OCI Mitigation Planning

1. OCI Mitigation Planning Glenn Baer National Defense Industrial Association March 2006

2. Organizational Conflicts of Interest FAR Subpart 9.5 prescribes the limitations • Avoid, neutralize, or mitigate significant potential • Conflicts before contract award. • Contractors have a statutory obligation to disclose • The two underlying principles are-- • Preventing the existence of conflicting roles that might bias • a contractor’s judgment; and • (b) Preventing unfair competitive advantage. An unfair competitive advantage exists where a contractor competing for award of any Federal contract possesses proprietary or source selection information – • The purpose: “level the playing field” in competitive procurement and to serve as a means of protecting the government’s interest in sole source procurement.

3. OCI in today’s environment • The current OCI environment within the defense industrial base is particularly complex an increasingly exacerbated by mergers, business consolidations, and evolving small businesses. • OCI is and will continue to be a major and growing concern in federal acquisition • Five years ago Industry expecting an OCI “train wreck” unified to propose regulatory changes that, among other things, promoted mitigation & waver over recusal and divestiture. Concern was the lack of clarity in the regulations could threaten effective competition, provide inequitable disparate treatment of contractors, increase cost, discourage long term investment, and promote the erosion of industrial and technological capability.

4. OCI by the FAR • 4 Basic Principles of OCI: • 9.505-1 Providing systems engineering (SE) and technical direction. • The contractor that does SE for the development of the system should not be responsible for production of the system. • 9.505-2 Preparing specifications or work statements. • The contractor that writes the specs shall not participate in the initial production contract. • 9.505-3 Providing evaluation services • A contractor will not participate in evaluation of it’s own or its competitor’s proposals. • 9.505-4 Obtaining access to proprietary information • A contractor can’t use proprietary information supplied by another contractor to gain an unfair competitive advantage. From 9.505-1, 9.505-2, 9.505-3, 9.505-4

5. The Mitigation Plan Constructs The practical heart of OCI management Serves as to overcome a perceived bias in judgment or potential unfair competitive advantage and preserves the integrity of organizations objectivity by establishing audible isolation controls intended to neutralize potential conflicts of interest through: • Organizational, Physical and Managerial Separation • Financial and Goal Separation • Data Security and Management • Personnel Policies and Certifications • Internal Audit & Reporting • Screening and Task Assignment Monitoring You must continue to screen past and proposed contract requirements relationships or financial interest and disclose potential OCI’s and recognize that potential conflicts might evolve during contract performance

6. OCI isolation requirements Organizational Separation & Managerial Separation • Establish “Fire walls” between potentially conflicting organizations • Isolate the conflicting workforce identifying roistered employees move to organizations with like requirements • Management: Establish two levels of separation to Isolate Sr. management and to ensure that no pressure or bias is introduced into the evaluations and recommendations from other organizations further ensure no subordinate or roster employee is placed in a compromising position based on an inappropriate request from senior manager. Vice Presidents will not be rostered employees, they have access top level financial and all non SPI program information to monitor and direct program performance and deliveries.

7. OCI isolation requirements Financial and Goal Separation Financial or design interest in a particular manufacturing product, process or vendor can be perceived to impair one’s impartial objective assistance or advise to the government. Similarly conflicting performance goals can reward conflicts • Separate all financial and performance goals such that isolated workforce does not receive rewards for conflicting requirements. Common Executive management can have financial roll-up oversight • Goals and reward systems must be separated between conflicting organizations. Reward system for those inside and outside the “firewall” must be separate and not tied to either organizations successes. • Separate marketing and business development activities, train sales and marketing team to understand OCI mitigation

8. OCI isolation requirements Physical Separation • Where possible establish remote facilities for “fire walled” employees. Establish facility security controls, pass/ keys access during work and non-work hours. • Must physically separate those at common work sites providing controlled access to “fire walled” workforce. establish cipher locked workspace with separate employee identification & security • Customer site & other facility controls again with access limited work space can facilitate this separation

9. OCI isolation requirements Data separation & protection Controlling and protecting data is a critical element of successful mitigation • Data access control must be established. • Isolated employees must operate on separate data servers to prevent Transfusion. • Recommend establishing an individual to control hardcopy, electronic & oral sensitive information (COI avoidance monitor) • Must define and understand data types, All must be considered Sensitive Program information. • Procurement Sensitive - adversely impact acquisition planning • Competition Sensitive - adversely affect the source selection process • Proprietary Data - the legal property of the government, a company or individual

10. Data protection is the heart of the plan • Managing Meetings under mitigation plans In meetings conducted or sponsored by personnel under the mitigation plan the chairperson shall be responsible for notifying all meeting participants of the scope of the meetings agenda. Any handouts, electronic projections, overheads or viewgraphs presented containing SPI must contain the following notice: MATERIAL TO BE DISCUSSED TODAY CONTAINS SENSITIVE PROGRAM DATA ALL _____ PROGRAM AND OR CONTRACTOR PERSONNEL WHO HAVE NOT EXECUTED THE REQUIRED CONFIDENTIAL PROPRIETARY INFORMATION AGREEMENTS MUST EXCUSE THEMSELFS FROM THIS MEETING IMMEDIATLY

11. OCI isolation requirements Personnel Policies and Procedures • Personnel and mitigation plan policies must ensure access to all necessary skill competencies both inside and outside the wall. The plan must address entrance and exit from the firewall • Promotion opportunities must be consistent both within & outside the “firewall” • Personnel training must be established for all rostered employees to understand compliance requirements.

12. OCI statements & agreements • Nondisclosure Agreements are must be executed by roistered employees that will be inside the “Firewall” • Compliance Statements are used to acknowledge training, accept and understand the plan requirements. • Debriefing Statement are to understand continuing obligations

13. OCI review & revision process The plan must include internal audit requirements to monitor enforcement and establish customer reviews • Internal audit and reporting procedures must be established in the plan with enforcement controls that include termination and possible criminal prosecution. The contractor must encourage self governance and enforce non-attribution voluntary disclosures. • Regular customer briefings are necessary to established to keep the customer advised of any mitigation plan controls and to assess any changes in the business environment or contract tasking that might introduce a change to the plan.

14. OCI isolation requirements Task Order Monitoring An OCI may not be apparent at the initiation of a Task order requirement but evolve during performance. Services requirements are particularly susceptible to these conditions • Must screen for potential OCI’s at task orders initiation and during performance • Must have a process to screen potentially conflicting requirements including those of subcontractors

15. MITIGATION PLANNING BENEFITS For the Company • Expands or retains business in areas that could otherwise be unavailable. • Improves employee awareness of OCI issues and Improves customer confidence. • Obviously administrative cost can be high and organizational disruption can be a negative. For the Agency • Permits longer term planning and investment by private industry. • Increases effective competition for government requirements. • Improves agency visibility into potential conflict of interest. An issue in developing successful mitigation is always the timing of when to establish the controls

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