Government Contracts Legal Forum : Government Contracts Lawyers & Attorneys for Litigation & Counseling

 Although not conveyed in those exact words, that sentiment was expressed at several points by Chairman McCaskill during a hearing on April 17 before the Senate Ad Hoc Subcommittee on Contracting Oversight of the Homeland Security and Governmental Affairs Committee on The Comprehensive Contingency Contracting Reform Act of 2012 (S. 2139). Why? Because the Air Force suspends and debars more contractors than other agencies. And it is clear that legislators want to force other agencies to produce suspension and debarment numbers similar to the Air Force. How best to go about spurring suspension and debarment activity is currently being debated between the legislative and executive branches. Unfortunately, this debate places companies doing business with the government in the unenviable position between Congress, which is trying to legislatively broaden the scope of suspension and debarment, and the Executive branch, which is trying to demonstrate such legislation is not necessary by increasing the number of suspension and debarments.

As my colleague Alexina Jackson previously reported (3/15/12), Congress’ most recent attempt to stimulate suspension and debarment activity is Section 113 of S. 2139, which would usurp an agency’s discretion to suspend a contractor only after it affirmatively determines such action is necessary, and instead establish certain mandatory suspension provisions. If enacted, any federal government allegation of fraud against a contractor in a civil or criminal proceeding related to any federal contract would trigger a statutory suspension. This exclusion would apply to any contractor, not just those involved in contingency operations, expanding upon recent statutory initiatives that prohibit the use of certain appropriated funds for companies that have been criminally convicted.

Chairman McCaskill stated during the hearing that this provision was “trying to encourage aggressiveness” and overcome the “cultural pre-disposition to not suspend or debar” found at agencies other than the Air Force. Chairman McCaskill stated her view was that there should be a presumption of exclusion if charges are alleged against a contractor, and, only after a formal consideration of the circumstances should the contractor be permitted to continue competing for federal contracts.

While all of the agencies testifying before the subcommittee—Defense, State and USAID—seemed to agree that the government should increase its number of suspensions and debarments, they all oppose the bill’s automatic exclusion provision as the best means to achieve that goal. In his written testimony, Mr. Ginman, Director, Defense Procurement and Acquisition Policy, stated “DoD opposes mandating automatic suspension because for the suspension and debarment process to have legitimacy and credibility, SDOs need independence, freedom of action, and discretion to exercise judgment regarding whether an exclusion is appropriate.” Both the State Department and USAID pointed to their increasing numbers of suspensions and debarments in recent years to support their position that legislative action is not required. Interestingly, both DoD and State expressed concern that an automatic exclusion denies contractors’ due process, which they anticipate leading to increased litigation, thereby threatening to eviscerate the efficiencies built into the current system.

It is a long, long journey for a bill to become a law, so it is too early in the process to know what, if anything, will ultimately be enacted. Unquestionably, protecting tax dollars from unscrupulous contractors is a laudable goal that the government should pursue. How best to pursue that goal, however, is currently the subject of reasonable debate. How these differences are ultimately resolved is secondary. For now, what companies doing business with the government need to understand is that the discussion is on-going and the raw number of suspensions and debarments appears to be the only metric being evaluated. Either through legislation or increased enforcement, there is going to be increased suspension and debarment activity for the foreseeable future and the current “more-is-better” climate easily can impact good and ethical companies, requiring extra on-going vigilance. 

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In our earlier post, we discussed the provisions sprinkled throughout the Consolidated Appropriations Act of 2012 (Pub. L. 112-74) that prohibit certain agencies from using federal appropriated funds “to enter into a contract . . .[with] any corporation that was convicted of a felony criminal violation under any Federal law within the preceding 24 months, where the awarding agency is aware of the conviction, unless the agency has considered suspension or debarment of the corporation and made a determination that this further action is not necessary to protect the interests of the Government.” As we noted, this is not a government-wide prohibition, but rather Congress inexplicably included the exclusion provisions in only five of the nine Divisions comprising the Act, and established different standards in the various exclusion provisions.

Federal agencies are now attempting to implement this requirement. Indeed, contracting officers are particularly concerned as issuance of a contract in violation of the restriction could result in a violation of the Anti-Deficiency Act. The Federal Acquisition Regulatory Council opened a FAR Case and a proposed FAR provision is due to the Council on March 7, 2012. (FAR Case 2012-005). Given the different standards under the Act that apply to different agencies and the complexities underlying appropriations law, this will not be a simple undertaking. 

In the interim, on January 23, 2012, the DoD’s Director of Defense Procurement and Acquisition Policy issued a DFARS class deviation effective immediately that imposes a new certification requirement on contractors in an effort to comply with the Appropriations restriction. The deviation established DFARS 252.209-7999 to be used whenever the agency is using FY 2012 funds and requires that all offerors on DoD contracts complete the following representation:

The Offeror represents that -

It is [ ] is not [ ] a corporation that was convicted of a felony criminal violation under Federal law within the proceeding 24 months.

DoD’s implementation still leaves some open questions. For example, DoD’s interim certification appears to assume the restriction only applies to “the offeror.” The statute, however, is ambiguous as to whether it is limited to the contractor or applies to all affiliated entities under the same corporate umbrella. Further, the DFARS deviation is required to be included on all solicitations, but both the statute and DoD’s class deviation are unclear as to whether this restriction applies to new task or delivery orders under existing contracts. Thus, even though DoD and other agencies are diligently working to clarify the Act’s requirements, many questions remain. It will be interesting to see how the FAR Council proposes to manage this unruly statutory scheme.

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Guaranteed to create uncertainty, the Consolidated Appropriations Act of 2012 (Pub. L. 112-74), which President Obama signed into law on December 23, 2011 (the “Act”), included several little-noticed provisions generally excluding the use of federal funds for any corporation convicted of a felony within the past 24 months. All of these provisions establish a unique procedure whereby the statutory exclusion is only triggered when the awarding agency is “aware of the conviction” and the agency’s consideration of suspension and debarment provides the relief from the statutory exclusion for the contractor. 

And it gets even more curious. The Act is a consolidation of nine different appropriations bills (delineated as Divisions under the Act) appropriating funds for FY 2012. As set forth below, Congress has inexplicably included the exclusion provisions in only five of the nine divisions comprising the Act, and equally inexplicably used different standards in the exclusion provisions. The covered divisions of the Act and the specific language include:

 

DIVISION A—DEPARTMENT OF DEFENSE APPROPRIATIONS ACT, 2012

SEC. 8125. None of the funds made available by this Act may be used to enter into a contract, memorandum of understanding, or cooperative agreement with, make a grant to, or provide a loan or loan guarantee to, any corporation that was convicted of a felony criminal violation under any Federal law within the preceding 24 months, where the awarding agency is aware of the conviction, unless the agency has considered suspension or debarment of the corporation and made a determination that this further action is not necessary to protect the interests of the Government.

DIVISION B—ENERGY AND WATER DEVELOPMENT APPROPRIATIONS ACT, 2012

SEC. 504. None of the funds made available by this Act may be used to enter into a contract, memorandum of understanding, or cooperative agreement with, make a grant to, or provide a loan or loan guarantee to any corporation that was convicted (or had an officer or agent of such corporation acting on behalf of the corporation convicted) of a felony criminal violation under any Federal law within the preceding 24 months, where the awarding agency is aware of the conviction, unless the agency has considered suspension or debarment of the corporation, or such officer or agent, and made a determination that this further action is not necessary to protect the interests of the Government.

(emphasis added).
 

 

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