As the United States prepared to take a long holiday over the July 4th weekend, the Department of Justice set off some fireworks of its own: the department published a new edition of the FCPA Resource Guide, a one-volume compendium of all things related to the Foreign Corrupt Practices Act (FCPA). What does the Foreign… Read More
The United States General Service Administration (GSA) was established as a government agency in 1949 to, among other things, provide communications and procurement services for other agencies. As part of its acquisition policy, the GSA maintains a Suspension & Debarment (S&D) process to help it avoid doing business with unfit contractors. Debarred contractors are deemed non-responsible and face restrictions on their participation in government contracts.
What Does Debarred Mean?
Debarred is a verb that means “to be excluded”. Contractors who have been debarred by the GSA through its S&D process are excluded from certain types of participation in government contracts.
The purpose of the Suspension and Debarment process is to protect the interests of the Federal government by ensuring that it deals exclusively with contractors who are responsible to carry out their duties.
Who Can Be Debarred?
The GSA is permitted by the Federal Acquisition Regulations (FAR) to suspend or debar government contractors. A contractor is defined as an entity who either:
- Submits offers for, is awarded, or may be expected to submit offers for, or be awarded a government contract or subcontract; or
- Conducts business with the government as an agent or representative for another contractor.
Contractors are suspended or debarred as a result of wrongdoing or alleged wrongdoing that damages their status as a “responsible contractor”. The standards for contractor responsibility include the following:
- Having sufficient financial resources to perform the contract
- Having the ability to comply with proposed delivery schedules for project work
- Having a satisfactory record of contract performance
- Having a satisfactory record of business ethics and integrity
- Having the necessary organization, experience, accounting systems, and operating controls to effectively regulate processes and assure quality
- Having the necessary production capabilities, technical equipment, and facilities to execute the contract
- Having the necessary licensing and qualifications to perform the contract in compliance with local laws and regulations
Business integrity and ethics violations are among the leading causes of debarment for government contractors. An S&D process can result from a variety of ethics and integrity violations, including, but not limited to:
- Violating federal antitrust statutes
- Criminal corruption, including fraud, embezzlement, bribery, theft, forgery, falsification of records, tax evasion, and other crimes.
- Failure to disclose violations of criminal law
- Violations of OSHA or the Drug-Free Workplace Act
- Participating in unfair trade practices
What Happens When You Get Debarred?
The effects of being suspended or debarred by the GSA are that:
- The contractor’s name will be published as ineligible in the System for Award Management (SAM), used by the GSA and agencies in the Executive Branch to manage and award government contracts.
- The contractor may not be awarded a government contract by any agency in the Executive Branch unless the head of that agency can offer a compelling reason (in writing) why business dealings should continue.
- No government contract may award the debarred contractor a subcontract in excess of $30,000 without additional stipulations and restrictions.
- The contractor may not conduct business with the Federal government as an agent, representative, or surety of another contractor.
- The contractor’s relationship with any organization doing business with the government will fall under additional scrutiny.
What is the Difference Between Suspension and Debarment?
The GSA may initiate the S&D process based on information obtained from a variety of sources, including voluntary and mandatory disclosure.
Once the case begins, the contractor may be immediately suspended and listed on the SAM website. A suspension lasts for a maximum of 12 months, usually until the case can be fully investigated or litigated as needed. As part of the process, contractors may submit evidence to demonstrate their responsibility.
If the GSA proceeds with the debarment process, the contractor will face exclusion from doing business with the federal government, typically for a period of three years.