[Federal Register Volume 73, Number 59 (Wednesday, March 26, 2008)]
[Proposed Rules]
[Pages 15961-15962]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-6100]





48 CFR Parts 3, 9, and 52

[FAR Case 2007-017; Docket 2008-0002; Sequence 2]
RIN: 9000-AK97

Federal Acquisition Regulation; FAR Case 2007-017; Service 
Contractor Employee Personal Conflicts of Interest

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Advance notice of proposed rulemaking.


SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (the Councils) are interested in 
determining if, when, and how service contractor employees' personal 
conflicts of interest (PCI) need to be addressed and whether greater 
disclosure of contractor practices, specific prohibitions, or reliance 
on specified principles would be most effective and efficient in 
promoting ethical behavior.

DATES: Comment Date: Interested parties should submit written comments 
to the FAR Secretariat on or before May 27, 2008 to be considered in 
the formulation of any proposed or interim rule.

ADDRESSES: Submit comments identified by FAR case 2007-017, by any of 
the following methods:
     Regulations.gov: http://www.regulations.gov.Submit 
comments via the Federal eRulemaking portal by inputting ``FAR Case 
2007-017'' under the heading ``Comment or Submission''. Select the link 
``Send a Comment or Submission'' that corresponds with FAR Case 2007-
017. Follow the instructions provided to complete the ``Public Comment 
and Submission Form''. Please include your name, company name (if any), 
and ``FAR Case 2007-017'' on your attached document.
     Fax: 202-501-4067.
     Mail: General Services Administration, Regulatory 
Secretariat (VPR), 1800 F Street, NW, Room 4035, ATTN: Diedra Wingate, 
Washington, DC 20405.
    Instructions: Please submit comments only and cite FAR case 2007-
017, in all correspondence related to this case. All comments received 
will be posted without change to http://www.regulations.gov. Please 
include your name and company name (if any) inside the document.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact 
Ms. Meredith Murphy, Procurement Analyst, at (202) 208-6925. For 
information pertaining to status or publication schedules, contact the 
FAR Secretariat, Room 4035, GS Building, Washington, DC 20405, (202) 
501-4755. Please cite FAR Case 2007-017.


A. Background

    1. The Councils are considering the need for standard PCI clauses 
or a set of standard PCI clauses, if appropriate, for inclusion in 
solicitations and contracts as recommended by the Acquisition Advisory 
Panel's Final Report. The Councils are publishing a related advance 
notice of proposed rulemaking on the subject of Organizational 
Conflicts of Interest.
    2. The Federal Government is increasingly turning to private 
contractors to perform a wide array of its work. As a result, 
contractor employees are increasingly working side-by-side with Federal 
employees, but are not subject to the same ethical safeguards that have 
been put in place for Federal employees to ensure the integrity of 
Government operations. Issues such as financial conflicts of interest, 
impartiality concerns, misuse of information, misuse of apparent or 
actual authority, and misuse of property are all areas of potential 
personal conflicts of interest for contractor employees that could 
result in harm to the public fisc and loss of public confidence in 
Government. For an introduction to the potential problems resulting 
from contractor employees' personal conflicts of interest, see the 
speech given by the Director of the Office of Government Ethics to the 
Defense Industry Initiative entitled ``Who Are Government Workers and 
How Can Management Improve Worker Ethical Sensitivity?'' at: http://www.usoge.gov/pages/forms_pubs_otherdocs/fpo_files/reports_plans/cusick_speech061407.pdf.
    3. The Government Accountability Office (GAO) released, on March 7, 
2008, GAO-08-169, Defense Contracting: Additional Personal Conflict of 
Interest Safeguards Needed for Certain DOD Contractor Employees. GAO's 
reporting objectives, in part, were to assess (1) what safeguards exist 
to prevent personal conflicts of interest for contractor employees when 
performing DOD's tasks and (2) whether Government and defense 
contractor officials believe additional safeguards are necessary. To 
conduct this review, GAO reviewed conflicts-of-interest laws and 
policies and interviewed ethics officials and senior DoD leaders 
regarding applicability to DOD Federal and contractor employees. The 
public may wish to consider GAO's findings, conclusions, and 
recommendations regarding additional safeguards for personal conflicts 
of interest pertaining to contractor employees in providing comments in 
response to this Notice.
    4. The Acquisition Advisory Panel (AAP) was chartered by the 
Congress at Section 1423 of the Services Acquisition Reform Act (SARA). 
Relevant portions of the final report of the AAP are located on the Web 
at http://acquisition.gov/comp/aap/documents/Chapter6.pdf. The Panel 
found that ``(t)here is a need to assure that the increase in 
contractor involvement in agency activities does not undermine the 
integrity of the Government's decision-making processes'' (AAP Final 
Report, Chapter 6, Finding 7, page 417). The AAP also found that 
``(m)ost of the statutory and regulatory provisions [addressing PCI] 
that apply to Federal employees do not apply to contractor employees, 
even where contractor employees are co-located and work side-by-side 
with Federal employees and are performing similar functions'' (AAP 
Final Report, Chapter 6, Finding 7, page 418).
    5. The AAP concluded that, ``in view of the tremendous amount of 
Federal contracting for services, and particularly in the context of 
the multisector workforce, additional measures to protect against PCIs 
by contractor personnel [are] needed''(AAP Final Report, Chapter 6, 
Recommendation 5-2, page 423). While it concluded that it is not 
necessary to adopt any new Federal statutes, the AAP was concerned that 
certain types of contracts, primarily service contracts, might present 
greater problems than others, and it recommended that the FAR Council 
should identify those types of contracts where the potential

[[Page 15962]]

for PCIs raises a concern. However, the AAP also expressed concern that 
a blanket application of Government ethics provisions to contractor 
employees might result in over-regulation with its attendant costs to 
industry, particularly small businesses.
    6. Two recent FAR cases, 2006-007 and 2007-006, have expanded, or 
propose to expand, general business ethics coverage and requirements in 
the FAR with respect to contractor entities. The former case was 
published as a final rule at 72 FR 65873, November 23, 2007, with an 
effective date of December 24, 2007. It requires employers to post 
Inspector General (IG) Hotline posters in their places of business, to 
have a written code of business ethics, and, with the exception of 
small businesses, to have a formal business ethics training program and 
internal control system. The latter case was published as a proposed 
rule at 72 FR 64019, November 14, 2007. The comment period closed on 
January 14, 2008. The Councils are now reviewing the comments received. 
FAR Case 2007-006 proposes more mandatory requirements for the business 
ethics programs. For example, contractors that do not timely report 
violations of law in connection with a Government contract or 
subcontract may be subject to suspension or debarment. Neither of these 
FAR cases specifically addressed personal conflicts of interest for 
contractor employees working in the Federal workplace.
    7. Some Government agencies' approaches are located at the 
following Web sites:
Sections 752.7013 and 752.7027 located at http://www.access.gpo.gov/nara/cfr/waisidx_07/48cfr752_07.html.
    DEPARTMENT OF ENERGY -- Personal conflicts of interest of 
management and operating contractors: Sections 970.0371-1 through 
970.0371-9, and 970.5203-3 located at http://www.access.gpo.gov/nara/cfr/waisidx_07/48cfr970_07.html.
    ENVIRONMENTAL PROTECTION AGENCY -- Personal Conflicts of interest--
contracts involving current or former EPA employees: Subpart 1503.6 
located at http://www.access.gpo.gov/nara/cfr/waisidx_07/48cfr1503_07.html; and section 1552.203-70 located at http://www.access.gpo.gov/nara/cfr/waisidx_07/48cfr1552_07.html.
    NUCLEAR REGULATORY COMMISSION -- Personal conflicts of interest -- 
current or former agency employee involvement: Section 2052.209-70 
located at http://www.access.gpo.gov/nara/cfr/waisidx_07/48cfr2052_07.html.

B. Solicitation of Public Comment

    The Councils are seeking comments and recommendations regarding 
whether additional regulatory coverage is needed, the suitability of 
applying other agencies' approaches, or another alternative. The 
Councils are also interested in industry initiatives in this area, 
particularly standardized or model non-disclosure agreements.
    This is not a significant regulatory action and, therefore, was not 
subject to review under Section 6(b) of Executive Order 12866, 
Regulatory Planning and Review, dated September 30, 1993. This rule is 
not a major rule under 5 U.S.C. 804.

    Dated: March 19, 2008.
Al Matera,
Director, Acquisition Policy Division.
[FR Doc. E8-6100 Filed 3-25-08; 8:45 am]