Nov 19, 2009

A newly proposed rule that would require contractors to more carefully track their employees’ potential conflicts of interest would be hard to administer because of the vague guidance in the rule, according to a new analysis.

For the first time, contractors providing agencies with acquisition advisory services would have to get detailed disclosures of financial and personal matters from their employees under the proposed rule. The company would then monitor which employees it assigns to a contract to avoid any personal conflicts.

But what information is necessary for contractors to gather? No one’s exactly sure.

“The proposed rule provides little guidance,” according to a legal analysis of the rule by the Venable law firm.

Venable's analysis, which digs into the possible effects of the conflicts rule, is filled with legalese, but several statements stand out:

“The proposed rule illustrates the inherent complexities of efforts to more closely regulate government contractors.”

“Many of the issues are unclear and potentially require government contractors to seek far more personal and private information from employees than is usual in the private sector.”

“The noncompliance provisions of the proposed rule provide harsh sanctions that may cause such government contractors to compel their employees to provide otherwise unnecessary personal and private information.”

Venable notes that the Office of Government Ethics has a relatively clear description of the financial interest that a federal employee needs to have, which includes disclosures about employee’s spouse and any organization in which the employee serves as an officer.

“Depending on the perspective of the contractor interpreting the proposed rule, the contractor’s covered employees might be subject to a broader or narrower range of imputed interests than federal employees,” according the analysis.

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