Suspension and debarment activity is on the rise, even among agencies that do not  traditionally suspend and debar contractors and recipients of Federal assistance.

Suspension and debarment activities at six agencies that had “few or no” procurementrelated suspensions or debarments prior to 2010 increased these actions 14 fold between  2010 and 2013 – from 19 to 271 – according to a recent Government Accountability Office  (GAO) report.1  The six agencies that GAO surveyed were the Departments of Commerce,  Health and Human Services, Justice, State, Treasury, and the Federal Emergency  Management Agency, each of which was the subject of an earlier GAO report that was  critical of the agencies’ lack of suspension/debarment activity.2

In addition to the increased activity at the surveyed agencies, the number of suspensions  and debarments at the Veterans Administration more than doubled – increasing from 34  actions in 2011 to 73 actions in 2013. Activity is on the rise at least in part because of  the heightened level of Congressional scrutiny. In response, the agencies have added  staff dedicated to the suspension and debarment function, and increased training and  awareness of suspension and debarment officials as well as agency investigators and  auditors. In the case of Justice, a 2012 memorandum from the Attorney General to all  litigating authorities and the FBI, reminding them to consider whether the facts of a case  warrant exclusion, has also played a role. Agency Inspectors General are also better  coordinating with suspension and debarment officials; a number of the agencies established  monthly meetings with agency OIG, general counsel, and ethics officers to track and  discuss referrals for suspension or debarment.

It is critical that companies that contract with any of these agencies, or that rely on these  agencies for grants, cooperative agreements, scholarships, or other assistance, be aware  of the dramatically increased scrutiny these agencies are turning toward suspending or  debarring companies that demonstrate a lack of business integrity. Companies that are  under investigation for fraud, anti-trust violations, unfair trade practice, or “embezzlement,  theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, violating Federal criminal tax laws, or receiving  stolen  property,”3 may be suspended from Federal contracting and assistance for up to 12 months if the agency  determines that there is adequate evidence of a violation,  even if the company has not been charged. If a company  is convicted of any of these violations, it may be debarred  from Federal contracting for up to three years, depending  on the egregiousness of the violation.

If a company is under investigation or has reached a  settlement relating to any of these violations with any of  these agencies, the company should consider contacting the  agency suspension and debarment office and presenting to  that office facts that demonstrate that, notwithstanding any  underlying allegations, the company is presently responsible  for purposes of receiving the benefits of dealing with the  Federal government. Indeed, this applies to all Federal  agencies; GAO reports that government-wide, the number  of suspensions and debarments more than doubled between  2009 and 2013 – increasing from 1,836 to 4,812.

Of course, an increase simply in the number of suspensions  and debarments tells little about whether the agencies  actually are doing a better job of ensuring that they contract  with or provide assistance to presently responsible entities.  However, given the level of scrutiny of agencies’ performance  in this area, contractors and recipients of federal assistance  should expect the current trend of increased suspension  and debarment activity to continue.