Suspension and debarment has long been a remedy available to the government to ensure that it only does business with currently responsible contractors. When a company is suspended or debarred, it is subject to a number of restrictions, primarily not being able to do business with the government as a prime contractor or subcontractor. For a company that does nothing but government contracts, this can be a substantial blow to business.
A new report from the Interagency Suspension and Debarment Committee reveals that the government has been using this powerful weapon in the war against contractor fraud. The report reveals that the number of suspensions and debarments is up from more than 1,900 in fiscal year 2009 to more than 3,000 in 2011. The Office of Federal Procurement Policy Administrator, Joe Jordan, is touting this as “significant progress in cracking down on bad actors.”
All government contractors should take notice of these increased numbers. They reveal a willingness of the government to employ suspension and debarment more routinely than in the past. This means that non-compliance with government contract terms or conditions that would have once been minor, could now be problematic. In one recent case, we represented a client that faced debarment because the company defaulted on a $20,000 task order. The government was concerned that this was the beginning of a pattern, even though the company had been successfully performing government contracts for a number of years without any issues.
In addition to taking notice, contractors should take a proactive approach to compliance. Contractors should routinely evaluate their compliance programs and make sure they are tailored to the company’s risk profile. Contractors should also make all required disclosures, including mandatory disclosures under the government’s mandatory disclosure regime. Finally, contractors should always consider approaching suspension/debarment officials first if there is any doubt about their current responsibility as a contractor. This could help prevent any formal action, and demonstrates to the government that the company does not want to be considered a “bad actor.”