Type: Law Bulletins
Date: 03/02/2012

Suspension and Debarment - It Can Happen to You

Don’t think you can be suspended or debarred?  Think again.  On February 8, 2012, Booz Allen Hamilton, one of the federal government’s largest contractors, announced that its San Antonio regional office had been suspended by the Air Force.  

The suspension of Booz Allen Hamilton comes on the heels of a noticeable increase in the number of suspension and debarment actions being taken by Federal agencies, including actions taken against large, high-dollar contractors.  In 2011, USAID suspended one of its top 10 contractors, AED.  At the time it was suspended, AED held about 65 awards from USAID valued just under $640 million.  On the non-civilian side, records of suspension and debarment actions taken by the Department of Defense reveal that proposed debarments have risen steeply from 2010 to 2011—proposed debarments by both Air Force and Navy doubled, with the Army not far behind.

This trend appears to represent the front of the system, not the tail end, as continued attention is placed on suspension and debarment by lawmakers and agencies. 

  • The 2012 Consolidated Appropriations Act prohibits federal agencies from making awards to any company that has either been convicted of a felony within the past 24 months or that is delinquent in its taxes, unless the agency has first considered suspension or debarment and found it not to be in the Government’s best interest. 
  • The 2012 National Defense Authorization Act also encourages CENTCOM to recommend debarment of contractors either actively supporting persons or entities actively opposing United States or coalition forces or failing to use due diligence to make sure that no government funds it received were given to such persons or entities.  
  • The Office of Management and Budget recently (November 15, 2011) issued a memorandum that requires executive departments and agencies to focus more attention on implementing the FAR provisions governing suspensions and debarments. 
  • And, the GAO has chimed in, releasing a report entitled “Suspension and Debarment—Some Agency Programs Need Greater Attention, and Government-wide Oversight Could be Improved.”  GAO-11-739. 

This attention is going to have a direct effect of increasing the use of suspension and debarment and is, no doubt, the result of increasing public pressure to cut waste and abuse in government spending.  

The takeaway?  It is not only important to avoid any event that could trigger suspension or debarment, but it is also important to take the appropriate steps to identify high risk areas of your business, determine whether preemptive disclosures should be made, and take the appropriate steps (including an investigation or perhaps remedial measures) to deal with any such areas.  By carefully evaluating high risk areas and developing an adequate and implemented compliance program, contractors can significantly reduce the risk of suspension or debarment.

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