As published in LAW360, here: http://www.law360.com/articles/511084/a-false-sense-of-security-from-less-suspension-debarment
We are heading for a period of decreased suspension and debarment activity. I don’t mean the exclusions of individuals after mandatory disclosures, immigration violations or following news stories. Those will continue. I mean agency-developed, field-referred cases that evolve through partnerships
In Agility Def. & Gov’t Servs. v. Dep’t of Def., the Eleventh Circuit reversed an Alabama district court ruling and held that under the Federal Acquisition Regulation (FAR), when the government suspends a contractor, it may suspend affiliates of that contractor for more than 18 months based solely on its affiliation with the contractor as long as legal proceedings have been initiated against the contractor, even if no legal proceedings are initiated against the affiliate.
In November 2009, the Defense Logistics Agency (“DLA”) suspended Public Warehousing Company, K.S.C. (“Public Warehousing”), the parent company of Agility Defense and Agility International, after it was indicted for allegedly defrauding the government in connection with a food supply contract. DLA also suspended Agility Defense and Agility International solely because they were affiliates of Public Warehousing Company, K.S.C (“Public Warehousing”). Both affiliates submitted written responses to DLA opposing their suspensions and arguing that neither affiliate was implicated in indictment of Public Warehousing and that both companies had sufficient compliance procedures in place. DLA rejected their requests to end the suspensions, and later rejected a second request to end the suspensions after Agility Defense presented evidence of improved compliance procedures and Agility International proposed a management buyout.
Continue Reading Eleventh Circuit Allows Suspension of Affiliates To Exceed 18 Months
On February 21, 2013, the Office of Personnel Management ("OPM") issued a notice in the Federal Register of its intent to adopt the policies and procedures set forth in the Federal Acquisition Regulation ("FAR") at Subpart 9.4 concerning debarment, suspension, and ineligibility of government contractors. Because OPM’s procurement rules are not contained in the Code of Federal Regulations, OPM proposes a new internal policy, to be titled "Contracting Policy 9.4: OPM Suspension and Debarment Program." OPM states that it has long-maintained procedures consistent with FAR Subpart 9.4, but it is adopting this proposed policy to make clear that FAR Subpart 9.4 applies to its contracting decisions.
Consistent with FAR Subpart 9.4, the proposed policy will provide as follows:
Continue Reading OPM Issues Notice of Written Suspension and Debarment Policy
On Thursday, August 9, 2012 at 1:00 p.m. (Eastern time), Crowell & Moring government contracts attorneys Richard Arnholt and Alexina Jackson will conduct a webinar entitled “Suspension and Debarment: Increased Enforcement Calls for Increased Attention to Compliance” in conjunction with L2 Federal Resources. During this 90-minute webinar, C&M’s experts will provide an overview of
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
Section 1683 of the 2013 National Defense Authorization Act, H.R. 4310, as approved last week by the House Committee on Armed Services, proposes an amendment to the Small Business Act to clarify that misrepresentation as to small business status in order to obtain certain prime contracts or subcontracts is an independent basis for suspension
Recent legislative trends appear to be squarely at odds with the stated purpose of suspension and debarment. The Federal Acquisition Regulation (FAR) describes a process focusing on “present responsibility,” an express acknowledgement of the potential for contractor rehabilitation, providing discretion to the suspension and debarment official (SDO) to determine the proper outcome of a contractor’s misconduct. Fiscal Year 2012 legislation and proposed legislation, however, suggest a punitive purpose for suspension and debarment, replacing discretion with mandatory outcomes.
The FAR describes the policy of suspension and debarment in subpart 9.402. Agencies are to do business “with responsible contractors only.” Using discretion, agencies are to suspend or debar to protect the government’s interest in contracting with responsible contractors. Because of the “serious nature of debarment and suspension,” it is a tool that should be used “only in the public interest for the Government’s protection and not for purposes of punishment.” FAR 9.402(a)-(b). It is the SDO’s responsibility to assess whether suspension or debarment is in the government’s interest—the mere existence of grounds for suspension or debarment does not require suspension or debarment. FAR 9.406-1(a); 9.407-1(b)(2).
Rather, the SDO is encouraged to consider a list of contractor mitigating factors, many remedial in nature, before imposing suspension or debarment. Various of the remedial actions (including internal disciplinary action, enhanced review and control procedures and training programs, and management recognition of the seriousness of the misconduct) are best characterized as a contractor’s rehabilitation to status as a responsible contractor. FAR 9.406-1(a); 9.407-1(b)(2). Once a contractor returns to being presently responsible, it may continue to do business with the government. Penalties for contractor misdeeds may be pursued instead through various remedies available to the Department of Justice, such as the False Claims Act or Foreign Corrupt Practices Act. (For a discussion of FY 2011 DoJ Fraud and False Claims recoveries, refer to an earlier post).
In contrast, recent legislation—and proposed legislation—paints a black-and-white, punitive role for suspension and debarment. The Consolidated Appropriations Act of 2012 (Pub. L. 112-74, Dec. 23, 2011), for example, prevents agencies from funding contracts, agreements, grants, or loans to companies convicted of a felony crime of which the agency is aware unless the agency affirmatively considers the company for suspension and debarment and determines that no further action is necessary. In certain divisions of the Act, the funding prohibition extends to convictions of an agent of the company. (For more details, refer to earlier posts (1/18/12, 2/23/12)). This law also raises questions about the role and authority of the lead agency if every agency must make these affirmative findings for each new contract award and risks doing so in an inconsistent manner.Continue Reading Rehabilitation Or Punishment? — The Evolution of Suspension and Debarment
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
In January and February, my colleague, Bob Wagman, wrote about complications related to provisions on suspension and debarment in the Consolidated Appropriations Act of 2012 (Pub. L. 112-74) (1/18/12) (2/23/12). The provisions in the 2012 Appropriations Act were all premised on the conviction of a corporation (or in certain provisions, its officer or agent) of a felony criminal violation. This month we look at a proposed bill that would mandate suspension (not debarment) for mere allegations of fraud, among other things.
Around February 29, 2012, Senators Claire McCaskill (Mo.) and Jim Webb (Va.) introduced legislation called the Comprehensive Contingency Contracting Reform Act of 2012. S.2139, 112th Cong. (2nd Sess. 2012) (Act). Intended to “overhaul the federal government’s planning, management, and oversight of contracting during overseas contingency operations” (Sen. Webb Press Release, Mar. 1, 2012), the bill includes a section on “Additional bases for suspension of contractors from contracting with the Federal Government.” Act sec. 113.
Section 113 of the Act provides for the automatic suspension of a contractor in three situations:
(1) If a contractor is charged with a criminal federal offense related to the performance of a
contract related to “overseas contingency operations” for the Department of Defense,
Department of State, or U.S. Agency for International Development.
(2) If the head of one of the above named agencies makes a final determination that the
contractor failed to pay or refund amounts due or owed to the federal government in
connection with an “overseas contingency operation.”
(3) If the federal government alleges fraud against a contractor in a civil or criminal
proceeding related to a federal contract, whether or not connected to “overseas contingency
operations,” and whether or not the alleged acts were committed by the contractor, its
employee, affiliate, or subsidiary, or any business owned or controlled by the contractor.Continue Reading Attempting to Broaden the Mandatory Suspension & Debarment Net: McCaskill – Webb Senate Bill 2139
‘Felony Conviction’ ‘Anti-Deficiency Act’
Continue Reading Suspension and Debarment – Agencies grapple with the statutory exclusion for felony convictions in the FY 2012 Consolidated Appropriations Act