Department of Defense has an Active Suspension and Debarment Process

The Government Accountability Office (“GAO”) recently issued a report finding that the Department of Defense (“DOD”) had effective processes to refer contractors for potential suspension or debarment, but that DOD was not reporting a small number of discretionary actions. Suspension and Debarment, DOD has Active Referral Processes, but Action Needed to Promote Transparency, GAO-12-932 (Sept. 19, 2012).

The GAO noted that in fiscal year 2011, DOD had the federal government’s largest procurement budget, totaling over $375 billion.  DOD used suspensions and debarments as tools to protect the federal government against nonresponsible contractors, such as those who had committed fraud.  A suspension is a temporary disqualification of a contractor from receiving new government contracts pending completion of an investigation and any legal proceedings. A debarment is an exclusion of a contractor from receiving new government contracts for a specified period.

The DOD components identify numerous cases of actual or alleged contractor misconduct that could result in suspension or debarment.  The sources of these leads are the various DOD Criminal Investigative components, the Defense Contract Audit Agency, DOD component contracting officers, program officials and attorneys, and the FBI. GAO found that, acting on various referrals, the DOD components took a total of 3,443 suspension and debarment actions during fiscal years 2009-11.  In doing so, the GAO concluded that DOD had complied with Federal Acquisition Regulation (“FAR”) requirements.

In its examination, GAO noted that contractors that were suspended, proposed for debarment or debarred are thereby excluded from receiving new contracts unless the agency designee determines on a contract-by-contract basis that such a contractor not be excluded and there is a compelling reason for such action.  FAR 9.405(a).  DOD components made 14 compelling reason determinations during fiscal years 2009-11.  However, GAO noted that the DOD Authorization Act of 1982, Pub. L. No 97-86, § 914 (1981), codified as amended at 10 U.S.C. § 2393, requires that any compelling reason determination by DOD be justified in writing, and that notice of the determination be submitted to the General Services Administration, to be kept on file for public inspection.  DOD had not submitted any such determinations for the 14 cases, but began to do so during the GAO review.

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