Suspension and debarment of contractors: Is it going too far?

• Author: Grandon, Rodney A.
• Position: LEGAL VIEWPOINT

Suspensions and debarments to exclude government contractors from the federal marketplace incite passions on all sides.

Recent congressional action suggests a desire for more suspension and debarment actions to "punish" contractors, notwithstanding the stated regulatory purpose expressly excluding punishment as a basis for exclusion.

Congress may do what it likes in terms of establishing exclusions. The question is whether more and mandatory exclusions serve desired policy objectives, including protecting the government's business interests, promoting competition, preserving and expanding employment and growing the tax base.

Suspension and debarment practitioners both in the government and in the private bar wonder whether all this attention on a formerly sleepy section of federal contract law is the "new normal."

While recent attention has helped agencies view and use suspension and debarment as useful remedies to protect the government's interest, the "exclude more" mentality has its own dangers as we begin to approach a "one-strike-and-you're-out" expectation.

Under the procurement rules, suspension and debarment are discretionary actions that are among the tools available to agencies as they seek to comply with the requirement to solicit offers from, award contracts to and consent to subcontracts with responsible contractors only.

Suspension and debarment are a means to exclude non-responsible contractors. According to the Federal Acquisition Regulation, or FAR, it is the federal agency's suspending and debarring official's responsibility to determine whether an exclusion is in the government's interest.

If a cause for suspension or debarment exists, the contractor has the burden of demonstrating its present responsibility and that an exclusion is not necessary.

But what is a "Presently responsible contractor? Present responsibility is a term that is summarized as a contractor's ability to be trusted to deal fairly and honestly with the government, though it is not defined in law or regulation. The FAR provides minimal guidance.

The practice of suspension and debarment has evolved. Before reaching a debarment decision, the FAR lists several factors the suspending and debarring official must consider: whether the contractor had effective standards of conduct or internal controls in place at the time of the activity forming the basis for the suspension or debarment, whether the contractor timely disclosed the activity forming the basis for the action to the government, whether the contractor has fully investigated the matter and made the results available to the debarring official and whether the contractor has cooperated with the government during the investigation and legal proceedings.

The official should also consider...