[Federal Register Volume 62, Number 146 (Wednesday, July 30, 1997)]
[Rules and Regulations]
[Pages 40748-40753]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-20022]


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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: Final rule.

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SUMMARY: The Department of Energy (DOE) publishes today amendments to 
its Acquisition Regulation that 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.

DATES: These regulations will be effective on August 29, 1997.

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 of Public Comments
III. 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

[[Page 40749]]

    E. Review Under the National Environmental Policy Act
    F. Review Under Executive Order 12612
    G. Review Under Unfunded Mandate Reform Act of 1995
    H. Review Under Small Business Regulatory Enforcement Fairness 
Act of 1996

I. Background

    Subsections (b) (2) and (5) of section 4304 of the Federal 
Acquisition Reform Act of 1996 (FARA), Public Law 104-106, repealed 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 is amending the DEAR to implement and 
supplement the current FAR provisions in the manner described below. 
The objective of the revision is to streamline the Department's OCI 
procedure and reduce the burdens on contractors, but also to preserve 
the necessary protections provided by an OCI control system.
    A proposed rule to accomplish this purpose was published for public 
comment on August 6, 1996, at 61 FR 40775.

II. Discussion of Public Comments

    The Department received five sets of comments in response to the 
publication of the proposed rule. Three sets of those comments were 
from entities that manage and operate DOE facilities, one of which is a 
university and two of which are large businesses. Two sets of comments 
were received from trade associations. The comments fall into four 
areas and are discussed below.

A. Scope of Coverage

    One commenter suggested that it be made clear that ``advisory and 
assistance services'' do not include research contracts with 
universities. The Department believes that the FAR definition is clear. 
See FAR 37.201. The definition of advisory and assistance services 
provides that such services may be used in support of research and 
development; however, it does not include research and development 
itself. Therefore, the Department sees no need for clarification in the 
text of the rule, and intends that each procurement request for support 
services be evaluated against that definition to determine whether the 
services to be procured are advisory and assistance services and, 
therefore, should be covered by the organizational conflicts of 
interest process.
    Another commenter questioned the use of the clause at 952.209-72 in 
``all contracts, rather than limiting its application to the 
contractor's performance of technical consulting and management support 
services.'' The basis of this comment is unclear. The proposed rule and 
the final rule provide for the use of the organizational conflicts of 
interest clause only in those contracts that provide advisory and 
assistance services and that are valued in excess of the simplified 
acquisition threshold. The Department does not intend that the clause 
be used routinely in other contracts. It should be noted, however, that 
FAR 9.502(b) provides that the applicability of Subpart 9.5 is not 
limited to any particular kind of acquisition and thus allows for the 
possibility that the contracting officer will determine that it is 
appropriate in rare instances to include the organizational conflicts 
of interest clause in individual contracts involving other types of 
work.

B. Disclosure Requirement

    Two commenters suggested that the Department ought to limit the 
disclosure requirement to that of the FAR. In the time since 
publication of the proposed rule, the FAR solicitation provision has 
been deleted. See 62 FR 224 (1997). However, Subsection 9.507-1 still 
provides for including a solicitation provision in affected 
solicitations. The revised FAR requires that this solicitation 
provision, among other things, state the nature of any potential 
conflicts identified by the contracting officer, but is not explicit 
about how the contracting officer is to make this judgment.
    The Department's substantial experience in the area of 
organizational conflicts of interest has demonstrated that specificity 
in defining disclosure requirements facilitates the entire process by 
providing the contracting officer with the best information available. 
The quality of the ultimate decision as to whether an organizational 
conflict of interest may exist is only as good as the information that 
the decision-maker has at hand. The ability to craft meaningful 
remedies to situations that may present an organizational conflict of 
interest is as well dependent upon having complete and accurate 
information before the decision-maker.
    One commenter suggested that ``[i]n many cases, agency personnel 
are aware of the issues and activities that would impair the 
objectivity of their actual or potential contractors or that would 
impact the fairness of a procurement.'' The Department disagrees. One 
type of conflict of interest consists of conflicting financial, 
contractual, or organizational interests of the individual contractor 
that might reasonably be expected to impair the objectivity of the 
contractor or its ability to render impartial analysis or advice. The 
potential for conflicting financial interests can be meaningfully 
identified only by a disclosure of relevant interests, and there is no 
meaningful way to address this facet of organizational conflicts of 
interest without disclosure by the proposer.
    The final rule supplements the FAR disclosure requirements to 
ensure that the apparent successful offeror discloses all information 
relevant to the OCI determination. The Department has limited the 
disclosure period nominally to 12 months. Also, the Department has 
limited the requirement to the apparent successful offeror and does not 
require disclosure from subcontractors, except under management and 
operating contracts and other contracts for the operation or 
remediation of a DOE site or facility, or affiliates.

C. The Organizational Conflicts of Interest Clause

    Other commenters questioned various portions of the clause.
1. Affiliates
    Three commenters argued that affiliates of the contractor should 
not be covered by the organizational conflicts of interest clause at 
952.209-72. The Department believes this provision is necessary because 
an organizational conflict of interest may arise where the interests of 
an affiliate may affect the objectivity of a contractor, or an 
affiliate may benefit from an unfair competitive advantage. A detailed 
discussion of this point was contained in the proposed rule at 61 FR 
40777 (Aug. 6, 1996). Affiliates are unaffected by this clause unless 
they attempt to propose in situations described in the clause that 
present the potential for an organizational conflict of interest. The 
FAR provides for the drafting of a clause to deal with organizational 
conflicts of interest. The clause in this final rule has been drafted 
to deal systematically with the potential sources of organizational 
conflicts of interest relating to the performance of the contractor.
    In this regard, the clause has been drafted to protect the 
integrity of the

[[Page 40750]]

procurement process as it relates to future procurements and to protect 
the integrity of any advice or recommendations produced by the 
contractor in the performance of its contract, which advice or 
recommendations then may be used in Departmental decision-making and 
policy setting processes.
2. Contracting Officer Discretion
    Another commenter believed that the clause limits the discretion of 
the contracting officer to deal with identified organizational 
conflicts of interest. The Department disagrees. The clause provides a 
generic remedy to almost every type of post-contract award 
organizational conflict of interest. In addition, section 909.507-2 of 
this rule provides that ``[c]ontracting officers may make appropriate 
modifications where necessary to address the potential for 
organizational conflicts of interest in individual contracts.'' This 
language provides adequate authority for contracting officers to 
consider and adopt appropriate changes to the clause. The contracting 
officer is, of course, required by 909.507-2 to determine the duration 
of the bar in paragraph (b)(1)(i) against a contractor's or its 
affiliate's proposing on work ``stemming directly from'' work performed 
under the contract.
3. Five Year Prohibition
    Two other commenters believed that the prohibitions against the 
contractor or its affiliates proposing for five years on work stemming 
``directly from the contractor's performance of work under this 
contract'' or where the contractor prepares a statement of work or 
specifications for future competitive solicitations is excessive. The 
Department has made a change to allow the contracting officer more 
discretion in using the clause at 952.209-72. As a preliminary matter, 
one should recognize that the prohibitions of the clause do not prevent 
the contractor or its affiliates from proposing on the follow-on 
support services contract.
    The clause has been revised to provide the contracting officer the 
discretion to determine the term of the bar in paragraph (b)(1)(i) 
against a contractor's or its affiliate's proposing on work ``stemming 
directly from'' work performed under the contract. That term should be 
between three and five years in the normal contract for advisory and 
assistance services, but the contracting officer may select a period of 
greater or lesser duration.

E. Subcontracts

    Comments were received questioning the flowdown of the 
organizational conflicts of interest concerns to subcontracts for 
advisory and assistance services valued in excess of the simplified 
acquisition threshold, particularly in light of the general Government-
wide practice of not applying organizational conflicts of interest to 
subcontracts. The Department has chosen to limit the mandatory flowdown 
of organizational conflicts of interest coverage to subcontracts under 
management and operating contracts and other contracts for the 
operation or management of a DOE facility or environmental remediation 
of a specific DOE site or sites. To achieve this result, the 
organizational conflict of interest in those contracts will contain 
Alternate I to the organizational conflicts of interest clause at 
952.209-72.
    Contractors under other contracts awarded by DOE generally will not 
be required to acquire disclosure from prospective subcontractors and 
will not be required to flowdown the clause at 952.209-72 in 
subcontracts for advisory and assistance services valued in excess of 
the simplified acquisition threshold. However, there is provision for 
the contracting officer to use Alternate I in other contracts where he 
or she believes there will be sufficient subcontracting for advisory 
and assistance services awarded to warrant its use. It is believed that 
this change will limit the burden of organizational conflicts of 
interest requirements, but permit discretionary application where the 
nature and extent of anticipated subcontracting warrant additional 
protection for the Government.

III. 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, 
these final regulations meet the relevant standards of Executive Order 
12988.

C. Review Under the Regulatory Flexibility Act

    This final 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. In the proposed rule, DOE certified that these 
regulations will not have a significant economic impact on a 
substantial number of small entities, and, therefore, no initial 
regulatory flexibility analysis was prepared. The Department received 
no comments on this certification.

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 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,

[[Page 40751]]

Subpart D) implementing the National Environmental Policy Act (NEPA) of 
1969 (42 U.S.C. 4321 et seq.). Specifically, this rule is categorically 
excluded from NEPA review because the amendments made to the DEAR would 
be strictly procedural (categorical exclusion A6). Therefore, this 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 rule revises certain policy and procedural 
requirements. States which contract with DOE will be subject to this 
rule. However, DOE has determined that this rule will not have a 
substantial direct effect on the institutional interests or traditional 
functions of the States.

G. Review Under Unfunded Mandate Reform Act of 1995

    The Unfunded Mandate Reform Act of 1995 requires preparation of a 
budgetary impact statement for rules that may result in estimated costs 
to state, local, or tribal governments in the aggregate, or in the 
private sector, of $100 million or more. It also requires a plan for 
informing and advising any small governments that may be uniquely 
impacted by the rule.
    DOE has determined that the rule will not impose estimated costs of 
$100 million or more and that it will not significantly or uniquely 
affect small government. Accordingly, there are no actions required to 
comply with the Unfunded Mandate Reform Act of 1995.

H. Review Under Small Business Regulatory Enforcement Fairness Act of 
1996

    Prior to the effective date of this regulatory action, set forth 
above, DOE will submit a report to Congress containing the rule and 
other information, as required by 5 U.S.C. 801(a)(1)(A). The report 
will state that the rule is not a ``major rule'' as defined by 5 U.S.C. 
804(2).

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

    Government Procurement.
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 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.


Sec. 909.503   Waiver.

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


Sec. 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 
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, evaluation, and determination 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 
decisions shall be included in the contract file.


Sec. 909.507  Solicitation provisions and contract clause.


Sec. 909.507-1  Solicitation provisions. (DOE coverage-paragraph (e)).

    (e) 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 952.209-8 (c)(1) up to 36 
months.


Sec. 909.507-2  Contract Clause.

    (a) (1) The contracting officer shall insert the clause at 48 CFR 
952.209-72, Organizational Conflicts of Interest, in each solicitation 
and contract for advisory and assistance services expected to exceed 
the simplified acquisition threshold.
    (2) Contracting officers may make appropriate modifications where 
necessary to address the potential for organizational conflicts of 
interest in individual contracts. Contracting officers shall determine 
the appropriate term of the bar of paragraph (b)(1)(i) of the clause at 
48 CFR 952.209-72 and enter that term in the blank provided. In the 
usual case of a contract for advisory and assistance services a period 
of three, four, or five years is appropriate; however, in individual 
cases the contracting officer may insert a term of greater or lesser 
duration.
    (3) The contracting officer shall include Alternate I with the 
clause in instances in which a meaningful amount of subcontracting for 
advisory and assistance services is expected.
    (b) Contracts, which are not subject to part 970 but provide for 
the operation of

[[Page 40752]]

a DOE site or facility or environmental remediation of a specific DOE 
site or sites, shall contain the organizational conflict of interest 
clause at 48 CFR 952.209-72. The organizational conflicts of interest 
clause in such contracts shall include Alternate I to that clause.

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:


Sec. 952.209-8  Organizational Conflicts of Interest-Disclosure.

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

Organizational Conflicts of Interest Disclosure-Advisory and Assistance 
Services (June 1997)

    (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.
    (c) The statement must contain the following:
    (1) 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.
    (2) 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 may result in the 
assessment of penalties associated with false statements or such 
other provisions provided for by law or regulation.

(End of provision)


Sec. 952.209-70   [Removed]

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


Sec. 952.209-72   Organizational conflicts of interest.

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

Organizational Conflicts of Interest (June 1997)

    (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. For the purpose of 
this clause, affiliation occurs when a business concern is 
controlled by or has the power to control another or when a third 
party has the power to control both.
    (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 (Contracting Officer see 
DEAR 9.507-2 and enter specific term) 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.

[[Page 40753]]

    (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) 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.
    (e) 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)

    ALTERNATE I: In accordance with 909.507-2 and 970.0905, include 
the following alternate in the specified types of contracts.
    (f) Subcontracts. (1) The contractor shall include a clause, 
substantially similar to this clause, including this paragraph (f), 
in subcontracts expected to exceed the simplified acquisition 
threshold determined in accordance with FAR Part 13 and involving 
the 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 the organizational conflict to the 
satisfaction of the contractor. 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.

(End of alternate)

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:


Sec. 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 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 include Alternate I.
    9. Subsection 970.5204-44 is amended by revising clause paragraph 
(b)(15) to read as follows:


Sec. 970.5204-44  Flowdown of contract requirements to subcontracts.

* * * * *
    (b) * * *
    (15) Organizational Conflicts of Interest. Clause at 48 CFR (DEAR) 
952.209-72 in accordance with 48 CFR (DEAR) 970.0905.
* * * * *
[FR Doc. 97-20022 Filed 7-29-97; 8:45 am]
BILLING CODE 6450-01-P