FAR 3.1101—Definitions.
Plain-English Summary
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.
Key Rules
Sensitive acquisition support
The term covers contractor support or advice tied to acquisition activities that are closely associated with inherently governmental functions. The listed activities include acquisition planning, requirements development, drafting or approving contract documents, proposal evaluation, contract award, contract administration, termination, and cost reasonableness determinations.
Covered employee scope
A covered employee is an individual performing one of these sensitive acquisition functions who is either a contractor employee or a self-employed subcontractor treated as a covered employee because there is no employer to receive required disclosures. The definition is intentionally broad enough to capture the people whose work could influence Government decisions.
Personal conflict standard
A personal conflict of interest exists when a covered employee has a financial interest, personal activity, or relationship that could impair impartiality or the ability to act in the Government’s best interest. The standard focuses on whether the interest could affect judgment, not just whether an actual improper decision has already occurred.
De minimis exception
Very small interests that would not impair impartiality are not treated as personal conflicts of interest. This means not every minor or remote interest triggers the subpart, but the interest must truly be insignificant and not reasonably capable of affecting the employee’s judgment.
Sources of conflicts
The rule identifies common conflict sources, including financial interests of the employee, close family members, or household members; outside employment or financial relationships; job-seeking or negotiating for future employment; and gifts, including travel. These are examples, not an exhaustive list, so other comparable relationships may also create a conflict.
Examples of financial interests
Financial interests can arise from compensation, consulting, expert witness work, honoraria, research funding, stock or bond ownership, partnership interests, real estate, patents and copyrights, and business ownership or investment interests. Diversified mutual fund investments are excluded from the listed investment examples.
Responsibilities
Contractor
Identify whether employees or subcontractor personnel will perform acquisition functions closely associated with inherently governmental functions, screen those individuals for personal conflicts of interest, and ensure disclosures and controls are in place before and during performance.
Covered employee
Disclose financial interests, outside relationships, job-seeking activity, gifts, and other circumstances that could impair impartiality, and avoid participating in work where a personal conflict of interest exists unless the conflict is addressed under applicable contract requirements.
Subcontractor
When a self-employed individual is performing covered work, treat that person as a covered employee for disclosure and conflict purposes and ensure the required information can be provided even though there is no separate employer to receive it.
Contracting Officer
Use these definitions to determine whether contract work falls within the subpart, require appropriate conflict-of-interest protections in the contract, and monitor whether the contractor’s personnel performing sensitive acquisition support are properly identified and controlled.
Agency
Apply the definitions consistently when planning, awarding, and administering contracts for acquisition support services, and ensure the agency’s oversight processes protect the integrity of inherently governmental decision-making.
Practical Implications
This section is the gateway to the rest of the personal conflict of interest rules: if the work is within the listed acquisition functions, conflict screening and disclosure requirements are likely to apply.
Contractors should not assume only direct decision-makers are covered; support roles such as drafting requirements, evaluating proposals, or advising on contract administration can also trigger coverage.
The conflict definition is broad and includes family, household, outside employment, future job prospects, gifts, and travel, so compliance programs need more than a simple financial-interest check.
Minor interests may be excluded, but contractors should document why an interest is de minimis rather than assuming it is harmless.
A common pitfall is overlooking self-employed subcontractors or consultants, who may still be treated as covered employees for disclosure purposes even without a traditional employer relationship.
Official Regulatory Text
As used in this subpart- Acquisition function closely associated with inherently governmental functions means supporting or providing advice or recommendations with regard to the following activities of a Federal agency: (1) Planning acquisitions. (2) Determining what supplies or services are to be acquired by the Government, including developing statements of work. (3) Developing or approving any contractual documents, to include documents defining requirements, incentive plans, and evaluation criteria. (4) Evaluating contract proposals. (5) Awarding Government contracts. (6) Administering contracts (including ordering changes or giving technical direction in contract performance or contract quantities, evaluating contractor performance, and accepting or rejecting contractor products or services). (7) Terminating contracts. (8) Determining whether contract costs are reasonable, allocable, and allowable. Covered employee means an individual who performs an acquisition function closely associated with inherently governmental functions and is- (1) An employee of the contractor; or (2) A subcontractor that is a self-employed individual treated as a covered employee of the contractor because there is no employer to whom such an individual could submit the required disclosures. Personal conflict of interest means a situation in which a covered employee has a financial interest, personal activity, or relationship that could impair the employee’s ability to act impartially and in the best interest of the Government when performing under the contract. (A de minimis interest that would not "impair the employee’s ability to act impartially and in the best interest of the Government" is not covered under this definition.) (1) Among the sources of personal conflicts of interest are- (i) Financial interests of the covered employee, of close family members, or of other members of the covered employee's household; (ii) Other employment or financial relationships (including seeking or negotiating for prospective employment or business); and (iii) Gifts, including travel. (2) For example, financial interests referred to in paragraph (1) of this definition may arise from- (i) Compensation, including wages, salaries, commissions, professional fees, or fees for business referrals; (ii) Consulting relationships (including commercial and professional consulting and service arrangements, scientific and technical advisory board memberships, or serving as an expert witness in litigation); (iii) Services provided in exchange for honorariums or travel expense reimbursements; (iv) Research funding or other forms of research support; (v) Investment in the form of stock or bond ownership or partnership interest (excluding diversified mutual fund investments); (vi) Real estate investments; (vii) Patents, copyrights, and other intellectual property interests; or (viii) Business ownership and investment interests.