Debarment and Suspension of Government Contractors: An Overview of the Law Including Recently Enacted and Proposed Amendments

Kate M. Manuel
Legislative Attorney

Debarment and suspension are among the techniques agencies use to ensure that they deal only with contractors who are "responsible" in fulfilling their legal and contractual obligations. Debarment generally removes contractors' eligibility for federal contracts for a fixed period of time, while suspension removes their eligibility for the duration of an investigation or litigation. Persons may be debarred or suspended from federal contracting on procurement or nonprocurement grounds. Nonprocurement debarments are discussed in a separate report, CRS Report R40993, Debarment and Suspension Provisions Applicable to Federal Grant Programs, by Carol J. Toland. However, all persons excluded on any grounds are listed in the Excluded Parties List System (EPLS), which contracting officers must check before awarding a contract. 

Some statutes require or allow agency officials to exclude contractors that have engaged in conduct prohibited under the statute. Such statutory debarments and suspensions are federal government- wide; they are often mandatory, or at least beyond agency heads' discretion; and they are punishments. Statutes prescribe the debarments' duration, and agency heads generally cannot waive the exclusion. 

The Federal Acquisition Regulation (FAR) also authorizes debarment and suspension of contractors. Such administrative debarments can result when contractors are convicted of, found civilly liable for, or found by agency officials to have committed certain offenses, or when other causes affect contractor responsibility. Administrative suspensions can similarly result when contractors are suspected of or indicted for certain offenses, or when other causes affect contractor responsibility. Administratively debarred or suspended contractors are excluded from contracts with executive branch agencies. Administrative exclusions are discretionary and can be imposed only to protect government interests. Agencies can use administrative agreements instead of debarment and can continue the current contracts of debarred contractors. The seriousness of a debarment's cause determines its length, which generally cannot exceed three years, but agency heads may waive administrative exclusions for compelling reasons. 

Because they are dealing with the federal government, contractors are entitled to due process before being excluded from government contracts, although the nature of the process due to them varies for debarments and suspensions. In addition to depriving the contractor of due process, conduct that effectively excludes a contractor without officially debarring or suspending it may also constitute improper de facto debarment. Further, agencies could be found to have violated the Administrative Procedure Act if they exclude a contractor based upon circumstances that the agency was aware of when it previously found the contractor sufficiently "responsible" to be awarded a federal contract. 

The magnitude of federal spending on contracts, coupled with recent instances of alleged contractor misconduct, has prompted Congress to consider ways to make debarment and suspension more effective means of ensuring that the government does not deal with nonresponsible contractors. The 111th Congress has enacted several statutes pertaining to debarment and suspension and is considering additional legislation (e.g., P.L. 111-8, P.L. 111-84, P.L. 111-117, P.L. 111-118, P.L. 111-195, H.R. 595, H.R. 1334, H.R. 1668, H.R. 1983, H.R. 2194, H.R. 2349, H.R. 2568, H.R. 2708, H.R. 2825, H.R. 3492, H.R. 3922, H.R. 4280, H.R. 4321, H.R. 5136, H.R. 5265, H.R. 5366, H.R. 5726, S. 265, S. 2782, S. 3636, S. 3455).


Date of Report: August 16, 2010
Number of Pages: 22
Order Number: RL34753
Price: $29.95

Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports

Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.