Government Contracts Monitor

Debarments and Debarment Authority on the Move

May 25, 2012

Debarment Authority: Small Businesses Beware.

The 2013 National Defense Authorization Act (H.R. 4310), if enacted in its current form, would require agency officials to suspend or debar a contractor for misrepresenting itself as a small business.

The bill would make the measures mandatory:

Section 1683—Requirement Fraudulent Businesses Be Suspended or Debarred

This section would amend subsection (d) of section 15 of the Small Business Act (15 U.S.C. 644) by clarifying that misrepresentation as a small business concern is an independent basis for suspension or debarment of a contractor. This section would also require a revision to the Federal Acquisition Regulation and would require the Administrator of the Small Business Administration to develop and promulgate guidance implementing this section, and to publish standard operating procedures for suspension and debarment on its website.

According to the House Armed Services Committee’s Report on the bill, this provision clarifies that a misrepresentation of small business size status is an independent basis for suspension or debarment of a contractor. The bill has passed the House of Representatives and is now awaiting a conference committee mark-up with the Senate.

Debarment Activity: The Navy Has Been Busy.

On May 7, 2012 the Assistant General Counsel for Acquisition Integrity issued a Memorandum for the Acquisition Community At Large detailing the suspension and debarment actions taken by the Department of the Navy Suspension and Debarring Official in April 2012. The memorandum lists 12 newly debarred contractors – 3 companies and 9 individuals. The average length of debarment for these newly debarred contractors is over 4 years, with individual debarment terms ranging from 1 to 9 years.

In addition, during April 2012 alone, 13 new individuals and 14 new companies were noticed for debarment. In short, the Navy SDO has been active.

Debarment Trends: The Air Force Suggests a Different Approach

The Spring 2012 edition of Fraud Facts, an Air Force publication, (Spring 2012 --NEW--) contains articles on recent initiatives, activities, and policy questions, including –

DoD’s movement toward a values-based ethics program;
Changes in the methods by which the Air Force fights fraud;
An overview of recent Air Force debarments; and
A policy piece exploring the question of whether it makes sense for debarments to terminate automatically without any consideration of the contractor’s present responsibility.

The purpose of the policy piece is to raise the argument that debarment continue for an indefinite period – until the contractor can demonstrate present responsibility. According to Todd Canni, Director of Air Force Suspension and Debarment Operations,

Under such a system, there would be no presumption as to when a contractor will be ready to be declared eligible, nor would there be any presumption that the contractor will ever be responsible. Rather, after being debarred, the contractor may choose to not pursue government contracts anymore and its debarment would remain in effect. Alternatively, it could decide that they value doing business with the government and want to make the changes necessary to be responsible. In the latter case, the system should encourage the contractor to improve quickly and then return to the agency SDO and demonstrate its present responsibility.

The last point is particularly noteworthy for contractors that have been debarred: “return to the agency SDO and demonstrate … present responsibility.” This can be done well before the end of the term of debarment. Indeed often it can be done during the debarment proceeding itself in order to avoid debarment.

Lindsay Simmons is the attorney responsible for the content of this article.

Attorneys

Lindsay Simmons