Overview
FAR 3.601 establishes a general prohibition against awarding government contracts to federal employees or business entities they own or control. This policy is designed to maintain public trust by preventing conflicts of interest and eliminating the appearance of favoritism or preferential treatment in the procurement process.
Key Rules
- General Prohibition: Contracting officers are prohibited from knowingly awarding contracts to Government employees or organizations substantially owned or controlled by them.
- Purpose: The rule specifically targets the mitigation of conflicts between an employee's private interests and their official Government duties.
- Special Government Employees (SGEs): Individuals serving as experts, advisors, or consultants (under 18 U.S.C. 202) are generally excluded from this prohibition.
- SGE Exceptions: An SGE is treated as a Government employee (and thus barred from awards) if:
- The contract stems directly from their specific activities as an SGE;
- They are in a position to influence the contract award; or
- A separate conflict of interest is identified.
Practical Implications
- Contracting officers must conduct due diligence and rely on contractor representations to ensure that no prohibited ownership or control exists before making an award.
- Firms employing federal consultants or "special" employees must carefully wall off those individuals from any procurement actions related to their government service to avoid disqualification.