When it comes to suspension and debarment from government contracts, companies should follow the basic ten commandments to reduce an adverse decision when responding to a proposed suspension debarment notice.
Show That Your Company is a Responsible Government Contractor
When responding to contractor debarment and suspension notices, the critical point when deciding your negotiation strategies is to convince the deciding official that you are a responsible federal government contractor. The government is mandated by statute to only award contracts to responsible contractors.
- Simply saying that you are sorry or blaming an employee for unethical behavior is not enough.
- Simply firing an employee is not enough
- You must show how you will develop and actually follow through with your compliance programs.
- Since violation of the False Claims Act is a very common subject lately, serious development of fraud prevention policies and procedures could reduce the impact of a suspension or debarment
The chances of avoiding suspension or debarment from government contracts can be reduced by admitting liability but more importantly convincing that debarment official that you take the matter seriously by digging deep into the company operations and showing some level of follow up and oversight to make sure the problem does not occur again. See information about Federal False Claims Act penalties.
Negotiation Strategies – Develop a Very Detailed Contractor Ethics Program
Debarment and suspension of government contractors often occur because an employee or executive may choose to take shortcuts or simply made no effort to understand FAR regulations that apply to the contract. Failure to develop a detailed contractor ethics program or internal controls and policies can be a sign to the SDO that your company is a risk an therefore not a responsible contractor.
When looking at viable negotiation strategies, understand that a parent company that has subsidiary companies still have to make sure that the subsidiaries maintain effect ethics programs that can avoid suspension and debarment.
Having an ethics program on paper but simply not following through with effective oversight can raise a red flag that will essentially lead to suspension or debarment.
- Contractors with high-dollar contracts should especially be aware of this common pitfall
- Do you have a process for identifying employees who put the company at risk for suspension and debarment
- Does your employment contracts have provisions for swift termination?
- The SDO does not want to see reactive measures, they want to see proactive measures
Do Not Be Argumentative With Debarment Officials in Responses: As a government contractor that wants to avoid debarment and suspension often take the matter on themselves and without an attorney. This can be dangerous because, with the experience in suspension and debarment proceedings, the contractor may be argumentative by simply not demonstrating any apologetic symptoms but instead arguing that it doesn’t see any reason why the matter should be taken so seriously.
- When you appear before a suspension and debarment official, he or she holds the cards to your future of doing business with the government
- The government has taken the matter seriously. It is up to you to demonstrate that your company can be trusted to be responsible
- Although it can be an expensive undertaking, having legal counsel that understands the suspension and debarment process can be a great benefit to the end result.
Develop Contractor Compliance Programs that Make Sense
Federal debarment regulations can become a government contractor’s worst enemy if they respond to the debarment or suspension notice with a stack of paperwork called a company compliance program. To avoid termination from doing business with the federal government, your contractor compliance programs should target specific issues and show the risk to the company.
- Contractor compliance programs should show a simple process that identifies specific issues and shows a path of correcting them
- The SDO may also look for allowances for voluntary disclosure from employees
- Having the required expertise on FAR regulations is also critical – remember the suspension and debarment program is there to minimize the government’s risk. The biggest risk is nonperformance of the contract.
- Learn how to identify company risk and how to develop internal policies and controls to minimize exposure.
Remember that Suspension and Debarment Regulations Should Not Punish Contractors: Oftentimes, federal government contractors think that the contracting agency is simply punishing them by referring them to debarment and suspension. As a result, they hire a suspension and debarment lawyer for litigating and create an adverse situation.
Although finding a debarment and suspension lawyer is advisable, the primary reason is not to create a hostile environment. Instead, the attorney should be focused on helping to convince the SDO that you are a responsible contractor and that you have protective measures in place that can avoid suspension or debarment actions in the future. Of course, the facts of each case are different and there might be evidence of bad faith. However, the legal standard and burden of proof
Of course, the facts of each case are different and there might be evidence of bad faith. However, the legal standard and burden of proof are high. The government has already made a recommendation to debar or suspend your company.
- The goal of a suspension and debarment lawyer should be to get your company back into operation and to avoid a final decision that is adverse to the company
Understand the Debarment and Suspension Process
The Federal debarment and suspension process should provide for a smooth path to helping the SDO make an informed decision.
Requesting the administrative record should be done early and not wait until the eleventh hour. When you hire a suspension and debarment lawyer, it is important to know that the debarring official wants to get to the issues quickly. Showing up at a hearing or meeting, the attorney should be prepared to discuss the issues and get to a plan of action that can avoid the suspension or debarment.
- Understanding the process is critical to setting a good impression on the SDO
- The focus on any debarment or suspension action should be to get to a win-win result
Know When to Request an Administrative Agreement: One of the tools that companies can use to avoid debarment and suspension of government contractors is to consider asking for an Administrative Agreement. First, you should understand the risk to your business. These agreements become a matter of public record. However, there are situations where the CEO of the company has been found guilty of criminal charges, has been indicted in a criminal proceeding and the business still wants to operate. This could be a situation for requesting an Administrative Agreement that would keep the owner away from the business operations.
Conduct an Internal Investigation: One great tool that government contractors fail to use when facing Procurement Debarment and Suspension of Government Contractors is to conduct an internal investigation. Having someone on the inside conduct the investigation can lead to devastation results if that person does not understand the suspension and debarment process.
Sometimes, the suspension and debarment law firm can conduct the investigation because it is in a better position to know the issues that can be identified in your ethics or internal policies and controls before presenting them to the SDO.
When problems are found, companies and debarment lawyers should focus on disclosing them early to the debarring official. Remember that the focus is to identify the potential problems and to convince the SDO that you will resolve them.
- The debarring official must have some level of comfort when making a decision not to debar or suspend you company.
Know That Suspension and Debarment Can Trigger from Other Actions
When government contractors are subjected to federal investigations for violations of the False Claims Act, ITAR compliance rules or involved in some level of procurement fraud and criminal activity, those actions by their very nature trigger suspension and debarment actions.
The contractor now has the problem of dealing with both the criminal and civil penalties. However, now they also have to defend the suspension or debarment action. This can be problematic when there are so many moving pieces. For example, information discovered during the debarment action could also implicate the contractor in another criminal defense case.
Having different attorneys or law firms handling separate issues can be risky. Consider having the same entity handle all the legal issues if they have the requisite experience.
For immediate help in a pending federal suspension and debarment action, contact Watson & Associates’ government contract attorneys or call 1-866-601-5518