PROPOSED POLICY, ORGANIZATIONAL CONFLICT OF INTEREST

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00473A000600110001-7
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 29
• Document Creation Date: December 12, 2016
• Document Release Date: October 22, 2001
• Sequence Number: 1
• Publication Date: November 14, 1977
• Content Type: MF

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14 NOV 1977 L57-:
On file, OMB release instructions
a
MEMORANDUM FOR: Mr. ester A. Fettig, Administrator
Office of Federal Procurement Policy
Office of Management and Budget
Executive Office of the President
SUBJECT: Proposed Policy, Organizational
Conflict of Interest
REFERENCE: Menlo dtd Sep 27, 1977 To The Beads of
Executive Departments and Establish-
ments fm OFPP/OMB, same subject
The referent memorandum requests official Agency views
on a draft of a proposed policy on organizational conflict
of interest which is proposed for issuance by the Office of
Federal Procurement Policy, pursuant to Public Law 93-400.
The proposed policy changes expand on existing organiza-
tional conflict of interest regulations in areas which we
believe are necessary to eliminate possible abuses in the
Federal procurement system. The Central Intelligence Agency
concurs fully with both the purpose and method of implement-
ing the proposed policy changes.
/s/John F. Blake
John F. Blake
Acting Deputy Director
Distribution:
Orig -
Addressee
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A-DDCI
1 -
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1-1 -
A-DDA.
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fyiltrm..u b1ec3
Originating Office:
/s/ James H. McDonald
10 NOV 1977
James H. McDonald Date
Director of Logistics
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EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND 13UDGET
OFFICE OF FEDERAL
PROCUREMENT POLICY
WASHINGTON, D.C. 20503 DD f A Re`.7.
SEP271977
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Proposed Policy, Organizational Conflict
of Interest
Enclosed is a proposed policy to be issued by my office
pursuant to Public Law 93-400. This matter was published
in the Federal ReZister_on September 20, 1977.
Official agency views on the enclosed draft should be
submitted to the Administrator for Federal Procurement
Policy by November 20, 1977. Following receipt of
comments, a public meeting will be scheduled for the
purpose of hearing oral presentations.
Questions may be referred to Jack A. Nadol, Deputy
Assistant Administrator for Regulations, telephone
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OFFICE OF MANAGEMENT AND BUDGET
OFFICE OF FEDERAL PROCUREMENT POLICY
Proposed Policy: Invitation for Public Comment
The Office of Federal Procurement Policy, Office of Management
and Budget, is considering the adoption of a policy which would
require the use by all Federal executive agencies of regulations
and contract clauses governing organizational conflicts of
interest.
The problem of organizational conflicts of interest has received
much recent attention by Federal executive agencies and Congress.
It is the view of this Office that any attempted solution to
this problem -- to the extent it involves imposing procurement
regulations and contractual requirements -- should be uniformly
applicable Government-wide.
This proposed policy would amend the Federal Procurement Regulations
by adding a Section 24 and would supersede Appendix G of the
Armed Service Procurement Regulation (ASPR).
The policy is directed to the avoidance of contractual relation,
ships which might encourage contractors to give biased advice
and, secondly, the reduction of opportunities for contractors
to gain an unfair competitive advantage. The policy would
require contractors to disclose existing organizational conflicts
when submitting an offer, and to stay free of conflicts during
performance or be terminated.
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It requires contracting officers to make determinations
regarding the existence and elimination of organizational
conflicts of interest. The policy would also require the
incorporation of organizational conflicts of interest solici-
tation notices and contract clauses.
The "Organizational Conflict of Interest" regulations and
clauses which follow are proposed for mandatory use by all
Federal executive agencies.
Comments should be addressed to the Administrator for Federal
Procurement Policy, Office of Management and Budget, Washington,
D. C. 20503 and should be received by November 22, 1977.
Questions may be referred to Mr. Jack Nadol, Deputy Assistant
Administrator for Regulations, telephone 2,p2/3
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Section Analysis
Defines organizational conflict of interest (OCI) as an
interest that may diminish objectivity or give unfair compe-
titive advantage. This definition includes the interest of
chief executives and directors of an organization to insure
that (OCI) rules will not be circumvented by creation of a
sister corporation by directors who have no legal affiliation.
It also includes subcontractors and consultants so as to
reduce another opportunity for abuse.
Section 2403
Lists possible situations where OCI may exist or arise. This
is to overcome the belief by many that OCI covers only "hardware
exclusion" and restrictive specifications.
Section 2404
Requires offerors to disclose potential OCI. One of the major
weaknesses of the current regulation is that no disclosure is
required and contracting officers are making awards with little
knowledge of potential OCI.
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Section 2405
Requires notice in the solicitation that if an OCI could result,
a clause to eliminate OCI will be incorporated into the contract.
Such a clause could prohibit a contractor from some future
work and he should be advised of this prior to making a proposal.
Section 2406
Requires that a solicitation representation be included in all
evaluation, consultant, management support, research and
development contracts, and other contracts over $100,000.
This coverage is agreed to by DOD and GSA; however, DOD would
cover only negotiated contracts, while GSA would cover both
negotiated and formally advertised. Our draft covers the latter.
OCI type prohibitions are not self executing and may be applied
only if specifically incorporated into a solicitation or con-
tract clause. We therefore require wide application of solicita-
tion representation so the contracting officer will have the
knowledge on which to make his determination and to incorporate
a contract clause to avoid OCI.
Section 2407-1
The general conflict clause requires the contractor to warrant
there is no conflict of interest and requires notice to the
C.O. if one arises. It also gives the C.O. authority to
terminate.
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Section 2407-2
Lists areas where OCI may be avoided by special clauses, e.g.
"hardware exclusion."
Section 2403
Requires a D&F when OCI is present, or an exception is
granted.
Section 2411
Requires pass through to subcontracts and consultant agree-
ments.
Section 2412
Provides that in addition to other remedies for violation of
OCI rules a contractor may be disqualified from subsequent
agency contracting.
Section 2413
Explains and gives examples of OCI. This is similar to the
current appendix G provisions of ASPR. It provides help to
C.O.s in making determinations as to whether or not OCI is
present.
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SUBPART 1.24 - ORGANIZATIONAL CONFLICTS OF INTEREST
1.2400 Scope of Subpart
This subpart sets forth policies and procedures regarding
organizational conflicts of interest.
1.2401 Policy.
It is the policy of the Government that organizational con-
flicts of interest connected with the procurement of supplies
and services be identified, prior to award if possible, and
be adequately avoided, eliminated, or neutralized.
1.2402 Definitions.
(a) The term "organizational conflict of interest" means
that a relationship exists whereby an offeror or a contractor
(including his chief executives, directors, proposed consul-
tants or subcontractors) has interests which (1) may diminish
his capacity to give impartial, technically sound, objective
assistance and advice or may otherwise result in a biased work
product or, (2) may result in an unfair competitive advantage.
It does not include the "normal flow of benefits" from the
performance of a contract.
(b) The term "contractor" means any person, firm, unincor-
porated association, joint venture, partnership, corporation
or affiliate thereof, which is a party to a contract with the
United States of America. As used in this definition, the term
"affiliate" has the same meaning as provided in 41 CFR ? 1-1.601-1
(e).
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1.2403 Conflict of interest
(a) In addition to other situations, an organizational conflict
pf interest may exist or arise:
(1) Even if there is no follow-on procurement;
(2) Even if a contract is awarded on a noncompetitive or
a sole source basis;
(3) Even though a hardware exclusion clause may not be
appropriate;
(4) From prior and prospective interests as well as current
interests.
(5) Whenever the contractor's judgement or performance may
be biased even though there is no competitive advantage.
(6) From benefits which later accrue to the industry even if
the contractor receives no more benefits than any other contractor
in the industry.
(7) From-benefits which are not directly financial in character.
(b) The fact that the Government can identify and later
eliminate or neutralize any potential bias arising from the
performance of or affecting the work product of a contract, is
not relevant to a determination regarding the existence and
elimination of an organizational conflict of interest prior to
award.
(c) The existence of an organizational conflict of interest
is more likely to be disclosed if a contract results from com-
petition. Accordingly, greater care shall be exercised in the
absence of competition, particularly whenever a contract may
result pdOPIq
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(d) It is not relevant that the contractor has the professional
reputation of being able to resist temptations which may arise
from an organizational conflict of interest.
(e) An organizational conflict of interest is presumed to
exist whenever one of the contractual relationships prohibited
by paragraph 1-2413 would appear to result.
1.2404 Disclosure of potential organizational conflicts of
interest.
When submitting offers (bids and proposals) in connection
with the procurement of supplies and services, offerors and
contractors (with respect to modifications) shall be required
to disclose any organizational conflicts of interest by com-
pleting the representation required by 1.2406. When a con-
tracting officer finds that an organizational conflict of interest
exists or may exist with respect to an offeror or contractor,
no contract or contract modification award shall be made until
the organizational conflict of interest has been adequately avoided,
eliminated or neutralized, except as provided in 1.2408 below.
1.2405 Notices and representations; action required of con-
tracting officers.
(a) The representation required by 1.2406 is designed to alert
the contracting officer to situations or relationships which may
constitute either present or future organizational conflicts of
interest with respect to a particular offeror or contractor.
However, this representation may not identify a potential organi-
zational conflict of interest involving a successful offeror that
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could affect his participation in subsequent procurements arising
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out of or related to work performed under a contract that results
from a solicitation currently under consideration. Accordingly,
whenever such potential conflicts are foreseeable by the con-
tracting officer, a special notice also shall be included in
the solicitation informing offerors of the fact that such a po-
tential conflict is foreseen and that a special contract clause
designed to eliminate the conflict will be included in any resul-
tant contract as required by 1.2407(.2). Such notice shall
specify the proposed extent and duration of restrictions to be
imposed with respect to participation in subsequent procurements.
A fixed term of. reasonable duration is measured by the time re-
quired to eliminate what would otherwise constitute an unfair
competitive advantage. This is a variable; for example, it may
run to the date of award of a first production contract or for a
stated period of time. Except in the few instances where a per-
manent exclusion is appropriate, in no event shall an exclusion
be stated which is not related to a specific expiration date or an
event certain.
1.2406 Representation.
(a) The representation prescribed by this section shall be
included in (1) all solicitations for the conduct of evaluation
services and for technical consulting and management support
services, (2) solicitations, modifications and unsolicitated
proposals involving research and development and (3) all other
solicitations, modifications, and unsolicited proposals which
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It also may be employed as otherwise deemed desirable by the
heads of agencies.
"ORGANIZATIONAL CONFLICTS OF INTEREST REPRESENTATION
(a) The offeror represents, to the best of his knowledge
and belief, that:
The award to him of a contract or the modification of an exist-
ing contract does ( ) or does not ( ) involve an organiza-
tional conflict of interest as defined in the Federal Procure-
ment Regulations (see 41 CFR 1.2402'.(a) and the Armed Services
Procurement Regulation (see paragraph 1-2402(a)).
(b) If the representation, as completed, or other infor-
mation indicates the existence of an organizational conflict
of interest, the contracting officer will determine whether
.a conflict does exist. If the contracting offcer determines
that a conflict exists, the offeror will be disqualified unless
a special clause is included in the contract which is designed
to adequately avoid, eliminate, or neutralize the conflict.
The offeror will be permitted to negotiate the terms of
the clause.
(c) When a solicitation involves a formally advertised
procurement and the representation of the otherwise successful
offeror indicates a conflict of interest, the contracting
officer will discuss the matter with the offeror and will
determine whether it is reasonable to expect that the conflict
can be adequately avoided, eliminated or neutralized by the
offeror. If the determination is negative, he will find that
the offeror is not responsible. If the determination is affirma-
tive, he will enter into an agreement with the contractor
which adequately avoids, eliminates or neutralizes the conflict
and subsequently award the contract."
(b) Failure to execute the representation will be deemed
to be a minor informality and the offeror or contractor will be
permitted to correct the omission.
(c) Refusal to provide the representation and any additional
information'required, or the nondisclosure or misrepresentation
of any relevant interest shall disqualify the offeror or con-
tractor for award.
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1.2407 Contract Clauses.
1.2407-1 General Contract Clause.
,All contract actions subject to the solicitation representa-
tion required by 1.2406 shall include the following clause:
ORGANIZATIONAL CONFLICTS OF INTEREST -- GENERAL
(a) The contractor warrants that, to the best of his
knowledge and belief, and except as otherwise set forth in
this contract, he does not have any organizational conflict
of interest, as defined in the Federal Procurement Regulations
(see 41 CFR 1.2402(a)) and the Armed Services Procurement
Regulation (see paragraph 1-2402(a)).
(b) The contractor agrees that, if after award he discovers
an organizational conflict of interest with respect to this
contract, he shall make an immediate and full disclosure in
writing to the contracting officer which shall include a des-
cription of the action which the contractor has taken or pro-
poses to.take to avoid, eliminate or neutralize the conflict.
The Government may, however, terminate the contract for the
convenience of the Government if it would be in the best in-
terests of the Government.
(c) The contractor agrees further that, if the award follows
a formally advertised solicitation and a conflict of interest
was identified prior to award, he will adequately avoid,
eliminate or neutralize the conflict in a manner satisfactory
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(d) In the event that the contractor was aware of organiza-
tional conflict of interest prior to the award of this contract
and intentionally did not disclose the-conflict to the Con-
tracting Officer, the Government may terminate the
contract at no cost to the Government.
END OF CLAUSE
1.2407-2 Special Contract Clause.
When an organizational conflict of interest is found to exist,
it shall be adequately avoided, eliminated, or neutralized
through th.e use of an appropriate special contract clause.
Examples of the types of clauses which may be employed include
but are not limited to the following:
(i) Hardware exclusion clauses which prohibit the acceptance
of production contracts which follow a related nonproduction
contract previously performed by the contractor;
(ii) Software exclusion clauses;
(iii) Clauses which require the contractor, members of his
Board of Directors, or his chief executives to avoid, eliminate,
or neutralize an organizational conflict of interest; and
(iv) Clauses which provide for the protection of the con-
fidentiality of data and guard against its unauthorized use.
The prospective contractor shall be given the opportunity to
negotiate the terms and conditions of the clause and its applica-
tion. The extent and time period of any restrictions shall be
specified in the clause.
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1.2407-3 Records of use of special notices and clauses.
Agencies shall maintain, in accordance with agency procedures,
and for an appropriate period of time as determined by the
circumstances, a record of all special solicitation notices
used pursuant to 1.2405 and of all special contract clauses
incorporated in contracts pursuant to 1.2407-2.
1.2408 Contract award when an Organizational Conflict of
Interest is present.
(a) When an organizational conflict of interest is present,
an award shall not be made to an offeror who has a conflict unless:
(1) the conflict has been adequately avoided, eliminated
or neutralized; or
(2) the head of the agency determines that the award of the
contract would be otherwise in the best, interests of the Govern-
ment. Where such a determination is made, an appropriate written
finding and determination shall be placed in the contract file.
(b) Examples of circumstances justifying the determination
permitted by 1.2408(a)(2) include but are not necessarily
limited to:
(1) [Situations where]the public exigency will not otherwise
permit; and
(2) [Situations where]the requirement cannot otherwise be
obtained.
1.2409 Action in liew of termination.
If the contracting officer determines that it would not be in
the best _111 rS ftgr ~~de 2 -e~i~-RAP ~~ -4 0600d6fl9fl'I~~t
raga; rcd by 1.2407, the contracting officer
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shall take every reasonable action to avoid, eliminate, or
otherwise neutralize the organizational conflict of interest.
1.2410 Architect-engineering and construction contracts.
The award of related architect-engineering and construction
contracts to the same contractor can result in self-inspection
of construction work and permit the contractor to render biased
decisions. Such contract awards are prohibited.
1.2411 Subcontracts
The contractor shall require a representation in accordance with
Section 1.2406 from subcontractors and consultants and shall
include in consultant agreements or in subcontracts involving
performance of work under a prime contract covered by this
section, contract clauses in'accordance with 1.2407.
1.2412 Remedies
In addition to other remedies, as may be permitted by law or
contract for a knowing breach of the restriction in this sec-
tion or for nondisclosure or misrepresentation of any relevant
interest required to be disclosed by this section, the agency
shall disqualify the contractor from subsequent agency contracts.
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Specific examples of contractual relationships
which constitute an inherent organizational conflict of interest
and rules for their avoidance.
Introduction: The following examples illustrate types
of organizational conflicts of interest which frequently
arise, but [they]are not all inclusive. They are not rules in the
literal sense, but are only examples of the two principles
enumerated in the definition of an "organizational conflict
of interest" set forth in paragraph 1-2402(a) above. These
two basic principles [(1) preventing conflicting roles and
competing interests which might bias a contractor's judgment
and (2) preventing a contractor from gaining an unfair competitive
advantage over others] are the fundamental goals which must
always be borne in mind in reaching a determination as to the
presence or absence of an organizational conflict of interest.
Organizational conflicts may involve not just
hardware production but also software and services in
many forms. Many consulting and engineering firms, for
example, have no hardware capability but may nevertheless
perform work under contractual situations giving rise to
potential conflicts under the two principles mentioned above.
Attention must be given therefore to the possible need for
using both hardware and software exclusion clauses in
appropriate cases, particularly in the fields of research,
development, test, and evaluation, where objectivity may
be influenced or a competitive advantage gained.through
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(a) If a contractor agrees to provide systems
engineering and technical direction (SE/TD) for a system,
without at the same time assuming overall contractual
responsibility for:
(1) development, or
(2) integration, assembly, and checkout (IAC), or
(3) production of the system, then that
contractor shall not later be allowed to supply the
system or any major components thereof, or to be a sub-
contractor or consultant to a supplier of the system
or any major components thereof.
Explanation: The SE/TD contractor occupies a highly
influential and responsible position as an agent of the
Government,both in determining basic concepts of a system and
in supervising their execution by other contractors. To-assure
the objectivity of its services and hence a more soundly
planned system, the SE/TD contractor must not be in a position
to make decisions which could.favor its own products. Furthermore,
it would be inconsistent with the managerial responsibility of an
SE/TD contractor for it to be concurrently one of the component.
suppliers.
Illustration 'A: Company A agrees to provide SE/TD for
the Navy on the power plant for a group of submarines (i.e.,
turbine, drive shafts, props, etc.). Company A shall not be allowed
to supply any power plant components. Company A can, however
supply components of t2082/'~War'.kaRD b POvi 0-~fA AA& 1~b0 '
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[not the submarine] and the ban on the supply of components is
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coterminous with the system only.
Illustratior_B: Company A is the SE/TD contractor for
system X. After some progress, but prior to completion,
the system is canceled. Later, system Y is developed to
achieve the same purposes as system X, but in a fundamentally
different fashion. Company B is the SE/TD contractor for
system Y. Company A may bid to produce system Y or its
components.
(b) If a contractor agrees to prepare and furnish
complete specifications covering nondevelopmental items to
be used in competitive procurement, that contractor shall not
be allowed to furnish such items, either as a prime or
subcontractor, for a reasonable period of time including, at
least, the initial procurement. This rule shall not apply to:
(1) Contractors who furnish at Government request
specifications or data with respect to the product they
furnished, even though the specifications or data may have
been paid for separately or in the price of the product.
(2) Situations where one or more contractors acting
as industry representatives assist Government agencies in
preparing, refining, or coordinating specifications, regardless
of source, which assistance is supervised and controlled by
Government representatives.
(3) Contracts for developmental or prototype items.
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Explanation: If a single contractor is engaged
by the Government to draft complete specifications for
nondevelopmental equipment, he should be eliminated for a
reasonable time from competition for production based on the
specifications. This should be done in order to avoid a
situation where he could draft specifications which would
favor his own products or capabilities. In this way the
Government can be assured of getting unbiased advice as to the
content of its specifications and can avoid allegations of
favoritism in the award of production contracts.
In development work it is normal to select firms
which have done the most advanced work in the field. It is
to be expected that these firms will design and develop
around their own prior knowledge. Development contractors
can frequently start production earlier and more knowledgeably
than fires which did not participate in the development, and
this affects the time and quality of production, both of which are
important to the Government. In many instances the Government
may have financed such development. Thus, the development
contractor may have an unavoidable competitive advantage which
is not considered unfair and no prohibition should he imposed.
In instances of cooperation between industry and Government
agencies to prepare, refine, or coordinate specifications,
there is continuous participation and supervision by Government
representatives and, usually, more than one contractor
concerned. In these circumstances Government supervision
pr ey ? F iP#PO#j*(kOOa l PPjT7to favor
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a given contractor's products or capabilities.
Illustration' A: Company A prepares updated Government
specifications for a standard refrigerator to be procured
competitively. Company A shall not be allowed for a reasonable
period of time to compete for supply of the refrigerator.
Illustration.B: Company A designs or develops a new
electronic equipment and, as a result of the design or
development, prepares specifications. Company A may supply
the electronics equipment.
Illustration C: XYZ Tool Company and/or KLM Machinery
Company representing the American Tool Institute work under
the supervision and control of Government representatives to
refine specifications or to clarify the requirements of a
specific procurement. These companies may supply the item.
Illustration' D: Prior to selection of the Automatic
Data Processing (ADP) Equipment, Company A is awarded a
contract to develop software to automate an Air Force function.
Since software can be written to favor a particular vendor's
commercial ADP hardware, a potential conflict of interest
exists. Accordingly, Company A should be barred from at least
the initial follow-on ADP hardware procurement using the software
developed under its development contract.
Illustration E: A System Engineering and Integration
contract is awarded to Company A. As part of its effort it is
required to identify and modify commercially available software
packages, integrate them into a csystem,and identify and provide
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requirements to operate the resulting system. Since
the identified packages and. modifications can be biased
toward a particular vendor's hardware when used in a
follow-on acquisition, Company A should be barred from at least
the initial follow-on computer hardware procurement.
Illustration F: A study contract is awarded to Company A
to solve a computer interface problem. The effort will
require the identification of commercial equipment that will
solve the interface problem. Since the vendor's judgment
could be biased if allowed to recommend its own equipment, it
should be barred from :at least the initial follow-on procurement
resultant from its interface effort.
(c) If a single contractor, other than a company
which has participated in the development or design of a
system, agrees to assist a Government agency or a contractor
of a Government agency in the preparation of a statement of
work, or agrees to provide material leading directly,
predictably, and without delay to a statement of work, to
be used in the competitive procurement of a system or services,
that contractor shall not be allowed to supply the services,
or the system or major components tha-reof, unless it is the
sole source. The content of a statement of work shall not
be considered predictable if more than one contractor is involved
in the preparation of material leading to it.
Explanation: The various services related to a
statepn.ent o w l~ to I6 20g : LIAR&W O # W6 6b f ent
pproved or a ease
should normally be performed by the Government agency. However,
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when it is necessary to seek the assistance of contractors,
they may often be in a position to favor their own products
or capabilities. To overcome this possibility of bias, such
contractors are to be prohibited from supplying a system or
services procured on the basis of work statements. growing out
of their services.
No prohibitions are imposed on development contractors
for the reasons given in the explanation to rule (b).
Illustration A: Company A receives a contract to define
the detailed performance characteristics a Government agency
will require for the purchase of rocket fuels. A has not
developed the particular fuels. At the time the contract is
awarded, it is clear to both parties that the performance
characteristics arrived at will be used by the Government
agency to choose competitively a contractor to develop or
produce the fuels. Company A shall not be permitted to bid
on this procurement.
Illustration B: Company A receives a contract to
prepare a detailed plan for the procurement of services
aimed at the advanced scientific and engineering training of
a Government agency's personnel. It suggests a curriculum
which the agency endorses and incorporates in requests for
proposals to various institutions to establish and conduct
such training. Company A shall not be permitted to bid on
this procurement.
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 Approved For Release 2002/01/09 : CIA-RDP80-00473A000600110001-7
Illustration C: Company A prepares a feasibility study
of a new weapons system without proposing in detail the
characteristics of a possible final device. It may bid to
produce the system or components thereof.
(d) If a contractor gains access to proprietary
data of other companies incidental to the performance of a
Government contract, the contractor must agree with such
companies to protect such data from unauthorized use or
disclosure so long as it remains proprietary. In addition,
the contractor shall not be permitted to utilize the data
for any purpose other than that for which it was furnished
to him,unless otherwise specifically provided for in his
contract or unless written authorization from the owner of
the data has been obtained.
Explanation: Proprietary data is information
considered so valuable by its owners that it is held secret
by them and their licensees. Where a contractor must obtain
such data from others for purposes of performing a Government
contract, and can obtain it by the leverage of that contract,
he will gain an advantage over other companies unless there
are restrictions upon his use of the data. Such restrictions
are necessary both to protect the data, and to encourage
companies to furnish it to contractors when necessary for the
performance of a Government contract. The rule is not intended
to protect proprietary data furnished voluntarily by companies
without limitations as'to use, or data which falls into the public
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domain.
 Approved For Release 2002/01/09 : CIA-RDP80-00473A000600110001-7
Illustration/A: Company A is selected to study the
use of lasers in military communications. The Government
'agency will request that firms doing research in the field
make proprietary data available to A. In order to receive
the contract, A must agree with such firms to protect any pro-
prietary data it obtains, so long as the data remains proprietary,
and shall not be permitted to utilize the data in supplying
any lasers to the Government agency. While A could not receive
a competitively awarded contract to perform additional studies
of lasers using such data, it may receive a contract award
if it is the sole source.
(e) A contractor who in connection with the
performance of a study, consulting or similar contract will
be given information by a Department regarding the Department's
plans or programs,which is not available to other interested
potential contractors, shall not be permitted to compete
with such firms for work relating to such plans or programs.
(f) A contractor shall not, without making a full
disclosure to the contracting officer, and in the absence
of adequate safeguards, be allowed to evaluate or give other
consulting services:
(1) which will necessarily require the
evaluation-of the contractor's own work product or (2),
with respect to the product or services of any other contractor
with which the contractor has an existing consulting
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(g) A contractor performing evaluation or consulting
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services for the Government in connection with a competitive
procurement shall not be permitted to enter into a contrac-
tual relationship with the successful offeror with respect
to work arising out of or related to the performance of the
contract resulting from the competition.
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 2002/01/09: CIA-RDF18-0 IM10130001-7 1-1 SECRET
STATI
ROUTING AND RECORD SHEET
SUBJECT: (Optional) He ---~
TL Proposed Policy, Organizational Conflict of Interest
FROM:
Dir Logistics
EXTENSION
NO.
OL 7 4494a
DATE
NOV1977
TO: (Officer designation, room number, and
building)
A
D
COMMENTS (Number each comment to show from who
RECEIVED
to whom. Draw a line across column after each comment.)
t. A-DDA
1 J. i~ji
v 1977
2
Mike :
2.
As you know, organizational
conflict of interest laws
have been around for a long
3.
time. Our primary concern
in the past has been with
the use of "hardware exclu-
4.
sion" clauses for contracts
for R&D to prevent an unfair
advantage flowing to such
5.
contractors in follow-on
hardware acquisition phases.
The proposed regulatory
6.
change will impact both the
FPR and the ASPR. _] .t will
require inclusion in con-
7
.
trac -or proposalsof certain
representa ions regc in_
--
existing organizational con-
8.
-
~Ti s an 'Cet t o fhe'
contractor to s I-ree of
such con licts durin
con-
g
9.
tract performa e "_7t--also
establishes sanctions for
violation of conflict
oli-
p
10.
cies. The policy changes
proposed do not impinge on
th
DCI'
ibi
i
f
e
s respons
l
or
ty
11.
protection of sources and
methods. Sufficient latitude
f
di
i
or management
scret
on
12.
necessary to execute con-
tracts critical to our missio
i
i
13.
s
ncluded. We, therefore,
recommend concurrence.
14.
We.. c ona
15.
STATI
FORM 610 USE PREVIO
3-62 EDITIONS
^ UNCLASSIFIED
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Approved For Release 2002/01/09 : CIA-RDP80-00473A000600110001-7