52.203-16 Preventing Personal Conflicts of

Interest.

As prescribed in 3.1106 , insert the following clause:

Preventing Personal Conflicts of Interest (Jun 2020)

(a) Definitions. As used in this clause—

Acquisition function closely associated with inherently governmental functions means supporting or

providing advice or recommendations with regard to the following activities of a Federal agency:

(1) Planning acquisitions.

(2) Determining what supplies or services are to be acquired by the Government, including

developing statements of work.

(3) Developing or approving any contractual documents, to include documents defining

requirements, incentive plans, and evaluation criteria.

(4) Evaluating contract proposals.

(5) Awarding Government contracts.

(6) Administering contracts (including ordering changes or giving technical direction in contract

performance or contract quantities, evaluating contractor performance, and accepting or rejecting

contractor products or services).

(7) Terminating contracts.

(8) Determining whether contract costs are reasonable, allocable, and allowable.

Covered employee means an individual who performs an acquisition function closely associated with

inherently governmental functions and is—

(1) An employee of the contractor; or

(2) A subcontractor that is a self-employed individual treated as a covered employee of the

contractor because there is no employer to whom such an individual could submit the required

disclosures.

Non-public 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.

Personal conflict of interest means a situation in which a covered employee has a financial interest,

personal activity, or relationship that could impair the employee’s ability to act impartially and in the
best interest of the Government when performing under the contract. (A de minimis interest that

would not "impair the employee’s ability to act impartially and in the best interest of the

Government" is not covered under this definition.)

(1) Among the sources of personal conflicts of interest are-

(i) Financial interests of the covered employee, of close family members, or of other members of the

covered employee’s household;

(ii) Other employment or financial relationships (including seeking or negotiating for prospective

employment or business); and

(iii) Gifts, including travel.

(2) For example, financial interests referred to in paragraph (1) of this definition may arise from-

(i) Compensation, including wages, salaries, commissions, professional fees, or fees for business

referrals;

(ii) Consulting relationships (including commercial and professional consulting and service

arrangements, scientific and technical advisory board memberships, or serving as an expert witness

in litigation);

(iii) Services provided in exchange for honorariums or travel expense reimbursements;

(iv) Research funding or other forms of research support;

(v) Investment in the form of stock or bond ownership or partnership interest (excluding diversified

mutual fund investments);

(vi) Real estate investments;

(vii) Patents, copyrights, and other intellectual property interests; or

(viii) Business ownership and investment interests.

(b) Requirements. The Contractor shall—

(1) Have procedures in place to screen covered employees for potential personal conflicts of interest,

by-

(i) Obtaining and maintaining from each covered employee, when the employee is initially assigned

to the task under the contract, a disclosure of interests that might be affected by the task to which

the employee has been assigned, as follows:

(A) Financial interests of the covered employee, of close family members, or of other members of the

covered employee’s household.

(B) Other employment or financial relationships of the covered employee (including seeking or

negotiating for prospective employment or business).

(C) Gifts, including travel; and

(ii) Requiring each covered employee to update the disclosure statement whenever the employee’s
personal or financial circumstances change in such a way that a new personal conflict of interest

might occur because of the task the covered employee is performing.

(2) For each covered employee—

(i) Prevent personal conflicts of interest, including not assigning or allowing a covered employee to

perform any task under the contract for which the Contractor has identified a personal conflict of

interest for the employee that the Contractor or employee cannot satisfactorily prevent or mitigate

in consultation with the contracting agency;

(ii) Prohibit use of non-public information accessed through performance of a Government contract

for personal gain; and

(iii) Obtain a signed non-disclosure agreement to prohibit disclosure of non-public information

accessed through performance of a Government contract.

(3) Inform covered employees of their obligation-

(i) To disclose and prevent personal conflicts of interest;

(ii) Not to use non-public information accessed through performance of a Government contract for

personal gain; and

(iii) To avoid even the appearance of personal conflicts of interest;

(4) Maintain effective oversight to verify compliance with personal conflict-of-interest safeguards;

(5) Take appropriate disciplinary action in the case of covered employees who fail to comply with

policies established pursuant to this clause; and

(6) Report to the Contracting Officer any personal conflict-of-interest violation by a covered

employee as soon as it 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. Provide follow-up

reports of corrective actions taken, as necessary. Personal conflict-of-interest violations include-

(i) Failure by a covered employee to disclose a personal conflict of interest;

(ii) Use by a covered employee of non-public information accessed through performance of a

Government contract for personal gain; and

(iii) Failure of a covered employee to comply with the terms of a non-disclosure agreement.

(c) Mitigation or waiver.

(1) In exceptional circumstances, if the Contractor cannot satisfactorily prevent a personal conflict

of interest as required by paragraph (b)(2)(i) of this clause, the Contractor may submit a request

through the Contracting Officer to the Head of the Contracting Activity for-

(i) Agreement to a plan to mitigate the personal conflict of interest; or

(ii) A waiver of the requirement.

(2) The Contractor shall include in the request any proposed mitigation of the personal conflict of
interest.

(3) The Contractor shall-

(i) Comply, and require compliance by the covered employee, with any conditions imposed by the

Government as necessary to mitigate the personal conflict of interest; or

(ii) Remove the Contractor employee or subcontractor employee from performance of the contract or

terminate the applicable subcontract.

(d) Subcontracts. The Contractor shall include the substance of this clause, including this paragraph

(d), in subcontracts—

(1) That exceed the simplified acquisition threshold, as defined in Federal Acquisition Regulation

2.101 on the date of subcontract award; and

(2) In which subcontractor employees will perform acquisition functions closely associated with

inherently governmental functions (i.e., instead of performance only by a self-employed individual).

(End of clause)

Parent topic: 52.203 [Reserved]