The Government-Wide Debarment and Suspension Regulations After a Decade-A Constitutional Framework-Yet, Some Issues Remain in Transition

• Author: Brian D. Shannon
• Pages: 01

1. Introduction

   "[Tjhe current [debarment and suspension] process maintains an appropriate balance between protecting the government's interests in its contractual relationships, and providing contractors with due process."1

   The General Accounting Office reached this conclusion following its 1987 review of the msjor federal procuring agencies' debarment and suspension procedures. Those procedures, which are generally the same today,2 had their genesis as gov- 'Associate Professor of Law Texas Tech Unwerrlry Sehoal of Law BS summacera linzde. Angelo State Unl\ersn) 1878. J D.rlrh high honors, The Unrwrrrly 01Texas School of Lar, 1882 Pralerrar Shannon WBI &n Attorney Advisor In the Offlee of rhe General Counsel to the Secretary of the Air Farce from 1883.86 and iened as Couneel to the Air Farce Debarment and Suwennan Reiiev Board during that lime The positiom eapouaed ~n fhii article &re those of the author, hanmer and do nor neeesiarily refieel eifhei rhe hlsrarieal or current view of rhe Uepsrrmenl of rhe Mi Force 01 the Department of Defense The author rould also like to express apprerla.

   Cmw 0, Goi 7 OPERIT~OII PR(Feb 19871 Ihirelmfter G40 B

   *Sa# Fed AcqulslIlan Reg rubpf 8 4 lheremafler FAR],

   48 C FR wbpt 8 1(1@80)

   The regularlan~ define B ' debarmcnr" 8s the exeluilon of a eonfracror from Gmern. menf conrraenng and Ga,ernment-%ppraved .iubcanlractmg for 8 realanable ipeelfled perlad ' FAR R 403, 48 C FR I 8 403 (ISSO) A 'suspension' 11 an agency a(. fmn 'to duw~lIfy

   8 contractor fempor'8nly from Goiernrnent contracting and Gov-ernrnenr.spprmed rubconrractlng 'Id Thus. both of these ~rllonscause B eon.

   ernment.wide regulations approximately one decade ago Subsequent to the efforts of an interagency task force and congressional hearings. in July 1861, the Senate Subcommittee on Oversight of Government Management recommended that the federal government issue new debarment and suspension regulations to hare government-wide effect The federal government proceeded to implement those recommendations. Thereafter. over the last decade the federal government has greatly expanded Lts rate of imposing debarment and suspension against many of the contractors with whom It does buslnew5 and these actions are effective throughout the government. Because of the tensions between the government's interests in procurement integrity and contractors' interests in continuing to pursue government work-and perhaps as a re. suit of the heightened activity by the federal government in The debarment and suspension arena-a number of scholars and practitioners have written about the process In partlcu- -

   lar, several of these writers either have questioned the constitutional validity or otherwise have been critical of the government's debarment and suspension process.' This author respectfully disagrees with these analyses, and a maJor focus of this article is an examination of the reasons why agency adherence to the current debarment and suspension regulations will result in actions that comport with constitutional due process requirements. On the other hand, even though these government rules provide a constitutional framework, the regulations remain in transition and have been the subject of periodic changes. Thus, new matters will continue to arise. Accordingly, this article also will explore certain issues regarding not only recent but also contemplated changes to the debarment and suspension procedures

   I1 The Government-Wide Debarment and Suspension Regulations A Brief Overview

   The regulations governing the debarment and suspension of federal government contractors are set forth in subpart 9 4 of the Federal Acquisition Regulation (FAR).n These regulations evolved from efforts by the Office of Federal Procurement Policy (0FPP)-efforts that commenced approximately one decade ago. Roughly contemporaneously with the recommendations of the Senate Subcommittee on Oversight of Government Management to create debarment and suspension regulations with government-wide effect? the OFPP issued a policy letter setting forth proposed government-wide debarment and suspension regulations lo Thereafter, in June 1982, the OFPP issued an additional policy letter delineating final rules for government-wide debarment and suspension proce-

   dures " The OFPP mended that federal agencies imnally adopt the rules stated in Policq Letter 82.1 as part of the various agencies' procurement regulations and ulnmately intended to include them as subpart 0.4 of the FAR.'?

   The government did not simply thrust the rules included m Policy Letter 82-1 on the contracting community in a unilat. era1 fashion Instead, an intergovernmental task force corn. prised of legal and procurement experts from various federal agencies considered over 600 industry comments to the proposed rules lJ The OFPP maintained that the proposed Policy Letter 81-3 provided "fundamental due process" for contractors but, as a result of the public comments the OFPP further refined the procedures '+

   The OFPP's rules, as incorporated in the FAR. generally permit an agency to bar a contractor from recewmg new contract awards throughout the federal government prior to any opportunity for a hearing. Specifically. a federal agency may sus-pend a contractor based on adequate evidence of a variety of charges relating to a lack of contractor integrity l5 4n agency may impose a debarment on roughly similar grounds,Is

   my' POI c) Lar:cr R2-I nrredaied the m~lemerlarior of the

   frn note5 24-40 and acrarrpanringLa,+ Section of the American Bare P'OCP,. afforded Rough,> con ebarmenl and Iurpenllon pmcene io debarment and m?~en~ior races Ihan that (el forth ~n :he

   although a debarment requires a higher "preponderance of evidence" standard An agency's issuance of a notice of suspension or proposed debarment has the immediate effect of barring the contractor from receiving new contract awards from any federal agency l3 Thereafter, the hearing requirements vary depending on whether a debarment or suspension is involved. With respect to a proposed debarment, the contractor has the right to submit-in person, in writing, or through counsel-information and argument in opposition to the proposed debarment within thirty days following receipt of the notice.'e If the action IS not premised on a conviction or civil judgment, the contractor is entitled to an additional factfinding hearing if its initial presentation raises a genuine dispute concerning the facts giving rise to the proposed debarment.?@

   Similarly, with respect to a suspension, the contractor 1s entitled to submit information and argument in opposition to the suspension within thirty days following receipt of the notice Except in cases in rrhich (1) an indictment serves as the basis for the suspension or (2) the Department of Justice has advised that additional proceedings would jeopardize substantial governmental interests in pending or contemplated criminal or civil proceedings, the regulations require the agency to conduct additional factfinding proceedings vhen the contractor's submission in opposition raises questions of mate. rial fact.22 Because a suspension or proposed debarment precedes the opportunity for any form of hearing, contractors repeatedly have challenged the procedures on due process grounds. The next section addresses the due process issues connected with agency actions to debar or suspend government contractors

   udgment on charges smular

   are government-wide effect under the OFPP irameuark ~rlor

   10 1888 only final debarments had slmilar %mer"-meot-wide effect mere B ~ O D B O ~ P I I for debarmenr onli had the effeer of barnq the cantractor from 'ecelim8 ne

   wrilon or civil judgmenr the regula-

   111. The Debarment and Suspensian Regulations Fully Comport

   Despite numerous commentaries impugning either the constitutionality or desirability of the government-wide debarment and suspension regulat~ons,~~the courts generally have had little problem in upholding agency debarment and suspension actions against constitutional challenges when the agencies hare adhered to the regulations. The ensuing subsections will examine some of the early decisions that helped shape the debarment and suspension regulations' evolution, analyze the constitutional due process issues that are pertinent to the rules-inciuding a detailed focus on a recent decision of the Supreme Court that may alter the analysis in future debarment and suspension challenges--and discuss why cases adhering to the regulations comport with due process require-ments

   with Constitutional Requirements

   1. Significanl Decisions Prior to the Promulgation of the

      Government-Wide Debament and Suspension Regulations.

      The federal government did not draft the government-nde debarment and suspension regulations from a blank slate. Several significant court decisions guided the drafters in their efforts. The seminal case which led to the federal government's eventual development of goiernment-wide debarment and suspension procedures was Gonzales 1;. Freeman." In Gomales the Commodity Credit Corporation first suspended, then debarred a contractor from doing business with the agency for fire years The contractor challenged the action on due process grounds With respect to whether the court could even consider the contractors challenge, the District of Columbia Circuit announced

      Thus to sax that there 1s no "right" to government contracts does not resoIve the question of JUStlclabilitÔf course there 1s no such right; but that cannot mean that the government can act arbitrarily. either substantively or procedurally. against a person or that such person is not entitled to challenge the processes and the evidence before

      he is officially declared ineligible for government contracts.26

      The court was concerned about the lack of standards to guide the agency in making debarment determinations Accordingly, the court ultimately concluded that the lack of regulations and standards resulted in the...