Difference Between Suspension and Debarment

The federal government’s oversight of contract compliance and other factors leading to the suspension and debarment of government contractors have increased dramatically over the past few years. Staying off the debarment list means knowing what gets you into trouble and what being a responsible contractor means. Suspension and Debarment actions gravely impact government contractors and grant recipients. If you are placed on an administrative exclusions list, you cannot bid on government contracts, receive grants or sometimes, even not received federal loans.

The purpose of federal suspension debarment regulations is to protect the government and not contractors. 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 properly respond. Having a suspension and debarment lawyer can significantly improve your chances of success.

The difference between suspension and debarment from government contracts will impact how you respond to each action.

When it Comes to the Debarment and Suspension of Government Contractors, Does the Contracting Officer Use the Process as a Means of Punishing Government Contractors to Violate the Law and Procurement Policy? Yes. However, the regulations forbid this level of intent.

Government contractors and individuals often find out disastrous and deadly mistakes when they respond to proposed suspension and debarment 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 on your business
• The preponderance of the evidence can sometimes be difficult to meet when the stress of being debarred is present

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 debarment and suspension 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 federal debarment actions, 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 or 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.

Things You Want to Do to Avoid Suspension and Debarment List Actions Under FAR 52.209-6

 The first thing you want to do is get FAR 52.209-6 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 their 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 suspending or debarring 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 and 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.

Suspension Meaning

Suspension and debarment 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 award.  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 ongoing agency investigation.

Debarment Meaning?

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.  

The purpose of debarment is to ensure that federal contractors and individuals involved in providing goods and services to the federal government are meeting certain ethical standards and comply with applicable laws. When a contractor is debarred, they are prohibited from participating in activities related to their contract or other agreements with the government until the reason for debarment has been resolved.

Debarment can be imposed by any federal agency that awards contracts or grants. Reasons for debarment may include fraudulent behavior, criminal activity, failure to meet contractual obligations, or non-compliance with governmental regulations.

Federal contractors who have been found guilty of engaging in fraudulent practices or illegal activities could face consequences such as suspension or debarment. This is done to protect the government’s interests and to help ensure that only trustworthy contractors (responsible) are awarded contracts.

Debarment can have serious implications for you; if you are unable to fulfill your contract obligations, it may result in financial losses as well as damage to your reputation. In addition, having a record of being debarred can make it difficult for a company or individual to be awarded future contracts with the government.

To avoid such consequences, contractors should always strive to meet all applicable laws and regulations, and conduct themselves ethically when dealing with any government agency. If there is an issue that could lead to possible debarment, contractors should take steps immediately to address the situation before

• debarment of government contractors is typically for three years
• Based upon a preponderance of the evidence, usually a conviction

The period is usually three years but can be longer.

Debarment from government contracts 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 a suspension precedes a debarment, the suspension period shall be considered in determining the debarment period.

Contractor suspension and debarment proceedings 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.

Suspension and Debarment Proceedings – 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 are given 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.

Are There Penalties from Suspension or Debarment from Government Contracts?

Each suspension or debarment action is triggered by the respective contracting agency or law enforcement agency conducting a government investigation.  Suspension of government contractors and individuals relates to all federal procurement and non-procurement programs.  You cannot submit bids or offers if you are on the suspension and debarment list. Chances are that your current government contracts will not be renewed. 

Contractors laws regarding suspension also limit your company from participating as a subcontractor on federal projects over $30,000 unless there is a compelling reason to do so and the contractor first notifies the contracting officer and further complies with the provisions of FAR 9.405-2(b).

Thoughts for Responding to Suspension and Debarment List Actions

When responding to a suspension and debarment letter, you should carefully read the document in its entirety and consult with a suspension and debarment lawyer if necessary. Make sure that you understand all of the details outlined in the letter, including what conduct resulted in your organization being debarred, for how long it will last, what actions must be taken to resolve the issue, and who submitted the notice.

Once you are thoroughly informed about the situation, follow all of the instructions in the letter. This could include providing additional documentation, submitting evidence that corrective action has been taken, or engaging in a formal debarment removal process. It is also important to maintain open communication with both your customer and the government throughout this process so that all parties involved are aware of how you are addressing the situation.

If you have been debarred due to a violation of laws or regulations, it is crucial to take steps to ensure that similar issues do not occur in the future. Consider implementing new policies or procedures related to compliance, ethics and accountability within your organization.

Federal suspension and debarment responses require serious consideration and strategy. For example, you want to address / improve your ethics and compliance programs with careful consideration in a wide variety of circumstances, for example:

• Proactively as an integrated component of their ethics and compliance programs, and before problems arise in order to establish credibility and tip the scales in favor of a “show cause letter” or similar informal inquiry short of a suspension or proposed debarment should problems arise in the future.
• Proactively upon discovery of wrongdoing, but after mitigation efforts are in place to ensure the problem cannot reoccur, in order to keep the suspending and debarring official informed but minimize the risk of an immediate suspension or proposed debarment.
• In connection with mandatory disclosure of any significance to explain the circumstances, and impact a proposed debarment as a collateral consequence.
• On behalf of individuals who are the subjects of mandatory disclosures, should the company be required to provide (or find benefit in providing) seasoned suspension/debarment lawyer.
• Reactively after a notice of proposed debarment, suspension, or show cause letter issues.

Suspension, debarment and show cause letter engagements – whether proactive or reactive – require political savvy, in-depth experience with remedies coordination to anticipate the government’s next steps and particular knowledge of suspension and debarment defense. They also require the capacity to involve teams of experienced attorneys at a moment’s notice to avoid the devastating consequences of suspension and debarment.

Get Help 

Improve your chances of reversing adverse actions against you or your company. Call Watson & Associates’ contractors lawyers for help with federal suspension and debarment from government contracts and to speak with a FAR 52.209 6 debarment lawyer at 1-866=601-5518. FREE CONFIDENTIAL CONSULTATION.