FAR 3.1—Subpart 3.1

Standards of conduct.

[Reserved]

Independent pricing.

Procurement integrity.

Scope of subpart.

FAR 3.1000 is the scope statement for FAR subpart 3.10, and it tells readers exactly what this subpart is meant to do. It implements 41 U.S.C. 3509, which addresses notification of violations of Federal criminal law or overpayments, and it also sets the policy framework for contractor codes of business ethics and conduct and for displaying agency Office of Inspector General (OIG) fraud hotline posters. In practical terms, this means the subpart is not just about ethics in the abstract; it ties ethics requirements to reporting obligations, internal compliance expectations, and visible fraud-reporting information for employees and others working on federal contracts. For contractors, this section signals that the government expects an active ethics and compliance environment, not merely a written policy. For contracting officers and agencies, it establishes the basis for enforcing these ethics-related requirements and ensuring contractors are aware of the applicable standards and poster-display obligations.

Definitions.

FAR 3.1001 provides the definitions used in this subpart for three key terms: "subcontract," "subcontractor," and "United States." These definitions matter because they determine who is covered by the subpart’s requirements and how far those requirements reach in the supply chain. In practice, the definition of subcontract is broad: it includes any contract a subcontractor enters into to furnish supplies or services for performance of a prime contract or another subcontract. The definition of subcontractor is also broad and includes suppliers, distributors, vendors, and firms that provide supplies or services to or for a prime contractor or another subcontractor. The definition of United States establishes the geographic scope as the 50 States, the District of Columbia, and outlying areas, which is important when determining whether a transaction, entity, or activity falls within the subpart’s coverage. Together, these definitions are intended to remove ambiguity and ensure consistent application of the subpart’s rules across prime contracts, lower-tier subcontracts, and covered locations.

Policy.

FAR 3.1002 states the Government’s basic policy on contractor ethics and integrity. It covers the expectation that government contractors act with the highest degree of integrity and honesty, the recommendation that contractors maintain a written code of business ethics and conduct, and the related expectation that contractors establish an employee ethics and compliance training program and an internal control system. It also explains what those internal controls should accomplish: they must be appropriate to the company’s size and level of federal contracting, help detect and disclose improper conduct quickly, and ensure corrective action is taken promptly. In practice, this section is the policy foundation for contractor ethics programs and compliance systems, especially for companies doing significant federal business. It signals that ethics is not just a paper requirement; contractors are expected to build real processes that prevent, identify, report, and correct misconduct.

Requirements.

FAR 3.1003 explains the contractor ethics and disclosure requirements that support the Government’s anti-fraud and integrity policy. It covers when the mandatory contract clauses at 52.203-13, Contractor Code of Business Ethics and Conduct, and 52.203-14, Display of Hotline Poster(s), must be included; the contractor’s duty to disclose credible evidence of certain criminal and civil violations; the duty to repay significant overpayments; the Government’s suspension and debarment consequences for knowing failures to disclose; the contracting officer’s response when possible violations are reported; and the role of agency Offices of Inspector General (OIGs) in fraud hotline posters. It also addresses special poster requirements for contracts funded with disaster assistance funds when requested by the Department of Homeland Security. In practice, this section turns broad ethics policy into enforceable contract obligations and reporting duties, and it gives contracting officers and contractors a clear framework for identifying, disclosing, and escalating suspected fraud, conflicts of interest, bribery, gratuities, False Claims Act violations, and overpayments. The section matters because failure to disclose can lead not only to contract remedies but also to suspension and debarment, which can affect a contractor’s ability to do business with the Government across agencies.

Contract clauses.

FAR 3.1004 tells contracting officers when to include two mandatory ethics- and fraud-prevention clauses in solicitations and contracts: FAR 52.203-13, Contractor Code of Business Ethics and Conduct, and FAR 52.203-14, Display of Hotline Poster(s). It sets the dollar and performance-period threshold for the ethics clause, and it sets the conditions for using the hotline poster clause, including important exceptions for commercial products and commercial services and for work performed entirely outside the United States. It also explains how the contracting officer must tailor the hotline poster clause by identifying the applicable posters, adding the correct website links or contact information, and, when an agency has adopted a lower threshold for poster display, substituting that lower amount in the clause. In practice, this section ensures contractors receive notice of ethics, internal control, and fraud-reporting expectations, while giving agencies a mechanism to promote reporting of suspected fraud, waste, and abuse. For contracting officers, it is a clause-selection and clause-customization rule; for contractors, it is a compliance trigger that can affect internal ethics programs, poster display obligations, and contract administration.

Scope of subpart.

FAR 3.1100 is the scope statement for the personal conflict of interest subpart. It tells readers that this subpart exists to implement the statutory policy in 41 U.S.C. 2303 concerning personal conflicts of interest involving employees of Government contractors. In practical terms, it signals that the detailed rules in the rest of the subpart are aimed at preventing contractor personnel from using their Government work for private gain or allowing outside interests to influence their performance. The section itself is brief, but it is important because it defines the subject matter and legal basis for the entire subpart, which affects contractor ethics programs, employee screening, disclosure, training, and compliance controls. For contracting officers and contractors, this scope statement is the starting point for understanding when personal conflict-of-interest requirements may apply and why they matter in federal procurement.

Definitions.

FAR 3.1101 defines the core terms used in the subpart governing personal conflicts of interest for contractor personnel performing certain sensitive acquisition support work. It explains what counts as an "acquisition function closely associated with inherently governmental functions," identifies who is a "covered employee," and defines "personal conflict of interest" in practical terms. The section also lists the kinds of activities that create the highest risk because they involve planning acquisitions, defining requirements, drafting or approving contract documents, evaluating proposals, awarding contracts, administering contracts, terminating contracts, and determining cost reasonableness, allocability, and allowability. In addition, it explains that a covered employee may be a contractor employee or, in limited cases, a self-employed subcontractor treated as a covered employee because there is no employer to receive disclosures. The personal conflict definition is broad and includes financial interests, personal activities, and relationships that could impair impartiality, while excluding de minimis interests that would not affect judgment. The section further identifies common sources of conflicts, such as family or household financial interests, outside employment or job-seeking, gifts and travel, consulting and advisory roles, honoraria, research support, investments, real estate, intellectual property, and business ownership. In practice, this section sets the vocabulary for conflict screening, disclosure, mitigation, and oversight when contractors support acquisition decisions that must remain objective and in the Government’s best interest.

Policy.

FAR 3.1102 states the Government’s basic policy for contractor personal conflict-of-interest controls. It covers two related but distinct obligations: first, contractors must identify and prevent personal conflicts of interest involving their covered employees; second, contractors must prohibit covered employees who obtain nonpublic information through performance of a Government contract from using that information for personal gain. In practice, this policy is the foundation for contractor ethics and conflict-management programs under the personal conflict of interest rules in FAR subpart 3.11. It signals that the Government expects contractors to actively manage employee conflicts, not merely react after a problem occurs. The section matters because it protects the integrity of procurement decisions, reduces the risk of biased performance, and helps prevent misuse of sensitive Government information. For contractors, it means building screening, disclosure, training, and enforcement processes; for contracting officers and agencies, it provides the policy basis for requiring and evaluating contractor compliance measures.

Procedures.

FAR 3.1103 sets out the operating procedures for preventing personal conflicts of interest when contractor employees perform acquisition functions closely associated with inherently governmental functions. It explains what the contractor must do under the mandatory clause at 52.203-16, including screening covered employees, collecting and updating disclosures of financial interests, family interests, outside employment, prospective employment, gifts, and travel, and preventing employees from working on tasks where a conflict cannot be satisfactorily mitigated. It also requires contractors to prohibit misuse of non-public information, obtain signed nondisclosure agreements, inform employees of their obligations, maintain oversight, discipline noncompliance, and report violations to the contracting officer with corrective-action follow-up. The section then describes the contracting officer’s role when a violation is reported: review the contractor’s response, decide whether the violation has been satisfactorily resolved, and take further action with agency legal counsel if needed. In practice, this section is the day-to-day compliance framework for managing personal conflict risk in sensitive support contracts, and it is intended to protect procurement integrity, public trust, and the fairness of acquisition decisions.

Mitigation or waiver.

FAR 3.1104 explains the limited process for dealing with personal conflicts of interest when a contractor cannot fully prevent them under the clause at FAR 52.203-16, Preventing Personal Conflicts of Interest. It covers when a contractor may request relief, how that request must be routed through the contracting officer, what the head of the contracting activity (HCA) may do in response, the requirement for a written best-interest determination, and the fact that this authority cannot be redelegated. In practice, this section creates an exception process—not a routine workaround—for unusual situations where strict prevention is not feasible. It matters because it preserves the Government’s ability to use contractor support while still protecting procurement integrity, impartiality, and public trust. Contractors should read this as a narrow, high-level approval path, and contracting personnel should treat it as a controlled exception requiring careful documentation and senior-level judgment.

Violations.

FAR 3.1105 addresses what happens when a contracting officer suspects that a contractor has violated certain requirements of the clause at 52.203-16, Preventing Personal Conflicts of Interest. Specifically, it covers suspected violations of paragraph (b), paragraph (c)(3), or paragraph (d) of that clause and directs the contracting officer to seek advice from agency legal counsel. The section exists to ensure that potential personal conflict-of-interest issues are handled consistently, carefully, and with legal oversight rather than by ad hoc contracting action. In practice, this means the contracting officer does not independently decide the final response to a suspected violation; instead, the matter is elevated for legal review and recommended action. The provision is narrow but important because personal conflicts of interest can affect contractor employee objectivity, integrity of procurement support, and the fairness of federal decision-making. It helps protect the Government by ensuring suspected violations are evaluated promptly and through the proper internal channels.

Contract clause.

FAR 3.1106 tells contracting officers when they must include the clause at 52.203-16, Preventing Personal Conflicts of Interest, in solicitations and contracts. It applies only when the acquisition exceeds the simplified acquisition threshold and includes services by contractor employees that involve performance of acquisition functions closely associated with inherently governmental functions for, or on behalf of, a Federal agency or department. The section also addresses mixed contracts, where only part of the work involves those sensitive acquisition functions, and requires the clause to be limited to that portion of the contract. Finally, it creates an exception for self-employed individuals performing the work themselves, rather than through contractor employees. In practice, this section is about protecting the Government from personal conflicts of interest in sensitive acquisition support work and ensuring the clause is used only where the regulatory trigger is present.