FAR 3.1106—Contract clause.
Plain-English Summary
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.
Key Rules
Insert the PCI clause
The contracting officer must insert FAR 52.203-16, Preventing Personal Conflicts of Interest, in solicitations and contracts that exceed the simplified acquisition threshold and include covered acquisition-function services performed by contractor employees.
Covered services trigger
The clause is required only when the contract includes services by contractor employee(s) involving acquisition functions closely associated with inherently governmental functions for, or on behalf of, a Federal agency or department. If the work does not involve those functions, this section does not require the clause.
Limit clause to covered portion
If only part of the contract involves covered acquisition functions, the contracting officer must still include the clause, but its applicability must be limited to that specific portion of the work. The clause should not be applied more broadly than the sensitive services actually being performed.
No clause for self-employed individuals
Do not insert the clause in solicitations or contracts with a self-employed individual when the covered acquisition functions will be performed entirely by that individual, rather than by an employee of a contractor.
Responsibilities
Contracting Officer
Determine whether the acquisition exceeds the simplified acquisition threshold and whether the statement of work includes covered acquisition functions. Insert FAR 52.203-16 when required, limit its applicability to only the covered portion of the contract when appropriate, and omit it for qualifying self-employed individuals.
Contractor
When the clause is included, ensure contractor employees performing covered acquisition functions comply with the personal conflict of interest requirements imposed by the clause and manage staffing and oversight accordingly.
Self-Employed Individual
If performing the covered acquisition functions personally, the individual is outside the clause insertion requirement under this section; however, the individual must still perform the work consistent with any other applicable contract terms and ethics-related requirements.
Agency/Department
Identify acquisition support requirements that involve functions closely associated with inherently governmental functions and ensure contracting personnel apply the clause requirement consistently in covered procurements.
Practical Implications
This section is a threshold-and-scope rule: both the dollar threshold and the nature of the services must be checked before adding the clause.
A common mistake is inserting the clause into every services contract without confirming that the work actually involves covered acquisition functions.
For mixed contracts, the clause should be tailored to the covered portion only; overbroad application can create unnecessary compliance burden and confusion.
Contractors should pay close attention to staffing arrangements, because the rule turns on contractor employees versus a self-employed individual performing the work personally.
Because the clause addresses personal conflicts of interest in sensitive acquisition support, contracting officers should coordinate early with program and acquisition personnel to identify covered work before award.
Official Regulatory Text
(a) Insert the clause at 52.203-16 , Preventing Personal Conflicts of Interest, in solicitations and contracts that- (1) Exceed the simplified acquisition threshold; and (2) Include a requirement for services by contractor employee(s) that involve performance of acquisition functions closely associated with inherently governmental functions for, or on behalf of, a Federal agency or department. (b) If only a portion of a contract is for the performance of acquisition functions closely associated with inherently governmental functions, then the contracting officer shall still insert the clause, but shall limit applicability of the clause to that portion of the contract that is for the performance of such services. (c) Do not insert the clause in solicitations or contracts with a self-employed individual if the acquisition functions closely associated with inherently governmental functions are to be performed entirely by the self-employed individual, rather than an employee of the contractor.