Conflict of Interest Rule Aims at Contractors A proposed rule would require contractors to monitor some employees’ personal finances to prevent conflicts of interest. The rule, published in the Nov.13 Federal Register, would apply to “employees performing acquisition functions closely associated with inherently governmental functions.” They would be required to submit annual financial statements to their employer. The Federal Acquisition Regulation councils estimated 10,000 companies and 250,000 employees would be covered by the rule, but said the number will shrink as the government brings more acquisition work in-house. The rule implements a requirement in the 2009 Defense Authorization Act. The proposed rule is similar to conflict of interest restrictions governing federal employees. The councils are considering whether personal conflict of interest rules should apply to contractors working in other areas besides acquisition. The definition of “inherently governmental functions” has long been considered murky. The office of Management and Budget is working on a new definition and says it expects to complete its review by the end of the year. The FAR councils said the proposed rule covers contractors involved in acquisition planning; developing statements of work; evaluating proposals; awarding contracts; administering or terminating contracts; or cost evaluation. “Personal conflict of interest means a situation in which a covered employee has a financial interest, personal activity, or relationship that could impair the employee’s ability to act impartially and in the best interest of the Government when performing under the contract,” the rule states. Each covered employee would be required to sign a non-disclosure agreement prohibiting the disclosure of non-public government information that was acquired in the course of working on a contract. Employees would be prohibited from using such information for personal gain. Contractors would have to obtain annual financial disclosure statements from covered employees providing the following information: *Financial interests of the covered employee, close family members or members of the household, including ownership of stocks, bonds, businesses and real estate; *Outside employment and financial relationships, including seeking a job; and *Gifts, including travel. Companies would not be required to report the information to the government unless a conflict of interest was discovered after the contract was awarded. Contractors that do not comply would be subject to contract termination, suspension or debarment. The proposed rule would also cover sole proprietors and consultants. In addition, prime contractors would be responsible for ensuring that their subcontractors comply with the conflict of interest provisions if the subcontract amounts to more than $100,000. Companies would be required to tell covered employees “to avoid even the appearance of a personal conflict of interest.” The proposed rule is FAR case 2008-025. Comments are due Jan. 12, 2010.