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DoD Organizational Conflict of Interest proposal will create “years of needless turmoil”

Arlington, Va., July 21, 2010—Industry faces “years of needless turmoil” if the Defense Department institutes its organizational conflict of interest (OCI) rules as written, the Professional Services Council and fellow members of the Council of Defense and Space Industry Associations said in joint comments submitted to the department today on its April 22, 2010 proposed rule.

Although DoD’s intent is to make mitigation the preferred means of resolving any identified organizational conflict of interest, the proposal fails to do so because it offers little guidance on how contracting officers should identify and resolve conflicts, places the burden for identifying OCI on the contractor, and limits the application of mitigation to narrow circumstances. In addition, the rule oversteps congressional intent by expanding the application of the OCI rules to more than just the weapons systems acquisitions the rules were statutorily required to cover. Rather, Defense unilaterally decided to apply OCI rules to all DoD procurements, including most commercial items procurements.

“We do not believe this will be a good rule for the department’s industrial base and it will certainly put the industry through several years of needless turmoil,” said PSC Executive Vice President and Counsel, Alan Chvotkin, who served as CODSIA’s project officer for these comments.

“As written, the rule would force companies to ‘choose a major’ or risk losing contracts because a ‘minor concentration’ in a related sector may be misinterpreted as OCI in the minds of contracting officers,” Chvotkin said. “Under the proposal, it is far easier for contracting officers to exclude a well-qualified company from competition than it is to institute a mitigation strategy. Further, the rule only accepts mitigation as an acceptable strategy for resolving one of the three types of OCI identified in the proposal.” 

To read CODSIA's comments click here.