While most federal contractors run an honest business, the news is saturated with stories about unscrupulous firms defrauding the government in order to win government contracts and grants. While there are many ways for contracting officers to respond to issues with vendors, including civil and criminal prosecution, a major tool at their disposal is Suspension and Debarment.
Suspension and Debarment, or S&D, are non-punitive measures which help ensure that federal dollars are only awarded to firms that are considered to be “presently responsible”. This means vendors who conduct business in an ethical manner and in accordance with any applicable laws and regulations. A vendor is also considered responsible if they generally complete the work contracted out to them according to the terms of the agreement. This simple due process procedure allows contracting officers to stop an irresponsible vendor from receiving further contract or grant awards.
Suspension and Debarment are defined in the Code of Federal Regulations as the following:
Debarment: An action taken by a debarring official under Subpart H of this part to exclude a person from participating in covered transactions and transactions covered under the Federal Acquisition Regulation (48 CFR chapter 1).
Suspension: An action taken by a suspending official under subpart G of this part that immeidately prohibits a person from participating in covered transactions and transations covered under the FAR (48 CFR chapter 1) for a temporary period, pending completion of an agency investigation and any judicial or administrative proceedings that may ensue.
In simpler terms, Suspension is an action which immediately stops a contractor’s ability to win contracts or grants for a period up to 12 months. This is generally used when it is necessary to act immediately while the agency determines whether to debar the vendor. Debarment takes a somewhat longer period of time to take effect and requires more evidence than suspension. Debarment can last anywhere from 1-3 years.
There are a number of actions which could be cause for S&D proceedings. These include:
Conviction or Civil Judgement
- Fraud in agreements or transactions
- Antitrust violations
- Embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, receiving stolen property, making false claims, or obstruction of justice
- Any other offense indicating a lack of business integrity or business honesty that seriously and directly affects present responsibility
Serious Violation of Terms of Public Agreement
- Willful failure to perform agreement
- History of poor performance
- Willful violation of statutory or regulatory requirements applicable to agreement
- Non-IRS debts
Any other cause if so serious or compelling that it affects the firm’s present responsibility.
While it is possible for a firm to appeal an S&D decision, it is a difficult and lengthy process with little chance of success – and may even result in a prolonging of suspension or debarment. Under the current rules for S&D, each agency is responsible for how it processes and applies these measures. This flexibility does give government contractors the ability to negotiate with the agency in order to avoid S&D and continue receiving contracts or grants.
Although S&D are not applied as punitive measures, they can have a negative impact on the business in question. Debarment can cripple a business or end a career. S&D decisions are considered public information, so anyone can look up whether a business has been debarred as well as the reason for their debarment.
What can your business do in order to avoid being the subject of S&D proceedings? First and most obviously, follow all laws and regulations applicable to your industry and the contract you are working on. Conduct your business in an ethical manner and do your best to fulfill the terms of any agreements you enter into. Be absolutely certain that your company is completely and accurately registered in the System for Award Management. Misrepresenting yourself when it comes to set-asides or Reps and Certs is one of the easiest mistakes a vendor can make – and the most likely to lead to S&D proceedings if they are awarded a contract they are not qualified for because of this mistake. Less obviously – be sure to check out the status of any sub-contractors before signing them on to a project. While you may not necessarily be held responsible for the actions of those businesses and individuals you subcontract work out to, it only takes a few minutes to search the Excluded Parties database and avoid the headache that comes with an investigation if they are not on the up and up.