HomeResourcesAudit Database Project Compliance RecommendationsInternal Control and Anti-CorruptionSubcontractor Had a Conflict of Interest - FAR Subpart 9.5 Organizational and Consultant Conflicts of Interest - Contract Information Bulletin 99-17

Subcontractor Had a Conflict of Interest - FAR Subpart 9.5 Organizational and Consultant Conflicts of Interest - Contract Information Bulletin 99-17

Federal Acquisition Regulations (FAR) Subpart 9.5 Organizational and Consultant Conflicts of Interest prescribes responsibilities, general rules, and procedures for identifying, evaluating, and resolving organizational conflicts of interest.

FAR 9.504(a) provides that the contracting officer is to identify potential conflicts of interest as early in the acquisition process as possible and is to avoid, neutralize, or mitigate significant conflicts before contract award. Also, Contract Information Bulletin 99-17 precludes a contractor from furnishing implementation services, as the prime or subcontractor, when the contractor has a substantial role in the design of an activity under contract with USAID by providing USAID with “material leading directly, predictably, and without delay” to a work statement for the implementation of the activity, subject to some exceptions.

Owner of a subcontractor employed by the project had an organizational conflict of interest with the project. At the time of employment the individual was an owner and manager of a dairy producer (the subcontractor). Contractor and this individual informally agreed that subcontractor would turn over the dairy business to an “arms-length manager,” but employee did not reveal to the contractor that the new manager was in fact the brother of the employee.

General Recommendations

  • Require contractors and subcontractors’ senior technical and management personnel involved with selecting beneficiaries to sign conflict of interest statements.
  • Require contractor to establish and implement procedures with regard to the selection of beneficiaries to minimize the risk of other conflicts of interest.

SOURCE: AUDIT REPORT NO. 7-685-11-006-P MARCH 31, 2011

The recommendations are derived from audit reports of the Office of the Inspector General. The source refers to the audit report, which is available on this site as part of the Audit Database Project: an educational tool for compliance with USAID regulations.  Please see the disclaimer of this site before using recommendations.

Tags: Internal Control Anti-Corruption

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