Government Contracts Monitor

Be Careful Out There: Contractor Suspensions and Debarments Are on the Rise

October 2, 2012

By: Eric Whytsell

The Government’s continued emphasis on rooting out fraud, waste and abuse appears to be paying off, at least in terms of the increased number of contractors being identified as ineligible for federal government contracts.

According to a new report touted by Office of Federal Procurement Policy Administrator Joe Jordan, suspensions and debarments of contractors that violate federal contracting rules have increased by almost 60% government-wide over the past three years.  The Interagency Suspension and Debarment Committee (ISDC), a coordinating body of federal representatives, recently found that agencies have collectively increased suspensions and debarments from just over 1900 in FY 2009 to more than 3000 in FY 2011.

This should come as no surprise to anyone who has been paying attention to trends in government contracting policy and the realities of the government marketplace.  Ongoing budgetary tightening and an ever-increasing emphasis on compliance and transparency have naturally resulted in stepped up efforts to ensure the Federal Government only does business with “responsible” contractors.  And, as Mr. Jordan notes on the Office of Management and Budget (OMB) website, “The ability to debar or ban a certain company from doing business with the U.S. government is an important tool we have to protect taxpayer dollars from waste, fraud and abuse.” 

There is every reason to think that this trend will continue.  Last Fall, then-OMB Director Jack Lew issued a memorandum to federal agencies requiring them to, among other things, appoint a senior accountable official to "assess the agency's suspension and debarment program -- including the adequacy of available training and resources -- review internal policies and procedures," ensure databases are checked before grants and contracts are awarded, and "take corrective action if an award is improperly made to a suspended or debarred contractor." 

According to the ISDC report, all 24 agencies – which together account for 98% of federal contracting – now have senior accountable officials in place to ensure companies are appropriately suspended or debarred when necessary.  In addition, several departments, including Health and Human Services, Commerce and Interior, have already taken steps to ensure better compliance with federal contracting rules.

In response, smart contractors should redouble their efforts to ensure their status as “responsible” contractors by understanding and complying with all applicable laws and regulations.  That may be easier said than done, but it remains essential in today’s federal marketplace.

 

Eric Whytsell is the attorney responsible for the content of this article.