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Order Code RL34753
Debarment and Suspension of Government
Contractors: An Overview of the Law Including
Recently Enacted and Proposed Amendments
November 19, 2008
Kate M. Manuel
Law Clerk
American Law Division
Debarment and Suspension of Government
Contractors: An Overview of the Law Including Recently
Enacted and Proposed Amendments
Summary
The amount spent on government contracts, coupled with widely reported
contractor misconduct, has generated congressional interest in debarment and
suspension. Debarment or suspension of contractors is one means agencies use to
ensure that they deal only with contractors who are responsible in fulfilling their legal
and contractual obligations. Debarment removes a contractor's eligibility for
government contracts for a fixed period of time, while suspension temporarily debars
a contractor for the duration of an agency investigation or litigation. Like
government procurement law generally, the law of suspension and debarment has
multiple sources, and contractors can currently be debarred or suspended either under
statutory provisions or under the Federal Acquisition Regulation (FAR).
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 also known as inducement debarments and suspensions because they
further induce contractor compliance with statutes. 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 statutory debarments.
The FAR also authorizes debarment and suspension of contractors. Such
administrative debarments and suspensions are also known as procurement
debarments and suspensions because they protect government interests in the
procurement process. 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.
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 current contracts of debarred contractors. The
seriousness of a debarment's cause determines its length, which generally cannot
exceed three years, but agency heads can waive debarments for compelling reasons.
The 110th Congress enacted several bills addressing debarment and suspension,
including the Sudan Accountability and Divestment Act (P.L. 110-174), a
Supplemental Appropriations Act (P.L. 110-252, �� 6101-03), and the Duncan
Hunter National Defense Authorization Act (P.L. 110-417, �� 871-73). The 110th
Congress also considered other bills that would have (1) created new statutory
debarments; (2) supplemented the FAR provisions on contractor responsibility,
debarment, and suspension; or (3) increased the information about contractors'
responsibility available to contracting officers. Similar proposals may be put forward
in the 111th Congress.
Contents
Overview of Debarment and Suspension . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Statutory Debarment and Suspension . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Administrative Debarment and Suspension . . . . . . . . . . . . . . . . . . . . . . 5
Recently Enacted and Proposed Amendments . . . . . . . . . . . . . . . . . . . . . . . 12
Amendments Enacted in the 110th Congress . . . . . . . . . . . . . . . . . . . . 13
Amendments Proposed in the 110th Congress . . . . . . . . . . . . . . . . . . . 15
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
List of Tables
Table 1. Statutory Debarments and Suspensions . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Table 2. Comparison of Statutory and Administrative Debarments . . . . . . . . . . 11
Debarment and Suspension of Government
Contractors: An Overview of the Law
Including Recently Enacted and Proposed
Amendments
As a general rule, government agencies contract with the lowest qualified
responsible bidder or offeror. Debarment and suspension relate to the responsibility
of bidders and offerors. Government agencies debar and suspend contractors in order
to preclude future contractual dealings with contractors that are "nonresponsible," or
not responsible, in fulfilling their legal or contractual obligations. Debarment
removes a contractor from eligibility for future contracts with the government for a
fixed period of time, while suspension temporarily debars a contractor for the
duration of any agency investigation of the contractor or ensuing legal proceedings.
Debarment and suspension are collectively known as exclusions.
This report reviews the legal framework for the exclusion of government
contractors and discusses recent congressional efforts to make contractor debarment
and suspension more effective means of ensuring that the government does not deal
with nonresponsible contractors.
Overview of Debarment and Suspension
Contractors can currently be debarred or suspended under federal statutes or
under the Federal Acquisition Regulation (FAR), an administrative rule governing
contracting by executive branch agencies.1 There is only one explicit overlap
between the causes of debarment and suspension under statute and those under the
FAR, involving debarments and suspensions for violations of the Drug-Free
Workplace Act of 1988.2 However, the "catch-all" provisions of the FAR -- which
allow (1) debarment for "any ... offense indicating a lack of business integrity or
business honesty" and (2) debarment or suspension for "any other cause of [a] serious
1
The FAR is promulgated by the General Services Administration (GSA), the Department
of Defense (DOD), and the National Aeronautics and Space Administration (NASA) under
the authority of the Office of Federal Procurement Policy Act of 1974. See Office of
Federal Procurement Policy Act of 1974, P.L. 93-400, 88 Stat. 796 (codified at 41 U.S.C.
�� 401-38); DoD, GSA & NASA, Establishing the Federal Acquisition Regulation: Final
Rule, 48 Fed. Reg. 42,102, 42,142 (Sept. 19, 1983).
2
The Drug-Free Workplace Act of 1988, P.L. 100-690, �� 5151-5160, 102 Stat. 4181
(codified at 41 U.S.C. �� 701-07), is mentioned in FAR 9.406-2(b)(1)(ii) and 9.407-2(a)(4),
which corresponds to 48 C.F.R. � 9.406-2(b)(1)(ii) and 9.407-2(a)(4).
CRS-2
or compelling nature"3 -- could potentially make the same conduct a grounds for
debarment or suspension under statute and under the FAR.
Statutory Debarment and Suspension. Some federal statutes include
provisions specifying that contractors who engage in certain conduct prohibited under
the statute shall or may be debarred or suspended from future contracts with the
federal government.4 Because they are designed to provide additional inducement
for contractors' compliance with the statutes, such statutory debarments and
suspensions are also known as inducement debarments and suspensions. The terms
"statutory debarment" and "statutory suspension" are also used in reference to
exclusions that result under executive orders,5 even though executive orders are not
statutes, as a way of grouping exclusions that result from executive orders with other
inducement-based exclusions and contrasting them with administrative or
procurement exclusions.
Statutes providing for debarment and suspension often require that the excluded
party be convicted of wrongdoing under the statute, but at other times, findings of
wrongdoing by agency heads suffice for exclusion.6 Sometimes the exclusion applies
only to certain types of contractors, or dealings with specified agencies (e.g.,
institutions of higher education who contract with the government, contracts with the
Department of Defense).7 Most of the time, however, the exclusion applies more
broadly to all types of contractors dealing with all federal agencies.8 Persons
identified by statute -- often the head of the agency administering the statute
requiring or allowing exclusion -- make the determinations to debar or suspend
contractors.9 Debarments last for a fixed period specified by statute, while
suspensions last until a designated official finds that the contractor has ceased the
conduct that constituted its violation of the statute.10 Generally, statutory exclusions
can only be waived by a few officials under narrow circumstances, if at all.11 Agency
3
48 C.F.R. � 9.406-2(a)(5) & (c); 48 C.F.R. � 9.407-2(c).
4
See, e.g., 21 U.S.C. � 862 (authorizing debarment for violations of federal or state
controlled substance laws).
5
See, e.g., Executive Order 11246, as amended (providing for suspension of contractors who
fail to comply with equal employment opportunity and affirmative action requirements).
6
Compare 21 U.S.C. � 862 (debarment based on conviction) with 41 U.S.C. � 10(b)
(debarment based on agency head's findings).
7
See, e.g., 10 U.S.C. � 983 (debarment for institutions of higher education only); 48 C.F.R.
� 209.470 (same); 10 U.S.C. � 2408 (debarment from Department of Defense contracts
only).
8
See, e.g., 40 U.S.C. � 3144 (government-wide debarment for failure to pay wages under
the Davis-Bacon Act).
9
See, e.g., 42 U.S.C. � 7606 (Administrator of the Environmental Protection Agency to
debar contractors for certain violations of the Clean Air Act).
10
Compare 41 U.S.C. � 701(d) (providing for debarment for up to five years) with 33 U.S.C.
� 1368 (suspensions for certain violations of the Clean Water Act end with the violation).
11
Compare 33 U.S.C. � 1368 (allowing the President to waive a debarment "in the
(continued...)
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heads generally cannot waive exclusions to allow debarred or suspended contractors
to contract with their agency. Table 1 surveys the main statutory debarment and
suspension provisions presently in effect.
Table 1. Statutorya Debarments and Suspensionsb
Mandatory
Cause of Decision Waiver of
Statute or Duration & Scope
Debarment Maker Debarment
Discretionary
Buy Violations of Mandatory Head of the 3 years; Not provided
American the Buy agency that government-wide for
Act (41 American Act awarded the
U.S.C. � in constructing, contract under
10(b)) altering, or which the
repairing any violation
public building occurred
or work in the
United States
using
appropriated
funds
Clean Air Conviction for Mandatory EPA Lasts until EPA Waiver by
Act (42 violating 42 Administrator Administrator President
U.S.C. � U.S.C. � certifies the when he or she
7606) 7413(c) condition is determines it
corrected; is in the
government-wide paramount
but limited to the interests of the
facility giving rise United States
to the conviction and notifies
Congress
Clean Conviction for Mandatory EPA Lasts until EPA Waiver by
Water Act violating 33 Administrator Administrator President
(33 U.S.C. U.S.C. � certifies the when he or she
� 1368) 1319(c) condition is determines it
corrected; is in the
government-wide paramount
but limited to the interests of the
facility giving rise United States
to the conviction and notifies
Congress
Davis- Failure to pay Mandatory Comptroller 3 years; Not provided
Bacon Act prescribed General government-wide for
(40 U.S.C. wages for
� 3144)c laborers and
mechanics
11
(...continued)
paramount interests of the United States" with notice to Congress) with 40 U.S.C. � 3144
(making no provisions for waiver).
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Mandatory
Cause of Decision Waiver of
Statute or Duration & Scope
Debarment Maker Debarment
Discretionary
Drug-Free Violations of Mandatory Head of the Up to 5 years; Waiver under
Workplace the act as shown contracting government-wide FAR
Act of 1988 by repeated agency procedures
(41 U.S.C. failures to
� 701(d)) comply with its
requirements, or
employing
numerous
individuals
convicted of
criminal drug
violations
Executive Failure to Discretionary Secretary of Lasts until the Not provided
Order comply with Labor contractor for
11246, as equal complies with the
amended employment EEO and
opportunity and affirmative action
affirmative requirements;
action government-wide
requirements
Military Policy or Mandatory Secretary of Lasts so long as the Not provided
Recruiting practice Defense policy or practice for
on Campus prohibiting triggering the
(10 U.S.C. military suspension; limited
� 983; 48 recruiting on to Department of
C.F.R. � campus Defense Contracts
209.470)
Service Failure to pay Mandatory Secretary of 3 years; Waiver by the
Contract compensation Labor or the government-wide Secretary of
Act (41 due to head of any Labor because
U.S.C. � employees agency of unusual
354) under the act circumstances
Walsh- Failure to pay Mandatory Secretary of 3 years; Waiver by the
Healy Act the minimum Labor government-wide Secretary of
(41 U.S.C. wage, requiring Labor; no
� 37) mandatory and criteria for
uncompensated waiver
overtime, use of specified
child labor, or
maintenance of
hazardous
working
conditions
Source: Congressional Research Service.
a. The term "statutory" is used here, as is customary, to contrast all types of inducement exclusions
-- whatever their legal basis -- with those exclusions under the FAR that are designed to protect
the government's interests in the procurement process.
b. There are two other statutory provisions discussing debarment that are not included in this table
because they provide for personal debarment. Section 862 of Title 21 of the United States Code
allows the court sentencing an individual for violating federal or state laws on the distribution
of controlled substances to debar that individual for up to one year, in the case of first-time
CRS-5
offenders, or for up to five years, in the case of repeat offenders. Section 2408 of Title 10 of
the United States Code similarly prohibits persons who have been convicted of fraud or any
other felony arising out of a contract with DOD from working in management or supervisory
capacities on any DOD contract, or engaging in similar activities. Contractors who knowingly
employ such "prohibited persons" are themselves subject to criminal penalties.
c. The statutory debarment provided for in the Davis-Bacon Act is better known under its former
location within the United States Code, 40 U.S.C. � 276a-2(a).
Administrative Debarment and Suspension. As a matter of policy, the
federal government seeks to "prevent improper dissipation of public funds"12 in its
contracting activities by dealing only with responsible contractors.13 Debarment and
suspension promote this policy by precluding agencies from entering into new
contractual dealings with contractors whose prior violations of federal or state law,
or failure to perform under contract, suggest they are nonresponsible.14 Because
exclusions under the FAR are designed to protect the government's interests, they
may not be imposed solely to punish prior contractor misconduct.15 Federal courts
will overrule challenged agency decisions to debar contractors when agency officials
seek to punish the contractor -- rather than protect the government -- in making
their exclusion determinations.16
Debarment. The FAR allows agency officials to debar contractors from
future executive branch contracts under three circumstances. First, debarment may
be imposed when a contractor is convicted of or found civilly liable for any integrity
offense. Integrity offenses include the following:
! fraud or criminal offenses in connection with obtaining, attempting
to obtain, or performing a public contract
! violations of federal or state antitrust laws relating to the submission
of offers
! embezzlement, theft, forgery, bribery, falsification or destruction of
records, making false statements, tax evasion, or receipt of stolen
property
! intentional misuse of the "Made in America" designation
12
United States v. Bizzell, 921 F.2d 263, 267 (10th Cir. 1990) ("It is the clear intent of
debarment to purge government programs of corrupt influences and to prevent improper
dissipation of public funds. Removal of persons whose participation in those programs is
detrimental to public purposes is remedial by definition.") (internal citations omitted).
13
48 C.F.R. � 9.402(a) (directing agency contracting officers to "solicit offers from, award
contracts to, and consent to subcontracts with responsible contractors only").
14
See id. ("Debarment and suspension are discretionary actions that ... are appropriate
means to effectuate [the] policy [of dealing only with responsible contractors].").
15
48 C.F.R. � 9.402(b) ("The serious nature of debarment and suspension requires that these
sanctions be imposed only in the public interest for the Government's protection and not for
purposes of punishment.").
16
See, e.g., IMCO, Inc. v. United States, 97 F.3d 1422, 1427 (Fed. Cir. 1996) (upholding an
agency's debarment determination but noting that the outcome would have been different
had the debarment been imposed for purposes of punishment).
CRS-6
! other offenses indicating a lack of business integrity or honesty that
seriously affect the present responsibility of a contractor17
Second, debarment may be imposed when (1) the Secretary of Homeland Security or
the Attorney General finds, by a preponderance of the evidence, that a contractor is
not in compliance with the employment provisions of the Immigration and
Nationality Act, or when (2) an agency official finds, by a preponderance of the
evidence, that the contractor has committed serious violations of the terms of a
government contract or subcontract;18 committed violations of the Drug-Free
Workplace Act of 1988;19 intentionally affixed a "Made in America" label, or similar
inscription, on ineligible products; or committed an unfair trade practice as defined
in Section 20120 of the Defense Production Act.21 Finally, debarment may be
imposed whenever an agency official finds, by the preponderance of the evidence,
that there exists "any other cause of so serious or compelling a nature that it affects
the present responsibility of a contractor."22
Debarments last for a "period commensurate with the seriousness of the
cause(s)," generally not exceeding three years.23 Debarment-worthy conduct can be
17
48 C.F.R. � 9.406-2(a)(1)-(5).
18
For purposes of the FAR, serious violations of the terms of a government contract or
subcontract include (1) willful failure to perform in accordance with a term of the contract
or (2) a history of failure to perform or unsatisfactory performance under contract. 48
C.F.R. � 9.406-2(b)(1)(i)(A)-(B).
19
Such violations include (1) failure to comply with the requirements in Section 52.223-6
of the FAR or (2) employment of so many persons who have been convicted of violating
criminal drug statutes in the workplace as to indicate that the contractor failed to make good
faith efforts to provide a drug-free workplace. 48 C.F.R. � 9.406-2(b)(1)(ii)(A)-(B). FAR
52.223-6 requires that contractors (1) publish a statement notifying employees that the
manufacture, distribution, possession, or use of controlled substances in the workplace is
prohibited and specifying actions to be taken in response to employee violations; (2)
establish drug-free awareness programs to inform employees of the policy; (3) provide
employees with a written copy of the policy; (4) notify employees that their continued
employment is contingent upon their compliance with the policy; (5) notify agency
contracting officials of employee convictions for violations of controlled substance laws;
and (6) take steps to terminate or ensure treatment of employees convicted of violating
controlled substance laws.
20
Section 201 covers (1) violations of Section 337 of the Tariff Act of 1930; (2) violations
of agreements under the Export Administration Act of 1979 or similar bilateral or
multilateral export control agreements; or (3) knowingly false statements regarding material
elements of certifications concerning the foreign content of an item.
21
48 C.F.R. � 9.406-4(b)(1)-(2).
22
48 C.F.R. � 9.406-4(c).
23
48 C.F.R. � 9.406-4(a)(1). Debarments are limited to one year for violations of the
Immigration and Nationality Act, but can last up to five years for violations of the Drug-Free
Workplace Act. 48 C.F.R. � 9.406-4(a)(1)(i)-(ii). The FAR allows debarring officials to
extend the debarment for an additional period if they determine that an extension is
necessary to protect the government's interests. 48 C.F.R. � 9.406-4(b). Extension cannot
(continued...)
CRS-7
imputed from officers, directors, shareholders, partners, employees, or other
individuals associated with a contractor to the contractor, and vice versa, as well as
between contractors participating in joint ventures or similar arrangements.24 Due
process requires that contractors receive written notice of proposed debarments and
of debarring officials' decisions, as well as the opportunity to present evidence within
the decision-making process for all debarments except those based upon contractors'
convictions.25
Suspension. The FAR also allows agency officials to suspend government
contractors (1) when the officials suspect, upon adequate evidence, any of the
following offenses, or (2) when contractors are indicted for any of the following
offenses:
! fraud or criminal offenses in connection with obtaining, attempting
to obtain, or performing a public contract
! violation of federal or state antitrust laws relating to the submission
of offers
! embezzlement, theft, forgery, bribery, falsification or destruction of
records, making false statements, tax evasion, or receipt of stolen
property
! violations of the Drug-Free Workplace Act of 198826
! intentional misuse of the "Made in America" designation
! unfair trade practices, as defined in Section 201 of the Defense
Production Act27
! other offenses indicating a lack of business integrity or honesty that
seriously affect the present responsibility of a contractor28
Agency officials may also suspend a contractor when they suspect, upon adequate
evidence, that there exists "any other cause of so serious or compelling a nature that
it affects the present responsibility of a ... contractor or subcontractor."29
A suspension lasts only as long as an agency's investigation of the conduct for
which the contractor was suspended, or any ensuing legal proceedings. It may not
23
(...continued)
be based solely upon the facts and circumstances upon which the initial debarment was
based, however. Id.
24
48 C.F.R. � 9.406-5(a)-(c).
25
48 C.F.R. � 9.406-3. When debarment is based on a conviction, the hearing that the
contractor received prior to the conviction suffices for due process in the debarment
proceeding.
26
See supra note 19 for a description of what conduct violates the Drug-Free Workplace
Act.
27
See supra note 20 for a listing of unfair trade practices under Section 201 of the Defense
Production Act.
28
48 C.F.R. � 9.407-2(a)-(b).
29
48 C.F.R. � 9.407-2(c).
CRS-8
exceed 18 months unless legal proceedings have been initiated within that period.30
Suspension-worthy conduct can be imputed, just like debarment-worthy conduct,31
and similar due-process protections apply.32
Agency Discretion, Administrative Agreements, Continuation of
Current Contracts, and Waivers. Not all contractors who engage in conduct
that could lead to debarment or suspension under the FAR are actually excluded,
permanently or temporarily, from contracting with executive branch agencies. Nor
does the debarment or suspension of a contractor guarantee that executive branch
agencies do not presently have contracts with that contractor, or will not contract
with that contractor before the exclusion period ends. Several aspects of the
exclusion process under the FAR explain why this is so.
First, under the FAR, debarment or suspension of contractors is discretionary.33
The FAR says that agencies "may debar" or "may suspend" a contractor when
grounds for exclusion exist,34 but it does not require them to do so.35 Rather, the
FAR advises contracting officers to focus upon the public interest in making
debarment determinations.36 The public interest encompasses both (1) safeguarding
public funds by excluding contractors who may be nonresponsible from contracting
with the government and (2) avoiding economic injury to contractors who might
technically be excludable but are fundamentally responsible and safe for the
government to contract with.37 Because of this focus on the public interest, agency
officials can find that contractors who engaged in exclusion-worthy conduct should
not be excluded because they appear unlikely to engage in similar conduct in the
future.38 Any circumstance suggesting that a contractor is unlikely to repeat past
misconduct -- such as changes in personnel or procedures, restitution, or cooperation
in a government investigation -- can potentially incline an agency's decision against
30
48 C.F.R. � 9.407-4(a).
31
48 C.F.R. � 9.407-5.
32
48 C.F.R. � 9.407-3(a)-(d). The due process protections with suspension are not as
extensive as those with debarment because suspension is "less serious" than debarment.
33
48 C.F.R. � 9.402(a) ("Debarment and suspension are discretionary actions.").
34
48 C.F.R. � 9.406-2(a), 9.407-1(a).
35
48 C.F.R. � 9.406-1(a) ("The existence of a cause for debarment ... does not necessarily
require that the contractor be debarred.").
36
Id. Suspensions under the FAR are based on the standard of the "government's interests."
48 C.F.R. � 9.407-1(a). This is broadly similar, but not identical, to the "public interest,"
which is why the focus of this paragraph is limited to debarments.
37
See, e.g., Commercial Drapery Contractors, Inc. v. United States, 133 F.3d 1, 14-15 (D.C.
Cir. 1998) ("Suspending a contractor is a serious matter. Disqualification from contracting
`directs the power and prestige of government' at a single entity and may cause economic
injury.").
38
48 C.F.R. � 9.406-1(a). See, e.g., Roemer v. Hoffman, 419 F. Supp. 130, 132 (D.D.C.
1976) (stating that the proper focus, in debarment determinations, is upon whether the
contractor is presently responsible notwithstanding the past misconduct).
CRS-9
debarment.39 Moreover, exclusion can be limited to particular "divisions,
organizational elements, or commodities" of a company if agency officials find that
only segments of a business engaged in wrongdoing.40 Other contractors cannot
challenge agency decisions not to propose a contractor for debarment or not to
exclude a contractor proposed for debarment.41 They can only contest an agency's
certification of a contractor's present responsibility,42 which is required prior to a
contract award.43
Second, agencies can use administrative agreements as alternatives to
debarment.44 In these agreements, the contractor generally admits its wrongful
conduct and agrees to restitution; separation of employees from management or
programs; implementation or extension of compliance programs; employee training;
outside auditing; agency access to contractor records; or other remedial measures.45
The agency, for its part, reserves the right to impose additional sanctions, including
debarment, in the future if the contractor fails to abide by the agreement or engages
in further misconduct.46 Such agreements are not explicitly provided for within the
FAR, but are within agencies' general authority to determine with whom they
contract.47 Only the agency signing the agreement is a party to it, and other agencies
may not be aware of the agreement's existence, a situation which the Government
Accountability Office (GAO) has suggested should be remedied in order to provide
39
48 C.F.R. � 9.406-1(a)(1)-(10).
40
Id. at (b). See, e.g., Peter Kiewit Sons' Co. v. Army Corp. of Eng'rs, 534 F. Supp. 1139,
1155 (D.D.C. 1982), rev'd on other grounds, 714 F.2d 170 (D.C. Cir. 1983) (holding that
an agency cannot properly debar a corporation-contractor based upon the misconduct of two
subsidiaries and a corporate division).
41
See, e.g., Heckler v. Chaney, 470 U.S. 821, 832 (1985) (holding that agency refusal to act
is generally not judicially reviewable).
42
See, e.g., Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324,
1334-39 (Fed. Cir. 2001) (upholding a challenged agency responsibility determination).
43
48 C.F.R. � 9.103(b) ("No purchase or award shall be made unless the contracting official
makes an affirmative determination of responsibility.").
44
Office of Management and Budget, Suspension and Debarment, Administrative
Agreements, and Compelling Reason Determinations, Aug. 31, 2006, available at
[http://www.whitehouse.gov/omb/memoranda/fy2006/m06-26.pdf] ("Agencies can
sometimes enter into administrative agreements ... as an alternative to suspension or
debarment.").
45
Alan M. Grayson, Suspension and Debarment 37-38 (1991).
46
See, e.g., United States Department of State, Bureau of Political Military Affairs, In the
Matter of General Motors Corporation & General Dynamics Corporation, Oct. 22, 2004,
available at [http://www.contractormisconduct.org/ass/contractors/26/cases/108/528/
general-dynamics-4_ca.pdf].
47
48 C.F.R. � 1.601(a) ("Unless specifically prohibited by another provision of law,
authority and responsibility to contract ... are vested in the agency head.").
CRS-10
contracting officers with more complete information about contractors' responsibility
when making awards.48
Third, even when a contractor is debarred, suspended, or proposed for
debarment under the FAR, an agency may generally allow the contractor to continue
performance under any current contracts or subcontracts unless the agency head
directs otherwise.49 The debarment or suspension serves only to preclude an
excluded contractor from (1) receiving contracts from executive branch agencies; (2)
serving as a subcontractor on certain contracts with executive branch agencies;50 or
(3) serving as an individual surety for the duration of the debarment or suspension.51
Any contracts that the excluded contractor presently has remain in effect unless they
are terminated for default or for convenience under separate provisions of the FAR.52
Finally, the FAR authorizes agencies to waive a contractor's exclusion and enter
into new contracts with a debarred or suspended contractor.53 For an exclusion to be
waived, an agency head must "determine, in writing, that there is a compelling reason
to do so."54 Compelling reasons exist when (1) goods or services are available only
from the excluded contractor; (2) an urgent need dictates dealing with the excluded
contractor; (3) the excluded contractor and the agency have entered an agreement not
to debar the contractor that covers the events upon which the debarment is based; or
(4) reasons relating to national security require dealings with the excluded
contractor.55 Waivers are agency-specific and are not regularly communicated to
other agencies, a situation which the GAO has also suggested remedying.56 Agency
determinations about the existence of compelling reasons are not, per se, reviewable
by the courts; however, other contractors can challenge awards to formerly excluded
48
GAO, Federal Procurement: Additional Data Reporting Could Improve the Suspension
and Debarment Process 12-13 (2005), available at [http://www.gao.gov/highlights/
d05479high.pdf].
49
48 C.F.R. � 9.405-1(a). However, when the existing contracts or subcontracts are
"indefinite quantity" contracts, an agency may not place orders exceeding the guaranteed
minimum. 48 C.F.R. � 9.405-1(b)(1). Similarly, an agency may not (1) place orders under
optional use Federal Supply Schedule contracts, blanket purchase agreements, or basic
ordering agreements with excluded contractors or (2) add new work, exercise options, or
otherwise extend the duration of current contracts or orders. 48 C.F.R. � 9.405-1(b)(2)-(3).
50
With subcontracts that are subject to agency consent, there can be no consent unless the
agency head provides compelling reasons for the subcontract. 48 C.F.R. � 9.405-2(a). With
subcontracts that are not subject to agency consent, there must be compelling reasons for
the subcontract only when its amount exceeds $30,000. 48 C.F.R. � 9.405-2(b).
51
48 C.F.R. � 9.405(a)-(c); � 9.405-2(a)-(b).
52
See 48 C.F.R. � 49.000-607.
53
48 C.F.R. � 9.405(a).
54
Id.
55
Defense Federal Acquisition Regulation Supplement (DFARS) � 209.405(a)(2)(i)-(iv),
available at [http://www.acq.osd.mil/dpap/dars/dfarspgi/current/index.html].
56
Federal Procurement, supra note 48, at 14.
CRS-11
contractors through the customary bid protest process.57 Moreover, even when an
agency does not waive a contractor's exclusion, it can reduce the period or extent of
debarment if the contractor shows (1) newly discovered material evidence; (2)
reversal of the conviction or civil judgment on which the debarment was based; (3)
bona fide changes in ownership or management; (4) elimination of other causes for
which the debarment was imposed; or (5) other appropriate reasons.58
Excluded Parties List System. A key aspect of the administrative
debarment and suspension system under the FAR is the Excluded Parties List System
(EPLS). The FAR requires that the General Services Administration (GSA) operate
a Web-based EPLS ([https://www.epls.gov]), into which agencies must submit
information on all excluded contractors within five working days of the exclusion
determination.59 All executive branch agencies have access to the EPLS, and
contractors listed in the EPLS are "excluded from receiving contracts" from
executive branch agencies.60 The EPLS thus helps to ensure that exclusions of
contractors under the FAR are effective throughout the executive branch.61
The EPLS only includes contractors who are currently debarred or suspended,
have been previously debarred or suspended, or have been proposed for debarment.62
It does not include contractors who made voluntary changes to their personnel or
policies in order to show continuing responsibility, or who entered administrative
agreements with government agencies. In fact, the inclusion of administrative
agreements in the EPLS is one of the changes that the GAO has recommended to
improve the suspension and debarment process.63
Table 2. Comparison of Statutory and Administrative
Debarments
Characteristic Statutory Debarments Administrative Debarments
Authority for Various statutes FAR (Part 9); Office of Federal
debarments Procurement Policy Act
57
48 C.F.R. � 33.103 & 104.
58
48 C.F.R. � 9.406-4(c)(1)-(5).
59
48 C.F.R. � 9.404(a)(1), (c)(3).
60
48 C.F.R. � 9.405(a).
61
48 C.F.R. � 9.406-1(c).
62
48 C.F.R. � 9.404(c)(6).
63
Federal Procurement, supra note 48, at 14.
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Characteristic Statutory Debarments Administrative Debarments
Basis for debarments Specified violations of statutes 1. Contractors convicted of or
(e.g., violations of federal or found civilly liable for specified
state controlled substance laws; offenses
certain violations of the Buy 2. Agency officials found
American Act, Clean Air Act, contractors engaged in specified
Clean Water Act; etc.) conduct
3. Other causes affect present
responsibility
Debarring official Generally head of the agency Head of the contracting agency or
administering the statute a designee
Purpose Often mandatory, occasionally Always discretionary
discretionary
Scope Punitive Preventative; cannot be punitive
Duration Prescribed by statute Commensurate with the offense,
generally not over 3 years
Extent Government-wide Executive branch agencies
Waiving official Generally the head of the agency Head of the contracting agency
administering the statute
Source: Congressional Research Service.
Recently Enacted and Proposed Amendments
The magnitude of federal spending on contracts, coupled with recent high-
profile examples of contractor misconduct, heightened congressional interest in
debarment and suspension. As the largest purchaser of goods and services in the
world, the federal government spent more than $439 billion on government contracts
in FY2007 alone.64 Some of this spending was with contractors who reportedly
received contract awards despite having previously engaged in serious misconduct,
such as failing to pay taxes, bribing foreign officials, falsifying records submitted to
64
USASpending.gov, Contracts and Other Spending in Billions of Dollars (2008), available
at [http://www.usaspending.gov/index.php].
CRS-13
the government, and performing contractual work so poorly that fatalities resulted.65
Given this context, Members of the 110th Congress considered several bills that
would have strengthened the existing debarment and suspension regime. Some of
these bills have been enacted, including the Sudan Accountability and Divestment
Act (P.L. 110-174); a Supplemental Appropriations Act (P.L. 110-252, �� 6101-
03);66 and the Duncan Hunter National Defense Authorization Act (P.L. 110-417, ��
871-73).67 Many other bills were not enacted, but sought to make debarment and
suspension more effective means of excluding nonresponsible contractors by (1)
creating new statutory debarments; (2) supplementing the FAR provisions on
contractor responsibility, debarment, and suspension; and (3) increasing the
information about contractors' responsibility available to contracting officers.
Similar legislation may be put forward in the 111th Congress.
Amendments Enacted in the 110th Congress. The 110th Congress
enacted several amendments to the pre-existing debarment and suspension laws.
These amendments are briefly summarized below, with analysis of the approach to
strengthening debarment and suspension represented by each enacted amendment
saved for the following section.
First, the Sudan Accountability and Divestment Act created a new statutory
debarment. It required the heads of executive agencies to ensure that all agency
contracts for the procurement of goods and services include a clause requiring the
contractor to certify that it does not conduct business operations, as defined under the
act, in Sudan.68 Agency heads may debar or suspend for up to three years contractors
who are found to have falsely certified that they do not conduct business in Sudan.69
65
See, e.g., Project on Government Oversight, Federal Contractor Misconduct: Failures of
the Suspension and Debarment System (2002), available at [http://www.pogo.org/
pogo-files/reports/contract-oversight/federal-contractor-misconduct/co-fcm-20020510.html]
("[S]ince 1990, 43 of the government's top contractors paid approximately $3.4 billion in
fines/penalties, restitution, and settlements. Furthermore, four of the top 10 government
contractors have at least two criminal convictions. And yet, only one of the top 43
contractors has been suspended or debarred from doing business with the government, and
then, for only five days."); Kathleen Day, Medicare Contractors Owe Taxes, GAO Says, The
Washington Post, Mar. 20, 2007, at D1 (failure to pay taxes); Contract Fraud Loophole
Exempts Overseas Work, Grand Rapids Press, Mar. 2, 2008, at A9 (bribery of foreign
officials); Ron Nixon & Scott Shane, Panel to Discuss Concerns on Contractors, New York
Times, July 18, 2007, at A15 (falsified records); Terry Kivlan, Shoddy Standards Blamed
for Troop Electrocutions in Iraq, National Journal's Congress Daily, PM Edition, July 11,
2008 (poor quality work causing fatalities).
66
These sections of the Supplemental Appropriations Act are sometimes known as the
"Close the Contractor Fraud Loophole Act."
67
These sections of the Duncan Hunter National Defense Authorization Act are sometimes
called the "Clean Contracting Act."
68
P.L. 110-174, � 6(a), 121 Stat. 2520.
69
Id. at � 6(b)(3).
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Second, the Supplemental Appropriations Act of 2008 augmented the FAR
provisions on contractor responsibility, debarment, and suspension. It amended the
FAR to require that contractors provide timely notification of violations of federal
criminal law or overpayments in connection with the award or performance of a
"covered contract or subcontract."70 Covered contracts or subcontracts are those that
are greater than $5 million in amount and more than 120 days in duration, regardless
of whether they are performed outside the United States or include commercial
items.71 The act did not specify whom contractors are to notify, but regulations
implementing the act require notification of both the contracting agency's inspector
general and the contracting officer.72
Third, the Duncan Hunter National Defense Authorization Act for Fiscal Year
2009 increased the information about contractors' responsibility available to
contracting officers. It required the creation of a database with information beyond
that in the EPLS for use by agency officials.73 The database covers all contractors
that have at least one government contract worth $500,000 or more.74 For these
contractors, the database includes a brief description of all civil, criminal, or
administrative proceedings involving contracts with the federal government that
resulted in a conviction or a finding of fault within the past five years.75 It also
includes all terminations for default, administrative agreements, and
nonresponsibility determinations relating to federal contracts within the past five
years.76 Entities with contracts worth more than $10 million, in total, are required to
submit this information as part of the award process and update the information
semiannually.77 Access to the database is limited to acquisition officials of federal
agencies, other government officials as appropriate, and the chairman and ranking
Member of the congressional committees with jurisdiction.78 The act also called for
the Interagency Committee on Debarment and Suspension to resolve which of
multiple agencies wishing to exclude a contractor should be the lead agency in
bringing exclusion proceedings and to coordinate exclusion actions among
70
P.L. 110-252, �� 6101-03, 122 Stat. 2323. Previously, under FAR 9.405 and 52.209-5(a),
contractors with awards worth more than $30,000 had to disclose the existence of
indictments, charges, convictions, or civil judgments against them. Disclosure of existing
legal proceedings is, however, different from disclosure of grounds upon which future legal
proceedings could be based.
71
Id.
72
DoD, GSA & NASA, Contractor Business Ethics Compliance Program and Disclosure
Requirements, 73 Fed. Reg. 67,064, 67,093 (Nov. 12, 2008).
73
P.L. 110-417, �� 871-73, 122 Stat. 4356.
74
Id. at � 872(b)(1).
75
Id. at � 872(c).
76
Id.
77
Id. at � 872(f).
78
Id. at � 872(e)(1).
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agencies.79 The involvement of the Interagency Committee is potentially significant
because although the FAR previously encouraged agencies to coordinate their
exclusion efforts, it provided no requirement or mechanism for them to do so.80
Amendments Proposed in the 110th Congress. In addition to these
enacted amendments to the pre-existing debarment and suspension laws, the 110th
Congress considered numerous other bills addressing contractor exclusion. The
proposals in these bills can be broadly categorized as involving one or more of the
following three approaches to making debarment and suspension more effective
means of excluding nonresponsible contractors. These approaches are (1) creating
new statutory debarments covering additional misconduct; (2) supplementing the
FAR provisions on contractor responsibility, debarment, and suspension; and (3)
increasing the information about contractors' responsibility available to contracting
officers in their decision making. Because similar proposals are likely in the 111th
Congress, the approaches which these proposals exemplified are analyzed in the
following paragraphs.
New Statutory Debarments. Members of the 110th Congress introduced
several bills that would have created new statutory debarments for various types of
perceived misconduct by contractors. Some proposed debarments would have
addressed typical procurement concerns, such as those for contractors who violate the
Foreign Corrupt Practices Act, or similar applicable laws in foreign countries;81
misrepresent themselves as qualifying small businesses under the Small Business
Act;82 procure sweatshop goods for the government;83 or knowingly fail to report
violations of federal criminal law or receipt of "significant overpayments" in
connection with a government contract to the inspector general of the contracting
agency.84 Other proposed statutory debarments would have promoted broader policy
goals, such as compliance with immigration law;85 protection of national security;86
and payment of income taxes.87 Some of the proposed statutory debarments would
also have added to or changed the executive branch personnel involved in exclusion
79
Id. at � 873(a)(1)-(2).
80
48 C.F.R. � 9.402(c) ("When more than one agency has an interest in the debarment or
suspension of a contractor, consideration shall be given to designating one agency as the
lead agency for making the decision. Agencies are encouraged to establish methods or
procedures for coordinating their actions.").
81
See, e.g., H.R. 6426 � 11 (debarment from Department of Defense contracts only).
82
See, e.g., H.R. 1873 � 302.
83
See, e.g., H.R. 1992 � 318.
84
See, e.g., S. 2916 � 2. Although similar to the amendment to the FAR made by P.L. 110-
252, this provision of S. 2916 was not tied to the FAR and so would have created a new
statutory debarment.
85
See, e.g., H.R. 1591 � 569; H.R. 3496 � 2;H.R. 3867 � 206. The debarment in H.R. 1591
� 569 was not included in H.R. 2206, the version of the bill enacted as P.L. 110-28.
86
See, e.g., S. 680, as introduced, � 128 (allowing the head of an executive agency to debar
a contractor after finding the contractor to be a "serious threat to national security").
87
See, e.g., H.R. 4881 � 3 (debarment of contractors with delinquent tax debt).
CRS-16
or waiver determinations. Requiring an agency's inspector general to review all
contracts worth more than a specified amount and report any improper conduct or
wrongdoing to the agency head for possible exclusion was one approach proposed
in the 110th Congress.88 Another approach proposed in the 110th Congress required
the agreement of multiple executive branch agency heads to waive an exclusion.89
Such statutory debarments have some advantages as a strategy for checking
contractor misconduct. Their use could allow Congress to remove agency discretion
in excluding contractors by substituting mandatory debarments under statute for
discretionary ones under the FAR. However, to be sure that exclusion necessarily
follows specified conduct, statutes would probably need to state that agency officials
shall debar contractors for engaging in that conduct, rather than that agency officials
may debar contractors, or shall consider debarring contractors, for engaging in that
conduct.90 Statutory debarments can also be punishments for past misconduct, unlike
administrative debarments. A statutory debarment can explicitly link a contractor's
prior actions (e.g., hiring illegal immigrants) to its future ability to contract with the
federal government.91 Administrative debarments, in contrast, are currently "not for
purposes of punishment"92 and must be based on the public interest in protecting
public funds from nonresponsible contractors.93 Further, statutes mandating or
allowing debarment can require the involvement of agency personnel who are not
involved in exclusion decisions under the FAR, or impose more stringent conditions
on waivers than the FAR imposes. Agency inspectors general, for example, are not
routinely involved in agency contracting activities under the FAR. They are thus less
prone than agency contracting officials, who deal with contractors on a regular basis,
to become "too close" to specific contractors to make effective exclusion
determinations about them,94 and their involvement in agency exclusion processes
88
See, e.g., H.R. 1684 � 301.
89
See, e.g., H.R. 1591, as engrossed by the Senate, � 569 (waiver possible only when the
Administrator of GSA, the Secretary of Homeland Security, and the Attorney General agree
that it is "necessary to national defense or in the interest of national security"); H.R. 6782
� 7 (waiver, in cases involving convictions for violation of immigration laws, only possible
with the consent of the Administrator of GSA, Secretary of Homeland Security, and
Attorney General).
90
Compare H.R. 1591, as engrossed by the Senate, � 569 (requiring debarment of
contractors who hire illegal aliens) with S. 680, as introduced, � 128 (granting agency heads
discretion to debar on the basis of national security) and H.R. 1585 � 804 (stating that the
Secretary of Defense "shall consider" debarring or suspending contractors who engage in
certain conduct).
91
See, e.g., H.R. 1591, as engrossed by the Senate, � 569 ("[A]n employer who holds a
Federal contract, grant, or cooperative agreement and is determined to have violated this
section shall be debarred from the receipt of new Federal contracts ... for ... 10 years.").
92
Congress could theoretically legislate changes to the FAR to allow punitive debarments
or suspensions under the FAR.
93
48 C.F.R. � 9.406-1(a).
94
See, e.g., Kenneth P. Doyle, Ex-CIA Official Foggo Pleads Guilty to One Count of
Honest-Services Fraud, 90 Fed. Cont. Rep. 271 (Oct. 7, 2008) (describing how a contracting
(continued...)
CRS-17
could provide a check on agency decision making.95 Allowing waivers only when two
executive branch agency heads agree,96 or with the President's consent,97 likewise
imposes more stringent conditions on waivers than does the FAR. The FAR allows
the head of each federal agency to make an independent waiver determination for his
or her agency.98
The proliferation of statutory debarments could pose other problems, however.
Drafters of statutes requiring or allowing debarment would have to ensure that the
legislative vehicles used to introduced statutory debarments do not inadvertently limit
the debarments' scope. Debarments introduced in appropriations bills, for example,
could be limited to contractors dealing with particular agencies if the bill specified
that the debarment was from funds appropriated under the legislation.99 In this
example, similar provisions would need to be introduced into the appropriations for
all agencies to ensure that the statutory debarment has government-wide effect.
Statutory debarments, when mandatory, could also limit agency flexibility in dealing
with contractors and meeting agency needs. A statute specifying that "contractors
shall be debarred" would not allow agency officials the discretion not to debar a
contractor that made changes in its personnel or policies, or the flexibility to enter an
administrative agreement in lieu of debarment. Further, such a statute would probably
substitute waivers only by the President, or the head of the agency administering the
statute, for waivers by individual agency heads.100
Changes to the FAR. In addition to proposals creating further statutory
exclusions, the 110th Congress considered several proposals to supplement the FAR
provisions on contractor responsibility, debarment, and suspension. Proposed changes
to the FAR included the following:
94
(...continued)
official at the Central Intelligence Agency steered agency contracts to a contractor owned
by his friend in exchange for money); Boeing Reaches Tentative $615 Million Settlement
with Government Due to Contract Scandals, 85 Fed. Cont. Rep. 544 (May 16, 2006)
(describing how an Air Force contracting official was influenced in her official decisions
by her discussions about future employment with one contractor). Debarment and
suspension determinations under the FAR are ultimately made by the agency head, or his
or her designee. See 48 C.F.R. � 9.403. However, these determinations are based upon the
recommendations of contracting officers who work closely with the contractors. See
Grayson, supra note 45, at 23.
95
See, e.g., H.R. 1684 � 301.
96
See, e.g., id; H.R. 6782 � 7.
97
See, e.g., H.R. 1581 � 301 (allowing the President to waive debarment upon a
determination that the waiver "is in the national security interest of the United States").
98
48 C.F.R. � 9.405(a) (allowing waivers when agency heads find compelling reasons).
99
See, e.g., S. 3182 � 507 (debarment from funds appropriated to the Departments of
Commerce and Justice and related agencies). See also H.R. 2638 � 8038; H.R. 3867 � 206;
and H.R. 6426 � 11 for other agency-specific debarments.
100
Compare 33 U.S.C. � 1368 (waiver by the President) with 48 C.F.R. � 9.405(a) (waiver
by agency heads).
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! specifying that a contractor cannot be found responsible unless it
engages in certain desirable conduct, or if it engages in certain
undesirable conduct;101
! specifying that certain conduct indicates a "lack of business integrity
or business honesty that seriously and directly affects the present
responsibility of a Government contractor;"102
! adding conduct to the grounds upon which an excluding official may
propose a contractor for debarment or may suspend a contractor;103
! requiring that agency officials propose contractors who engage in
certain conduct for debarment;104
! requiring contractors to supply additional information to the agency
in its bid or offer for use in agency decision making;105 and
! requiring excluding officials to justify in writing their decision not to
debar or suspend a contractor who engaged in certain conduct.106
Such amendments to the FAR could increase the likelihood of government-wide
administrative debarment and non-award of contracts to nonresponsible contractors
without creating numerous statutory debarment provisions scattered throughout the
United States Code. For example, language specifying that contractors cannot be
101
See, e.g., H.R. 3383 � 2 ("Not later than 180 days after the date of the enactment of this
Act, the Secretary of Defense shall prescribe in regulations a requirement that a contracting
officer of the Department of Defense may not determine a contractor to be responsible for
purposes of the award of a covered contract ... unless the entity to be awarded the contract
has in place ... an internal ethics compliance program."). See also S. 606 � 102 (precluding
a contractor from being found responsible if it has exhibited a pattern of overcharging the
government or failing to comply with the law); S. 2394 � 3 (establishing that a contractor
that has tax debt cannot be responsible); H.R. 4779 � 2105 (stating the certain misconduct
effects present responsibility).
102
See, e.g., H.R. 3854 � 4 ("The imposition of liquidated damages on a contractor or
subcontractor for failure to comply with the procedures for the substitution of subcontractors
on 2 contracts within a 3-year period shall be deemed to be adequate evidence of the
commission of an offense indicating a lack of business integrity or business honesty that
seriously and directly affects the present responsibility of a Government contractor within
the meaning of part 9.4 of the [FAR].").
103
See, e.g., S. 2394 � 8 (adding (1) knowingly making false statements regarding federal
tax information and (2) convictions or civil judgments of liability for tax evasion or other
tax offenses to the list of causes of debarment and suspension in the FAR).
104
See, e.g., H.R. 4881 � 3 (addressing knowingly making false statements regarding federal
tax information).
105
See, e.g., id. (covering tax debt).
106
See, e.g., S. 2394 � 8 (knowingly making false statements regarding federal tax
information). Such proposed requirements differ from the pre-existing requirement that
agencies document their decisions not to debar whenever a notice of proposed debarment
has been issued. 48 C.F.R. � 9.404. Under the proposed requirements, agencies would have
to justify the nonexclusion of all contractors who engage in certain conduct, not just those
contractors whom agency officials determine should be considered for exclusion.
CRS-19
found responsible if they have engaged in certain conduct107 would ensure that no
contracts are awarded to these contractors because a contractor must be found
responsible to be awarded a contract.108 Similarly, language specifying that
contractors who engage in certain conduct must be proposed for debarment109 would
ensure that agencies at least consider debarring these contractors, even if they
ultimately decide against debarment. However, statutes that stop short of requiring
findings of nonresponsibility or exclusion in certain situations110 would continue
agency officials' existing discretion to find contractors responsible for awards and
make exclusion determinations.111 Thus, changing the FAR to specify only that
certain conduct indicates "a lack of business integrity or business honesty,"112 or to
create additional grounds for debarment or suspension,113 might only minimally
increase the likelihood of exclusion or non-award under the FAR. Similarly, requiring
agency officials to justify nonexclusion or award determinations in writing114 might
not decrease the frequency of nonexclusion or non-award determinations even though
written justifications could be subjected to increased public scrutiny.
Increasing Information Available About Contractors' Responsibility.
A third approach found in legislative proposals in the 110th Congress to better ensure
that the government does not contract with nonresponsible contractors involved
increasing the information about contractors' responsibility available to agency
officials in the hopes that nonresponsible contractors can be more easily detected and
avoided. The Duncan Hunter National Defense Authorization Act for Fiscal Year
2009 implemented some of these proposed changes, but the full range of proposed
changes was broader than the provisions enacted in the Duncan Hunter Act.
Creation of a centralized database with information beyond that currently
available in the EPLS was one commonly proposed method of increasing the
information available about contractors' responsibility. Proposed legislation called
for this expanded database to include some or all of the following information about
contractors:
! state or federal civil, criminal, or administrative proceedings;
! federal contracts terminated for default;
! administrative agreements between the contractor and federal or state
governments;
107
See, e.g., S. 2394 � 3.
108
48 C.F.R. � 9.103(b) ("No purchase or award shall be made unless the contracting
officials make an affirmative determination of responsibility.").
109
See, e.g., H.R. 4881 � 3.
110
See, e.g., S. 2394 � 3 (contractors with delinquent tax debt cannot be found responsible);
H.R. 3383 � 2 (contractors without ethics compliance programs cannot be found
responsible).
111
48 C.F.R. � 9.406-2(a); 9.407-1(a).
112
See, e.g., H.R. 3854 � 4.
113
See, e.g., S. 2394 � 8.
114
See, e.g., S. 2904 � 8.
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! final findings of nonresponsibility by federal or state procurement
officials;
! assessments of the quality of work on federal or state awards;
! findings of federal or state audit disputes;
! orders from federal or state agencies asking the contractor to show
cause why it should not be excluded;
! publicly available government reports, such as those from the GAO,
Congressional Budget Office, and agency inspectors general,
concerning contractor performance or specific instances of waste,
fraud, and abuse; and
! evidence of repeated, pervasive, or significant violations of law by
contractors.115
Requiring contractors to supply this information, or other information, as part of the
contract award process was another proposed method for increasing the information
available about contractors' responsibility.116
A related strategy sought to increase the information available to Congress and
the public about agencies' contracting activities so that problematic agency actions
could be detected more readily. Such proposals often required agency officials to
justify in writing their decisions not to exclude contractors who engaged in specified
conduct117 or to find a contractor who had engaged in specified conduct
"responsible."118 Reporting to Congress on the number of annual exclusions imposed
by agencies119 or the number of waivers granted for compelling reasons120 were other
proposals.
Because the EPLS currently lists only those contractors who are presently
excluded, have previously been excluded, or have been proposed for debarment,121 an
expanded database with information about civil, criminal, or administrative
proceedings involving contractors, assessments of the quality of contractors' work on
115
See, e.g., H.R. 5658 � 4502 (calling for information on civil, criminal or administrative
proceedings, terminations for default, administrative agreements, and findings of
nonresponsibility); H.R. 3033 � 2 (same); S. 3139 � 201 (same); H.R. 6411 � 7 (adding
assessments of the quality of work on federal contracts, audit disputes, and show-cause
orders to the elements of H.R. 5658 and requiring inclusion of government reports); S. 3139
� 201 (requiring inclusion of evidence of violations of law).
116
See, e.g., H.R. 3033 � 5 (requiring contractors to disclose information about criminal,
civil, and administrative proceedings, etc., in writing when bidding); H.R. 4881 � 3
(requiring contractors to submit a form certifying that they do not have seriously delinquent
tax debt and authorizing the Secretary of the Treasury to disclose information describing any
seriously delinquent tax debts to the agency head).
117
See, e.g., S. 2394 � 8.
118
See, e.g., S. 3139 � 201.
119
See, e.g., H.R. 2033 � 5.
120
See, e.g., H.R. 3383 � 3.
121
48 C.F.R. � 9.404(c)(6).
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federal or state contracts, and similar information122 would significantly increase the
information available to agency officials in their decision making. In principle, more
extensive information should lead to better decision making by giving agency officials
a more thorough picture of contractors' responsibility. In practice, however, more
extensive information about past misconduct might not necessitate different
contracting decisions given the FAR's current focus upon present and future
responsibility, rather than past misconduct per se.123 Moreover, increased quantities
of information to be scrutinized by agency officials carry their own costs, especially
when some of the information could concern situations in which the contractor was
ultimately found not to be at fault.124 Agency employees could have to spend
additional time in reviewing the broader range of information in any expanded
database, and they would not be able to rely on mere listings of civil, criminal, or
administrative proceedings to make decisions if all proceedings -- and not just those
that ended with findings of contractor fault -- were listed. Requiring contractors to
supply information as part of the award process would ensure that agency officials do
not have to spend time gathering this information, although they still might have to
verify the information and enter it into the database.
Reports to Congress on agency exclusions are not currently required under the
FAR, or under most statutes prescribing debarments, so this change could potentially
increase the quality of agency decision making by subjecting it to increased scrutiny.
The EPLS is currently accessible to the public at [https://www.epls.gov]; thus, any
gains in the quality of decision making to result from public access to information
about contractors would probably require information beyond that already in the
EPLS. Contractors are, however, likely to resist wide-spread publication125 of much
of this information on privacy grounds.126
Conclusion
Debarments and suspensions of contractors, whether under statutory provisions
or under the FAR, ensure that contractors who have failed to fulfill legal or contractual
obligations have limited opportunities for future contractual dealings with the
government. Statutory debarments are often mandatory, leaving no discretion to
contracting officers; are punishments; and last for a period prescribed by statute, with
limited opportunities for agencies to waive them. Statutory suspensions otherwise
122
See, e.g., H.R. 3033 � 2; H.R. 5658 � 4502; H.R. 6411 � 7; S. 3139 � 201.
123
48 C.F.R. � 9.402(b) ("The serious nature of debarment and suspension requires that
these sanctions be imposed only in the public interest for the Government's protection and
not for purposes of punishment.").
124
See, e.g., H.R. 6411 � 7 (requiring information on all proceedings involving contractors);
S. 3139 � 201 (requiring all complaints, indictments, and legal actions regardless of their
outcome).
125
See, e.g., H.R. 3033, � 2 (calling for the database of contractor information to be
available to the public on the Web).
126
See, e.g., Stan Soloway, Fine Line between Transparency and Chaos, Washington Tech.,
July 14, 2008, available at [http://www.washingtontechnology.com/print/23_12/
33117-1.html].
CRS-22
resemble statutory debarments, but last only until a designated agency official finds
that the contractor has ceased the conduct violating the statute. Administrative
debarments, by contrast, are within the discretion of agency contracting officials;
cannot be punitive; may generally last no longer than three years; and can be waived
by agency heads. Administrative suspensions are temporary administrative
debarments, lasting only as long as any agency investigation of contractor misconduct
or ensuing legal proceedings.
Congress has recently explored several approaches to making debarment and
suspension more effective means of ensuring that federal contracts are not repeatedly
awarded to contractors that are publicly known for not paying taxes, bribing foreign
officials, falsifying records, or similar misconduct. The 110th Congress enacted
legislation (1) creating an additional statutory debarment encouraging divestment from
Sudan; (2) amending the FAR to require that contractors report violations of federal
criminal law or receipt of overpayments during the award or performance of certain
contracts; (3) creating an expanded database of information about contractors'
responsibility for use by agency officials; and (4) involving the Interagency
Committee on Debarment and Suspension more integrally in coordinating agency
exclusion actions. Congress also considered several other bills that would have (1)
created new statutory debarments covering additional misconduct; (2) supplemented
the FAR provisions on contractor responsibility, debarment, and suspension; and (3)
increased the information about contractors' responsibility available to contracting
officers in their decision making. Similar proposals may be put forward in the 111th
Congress.
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