Federal Contract Debarment

What does it really mean?

Federal Contract DebarmentThose of us that have had any involvement in the realm of federal contract work for a long enough period of time know someone in the contractor community that has faced or is facing sanctions. Receiving notice of suspension and potential debarment can, and rightfully should, immediately get your attention. However, understanding the process and how the Federal Government views these situations can help abate some of the anxiety. Understanding the law, preparing a detailed case, and properly addressing the issues raised can be your best option for coming out of the process with your reputation intact.

SUSPENSION AND DEBARMENT

The Federal Acquisition Regulation (FAR for short) lays out two particular sanctions; suspension and debarment. Although there are a vast number of reasons that one may find themselves in this situation, typical issues most often involve contractor fraud or other, often criminal, behaviors. The FAR provides a list of potential causes for debarment under FAR 9.406-2 and they include such things as

  • conviction of civil judgment for fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a public contract or subcontract
  • violation of federal or state antitrust statutes relating to the submission of offers
  • commission of embezzlement
  • theft
  • forgery
  • bribery
  • falsification or destruction of records
  • making false statements
  • tax evasion
  • violating Federal criminal tax laws
  • receiving stolen property

Likewise, less serious offenses that “indicate a lack of business integrity or business honesty that seriously and directly affects the present responsibility of a Government contractor or subcontractor” or violation of the terms of a “Government contract or subcontract so serious as to justify debarment…” can also be problematic. Although this list in not exhaustive, one thing is clear; lying to the Government when it involves their money is the surest way to place yourself and potentially your business under the microscope.

There is an upside.

Although this all sounds incredibly negative, there is an upside to this analysis. Suspension and Debarment are not punitive! You heard that right…the FAR makes clear that due to the serious nature of these remedies, their imposition is to be used sparingly. FAR 9.402 lays out the policy framework for suspension and debarment and describes them as “discretionary actions” that can be an appropriate means to effectuate Government contracting policy. The guidance provided by the FAR basically holds that because of the serious nature of suspension and debarment, imposition of these sanctions is only appropriate when “in the public interest for the Government’s protection and not for the purposes of punishment.”

CONCLUSION

Overall, the laws controlling Government contracting are incredibly complicated and intricate however, the process of avoiding sanctions doesn’t have to be. The major underlying rule is “honesty is the best policy.” Companies that strive to be completely transparent and “do the right thing” by their Government customers have nothing to worry about. Just because questions arise or an investigation is implemented does not mean your contracting career is over. Carefully planning an approach and gathering the right information with someone who is knowledgeable about the process can mean the difference between keeping your reputation and losing everything you have worked so hard to create. The contracting profession is, in many ways, like the legal profession – the best and most valuable tool we have in our integrity. Keeping sight of that fact will, even in difficult times, get you through.

If you or someone you know is dealing with potential suspension and/or debarment give us a call…we can help.