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This subpart has been developed
In addition, this regulation is

the reserach and development field.
in accordance with that instruction.
responsive to Public Law 95-39 dated June 10, 1977.

$9-1.5402 Scope and applicability.

(a)(1) This subpart identifies various organizational conflicts of interest which might come into being and methods for avoidance of such conflicts. It provides that action must be taken to avoid placing a contractor in a position where his judgment might be biased or where he would have an unfair competitive advantage within the scope and intent of this subpart.

(2) If a contracting officer determines that a proposed procurement does involve a situation covered in §9-1.5407, all prospective contractors shall be advised of the extent of restrictions on follow-on or other work by notice in solicitations and by a clause in resulting contracts. Such notice and contract clause shall spell out the specific extent of any future restrictions on the contractor which are imposed by the contract. This, of course, does not require contract awards in circumstances that demonstrate a clear conflict of interest of a kind not specifically enumerated herein. Section 9-1. 5408 shall be implemented by including in cost-reimbursement type contracts, where appropriate, a provision requiring the approval of the contracting officer for the private use of information or data developed or obtained by employees of such contractor in the performance of cost-reimbursement type contracts. A standard form of notice for use in solicitations or contract clause is not prescribed in this subpart; such notices and clauses must be especially adapted to apply the principle of these rules to the specific facts of each contractual situtation.

(b) Except in unusual or specific situations identified by contracting officers, those parts of the rules which pertain to unfair competitive advantage are not applicable to contracts with educational institutions, or with not-for-profit organizations which conduct education and training activities, or whose facilities are used in joint programs with educational institutions for such purpose.

(c) The disclosure provision set forth in §9-1.5406(d) and the contract clause set forth in §9-7.103-54 need not apply to contracts and arrangement for (i) research and development or (ii) architect and engineering services. (See $9-1.5405(d) and (e).)

$9-1.5403 Reserved.

$9-1.5404 Qualification and evaluation criteria, waiver.


Failure on the part of an offeror to submit information

pursuant to the disclosure provision set forth in §9-1.5406(d) or to accept the Organizational Conflicts of Interest Clause set forth in $9-7.103-54 shall disqualify the offeror from further consideration for contract award. However, nothing contained herein shall preclude the offeror, because of a potential conflict, from proposing to exclude specific kinds of effort from the statement of work as contained in the solicitation unless the solicitation specifically prohibits such exclusion. Any such exclusion contained in the offeror's proposal shall be considered by the Government as an evaluation factor, and if the Government considers such proposed exclusion to be an essential or integral part of the required work, the offeror's proposal may be considered nonresponsive.

(b) The head of a procuring activity or the senior procurement official, Headquarters, or their designees, may authorize the contracting officer to grant the waiver provided for in (e) of the clause set forth in §9-7.103-54.

$9-1.5405 Definitions.

(a) The term "organizational conflict of interest" means a situation where a contractor, normally a corporation, has interests, either due to its other activities or its relationships with other organizations, which place it in a position that may be unsatisfactory or unfavorable (1) from the Government's standpoint in being able to secure impartial, technically sound, objective assistance and advice from the contractor, or in securing the advantages of adequate competition in its procurement; or (2) from industry's standpoint in that unfair competitive advantage may accrue to the contractor in question.

(b) The term "evaluation services" means any work or effort involving the independent study of a particular technology, process, or product which entails the assessment, appraisal, or survey of such technology, process, or product.

(c) The term "technical consulting and management support services" means any work or effort to provide internal assistance to any ERDA program element or other organizational component in the formulation or administration of its programs or projects, which normally requires the contractor to be given access to internal ERDA information. Such services typically include assistance in the preparation of program plans; evaluation, monitoring or review of contractors' activities or proposals submitted by prospective contractors; preparation of preliminary designs, specifications, or statements of work; the making of recommendations, or the rendering of an opinion or advice regarding any technical problem, issue or question.

(d) The term "research and development" means any work or effort involving (1) theoretical analysis, exploration, or experimentation;

or (2) the extension of investigative findings and theories of a scientific or technical nature into practical application for experimental and demonstration purposes, including the experimental production and testing of models, devices, equipment, materials, and pro


(e) The term "architect-engineer services" means work or effort of a professional nature associated with research, development, design and construction, alteration, or repair of real property including utilities and appurtenances thereto. Such services embrace conceptual design and Title I, Title II and Title III work, as defined in $918.306-50(b).

$9-1.5406 General policy.

(a) In order to assist in deciding what, if any, steps should be applied to avoid organizational conflicts of interest, there are two paramount principles to be considered. These are: (1) preventing conflicting roles which might bias a contractor's judgment in relation to its work for ERDA, and (2) preventing unfair competitive advantage. The ultimate test should always be; is the contractor placed in a position where its judgment may be biased, or where it has an unfair competitive advantage?

(b) Final program decisions, such as the determination of projects or programs and their scope, which are required to meet ERDA missions and objectives, are of course, the responsibility of Government personnel and cannot, therefore, be delegated to contractor personnel. Program decisions must be based on impartial, disinterested, and the best available technical and other judgments. The effective and formal power to make such decisions must remain in the hands of fulltime ERDA officials. Outside technical and other advice may be weighed and used selectively to assist in developing the bases on which program decisions will be made.

(c) It is difficult to identify, and to prescribe in advance, a specific method for avoiding all of the various situations which involve potential organizational conflicts of interst. Basically, potential conflicts of interest become acute when ERDA's quest for objectivity is paramount, such as for advice, evaluations, technical, and analytical services and similar assistance that lay direct groundwork for program decisions on large future procurements, research and development programs, and production. The general policy in paragraph (a) of this section cannot be automatically or routinely implemented; the application of considered judgment is necessary if that policy is to be applied in an effective workable manner. The following sections provide guides for the application of the general policy in specific situations. However, contracting and program officials should be

alert to other situations which may warrant application of the general policy.

(d) The following disclosure provision shall be included in all solicitations for evaluation and technical consulting and management support services as defined in §9-1.5405. Where a formal solicitation is not used, the provision shall be furnished to the offeror in whatever manner is practical in order that ERDA may receive and evaluate the required information as a condition precedent to award.

Disclosure Statement Regarding Organizational
Conflicts of Interest

Pursuant to ERDA-PR Subpart 9-1.54, it is ERDA policy to avoid situations which place an offeror in a position where its judgment may be biased because of any present or planned interest, financial or otherwise, the offeror may have which relates to the work to be performed pursuant to this solicitation, or where the offeror's performance of such work may provide it with an unfair competitive advantage. (As used herein, "offeror" means the proposer or any of its affiliate organizations or proposed subcontractors). Therefore:

(1) The offeror shall provide a statement which describes in a concise manner all relevant facts concerning any present or planned interest (financial, contractual, organizational, or otherwise) relating to the work to be performed hereunder and bearing on whether the offeror has a possible conflict of interest with respect to (a) being able to render impartial, technically sound, and objective assistance or advice, or (b) being given an unfair competitive advantage.

(2) In the absence of any interest referred to above, the offeror shall submit a statement certifying that to its best knowledge and belief no such interest exists.

(3) ERDA will review the statement submitted and may require that additional relevant information required of the offeror or otherwise known to ERDA will be used to determine whether an award to the offeror may create a conflict of interest relating to bias or prior contractual restrictions. If such conflict is found to exist, ERDA may (i) disqualify the offeror, (ii) impose appropriate conditions which satisfactorily mitigate or avoid such conflict, or (iii) determine that it is otherwise in the best interests of the Government not to disqualify the offeror.

(4) Failure to provide the statement and any additional information required, or the nondisclosure or misrepresentation of any relevant interest shall result in disqualification under this

solicitation or, if discovered after award, may result in termination at no cost to the Government, disqualification under subsequent related contractual efforts, and such other remedial action as may be permitted or provided by law or the resulting contract. The attention of the offeror in complying with this provision is directed to 18 U.S.C. $1001.

(e) Notwithstanding any other provision contained in this subpart, the contract clause set forth in §9-7.103-54 shall be included in all contracts or arrangements for technical consulting and management support services and may be used, after any appropriate modification, in any contract or arrangement for evaluation services. The disclosure provision set forth in §9-1.5406(d) and the contract clause set forth in $9-7.103-54 need not apply to contracts or arrangements for (1) research and development and (2) architect-engineer services, both as defined in §9-1.5405.

$9-1.5407 Guides applicable prior to selection of

contractor and execution of contract.

(a) A contractor who, in connection with the performance of a study contract, will be given information by ERDA regarding ERDA's plans or programs which is not available to interested industrial firms, should not be permitted to compete with such firms for work relating to such plans or programs.

(b) Development contractors generally should not be prohibited from consideration as a supplier for a product which they develop and design. In development work it is normal to select firms which have done the most advanced work and which are the most experienced in the field. It is to be expected that these firms will develop and design around their own prior knowledge. Also, a contractor who participates in an early stage of development is not precluded from getting a contract for a later stage of development or production. As part of ERDA's overall planning for the development, design, and the production stages, consideration. should be given to the likelihood of competitive solicitations for procuring parts of the design or product effort. The arrangement for such procurement should provide for the maximum competition consistent with satisfying ERDA requirements. Where the designer and developer is permitted to compete with others for the furnishing of the final product, heads of procuring activities or designees should take appropriate steps to see that the information furnished ERDA under the design and development contract is available to other potential bidders, on a timely basis.

(c) If a single contractor, other than a company which has participated in the development referred to in paragraph (b) undertakes a contract which essentially is to assist ERDA or a contractor of ERDA

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