FAR 9.508—Examples.
Plain-English Summary
FAR 9.508 provides illustrative examples of organizational conflicts of interest (OCI) to help contracting officers apply the general OCI principles in FAR 9.505 to real procurements. The examples show when a contractor that helps define requirements, prepare specifications, develop systems, or provide technical direction may be restricted from later competing for or performing follow-on work. They also explain the difference between a prohibited conflict and a permissible one, such as when the contractor’s work is limited to a specific system rather than an entire platform, or when the contractor developed the item and then also supplies it. The section covers systems engineering and technical direction, specification development, follow-on production or hardware buys, development contracts, government-supervised specification refinement, training curriculum development, protection of proprietary information, and regulatory or licensing systems where a contractor may later be barred from consulting for applicants. In practice, these examples help agencies decide whether to exclude a contractor from a competition, impose use restrictions, require protective agreements, or prohibit certain outside consulting activities to preserve fairness, avoid biased ground rules, and protect sensitive information.
Key Rules
Examples are illustrative only
The scenarios in paragraphs (a) through (i) are not exhaustive. Contracting officers must use them as guidance when applying the broader OCI rules in FAR 9.505 to the facts of a particular acquisition.
System-level work can bar related supply
A contractor providing systems engineering or technical direction for a specific system may be barred from supplying components of that system, but not necessarily unrelated components of a larger platform. The restriction is tied to the system the contractor helped shape, not automatically to the entire end item.
Successor systems may be allowed
If a prior system is canceled and a later system is developed to achieve the same purpose in a fundamentally different way, the earlier systems engineering contractor may compete for the later system or its components. The key issue is whether the later effort is truly distinct from the earlier one.
Developers may also supply what they created
A contractor that develops equipment and prepares the specifications for that equipment is not automatically barred from supplying the equipment. Development work alone does not create a disqualifying OCI if the contractor is simply selling the item it developed.
Government-supervised specification refinement may be permissible
Industry participants working under government supervision to refine or clarify specifications for a specific acquisition may still be allowed to supply the item. The presence of government control and the limited purpose of the work reduce OCI concerns.
Ground rules work can require exclusion
If a contractor prepares specifications or performance criteria that become the basis for selecting commercial hardware or other follow-on work, the contractor may have to be excluded from the initial follow-on acquisition. This prevents the contractor from competing on requirements it helped write.
Definition contracts can bar follow-on production
A contractor hired to define detailed performance characteristics for a future procurement may be prohibited from receiving the follow-on contract when it is clear the agency will use those characteristics to select a developer or producer. The conflict arises because the contractor influenced the competitive basis for the later buy.
Training curriculum development can bar training performance
A contractor that designs a training plan or curriculum that the agency adopts for an RFP may be barred from later competing to conduct the training. The contractor would otherwise have an unfair advantage in shaping the requirements for the service it wants to perform.
Protect proprietary information with agreements
When a contractor receives proprietary information from third parties to perform a study or similar effort, the contract must require protective agreements and limit use of the information. The contractor may not use that information for its own benefit or for unrelated Government work.
Regulatory or licensing support may require post-performance limits
A contractor helping an agency develop a system for evaluating or processing license applications may be prohibited from consulting for applicants during performance and for a reasonable period afterward. This prevents the contractor from using inside knowledge or influence to benefit regulated parties.
Responsibilities
Contracting Officer
Identify OCI risks using these examples as guidance, determine whether the contractor should be excluded from a follow-on procurement, and tailor contract restrictions, protective clauses, or post-performance limitations to the specific facts.
Contractor
Avoid competing for work that it helped define when the OCI rules make that improper, comply with any required protective agreements, and refrain from using proprietary or source-selection-related information for unauthorized purposes.
Agency
Structure procurements to prevent unfair competitive advantage, ensure contractors protecting sensitive or proprietary information are bound by enforceable restrictions, and impose reasonable post-performance limits where contractor involvement in regulatory or licensing processes creates risk.
Government-supervised industry participants
When helping refine specifications under Government control, work only within the authorized scope and recognize that the ability to supply the item depends on the specific facts and the degree of influence over the acquisition.
Practical Implications
These examples are often used to decide whether a contractor must be excluded from a competition, so early OCI screening is critical before award.
The biggest pitfall is treating all prior involvement as disqualifying; the real question is whether the contractor helped shape the exact requirement or source-selection basis for the later buy.
Contractors should watch for situations where they write specifications, performance criteria, training curricula, or evaluation processes and then want to bid on the resulting work.
Agencies should use clear contract language for proprietary data protection and post-performance restrictions, especially in studies, advisory work, and regulated-industry support.
Contracting officers should document why a situation is or is not an OCI, because these examples are fact-specific and often turn on the scope of the system, the degree of government control, and whether the later procurement is truly the same effort or a fundamentally different one.
Official Regulatory Text
The examples in paragraphs (a) through (i) of this section illustrate situations in which questions concerning organizational conflicts of interest may arise. They are not all inclusive, but are intended to help the contracting officer apply the general rules in 9.505 to individual contract situations. (a) Company A agrees to provide systems engineering and technical direction for the Navy on the powerplant for a group of submarines ( i.e., turbines, drive shafts, propellers, etc.). Company A should not be allowed to supply any powerplant components. Company A can, however, supply components of the submarine unrelated to the powerplant ( e.g., fire control, navigation, etc.). In this example, the system is the powerplant, not the submarine, and the ban on supplying components is limited to those for the system only. (b) Company A is the systems engineering and technical direction contractor for system X. After some progress, but before completion, the system is canceled. Later, system Y is developed to achieve the same purposes as system X, but in a fundamentally different fashion. Company B is the systems engineering and technical direction contractor for system Y. Company A may supply system Y or its components. (c) Company A develops new electronic equipment and, as a result of this development, prepares specifications. Company A may supply the equipment. (d) XYZ Tool Company and PQR Machinery Company, representing the American Tool Institute, work under Government supervision and control to refine specifications or to clarify the requirements of a specific acquisition. These companies may supply the item. (e) Before an acquisition for information technology is conducted, Company A is awarded a contract to prepare data system specifications and equipment performance criteria to be used as the basis for the equipment competition. Since the specifications are the basis for selection of commercial hardware, a potential conflict of interest exists. Company A should be excluded from the initial follow-on information technology hardware acquisition. (f) Company A receives a contract to define the detailed performance characteristics an agency will require for purchasing rocket fuels. Company A has not developed the particular fuels. When the definition contract is awarded, it is clear to both parties that the agency will use the performance characteristics arrived at to choose competitively a contractor to develop or produce the fuels. Company A may not be awarded this follow-on contract. (g) Company A receives a contract to prepare a detailed plan for scientific and technical training of an agency’s personnel. It suggests a curriculum that the agency endorses and incorporates in its request for proposals to institutions to establish and conduct the training. Company A may not be awarded a contract to conduct the training. (h) Company A is selected to study the use of lasers in communications. The agency intends to ask that firms doing research in the field make proprietary information available to Company A. The contract must require Company A to- (1) Enter into agreements with these firms to protect any proprietary information they provide; and (2) Refrain from using the information in supplying lasers to the Government or for any purpose other than that for which it was intended. (i) An agency that regulates an industry wishes to develop a system for evaluating and processing license applications. Contractor X helps develop the system and process the applications. Contractor X should be prohibited from acting as a consultant to any of the applicants during its period of performance and for a reasonable period thereafter.