Your Employees Have Conflicts Too: The Personal Conflict-of-Interest Rule for Contractor Staff

Published September 14, 2026 | TIKC NewsWire

Conflicts of interest aren’t just an organizational problem. When your employees do certain kinds of work for the government, their personal financial interests become your compliance obligation. FAR Subpart 3.11 and clause FAR 52.203-16 require contractors whose employees perform “acquisition functions closely associated with inherently governmental functions” to identify and prevent personal conflicts of interest (PCI) among those employees.

Who This Covers

Think of contractor employees who help the government make or shape acquisition decisions — drafting statements of work, evaluating proposals or quotes, developing requirements or independent cost estimates, advising on award or source selection, or providing technical evaluation support. If your people sit that close to the government’s decision-making, the rule applies to them.

What a Personal Conflict Looks Like

A PCI exists when a covered employee has a personal financial interest — their own, a family member’s, or a close associate’s — that could impair, or appear to impair, their impartiality in performing the work. Examples: an employee evaluating a proposal from a company they hold stock in, or shaping requirements that would benefit a spouse’s employer. The concern is the same as OCI, just at the human level: can we trust this judgment to be objective?

Your Obligations as the Contractor

Have covered employees disclose personal conflicts and relevant financial interests. Prevent PCI — recuse or reassign the employee where a conflict exists. Prohibit misuse of nonpublic information the employee accesses through their work. Report and remediate any PCI violation to the contracting officer, and discipline where warranted. These are not aspirational goals — they are contractual obligations when FAR 52.203-16 applies.

What to Do Now

Identify which of your positions perform covered acquisition-support functions, and build a simple PCI process for them: a disclosure form at assignment and annually, a screening step before sensitive tasks, and a documented recusal path. It’s the personal-level companion to your OCI program — and in an environment where the whole of FAR Part 3 is being reframed around “business ethics and conflicts of interest,” it’s exactly the kind of control that keeps you eligible and out of trouble.

The Bottom Line

Personal conflicts of interest are the individual-level mirror of the organizational conflicts that are now driving bid protests and enforcement actions across the federal market. The contractor that builds PCI disclosure and recusal into its standard operating procedure — not as a reaction to a problem but as a standing control — is the contractor that never has to explain to a contracting officer why one of its employees was evaluating a company it had a financial stake in. Brick by brick.

Frequently Asked Questions

Does this apply to all my employees?

No — only those performing acquisition functions closely associated with inherently governmental functions, such as proposal evaluation, requirements development, independent cost estimating, and source-selection support. Identify them precisely by role and by task, because that’s where the duty bites — and document which positions are covered.

How is PCI different from OCI?

OCI is about the company’s relationships and affiliations impacting competitive fairness. PCI is about an individual employee’s personal financial interests affecting their impartiality in performing government-adjacent work. Both require separate controls — your OCI program does not substitute for PCI disclosure and recusal procedures for covered employees.

What happens if a covered employee doesn’t disclose a conflict?

The contractor is required to report PCI violations to the contracting officer and take appropriate disciplinary action. An undisclosed PCI that influences a government decision can taint the procurement and expose the contractor to contract termination, protest, and in serious cases FCA or criminal referral depending on the nature of the undisclosed interest and the resulting harm.

References

Federal Acquisition Regulation. (2026). Subpart 3.11, Preventing personal conflicts of interest; 52.203-16, Preventing personal conflicts of interest. https://www.acquisition.gov

About the Author

Melanie Patterson

Founder & CEO of Team Integrity Knowledge Center and creator of GovCon iSource. Former nurse turned entrepreneur with over 10 years guiding small, women-owned, and minority-owned businesses to over $10 million in government awards. Build, grow, scale — brick by brick. Contact