Glossary
Conflict of interest
A conflict of interest in public procurement arises when an employee, officer, agent or their immediate family has a financial or other interest in a firm competing for or performing a contract. A separate category, the organizational conflict of interest (OCI), arises when a company's other work gives it an unfair informational advantage or impairs its objectivity.
The Uniform Guidance treats organizational conflicts of interest as a competition-restricting practice under 2 CFR 200.319, and requires recipients to maintain written standards of conduct governing employee conflicts.
The short version
- Two kinds matter: personal conflicts held by agency staff, and organizational conflicts held by you.
- The classic OCI is writing the specification and then bidding the work. Many solicitations bar it outright.
- Disclosure is usually a required bid form, and a false certification is far worse than the conflict itself.
- Gift and gratuity rules are strict and often criminal. A meal can be a violation in some jurisdictions.
Why it matters to a bidder
Most contractors think of conflicts as the agency's problem. They are not:
- Consulting can disqualify you from the build. If you performed the needs assessment, wrote the specification, or advised on the budget, you may be barred from competing, and even if you are not, an award to you invites a protest.
- Former agency employees carry restrictions. Post-employment rules commonly bar a former official from representing a firm before their old agency, or from working on a matter they handled, for a period of years.
- Teaming creates conflicts. A subcontractor who also supports the agency's oversight function can taint the whole team.
- Disclose early and in writing. An agency can often mitigate a disclosed conflict through a firewall or a limited waiver. It cannot mitigate one it learns about from a competitor.
A real example
An engineering firm is paid to prepare a facility condition assessment for a school district, including recommended equipment and preliminary cost estimates. Nine months later the district issues an RFP for design and the firm proposes. A competitor protests, pointing to specification language lifted from the assessment. The district cancels and re-solicits with a revised, vendor-neutral scope. The engineering firm loses the pursuit and the assessment relationship, having disclosed nothing because no one asked.
How state and local differs from federal
Federal organizational conflict rules are codified and reasonably uniform, with established mitigation practices such as firewalls and neutrality agreements. State and local rules are set by state ethics statutes and by local ordinances, and they vary in ways that surprise national vendors:
- Some jurisdictions apply strict prohibitions rather than mitigation. Where federal practice might accept a firewall, a local code may simply disqualify.
- Family and residency provisions are broader. Codes commonly reach a council member's spouse, business partner or relative within a defined degree.
- Campaign contributions can disqualify. A number of states and cities have pay-to-play rules barring award to firms that made political contributions to the officials who vote on the contract, sometimes with lookback periods of a year or more.
Because award votes often occur in public under the sunshine law, conflicts surface in front of an audience.
Common questions
Can I bid on work I helped specify?
Often not, and where it is allowed it is a protest magnet. Ask the agency in writing before investing in the pursuit.
What is a pay-to-play rule?
A prohibition on awarding contracts to firms that made political contributions to the officials deciding the award, common in several states and large cities.
Do I have to disclose a former agency employee on my team?
Usually yes. Post-employment restrictions and disclosure forms are standard, and nondisclosure is treated more harshly than the relationship itself.
Can a disclosed conflict be waived?
Sometimes, through mitigation plans or a written waiver by the agency. Some codes do not permit waivers at all.