Suspension and Debarment

Suspension and debarment actions prevent companies and individuals from participating in government contracts, subcontracts, loans, grants and other assistance programs. The effect of federal suspension and debarment is government wide.

Fortunately, most federal contractors never have to worry about such matters. But it's still important to know the rules of suspension and debarment, particularly if federal business is a significant portion of your sales.

Grounds for Suspension and Debarment

Grounds for both suspension and debarment include:

  • Commission of fraud or a criminal offense in connection with a public contract or subcontract;
  • Violation of antitrust statutes relating to the submission of offers;
  • Commission of embezzlement, theft, forgery and related crimes;
  • Intentionally affixing a label bearing a "Made in America" inscription to a product sold in or shipped to the United States, when the product was not made in the United States;
  • Violation of the Drug-Free Workplace Act of 1988;
  • Commission of an unfair trade practice;
  • Non-compliance (as determined by the Attorney General) with Immigration and Nationality Act employment provisions;
  • Violation of the terms of a government contract or subcontract so serious as to justify debarment;
  • Commission of any other offense indicating a lack of business integrity or business honesty that seriously and directly affects the present responsibility of a government contractor or subcontractor;
  • Any other cause of so serious or compelling a nature that it affects the present responsibility of a government contractor or subcontractor.

Suspensions can be particularly frustrating and seem especially unfair because they rest on suspicion or indictment, rather than final adjudication or conviction. Your company could be accused of something it didn't do, and, on top of all the problems associated with that, find itself suspended from performing federal contracts.

The List

Suspended or debarred contractors find themselves in that ominous place known as "List of Parties Excluded From Federal Procurement and Nonprocurement Programs." It's a searchable database on the Web for all the world to see. Federal agencies cannot do business with companies listed therein. Each listing includes:

  • Names and addresses of all contractors debarred, suspended, proposed for debarment, or declared ineligible, in alphabetical order, with cross- references when more than one name is involved in a single action;
  • Name of the agency or other authority taking the action;
  • Cause for the action (see 9.406-2 and 9.407-2 for causes authorized under this subpart) or other statutory or regulatory authority;
  • Effect of the action;
  • Termination date for each listing;
  • DUNS number and name and telephone number of the point of contact for the action.

Procedures

Federal agencies seeking debarment or suspension must give written notice to the contractor of the reasons for the proposed action. The contractor then has 30 days in which to make its case.

Generally, suspension is not to exceed 18 months. If a suspension is made permanent, the contractor enters into debarment, which generally can last up to 3 years.

Effect of Suspension and Debarment

Contracting officers are not allowed to solicit offers from, award contracts to, or consent to subcontracts with suspended or debarred contractors.

Contracting officers can avoid this prohibition only if they have "compelling reasons" to do so.

In the case of a subcontract, the prime contractor must explain to the contracting officer the "compelling reasons" why it needs to include the debarred or suspended subcontractor, along with the systems and procedures the prime contractor has established to ensure that it is fully protecting the government's interests.

Avoiding Suspension and Debarment

Suspensions and debarments do great harm to your reputation and your profits. They are to be avoided, needless to stay.

Stay on good terms with your contracting officers and keep a constant dialog going. Be clear that you want them to inform you early of any contracting problems, well before they spin out of control. Perform on time and take seriously the terms of your contract. And of course stay away from legal trouble.

If you do receive a notice of suspension or proposed debarment, you should contact your attorney immediately.


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