Contracts & Legal

Organizational Conflict of Interest

An Organizational Conflict of Interest (OCI) is when 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. COI is when a person in a position of trust has a competing professional or personal interest.

Definition: Organizational Conflict of Interest (OCI) 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. (FAR Subpart 2.1)

Organizational Conflict of Interest (OCI) Main Regulation

The Federal Acquisition Regulation (FAR) 9.5 is the primary regulation governing all OCI in DoD Acquisitions.

Website: FAR Subpart 9.5 – Organizational and Consultant Conflicts of Interest

Types of Organizational Conflict of Interest (OCI)

OCIs are becoming more and more common as the Government moves towards the contracting of services that Government employees traditionally did and as the defense industry merges and consolidates. It is the responsibility of contractors to avoid, neutralize, or mitigate OCIs to prevent an unfair competitive advantage. The following are three types of conflicts of interest they need to beware of.

  1. Biased Ground Rules: A firm has, in some sense, set the ground rules for the competition for another Government contract by, e.g., writing the Statement of Work (SOW) or the specification such that it could skew the competition in favor of itself.
  2. Unequal Access to Information: A firm has access to nonpublic information as part of its performance of a government contract and where that information may provide the firm an unfair competitive advantage in later competition for a Government contract.
  3. Impaired Objectivity: A firm’s work under one government contract could entail its evaluating itself or a related entity, either through an assessment of performance under another contract or an evaluation of proposals.

In the Event of a Potential Organizational Conflict of Interest (OCI)

If the Program Contracting Officer (PCO) and Program Manager (PM) discover that a potential conflict exists, the PM & Program Management Office (PMO) will assist the Contracting Officer in an investigation to identify all actual and potential OCIs.  Once an OCI has been determined to exist, the Contracting Officer will provide a written analysis, which includes the following:

  • The course of action for avoiding, neutralizing, or mitigating the conflict
  • A draft solicitation provision
  • A proposed contract clause
  • A request for a mitigation plan from the potential Offeror/Contractor(s)

Organizational Conflict of Interest (OCI) Evaluation

All offerors should be required to accept the proposed contract clause as a part of their proposal and either affirmatively state that they have no OCI issues or submit a mitigation plan.  The Contracting Officer, with assistance from the PM/Program Office and advice of Counsel, must evaluate the OCI issue for each offeror and determine:

  • whether that offeror has an OCI issue and, if so,
  • whether a mitigation plan can mitigate or neutralize the OCI for that offeror and, if so,
  • whether the submitted plan is adequate.
    • A mitigation plan should include, at a minimum, a Contractor-Government Non-Disclosure Agreement and a Contractor-Employee Non-Disclosure Agreement.

Organizational Conflict of Interest (OCI) Mitigation Approval

In the event that the apparent successful offer has an OCI issue, and if the Contracting Officer has determined that the offeror has submitted an adequate plan for mitigating the issue, a recommendation for approval of the mitigation plan will be submitted to the Chief of the Contracting Office.

Contract Award

After the mitigation plan is approved, the contract may be awarded to the successful offeror.  If, for some reason, a conflict of interest exists that cannot be avoided or mitigated. The Contracting Officer finds that it is in the best interest of the Government to award the contract in spite of a conflict of interest, a waiver request will be submitted to the Head of the Contracting Activity (HCA).

Organizational Conflict of Interest (OCI) Example

A conflict of interest arises when a contractor or employee (or their family members) for the government receives a personal financial reward from an external source (Company, school, individual) which may bias the individual’s judgment or compromise his or her ability to carry out their contractual obligation to the government.

Organizational Conflict of Interest (OCI) looks at the institution and everyone in it and any possible or actual conflicts. Conflict of Interest (COI), on the other hand, only looks at individuals. Taking someone off a project may solve a potential COI problem, but it won’t solve a potential OCI problem.

Definition: A Conflict of Interest (OCI) occurs when an individual’s personal interests could compromise his or her judgment, decisions, or actions in the workplace.

AcqLinks and References:

Updated: 8/15/2023

Rank: G3.5

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