PAKISTAN

CONFLICTS OF INTEREST

Nadeem Shah, Office of Acquisition & AssistancePriya Cariappa, Resident Legal Officer

PAKISTAN

Overview

• USAID’s Office of Acquisitions and Assistance (OAA)• Contracting/Agreement Officers and Representatives• Organizational Conflict of Interest (OCI)• Individual Conflict of Interest (ICI)• Scenarios and questions

PAKISTAN

Office of Acquisition and Assistance

• Negotiates, awards, and administers contracts and grants.• Protects U.S. Government (USG) interests and resources.• Supports the delivery of foreign assistance.• Facilitates contractor and recipient (Partner) compliance

with the terms of an award.

PAKISTAN

Roles and Responsibilities: CO/AO & COR/AOR

CO/AOIdentifies and evaluates potential organizational conflicts of interest early in the acquisition process.Works with the Partner to avoid, neutralize, or mitigate potential conflicts.COR/AORServes as the primary point of contact with Partner.Abides by the standards of conduct as explained in the COR/AOR Designation letter.

PAKISTAN

Organizational Conflict of Interest (OCI)

“Organizational conflict of interest” (OCI) means that because of other activities or relationships with other persons, a person is unable or potentially unable to render impartial assistance or advice to the Government, or the person’s objectivity in performing the contract work is or might be otherwise impaired, or a person has an unfair competitive advantage (FAR 2.101)

PAKISTAN

Whose responsibility are OCIs?• FAR 9.504(a): “. . . contracting officers shall analyze planned

acquisitions in order to— (1) Identify and evaluate potential organizational conflicts of interest as early in the acquisition process as possible; and (2) Avoid, neutralize, or mitigate significant potential conflicts before contract award.

• FAR 9.504(b): “Contracting officers should obtain the advice of counsel and the assistance of appropriate technical specialists in evaluating potential conflicts and in developing any necessary solicitation provisions and contract clauses.”

• ADS 202.3.9.1 requires Contracting and Agreement  Officers to identify and evaluate potential OCI problems during the acquisition and assistance process. 

PAKISTAN

Types of OCIs

• Unequal Access to Information: occurs when access to nonpublic information and where information provide unfair competitive advantage in later competition for a government contract (FAR 9.505-4)

• Impaired Objectivity: occurs when work under one government contract could entail self evaluation (FAR 9.505-3)

• Biased Ground rules: occurs when an implementing partner (IP) has in some sense set ground rules for another government contract (FAR 9.505-1 & 2)

PAKISTAN

Imputation of OCI• OCIs may be imputed in some cases.

• For example, a prime contractor may be charged with the knowledge of a subcontractor for purposes of OCI analysis.

• Similarly, an individual’s knowledge or actions may be imputed to the parent entity.

PAKISTAN

Individual Conflict of Interest (ICI)

• United States Government (USG) employees are held to strict statutory requirements – for example, circulating resumes, accepting gifts or making financial investments

• Implementing partners are required to adopt standards of business conduct that contain some of the same restrictions applicable to USG employees

PAKISTAN

Types of ICI

• Apparent ICI: gives the “appearance” of a ICI although one might not exist. However, as a best practice, organizations must remedy even the appearance of a ICI to avoid negative perceptions.

• Actual ICI : refers to the actual existence of a ICI.

PAKISTAN

Common ICI Examples and Indicators• Unexplained or unusual favoritism toward a particular

vendor.

• Relatives of an employee work for the organization.

• Continued acceptance of high priced, but low quality services or supplies.

PAKISTAN

Detection and Prevention Possibilities

• Internal Controls– Implement procedures to screen employees and obtain

financial disclosure statements.– Train employees in accordance with organizational

policies to prevent, avoid, and disclose conflicts.– Implement a conflict avoidance plan.

• Corporate Culture– Tone from the top: organizational leaders must promote

integrity and transparency,

PAKISTAN

Present Responsibility

Present Responsibility: failure to act appropriately may indicate a lack of business integrity.• Going forward, can the partner be trusted to adhere to

award terms, comply with laws and regulations, and conduct themselves ethically?

• Some factors considered in assessing responsibility:Standards of conductVoluntary disclosureInternal investigationFull cooperationPaid costsDisciplined employee

Remedial ActionsEthics trainingAdequate amount of timeManagement recognition of issue

Consider: What steps has a partner taken to identify, resolve, and prevent problems?

PAKISTAN

Scenario 1

During the course of a contract for information technology, Contractor A (the awardee) receives a SOW from Contractor B to prepare data system specifications and equipment performance criteria. The SOW is used as the basis for the equipment competition.

A subcontract is issued to Contractor B. Does a potential conflict of interest exist? Should Contractor B be excluded from the information technology hardware acquisition.

PAKISTAN

Scenario 2

Shiraz serves as the lead Procurement Officer for a large USAID contractor for a substantial energy contract. He has 20 years of experience and an excellent reputation. Unfortunately, work has overwhelmed him. As a result, he delegated some small procurements to junior procurement staff. Recently, Shiraz realized that this staff purchased 30,000 pounds of fuel in 6,000 pound increments from a trusted vendor without competition. However, the contractor’s procurement policy requires competition for any purchase that exceeds 5,000 pounds. What should he do?

PAKISTAN

Scenario 3

Humaira runs a disaster relief organization in Balochistan. After a particularly severe earthquake, Humaira received a sudden influx of donor funds to work with people in rural areas severely impacted by the earthquake. Humaira disburses funds through not-for-profit organizations in small increments, which in turn provide food, water, clothing, and blankets to the victims. She hires five individuals to monitor the distribution of these funds by the not-for-profit organizations. What did Humaira do right? What can go wrong?

PAKISTAN

Scenario 4

Sara recently started working as the Human Resources (HR) Director for the Cooperation of Rural Organizations Overlooking Karachi, an NGO that provides counsel to microfinance institutions (MFIs) in the rural areas of Sindh province. While in Islamabad, Sara met with Sumaira, the USAID AOR, and someone very well known in Sindh. Sumaira indicated that Sara should hire her cousin for the Deputy Chief of Party position. Sumaira’s cousin has ten years of experience working with MFIs in Sindh. What should Sara do?

PAKISTAN

Certain Applicable Contract Clauses

• FAR § 52.203-13: CONTRACTOR CODE OF BUSINESS ETHICS AND CONDUCT

• AIDAR 752.209-71: ORGANIZATIONAL CONFLICTS OF INTEREST DISCOVERED AFTER AWARD

PAKISTAN

QUESTIONS?