The upward trend of suspensions and debarments continued in FY 2014.  According to the Interagency Suspension and Debarment Committee (“ISDC”) Report to Congress, released March 31, 2015, while referrals to the suspending and debarring officials decreased 12% from FY 2013, suspensions, debarments, and proposed debarments increased, Government-wide, by almost 8%. Since the ISDC began collecting data in 2009, these actions have continued to increase markedly.

  • Suspensions and debarments rose nearly 14%.
    • In FY 2014, there were 122 additional suspensions from the previous year, rising from 887 in FY 2013 to 1,009 in FY 2014. Since FY 2009, however, suspensions rose 142%.
    • Similarly, FY 2014 brought 233 more debarments than FY 2013, growing from 1,696 to 1,929 actions. Over the past six years debarments have increased a whopping 188%.
  • Proposed debarments stayed steady.
    • Proposed debarments rose a mere 0.5%, with 12 additional actions in FY 2014 (2,241) than FY 2013 (2,229). What these numbers don’t show is that proposed debarments have increased more dramatically since 2009 than either suspensions or debarments, skyrocketing 199% from FY 2009 to FY 2014.
  • Administrative agreements fell 23%.
    • Administrative agreements allow a company to avoid debarment by committing to enhanced internal controls and compliance mechanisms. While suspensions and debarments rose, administrative agreements fell from 61 in FY 2013 to only 47 in FY 2014.  Their use overall, however, has increased since 2009, when there were only 35 such agreements.
  • The most active agencies in FY 2014 included the Army, Housing and Urban Development, Homeland Security, the Navy, and the Environmental Protection Agency.
    • In contrast, several agencies had no suspension or debarment actions, including the Department of Labor, the Nuclear Regulatory Commission, and the Social Security Administration. Indeed, since the ISDC began reporting to Congress, neither the Nuclear Regulatory Commission nor the Social Security Administration has reported any suspension or debarment activities.

The continuously increasing use of suspension and debarment actions is likely due to Congressional pressure which has resulted in stronger and more active suspension and debarment programs across Government agencies.  A May 2014 Government Accountability Office study reviewed the suspension and debarment programs of seven agencies.  In 2011, six out of the seven had either a weak program or no program at all.  By 2014, however, all seven agencies had “active and effective” suspension and debarment programs.

As the ISDC Report outlines, suspensions and debarments are “tools to protect the government’s interest – not punishment.”  Therefore, the number of such actions is not a “metric of success.”  With the rise of institutionalized suspension and debarment programs, particularly the growing number of dedicated staff, many Government contractors and Government contracts attorneys question whether the Government will heed the ISDC’s reminder to its members “to regularly review their own actions to determine if the level of activity is reflective of what is necessary to protect their agency and the government from harm.”  Regardless, as the ISDC’s statistics makes clear, Government contractors are well-served by implementing appropriate corporate governance processes to avoid the Government’s increasingly active suspension and debarment programs.

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This post first appeared in the Government Contracts Blog.