What is Debarment? Debarred Meaning in Federal Procurement

are you meeting the debarred definition under government contract rulesAs a federal government contractor, your goal should always be to avoid being debarred. The information below is meant to provide basic information and to help contractors or individuals decide what their next steps should be.  The ramifications for the company are serious and sometimes cause companies to close their doors. If you are debarred from government employment, your career will be in jeopardy even after the debarment period ends.

Debarment from government contracts means an action taken by a Federal agency or official to exclude a person or business entity from participating in transactions involving certain federal funds. Being debarred from government contracts also means the disqualification of a person or contractor to get invitations for bids, requests for proposals, or the award of a contract by the federal government.

When you are notified about the recommendation to be debarred, never try to address this on your own. Many contractors make the mistake of crafting a response that criticizes the contracting officer of some other government employee. This almost never ends well. If you are also involved in a criminal trial, having the proper legal representation is important. Criminal cases and the regular debarment process are different. Yet, many individuals or companies put themselves at more risk to become criminally liable.

The debarment period is compatible with the seriousness of the allegations or adequate evidence or facts in the record for a specified period of time commensurate with the seriousness of the offense or the failure or inadequacy of performance.

The federal Suspension and Debarment process is in place to protect the integrity of the procurement system and other federal programs while also protecting the government’s interest and taxpayer dollars. The suspension or debarment process is not to be used as punishment. Instead, the process is in place to check and balance the present responsibility of the contractor or individual.

What is the Overall Suspension and Debarment Process?

The GPO debarment and debarment process is set forth GPO directive 110.11C, Contractor Suspension and Debarment Procedures, dated January 10, 2013. The process starts with a referral to the Suspending Official and/or the Debarring Official (SDO). The SDO then will conduct an initial review of the allegations in the referral. If he or she decides there is sufficient basis, the SDO sends the contractor a Notice of Suspension and/or a Notice of Proposal to Debar, to which the federal contractors have 30 days to respond.

Being debarred or recommended for debarment in procurement has “catch-all” provisions under the FAR that allow the agency to act for  “any … offense indicating a lack of business integrity or
business honesty” and (2) debarment or suspension for “any other cause of [a] serious or compelling nature”. This leaves the door wide open for subjective analysis. The question remains – what is the proper way to respond to being debarred or suspended. Our suspension debarment attorneys deal with these issues on a daily basis.

Who Can Be Debarred?

Applying the debarment meaning, the Federal Acquisition Regulations (FAR) provide the authority for the suspension and debarment official (SDO) to suspend or debar federal government contractors. Besides companies debarred from government contracts, federal employees or even contractor employees can be debarred from doing business with the federal government.

Large DOD contractors also can face suspension or debarment from government contracts. A few companies have actually been tarnished. However, the reasons for the debarment in procurement could have been avoided.

Larger businesses that are debarred from federal contracts for mentor protégé violations and allegations of procurement fraud can also avoid or minimize such harsh results by simply retaining government contract suspension debarment lawyers that also understand the specific substantive areas of law that ultimately led to being debarred.
Government contractors are suspended and or debarred due to alleged wrongdoing that can severely question their present ability to be a responsible contractor.

Debarment Meaning – What Does “Responsible” Mean Under  Contractor Debarment Regulations?

Under the government’s debarment meaning, the applicable standards for contractor responsibility include but are not limited to the following:

  • The ability to provide adequate and sufficient financial resources to perform federal contracts
  • Having the ability to comply with proposed delivery schedules for project work
  • Demonstrating a satisfactory record of contract performance (also see the requirements for neutral ratings)
  • Demonstrating a satisfactory record of business ethics and integrity
  • Having the necessary organization, experience, accounting systems, and operating controls to effectively regulate processes and assure quality
  • Having the required resources to perform government contract
  • Having the necessary licensing and qualifications to perform the contract in compliance with local laws and regulations

What is debarment of government contractors? When applying the definition of being debarred from government contracts, many cases involved a lack of contractor business integrity and ethics violations. Small businesses and larger DOD contractors must be aware of the various examples of what can lead to being debarred from bidding Violating federal antitrust statutes

  • Criminal corruption, including fraud, embezzlement, bribery, theft, forgery, falsification of records, tax evasion, and other crimes.
  • Failure to disclose violations of criminal law
  • Violations of OSHA or the Drug-Free Workplace Act
  • Received a civil judgment against you
  • Violations of the FAR limitations on subcontracting regulations
  • Pass-through contracts
  • Violation of SBA HUBZone regulations
  • Noncompliance with SDVOSB certification requirements
  • Participating in unfair trade practices

Debarred from Government Employment?

Individuals facing debarment will also be impacted.  Debarments and suspensions impact individuals. By removing them from a government job, that person may waive reemployment in the industry. A debarred government employee may also find it difficult to get federal assistance such as federally-backed mortgages, loans etc. When it comes to being debarred from government employment, the common legal issues include providing an intentional, material false statement to the government. This could be on a job application. Common problems occur with job applications regarding being arrested for, charged with or convicted of any offense in the past years. Keep in mind that government attorneys come after employees for submitting an answer that they know to be false. See Grayton v. Office of Personnel Management, C.A.F.C. No. 2010-3161 (nonprecedential), 2/16/11).

In addition to submitting false information on job applications, the catch-all reasons usually cause government employees to have to fight for their careers – debarment or suspension for “any other cause of [a] serious or compelling nature.” This is another reason why you want to have an experience debarment and suspension attorney on your team.

Tips for Responding to a Proposed Debarment

Simply because you have a solid compliance program in place, your company is not immune from debarment or suspension from doing business with the federal government. If you are notified of a proposed debarment action, you must take this very seriously. You are on notice, and you now have to respond. How you, or your attorney, responds is critical to whether or not your business future will be in jeopardy.

Responding to a proposed debarment first starts with understanding the goals of the statute. See Federal Acquisition Regulation (FAR) 9.406-2 and OMB’s guidelines, and 2 C.F.R. § 180.800. The goal is to only award government contracts to “responsible” contractors. Your main goal is to present a response that speaks to your company’s responsibility and convince the SDO that your firm is not a risk to the government. Explain the policies you have in place, currently working on and any corrections you have completed once you were made aware of any alleged violations.

Second, you should not argue why the statute is unfair. This is almost never a winning argument when responding to a proposed debarment. The reality is that government contractors can be debarred if there are criminal convictions or civil judgments relating to fraud, embezzlement, theft, bribery, antitrust violations, and tax evasion. You never want to argue the merits of the case or argue that the case is still pending and that you should not be debarred until the outcome of the case.

Third, carefully read the notice of debarment and address the specific issues of concern discussed. You can present evidence to rebut any allegations. Fourth, when responding to a federal debarment and suspension of government contractors, you must substantially focus on establishing present responsibility are a contractor. You can introduce your version of the facts. However, you must be able to corroborate your version of the fact. Writing simply to shift blame is almost always never a good approach. This is why consulting with an experience debarment attorney is a good way to go.

After You Are Debarred What Happens Next?

After the SDO issues a ruling of being debarred or suspended as a contractor here are actions that will be put in place.

  • Your name will be published as ineligible in the System for Award Management (SAM), used by the GSA and agencies in the Executive Branch to manage and award government contracts.
  • The contractor may not be awarded a government contract by any agency in the Executive Branch unless the head of that agency can offer a compelling reason (in writing) why business dealings should continue.
  • No government contract may award the debarred contractor a subcontract in excess of $30,000 without additional stipulations and restrictions.
  •  You may not conduct business with the Federal government as an agent, representative, or surety of another contractor.
  • The contractor’s relationship with any organization doing business with the government will fall under additional scrutiny.

What is the Difference Between the Suspension and Debarment Laws?

The main difference between the suspension meaning and the debarment definition is the amount of time that a contractor or employee is prohibited from working with the federal government. Both can include contracts, employment, grants, or loans with the government. A party can be suspended pending the outcome of an investigation etc. Whereas, debarment may be focused on the actual outcome.

How Long Does Debarment Last? When you are debarred from doing business with the federal government, a period of debarment can last up to three years. The seriousness of the alleged actions or inactions will drive the amount of time that you are debarred from government contracts.

What options do you have after receiving a letter recommending you to be debarred? If you receive a federal Suspension or Debarment letter, you can respond to the Suspension and Debarment Office (SDO) before he or she makes a final decision.  You can consider this as part of the administrative due process.  To reduce the chances of being debarred from government contracting or doing business with the federal government, your response should focus primarily on the fact that either you or your company are responsible to contract with the government. You can also request a meeting with the SDO with your suspension and debarment lawyer.   Your response should not focus on blame but certainly should not leave out important points that would help your defense from being debarred.

Do You Have the Best Suspension and Debarment Lawyers on Board? As mentioned above, the cause leading to suspension or debarment can be the variable to decide if you have the best suspension debarment lawyer on board. For example, if you are debarred for violation of the small business regulations, you will want an attorney that also understands those regulations, etc. In addition, if you are being debarred, there may be also a separate ongoing criminal case. This creates a chance for competing or inconsistent statements in the two separate hearings. Having the right attorney can make a difference in both outcomes.

What are Common Mistake to Avoid? When you are slated for debarment as a federal contractor things you must avoid include; hiring different attorneys. to represent you in a criminal case and not involve the attorney that handles the actual debarment response.  The obvious reason is that statements in two different cases can not be used as committing false statements to the government.  Another common trap to avoid is to submit bids and represent that you are not debarred simply because the decision has not been made. If you have a pending debarment case, you may want to seriously consider disclosing it during the bid submission phase. Last, but not least, if you are a subcontractor and the prime is being investigated of subject to a potential suspension or debarment, your company may be next on the list for an investigation.

Contact Our Federal Debarment Lawyers for Immediate Help

If you are facing an adverse suspension or debarment action from government contracts action, have received a notice of proposed debarment or need help avoiding the debarred definition, call our government contracts debarment lawyers for immediate help. Call 1-866-601-5518 Toll-Free.