The federal agency and government’s oversight for contract compliance and other factors leading to debarment and suspension of government contractors have increased dramatically over the past few years. Staying off the suspension and debarment list means knowing what gets you into trouble and what being a responsible contractor means.
The purpose of federal suspension and debarment regulations is to protect the government and not contractors.
Understand the basic rules and you can improve your responses to save your company or career.
Sometimes companies surprisingly get notices from the government that the company or a specific individual is being recommended for suspension debarment. If you or your company has been suspended or proposed for debarment you must understand the process and to properly respond.
The difference between suspension and debarment from government contracts will make the difference in how you respond to each action.
FY 2016, there were 718 suspensions, 1855 proposed debarments, and 1676 debarments. By contrast, in FY 2009, there were 417 suspensions, 750 proposed debarments, and 669 debarments.
When it Comes to Debarment and Suspension of Government Contractors, Can the Contracting Officer Does Using the Process as a Means of Punishing Government Contractors Violate the Law and Procurement Policy? Yes, it Does.
Government contractors and individuals often find out disastrous and deadly mistakes when they respond to proposed debarment and suspension actions but fail to address the critical issues that will help the debarring official to make a favorable decision.
- Being placed on the federal debarment list is a more serious action than a suspension
- Either action can be disastrous to a company’s revenues if they can no longer do business with the government
- How you initially respond to either is completely different in substance and depth. There is a deep level of evidence and facts required by an attorney preparing a response given the impact to your business
- The preponderance of the evidence can sometimes be difficult to meet when the stress of being debarred is present
Things You Want to Do to Avoid Suspension and Debarment Actions Under FAR 52.209-6
The first thing you want to do is get FAR debarment and suspension training for your staff. This is important because your employees’ day-to-day actions or failure to act can lead to either suspension or debarment. Many companies get on the hook for something that one or more of its employees did.
- Whether you have provided your employees with the required training can be a substantial factor when the SDO makes a final determination
Second, you want to develop internal policies and controls. When the government recommends to suspend or debar your company, having the right internal policies and controls can be a mitigating factor and can impact the final decision.
- Always perform your due diligence on subcontractors and employees. As a prime contractor, you can be on the hook for any of their actions
For example, you should deploy a viable contractor code of conduct, contractor ethics policies, disclosure policies and rigorous consequences for improper internal behavior. Third, it is not a bad idea to conduct internal corporate investigations.
This can serve as a proactive measure and make the difference between suspension or debarment. If you are recommended for suspension or debarment actions, you must act quickly because your business’ future is at risk. Read more about Administrative Agreements During Suspension or Debarment.
Purpose of FAR 52.209-6 debarment and suspension regulations governing federal contractors
As a general rule, the FAR establishes contracting agencies government-wide must only contract with “responsible” contractors. In other words, when it comes to suspension and debarment regulations under FAR Part 9.4 and FAR 52.209 6, contractors are under greater scrutiny during the performance stage of their contracts.
Your goal is to continue to bring in business for your company. Suspension, although serious, suggests that the government recognizes that your company could quickly do certain things to get your company back on track.
When responding to both a federal debarment action, the goal is to show the debarring official that your company is a responsible contractor.
- Developing an actual proposed plan to show how you will meet the goal is always helpful.
- Getting professional help responding to either a suspension debarment action goes a long way with the government.
- The suspension and debarment statutes should not be used to punish a contractor.
- As a subcontractor, FAR 52.209 6 allows the government to reach you, although there is no privity of contract. The overall reason is to protect against contracting with non-responsible contractors.
On July 5, 2011, the Federal Government adopted a final rule that expanded the prohibition on subcontracting with suspended and debarred entities. This rule creates limitations on the acquisition of commercial items and commercial off-the-shelf items.
As a federal government contractor, you must be aware of the difference between suspension and debarment from government contracts. Knowing the difference could improve your response to the debarring official and get a more favorable outcome in your case.
What is the difference between Suspension and Debarment From Government Contracts?
Debarment and suspension of government contractors occur when the agency acts under Federal Acquisition Regulation FAR 9.407 (and other applicable statutes, Executive Orders, and federal suspension and debarment regulations) to temporarily disqualify a contractor from doing business with the federal government.
- The is an immediate need when the government wants to suspend your company
- A temporary measure is in place; there is a twelve-month limit but can be renewed
- Suspension occurs when there is a pending investigation or legal proceedings
- Based on adequate evidence, usually an indictment.
Suspension of government contractors means that the company is prohibited from bidding on or participating in government contracting or any type of federal financial assistance awards. A suspension is effective immediately especially when the government is made aware of criminal or administrative proceedings upon which the action is based, or for 12 months or 18 months.
- Suspensions are only for a temporary period of time pending the outcome of an investigation or legal or other administrative proceedings.
- If legal proceedings are not initiated within 12 months after the date of the suspension notice, the suspension shall be terminated unless an Assistant Attorney General requests its extension, in which case it may be extended for an additional 6 months. In no event may a suspension extend beyond 18 months, unless legal proceedings have been initiated within that period.
- The suspending official shall notify the Department of Justice of the proposed termination of the suspension, at least 30 days before the 12-month period expires, to give that Department an opportunity to request an extension.
If there is a government investigation, the suspension will not last longer than 12 months, unless a prosecuting official submits a written request for an extension to the suspending official. As different from a debarment, contractor suspension may not be extended beyond an additional 6 months. In cases where legal or administrative proceedings have been initiated, such as where an indictment has been filed or where a person has been proposed for debarment, the suspension will continue until the conclusion of those cases.
A suspension action can cause a contractor to be ineligible to do business with the government for a temporary period pending the completion of an on-going agency investigation.
Debarment Meaning – What Does Debarment Mean?
What does debarment from government contracts mean? Being debarred from federal contracts occurs when the contracting agency pushes to exclude government contractors from contracting or subcontracting with the federal government for a specified period.
- debarment of government contractors is typically for three years
- Based upon a preponderance of the evidence, usually a conviction
The period usually three years but can be longer.
Debarment shall be for a period commensurate with the seriousness of the cause(s). Generally, debarment should not exceed 3 years, except that – (i) Debarment for violation of the provisions of 41 U.S.C. chapter 81, Drug-Free Workplace (see 23.506) may be for a period not to exceed 5 years; and(ii) Debarments under 9.406-2(b)(2) shall be for one year unless extended pursuant to paragraph (b) of this subsection.
(2) If suspension precedes a debarment, the suspension period shall be considered in determining the debarment period.
Being placed on the government debarred list under FAR 9.4 can result from a criminal conviction, being found liable for a civil action, environmental violations, contract fraud, receiving stolen property, fraud embezzlement theft forgery bribery, or simply poor performance and providing false statements to the government. Learn more about the FAR debarment process and Debarment Policy for government contractors.
Basics of the Process
- Agencies refer suspension debarment cases to the SDO for action. As stated earlier, either the contracting officer or Inspector General’s office may refer the matter for either suspension or debarment.
- After receiving notice, you or your attorney is giving an opportunity to respond.
- You should address each allegation individually and provide as much detail as possible. See how to respond to suspension and debarment notices.
- SDO makes a decision based on the referral to be debarred from federal contracts.
- When going through the debarment process, you want to focus on responding to why your company should be considered responsible. Blame should not be the focus of your response.
Suspension and Debarment Clauses Incorporated into Your Contract FAR Clause 52.209-7 and FAR 52.209-6
For government contractors bidding on federal solicitations after April 22, 2010, contracting agencies must now include a new implementing FAR Clause 52.209-7) to make sure that you are presently responsible to perform the contract. This clause requires that contractors make certain disclosures (certifications). This requirement goes towards contractor responsibility.
This new clause requires vendors submitting proposals for federal contracts with an expected value of over $500,000 and having more than $10 million in active contracts and grants at the time of proposal submission to report in FAPIIS certain information pertaining to criminal, civil, and administrative proceedings. According to the FAR 52.209 6 rule, bidders must include and update information in the SAMS database.
Under FAR 52.209, offerors have to report information regarding:
- Criminal Convictions.
- Administrative Proceedings.
- Civil Liability.
Both have a grave impact on your company’s revenues. It is no secret that if you are unfortunate enough to be recommended for suspension debarment, your company cannot do further business with the federal government. Under 2 CFR 5800.890, you may appeal your debarment decision.
- This applies to companies proposed as subcontractors (with some exceptions.)
- Learning the difference between suspension and suspension helps when you are in a tough situation.
- You want to stay away from both
Suspension and debarment regulations – Any Options to Suspension or Debarment?
Just because the agency has recommended you for suspension and debarment from government contracts, the debarment Official (SDO) may choose to take no action. Depending on the response or arguments made by your attorney, the recommendation can end up being dropped altogether. Oftentimes, the SDO may provide a request for additional information because he or she cannot make a decision based upon the current evidence.
As you can see, suspension or federal debarment is not all about punishing government contractors. Instead, the SDO has to make a responsibility determination. The suspension or debarment process is more of a fact-gathering task so that the SDO can make an informed decision. See information about CPARS ratings.
Another option that the SDA may make is to have the parties enter into an Administrative Compliance Agreement. This document serves as documentation of remedial options that the contractor can enter into. The Compliance agreement is subject to oversight, audits and may often be published.
Improve your chances of reversing adverse actions against you or your company.
Call Watson & Associates’ lawyers for help with federal suspension and debarment from government contracts and to speak with a FAR debarment lawyer at 1-866=601-5518. FREE CONFIDENTIAL CONSULTATION.