizational conflict of 

interest, as used in this clause, means a 

situation in which— 

(1) A Government contract requires a 

contractor to exercise judgment to assist the 

Government in a matter (such as in drafting 

specifications or assessing another 

contractor’s proposal or performance) and the 

contractor or its affiliates have financial or 

other interests at stake in the matter, so that 

a reasonable person might have concern that 

when performing work under the contract, 

the contractor may be improperly influenced 

by its own interests rather than the best 

interests of the Government; or 

(2) A contractor could have an unfair 

competitive advantage in an acquisition as a 

result of having performed work on a 

Government contract, under circumstances 

such as those described in paragraph (1) of 

this definition, that put the contractor in a 

position to influence the acquisition. 

(b) If the Contractor identifies an 

organizational conflict of interest that was 

not previously addressed and for which a 

waiver has not been granted, or a change to 

any relevant facts relating to a previously 

identified organizational conflict of interest, 

the Contractor shall make a prompt and full 

disclosure in writing to the Contracting 

Officer. Organizational conflicts of interest 

that arise during performance of the contract, 

as well as newly discovered conflicts that 

existed before contract award, shall be 

disclosed. This disclosure shall include a 

description of— 

(1) The organizational conflict of interest; 

and 

(2) Actions to address the conflict that— 

(i) The Contractor has taken or proposes to 

take; or 


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(ii) The Contractor recommends that the 

Government take. 

(c) If, in compliance with this clause, the 

Contractor identifies and promptly reports an 

organizational conflict of interest that cannot 

be addressed in a manner acceptable to the 

Government, the Contracting Officer may 

terminate for the convenience of the 

Government— 

(1) This contract, except as provided in 

paragraph (c)(2) of this clause; 

(2) If this is a task- or delivery-order 

contract, the task or delivery order; or 

(3) If this is a blanket purchase agreement, 

the blanket purchase agreement call. 

(d) Subcontracts. The Contractor shall 

include the substance of this clause, 

including this paragraph (d), in subcontracts 

where the work includes or may include 

tasks that may create a potential for an 

organizational conflict of interest. The terms 

‘‘Contractor’’ and ‘‘Contracting Officer’’ shall 

be appropriately modified to reflect the 

change in parties. 

(End of clause) 

52.203–YY, Mitigation of Organizational 

Conflicts of Interest. 

As prescribed in 3.1207(c), insert a 

clause substantially the same as the 

following: 

Mitigation of Organizational Conflicts 

of Interest (Date) 

(a) Definition. Organizational conflict of 

interest, as used in this clause, is defined in 

the clause 52.203–ZZ, Disclosure of 

Organizational Conflict of Interest after 

Contract Award. 

(b) Mitigation plan. The Governmentapproved Organizational Conflict of Interest 

Mitigation Plan (Mitigation Plan) and its 

obligations are hereby incorporated in the 

contract by reference. 

(c) Changes. (1) Either the Contractor or the 

Government may propose changes to the 

Mitigation Plan. Such changes are subject to 

the mutual agreement of the parties and will 

become effective only upon written approval 

of the revised Mitigation Plan by the 

Contracting Officer. 

(2) The Contractor shall update the 

mitigation plan within 30 days of any 

changes to the legal construct of its 

organization, any subcontractor changes, or 

any significant management or ownership 

changes. 

(d) Noncompliance. (1) The Contractor 

shall report to the Contracting Officer any 

noncompliance with this clause or with the 

Mitigation Plan, whether by its own 

personnel or those of the Government or 

other contractors. 

(2) The report shall describe the 

noncompliance and the actions the 

Contractor has taken or proposes to take to 

mitigate and avoid repetition of the 

noncompliance. 

(3) After conducting such further inquiries 

and discussions as may be necessary, the 

Contracting Officer and the Contractor shall 

agree on appropriate corrective action, if any, 

or the Contracting Officer shall direct 

corrective action, subject to the terms of this 

contract. 

(e) Subcontracts. The Contractor shall 

include the substance of this clause, 

including this paragraph (e), in subcontracts 

where the work includes or may include 

tasks related to the organizational conflict of 

interest. The terms ‘‘Contractor’’ and 

‘‘Contracting Officer’’ shall be appropriately 

modified to reflect the change in parties. 

(End of clause) 

52.203–YZ, Limitation on Future 

Contracting. 

As prescribed in 3.1207(d), insert a 

clause substantially the same as the 

following: 

Limitation on Future Contracting (Date) 

(a) Limitation. The Contractor and any of 

its affiliates, shall be ineligible to perform 

llllllllll [Contracting Officer to 

describe the work that the Contractor will be 

ineligible to perform] as a contractor or as a 

subcontractor for a period of llllll. 

[Contracting Officer to determine appropriate 

length of prohibition.] 

(b) Subcontracts. The Contractor shall 

include the substance of this clause, 

including this paragraph (b), in subcontracts 

where the work includes tasks which result 

in an organizational conflict of interest. The 

terms ‘‘Contractor’’ and ‘‘Contracting Officer’’ 

shall be appropriately modified to reflect the 

change in parties. 

(End of clause) 

26. Amend section 52.204–2 by 

removing from the introductory 

paragraph ‘‘4.404(a)’’ and adding ‘‘4.403– 

3(a)’’ in its place; and revising the 

introductory texts of Alternate I and 

Alternate II to read as follows: 

52.204–2 Security requirements. 

* * * * * 

Alternate I (Apr 1984). As prescribed in 

4.403–3(b), add the following paragraphs (e), 

(f), and (g) to the basic clause: 

* * * * * 

Alternate II (Apr 1984). As prescribed in 

4.403–3(c), add the following paragraph (e) to 

the basic clause: 

* * * * * 

27. Add sections 52.204–XX, 52.204– 

XY, 52.204–YY, and 52.204–YZ to read 

as follows: 

52.204–XX, Access to Nonpublic 

Information. 

As prescribed in 4.401–4(a), insert the 

following clause: 

Access to Nonpublic Information (Date) 

(a) Definition. Nonpublic information, as 

used in this clause, means any Government 

or third-party information that— 

(1) Is exempt from disclosure under the 

Freedom of Information Act (5 U.S.C. 552) or 

otherwise protected from disclosure by 

statute, Executive order, or regulation; or 

(2) Has not been disseminated to the 

general public, and the Government has not 

yet determined whether the information can 

or will be made available to the public. 

(b) Restrictions on use and disclosure of 

nonpublic information. (1) The restrictions 

provided in this clause are intended to 

protect both the Government and third-party 

owners of nonpublic information from 

unauthorized use or disclosure of such 

information. 

(i) The Contractor shall indemnify and 

hold harmless the Government, its agents, 

and employees from every claim or liability, 

including attorneys fees, court costs, and 

expenses arising out of, or in any way related 

to, the misuse or unauthorized modification, 

reproduction, release, performance, display, 

or disclosure of any nonpublic information to 

which it is given access during performance 

of this contract. 

(ii) Third-party owners of nonpublic 

information to which the Contractor may 

have access during performance of this 

contract are third-party beneficiaries with 

respect to the terms of this clause who, in 

addition to any other rights they may have, 

may have the right of direct action against the 

Contractor to seek damages from any 

violation of the terms of this clause or to 

otherwise enforce the terms of this clause. 

(2) With regard to any nonpublic 

information to which the Contractor is given 

access in performance of this contract, 

whether the information comes from the 

Government or from third parties, the 

Contractor shall— 

(i) Utilize the nonpublic information only 

for the purposes of performing the services 

specified in this contract, and not for any 

other purposes; 

(ii) Safeguard the nonpublic information 

from unauthorized use and disclosure; 

(iii) Limit access to the nonpublic 

information to only those persons who need 

it to perform services under this contract; 

(iv) Inform persons who may have access 

to nonpublic information about their 

obligations to utilize it only to perform the 

services specified in this contract and to 

safeguard it from unauthorized use and 

disclosure; 

(v) Obtain a signed nondisclosure 

agreement, which at a minimum includes 

language substantially the same as that found 

in paragraph (b)(1) and (b)(2)(i) through (iv) 

of this clause, from each person who may 

have access to the nonpublic information; 

(vi) Provide a copy of any such 

nondisclosure agreement to the contracting 

officer upon request; and 

(vii) Report to the contracting officer any 

violations of requirements (i) through (vi) of 

this paragraph as soon as the violation is 

identified. This report shall include a 

description of the violation and the proposed 

actions to be taken by the contractor in 

response to the violation, with follow-up 

reports of corrective actions taken as 

necessary. 

(3) If the Contractor receives information 

that is marked in a way that indicates the 

Contractor should not receive this 

information, the Contractor shall— 

(i) Notify the Contracting Officer; 

(ii) Use the information only in accordance 

with the instructions of the Contracting 

Officer; and 


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(iii) Comply with any other notification 

provisions contained in this contract. 

(c) Applicability. (1) The obligations and 

prohibitions of paragraph (b) do not apply if 

the Contractor can demonstrate to the 

Contracting Officer that the information— 

(i) Was in the public domain at the time 

the information was accessed by the 

Contractor; 

(ii) Was published, after having been 

accessed by the Contractor, or otherwise 

becomes part of the public domain through 

no fault of the Contractor; 

(iii) Was lawfully in the Contractor’s 

possession at the time the Contractor 

accessed it and was not acquired directly or 

indirectly— 

(A) From the Government; or 

(B) Under another Government contract; 

(iv) Was received by the Contractor from a 

party, other than the information owner, who 

has the authority to release the information 

and did not require the Contractor to hold it 

in confidence. 

(v) Is or becomes available, on an 

unrestricted basis in a lawful manner, to a 

third party from the information owner or 

someone acting under the control of the 

information owner; 

(vi) Is developed by or for the Contractor 

independently of the information received 

from the Government or the information 

owner and such independent development 

can be shown; 

(vii) Becomes available to the Contractor by 

wholly lawful inspection or analysis of 

products offered for sale by the information 

owner or someone acting under the 

information owner’s control, or an authorized 

third-party reseller or distributor; or 

(viii) Is provided to a third party by the 

Contractor with the prior written approval of 

the information owner. 

(2) The Contractor may release nonpublic 

information to which the Contractor is given 

access in performance of this contract to a 

third party pursuant to the lawful order or 

rules of a United States Court or Federal 

administrative tribunal or body of competent 

jurisdiction, provided that the Contractor 

gives to the information owner prior written 

notice of such obligation and the opportunity 

to oppose such disclosure. The Contractor 

shall provide a copy of the notice to the 

Contracting Officer at the same time as notice 

is given to the information owner. 

(d) Other contractual restrictions on 

information. This clause is subordinate to all 

other contract clauses or requirements that 

specifically address the access, use, handling, 

or disclosure of information. If any 

restrictions or authorizations in this clause 

are inconsistent with a requirement of any 

other clause of this contract, the requirement 

of the other clause shall take precedence over 

the requirement of this clause. 

(e) Remedies available to a third-party 

information owner. The Contractor’s failure 

to comply with the requirements of this 

clause may provide grounds for independent 

legal action or other remedies available to a 

third-party information owner based on the 

protections of paragraph (b)(1) of this clause 

(third-party beneficiary). 

(f) Subcontracts. The Contractor shall 

include this clause, including this paragraph 

(f), in subcontracts under which a 

subcontractor may have access to nonpublic 

information, The terms ‘‘contract,’’ 

‘‘contractor,’’ and ‘‘contracting officer’’ shall 

be appropriately modified to preserve the 

Government’s rights. 

(End of clause) 

Alternate I (Date). As prescribed in 4.401– 

4(a)(2)(i), add the following paragraph (c)(3) 

to the basic clause: 

(c)(3) The Contractor shall, if requested by 

the Contracting Officer— 

(i) Negotiate and sign an agreement 

identical, in all material respects, to 

paragraphs (b)(2) and (c) of this clause, with 

each entity identified by the Contracting 

Officer that has provided the Government 

nonpublic information to which the 

Contractor must now have access to perform 

its obligations under this contract; and 

(ii) Supply a copy of the executed 

agreement(s) to the Contracting Officer 

[within 30 days]. 

Alternate II (Date). As prescribed in 4.401– 

4(a)(2)(ii), add the following paragraph (c)(3) 

to the basic clause (if Alternate I is also used, 

redesignate the following paragraph as (c)(4)): 

(c)(3) The Contractor shall, if requested by 

the Contracting Officer— 

(i) Execute a Government-approved 

agreement with each entity identified by the 

Contracting Officer to whose facilities or 

nonpublic information the Contractor is 

given access; and 

(ii) Supply a copy of the executed 

agreement(s) to the Contracting Officer. 

52.204–XY, Release of Pre-Award 

Information. 

As prescribed in 4.401–4(b), insert the 

following provision: 

Release of Pre-Award Information 

(Date) 

(a) Definition. Nonpublic information, as 

used in this provision, means any 

Government or third-party information that— 

(1) Is exempt from disclosure under the 

Freedom of Information Act (5 U.S.C. 552) or 

otherwise protected from disclosure by 

statute, Executive order, or regulation; or 

(2) Has not been disseminated to the 

general public, and the Government has not 

yet determined whether the information can 

or will be made available to the public. 

(b) The Government may need to release 

some of the nonpublic information submitted 

by the offeror in connection with this 

solicitation. By submission of its offer, the 

offeror agrees that the Government may, in 

appropriate circumstances, release to its 

contractors, their subcontractors, and their 

individual employees, such nonpublic 

information, subject to the protections 

referenced at paragraph (d) of this provision. 

(c) This provision does not affect the 

agency’s responsibilities under the Freedom 

of Information Act or the Procurement 

Integrity Act. 

(d) To receive access to nonpublic 

information needed to assist in 

accomplishing agency functions, the 

contractor that will receive access to the 

information must be operating under a 

contract that contains the clause at 52.204– 

XX, Access to Nonpublic Information, which 

obligates the contractor to do the following: 

(1) Utilize the nonpublic information only 

for the purposes of performing the services 

specified in this contract, and not for any 

other purposes; 

(2) Safeguard nonpublic information from 

unauthorized use and disclosure; 

(3) Limit access to the nonpublic 

information to only those persons who need 

it to perform services under this contract; 

(4) Inform persons who may have access to 

nonpublic information about their 

obligations to utilize it only to perform the 

services specified in this contract and to 

safeguard that information from 

unauthorized use and disclosure; 

(5) Obtain a signed nondisclosure 

agreement from each person who may have 

access to the nonpublic information; and 

(6) Report to the Contracting Officer any 

violations of requirements (1) through (5) of 

this paragraph as soon as the violation is 

identified. This report shall include a 

description of the violation and the proposed 

actions to be taken by the Contractor in 

response to the violation, with follow-up 

reports of corrective actions taken as 

necessary. 

(e) Paragraph (e) of the clause at 52.204– 

XX, Access to Nonpublic Information, 

included in the contract of the contractor 

with access to the nonpublic information 

provides that the third-party information 

owner may have the right to pursue thirdparty beneficiary rights against the contractor 

with access to the information for breaches 

of the requirements of that clause. 

(End of provision) 

52.204–YY, Release of Nonpublic 

Information. 

As prescribed in 4.401–4(c) insert the 

following clause: 

Release of Nonpublic Information 

(Date) 

(a) Definition. Nonpublic information, as 

used in this clause, means any Government 

or third-party information that— 

(1) Is exempt from disclosure under the 

Freedom of Information Act (5 U.S.C. 552) or 

otherwise protected from disclosure by 

statute, Executive order, or regulation; or 

(2) Has not been disseminated to the 

general public, and the Government has not 

yet determined whether the information can 

or will be made available to the public. 

(b) The Contractor agrees that the 

Government may, in appropriate 

circumstances, release to its contractors, their 

subcontractors, and their individual 

employees, nonpublic information provided 

by the Contractor in the performance of this 

contract, subject to the protections referenced 

at paragraph (d) of this clause. 

(c) This clause does not affect the agency’s 

responsibilities under the Freedom of 

Information Act or the Procurement Integrity 

Act. 

(d) To receive access to nonpublic 

information needed to assist in 

accomplishing agency functions, the 


jlentini on DSKJ8SOYB1PROD with PROPOSALS
23254 Federal Register / Vol. 76, No. 80 / Tuesday, April 26, 2011 / Proposed Rules 

1Motorcycle Industry Council Petition for 

Rulemaking, March 14, 2005 (Docket No. NHTSA– 

2005–20286–0009) 

2 72 FR 68234 (December 4, 2007). 

contractor that will receive access to the 

nonpublic information must be operating 

under a contract that contains the clause at 

52.204–XX, Access to Nonpublic 

Information, which obligates the contractor 

to do the following: 

(1) Utilize the nonpublic information only 

for the purposes of performing the services 

specified in this contract, and not for any 

other purposes; 

(2) Safeguard nonpublic information from 

unauthorized use and disclosure; 

(3) Limit access to the nonpublic 

information to only those persons who need 

it to perform services under this contract; 

(4) Inform persons who may access 

nonpublic information about their 

obligations to utilize it only to perform the 

services specified in this contract and to 

safeguard that information from 

unauthorized use and disclosure; 

(5) Obtain a signed nondisclosure 

agreement from each person who may have 

access to the nonpublic information; and 

(6) Report to the Contracting Officer any 

violations of requirements (1) through (5) of 

this paragraph as soon as the violation is 

identified. This report shall include a 

description of the violation and the proposed 

actions to be taken by the contractor in 

response to the violation, with follow-up 

reports of corrective actions taken as 

necessary. 

(e) Paragraph (e) of the clause at 52.204– 

XX, Access to Nonpublic Information, 

included in the contract of the contractor 

with access to the nonpublic information 

provides that the third-party information 

owner may have the right to pursue thirdparty beneficiary rights against the contractor 

with access to the nonpublic information for 

breaches of the requirements of that clause. 

(f) Subcontracts. The Contractor shall 

insert this clause, including this paragraph 

(f), suitably modified to reflect the 

relationship of the parties, in all subcontracts 

that may require the furnishing of nonpublic 

information to this agency under the 

subcontract. 

(End of clause) 

52.204–YZ, Unequal Access to Nonpublic 

Information. 

As prescribed in 4.402–5, insert a 

provision substantially the same as the 

following: 

Unequal Access to Nonpublic 

Information (Date) 

(a) Definition. Nonpublic information, as 

used in this provision, means any 

Government or third-party information that— 

(1) Is exempt from disclosure under the 

Freedom of Information Act (5 U.S.C. 552) or 

otherwise protected from disclosure by 

statute, Executive order, or regulation; or 

(2) Has not been disseminated to the 

general public, and the Government has not 

yet determined whether the information can 

or will be made available to the public. 

(b) Pre-proposal requirements. Applying 

the principles of 4.402, the offeror shall 

inform the Contracting Officer, prior to the 

submission of its offer, if it or any of its 

affiliates possesses any nonpublic 

information relevant to the current 

solicitation and provided by the Government, 

either directly or indirectly; the offeror 

should also advise the Contracting Officer of 

any actions that the offeror proposes to take 

to resolve the situation. 

(c) Proposal requirements. If a firewall has 

been used to mitigate the impact of access to 

nonpublic information, the offeror 

represents, to the best of its knowledge and 

belief, that the firewall was implemented as 

agreed, and was not breached during the 

preparation of this offer; or, by checking this 

box [ ], that the firewall was not implemented 

or was breached, and additional explanatory 

information is attached. 

(End of provision) 

PART 53—FORMS 

53.204–1 [Amended] 

28. Amend section 53.204–1 by 

removing from paragraph (a) ‘‘(see 

4.403(c)(1).)’’ and adding ‘‘(see 4.403– 

2(c)(1).)’’ in its place. 

[FR Doc. 2011–9415 Filed 4–25–11; 8:45 am] 

BILLING CODE 6820–EP–P 

DEPARTMENT OF TRANSPORTATION 

National Highway Traffic Safety 

Administration 

49 CFR Part 571 

[Docket No. NHTSA–2011–0052] 

Federal Motor Vehicle Safety 

Standards; Lamps, Reflective Devices, 

and Associated Equipment 

AGENCY: National Highway Traffic 

Safety Administration (NHTSA), 

Department of Transportation (DOT). 

ACTION: Granting petition for 

rulemaking. 

SUMMARY: This notice grants the petition 

for rulemaking submitted by the 

Motorcycle Industry Council (MIC) 

requesting that the agency amend the 

license plate holder requirements of 

Federal Motor Vehicle Safety Standard 

(FMVSS) No. 108 to allow motorcycles 

to mount license plates at an upward 

angle of up to 30 degrees.1 Based on the 

information received in MIC’s petition 

and the petitions for reconsideration of 

the December 4, 2007 final rule 

reorganizing FMVSS No. 108,2 the 

agency believes that MIC’s petition 

merits further consideration through the 

rulemaking process. 

The National Highway Traffic Safety 

Administration plans to initiate the 

rulemaking process on this issue with a 

notice of proposed rulemaking later this 

year. The determination of whether to 

issue a rule will be made in the course 

of the rulemaking proceeding, in 

accordance with statutory criteria. 

FOR FURTHER INFORMATION CONTACT: For 

technical issues: Markus Price, Office of 

Crash Avoidance Standards (NVS–121), 

NHTSA, 1200 New Jersey Avenue, SE., 

West Building, Washington, DC 20590 

(Telephone: (202) 366–0098) (Fax: (202) 

366–7002). 

For legal issues: Jesse Chang, Office of 

the Chief Counsel (NCC–112), NHTSA, 

1200 New Jersey Avenue, SE., West 

Building, Washington, DC 20590 

(Telephone: (202) 366–2992) (Fax: (202) 

366–3820). 

SUPPLEMENTARY INFORMATION: 

Background 

On March 14, 2005, MIC submitted to 

the agency a petition for rulemaking 

requesting that the agency include an 

additional subpart to FMVSS No. 108. 

Specifically, MIC requested the addition 

of a subpart to be designated as 

S5.1.1.30, which would read as follows: 

‘‘S5.1.1.30 On a motorcycle where the 

upper edge of the license plate is not more 

than 1.2 m (47.25 in.) from the ground, the 

plate bearing the license numbers shall face 

between 30 degrees upward and 15 degrees 

downward from the vertical plane.’’ 

MIC submitted this petition for 

rulemaking with the understanding that 

the current FMVSS No. 108 requires 

license plates to be mounted at ± 15 

degrees of perpendicular to the plane on 

which the vehicle stands. In their 

petition, MIC took note that ‘‘although 

the lighting standard doesn’t directly 

speak to license plate mounting, the 

requirement at issue is contained in 

SAE J587 October 1981, which is 

incorporated into FMVSS No. 108 in 

Table III for license plate lamps.’’ 

Petitioner notes that the requirements of 

the October 1981 Standard J587 are 

different from the European Community 

(ECE) regulations. By including the 

proposed subpart, petitioner hopes to 

harmonize the current motorcycle 

license plate requirements with the 

requirements in the ECE regulations. 

Petitioner stated that this 

harmonization would not adversely 

affect safety or law enforcement efforts 

but would serve to reduce unnecessary 

design and manufacturing complexities 

for its member companies. Further, 

petitioner believes that by allowing a 30 

degree upward angle, the manufacturers 

will be afforded greater flexibility in 

design without any detriment to real 

world reflective illumination of the 

license plates. As additional support for 


jlentini on DSKJ8SOYB1PROD with PROPOSALS