In a June 2012 audit report, the Department of Justice Inspector General notes widespread problems with DOJ’s administration of two types of statutory debarments. The lengthy report, along with the responses from various DOJ divisions, highlight the continued attention being paid to suspension and debarment by federal agencies and the significant efforts being made to shore up those processes.
DOJ is responsible for two types of debarments statutorily mandated as a result of a conviction or qualifying offense:
(1) 10 USC 2408, which mandates debarment for fraud or felony convictions arising out of a contract with the Department of Defense. Parties debarred pursuant to this provision are prohibited from being involved with a defense contract or first-tier subcontract of a defense contract, typically for a period of not less than five years; and
(2) 21 USC 862, which prohibits an individual convicted of trafficking in or possession of drugs from receiving all or selected federal benefits.
The DOJ IG’s audit, which reviewed oversight and implementation of these statutory debarment authorities between FY 2005 through FY 2010, concludes that a number of shortcomings “create the possibility that federal funding may be inadvertently and inappropriately awarded to excluded individuals.” Specifically, the report notes:
- Not all qualifying cases are submitted to DOJ’s Defense Procurement Fraud Clearinghouse, the repository of exclusion data, by DOJ litigating divisions;
- Not all cases submitted to the Clearinghouse are entered into the Clearinghouse database, the Excluded Parties List System, which is available at EPLS.gov and lists excluded parties, or both;
- Non-qualifying cases were inappropriately entered into the EPLS by the Clearinghouse;
- Data entered into the Clearinghouse database and the EPLS is not always accurate or complete, and corresponding records in each database are not always identical; and
- Data entry into the Clearinghouse database and the EPLS is not consistently performed in a timely manner.
Responses from the various DOJ divisions to the audit report include broad agreement with the IG’s 21 recommendations to address these deficiencies and commitments to promptly implement those improvements.
Importantly, increased attention to mandatory exclusions pursuant to 10 USC 2408 heightens a compliance risk to contractors. In addition to the mandatory debarment provision, that statute provides for criminal penalties of up to $500,000 where a contractor or subcontractor is convicted of knowingly employing a person debarred under this authority or allowing such a person to serve on the board of directors. Contractors’ hiring procedures should include steps to address and mitigate this risk.
We expect agencies to continue to focus on improving their suspension and debarment processes and programs both for statutory and discretionary exclusion authorities in the coming months, a trend that will likely result in an increasing number of exclusions.