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