J.2 COI Contract Clause--Internet Version.docx

H.1 - BUSINESS ETHICS, CONFLICT OF INTEREST AND COMPLIANCE (DEC 2015)

a. General: It is imperative that the Contractor and the services provided under this contract be free, to the greatest extent possible, of all Organizational and Personal Conflicts of Interest. In this clause, all references to Organizational and/or Personal Conflicts of Interests will be referred to individually or collectively, as the text justifies, as Conflicts of Interest (COI). Except as provided below, the Contracting Officer shall not maintain a contract with a Contractor that the Contracting Officer determines has, or has the potential for, an unresolved COI. However, in accordance with FAR 9.503 Waiver, the Contracting Officer may contract with a Contractor that has an unresolved COI if the Contracting Officer determines that it is in the best interest of the Government to do so.

b. Definitions:

Actual COI– means that the COI is currently in existence as determined by the Offeror’s or Contractor’s Compliance Officer and/or as determined by IHS. This form of COI will require avoidance, neutralization or mitigation acceptable to IHS.

Affiliates – As defined in FAR 2.101 means associated business concerns or individual(s) if, directly or indirectly either one controls or can control the other; or a third party controls or can control both.

For purposes of this contract, affiliate control or influence may include, but is not limited to:

1. Interlocking management or ownership (e.g., individuals serving in similar capacities in several companies);

2. Identity of interests among family members such as spouse/domestic partner and/or any dependent of the respondent;

3. Shared facilities and equipment;

4. Common use of employees; or

5. A business concern organized just prior to, or immediately following, the release of a solicitation or request for information, which has the same or similar management, ownership, or principal employees as the offeror or Contractor.

Any business, whether or not it is organized for profit or located in the United States or its outlying areas, or person may be found to be an affiliate. Control may be affirmative or negative and it is immaterial whether it is exercised so long as the power to control exists.

Apparent (Perceived) COI – means that the COI on first observation appears to be an actual or potential COI, but may or may not be after analysis. Even if the apparent COI is determined to be non-existent, this perception may still require further explanation.

Avoidance – means Government action taken in one acquisition that is intended to prevent a COI in that acquisition or in a future action. Methods of avoiding COIs include, but are not limited to:

· Drafting the statement of work (SOW) to exclude tasks that require Contractors to utilize subjective judgment; or

· Obtaining advice from more than one source on any issue on which there are concerns about an COI so that there is no area in which the Government is relying solely on the advice of any one of the sources; or

· Excluding an offeror from participation in a contract award.

Financial Interests/Relationships – means a healthcare related direct or indirect ownership or investment interest (including an option or non-vested interest) in any entity that exists through equity, debt, or other means and includes any indirect ownership or investment interest no matter how many levels removed from a direct interest.

A financial interest/relationship may arise from the following non-exclusive examples:

1. Compensation, including wages, salaries, commissions, professional fees, or fees for business referrals;

2. Current or known future arrangements or requirements for which you are defined as an interested party, including, but not limited to, an entity that may create one or more of the three forms of COI;

3. Consulting relationships, including commercial and professional consulting and service arrangements, scientific and technical advisory board memberships, or serving as an expert witness in litigation;

4. Services provided in exchange for honorariums including travel expense reimbursements;

5. Research funding or other forms of research support;

6. Healthcare related investment in the form of stock or bond ownership, including healthcare sector investment only mutual funds;

7. Healthcare business ownership or partnership interests;

8. Patents, copyrights, and other intellectual property interests;

9. Seeking or negotiating for prospective employment or business; or

10. Gifts, including travel.

Mitigation– means action taken by the Contractor to reduce the COI risk to a level acceptable to CMS on a present contract.

Neutralization – means excluding or restricting a Contractor from offering, as a prime or subcontractor, on future contracts while allowing the Contractor to perform on the instant contract. This method protects the Government’s interests in cases where the Contractor’s work on the instant contract could be biased or impaired by virtue of its expectation of future work, or when the Contractor would have an unfair advantage in competing for award of the future work.

Organizational Conflict of Interest – In accordance with FAR 2.101 Definitions, means that because of other activities or relationships with other persons, a person is unable, or potentially unable, to render impartial assistance or advice to the Government, or the person’s objectivity in performing the contract work is, or might be, otherwise impaired, or a person has an unfair competitive advantage.

For purposes of this contract, the conflict of interest definition includes direct or indirect relationships including, but not limited to, the Contractor and its parent company, subsidiaries, affiliates, subcontractors, clients and principals.

Personal Conflicts of Interest – A situation in which a person has a financial interest, personal activity, or relationship that could impair the person’s ability to act impartially and in the best interest of the Government when performing under this contract.

1. Among the sources of personal conflicts of interest are—

(a) Financial interests of the person, spouse/domestic partner and/or any other dependent of the person, as defined for Federal tax purposes;

(b) Other employment or financial relationships (including seeking or negotiating for prospective employment or business) and,

(c) Gifts, including travel.

2. For example, financial interests referred to in paragraph (1)(a) of this definition may arise from—

(a) Compensation, including wages, salaries, commissions, professional fees, or fees for business referrals;

(b) Consulting relationships;

(c) Services provided in exchange for honoraria or travel expense reimbursements;

(d) Research funding or other forms of research support;

(e) Healthcare related investments;

(f) Real estate investments;

(g) Patents, copyrights, and other intellectual property interests; or

(h) Business ownership and investment interests.

Potential COI – means that the COI could become an actual COI due to contingency events and/or as determined by CMS. This form of COI will require avoidance, neutralization or mitigation acceptable to CMS.

Principal – As defined in FAR 52.203-13, Contractor Code of Business Ethics and Conduct, means an officer, director, owner, partner, or a person having primary management or supervisory responsibilities within a business entity (e.g., general manager, plant manager, head of a division or business segment, and similar positions).

Three (3) Types of COIs include:

Unequal Access to Information

“Unfair” access to non-public information – Consists of situations in which a firm has access to nonpublic information (including proprietary information and non-public source-selection information) as part of its performance of a Government contract and that information may provide the firm with a competitive advantage in a later competition for a Government contract. In these “unequal access to information” cases, the concern is limited to the risk of the firm gaining an unfair competitive advantage; there is no issue of bias. Note: Incumbency alone does not constitute “unequal access to information.”

c. Significant Potential Conflict of Interest: The Contracting Officer has determined that this contract may involve significant potential COIs.

1. Nature of Potential Conflict: Although not all inclusive, the Contracting Officer has determined that the following activities are considered to be an actual, potential or apparent COI with the work to be performed under this contract. The Contractor shall promptly notify the Contracting Officer of any relationships with any of the following entities:

For the purpose of identifying entities with actual, potential or apparent COIs, at a minimum, the entity is one that-

(a) Would review or does review, under the contract, Medicare and/or Medicaid services furnished by a provider or supplier that is a direct competitor of the Contractor; or

(b) Prepared work or is under contract to prepare work that would be reviewed under the contract; or

(c) Is affiliated or has a financial relationship, as these terms are explained above, with an entity to be reviewed under the contract.

2. Proposed Restraint on Future Contractor Activities: IHS is proposing to restrain future Contractor activities as follows: NA

d. Contractor Business Ethics, Conflict of Interest and Compliance Program Requirements: FAR 3.10 and FAR 52.203-13, Contractor Code of Business Ethics and Conduct, identify “…policies and procedures for establishment of Contractor codes of business ethics and conduct, and display of agency Office of Inspector General (OIG) hotline posters.” (See Section I, FAR 52.203-14 fill-in information for the website where you can find the HHS OIG fraud hotline poster).

The following chart is provided to clarify requirements under this contract:

1. COI Oversight Program: The Contractor shall maintain an effective COI Oversight Program. As part of the program, the contractor shall implement company business practices, procedures, polices and internal controls for compliance with COI requirements, such as:

(a) Preventing conflicts of interest, prohibiting the use of non-public information accessed through this contract for personal gain, and obtaining a signed non-disclosure agreement to prohibit disclosure of non-public information accessed through this contract;

(b) Conducting Internal and External Audits;

(c) Policy Enforcement and Employee Disciplinary Actions;

(d) Retention of Records;

(e) Management of Subcontractors;

(f) Internal control systems;

(g) Display of Fraud Hotline Poster(s) in accordance with FAR 52.203-14 Display of Hotline Poster(s).

(h) Reviewing the information required by Attachment J.2, Contractor Personal Conflict of Interest Financial Disclosure Template, for each principal, officer and member of the governing body (e.g., Board of Directors, Trustees, etc.) of the organization, as well as managers and key personnel who would be, or are involved with, the performance of this contract. It is recommended that individuals who have not disclosed changes within the reporting period, submit an annual disclosure update to their Compliance Officer for review;

(i) Informing employees, through an employee education and training program, of their obligation to disclose and prevent conflicts of interest, not to use non-public information accessed through performance of this contract for personal gain, and to avoid even the appearance of personal conflicts of interest; and,

(j) Reporting to the Contracting Officer any conflict of interest violations.

The following details are provided for respective COI disclosure expectations:

2. Conflict of Interest:

In accordance with FAR 3.10 and 52.203-13, Contractor Code of Business Ethics and Conduct, and this solicitation/contract, the Contractor shall have procedures in place to monitor and disclose all Organizational and Personal Conflicts of Interest throughout the life of the contract.

COI information shall be submitted as follows:

(a) Initial Submission of COI Information: The Contractor shall submit Conflict of Interest information identified in –

· Attachment J.2, Contractor Business Ethics, Conflict of Interest and Compliance Program Requirements (follow the format identified in the Attachment J.2).

(b) Personal Conflict Information: It is the offeror/contractor’s responsibility to have a COI plan in place (see H.1.d.1. COI Oversight Program) to ensure that actual, potential, or apparent personal conflicts of interest are identified, analyzed and mitigated for performance of this contract.

COI information shall be obtained by the Offeror/Contractor for each:

· Manager or Key personnel who would be, or are involved with, the performance of this contract;

· Governing Body Members (e.g., Board of Directors; Trustees, etc.); and,

· Principals of the organization as defined by FAR 52.203-13, Contractor Code of Business Ethics and Conduct.

Attachment J.2, Contractor Personal Conflict of Interest Financial Disclosure Template is provided as a “sample” for the Offeror/Contractor to follow when identifying, analyzing and mitigating actual, potential, or apparent Personal COIs for this contract. Notwithstanding, Personal COI information obtained from the above individuals shall not be submitted to the Government.

(c) Mitigation/Resolution: The Contracting Officer determines whether a COI has been identified and whether the actual, potential or apparent COI has been mitigated/resolved to the Government’s satisfaction. The Contractor's approved COI Mitigation/Resolution plan shall be incorporated into the contract.

In cases whereby a COI cannot be, or has not been, mitigated to the Contracting Officer’s satisfaction, the Contracting Officer may take the following action including, but not limited to:

i. Request a waiver in accordance with FAR 9.503 Waiver, from the Head of the Contracting Activity; or

ii. Make changes to the requirements of the contract; or

iii. Terminate the contract.

(d) Conflict of Interest Disclosure During Contract Performance: COI Disclosure Revisions shall be submitted to the Contracting Officer as follows:

i. When Revisions are Required:

· At any time during the performance of this contract, if the Contractor learns of any actual, potential, or apparent COI, whereby a reasonable business person might equate the COI to one (1) of the three (3) types of COIs identified in H.1.b Definitions, the Contractor shall notify the Contracting Officer in writing within five (5) business days of the identification of the actual, potential, or apparent COI. Within 30 calendar days, or as otherwise negotiated with the Contracting Officer, the Contractor shall submit a COI Disclosure Revision in accordance with H.1.d.2.(d) ii below.

If, as a result of the Government or Contractor independent auditor review, any findings require a change in the previous disclosure, submit a COI Disclosure Revision, in accordance (d) ii below, to the Contracting Officer within 30 calendar days of the final audit report.

· Within 30 calendar days when the Contracting Officer requests a revision.

· At least 45 calendar days prior to a change due to proposed or planned business actions, e.g., acquiring or selling a business or business segment, changes in ownership of the organization holding the contract, etc.

ii. What is Required in a Revision:

· When COI disclosures require revision, the Contractor shall provide a revised Attachment J.2, Contractor Business Ethics, Conflict of Interest and Compliance Program Requirements. Red-lined versions are preferred.

e. Independent Audit: Unless otherwise instructed, when a mitigation plan is required to be submitted, the Contractor shall obtain the services of an External/Independent auditor to conduct an audit of the “Mitigation Strategy.” If the Government chooses to execute the audit in lieu of the contractor independent audit, the Contracting Officer will notify the Contractor within 60 days of the anniversary date of the contract.

Such auditor shall have expertise in conducting compliance program and conflict of interest audits. The Contractor’s records may also be subject to audit by the Government to ensure compliance with this contract’s H.1 clause requirements and/or ensure that any corrective action, if necessary, has been implemented.

1. Subcontractors: A COI independent audit shall be required at the discretion of the Prime Contractor. If the Prime Contractor requires an audit of the subcontractor(s), the subcontractor’s audit shall be included with the Prime Contractor’s audit submission.

2. First Audit: When a mitigation plan is required, an independent audit of the COI program is due 90 days after the first anniversary date of the contract or as otherwise negotiated with the Contracting Officer. The independent audit will be submitted by the auditor directly to the Contracting Officer with a copy to the Contractor.

3. Subsequent Audits: Additional audits are at the discretion of the Contracting Officer. The Contracting Officer will consider previous audit findings, any corrective action(s) and any new COI information, when making the decision to require subsequent audits.

4. Audit Findings: When Contractor Conflict of Interest Oversight findings are disclosed in an independent audit, the Contractor shall include in the draft audit report its proposed corrective action plan for each finding. The Contracting Officer may require a revised COI mitigation plan to be submitted as a result of the audit findings.

5. Independent Audit Requirements:

(a) The auditor shall decide what processes it will use to review, verify and confirm the information, processes and policies disclosed by the Contractor to the Government. The audit shall include a process for the contractor to review audit findings and provide a response to the auditor, which shall be included in the final audit submitted to the CMS Contracting Officer.

(b) The audit shall confirm that any and all COI mitigation plans, approved by the Government, have been implemented and are functioning as anticipated. Although not all inclusive, the auditor may also want to consider the following:

(i) Review of all COI disclosures submitted to the Government to validate the accuracy and completeness of such disclosures;

(ii) Conducting appropriate interviews with principals, key personnel and independent members of the board of directors, as appropriate;

(iii) Reviewing the Contractor’s organizational chart(s), articles of incorporation, bylaws and/or other documents, to validate the accuracy and completeness of COI disclosures to the Government;

(iv) Confirming that the Contractor annually, at a minimum, collects and reviews for assessment and appropriate action by the Compliance Officer, personal conflict information from its principals, key personnel (on the relevant contract(s)) and board of director members;

(v) Confirming whether the Contractor is in compliance with its internal Contractor Conflict of Interest Oversight program(s); and,

(vi) For its Subcontractors, confirming whether the prime Contractor is monitoring Subcontractor compliance with the required contract flow-down provisions and disclosed practices, in accordance with contract H.1. The auditor may review other information as it deems appropriate to ensure that COI issues have been identified and resolved, in accordance with Contractor disclosures.

(vii) The auditor will also examine the Contractor’s records to verify that all of the requirements specified in FAR 52.203-13(c)(2)(ii), Contractor Code of Business Ethics and Conduct, are met.

6. Reporting Requirements: The audit report, inclusive of all auditor findings and proposed corrective actions, shall be delivered via e-mail or US Postal Service to the Contracting Officer directly from the auditor.

f. Subcontractor Flow-Down Clause: The prime Contractor is responsible for avoiding, neutralizing and mitigating all actual, potential, or apparent COIs of its Subcontractors, in accordance with this clause. Therefore, the prime Contractor shall flow-down clause H.1 Business Ethics, Conflict of Interest and Compliance, of this contract in all subcontracts. For Subcontractors, wherever the term “Contractor” is used, insert “Subcontractor.”