Government Contracting:Changes Proposed for Suspension and Debarment Proceedings Could take Power and Flexibility from Agencies

federal contractor suspension and debarmentA bill proposed on February 7th by House oversight chairman Rep. Darrell Issa, R-Calif., could change the way suspension and deparment programs are administered. The Stop Unworthy Spending, or SUSPEND, Act would consolidate the suspension and debarment offices of over 41 civilian agencies under a new centralized Board of Civilian Suspension and Debarment to be managed by the General Services Administration. Issa contends that the changes are necessary to combat over $1 trillion in contracts awarded to “fraudsters, criminals, or tax cheats.”

Suspension and debarment are non-punitive tools used by the federal government to discourage unethical behavior by vendors and help ensure contracts and grants are only awarded to “presently responsible” parties. Suspension is a temporary action (typically up to 12 months) used to immediately prohibit parties from participation in federal contracting while officials investigate whether to debar the vendor; debarment excludes the party from federal contracts and grants for 1 – 3 years. Suspension and debarment are typically used when vendors are guilty of committing fraud, criminal activity, violating terms of agreement, exhibiting a history of poor performance, falling behind on non-IRS related debts, or committing any other offense considered so serious or compelling it affects the firm’s present responsibility.

Issa and other supporters hope the bill will result in consistent, uniform application of suspension and debarment, increased government transparency, and help to stop socieoeconomic misrepresentation by vendors.

Under the current system, each agency has its own policies and procedures regarding suspension and debarment. Audits and reports have uncovered numerous weaknesses and inefficiency in several agencies’ programs. For instance, the Department of Transportation’s self-initiated audit of their suspension and debarment program in 2010 revealed that their Operating Administrations took an average of over 300 days to reach a suspension decision and an average of over 400 days for debarment decisions. It was also found that suspension and debarment decisions were not entered into the Excluded Party Listing System (EPLS) within the required 5 day period. The audit also noted several other weaknesses including insufficient management oversight of the program and unclear timelines for S&D proceedings in their policies.

An audit of Department of Justice S&D practices revealed similar problems in reporting suspension and debarment to EPLS. Of 13 debarments, only 11 were ever reported to EPLS and 6 of those reported were not entered in a timely fashion. Four of those reported late took more than 124 days to be uploaded. Eight of the reported debarments were also inaccurate, citing incorrect names, addresses, and other vital federal contractor information. The DOJ’s audit also revealed that from FY 2005 – 2010, the agency awarded 77 contracts and modifications – totaling approximately $15.6 million – to six suspended or debarred parties.

Opponents, including contractor advocacy groups, fear that the proposed changes could create unfair burdens for vendors. Suspension and debarment proceedings may become more formal in nature, requiring firms to hire counsel. This would result in higher expenses and slower turnaround for affected contractors as well as potential for duplication and inefficiency in proceedings. Agencies would no longer have the same flexibility, giving them less leverage to negotiate concessions which allow contractors to avoid suspension or debarment.

Following stories and GAO reports concerning federal dollars being awarded to ineligible or unethical firms, the need for change in how suspension and debarment are handled is clear. Whether Issa’s proposed bill will adequately address the weaknesses in the current system without creating new problems is unclear, however all parties agree that some sort of change is necessary to ensure taxpayer dollars are being spent appropriately and responsibly.

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