In addition, the policy letter requires agency officials to evaluate the potential for a conflict of interest and to determine whether an actual conflict exists before a contract is awarded. Compliance With the Certification Requirement Has Varied

Agency compliance with the requirement for obtaining contractors’ OCI certifications or advisory and assistance service contracts has varied. At two of the three agencies we reviewed—EPA and DOE—we found certificates in contract files in almost all cases in which they were required. The IG reported that, in most cases, DOD contracting officers failed to obtain the OCI certificates required by the FAR. Its April 1993 report stated that of 19 agencies reviewed, contractors’ certifications were obtained only at 9 of them. Case 1. Case 2. DOE and EPA offered formal in-house OCI training. The Navy did not have an OCI training course. We also asked them how they believed the OCI screening process could be improved. As shown by a 1993 PCIE study, however, agencies’ implementation of OCI requirements for advisory and assistance services has varied. We also noted that Navy contracting officials were not routinely evaluating contracts prior to award for potential conflicts of interest. Recommendations to the Director, OMB

We recommend that the Director, OMB (1) emphasize to heads of agencies the importance of ensuring that contracting officials receive sufficient training to help them to identify and to avoid and mitigate OCI situations and (2) take steps to avoid the possibility that the FAR might be interpreted to imply that if certificates have been obtained from contractors, agencies should not obtain other information in conducting an evaluation of the potential for conflicts of interest. At that time, we will send copies of this report to the Director of the Office of Management and Budget, the Secretaries of Energy, Defense, and Navy, and the Administrator of the Environmental Protection Agency.
Why GAO Did This Study

Pursuant to a legislative requirement and a congressional request, GAO reviewed three federal agencies' implementation of the Office of Management and Budget's (OMB) policies on conflicts of interest, focusing on: (1) whether the agencies have complied with existing requirements to identify and evaluate potential organization conflicts of interest (OCI); and (2) ways that agencies could improve their screening for such conflicts.

What GAO Found

GAO found that: (1) although the Environmental Protection Agency (EPA) and the Department of Energy (DOE) obtained contractors' OCI certifications in almost all of the cases reviewed, the Navy failed to obtain OCI certifications in most cases, mainly because contracting officers did not request or require them; (2) the Navy has since stressed the importance of obtaining OCI certifications; (3) a 1993 Presidential council report showed that only 9 of 19 agencies reviewed obtained OCI certifications; (4) many agency officials did not believe the certifications were an effective deterrent; (5) self-certifications have limitations because differences of opinion or interpretation cause potential OCI underreporting; (6) the OMB requirement that agencies evaluate the potential for OCI is an important supplemental control; (7) DOE and EPA have conducted preaward evaluations for potential OCI; (8) although the Navy has not routinely conducted required preaward OCI evaluations, it has tried to prevent future conflicts of interests; and (9) agencies could improve their screening for OCI by ensuring that all responsible officials receive OCI training to avoid misinterpretation.