The Federal Acquisition Regulation (FAR) is the statute that prescribes the policies and procedures governing the debarment and suspension of contractors by federal government agencies. It provides that all federal contractors debarred, suspended, or proposed for debarment are excluded from receiving contracts, and agencies shall not solicit offers from, award contracts to, or consent to subcontracts with these contractors, unless the agency head determines that there is a compelling reason for such action.
Suspension and debarment are discretionary actions. Accordingly, they are two separate proceedings. While suspension is the temporary exclusion from soliciting and receiving federal government contracts; debarment sets forth said exclusion for a fixed period of time, which normally does not exceed three years. Suspension and debarment apply for all organizational elements of the contractor and may extend to any affiliates unless the agency head or a designee states in writing otherwise.
What Happens When a Contractor is Debarred or Suspended?
Contractors debarred, suspended, or proposed for debarment, are also prohibited from:
- Entering into any subcontract in excess of $35,000.00, other than for a commercially available off-the-shelf items and other exclusions;
- Placing orders exceeding the guaranteed minimum under indefinite quantity contracts;
- Placing orders under Federal Supply Schedule contracts, blanket purchase agreements, or basic ordering agreements;
- Adding new work or extending the duration of current contract, and;
- Acting as individual sureties.
What is the Procedure for Suspension?
A contractor may be suspended upon suspicion, with adequate evidence, of: (1) commission of fraud or a criminal offense in connection with obtaining or performing a public contract or subcontract; (2) commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements; (3) commission of any other offense indicating a lack of business integrity or business honesty. Indictment for any of these causes constitutes adequate evidence for suspension.
The contractor and named affiliates are afforded an opportunity, following the imposition of suspension, to submit information in opposition to the suspension and the contractor has the burden of promptly presenting information of remedial measures made by it.
If a suspension is entered, it is for a temporary period pending the completion of any ensuing legal proceedings. If legal proceedings are not initiated within 12 months after the date of the suspension notice, the suspension shall be terminated unless an Assistant Attorney General requests its extension, in which case it may be extended for an additional 6 months. In no event may a suspension extend beyond 18 months, unless legal proceedings have been initiated within that period.
What is the Procedure for Debarment?
Debarment is imposed only after the completion of the legal proceedings against the contractor. A contractor may be debarred for the same reasons as provided for suspension. A notice of proposed debarment shall be issued advising the contractor and any named affiliates, in the same manner as they would be advised of a suspension.
In debarment actions based upon a conviction, the decision to debar is made on the basis of the information in the administrative record as well. If no suspension is in effect, the decision shall be made within 30 working days after receipt of any information submitted by the contractor.
If the debarring official decides to impose debarment, the contractor and any affiliates shall be given prompt notice specifying the reasons for debarment; and stating the period of debarment, including effective dates. The period shall be commensurate with the seriousness of the cause(s), and generally will not exceed 3 years. If suspension precedes a debarment, the suspension period shall be considered in determining the debarment period.
Can I Appeal a Suspension or Debarment Decision?
The Administrative Procedure Act, provides that a reviewing court shall hold unlawful and set aside agency findings and conclusions found to be arbitrary, capricious, an abuse of discretion, or not in accordance with the law. This standard of review is a narrow one, since a district judge is limited in his or her authority to find whether the agency action was rational. The ultimate decision, as to the propriety to debar, is a discretionary decision of the debarring agency. When made according to law and regulations, the decision is entitled to great deference.