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Eye Opener: Tracking contractors' conflicts of interest

By Ed O'Keefe

Eye Opener

Happy Monday! As the Obama administration nears some big decisions on the future of government contracting, it has for the first time proposed new rules on how some contractors should deal with potential conflicts of interest among their employees.

The new proposed rules, issued Friday in the Federal Register, are aimed specifically at companies that perform work closely associated with inherently governmental functions. The onus is on the companies, which would have to screen employees for potential conflicts of interest, have systems in place to verify that employees are complying with their rules, report any violations to government contracting officers and take any appropriate disciplinary actions against employees that violate the policies.

"The requirement to obtain and retain information on employees' potential conflict of interest is limited to service contractors whose employees are performing acquisition functions closely associated with inherently governmental functions for or on behalf of Federal agencies," according to the proposed rule. "This class is a minority of Government contractors and is becoming smaller as Government agencies bring more such functions back in house." In actual numbers, the proposed rules could impact roughly 250,000 employees at up to 10,000 government contractors, according to Robert Brodsky of Government Executive.

Government procurement officials could issue waivers to rule if it's determined that a certain employee or company should be kept on the job in the best interest of the government (a clause that seems ripe for potential abuse). But companies that fail to potential conflicts of interest could face fees, contract termination, suspension or disbarment.

Despite the proposed rules, the Office of Management and Budget is expected to issue new rules by the end of the year that better define "inherently governmental functions" and could mean insourcing several tasks currently performed by contractors.

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By Ed O'Keefe  | November 16, 2009; 6:15 AM ET
Categories:  Eye Opener  
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