There are few areas in life where one size fits all. Even hats can be too small for some and too big for others. So, in March, when the Defense Department proposed a one-size-fits all approach to addressing organizational conflicts of interest on everything from major weapons systems to professional services and information technology, smart contractors knew that those rules just weren’t going to fit DoD’s needs. And the Professional Services Council told them so in written comments.
Fast forward to Dec. 29 and guess what? Smart contracting officials at DoD agreed with us! They recognized that every sector of the defense industrial base was different when it came to the circumstances where conflicts could arise and how those conflicts could be addressed and narrowed down the final rule published that day. to just the area of Defense acquisitions Congress asked them to focus on: major weapon systems.
Here’s what PSC president Stan Soloway had to say following the publication of the final rule:
“The department’s final rule provides much needed clarity and focus. As Under Secretary of Defense Ash Carter told PSC, his goals for this regulation were to address conflict of interest risks to the department in major systems and to ‘rule with reason.’ This final DFARS rule accomplishes both of those goals while preserving opportunities for PSC professional and technical services companies to aggressively compete for appropriate work supporting the department’s important warfighting missions. Of equal importance is the department’s decision to limit application of this rule to major defense weapons systems programs, consistent with the legislation, instead of applying a ‘one size fits all’ approach to all defense procurements, as the proposed rule would have done. We particularly welcome the department’s recognition that more discussion is needed before defining an OCI policy for other than weapons systems acquisitions, especially given the substantially different competitive and other factors that characterize other market segments.”
Other PSC recommendations adopted in the final rule included:
1. Placing the OCI coverage in DFARS Part 209 (relating to contractor qualifications), as PSC recommended in its comments, rather than in DFARS Part 203 (relating to “improper business practices“) as in the proposed rule. While this may seem like a technical shift, it actually has real implications for the acquisition community.
2. Providing guidance to contracting officers to resolve organizational conflicts in a manner that will “promote competition and preserve DoD access to the expertise and experience of qualified contractors,“ as PSC generally recommended in its comments, rather than the proposed rule’s notional “preference for mitigation.” If the language of the proposed rule had survived, in practice contracting officers would almost certainly have rejected any mitigation strategy proposed by companies because the associated approval process was so onerous.
3. Providing guidance to contracting officers to “not impose across-the-board restrictions or limitations on the use of particular resolution methods” except as may be required for a particular acquisition, consistent with the PSC comments. PSC raised significant concerns about this “choose your major” approach, which would have placed prohibitions on systems engineering and technical assistance (SETA) and other contractors that covered not only the contract in question, but also entire programs and even entire government agencies.
4. Treating all mitigation strategies as equal in order to “minimize an organizational conflict of interest,” as PSC generally recommended in its comments, rather than the complex differentiation between types and gradations of mitigation approaches, with separate review and approval mechanisms, as provided for in the proposed rule.
Even though the final rule is a significant improvement over the earlier version, it must be implemented with care. That will be where smart contracting really takes place.
