Jay Rosen, “Mr. Monitor,” explores the similarities between suspensions and debarments, as well as how the actions differ. As far as likenesses go, consider both actions the kiss of death for federal contractors.
Recalling that the GSA website states, “The Suspension and Debarment process protects the federal government from fraud, waste and abuse by using a number of tools to avoid doing business with non-responsible contractors. Suspensions, proposals for debarment and debarments are the most widely known tools as these actions are visible to the public.
A suspension is used when there is an immediate need. It is a temporary measure; there is a 12-month limit, which can be extended for another six months. A debarment is for a specific term, but generally not longer than three years.
A suspension is used to essentially take steps to protect the government’s interests from a contractor that is believed to be unsuitable as a business partner until more of the facts can be assembled. Generally, the investigation is underway and there is a need to take protective steps before all the information has been fully gathered. This underscores the temporary nature of a suspension, while debarment is seen as more permanent solution, even with the limit of the three-year term.
Procedurally, a suspension requires notice at the time that a party is entered into the exclusive parties list on the System of Acquisition Management (SAM). A notice letter is issued to the contractor advising that the government has initiated the suspension, the factual basis for the suspension and the rights and procedures available to the respondent as it relates to the suspension. The notice usually indicates the exclusion is effective immediately.
A suspension is effective throughout the executive branch of the federal government and applies to procurement and non-procurement programs.
A suspended party cannot present offers or be awarded new contracts or contract renewals. Further, offers will not be solicited from a suspended party, nor will contracts be awarded to or existing contracts renewed or otherwise extended with a suspended party. Further subcontracts requiring government approval will not be approved for a suspended company by any agency in the executive branch of the federal government unless the head of the agency taking the contracting action or a designee states, in writing, the compelling reason for continued business dealings between you and the agency.
A suspension prevents a company from conducting business with the federal government as an agent or representative of other contractors or of participants in federal assistance programs, and the suspended party cannot act as an individual surety to other government contractors. It also prevents any such companies from being subcontractors to approved or at least non-suspended contractors. Finally, all affiliations of a suspended entity with a company doing business will be examined.
A debarment also begins with notice of a proposed debarment and, again, the party is put into SAM on the exclusion list.
A notice is sent out at the same time advising the party that they have been excluded from federal contracting under the procurement role. Once again, a debarment is temporary, usually three years in length and based on a preponderance of the evidence – usually a conviction.
Because suspension and debarment essentially eliminate a company’s access to future government revenue, the consequences can be devastating.
A company is not only excluded from future government contracts and subcontracts, it is also rendered ineligible for (among other things) federal grants, loans and subsidies. In addition, the collateral consequences that stem from S&D can be equally, if not more, destructive.
A suspended or debarred company may be precluded from contracting with state and local governments, foreign governments or international organizations, such as the World Bank.
A company may also lose its government security clearances and licenses. The reputational damage caused by the suspension or debarment may harm a company’s commercial interests, as well. The action can be devastating in many cases, and it has been referred to as a potential death sentence for companies that are dependent on federal dollars for their revenues. The bottom line: Suspension and debarment can strike fear into the heart of any federal government contractor.
In case you missed the earlier installments of this ongoing series, please see the links below.
Everything You Always Wanted to Know About Monitors But Were Afraid to Ask
Part 1, Part 2, Part 3, Part 4 and Part 5
Potential Issues in Corporate Monitorships
Part 1, Part 2, Part 3, Part 4 and Part 5
