A "Conflict of Interest" arises when an employee is involved in a particular matter as part of his/her official duties with an outside organization with which he/she also has a financial interest, or one which is imputed to him/her, i.e., the employee's 1) spouse, 2) minor children, 3) general partner, 4) an organization in which the employee serves as officer, director, trustee, partner, or employee, or 5) a person or organization with which the employee is negotiating for prospective or has an arrangement for prospective employment. Conflicts can be real or apparent.
A real conflict exists when an employee participates personally and substantially in particular matters that have a direct and predictable effect on a financial interest of the employee, or one of the five 'others' listed above. In this case, participation in the official matter is in violation of statute 18 U.S.C. 208. If the Deputy Ethics Counselor determines that the financial interest is not "so substantial as to be deemed likely to affect the integrity of the services with the Government may expect" from the employee, a waiver granting permission to participate in the official matter may be given.
An appearance of a conflict exists when an employee is involved in a particular matter involving specific outside parties (including individual, corporate entities, etc) and the circumstances are such that a reasonable person with knowledge of the relevant facts would question the employee's impartiality in the matter. Such circumstances include the involvement of a relative, spousal employer, or former employer in the matter. In this case, the Deputy Ethics Counselor could determine that it is in the best interests of the Government for that employee to be involved in that particular matter, despite the appearance of a conflict, and authorize the employee to participate.
Employees who have financial interests (outside employment, stocks and other financial holdings) of their own, or financial interests of anyone listed in the first paragraph above which are imputed to them, must disclose any conflict and work with the Deputy Ethics Counselor or Ethics Coordinator to obtain a waiver or authorization, or be disqualified from participating in particular matters concerning the outside entity.
For additional information, you may contact your IC's Ethics Officials (see links below).