20954 Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Proposed Rules 

(3) Communications in which the 

station licensee or control operator has 

a pecuniary interest, including 

communications on behalf of an 

employer, with the following 

exceptions: 

(i) A control station operator may 

participate on behalf of an employer in 

a government-sponsored emergency 

preparedness or disaster readiness test 

or drill, limited to the duration and 

scope of such test or drill, and 

operational testing immediately prior to 

such test or drill. 

(ii) An amateur operator may notify 

other amateur operators of the 

availability for sale or trade of apparatus 

normally used in an amateur station, 

provided that such activity is not 

conducted on a regular basis. 

* * * * * 

[FR Doc. 2010–9092 Filed 4–21–10; 8:45 am] 

BILLING CODE 6712–01–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 202, 203, 212, and 252 

RIN 0750–AG63 

Defense Federal Acquisition 

Regulation Supplement; 

Organizational Conflicts of Interest in 

Major Defense Acquisition Programs 

(DFARS Case 2009–D015) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Proposed rule with request for 

comments. 

SUMMARY: DoD is proposing to amend 

the Defense Federal Acquisition 

Regulation Supplement (DFARS) to 

implement section 207 of the Weapons 

System Acquisition Reform Act of 2009. 

DATES: Comments on the proposed rule 

should be submitted in writing to the 

address shown below on or before June 

21, 2010, to be considered in the 

formation of the final rule. 

ADDRESSES: You may submit comments, 

identified by DFARS Case 2009–D015, 

using any of the following methods: 

Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

E-mail: dfars@osd.mil. Include 

DFARS Case 2009–D015 in the subject 

line of the message. 

Fax: 703–602–0350. 

Mail: Defense Acquisition Regulations 

System, Attn: Ms. Amy Williams, OUSD 

(AT&L) DPAP (DARS), 3060 Defense 

Pentagon, Room 3B855, Washington, DC 

20301–3060. 

Comments received generally will be 

posted without change to http:// 

www.regulations.gov, including any 

personal information provided. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Amy Williams, 703–602–0328. 

SUPPLEMENTARY INFORMATION: 

A. Background 

DoD is proposing to amend the 

DFARS to implement section 207 of the 

Weapons System Acquisition Reform 

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

Section 207 requires DoD to revise the 

DFARS to provide uniform guidance 

and tighten existing requirements for 

organizational conflicts of interest 

(OCIs) by contractors in major defense 

acquisition programs. The law sets out 

situations that must be addressed and 

allows DoD to establish such limited 

exceptions as are necessary to ensure 

that DoD has continued access to advice 

on systems architecture and systems 

engineering matters from highly 

qualified contractors, while ensuring 

that such advice comes from sources 

that are objective and unbiased. 

In developing regulatory language, 

DoD is directed to consider the 

recommendation presented by the Panel 

on Contracting Integrity. DoD has 

reviewed the provisional 

recommendations of the Panel in the 

formation of this proposed rule and will 

consider the final recommendations of 

the Panel in the formation of the final 

rule. DoD must also consider any 

findings and recommendations of the 

Administrator of the Office of Federal 

Procurement Policy (OFPP) and the 

Director of the Office of Government 

Ethics (OGE) pursuant to section 841(b) 

of the Duncan Hunter National Defense 

Authorization Act (NDAA) for Fiscal 

Year (FY) 2009 (Pub. L. 110–417). 

Section 841(b) of the NDAA for FY 2009 

required review by OFPP, in 

consultation with OGE, of FAR coverage 

of OCIs. Neither OFPP nor OGE has 

issued recommendations to date 

pursuant to section 841, but are working 

with the FAR Acquisition Law Team, 

which includes representatives from 

DoD and the civilian agencies, to draft 

a proposed rule under FAR Case 2007– 

018. As part of this process, OFPP, OGE, 

and the Team are reviewing comments 

received in response to an Advance 

Notice of Proposed Rulemaking, 

published in the Federal Register at 73 

FR 15962 on March 26, 2008. 

A public meeting was held on 

December 8, 2009 (see 74 FR 57666) to 

provide opportunity for dialogue on the 

possible impact on DoD contracting of 

the section 207 requirements relating to 

OCIs. In the formation of this proposed 

rule, DoD considered the comments 

provided at the public meeting, as well 

as other unsolicited comments received 

from the public. Various presenters at 

the public meeting (1) Expressed a 

desire for policy and regulation to 

emphasize the importance of using 

mitigation strategies to address OCIs, (2) 

sought a more consistent approach 

within the Government to resolve OCIs, 

and (3) voiced a strong interest in 

ensuring any rule is published for 

comment prior to taking effect. 

To implement section 207 and its call 

for the tightening of existing OCI 

requirements effectively, DoD felt it was 

necessary to review the FAR’s coverage 

on OCIs in subpart 9.5 carefully. FAR 

subpart 9.5 is intended to provide the 

foundational principles and processes 

for identifying and addressing OCIs. At 

the same time, FAR subpart 9.5 is 

essentially unchanged from the days 

when the coverage was located in an 

appendix to the Defense Acquisition 

Regulation (DAR). The existing FAR 

coverage relies primarily upon examples 

to describe OCI; some in the contracting 

community incorrectly thought the 

examples in FAR 9.505 contained the 

universe of conflicts. Further, the 

existing FAR coverage does not provide 

any standard provisions or clauses 

addressing OCIs, and the requirements 

of FAR subpart 9.5 were often 

overlooked by the contracting 

community. 

DoD has concluded from its review 

that— 

• The many decisions issued in the 

past 15 years by the Government 

Accountability Office (GAO) and the 

Court of Federal Claims (CoFC) on OCIs 

should be reflected in any updated 

coverage; 

• The coverage of OCIs should be 

better organized and relocated to a new 

subpart 203.12 to be addressed along 

with improper business practices and 

personal conflicts of interest; 

• Standard provisions and clauses 

will be beneficial, as long as there is 

opportunity for contracting officers to 

tailor the provisions and clauses for 

particular circumstances, as 

appropriate; and 

• Expanding coverage to address 

unique issues associated with task and 

delivery order (indefinite-delivery/ 

indefinite-quantity) contracts is also 

useful. 

DoD proposes to use DFARS subpart 

203.12 in lieu of the present FAR 

subpart 9.5. However, when the FAR is 

revised, pursuant to the section 841(b) 

review, to incorporate broader OCI 

changes, DoD will follow the FAR and 


emcdonald on DSK2BSOYB1PROD with PROPOSALS
Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Proposed Rules 20955 

revise the DFARS to address only those 

aspects of OCIs that relate specifically to 

major defense acquisition programs. 

B. Details of Proposed Revised 

Coverage on OCIs. 

202.101 Definition: Adding a new 

definition of ‘‘organizational conflict of 

interest’’ refers to the types of conflicts 

first defined in Aetna Government 

Health Plans (B–254397, July 27, 1995). 

Further details necessary to identify 

conflicts are contained in section 

203.1204, entitled Types of 

organizational conflicts of interest. DoD 

believes it would be more useful to the 

contracting community if these details 

are in subpart 203.12 instead of in the 

part 202 definition. 

203.1200 Scope. This section is 

comparable to the scope statement at 

FAR 9.500(a); however, there are 

meaningful differences between the 

proposed and current coverage. The 

proposed coverage adopts principles 

from case law to define conflicts rather 

than relying primarily on examples. 

This proposed section continues to 

implement section 8141 of the National 

Defense Appropriations Act for Fiscal 

Year 1989 (Pub. L. 100–463), which was 

codified as 41 U.S.C. 405b. 

203.1201 Definitions. 

The proposed new coverage includes 

the following definitions: 

• Contractor, clarifying that the entire 

contractor organization is included 

when protecting against OCIs. GAO 

stated in its decision on Aetna 

Government Health Plans, supra, that 

there is no basis to distinguish between 

a firm and its affiliates, at least where 

concerns about potentially biased 

ground rules and impaired objectivity 

are at issue. (See ICF Inc., B–241372, 

February 6, 1991.) 

• Firewall, one of the techniques to 

mitigate an OCI. 

• Resolve, explaining that there are 

ways to acquire needed goods and 

services and also address OCIs. 

Unlike current FAR subpart 9.5., the 

proposed DFARS coverage does not 

include a definition of ‘‘marketing 

consultant’’ because the coverage is 

expanded beyond contracts only for 

marketing consultants. 

203.1202 Applicability. DoD proposes 

that this rule should continue to apply 

to contracts with both profit and 

nonprofit organizations (current FAR 

9.502(a)). 

DoD addresses the applicability of 

part 12, proposing that, except for 

commercially available off-the-shelf 

(COTS) items, the rule should also 

apply to acquisitions of commercial 

items. DoD made this determination, in 

part, based on the belief that the 

acquisition of commercial services 

might not be free from OCI concerns. 

203.1203 Policy. DoD proposes 

including a policy statement that 

reflects the harm that can be caused by 

OCIs. It is, therefore, the policy of DoD 

to protect its interests by identifying and 

resolving OCIs. It is also DoD policy that 

mitigation is generally the preferred 

method of resolution. 

203.1204 Types of organizational 

conflicts of interest. This section 

explains the three types of OCIs as 

recognized by the GAO and the Court of 

Federal Claims— 

• Impaired objectivity; 

• Unfair access to non-public 

information; and 

• Biased ground rules. 

Subsequent case law has amplified and 

refined the principles first articulated in 

the Aetna decision. This section reflects 

these further amplifications when they 

would help contracting officers identify 

conflicts of interest. 

The section organizes OCIs by type of 

conflict of interest, rather than type of 

task. However, an example taken from 

section 9.505 of the FAR is provided for 

each type of OCI. DoD believes that the 

expanded explanation reflecting the 

tenets from case law will improve 

contracting officers’ understanding of 

OCIs and their ability to both identify 

them and to work with contractors to 

address them. This approach should 

also help to address the criticism made 

by some that contracting officers believe 

no OCI exists when a contract differs 

from the examples listed in FAR subpart 

9.5. 

‘‘Unfair access to non-public 

information’’ is one of the three types of 

conflicts discussed in section 203.1204. 

Different sources sometimes refer to 

‘‘unfair access to data.’’ DoD selected the 

term ‘‘information’’ because it is (a) 

broader than ‘‘data,’’ which is defined in 

the FAR clause at 52.227–14, Rights in 

Data—General, to mean recorded 

information, and (b) used most 

frequently in case law. The section also 

includes a statement that natural 

competitive advantages are not conflicts 

which contracting officers are required 

to resolve. 

203.1205 Contracting officer 

responsibilities. This section addresses 

comments from several respondents to 

the Advance Notice of Proposed 

Rulemaking that the section on 

contracting officer responsibilities in 

current FAR subpart 9.5 does not 

encompass all the contracting officer 

responsibilities with regard to OCIs. 

Rather, these responsibilities are spread 

throughout the current subpart. One 

respondent requested that the coverage 

provide better direction to contracting 

officers to ensure more predictable 

results, and to ensure that the 

contracting officer roles and 

responsibilities are identified and 

fulfilled. 

203.1205–1 General. This subsection 

uses the principles in the current FAR 

9.504 to set forth the overarching 

responsibilities of contracting officers, 

which are to identify and evaluate OCIs 

prior to contract award, using common 

sense and good judgment, and the DoD 

preference for mitigation. 

203.1205–2 Identification of OCIs. 

This new subsection provides specific 

guidance on the identification of OCIs 

and introduces the differences between 

a potential OCI and an actual OCI. The 

subsection segregates the solicitation 

phase of acquisitions from the 

evaluation phase. 

In the solicitation phase of the 

process, contracting officers must 

examine the nature of the work to 

determine whether it may create a 

conflict, applying the principles in the 

new section 203.1204. Subsection 

203.1205–2 requires that a statement be 

placed in the file documenting a finding 

of no conflicts. This subsection also 

provides that contracting officers should 

obtain the assistance of the program 

office, appropriate technical specialists, 

and legal counsel to identify potential 

conflicts of interest. 

During the evaluation phase, 

contracting officers are required to 

examine the financial interests of the 

offerors to determine whether there is a 

conflict of interest. However, 

contracting officers are cautioned not to 

rely solely on information provided by 

the offeror in making this 

determination. Other sources of 

information are identified in this 

subsection. 

Overlook Systems Technologies, B– 

298099.4, B–298099.5, November 28, 

2006, held that communications 

regarding OCI do not constitute 

discussions. Implementation of 

Overlook means that, even in a sealed 

bidding situation, it is possible to 

converse about an OCI mitigation plan 

to arrive at an acceptable solution 

without such conversation being 

considered to be ‘‘discussions.’’ It should 

be noted that Overlook’s holding on 

communications only applies when OCI 

is an eligibility factor, which is 

accomplished by the provision at 

252.203–70XX, Notice of Potential 

Organizational Conflicts of Interest. 

203.1205–3 Resolution of 

organizational conflicts of interest. This 

section covers the three methods of 

resolution: avoidance, limitation on 

future contracting (neutralization), and 

mitigation. It addresses a response to the 


emcdonald on DSK2BSOYB1PROD with PROPOSALS
20956 Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Proposed Rules 

Advance Notice of Proposed 

Rulemaking that requested more 

coverage regarding resolution. The new 

coverage replaces the phrase 

‘‘neutralization’’ with the phrase 

‘‘limitation on future contracting’’ for 

purposes of clarity. 

To assist the contracting officer in 

fashioning an appropriate resolution, 

subsection 203.1205–3 describes the 

methods of resolution and provides 

illustrative examples (many of which 

are taken from case law) of each 

method. These examples are not 

intended to be all-inclusive lists. The 

subsection also makes it clear that a 

combination of resolution methods may 

be appropriate in some circumstances. 

It is not uncommon for a company to 

have both advisory and production (or 

implementation) capabilities, and for 

such dual capabilities to raise potential 

conflict of interest concerns. The rule 

requires that such conflicts be addressed 

adequately to protect the Government’s 

interest, but also provides that careful 

consideration be given to the manner in 

which conflicts are resolved. In 

particular, the rule restricts use of the 

avoidance method to exclude a class of 

contractors unless no less restrictive 

approach will protect the interests of the 

Government adequately. 

203.1205–4 Waiver. The proposed 

DFARS 203.1205–4 addresses the use of 

waivers. The coverage in current FAR 

subpart 9.5 is carried over. The 

proposed rule also makes it clear that 

waivers should be for residual conflicts 

that exist after all the techniques of 

resolution have been attempted to 

lessen a conflict. 

The proposed rule provides that 

waivers cannot be used in a competitive 

situation unless the solicitation 

specifically informed offerors that the 

Government reserves the right to waive 

the requirement to resolve an OCI. The 

reservation of the right to waive these 

requirements is incorporated in 

paragraph (i) of the provision at 

252.203–70XX, Notice of Potential 

Organizational Conflict of Interest, and 

implements a fundamental tenet that 

awards must be made using the 

evaluation factors stated in a 

solicitation. 

203.1205–5 Award. The proposed rule 

establishes that— 

(1) The contracting officer shall award 

the contract to the apparent successful 

offeror only if all organizational 

conflicts of interest are resolved (with 

limited exceptions); 

(2) Establishes what specific actions 

shall be taken if a contracting officer 

determines that award should be 

withheld from the apparent successful 

offeror based on conflict of interest 

considerations; and 

(3) If an organizational conflict of 

interest is identified at the time of task 

or delivery order contract award, the 

contracting officer shall include a 

resolution plan (mitigation plan, or 

limitation on future contracting) in the 

basic contract. 

DoD proposes to address in this 

subsection the unique OCI concerns 

created by task and delivery order 

contracts. The confluence of OCI 

concerns and task or delivery order 

contracting principles affects singleaward and multiple-award task and 

delivery order contracts differently, 

resulting in a different balance between 

the need to resolve OCIs at time of 

award and timing of knowing the actual 

requirement. 

For multiple-award task or delivery 

order contracts (against which other 

agencies may place orders and for GSA 

Schedules), the contracting officer for 

the ordering agency may determine that 

an organizational conflict of interest 

precludes award of an order unless a 

Government-approved resolution plan 

(mitigation plan or limitation on future 

contracting) is incorporated into the 

order. The contracting officer placing 

the order is responsible for 

administering the plan. 

203.1206 Solicitation provision and 

contract clauses. DoD used the 

requirements currently in FAR 9.506 

and 9.507 as the basis for the new 

provision and clauses on OCI. DoD 

determined that it was preferable to 

have a provision and clauses that can be 

tailored rather than providing no 

provision or clauses. Recognizing the 

variability among OCIs, DoD 

recommends the provision and clauses 

be prescribed ‘‘substantially the same 

as’’ so that contracting officers can tailor 

them, as appropriate. Further, the 

provision contains specific fill-ins that 

the contracting officer is required to 

complete, and the actual OCI mitigation 

plan is referenced in 252.203–70YY, 

Resolution of Organizational Conflicts 

of Interest. 

Section 203.1270 specifically 

implements section 207 of WSARA. It 

cites the definition of ‘‘lead system 

integrator’’ in the clause at 252.209– 

7007, cites the definitions of ‘‘major 

defense acquisition program’’ in 10 

U.S.C. 2430, cites the definition of 

‘‘major subcontractor’’ in the new 

proposed clause at 252.203–70WW, 

Organizational Conflict of Interest— 

Major Defense Acquisition Program, and 

bases the definitions of ‘‘systems 

engineering’’ and ‘‘technical assistance’’ 

on the discussion of systems 

engineering and technical direction at 

FAR 9.505–1. 

The policy section at 203.1270–3 is 

based on sections 207(b)(4) and (b)(2) of 

WSARA. 

Limitations on lead system integrators 

as required by 207(b)(1)(A) of WSARA 

are already incorporated in the DFARS 

at 209.570, and the associated clauses in 

252.209. 

Section 203.1270–5 on identification 

of OCIs provides considerations of 

situations in which OCIs must be 

addressed, as specified in section 

207(b)(1)(B) through (D) of WSARA. 

Section 203.1270–6(a) sets forth the 

restrictions on systems engineering and 

technical assistance contracts that are 

required by section 207(b)(3) of 

WSARA. With some exceptions, a 

contract for systems engineering and 

technical assistance for a major systems 

defense acquisition program shall 

prohibit the contractor or any affiliate of 

the contractor from participating as a 

contractor or major subcontractor in the 

development or construction of a 

weapon system under such program. 

Exceptions are proposed in paragraph 

203.1270–6(b), as authorized in 

paragraph (b)(4) of WSARA. The first 

exception is based on the exception for 

design and development work in 

accordance with FAR 9.505–2(a)(3), 

FAR 9.505–2(b)(3), or preparation of 

work statements in accordance with 

FAR 9.505–2(b)(1)(ii). 

The other exception is an exception 

for a contractor that is highly qualified 

with domain experience and expertise, 

if the OCI can be adequately resolved in 

accordance with the new proposed 

coverage at 203.1205–3. 

Although authorized by section 

207(b)(4) of WSARA, this rule does not 

propose any exceptions to the 

requirement of 207(b)(2) that a 

contractor for the performance of 

systems engineering and technical 

assistance functions for a major defense 

acquisition program receive advice from 

a federally funded research and 

development center or other sources 

independent of the prime contractor 

(implemented in the policy section 

203.1270–3). 

Section 203.1270–7 proposes an 

additional solicitation provision and 

contract clause for use in solicitations 

and contracts for systems engineering 

and technical assistance for major 

defense acquisition programs. This 

solicitation provision and clause are 

used in conjunction with the other 

appropriate OCI provisions and clauses 

prescribed at 203.1206. 

• 252.203–70VV, Notice of 

Prohibition Relating to Organizational 

Conflict of Interest—Major Defense 


emcdonald on DSK2BSOYB1PROD with PROPOSALS
Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Proposed Rules 20957 

Acquisition Program. This provision 

notifies the offerors that this solicitation 

is for the performance of systems 

engineering and technical assistance for 

a major defense acquisition program. It 

states the prohibition as required by 

paragraph (b)(3) of section 207, but 

provides the opportunity for offerors to 

request an exception. 

• 252.203–70WW, Organizational 

Conflict of Interest—Major Defense 

Acquisition Program. This clause 

defines ‘‘major subcontractor’’ and 

repeats the prohibition from section 

207(b)(3) of WSARA, which is in effect 

unless an approved OCI mitigation plan 

has been submitted and incorporated 

into the contract. Compliance with the 

OCI mitigation plan is a material 

requirement of the contract. 

• 252.203–70XX, Notice of Potential 

Organizational Conflict of Interest. This 

provision— 

Æ Provides a definition of 

‘‘organizational conflict of interest;’’ 

Æ Places offerors on notice that the 

contracting officer has identified a 

potential OCI and makes resolution of 

an OCI (or waiver) an eligibility 

requirement for award; 

Æ Requires the contracting officer to 

describe the nature of the potential 

conflict of interest and any steps the 

Government has taken to lessen the 

conflict; 

Æ Requires an offeror to disclose all 

relevant information regarding an OCI, 

or to represent, to the best of its 

knowledge and belief, that there is no 

OCI. 

Æ Regardless of whether the offeror 

discloses the existence of an OCI, the 

offeror must describe any other work 

performed on contracts and 

subcontracts within the past five years 

that is associated with the offer it plans 

to submit. 

Æ Requires an offeror to explain the 

actions it intends to use to resolve any 

OCI, e.g., submit an acceptable 

mitigation plan if an actual OCI exists 

or agree to a limitation on future 

contracting; 

Æ Indicates the clauses that may be 

included in the resultant contract 

depending upon the type of resolution; 

Æ Indicates that failure to disclose 

facts regarding an OCI could result in a 

termination for default of any resulting 

contract; and 

Æ Reserves the right to waive the 

requirement to resolve an OCI. 

• 252.203–70YY, Resolution of 

Organizational Conflicts of Interest. 

This clause is to be used generally when 

the contract may involve an OCI that 

can be resolved by an acceptable 

contractor-submitted mitigation plan 

prior to contract award. The clause— 

Æ Provides definitions of ‘‘contractor’’ 

and ‘‘organizational conflict of interest;’’ 

Æ Incorporates the mitigation plan in 

the contract; 

Æ Addresses changes to the mitigation 

plan; 

Æ Addresses violations of the 

mitigation plan; 

Æ Addresses breach of the provisions 

of the clause; and 

Æ Requires flowdown of the clause. 

• 252.203–70YZ, Limitation of Future 

Contracting. This clause will be used 

when the contracting officer decides to 

resolve 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. Although 

the clause contains a default time period 

of three years, this time period may be 

modified as long as the duration is 

sufficient to avoid unfair competitive 

advantage or potential bias. 

• 252.203–70ZZ, Disclosure of 

Organizational Conflict of Interest After 

Contract Award. DoD recognizes that 

events may occur during the 

performance of a contract that give rise 

to a new conflict. Examples of such 

events could be a novation or the 

acquisition of a business interest. This 

clause, which is included in 

solicitations and contracts when the 

solicitation includes the provision 

252.203–70XX, Notice of Potential 

Organizational Conflicts of Interest, 

requires the contractor to make a 

prompt and full disclosure of any newly 

discovered OCI. 

Part 212—Acquisition of Commercial 

Items. The proposed rule requires use of 

the provisions and clauses in contracts 

for the acquisition of commercial items 

(other than COTS items). The rule also 

notes that the representation in 

252.203–70XX, Notice of Potential 

Organizational Conflicts of Interest, is 

not in the ORCA database. The 

proposed rule exempts acquisitions for 

COTS items (as defined at FAR 2.101) 

from applicability of subpart 203.12 

because the revised coverage is not 

based in statute (see section IV.C. 

discussion entitled ‘‘203.1200, Scope’’) 

and COTS items are, by definition, sold 

in substantial quantities in the 

commercial marketplace and offered to 

the Government without modification, 

in the same form in which they are sold 

in the commercial marketplace. The 

requirements of the COTS definition 

render COTS items not susceptible to 

organizational conflicts of interest. 

This is a significant regulatory action 

and therefore is 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. 

C. Regulatory Flexibility Act 

DoD believes that the proposed 

changes will not 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 the 

requirements of subpart 203.12 do not 

differ from the burden currently 

imposed on offerors and contractors by 

FAR subpart 9.5. 

Further, the proposed rule does not 

include a certification requirement and 

allows for avoidance, neutralization, or 

mitigation of organizational conflicts of 

interest or, under exceptional 

circumstances, waiver of the 

requirement for resolution. 

An Initial Regulatory Flexibility 

Analysis has, therefore, not been 

performed. DoD invites comments from 

small business concerns and other 

interested parties on the expected 

impact of this rule on small entities. 

DoD will also consider comments 

from small entities concerning the 

existing regulations in subparts affected 

by this rule in accordance with 5 U.S.C. 

610. Interested parties must submit such 

comments separately and should cite 5 

U.S.C. 610 (DFARS Case 2009–D015) in 

correspondence. 

D. Paperwork Reduction Act 

The Paperwork Reduction Act (44 

U.S.C. Chapter 35) applies because the 

proposed rule contains information 

collection requirements. DoD invites 

comments on the following aspects of 

the proposed rule: (a) Whether the 

collection of information is necessary 

for the proper performance of the 

functions of DoD, including whether the 

information will have practical utility; 

(b) the accuracy of the estimate of the 

burden of the information collection; (c) 

ways to enhance the quality, utility, and 

clarity of the information to be 

collected; and (d) ways to minimize the 

burden of the information collection on 

respondents, including the use of 

automated collection techniques or 

other forms of information technology. 

The following is a summary of the 

information collection requirement. 

Title: Defense Federal Acquisition 

Regulation Supplement (DFARS); 

Organizational Conflicts of Interest in 

Major Defense Acquisition Programs. 

Type of Request: New collection. 

Number of Respondents: 8,690. 

Responses per Respondent: 

Approximately 1. 

Annual Responses: 9,255. 

Average Burden per Response: 

Approximately 26.75 hours. 


emcdonald on DSK2BSOYB1PROD with PROPOSALS
20958 Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Proposed Rules 

Annual Burden Hours: 247,560. 

Needs and Uses: DoD needs the 

information required by 252.203–70XX, 

252.203–YY, and 252.203–ZZ to 

identify and resolve organizational 

conflicts of interest, as required by 

section 207 of the Weapons System 

Acquisition Reform Act of 2009. 

Affected Public: Businesses or other 

for-profit institutions. 

Respondent’s Obligation: Required to 

obtain or retain benefits. 

Frequency: On occasion. 

These estimates are based on— 

• 252.203–70XX (e)(1)(i)(A) and (2)— 

5,650 responses providing information 

on OCIs and mitigation plans, average of 

40 burden hours per plan; 

• 252.203–70XX(e)(1)(ii)—2, 930 

responses providing information from 

offerors that do not submit a mitigation 

plan, average of 2 burden hours per 

response. 

• 252.203–70YY(b)(2)—565 updates 

to mitigation plan, average of 20 hours 

per update. 

• 252.203–70ZZ—110 disclosures of 

OCIs after contract award, average of 40 

hours per response. 

Written comments and 

recommendations on the proposed 

information collection should be sent to 

Ms. Jasmeet Seehra at the Office of 

Management and Budget, Desk Officer 

for DoD, Room 10236, New Executive 

Office Building, Washington, DC 20503, 

with a copy to the Defense Acquisition 

Regulations System, Attn: Ms. Amy 

Williams, OUSD(AT&L)DPAP(DARS), 

3060 Defense Pentagon, Room 3B855, 

Washington, DC 20301–3060. 

Comments can be received from 30 to 60 

days after the date of this notice, but 

comments to OMB will be most useful 

if received by OMB within 30 days after 

the date of this notice. 

To request more information on this 

proposed information collection or to 

obtain a copy of the proposal and 

associated collection instruments, 

please write to the Defense Acquisition 

Regulations System, Attn: Ms. Amy 

Williams, OUSD(AT&L)DPAP(DARS), 

3060 Defense Pentagon, Room 3B855, 

Washington, DC 20301–3060. 

List of Subjects in 48 CFR Parts 202, 

203, 212, and 252 

Government procurement. 

Ynette R. Shelkin, 

Editor, Defense Acquisition Regulations 

System. 

Therefore, DoD proposes to amend 48 

CFR parts 202, 203, 212, and 252 as 

follows: 

1. The authority citation for 48 CFR 

parts 202, 203, 212, and 252 continues 

to read as follows: 

Authority: 41 U.S.C. 421 and 48 CFR 

chapter 1. 

PART 202—DEFINITIONS OF WORDS 

AND TERMS 

2. Section 202.101 is amended by 

adding the definition for ‘‘organizational 

conflict of interest’’ to read as follows: 

202.101 Definitions. 

* * * * * 

Organizational conflict of interest 

means a situation in which, with 

reference to a particular acquisition— 

(1) An offeror, or any of its 

prospective subcontractors, by virtue of 

its past or present performance of 

another Government contract, grant, 

cooperative agreement, or other 

transaction— 

(i) Had access to non-public 

information that may provide it an 

unfair advantage in competing for some 

or all of the proposed effort; or 

(ii) Was in a position to set the ground 

rules, and thereby affect the 

competition, for the proposed 

acquisition; or 

(2) The contract awardee or any of its 

subcontractors— 

(i) Will have access to non-public 

information that may provide it an 

unfair competitive advantage in a later 

competition for a Government contract; 

(ii) May, from the perspective of a 

reasonable person with knowledge of 

the relevant facts, be unable to render 

impartial advice or judgments to the 

Government; or 

(iii) Will be in a position to influence 

a future competition, whether 

intentionally or not, in its own favor. 

* * * * * 

PART 203—IMPROPER BUSINESS 

PRACTICES AND PERSONAL 

CONFLICTS OF INTEREST 

3. Section 203.000 is added to read as 

follows: 

203.000 Scope of part. 

This part prescribes policies and 

procedures for avoiding improper 

business practices and conflicts of 

interest and for dealing with their 

occurrence. It implements 41 U.S.C. 

405b. 

4. Subpart 203.12 is added to read as 

follows: 

Subpart 203.12—Organizational Conflicts of 

Interest 

Sec. 

203.1200 Scope of subpart. 

203.1201 Definitions. 

203.1202 Applicability. 

203.1203 Policy. 

203.1204 Types of organizational conflicts 

of interest. 

203.1205 Contracting officer 

responsibilities. 

203.1205–1 General. 

203.1205–2 Identification of organizational 

conflicts of interest. 

203.1205–3 Resolution of organizational 

conflicts of interest. 

203.1205–4 Waiver. 

203.1205–5 Award. 

203.1206 Solicitation provision and 

contract clauses. 

203.1270 Implementation of section 207 of 

the Weapons System Acquisition Reform 

Act of 2009 (Pub. L. 111–23). 

203.1270–1 Definitions. 

203.1270–2. Applicability. 

203.1270–3 Policy. 

203.1270–4 Lead system integrators. 

203.1270–5 Identification of organizational 

conflicts of interest. 

203.1270–6 Systems engineering and 

technical assistance contracts. 

203.1270–7 Solicitation provision and 

contract clause. 

Subpart 203.12—Organizational 

Conflicts of Interest 

203.1200 Scope of subpart. 

This subpart— 

(a) Prescribes general rules and 

procedures for identifying, evaluating, 

and resolving organizational conflicts of 

interest (as defined in 202.101); and 

(b) Implements section 207 of the 

Weapons System Acquisition Reform 

Act of 2009 (Pub. L. 111–23). 

203.1201 Definitions. 

As used in this subpart— 

Contractor means a party to a 

Government contract other than the 

Government and includes the total 

contractor organization, including not 

only the business unit or segment that 

signs the contract. It also includes all 

subsidiaries and affiliates. 

Firewall means a combination of 

procedures and physical security 

arrangements intended to restrict the 

flow of information either within an 

organization or between organizations. 

Resolve means to implement an 

acquisition approach that will enable 

the Government to acquire the required 

goods or services while adequately 

addressing any organizational conflict of 

interest. 

203.1202 Applicability. 

(a) This subpart— 

(1) Applies to contracts (including 

task or delivery orders) and 

modifications to contracts with both 

profit and nonprofit organizations, 

including nonprofit organizations 

created largely or wholly with 

Government funds; 

(2) Does not apply to the acquisition 

of commercially available off-the-shelf 

items, but does apply to acquisitions of 

other commercial items (see 

212.301(f)(xiv)); 


emcdonald on DSK2BSOYB1PROD with PROPOSALS
Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Proposed Rules 20959 

(b) Although this subpart applies to 

every type of acquisition, organizational 

conflicts of interest are more likely to 

arise in contracts involving— 

(1) Pre-solicitation acquisition 

support services; 

(2) Other support services; 

(3) Advisory and assistance services; 

or 

(4) Contractor access to non-public 

information. 

203.1203 Policy. 

(a) Organizational conflicts of interest 

can impair— 

(1) The Government’s ability to 

acquire supplies and services that are 

the best value to the Government. For 

example— 

(i) A contractor with an organizational 

conflict of interest may influence the 

Government to pursue an acquisition 

outcome that is more compatible with 

the contractor’s interests than with the 

Government’s interests. 

(ii) A contractor that properly had 

access to non-public information while 

performing under a Government 

contract, grant, cooperative agreement, 

or other transaction may be able unfairly 

to use the non-public information to its 

advantage to win award of a future 

contract. 

(2) The public trust. The Government 

must avoid the appearance of 

impropriety which taints the public 

view of the acquisition system. 

Organizational conflicts of interest, by 

their mere appearance, call into 

question the integrity and fairness of the 

competitive procurement process. This 

concern exists regardless of whether any 

individual contractor employee or 

contractor organization ever actually 

renders biased advice or benefits from 

an unfair competitive advantage. 

(b) The vast preponderance of 

contracting done within DoD is done 

free of actual or potential conflict of 

interest. However, there are 

circumstances under which potential or 

actual conflict of interest could exist. In 

those instances, it is the Government’s 

policy to protect its interests by 

identifying and resolving organizational 

conflicts of interest. To that end, in 

every acquisition in which the 

contracting officer determines that 

contractor performance of the 

contemplated work may give rise to one 

or more organizational conflicts of 

interest, the contracting activity shall 

ensure that— 

(1) Offerors are required to disclose 

facts bearing on the possible existence 

of organizational conflicts of interest 

both prior to contract award and on a 

continuing basis during contract 

performance; 

(2) All identified organizational 

conflicts of interest are either resolved 

or waived prior to the award of a 

contract (including individual task or 

delivery orders); and 

(3) The contract establishes a process 

by which the parties will resolve any 

organizational conflicts of interest that 

arise during contract performance. 

(c) Except as may be otherwise 

prohibited within this regulation, it is 

DoD policy that, generally, the preferred 

method to resolve an organizational 

conflict of interest is mitigation (see 

203.1205–1). It is recognized, however, 

that mitigation may not be advisable in 

every instance. In accordance with 

203.1205–1(c), in those cases where the 

contracting officer determines that 

mitigation is not likely to be effective 

and the conflict of interest cannot 

otherwise be resolved, the contracting 

officer shall select another offeror or 

request a waiver in accordance with 

203.1205–4. 

(d) See 203.1270 for additional 

requirements that apply to major 

defense acquisition programs. 

203.1204 Types of organizational conflicts 

of interest. 

There are three types of organizational 

conflicts of interest. 

(a) ‘‘Impaired objectivity’’ 

organizational conflicts of interest exist 

when a contractor’s judgment and 

objectivity in performing tasks for the 

Government might be impaired because 

the substance of the contractor’s 

performance has the potential to affect 

other of its activities and interests. 

(1) Such conflicts generally involve 

two elements– 

(i) The contractor is performing tasks 

that involve the use of subjective 

judgment or giving advice; and 

(ii) The contractor has a financial or 

economic interest that could be affected 

by the outcome of its performance. 

(2) Examples of an organizational 

conflict of interest of this type may arise 

when— 

(i) The contractor (or one of its 

subcontractors) is required to evaluate 

products or services it or its affiliates 

provide or to evaluate the products or 

services of a competitor or a competitor 

of an affiliate; or 

(ii) A contractor will provide the 

Government technical or policy advice 

that could affect its other business 

interests, to include its interests beyond 

those related to Government 

acquisitions. 

(b) ‘‘Unfair access to non-public 

information’’ organizational conflicts of 

interest arise when a contractor has 

access to non-public information as part 

of its performance of a Government 

contract, grant, cooperative agreement, 

or other transaction and that non-public 

information may provide the contractor 

an unfair competitive advantage in a 

later competition for a Government 

contract. 

(1) Examples of an organizational 

conflict of interest of this type may arise 

when a support contractor in a program 

office has access to proprietary 

information or non-public source 

selection information which could 

provide the contractor with an unfair 

competitive advantage in future 

competitions. 

(2) The test for determining whether 

a contractor’s access to non-public 

information requires resolution is— 

(i) Whether the non-public 

information will be available to 

potential offerors; 

(ii) Whether the non-public 

information would be competitively 

useful in responding to a solicitation; 

and 

(iii) Whether the advantage afforded 

to the contractor by its access to the 

non-public information is unfair. 

(3) Not all competitive advantage is 

unfair. 

(i) The natural competitive advantage 

of an incumbent contractor or an offeror 

that has performed similar requirements 

in the past, does not by itself constitute 

an unfair competitive advantage. 

(ii) When a contractor develops or 

designs a product, that contractor 

frequently is in a position to produce 

the product more quickly, efficiently, 

and knowledgeably than firms that did 

not participate in its development. In 

many instances, the Government may 

have contracted for and financed the 

development. Because timeliness, 

efficiency, quality, and continuity are 

all important to the Government when 

it comes to the production process, 

development contractors have an 

inherent advantage when it comes to 

competing for follow-on production 

contracts. However, while the 

development contractor has a 

competitive advantage, it is an 

unavoidable advantage that is not 

considered unfair; hence, agencies 

should not prohibit development 

contractors from receiving award of 

follow-on production contracts merely 

because they have a competitive 

advantage. 

(c) ‘‘Biased ground rules’’ 

organizational conflicts of interest may 

arise when a contractor, in performing 

under one Government contract, grant, 

cooperative agreement, or other 

transaction, is in a position to set the 

ground rules for another Government 

acquisition. For example, this type of 

conflict may arise when, as part of its 


emcdonald on DSK2BSOYB1PROD with PROPOSALS
20960 Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Proposed Rules 

performance of a Government contract, 

an offeror will participate in preparing 

the statement of work or specifications, 

establishing source selection criteria, or 

otherwise influencing the ground rules 

of a future acquisition for which the 

contractor may compete. 

203.1205 Contracting officer 

responsibilities. 

203.1205–1 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 203.1205–2) and shall then resolve, 

prior to contract award, any 

organizational conflicts of interest 

identified (see 203.1205–3). 

(b) The contracting officer shall 

exercise common sense, good judgment, 

and sound discretion— 

(1) In deciding whether an acquisition 

will give rise to any organizational 

conflicts of interest; and 

(2) In developing an appropriate 

means for resolving any such conflicts. 

(c)(1) The contracting officer shall 

give preference to the use of mitigation 

to resolve an organizational conflict of 

interest. 

(2) If the contracting officer 

determines, after consultation with 

agency legal counsel, that the otherwise 

successful offeror is unable to mitigate 

an organizational conflict of interest 

effectively, then the contracting officer, 

taking into account both the instant 

contract and longer term Government 

needs, shall use another approach to 

resolve the organizational conflict of 

interest, select another offeror, or 

request a waiver. 

(3) For any acquisition that exceeds 

$1 billion, the contracting officer shall 

brief the senior procurement executive 

before determining whether an offeror’s 

mitigation plan is unacceptable. 

203.1205–2 Identification of organizational 

conflicts of interest. 

(a) The nature of the work to be 

performed determines whether a 

potential for a conflict of interest exists; 

the financial interests and other 

activities of the offeror/contractor 

determine whether an actual conflict 

requiring resolution exists. Therefore, 

the contracting officer shall particularly 

consider organizational conflicts of 

interest during preparation of the 

solicitation and evaluation of the offers. 

(b) Solicitation. The contracting 

officer shall review the nature of the 

work to be performed to determine 

whether performance by a contractor 

could result in an organizational 

conflict of interest (see 203.1202(b)). 

(1) The contracting officer should 

obtain the assistance of the program 

office, appropriate technical specialists, 

and legal counsel in identifying 

potential for organizational conflicts of 

interest. 

(2) In addition, the contracting officer 

shall require the program office or the 

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. 

(3) If the contracting officer 

determines that contractor performance 

of the contemplated work does not have 

the potential to create any 

organizational conflicts of interest, the 

contracting officer shall document in 

the contract file the rationale supporting 

the decision. 

(4) If the contracting officer 

determines that contractor performance 

of the contemplated work has the 

potential to create an organizational 

conflict of interest, then the contracting 

officer shall include a provision and 

clause as prescribed in 203.1206. 

(c) Evaluation of offers. 

(1) Information from offerors. The 

contracting officer shall use information 

provided by the offerors (see 252.203– 

70XX, Notice of Potential 

Organizational Conflict of Interest) to 

identify organizational conflicts of 

interest. However, the contracting 

officer should not rely solely on this 

contractor-provided information when 

determining whether an actual 

organizational conflict of interest will 

exist upon award. 

(2) Other sources of information. The 

contracting officer should seek readily 

available information about the 

financial interests of the offerors from 

within the Government or from other 

sources to determine whether an 

organizational conflict of interest will 

exist upon award. 

(i) Government sources. Government 

sources include the files and the 

knowledge of personnel within— 

(A) The contracting office; 

(B) Other contracting offices; and 

(C) The cognizant contract 

administration, finance, and audit 

activities. 

(ii) Non-Government sources. NonGovernment sources include— 

(A) Offeror’s Web site; 

(B) Credit rating services; 

(C) Trade and financial journals; and 

(D) Business directories and registers. 

(3) In competitive acquisitions, 

whether by sealed bid or negotiation, 

the contracting officer shall 

communicate to an offeror any issues or 

concerns raised by the offeror’s 

proposed organizational conflict of 

interest resolution plan and provide the 

offeror an opportunity to craft an 

acceptable solution. If resolution of an 

organizational conflict of interest is an 

evaluation criterion, the evaluation 

methodology shall be on an acceptable/ 

non-acceptable basis. 

203.1205–3 Resolution of organizational 

conflicts of interest. 

Organizational conflicts of interest 

may be resolved by avoidance, 

limitation on future contracting, or 

mitigation. In some circumstances, a 

combination of resolution methods may 

be appropriate. 

(a) Avoidance. Avoidance consists of 

Government action on one acquisition 

that is intended to prevent 

organizational conflicts of interest from 

arising in future acquisitions. Use of this 

technique is appropriate when, because 

of the nature of the work contemplated 

in the initial acquisition, the contractor 

for the initial acquisition would have 

access to non-public information or 

would be in a position to influence the 

ground rules for a future acquisition. In 

order to remain eligible for the future 

acquisition, a contractor will avoid, or 

be prohibited from, submitting an offer 

for the initial 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 future organizational conflicts 

of interest include, but are not limited 

to, the following examples: 

(1) Excluding an offeror or class of 

offerors from proposing to perform the 

work that could create an organizational 

conflict of interest on a future contract 

(e.g., excluding offerors that have a 

production capability for the future 

contract from being eligible to develop 

the specifications or statement of work). 

The use of an avoidance approach that 

prohibits a class of contractors or a list 

of specific contractors from 

participating in an acquisition has the 

potential to substantially reduce 

competition and reduce the 

Government’s potential to consider 

sources that may offer a best-value 

solution. Therefore, this approach 

should be used only if the contracting 

officer has determined that no less 

restrictive forms of resolution will 

adequately protect the Government’s 

interest. This determination must be 

documented in the contract file. 

(2) Drafting the statement of work to 

exclude tasks that require contractors to 

utilize subjective judgment. Tasks 

requiring subjective judgment, which 

involves the exercise of independent 

judgment, include— 


emcdonald on DSK2BSOYB1PROD with PROPOSALS
Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Proposed Rules 20961 

(i) Making recommendations; 

(ii) Providing analysis, evaluation, 

planning, or studies; and 

(iii) Preparing statements of work or 

other requirements and solicitation 

documents. 

(3) Structuring the contract 

requirements so that contractors can 

perform the work without access to nonpublic information to the extent 

feasible. 

(b) Limitation on future contracting 

(neutralization). 

(1) A limitation on future contracting 

allows a contractor to perform on the 

instant contract but precludes the 

contractor from submitting offers for 

future contracts where the contractor 

could obtain an unfair advantage in 

competing for award. The limitation on 

future contracting effectively neutralizes 

the organizational conflict of interest. 

(2) 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. 

(c) Mitigation. Mitigation is any action 

taken to minimize an organizational 

conflict of interest to an acceptable 

level. Mitigation may require 

Government action, contractor action, or 

a combination of both. A Governmentapproved mitigation plan, reflecting the 

actions a contractor has agreed to take 

to mitigate a conflict, shall be 

incorporated into the contract. Ways of 

acceptably mitigating organizational 

conflicts of interest include, but are not 

limited to, the following: 

(1) Using a firewall. (i) A firewall by 

itself, without any additional mitigation 

actions, is appropriate to resolve only 

‘‘unfair access to non-public 

information’’ organizational conflicts of 

interest (but see paragraph (c)(3) of this 

subsection). 

(ii) A firewall— 

(A) May include an agreement to limit 

reassignment of contractor employees 

who have access to non-public 

information; and 

(B) May also apply to the reporting 

chain within a company to ensure that 

an employee’s supervisor is not in a 

position to exercise inappropriate 

influence on another acquisition. 

(2) Disseminating previously nonpublic information to all offerors. This 

technique involves the Government 

disclosing to all offerors the 

competitively useful, non-public 

information previously accessed by the 

conflicted contractor in order to remove 

the unfair competitive advantage. This 

technique is appropriate only to resolve 

‘‘unfair access to non-public 

information’’ conflicts and should be 

used only after the contracting officer 

has carefully investigated and 

reasonably determined the extent and 

type of non-public information to which 

the conflicted contractor had access. 

(3) 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 unless it is utilized in 

conjunction with a firewall around the 

contractor or conflicted team member. 

This technique may be used to resolve 

any types of organizational conflict of 

interest. 

203.1205–4 Waiver. 

(a) Authority. (1) The agency head 

may waive the requirement to resolve an 

organizational conflict of interest in a 

particular acquisition only if the agency 

head determines that resolution of the 

organizational conflict of interest is 

either not feasible or is not in the best 

interest of the Government. 

(2) The agency head shall not delegate 

this waiver authority below the head of 

a contracting activity. 

(b) Any waiver shall– 

(1) Be in writing; 

(2) Cover just one contract action; 

(3) Describe the extent of the conflict; 

(4) Explain why it is not feasible or 

not in the best interest of the 

Government to resolve the 

organizational conflict of interest; and 

(5) Be approved by the appropriate 

official. 

(c) Use of waivers. 

(1) Agencies shall resolve conflicts to 

the extent feasible before granting a 

waiver for any remaining conflicts. 

(2) Circumstances when waivers are 

appropriate include, but are not limited 

to, the following examples: 

(i) A limited-time waiver is necessary 

to allow a contractor time to divest itself 

of conflicting businesses or contracts 

and the contractor agrees to stringent 

mitigation measures in the interim. 

(ii) A waiver is necessary in order for 

the agency to obtain a particular 

expertise. 

(3) Waivers shall not be used in 

competitive acquisitions unless the 

solicitation specifically informs offerors 

that the Government reserves the right 

to waive the requirement to resolve 

organizational conflicts of interest (see 

252.203–70XX(h)). 

(4) The contracting officer shall 

include the waiver request and decision 

in the contract file. 

203.1205–5 Award. 

(a) 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 therefor; and 

(3) Allow the contractor a reasonable 

opportunity to respond. 

(b) Except as provided in paragraphs 

(c) and (d), the contracting officer shall 

award the contract to the apparent 

successful offeror only if all 

organizational conflicts of interest are 

resolved. 

(c) If the contracting officer finds that 

it is in the best interest of the United 

States to award the contract 

notwithstanding a conflict of interest, a 

request for waiver shall be submitted in 

accordance with 203.1205–4. 

(d)(1) For task or delivery order 

contracts, it may not be possible for the 

contracting officer to identify all 

organizational conflict of interest issues 

at the time of award of the task or 

delivery order contract. To the extent an 

organizational conflict of interest can be 

identified at the time of task or delivery 

order contract award, the contracting 

officer shall include a resolution plan 

(mitigation plan or limitation on future 

contracting) in the basic contract. 

(2) The contracting officer shall 

consider organizational conflicts of 

interest at the time of issuance of each 

order. If a resolution plan is in the basic 

task or delivery order contract at the 

time of its award, the contracting officer 

may need to appropriately tailor the 

resolution when issuing an order. For 

example, appropriate tailoring could 

include— 

(i) Establishment of a reasonable time 

limitation on future contracting; 

(ii) Description of the arrangement 

where a team member without the 

conflict performs the effort; 

(iii) Description of the nature of the 

limitation on reassignments of a 

firewall; or 

(iv) Identification of the resolution 

method most appropriate for the order; 

(3) For multiple-award task or 

delivery order contracts against which 

other agencies may place orders and for 

GSA Schedules, the contracting officer 

for the ordering agency may determine 

that an organizational conflict of interest 

precludes award of an order unless a 

Government-approved mitigation plan 

is incorporated into the order. The 

contracting officer placing the order is 

responsible for administering the plan. 

203.1206 Solicitation provision and 

contract clauses. 

(a) The contracting officer shall 

include a solicitation provision 

substantially the same as 252.203– 

70XX, Notice of Potential 

Organizational Conflict of Interest, upon 

determining that contractor performance 

of the work may give rise to 

organizational conflicts of interest. 


emcdonald on DSK2BSOYB1PROD with PROPOSALS
20962 Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Proposed Rules 

(1) The contracting officer should fill 

in paragraph (c) of the provision when 

the Government has taken action prior 

to release of the solicitation to address 

or resolve potential organizational 

conflicts of interest. 

(2) If the contracting officer has 

decided on an approach for resolving 

organizational conflicts of interest prior 

to release of the solicitation, the 

contracting officer may include 

information regarding the type of 

resolution the contracting officer 

believes will be necessary to resolve the 

conflict. For example, the contracting 

officer may determine in advance that a 

limitation on future contracting is the 

most appropriate method for resolving 

the conflicts. 

(3) The representation in this 

provision is not in the Online 

Representations and Certifications 

Application (ORCA) database. 

(b)(1) The contracting officer shall 

include in solicitations and contracts a 

clause substantially the same as 

252.203–70YY, Resolution of 

Organizational Conflicts of Interest, 

when the contract may involve an 

organizational conflict of interest that 

can be resolved by an acceptable 

contractor-submitted mitigation plan 

prior to contract award. 

(2) The contracting officer shall 

consider whether the mitigation plan 

should include a limitation on 

reassignments of personnel with unfair 

access to non-public information. The 

contracting officer and the contractor 

shall agree upon a reasonable period of 

time for the restriction on 

reassignments. In the case of access to 

non-public pre-solicitation information, 

a reasonable period of time is after 

contract award and expiration of the 

protest period. 

(c) The contracting officer shall 

include in solicitations and contracts a 

clause substantially the same as 

252.203–70YZ, Limitation on Future 

Contracting, when the resolution of the 

organizational conflict of interest will 

involve a limitation on future 

contracting. 

(1) The contracting officer shall fill in 

the nature of the limitation on future 

contractor activities in paragraph (b) of 

the clause. 

(2) The contracting officer may 

modify the duration of the limitation, 

but the duration shall be sufficient to 

neutralize any unfair competitive 

advantage or potential bias. 

(d) The contracting officer shall 

include in solicitations and contracts a 

clause substantially the same as 

252.203–70ZZ, Disclosure of 

Organizational Conflict of Interest after 

Contract Award, when the solicitation 

includes the provision 252.203–70XX, 

Notice of Potential Organizational 

Conflict of Interest. 

203.1270 Implementation of section 207 of 

the Weapons System Acquisition Reform 

Act of 2009 (Pub. L. 111–23). 

203.1270–1 Definitions. 

As used in this section— 

Lead system integrator is defined in 

the clause at 252.209–7007, Prohibited 

Financial Interests for Lead System 

Integrators. 

Major defense acquisition program is 

defined in 10 U.S.C. 2430. 

Major subcontractor is defined in the 

clause at 52.203–70WW, Organizational 

Conflict of Interest—Major Defense 

Acquisition Program. 

Systems engineering means a 

combination of substantially all of the 

following activities: 

(1) Determining specifications. 

(2) Identifying and resolving interface 

problems. 

(3) Developing test requirements. 

(4) Evaluating test data. 

(5) Supervising design. 

Technical assistance means a 

combination of substantially all of the 

following activities: 

(1) Developing work statements. 

(2) Determining parameters. 

(3) Directing other contractors’ 

operations. 

(4) Resolving technical controversies. 

203.1270–2 Applicability. 

This section applies to major defense 

acquisition programs. 

203.1270–3 Policy. 

(a) The Department of Defense must 

ensure that it obtains advice on major 

defense acquisition programs from 

sources that are objective and unbiased. 

(b) Agencies shall obtain advice on 

systems architecture and systems 

engineering matters with respect to 

major defense acquisition programs 

from Federally Funded Research and 

Development Centers or other sources 

independent of the major defense 

acquisition program contractor. 

203.1270–4 Lead system integrators. 

For limitations on contractors acting 

as lead systems integrators, see 209.570. 

203.1270–5 Identification of organizational 

conflicts of interest. 

(a) When evaluating organizational 

conflicts of interest for major defense 

acquisition programs, contracting 

officers shall consider— 

(1) The ownership of business units 

performing systems engineering and 

technical assistance, professional 

services, or management support 

services to a major defense acquisition 

program by a contractor who 

simultaneously owns a business unit 

competing to perform as— 

(i) The prime contractor for the same 

major defense acquisition program; or 

(ii) The supplier of a major subsystem 

or component for the same major 

defense acquisition program; 

(2) The proposed award of a major 

subsystem by a prime contractor to 

business units or other affiliates of the 

same parent corporate entity, 

particularly the award of a subcontract 

for software integration or the 

development of a proprietary software 

system architecture; and 

(3) The performance by, or assistance 

of, contractors in technical evaluation. 

(b) See PGI 203.1270–5 for examples 

of organizational conflicts of interest 

that can arise in contracts for lead 

system integrators and the other specific 

areas of concern identified in paragraph 

(a) of this section. 

203.1270–6 Systems engineering and 

technical assistance contracts. 

(a) Except as provided in paragraph 

(b) of this subsection, a contract for the 

performance of systems engineering and 

technical assistance for a major defense 

acquisition program shall prohibit the 

contractor or any affiliate of the 

contractor from participating as a 

contractor or major subcontractor in the 

development or construction of a 

weapon system under such program. 

(b) Paragraph (a) of this subsection 

does not apply if the contracting officer 

determines that— 

(1) The performance is design and 

development work in accordance with 

FAR 9.505–2(a)(3), FAR 9.505–2(b)(3), 

or preparation of work statements in 

accordance with FAR 9.505–2(b)(1)(ii); 

or 

(2) The contractor is highly qualified 

with domain experience and expertise 

and the organizational conflict of 

interest will be adequately resolved in 

accordance with 203.1205–3. 

203.1270–7 Solicitation provision and 

contract clause. 

In addition to the provisions and 

clause required by 203.1206— 

(a) Use the provision at 252.203– 

70VV, Notification of Prohibition 

Relating to Organizational Conflict of 

Interest—Major Defense Acquisition 

Program, if the solicitation includes the 

clause 252.203–70WW, Organizational 

Conflict of Interest—Major Defense 

Acquisition Program; and 

(b) Use the clause at 252.203–70WW, 

Organizational Conflict of Interest— 

Major Defense Acquisition Program, in 

solicitations and contracts for systems 


emcdonald on DSK2BSOYB1PROD with PROPOSALS
Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Proposed Rules 20963 

engineering and technical assistance for 

major defense acquisition programs, 

unless the contracting officer has 

determined that an exception at 

203.1270–6(b) applies that does not 

require an Organizational Conflict of 

Interest Mitigation Plan. 

PART 212—ACQUISITION OF 

COMMERCIAL ITEMS 

5. Section 212.301 is amended by 

adding paragraph (f)(xiv) to read as 

follows: 

212.301 Solicitation provisions and 

contract clauses for the acquisition of 

commercial items. 

* * * * * 

(f) * * * 

(xiv) Except when acquiring 

commercially available off-the-shelf 

items, the contracting officer shall use 

the provision and clauses relating to 

Organizational Conflicts of Interest as 

prescribed at 203.1206 and 203.1270–7, 

when applicable. The representation in 

this provision is not in the Online 

Representations and Certifications 

Application (ORCA) database. 

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

6. Sections 252.203–70VV through 

252.203–70ZZ are added to read as 

follows: 

252.203–70VV Notice of Prohibition 

Relating to Organizational Conflict of 

Interest—Major Defense Acquisition 

Program. 

As prescribed in 203.1270–7(a), use 

the following provision: 

Notice of Prohibition Relating to 

Organizational Conflict of Interest— 

Major Defense Acquisition Program 

(DATE) 

(a) Definitions. Major subcontractor is 

defined in the clause at 52.201–WW, 

Organizational Conflict of Interest—Major 

Defense Acquisition Program. 

(b) This solicitation is for the performance 

of systems engineering and technical 

assistance for a major defense acquisition 

program. 

(c) Prohibition. As required by paragraph 

(b)(3) of section 207 of the Weapons System 

Acquisition Reform Act of 2009 (Pub. L. 111– 

23), if awarded the contract, the contractor or 

any affiliate of the contractor is prohibited 

from participating as a prime contractor or a 

major subcontractor in the development or 

construction of a weapon system under the 

major defense acquisition program, unless 

the offeror submits, and the Government 

approves, an Organizational Conflict of 

Interest Mitigation Plan. 

(d) Request for an exception. If the offeror 

requests an exception to the prohibition of 

paragraph (c) of this provision, then the 

offeror shall submit an Organizational 

Conflict of Interest Mitigation Plan with its 

offer for evaluation. If the plan is acceptable, 

it will be incorporated into the resultant 

contract and paragraph (d) of the clause at 

252.203–70WW will become applicable. 

(End of provision) 

252.203–70WW Organizational Conflict of 

Interest—Major Defense Acquisition 

Program. 

As prescribed in 203.1270–7(b), use 

the following clause: 

Organizational Conflict of Interest— 

Major Defense Acquisition Program 

(DATE) 

(a) Definition. Major subcontractor, as used 

in this clause, means a subcontractor that is 

awarded subcontracts totaling more than 10 

percent of the value of the contract under 

which the subcontracts are awarded. 

(b) This contract is for the performance of 

systems engineering and technical assistance 

for a major defense acquisition program. 

(c) Prohibition. Except as provided in 

paragraph (d) of this clause, as required by 

paragraph (b)(3) of section 207 of the 

Weapons System Acquisition Reform Act of 

2009 (Pub. L. 111–23), the Contractor or any 

affiliate of the Contractor is prohibited from 

participating as a prime contractor or major 

subcontractor in the development or 

construction of a weapon system under the 

major defense acquisition program. 

(d) Organizational Conflict of Interest 

Mitigation Plan. If the Contractor submitted 

an acceptable Organizational Conflict of 

Interest Mitigation Plan that has been 

incorporated into this contract, then 

paragraph (c) of this clause does not apply. 

The Contractor shall comply with the 

Organizational Conflict of Interest Mitigation 

Plan. Compliance with the Organizational 

Conflict of Interest Mitigation Plan is a 

material requirement of the contract. Failure 

to comply may result in the Contractor or any 

affiliate of the Contractor being prohibited 

from participating as a contractor or major 

subcontractor in the development or 

construction of a weapon system under the 

program, in addition to any other remedies 

available to the Government for noncompliance with a material requirement of a 

contract. 

(End of clause) 

252.203–70XX Notice of Potential 

Organizational Conflict of Interest. 

As prescribed in 203.1206(a), insert a 

provision substantially the same as the 

following: 

Notice of Potential Organizational 

Conflict of Interest (DATE) 

(a) Definitions. As used in this provision— 

Organizational conflict of interest means a 

situation in which, with reference to a 

particular acquisition— 

(1) An offeror, or any of its prospective 

subcontractors, by virtue of its past or present 

performance of another Government contract, 

grant, cooperative agreement, or other 

transaction— 

(i) Had access to non-public information 

that may provide it an unfair advantage in 

competing for some or all of the proposed 

effort; or 

(ii) Was in a position to set the ground 

rules, and thereby affect the competition, for 

the proposed acquisition; or 

(2) The contract awardee or any of its 

subcontractors— 

(i) Will have access to non-public 

information that may provide it an unfair 

competitive advantage in a later competition 

for a Government contract; 

(ii) May, from the perspective of a 

reasonable person with knowledge of the 

relevant facts, be unable to render impartial 

advice or judgments to the Government; or 

(iii) Will be in a position to influence a 

future competition, whether intentionally or 

not, in its own favor. 

Resolve means to implement an acquisition 

approach that will enable the Government to 

acquire the required goods or services while 

adequately addressing any organizational 

conflict of interest. 

(b) Notice. 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 203.12, Organizational Conflicts of 

Interest). 

(c) Action already taken by Government to 

resolve organizational conflict of interest. 

llllllllllll [Contracting 

Officer to describe the steps the Government 

has taken to resolve the conflict(s) of interest, 

if any.] 

(d) Pre-proposal requirement. Applying the 

principles of FAR subpart 203.12, the offeror 

shall assess whether there is an 

organizational conflict of interest associated 

with the offer it plans to submit. Before 

preparing its offer, the offeror should inform 

the Contracting Officer of any potential 

conflicts of interest, including those 

involving contracts, grants, cooperative 

agreements, or other transactions with other 

Government organizations, in order that the 

Government may assess whether the conflicts 

will require resolution. 

(e) Proposal requirements. (1) The offeror 

shall— 

(i)(A) Disclose all relevant information 

regarding any organizational conflicts of 

interest; or 

(B) Represent, to the best of its knowledge 

and belief, that there will be no 

organizational conflict of interest; and 

(ii) Describe any other work performed on 

contracts, subcontracts, grants, cooperative 

agreements, or other transactions within the 

past five years that is associated with the 

offer it plans to submit. 

(2) To the extent that either the offeror or 

the Government identifies any organizational 

conflicts of interest, the offeror shall explain 

the actions it intends to use to resolve such 

conflicts, e.g., by submitting a mitigation 

plan and/or accepting a limitation on future 

contracting. 

(3) If the offeror’s proposed action to 

resolve an organizational conflict of interest 

is not acceptable, the Contracting Officer will 


emcdonald on DSK2BSOYB1PROD with PROPOSALS
20964 Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Proposed Rules 

notify the offeror in writing, providing the 

reasons why the proposed resolution is not 

considered acceptable and allowing the 

offeror a reasonable opportunity to respond 

before making a final decision on the 

organizational conflict of interest. 

(4) The Contracting Officer has the sole 

authority to determine whether an 

organizational conflict of interest exists and 

to determine whether the organizational 

conflict of interest has been adequately 

resolved. 

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

submits an organizational conflict of interest 

mitigation plan that the Contracting Officer 

approves, the resultant contract will include 

the Government-approved Mitigation Plan 

and a clause substantially the same as 

252.203–70YY, Resolution 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 

252.203–70YZ, Limitation on Future 

Contracting. 

(g) Termination for default. If the 

successful offeror was aware, or should have 

been aware, of an organizational conflict of 

interest before award of this contract and did 

not fully disclose that conflict to the 

Contracting Officer, the Government may 

terminate the contract for default. 

(h) Waiver. The agency reserves the right 

to waive the requirement to resolve any 

organizational conflict of interest. 

(End of provision) 

252.203–70YY Resolution of 

Organizational Conflicts of Interest. 

As prescribed in 203.1206(b)(1), insert 

a clause substantially the same as the 

following: 

Resolution of Organizational Conflicts 

of Interest (DATE) 

(a) Definitions. As used in this clause— 

Contractor means a party to a Government 

contract other than the Government and 

includes the total contractor organization, 

including not only the business unit or 

segment that signs the contract. It also 

includes all subsidiaries and affiliates. 

Organizational conflict of interest means a 

situation in which, with reference to a 

particular acquisition— 

(1) An offeror, or any of its prospective 

subcontractors, by virtue of its past or present 

performance of another Government contract, 

grant, cooperative agreement, or other 

transaction— 

(i) Had access to non-public information 

that may provide it an unfair advantage in 

competing for some or all of the proposed 

effort; or 

(ii) Was in a position to set the ground 

rules, and thereby affect the competition, for 

the proposed acquisition; or 

(2) The contract awardee or any of its 

subcontractors— 

(i) Will have access to non-public 

information that may provide it an unfair 

competitive advantage in a later competition 

for a Government contract; 

(ii) May, from the perspective of a 

reasonable person with knowledge of the 

relevant facts, be unable to render impartial 

advice or judgments to the Government; or 

(iii) Will be in a position to influence a 

future competition, whether intentionally or 

not, in its own favor. 

(b) Mitigation plan. (1) The Governmentapproved Organizational Conflict of Interest 

Mitigation Plan (Mitigation Plan) and its 

obligations are hereby incorporated in the 

contract by reference. 

(2) The Contractor shall update the 

mitigation plan within 30 days of any 

changes to the legal construct of the 

organization, subcontractor changes, or 

significant management or ownership 

changes. 

(c) Changes. 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. 

(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 will 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 and 

to preserve the Government’s rights. 

(End of clause.) 

252.203–70YZ Limitation on Future 

Contracting. 

As prescribed in 203.1206(c), insert a 

clause substantially the same as the 

following: 

Limitation on Future Contracting 

(DATE) 

(a) Definitions. 

Contractor means a party to a Government 

contract other than the Government and 

includes the total contractor organization, 

including not only the business unit or 

segment that signs the contract. It also 

includes all subsidiaries and affiliates. 

(b) Limitation. The Contractor shall be 

ineligible to perform __________ [Contracting 

Officer to describe the work that the 

Contractor will be ineligible to perform] for 

a period of three years. 

(c) Subcontracts. The Contractor shall 

include the substance of this clause, 

including this paragraph (c), 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 and to preserve the 

Government’s rights. 

(End of clause.) 

252.203–70ZZ Disclosure of 

Organizational Conflict of Interest after 

Contract Award. 

As prescribed in 203.1206(d), insert 

the following clause: 

Disclosure of Organizational Conflict of 

Interest After Contract Award (DATE) 

(a) Definitions. As used in this clause— 

Contractor means a party to a Government 

contract other than the Government and 

includes the total contractor organization, 

including not only the business unit or 

segment that signs the contract. It also 

includes all subsidiaries and affiliates. 

Organizational conflict of interest means a 

situation in which, with reference to a 

particular acquisition— 

(1) An offeror, or any of its prospective 

subcontractors, by virtue of its past or present 

performance of another Government contract, 

grant, cooperative agreement, or other 

transaction— 

(i) Had access to non-public information 

that may provide an unfair advantage in 

competing for some or all of the proposed 

effort; or 

(ii) Was in a position to set the ground 

rules, and thereby affect the competition, for 

the proposed acquisition; or 

(2) The contract awardee or any of its 

subcontractors— 

(i) Will have access to non-public 

information that may provide it an unfair 

competitive advantage in a later competition 

for a Government contract; 

(ii) May, from the perspective of a 

reasonable person with knowledge of the 

relevant facts, be unable to render impartial 

advice or judgments to the Government; or 

(iii) Will be in a position to influence a 

future competition, whether intentionally or 

not, in its own favor. 

Resolve means to implement an acquisition 

approach that will enable the Government to 

acquire the required goods or services—while 

adequately addressing any organizational 

conflict of interest. 

(b) If the Contractor identifies an 

organizational conflict of interest that has not 

already been adequately resolved and for 

which a waiver has not been granted, the 

Contractor shall make a prompt and full 

disclosure in writing to the Contracting 

Officer. Organizational conflicts of interest 

that arise during the 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 resolve the conflict that— 

(i) The Contractor has taken or proposes to 

take, or 

(ii) The Contractor recommends that the 

Government take. 


emcdonald on DSK2BSOYB1PROD with PROPOSALS
Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Proposed Rules 20965 

1Public Law 92–513, 86 Stat 947, 961 (1972). 

2Public Law 99–579, 100 Stat. 3309 (1986). 

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

Contractor identifies and promptly reports an 

organizational conflict of interest that cannot 

be resolved in a manner acceptable to the 

Government, the Contracting Officer may 

terminate this contract for convenience of the 

Government. 

(d) Breach. Any nondisclosure or 

misrepresentation of any relevant facts 

regarding organizational conflicts of interests 

will constitute a breach and may result in— 

(1) Termination of this contract for default; 

or 

(2) Exercise of other remedies as may be 

available under law or regulation. 

(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 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 and to preserve the 

Government’s rights. 

(End of clause.) 

[FR Doc. 2010–9210 Filed 4–21–10; 8:45 am] 

BILLING CODE 5001–08–P 

DEPARTMENT OF TRANSPORTATION 

National Highway Traffic Safety 

Administration 

49 CFR Part 580 

[Docket No. NHTSA–2010–0046; Notice 1] 

Petition for Approval of Alternate 

Odometer Disclosure Requirements 

AGENCY: National Highway Traffic 

Safety Administration (NHTSA), DOT. 

ACTION: Initial determination. 

SUMMARY: The State of Wisconsin has 

petitioned for approval of alternate 

odometer requirements to certain 

requirements under Federal odometer 

law. NHTSA has initially determined 

that Wisconsin’s alternate requirements 

satisfy Federal odometer law, with 

limited exceptions. Accordingly, 

NHTSA has preliminarily decided to 

grant Wisconsin’s petition on condition 

that before NHTSA makes a final 

determination, Wisconsin amends its 

program to meet all the requirements of 

Federal odometer law or demonstrates 

that it meets the requirements of Federal 

law. This document is not a final agency 

action. 

DATES: Comments are due no later than 

May 24, 2010. 

ADDRESSES: You may submit comments 

[identified by DOT Docket ID Number 

NHTSA–2010–0046] by any of the 

following methods: 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov. Follow the 

online instructions for submitting 

comments. 

• Mail: Docket Management Facility: 

U.S. Department of Transportation, 1200 

New Jersey Avenue SE., West Building 

Ground Floor, Room W12–140, 

Washington, DC 20590–0001. 

• Hand Delivery or Courier: West 

Building Ground Floor, Room W12–140, 

1200 New Jersey Avenue, SE., between 

9 a.m. and 5 p.m. ET, Monday through 

Friday, except Federal holidays. 

• Fax: 202–493–2251. 

Instructions: For detailed instructions 

on submitting comments and additional 

information on the rulemaking process, 

see the Public Participation heading of 

the Supplementary Information section 

of this document. Note that all 

comments received will be posted 

without change to http:// 

www.regulations.gov, including any 

personal information provided. Please 

see the Privacy Act heading below. 

Privacy Act: Anyone is able to search 

the electronic form of all comments 

received into any of our dockets by the 

name of the individual submitting the 

comment (or signing the comment, if 

submitted on behalf of an association, 

business, labor union, etc.). You may 

review DOT’s complete Privacy Act 

Statement in the Federal Register 

published on April 11, 2000 (65 FR 

19477–78) or you may visit http:// 

DocketInfo.dot.gov . 

Docket: For access to the docket to 

read background documents or 

comments received, go to http:// 

www.regulations.gov or the street 

address listed above. Follow the online 

instructions for accessing the dockets. 

FOR FURTHER INFORMATION CONTACT: 

Andrew DiMarsico, Office of the Chief 

Counsel, National Highway Traffic 

Safety Administration, 1200 New Jersey 

Avenue, SE., West Building W41–227, 

Washington, DC 20590 (Telephone: 

202–366–5263) (Fax: 202–366–3820). 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

Federal odometer law, which is 

largely based on the Motor Vehicle 

Information and Cost Savings Act (Cost 

Savings Act) 1 and Truth in Mileage Act 

of 1986 2, as amended (TIMA), contains 

a number of provisions to limit 

odometer fraud and assure that the 

purchaser of a motor vehicle knows the 

true mileage of the vehicle. The Cost 

Savings Act requires the Secretary of 

Transportation to promulgate 

regulations requiring the transferor 

(seller) of a motor vehicle to provide a 

written statement of the vehicle’s 

mileage registered on the odometer to 

the transferee (buyer) in connection 

with the transfer of ownership. This 

written statement is generally referred to 

as the odometer disclosure statement. 

Further, under TIMA, vehicle titles 

themselves must have a space for the 

odometer disclosure statement and 

States are prohibited from licensing 

vehicles unless a valid odometer 

disclosure statement on the title is 

signed and dated by the transferor. 

Titles must also be printed by a secure 

printing process or other secure process. 

With respect to leased vehicles, TIMA 

provides that the regulations 

promulgated by the Secretary require 

written mileage disclosures be made by 

lessees to lessors upon the lessor’s 

transfer of the ownership of the leased 

vehicle. Lessors must also provide 

written notice to lessees about odometer 

disclosure requirements and the 

penalties for not complying with them. 

Federal law also contains document 

retention requirements for odometer 

disclosure statements. 

TIMA’s motor vehicle mileage 

disclosure requirements apply in a State 

unless the State has alternate 

requirements approved by the Secretary. 

The Secretary has delegated 

administration of the odometer program 

to NHTSA. Therefore, a State may 

petition NHTSA for approval of such 

alternate odometer disclosure 

requirements. 

Seeking to implement an electronic 

vehicle title transfer system, the State of 

Wisconsin has petitioned for approval 

of alternate odometer disclosure 

requirements. The Wisconsin 

Department of Transportation proposes 

a paperless odometer disclosure 

program. Last year, NHTSA reviewed 

certain requirements for alternative 

State programs and approved the 

Commonwealth of Virginia’s alternate 

odometer disclosure program. 74 FR 

643, 650 (January 7, 2009). Wisconsin’s 

program is similar to Virginia’s program 

in some respects and is broader in scope 

than Virginia’s in others. Like Virginia’s 

program, transactions involving an outof-State party are not, in general, within 

the scope of Wisconsin’s program. 

Wisconsin Pet. p. 2. Unlike Virginia’s 

program, which did not apply to 

transactions for leased vehicles, 

Wisconsin’s proposal implicates 

provisions of Federal odometer law 

related to these vehicles. Wisconsin Pet. 

p. 4. 

As discussed below, NHTSA’s initial 

assessment is that the Wisconsin 

program satisfies the requirements for 

approval under Federal odometer law, 

subject to resolution of certain concerns. 


emcdonald on DSK2BSOYB1PROD with PROPOSALS