Federal Acquisition Regulation

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On September 21, 2023, the White House directed federal agencies to incorporate interim Social Cost of Greenhouse Gases (SC-GHG) estimates into a wide range of federal agency actions, including each agency’s procurement function.  This most recent direction builds upon the Administration’s ongoing and wide-reaching effort (examples discussed here and here) to leverage federal procurement spending in pursuit of climate change and sustainability policy objectives.  The hallmark of that effort to date had been a proposed rule that would, if finalized, require thousands of federal contractors to inventory, publicly disclose, and, in some cases, seek reductions in GHG emissions (see our prior discussion here).  However, the White House’s incorporation of SC-GHG into the federal procurement process has the potential to be just as significant to the contracting community by providing a cost metric (in dollars) needed for contracting agencies to evaluate and confer a preference on bids and contractors with lower GHG emission profiles.Continue Reading Biden Administration Moves Closer to Establishing Framework for Giving Preference to Bids and Contractors with Lower GHG Emissions

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

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