1.  Screening of Covered Employees (Including Financial Disclosure)

Comments: More than half the respondents commented on this issue, and provided a variety of concerns and suggestions, which are addressed more specifically in the following response.

Response: In response to these comments, the Councils have narrowed the scope of the required disclosures in a number of ways. First, in response to concern that the word "including" in FAR 3.1103(a) created ambiguity, the Councils have substituted the word "by," to indicate that disclosure is the mandated screening mechanism. Next, in response to a wide variety of comments regarding the breadth of required disclosures, the Councils have made several revisions to FAR 3.1103(a)(1) to make it clear that contractors are afforded some flexibility in determining how to implement the screening requirement (i.e., one method of effective screening might require each covered employee to review a list of entities affected by the upcoming work and either disclose any conflict or confirm that he or she has none), and to allow that disclosures be limited to financial interests "that might be affected by the task to which the employee has been assigned." Finally, the Councils recognized that other potential sources of conflicts, including employment or gifts, should be covered by these procedures as well.

The Councils have also made changes in response to a number of respondents that noted inconsistencies and other concerns regarding updates to employee financial disclosures. These changes include ensuring that the language in FAR part 3 is consistent with the language in the clause, and that both require an update only when "an employee's personal or financial circumstances change in such a way that a new personal conflict of interest might occur because of the task the covered employee is performing." If it is the task that changes, rather than the financial circumstances, the situation will be covered by the requirement to obtain information from a covered employee "when the employee is initially assigned to the task under the contract." Implementing "as needed" disclosure addresses one respondent's concern about selling and repurchasing assets to avoid personal conflict of interest requirements, and also eliminates the need for disclosure on an annual basis.

Comments: In addition, several respondents addressed other areas related to the financial disclosure requirement. Several respondents were generally critical of the burden involved in the requirement to screen employees for conflicts of interest, arguing that it is short-sighted and "has an element of impossibility," or that it would be "onerous and unproductive" to require disclosure, for example, every time a covered employee's retirement portfolio, or that of his or her spouse, might include potential contractors. Other respondents stated that the financial disclosure requirement is intrusive, and would provide employers with "unprecedented insight into employee private financial data" that would give the employer leverage during negotiations about salary, benefits, and work conditions.

Response: The Councils carefully considered the comments that were critical of the burdensome or intrusive nature of the screening process involving financial disclosure, but have determined that the concerns expressed are outweighed by the importance of assuring the integrity of the Government's acquisition process.

Comments: Finally, two respondents recommended clarification of roles and responsibilities concerning the review of financial disclosure statements. One recommended that the rule should specify that contractors acting in good faith may rely on the information submitted by their employees or that the rule specify that review by the employee's supervisor and legal counsel or ethics officer is sufficient. The other recommended that the contractor should be required to designate an official to solicit and review financial disclosure statements, but also suggested that the Government's contracting officer should review the statements and be able to access the services of subject matter experts to assist with the review. The same respondent also suggested that the rule should require that the covered employee's submission "be accompanied by a certification as to the accuracy, completeness and truthfulness of the submission."

Response: The Councils consider that it is the contractor's responsibility to decide how to review employee disclosures. Government contracting officers have not been assigned the responsibility to review disclosures of financial interests. Further, there is a statutory prohibition on adding non-statutory certification requirements to the FAR without express written approval by the Administrator for Federal Procurement Policy (see FAR 1.107).