NASA MANAGEMENT INSTRUCTION 5101.19, DATED JULY 1, 1968 July 1, 1968 ATTACHMENT A NMI 5101.19 RULES FOR THE AVOIDANCE OF ORGANIZATIONAL CONFLICTS OF INTEREST* The following rules state general prohibitions which are then explained and illustrated by specific examples. There will undoubtedly occur cases which are not resolved by these rules. As the Bell Report said, "[Conflict of Interest] arises in several forms--not all of which are by any means yet fully understood." In order to assist in deciding what, if any, prohibitions should be applied in such instances, the two basic principles of this code-(1) preventing conflicting roles which might bias a contractor's judgment, and (2) preventing unfair competitive advantage--should be paramount. The following rules and examples are not all inclusive but merely attempt to achieve these two goals in a variety of situations. The ultimate test should always be: Is the contractor placed in a position where his judgment may be biased, or where he has an unfair competitive advantage? If so, corrective action must be taken in accordance with the rules below. As used in these rules, "contractor" means the person under contract to NASA to perform the work described in each rule, and its affiliates; "system" means system, subsystem, project or item. The term "systems engineering" includes a combination of substantially all the following activities: determination of specifications, identification and solution of interfaces between parts of the system, development of test requirements or plans and evaluation of test data, and supervision of design work. The term "technical direction" includes a combination of substantially all the following activities: preparation of work statements for contractors, determination of parameters, direction of contractors' operations, and resolution of technical controversies. 1. If a contractor agrees to provide systems engineering and technical direction (SE/TD) for a system, without at the same time assuming overall contractual responsibility for: (a) *These Rules are identical to those issued by the Department of Defense in DOD Directive 5500.10 on June 1, 1963, except for the words "Department of Defense" in order to make the guidelines applicable to NASA. NASA MANAGEMENT INSTRUCTION 5101.19, DATED JULY 1, 1968 ATTACHMENT A NMI 5101.19 July 1, 1968 development, or (b) integration, assembly and checkout (IAC), or (c) production of the system, then that contractor shall not later be allowed to supply the system or any major components thereof, or to be a subcontractor or consultant to a supplier of the system or any major components thereof. Explanation: The SE/TD contractor occupies a highly influential and responsible position both in determining basic concepts of a system and in supervising their execution by other contractors. To assure the objectivity of its services and hence a more soundly planned system, the SE/TD contractor must not be in a position to make decisions which could favor its own products. Furthermore, it would be inconsistent with the managerial responsibility of an SE/TD contractor for it to be concurrently one of the component suppliers. Example A: Company A agrees to provide SE/TD for NASA on a manned re-entry vehicle for a group of launch vehicles. Company A shall not be allowed to supply any components of the re-entry vehicle. Company A can, however, supply components of the launch vehicle unrelated to the re-entry vehicle. In this example, the system is the manned re-entry vehicle, not the launch vehicle, and the ban on the supply of components is coterminous with the system only. Example B: Company A is the SE/TD contractor for system X. After some progress, but prior to completion, the system is canceled. Later, system Y is developed to achieve the same purposes as system X, but in a fundamentally different fashion. Company B is the SE/TD contractor for system Y. Company A may bid to produce system Y or its components. 2. If a contractor agrees to prepare and furnish complete specifications covering nondevelopmental items to be used in competitive procurement, that contractor shall not be allowed to furnish such items, either as a prime or subcontractor, for a reasonable period of time including, at least, the initial procurement. This rule shall not apply to: a. Contractors who furnish at Government request specifications or data with respect to the product they furnished, even though the specifications or data may have been paid for separately or in the price of the product. b. Situations where one or more contractors acting as industry representatives assist NASA in preparing, refining or 2 NASA MANAGEMENT INSTRUCTION 5101.19, DATED JULY 1, 1968 July 1, 1968 ATTACHMENT A coordinating specifications, regardless of source, which assistance is supervised and controlled by Government representatives. c. Contracts for developmental or prototype items. Explanation: If a single contractor is engaged by the Government to draft complete specifications for nondevelopmental equipment, he should be eliminated for a reasonable time from competition for production based on the specifications. This should be done in order to avoid a situation where he could draft specifications which would favor his own products or capabilities. In this way the Government can be assured of getting unbiased advice as to the content of its specifications and can avoid allegations of favoritism in the award of production contracts. In development work it is normal to select firms which have done the most advanced work in the field. It is to be expected that these firms will design and develop around their own prior knowledge. Development contractors can frequently start production earlier and more knowledgeably than firms which did not participate in the development, and this affects the time and quality of production, both of which are important to the Government. In many instances the Government may have financed such development. Thus, the development contractor may have an unavoidable competitive advantage which is not considered unfair and no prohibition should be imposed. In instances of cooperation between industry and NASA to prepare, refine or coordinate specifications, there is continuous participation and supervision by Government representatives and, usually, more than one contractor concerned. In these circumstances Government supervision prevents the establishment of specifications oriented to favor a given contractor's products or capabilities. Example A: Company A prepares updated Government specifications for a standard compressor to be procured competitively. Company A shall not be allowed for a reasonable period of time to compete for supply of the compressor. Example B: Company A designs or develops a new electronic equipment and, as a result of the design or development, prepares specifications. Company A may supply the electronics equipment. 3 NASA MANAGEMENT INSTRUCTION 5101.19, DATED JULY 1, 1968 ATTACHMENT A NMI 5101.19 July 1, 1968 Example C: XYZ Tool Company and/or KLM Machinery Company representing the American Tool Institute work under the supervision and control of Government representatives to refine specifications or to clarify the requirements of a specific procurement. These companies may supply the item. 3. If a single contractor, other than a company which has participated in the development or design of a system, agrees to assist NASA or a contractor of NASA in the preparation of a statement of work, or agrees to provide material leading directly, predictably, and without delay to a statement of work, to be used in the competitive procurement of a system or services, that contractor shall not be allowed to supply the services, or the system or major components thereof, unless he is the sole s.. The content of a statement of work shall not be considered predictable if more than one contractor is involved in the preparation of material leading to it. Explanation: The various services related to a statement of work to be used in a competitive procurement should normally be performed by the Government. However, when it is necessary to seek the assistance of contractors, they may often be in a position to favor their own products or capabilities. To overcome this possibility of bias, such contractors are to be prohibiteċ from supplying a system or services procured on the basis of work statements growing out of their services. No prohibitions are imposed on development contractors for the reasons given in the explanation to rule 2. Example A: Company A receives a contract to define the detailed performance characteristics for the purchase of rocket fuels. A has not developed the particular fuels. At the time the contract is awarded, it is clear to both parties that the performance characteristics arrived at will be used to choose competitively a contractor to develop or produce the fuels. Company A shall not be permitted to bid on this procurement. Example B: Company A receives a contract to prepare a detailed plan for the procurement of services aimed at the advanced scientific and engineering training of NASA personnel. It suggests a curriculum which NASA endorses and incorporates in requests for proposals to various institutions to establish and conduct such training. Company A shall not be permitted to bid on this procurement. 4 NASA MANAGEMENT INSTRUCTION 5101.19, DATED JULY 1, 1968 July 1, 1968 ATTACHMENT A NMI 5101.19 Example C: Company A prepares a feasibility study of a new spacecraft without proposing in detail the characteristics of a possible final device. It may offer to produce the spacecraft or components thereof. 4. If a contractor agrees to conduct studies or provide advice concerning a system, which work requires access to proprietary data of other companies, the contractor must agree with such companies to protect such data from unauthorized use or disclosure so long as it remains proprietary. In addition, the contractor shall not be permitted to utilize the data in supplying the system, or components thereof, procured, either by formal advertising or negotiation, as a direct result of that study or advice, or in performing for NASA additional studies in the same field which are obtained competitively. Explanation: Proprietary data is information considered so valuable by its owners that it is held secret by them and their licensees. Where a contractor must obtain such data from others for purposes of the study, and can obtain it by the leverage of the NASA contract, he will gain an advantage over other companies unless there are restrictions upon his use of the data. Such restrictions are necessary both to protect the data and to encourage companies to furnish it to contractors for the necessary performance of the NASA contract. The rule is not intended to protect proprietary data furnished voluntarily by companies without limitations as to use or data which falls into the public domain. Example A: Company A is selected to study the use of lasers in communications. NASA will request that firms doing research in the field make proprietary data available to A. In order to receive the contract, A must agree with such firms to protect any proprietary data it obtains, so long as it remains proprietary, and shall not be permitted to utilize the data in supplying any lasers to the Government. Furthermore, while A could not receive a competitively awarded contract to perform additional studies of lasers using such data, it may receive a sole source contract for such studies. 5 |