[Federal Register Volume 61, Number 152 (Tuesday, August 6, 1996)]
[Proposed Rules]
[Pages 40775-40781]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19797]


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DEPARTMENT OF ENERGY

48 CFR Parts 909, 952, and 970

RIN 1991-AB26


Acquisition Regulation; Revisions to Organizational Conflicts of 
Interest

AGENCY: Office of Procurement and Assistance Management, Department of 
Energy.

ACTION: Proposed rule.

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SUMMARY: The Department of Energy (DOE) proposes today to amend its 
Acquisition Regulation to effect changes to its Organizational 
Conflicts of Interest policies as a result of the repeal of the two 
statutory provisions upon which DOE's system for treating 
organizational conflicts of interest was based.


[[Page 40776]]


DATES: Written comments (three copies) must be submitted no later than 
October 7, 1996.

ADDRESSES: Comments should be addressed to: Robert M. Webb, U.S. 
Department of Energy, Office of Procurement and Assistance Management, 
Office of Policy, HR-51, Room 8H-023, 1000 Independence Avenue, SW., 
Washington, D.C. 20585.

FOR FURTHER INFORMATION CONTACT:

Robert M. Webb, U.S. Department of Energy, Office of Procurement and 
Assistance Management, 1000 Independence Avenue, SW., Washington, D.C., 
20585, (202)586-8264.
Edward Lovett, U.S. Department of Energy, Office of Procurement and 
Assistance Management, 1000 Independence Avenue, SW., Washington, D.C. 
20585, (202)586-8614.

SUPPLEMENTARY INFORMATION:

I. Background.
II. Discussion.
    A. Types of Contracts Subject to OCI Treatment
    B. Dollar Threshold for Application
    C. Disclosure of Interest
    D. Contract Clause
    E. The OCI Determination
    F. Waiver
III. Public Comments.
    A. Consideration and Availability of Comments.
    B. Public Hearing Determination.
IV. Procedural Requirements.
    A. Review Under Executive order 12866.
    B. Review Under Executive order 12988.
    C. Review Under the Regulatory Flexibility Act.
    D. Review Under the Paperwork Reduction Act.
    E. Review Under the National Environmental Policy Act.
    F. Review Under Executive Order 12612.

I. Background

    Subsections (b)(2) and (5) of section 4304 of the Federal 
Acquisition Reform Act of 1996 (FARA), Pub. L. 104-106, repealed 
section 33 of the Federal Energy Administration Act of 1974 (15 U.S.C. 
789) and section 19 of the Federal Nonnuclear Energy Research and 
Development Act of 1974 (42 U.S.C. 5918). These two statutory 
provisions provided the basis for the Department of Energy 
organizational conflict of interest (OCI) regulation that is codified 
at 48 CFR Subpart 909.5. As a result of the repeal of the underlying 
statutes, the Department has re-examined the OCI systems established in 
the Department of Energy Acquisition Regulation (DEAR) and the Federal 
Acquisition Regulation (FAR) and proposes to implement and supplement 
the current FAR provisions in the manner described below. The OCI 
system refinements proposed in this regulation are intended to address 
concerns that the agency has identified based on more than a decade of 
experience under the OCI system described in the DEAR. To facilitate 
understanding of the revisions that the Department is proposing, the 
following text not only describes how the Department's regulation 
builds on the OCI system provided in the FAR, but also explains how it 
differs from the DOE OCI system currently found in the DEAR.

II. Discussion

A. Types of Contracts Subject to OCI Treatment

    The FAR OCI system applies to advisory and assistance services and 
to consultants. This regulation proposes no change in the FAR 
provisions that define the scope of coverage of the OCI regulations. 
Although the OCI system currently described in the DEAR applies to 
evaluation services and technical consulting and management support 
services, the Department believes that the FAR definition of ``advisory 
and assistance services'' and the DOE definitions of ``evaluation 
services'' and ``technical consulting and management support services'' 
are essentially the same. The scope of coverage of the FAR regulation 
and the DOE supplement proposed in this rule, therefore, will be 
substantially the same as the OCI system currently found in the DEAR.

B. Dollar Threshold For Application

    The OCI system described in the DEAR applies to covered contracts 
without regard to the dollar amount of the transaction. The FAR system 
applies to covered contracts in excess of the simplified acquisition 
threshold, currently $100,000. The proposed DOE system also would apply 
to covered contracts and subcontracts in excess of the simplified 
acquisition threshold.

C. Disclosure of Interest

    The solicitation provision currently found in DEAR section 952.209-
70, Organizational Conflicts of Interest--Disclosure or Representation, 
requires all offerors to provide a concise statement of all relevant 
facts concerning past, present, or currently planned interests 
(financial, contractual, organizational, or otherwise) that relate to 
the work described in the statement of work. The DEAR provision extends 
this disclosure requirement to the offeror's affiliates, proposed 
consultants, and subcontractors of any tier. It also places no time 
limit on the information that must be provided.
    In contrast, the FAR, in solicitation provision 52.209-8, 
Organizational Conflicts of Interest Certificate--Advisory and 
Assistance Services, requires that the apparent successful offeror 
submit a certificate that, among other things, describes services 
rendered to the Government or other clients, during the 12 months 
preceding the date of the certification, with respect, or directly 
related, to the same subject matter as the solicitation in question. 
The FAR provision allows the head of the contracting activity to extend 
the period subject to the reporting requirement to up to 36 months. The 
offeror's affiliates, proposed consultants, and subcontractors are not 
subject to the reporting requirement.
    The approach to disclosure of information proposed in this rule is 
based on the approach provided in section 52.209-8 of the FAR. Like the 
FAR, the proposed rule would require that only the apparent successful 
offeror disclose information related to organizational conflicts of 
interest and would not require disclosure from affiliates. The proposed 
rule provides, however, that any consultants or subcontractors 
identified as part of the team proposed by the offeror also would be 
subject to the disclosure requirement. The proposed rule also adopts 
the twelve to thirty-six month time period of the FAR for disclosure of 
information. Finally, the proposed rule clarifies and somewhat expands 
the categories of information that would be subject to disclosure to 
include all relevant information concerning any past, present, or 
currently planned interest (financial, contractual, organizational, or 
other information) related to the work described in the statement of 
work. These refinements of the language provided in the FAR will help 
ensure that all information relevant to an organizational conflict of 
interest review is available to the Department when it conducts its 
evaluation of the apparent successful offeror and any identified 
subcontractors and consultants.
    The proposed solicitation provision also eliminates the 
certification requirement. The Department believes that this approach 
is consistent with section 4301 of the FARA which requires agencies to 
eliminate certification requirements that are not required by statute. 
The new provision will require only a disclosure by the apparent 
successful offeror. This approach is predicated on anticipated changes 
to the FAR solicitation provision. The Department, however, will review 
the certification issue if the

[[Page 40777]]

FAR adopts a different approach to addressing this matter.

D. Contract Clause

    In section 9.507-2, Contract Clause, the FAR recognizes that there 
may be instances where, as a condition of award, the contractor's 
eligibility for future prime contracts should be restricted or the 
contractor must agree to some other restraint. The FAR further provides 
that the solicitation is to contain a proposed clause that specifies 
both the nature and duration of the proposed restraint and that the 
contracting officer is to include this clause in the contract. The FAR 
provides no model for this clause, but does recognize that, when 
appropriate, the contracting officer may negotiate the final terms of 
this clause with the successful offeror. The FAR also states that the 
restraint imposed by the clause is to be limited to a fixed term of 
reasonable duration. The duration of the restraint must be specified in 
the clause and may vary from one contract to another.
    This rule proposes to address this issue by providing a contract 
clause for inclusion in solicitations for advisory and assistance 
services and, ultimately, in the resulting contracts. This clause is 
modeled in many important respects on the organizational conflict of 
interest clause currently found in section 952.209-72 of the DEAR. The 
proposed clause differs, however, in a number of respects from the 
approaches found currently in the FAR and DEAR.
1. Coverage of Affiliates
    While the FAR does not provide that affiliates of the successful 
contractor would be subject to any restraints on future activities, the 
clause currently found in the DEAR extends the restrictions described 
in that clause to affiliates of the contractors and their successors in 
interest. The proposed DEAR clause would continue to extend restraints 
on future activities to affiliates of the successful contractor.
    Based on our experience in addressing organizational conflict of 
interest issues, the Department believes that this restriction on 
activities of affiliates is necessary for two reasons. First, it 
reduces the potential for bias in the contractor's work, by eliminating 
the possibility that a contractor's objectivity might be affected by 
the knowledge that a particular outcome might improve an affiliate's 
position in a competition stemming directly from performance of the 
contract. Second, it reduces the potential for an affiliate to obtain 
an unfair competitive advantage in future competitions, by ensuring 
that they are unable to benefit from information obtained by the 
contractor during the course of performance and not otherwise available 
to the public.
2. Application to Subcontractors
    The FAR does not require the restraints imposed on the successful 
contractor extend to subcontractors. The clause currently found in the 
DEAR provides that the restraints imposed by this clause are to flow 
down to subcontractors of any tier. The current DEAR clause further 
provides that the contracting officer must review the subcontractor's 
disclosure statement and may preclude award to a subcontractor if 
organizational conflict of interest issues cannot be resolved.
    Under the proposed rule, all subcontracts for advisory and 
assistance services whose value exceeds the simplified acquisition 
threshold would be subject to the proposed contract clause. This is 
necessary because prime contractors may subcontract crucial areas of 
contract performance. However, in contrast to the system currently 
described in the DEAR, the contracting officer would no longer be 
responsible for reviewing and evaluating the organizational conflict of 
interest information. In the future, the prime contractor would be 
responsible for conducting the organizational conflict of interest 
review of the subcontractors that were not identified in, and evaluated 
as part of, the proposal submitted in response to the solicitation. 
These subcontractors, in turn, would be responsible for evaluating 
subcontractors that they propose to use. In the event that the prime 
contractor or any of the subcontractors identify an actual or 
significant potential organizational conflict of interest that cannot 
be avoided or neutralized, they would be required to obtain the 
approval of the contracting officer prior to entering into the 
subcontract.
3. Other Issues
    The proposed clause would limit restrictions on future contracting 
to five years. This is in contrast to the clause currently found in the 
DEAR that places no time limit on the restrictions against future 
contracting. Also, the proposed rule permits the contracting officer to 
tailor the provisions of the clause to address the circumstances of 
each acquisition.

E. The OCI Determination

    The OCI system described in the DEAR explicitly requires the DOE 
contracting officer to evaluate all relevant information concerning 
possible organizational conflicts of interest prior to any award and to 
make a finding as to whether a possible organizational conflict of 
interest may exist with respect to a particular offeror. Consistent 
with applicable statutory requirements, the OCI regulation currently 
found in the DEAR provides that the contracting officer must determine 
whether the interests disclosed and information otherwise available 
present ``little or no likelihood'' of an organizational conflict of 
interest. If, by application of this standard, an organizational 
conflict of interest is found, then the contacting officer may take 
steps to avoid the conflict, disqualify the offeror from award, or, 
after another statutorily directed determination, award the contract in 
the face of the conflict.
    The FAR does not explicitly require the contracting officer to 
evaluate the information submitted in the OCI certificate nor, to make 
a written determination regarding the potential for an organizational 
conflict of interest in all instances.
    To clarify the responsibilities of the contracting officer, the 
proposed rule would require the contracting officer to make a written 
determination regarding the existence of an actual or significant 
potential organizational conflict of interest for each procurement 
subject to OCI requirements. If an actual or significant potential 
conflict exists, the contracting officer would be required to ``avoid, 
neutralize, or mitigate'' the conflict. If the conflict cannot be 
avoided, neutralized, or mitigated, the contracting officer may 
disqualify the offeror from award and begin the disclosure and 
evaluation process with the firm next in line for award.

F. Waiver

    The OCI regulations currently contained in the DEAR do not provide 
for waiver of any portion of the OCI requirements. In order to award a 
contract in the face of an organizational conflict of interest, the 
Secretary or the Secretary's designee must determine that the award is 
in the best interests of the United States. The regulations further 
require that an appropriate written finding and determination be 
published in the Federal Register.
    The FAR provides that ``any general rule or procedure'' of Subpart 
9.5 may be waived by an official not lower than the Head of the 
Contracting Activity. Consistent with the FAR, the proposed rule 
delegates the FAR waiver authority to DOE Heads of Contracting 
Activities.

[[Page 40778]]

III. Public Comments

A. Consideration and Availability of Comments

    Interested persons are invited to participate by submitting data, 
views, or arguments with respect to the proposed Department of Energy 
Acquisition Regulation amendments set forth in this notice. Three 
copies of written comments should be submitted to the address indicated 
in the ADDRESSES section of this notice. All written comments received 
by the date indicated in the DATES section of this notice and all other 
relevant information in the record will be carefully assessed and fully 
considered prior to publication of the final rule. All comments 
received will be available for public inspection in the DOE Reading 
Room, Room 1E-190, Forrestal Building, 1000 Independence Avenue, SW., 
Washington, DC 20585, between the hours of 9 a.m. and 4 p.m., Monday 
through Friday, except Federal holidays. Any information considered to 
be confidential must be so identified and submitted in writing, one 
copy only. DOE reserves the right to determine the confidential status 
of the information and to treat it according to our determination (See 
10 CFR 1004.11).

B. Public Hearing Determination

    The Department has concluded that this proposed rule does not 
involve a substantial issue of fact or law and that the proposed rule 
should not have substantial impact on the nation's economy or a large 
number of individuals or businesses. Therefore, pursuant to Public Law 
95-91, the DOE Organization Act, and the Administrative Procedure Act 
(5 U.S.C. 553), the Department does not plan to hold a public hearing 
on this proposed rule. However, should a sufficient number of people 
request a public hearing, the Department will reconsider its 
determination.

IV. Procedural Requirements

A. Review Under Executive Order 12866

    Today's regulatory action has been determined not to be a 
``significant regulatory action'' under Executive Order 12866, 
``Regulatory Planning and Review,'' (58 FR 51735, October 4, 1993). 
Accordingly, this action was not subject to review under that Executive 
Order by the Office of Information and Regulatory Affairs of the Office 
of Management and Budget (OMB).

B. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on 
Executive agencies the general duty to adhere to the following 
requirements: (1) Eliminate drafting errors and ambiguity; (2) write 
regulations to minimize litigation; and (3) provide a clear legal 
standard for affected conduct rather than a general standard and 
promote simplification and burden reduction. With regard to the review 
required by section 3(a), section 3(b) of Executive Order 12988 
specifically requires that Executive agencies make every reasonable 
effort to ensure that the regulation: (1) Clearly specifies the 
preemptive effect , if any; (2) clearly specifies any effect on 
existing Federal law or regulation; (3) provides a clear legal standard 
for affected conduct while promoting simplification and burden 
reduction; (4) specifies the retroactive effect, if any; (5) adequately 
defines key terms; and (6) addresses other important issues affecting 
clarity and general draftsmanship under any guidelines issued by the 
Attorney General. Section 3(c) of Executive Order 12988 requires 
Executive agencies to review regulations in light of applicable 
standards in section 3(a) and section 3(b) to determine whether they 
are met or it is unreasonable to meet one or more of them. DOE has 
completed the required review and determined that, to the extent 
permitted by law, the proposed regulations meet the relevant standards 
of Executive Order 12988.

C. Review Under the Regulatory Flexibility Act

    This proposed rule has been reviewed under the Regulatory 
Flexibility Act of 1980, 5 U.S.C. 601 et seq., that requires 
preparation of an initial regulatory flexibility analysis for any 
proposed rule which is likely to have significant economic impact on a 
substantial number of small entities. This proposed rule would likely 
ease any burden on small businesses associated with the organizational 
conflicts of interest system currently found in the DEAR. The proposal 
would limit application to contracts and subcontracts in excess of 
$100,000, thereby not applying to transactions dominated by small 
businesses. The proposed system requires no special expertise and the 
disclosure requirements are limited to the apparently successful or 
those firms in the competitive range, as opposed to applying to all 
offerors. The obligation to disclose past interests, which the system 
currently found in the DEAR does not limit, has been limited from 
generally to the past twelve (12) months. On the basis of the 
foregoing, DOE certifies that this proposed rule, if adopted, would not 
have a significant economic impact on a substantial number of small 
entities, and, therefore, no initial regulatory flexibility analysis 
has been prepared.

D. Review Under the Paperwork Reduction Act

    No additional information or record keeping requirements are 
imposed by this rulemaking. Accordingly, no OMB clearance is required 
under the Paperwork Reduction Act of 1980 (44 U.S.C. 3501, et seq.).

E. Review Under the National Environmental Policy Act

    DOE has concluded that promulgation of this proposed rule falls 
into a class of actions which would not individually or cumulatively 
have significant impact on the human environment, as determined by 
DOE's regulations (10 CFR Part 1021, Subpart D) implementing the 
National Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321 et 
seq.). Specifically, this proposed rule is categorically excluded from 
NEPA review because the proposed amendments to the DEAR would be 
strictly procedural (categorical exclusion A6). Therefore, this 
proposed rule does not require an environmental impact statement or 
environmental assessment pursuant to NEPA.

F. Review Under Executive Order 12612

    Executive Order 12612, (52 FR 41685, October 30, 1987), requires 
that regulations, rules, legislation, and any other policy actions be 
reviewed for any substantial direct effects on States, on the 
relationship between the Federal Government and the States, or in the 
distribution of power and responsibilities among the various levels of 
Government. If there are sufficient substantial direct effects, then 
the Executive Order requires the preparation of a federalism assessment 
to be used in all decisions involved in promulgating and implementing a 
policy action. This proposed rule, when finalized, will revise certain 
policy and procedural requirements. States which contract with DOE will 
be subject to this proposed rule. However, DOE has determined that this 
proposed rule will not have a substantial direct effect on the 
institutional interests or traditional functions of the States.

List of Subjects in 48 CFR Parts 909, 952, and 970.

    Government procurement.


[[Page 40779]]


    Issued in Washington, D.C. on July 22, 1996.
Richard H. Hopf,
Deputy Assistant Secretary for Procurement and Assistance Management.

    For the reasons set out in the preamble, Chapter 9 of Title 48 of 
the Code of Federal Regulations is proposed to be amended as set forth 
below.

PART 909--CONTRACTOR QUALIFICATIONS

    1. The authority citation for Part 909 continues to read as 
follows:

    Authority: 42 U.S.C. 7254, 40 U.S.C. 486(c).

    2. Subpart 909.5 is revised to read as set forth below:

Subpart 909.5--Organizational and Consultant Conflicts of Interest

909.503  Waiver.
909.504  Contracting officer's responsibility.
909.507  Solicitation provisions and contract clause.
909.507-1  Solicitation provisions.
909.507-2  Contract clause.


909.503   Waiver.

    Heads of Contracting Activities are delegated the authorities in 48 
CFR (FAR) 9.503 regarding waiver of OCI requirements.


909.504   Contracting officer's responsibility. (DOE coverage--
paragraphs (d) and (e))

    (d) The contracting officer shall evaluate the statement by the 
apparent successful offeror or, where individual contracts are 
negotiated with all firms in the competitive range, all such firms for 
interests relating to a potential organizational conflict of interest 
in the performance of the proposed contract. Using that information and 
any other credible information, the contracting officer shall make a 
written determination of whether those interests create an actual or 
significant potential organizational conflict of interest and identify 
any actions that may be taken to avoid, neutralize, or mitigate such 
conflict. In fulfilling their responsibilities for identifying and 
resolving potential conflicts, contracting officers should avoid 
creating unnecessary delays, burdensome information requirements, and 
excessive documentation.
    (e) The contracting officer shall award the contract to the 
apparent successful offeror unless a conflict of interest is determined 
to exist that cannot be avoided, neutralized, or mitigated. Before 
determining to withhold award based on organizational conflict of 
interest considerations, the contracting officer shall notify the 
offeror, provide the reasons therefor, and allow the offeror a 
reasonable opportunity to respond. If the conflict cannot be avoided, 
neutralized, or mitigated to the contracting officer's satisfaction, 
the contracting officer may disqualify the offeror from award and 
undertake the disclosure and evaluation process with the firm next in 
line for award. 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 48 CFR 909.503. The waiver request and decision shall 
be included in the contract file.


909.507   Solicitation provisions and contract clause.


909.507-1   Solicitation provisions. (DOE coverage--paragraph (c))

    (c) The contracting officer shall insert the provision at 48 CFR 
952.209-8, Organizational Conflicts of Interest Disclosure--Advisory 
and Assistance Services, in solicitations for advisory and assistance 
services expected to exceed the simplified acquisition threshold. In 
individual procurements, the Head of the Contracting Activity may 
increase the period subject to disclosure in paragraph (c)(4) up to 36 
months.


909.507-2   Contract Clause.

    Contracting Officers shall insert the clause at 48 CFR 952.209-72, 
Organizational Conflicts of Interest, in each contract for advisory and 
assistance services expected to exceed the simplified acquisition 
threshold. Contracting officers may make appropriate modifications 
where necessary to address the potential for organizational conflicts 
of interest in individual contracts.

PART 952--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    3. The authority citation for Part 952 continues to read as 
follows:

    Authority: 42 U.S.C. 7254; 40 U.S.C. 486(c).
    4. Subsection 952.209-8 is added as follows:


952.209-8   Organizational conflicts of interest--disclosure.

    As prescribed in 48 CFR 909.507-1(c), insert the following 
provision:

Organizational Conflicts of Interest Disclosure--Advisory and 
Assistance Services (XXX 1996)

    (a) Organizational conflict of interest means that because of 
other activities or relationships with other persons, a person is 
unable or potentially unable to render impartial assistance or 
advice to the Government, or the person's objectivity in performing 
the contract work is or might be otherwise impaired, or a person has 
an unfair competitive advantage.
    (b) An offeror notified that it is the apparent successful 
offeror shall provide the statement described in paragraph (c) of 
this provision. For purposes of this provision, ``apparent 
successful offeror'' means the proposer selected for final 
negotiations or, where individual contracts are negotiated with all 
firms in the competitive range, it means all such firms. The 
requirements of this provision apply individually to any of the 
proposer's identified consultants or subcontractors that will also 
furnish advisory and assistance services in performance of this 
contract.
    (c) The statement must contain the following:
    (1) Name of the agency and the number of the solicitation in 
question.
    (2) The name, address, telephone number, and federal taxpayer 
identification number of the apparent successful offeror.
    (3) A description of the nature of the services rendered by or 
to be rendered on the instant contract.
    (4) A statement of any past (within the past twelve months), 
present, or currently planned financial, contractual, 
organizational, or other interests relating to the performance of 
the statement of work. For contractual interests, such statement 
must include the name, address, telephone number of the client or 
client(s), a description of the services rendered to the previous 
client(s), and the name of a responsible officer or employee of the 
offeror who is knowledgeable about the services rendered to each 
client, if, in the 12 months preceding the date of the statement, 
services were rendered to the Government or any other client 
(including a foreign government or person) respecting the same 
subject matter of the instant solicitation, or directly relating to 
such subject matter. The agency and contract number under which the 
services were rendered must also be included, if applicable. For 
financial interests, the statement must include the nature and 
extent of the interest and any entity or entities involved in the 
financial relationship. For these and any other interests enough 
such information must be provided to allow a meaningful evaluation 
of the potential effect of the interest on the performance of the 
statement of work.
    (5) A statement that no actual or potential conflict of interest 
or unfair competitive advantage exists with respect to the advisory 
and assistance services to be provided in connection with the 
instant contract or that any actual or potential conflict of 
interest or unfair competitive advantage that does or may exist with 
respect to the contract in question has been communicated as part of 
the statement required by (b) of this provision.
    (d) Failure of the offeror to provide the required statement may 
result in the offeror being determined ineligible for award. 
Misrepresentation or failure to report any fact

[[Page 40780]]

may result in the assessment of penalties associated with false 
statements or such other provisions provided for by law or 
regulation.

(End of provision)


952.209-70   [Removed]

    5. Subsection 952.209-70 is removed.
    6. Subsection 952.209-72 is revised to read as follows:


952.209-72   Organizational conflicts of interest.

    As prescribed at 48 CFR 909.507-2, the contracting officer shall 
insert the following clause:

Organizational Conflicts of Interest (XXX 1996)

    (a) Purpose. The purpose of this clause is to ensure that the 
contractor (1) is not biased because of its financial, contractual, 
organizational, or other interests which relate to the work under 
this contract, and (2) does not obtain any unfair competitive 
advantage over other parties by virtue of its performance of this 
contract.
    (b) Scope. The restrictions described herein shall apply to 
performance or participation by the contractor and any of its 
affiliates or their successors in interest (hereinafter collectively 
referred to as ``contractor'') in the activities covered by this 
clause as a prime contractor, subcontractor, cosponsor, joint 
venturer, consultant, or in any similar capacity.
    (1) Use of Contractor's Work Product. (i) The contractor shall 
be ineligible to participate in any capacity in Department 
contracts, subcontracts, or proposals therefor (solicited and 
unsolicited) which stem directly from the contractor's performance 
of work under this contract for a period of five years after the 
completion of this contract. Furthermore, unless so directed in 
writing by the contracting officer, the Contractor shall not perform 
any advisory and assistance services work under this contract on any 
of its products or services or the products or services of another 
firm if the contractor is or has been substantially involved in 
their development or marketing. Nothing in this subparagraph shall 
preclude the contractor from competing for follow-on contracts for 
advisory and assistance services.
    (ii) If, under this contract, the contractor prepares a complete 
or essentially complete statement of work or specifications to be 
used in competitive acquisitions, the contractor shall be ineligible 
to perform or participate in any capacity in any contractual effort 
which is based on such statement of work or specifications. The 
contractor shall not incorporate its products or services in such 
statement of work or specifications unless so directed in writing by 
the contracting officer, in which case the restriction in this 
subparagraph shall not apply.
    (iii) Nothing in this paragraph shall preclude the contractor 
from offering or selling its standard and commercial items to the 
Government.
    (2) Access to and use of information. (i) If the contractor, in 
the performance of this contract, obtains access to information, 
such as Department plans, policies, reports, studies, financial 
plans, internal data protected by the Privacy Act of 1974 (5 U.S.C. 
552a), or data which has not been released or otherwise made 
available to the public, the contractor agrees that without prior 
written approval of the contracting officer it shall not:
    (A) Use such information for any private purpose unless the 
information has been released or otherwise made available to the 
public;
    (B) Compete for work for the Department based on such 
information for a period of six (6) months after either the 
completion of this contract or until such information is released or 
otherwise made available to the public, whichever is first;
    (C) Submit an unsolicited proposal to the Government which is 
based on such information until one year after such information is 
released or otherwise made available to the public; and
    (D) Release such information unless such information has 
previously been released or otherwise made available to the public 
by the Department.
    (ii) In addition, the contractor agrees that to the extent it 
receives or is given access to proprietary data, data protected by 
the Privacy Act of 1974 (5 U.S.C. 552a), or other confidential or 
privileged technical, business, or financial information under this 
contract, it shall treat such information in accordance with any 
restrictions imposed on such information.
    (iii) The contractor may use technical data it first produces 
under this contract for its private purposes consistent with 
paragraphs (b)(2)(i)(A) and (D) of this clause and the patent, 
rights in data, and security provisions of this contract.
    (c) Disclosure after award. (1) The contractor agrees that, if 
changes, including additions, to the facts disclosed by it prior to 
award of this contract, occur during the performance of this 
contract, it shall make an immediate and full disclosure of such 
changes in writing to the contracting officer. Such disclosure may 
include a description of any action which the contractor has taken 
or proposes to take to avoid, neutralize, or mitigate any resulting 
conflict of interest. The Department may, however, terminate the 
contract for convenience if it deems such termination to be in the 
best interest of the Government.
    (2) In the event that the contractor was aware of facts required 
to be disclosed or the existence of an actual or potential 
organizational conflict of interest and did not disclose such facts 
or such conflict of interest to the contracting officer, DOE may 
terminate this contract for default.
    (d) Subcontracts. (1) The contractor shall include a clause, 
substantially similar to this clause, including this paragraph, in 
subcontracts expected to exceed the simplified acquisition threshold 
determined in accordance with FAR Part 13 and involving performance 
of advisory and assistance services as that term is defined at FAR 
37.201. The terms ``contract,'' ``contractor,'' and ``contracting 
officer'' shall be appropriately modified to preserve the 
Government's rights.
    (2) Prior to the award under this contract of any such 
subcontracts for advisory and assistance services, the contractor 
shall obtain from the proposed subcontractor or consultant the 
disclosure required by DEAR 909.507-1, and shall determine in 
writing whether the interests disclosed present an actual or 
significant potential for an organizational conflict of interest. 
Where an actual or significant potential organizational conflict of 
interest is identified, the contractor shall take actions to avoid, 
neutralize, or mitigate to the satisfaction of the contractor the 
organizational conflict. If the conflict cannot be avoided or 
neutralized, the contractor must obtain the approval of the DOE 
contracting officer prior to entering into the subcontract.
    (e) Remedies. For breach of any of the above restrictions or for 
nondisclosure or misrepresentation of any facts required to be 
disclosed concerning this contract, including the existence of an 
actual or potential organizational conflict of interest at the time 
of or after award, the Government may terminate the contract for 
default, disqualify the contractor from subsequent related 
contractual efforts, and pursue such other remedies as may be 
permitted by law or this contract.
    (f) Waiver. Requests for waiver under this clause shall be 
directed in writing to the contracting officer and shall include a 
full description of the requested waiver and the reasons in support 
thereof. If it is determined to be in the best interests of the 
Government, the contracting officer may grant such a waiver in 
writing.

(End of clause)

PART 970--DOE MANAGEMENT AND OPERATING CONTRACTS

    7. The authority citation for part 970 continues to read as 
follows:

    Authority: Sec. 161 of the Atomic Energy Act of 1954 (42 U.S.C. 
2201), sec. 644 of the Department of Energy Organization Act, Public 
Law 95-91 (42 U.S.C. 7254).

    8. Section 970.0905 is revised to read as follows:


970.0905  Organizational conflicts of interest.

    Management and operating contracts shall contain an organizational 
conflict of interest clause substantially similar to the clause at 48 
CFR 952.209-72 and appropriate to the statement of work of the 
individual contract. In addition, the contracting officer shall assure 
that the clause contains appropriate restraints on intra-corporate 
relations between the contractor's organization and personnel operating 
the Department's facility and its parent corporate body and affiliates, 
including personnel access to the facility, technical transfer of 
information from the facility, and the availability from the facility 
of other advantages flowing from performance of the contract. The 
Contracting Officer is responsible for ensuring that M&O contractors 
adopt policies and procedures in the award of subcontracts

[[Page 40781]]

that will meet the Department's need to safeguard against a biased work 
product and an unfair competitive advantage. To this end, the 
organizational conflicts of interest clause in the management and 
operating contract shall require a disclosure of interests 
substantially similar to the one at 48 CFR 952.209-8 and inclusion of a 
clause substantially similar to the one at 48 CFR 952.209-72 in each 
subcontract for advisory and assistance services expected to exceed the 
simplified acquisition threshold, determined in accordance with FAR 
part 13.
    9. Subsection 970.5204-44 is amended by revising clause paragraph 
(b)(15) to read as follows:


970.5204-44  Flowdown of contract requirements to subcontracts.

* * * * *

Flowdown of Contract Requirements to Subcontracts (Oct 1995)

* * * * *
    (b) * * *

    (15) Organizational Conflicts of Interest. Clause at DEAR 
952.209-72 in accordance with DEAR 970.0905.
* * * * *
[FR Doc. 96-19797 Filed 8-5-96; 8:45 am]
BILLING CODE 6450-01-P