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Thursday, March 21, 2013

Debarment and Suspension of Government Contractors: A Legal Overview

Kate M. Manuel
Legislative Attorney

Debarment and suspension are among the techniques agencies use to ensure that they deal only with vendors 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. 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 federalgovernment- wide; they are often mandatory, or at least beyond agency heads’ discretion; and they are punishments. Statutes prescribe the debarments’ duration, and the heads of procuring agencies 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 may use administrative agreements instead of debarment and may 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. Agencies are generally prohibited from using means other than debarment or suspension proceedings to effectively exclude contractors. Such conduct is commonly known as de facto debarment. Conduct that results in de facto debarment could also result in contractors’ being deprived of protected liberty interests in prospective government contracts. Additionally, 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.

Debarment and suspension are perennially of interest to Congress because of the magnitude of federal procurement spending and reports that agencies have awarded contracts to vendors who allegedly engaged in misconduct. The 112
th Congress enacted several measures addressing debarment and suspension (P.L. 112-10, P.L. 112-55, P.L. 112-56, P.L. 112-74, P.L. 112-81, P.L. 112-154, P.L. 112-239), as well as conducted oversight of agencies’ exclusion practices in response to reports from the Government Accountability Office and agency inspectors general. The 113th Congress may take similar steps if concerns about nonresponsible contractors persist, something which seems likely given the recent suspension of BP for conduct related to the Deepwater Horizon oil spill. There have also been calls for the exclusion of other firms.

Date of Report: March 11, 2013
Number of Pages: 25
Order Number: RL34753
Price: $29.95

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