Jun 25, 2012

Thomas Marcinko

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Effective Compliance Programs Best Defense Against Government Emphasis on Suspension & Debarment

Predictably, and as previously reported in this blog, suspensions and debarments continue to increase.  According to the Interagency Suspension & Debarment Committee, there were 4,200 suspensions, debarments, and proposed debarments in 2010 compared to 2,700 in 2009.  According to Federal News Radio, at least for the Department of Defense,  the increase continued in 2011.  The military departments plus the Defense Logistics Agency have taken 1,525 actions to debar contractors in 2011, compared to 1,398 in 2010 and 1024 in 2009.

Significantly, the objectionable behavior does not have to relate specifically to a government contract.  The regulations allow a contractor to be debarred for any cause so serious or compelling in nature that it affects the present responsibility of the contractor.  As open-ended as this statement is, the key phrase that protects contractors is “present responsibility.”   Suspension and debarment are meant to protect the government, not to punish the contractor.  As Steve Shaw the Air Force Deputy General Counsel for Contractor Responsibility pointed out, punishment is an important goal of the Justice Department.  Punishment is not an objective of the procurement system.  However, many observers fear that Congress is shifting the focus of suspension and debarment to punishment without regard to whether or not the contractor in question is presently responsible.

Whether issued due to lack of present responsibility or for punishment of a past deed, the ramifications of being suspended or debarred can be severe.  Not only is the contractor barred from receiving federal government contracts, but many state and local governments as well as lenders monitor this excluded parties list.   The best way for contractors to avoid being suspended or debarred is to adopt a strong compliance program.  Mr. Shaw stated the obvious when he told Federal News Radio that his office prefers to help contractors establish ethical procedures and compliance programs and that contractors who do so are much less likely to be immediately suspended or debarred when a potential issue arises.  If you need any assistance with compliance please contact Hope Lane at 301.231.6266.