Yesterday, Treasury released its interim rule for conflictgs of interest under Section 108 of the Emergency Economic Stabilization Act of 2008 (EESA) “in connection with the administration and execution of the EESA authorities.” These authorities include the use of outside contractors, vendors and other service providers under the Troubled Asset Relief Program (TARP). The interim rule replaces the interim guidelines Treasury released on October 6, 2008.
The interim rule addresses “conflicts that may arise during the selection of individuals or entities seeking a contract or financial agency agreement with Treasury” with particular focus on those “involved in the acquisition, valuation, management, and disposition of troubled assets” under TARP. The rule addresses such organizational conflicts by requiring entities to disclose conflicts, both actual and potential, and requiring that the entity design mitigation plans to deal with such conflicts. After approval, the mitigation plan becomes a binding part of the agreement between the service provider and Treasury. The provisions of the rule are not comprehensive. Rather they supplement requirements imposed by contract, financial agency agreement, and applicable federal law and regulations, including applicable provisions of the Federal Acquisition Regulation. The rule imposes requirements on “retained entities” defined to include “contractors, financial agents, and their subcontractors.” Waivers by Treasury may be required for potential conflicts that cannot be adequately minimized through mitigation plans. Waivers will be granted on a case-by-case basis, and will be granted “when it is clear from the totality of the circumstances that a waiver is in the government’s interest.” Prohibitions in the rule include restrictions on retained entities accepting certain gifts, communicating with third parties, and disclosing non-public information.