On December 27, President Biden signed the Preventing Organizational Conflicts of Interest in Federal Acquisition Act into law. The legislation, ushered through Congress by a bipartisan group of backers, strengthens existing regulations around federal contractor conflict of interest mitigation and provides new requirements for agencies to follow to sniff out potential conflicts of interest. 

The legislation was borne from an early April revelation that McKinsey, the famed management consulting firm, was working with the Food and Drug Administration (FDA) to overhaul the drug approval process while simultaneously consulting for some of the nation’s leading pharmaceutical companies including Purdue Pharma. A report from the House Committee on Oversight and Reform found that at least 22 McKinsey employees worked on the FDA contract and for outside pharmaceutical clients. McKinsey claims it was under no obligation to disclose its private sector clients to the government. That will change following the passage of the recent legislation. 

The bill requires the Federal Acquisition Regulatory Council to revise the Federal Acquisition Regulation (FAR) to illustrate better how organizational conflicts of interest (OCI) manifest with new definitions, to guide what types of relationships with outside clients that may cause a contractor to run afoul of OCI rules, and to issue illustrative examples of situations posing OCI concerns. 

The legislation also mandates changes in the FAR to provide agencies with contract provisions they may use to mandate that federal contractors disclose information related to potential OCIs. The provisions will also limit future contracting as companies would be required to disclose potential OCIs related to new prospective business while performing on a contract the new business could oppose. Lastly, the legislation requires executive agencies to update their OCI procedures pursuant to the aforementioned changes in the FAR and adjust existing procedures accordingly to address agency-specific OCI concerns. 

The legislation requires the amended FAR rules to go into effect no later than 18 months after the legislation’s enactment. 

For more information on the firm’s Government Contracts Practice, and specifically, assistance related to organizational conflicts of interest, contact the author at toverman@bassberry.com.