The Biggest Conflict-of-Interest Overhaul in Decades: What the New FAR OCI Rules Mean for You

Published September 11, 2026 | TIKC NewsWire

Organizational conflicts of interest (OCIs) are getting their first major rewrite in a generation — and the change signals how seriously the government now treats conflicts. Implementing the Preventing Organizational Conflicts of Interest in Federal Acquisition Act, the FAR Council proposed moving the OCI rules out of FAR Subpart 9.5 into a brand-new FAR Subpart 3.12, and retitling all of FAR Part 3 to “Business Ethics and Conflicts of Interest.” The relocation isn’t cosmetic — it reframes OCI as a core ethics obligation, not a box you check on qualifications.

The Three Conflicts, Sorted Into Two Buckets

The proposed rule keeps the three familiar OCI types but organizes them into two categories: impaired objectivity (your work requires you to assess your own or a competitor’s performance) and unfair competitive advantage, which covers biased ground rules (you helped write the requirements) and unequal access to information (you hold nonpublic information others don’t). It also clarifies that a contractor’s ordinary incumbent advantage is not, by itself, a disqualifying OCI — the government still needs hard facts, consistent with bid-protest case law.

New Clauses You’ll Actually See in Solicitations

A disclosure-and-representation provision: where a contracting officer identifies a likely OCI, offerors must identify potential OCIs and propose mitigation — at proposal time, or within five days of discovering new information before award. A post-award disclosure clause requires prompt, full disclosure of any new or newly discovered OCI during performance. A mitigation clause folds the government-approved mitigation plan into the contract, with a CO able to terminate if a new OCI can’t be acceptably resolved.

Notably, the rule would let contracting officers accept — effectively waive — an impaired-objectivity OCI when the government is the only stakeholder harmed. It exempts acquisitions at or below the simplified acquisition threshold and commercial products/COTS — but commercial services above the threshold are covered.

What This Means for Small Business Contractors

If you perform advisory, engineering-support, or professional-services work, the proposed rule hits your pipeline directly. Every solicitation where a CO identifies a likely OCI will now require you to disclose it and propose mitigation before award — not wait to be asked. Firms that have been quietly hoping a conflict wouldn’t come up are about to face a system that requires them to surface it themselves. The upside: firms that build clean OCI screening and mitigation into their capture process become more competitive, not less, because they can win work their less-prepared competitors get knocked out of.

How to Position Before the Final Rule Lands

Inventory your relationships and affiliates for all three conflict types. Every contract where your firm advises the government, accesses non-public procurement information, or evaluates competing systems is a potential OCI against future competitive work in the same space. Map that exposure now — before a solicitation provision forces you to disclose it under time pressure.

Build a reusable mitigation-plan template. The proposed rule requires mitigation plans to be submitted before award and incorporated into the contract. Once that plan is part of the contract, noncompliance is a breach. A pre-built template with firewall procedures, personnel recusal controls, and access restrictions lets you respond to any solicitation’s OCI provision quickly and credibly.

Add an OCI screening step to your bid/no-bid process. Before every proposal on advisory, evaluative, or information-access work, ask: could our performance on this be argued to have been influenced by information or relationships from another contract? If the answer is possibly yes, the question goes to counsel before the proposal goes out the door.

The Bottom Line

The OCI rule overhaul reframes conflict of interest from a qualification question into a core ethics obligation — and pairs it with mandatory disclosure, contractual mitigation plans, and subcontractor flowdown requirements. For firms that do advisory, engineering, or professional-services work, this is the most consequential change to the competitive landscape in a generation. The firms that map their conflicts, build their mitigation plans, and disclose proactively will win the work others get disqualified from. Brick by brick — integrity is the only architecture that holds.

Frequently Asked Questions

Is the new OCI rule final?

No — it is a proposed rule expected to be finalized as part of the broader FAR overhaul. The comment period has closed and the direction is set, so preparing now is the right move. Firms that build OCI screening and mitigation processes before the final rule lands will be ahead of the field when it does.

Does the OCI overhaul apply to small businesses?

Yes, for small businesses performing advisory or services work above the simplified acquisition threshold — exactly the space where impaired-objectivity and biased-ground-rules OCIs arise. The rule exempts acquisitions at or below the SAT and commercial products/COTS but covers commercial services above the threshold.

What happens if a contractor doesn’t disclose an OCI?

An undisclosed OCI discovered after award can result in termination for default, disqualification from the competition, and potentially False Claims Act liability if the government can show the contractor knowingly concealed a material conflict while submitting invoices. Losing competitors may also file bid protests on OCI grounds — a consistently sustained basis at GAO.

References

Crowell & Moring LLP. (2025, January). FAR Council proposes substantial changes to OCI regulations.

PilieroMazza. (2025). Proposed rule on organizational conflicts of interest signals significant changes for contractors. https://www.pilieromazza.com

Wiley Rein LLP. (2025, January 15). FAR Council proposes wholesale revamp of organizational conflict of interest rules. https://www.wiley.law