a.  Clarification of Contractor Liability

Comments: Two respondents expressed concern about the imposition of liability upon contractors, and suggested that an employer should only be sanctioned when it fails to address issues within its control, not as a guarantor of flawless performance by its employees in the area of personal conflicts of interest.

Response: A contractor should only be held liable for a violation if the contractor fails to comply with paragraphs (b), (c)(3), or (d) of the clause at FAR 52.203-16. There is nothing in the clause that establishes contractor liability for a violation by an employee, as long as the contractor followed the appropriate steps to uncover and report the violation.

Because the rule addresses both violations by a covered employee and violations by the contractor, the Councils have clarified in each instance what type of violation is being addressed (FAR 3.1103(a)(6) and (b); FAR 3.1105(a) and (b); and FAR 52.203-16(b)(6)). This should help the concern of the respondent that the contractor may be subject to remedies for violations by covered employees, rather than compliance with the clause requirements.

In addition, the Councils have adopted two suggested changes to the text of FAR 3.1105(b). "Pursue" has been changed to "consider," to more accurately reflect the contracting officer's obligation. The Councils also deleted the term "sufficient" before the word "evidence" in describing the conditions for considering appropriate remedies. If the contracting officer finds evidence of a violation, the contracting officer should consider appropriate remedies. The term "evidence" on its own presents the requirement for a level of certainty beyond a mere rumor or suspicion.