Peters, Grassley, Hassan, and Ernst Press For Action on Rulemaking to Address Federal Contracting Conflicts of Interests after Missed Deadline ➞

Senators Authored 2022 Bipartisan Law to Address Reported Conflicts of Interest Between Taxpayer-Funded Projects and Contractors' Other Work

WASHINGTON, D.C. - U.S. Senator Gary Peters (D-MI), Chairman of the Homeland Security and Governmental Affairs Committee, Chuck Grassley (R-IA), Maggie Hassan (D-NH), and Joni Ernst (R-IA) are urging the Federal Acquisition Regulatory (FAR) Council to issue a rulemaking to prevent conflicts of interest in government contracting after missing its deadline by more than three months. In a letter to the Federal Acquisition Regulatory (FAR) Council, the senators called on the Council to quickly issue updated procurement rules required under thePreventing Organizational Conflicts of Interest in Federal Acquisition Act, which the senators authored and passed into law in 2022. The new guidance required by the senators' law will ensure taxpayer dollars are being used to carry out government contracts that are in the best interest of the American people by addressing potential concerns about the reliability of consultations, advice, or projects when contractors are also working with the private sector. On Tuesday, Peters will hold a hearing to examine how conflicts of interest in federal contracting could lead to potential national security threats.

"Recently, examples of organizational conflicts of interest have come to light where U.S contractors were also advising foreign adversaries or had provided services to foreign governments and were stuck in situations where requirements under U.S. and foreign laws conflicted," wrote the senators. "Additionally, U.S. contractors were found to have been working with regulatory agencies while also working for the regulated entity. Other potential conflicts exist where U.S.-based technology service providers working for foreign adversaries while performing multibillion dollar contracts for the U.S. government risk exposing-or being coerced to expose-vulnerabilities in services provided to the U.S. government. Further guidance and reforms are needed expeditiously, as directed by the law, to ensure that these types of conflicts do not occur."

The senators continued: "We support the FAR Council's commitment to addressing complex federal acquisition issues, ensuring that the government spends money wisely and eliminates waste and abuse of taxpayer dollars. In fiscal year 2023, the federal government obligated more than $750 billion dollars through federal contracts. The federal government must ensure that contracts are awarded in the best interests of the American people. Contractors who have the opportunity to do business with the federal government must support the American people without bias or compromise and must not jeopardize America's national security.

As Chairman of the Homeland Security and Governmental Affairs Committee, Peters has worked to increase transparency in federal contracting and ensure the government is working in the best interest of the American people. Last year, Peters, in coordination with U.S. Senator Josh Hawley, called on the U.S. Government Accountability Office (GAO) to examine the issue of potential security risks posed by consulting firms, and its report was issued last week. Peters also cosponsored legislation to avert possible conflicts of interest on the part of firms who consult with U.S. federal agencies and adversarial foreign governments.

The text of the letter is copied below and available here.

Dear Chair Harada,

We write to you today to urge swift implementation of the Preventing Organizational Conflicts of Interest in Federal Acquisition Act, which was signed into law on December 27, 2022. We are proud to have worked in a bipartisan, bicameral manner to author and advance this law in response to reports that have highlighted the need to prevent conflicts of interest within companies that are awarded federal contracts. The law, when implemented, will provide transparency before federal contractors are awarded contracts with taxpayer dollars, and ensure contractors are working in the interest of the American people.

Specifically, the law directs the Federal Acquisition Regulatory (FAR) Council to revise the Federal Acquisition Regulation within eighteen months of enactment with definitions, guidance, and illustrative examples related to relationships of contractors with public, private, domestic, and foreign entities that may cause contract support to be subject to potential organizational conflicts of interest, including undue influence. The law also requires the FAR Council to provide executive agencies with solicitation provisions and contract clauses to avoid or mitigate organizational conflicts of interest. The deadline for the FAR Council to revise the Federal Acquisition Regulation with these updates was June 27, 2023. That deadline has now passed without a notice of proposed rulemaking being issued by the Council related to these revisions.

Recently, examples of organizational conflicts of interest have come to light where U.S contractors were also advising foreign adversaries or had provided services to foreign governments and were stuck in situations where requirements under U.S. and foreign laws conflicted. Additionally, U.S. contractors were found to have been working with regulatory agencies while also working for the regulated entity. Other potential conflicts exist where U.S.- based technology service providers working for foreign adversaries while performing multibillion dollar contracts for the U.S. government risk exposing-or being coerced to expose-vulnerabilities in services provided to the U.S. government. Further guidance and reforms are needed expeditiously, as directed by the law, to ensure that these types of conflicts do not occur.

We support the FAR Council's commitment to addressing complex federal acquisition issues, ensuring that the government spends money wisely and eliminates waste and abuse of taxpayer dollars. In fiscal year 2023, the federal government obligated more than $750 billion dollars through federal contracts. The federal government must ensure that contracts are awarded in the best interests of the American people. Contractors who have the opportunity to do business with the federal government must support the American people without bias or compromise and must not jeopardize America's national security.

Accordingly, for Congress to conduct independent oversight, no later than October 7, please provide the status and timeline of next steps to implement this law. Additionally, please provide records showing the steps the FAR Council has already taken to implement the law. If no steps have been taken, why not? Finally, please explain in detail the reason the FAR Council did not finalize the rulemaking necessary to implement this law in June as was required. I look forward to continuing to work with you to ensure the government spends money wisely and eliminates waste and abuse of taxpayer dollars.

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