The DOS proposes to amend the U.S. Department of State Acquisition Regulation (DOSAR) to update and streamline procedural aspects of its suspension and debarment process. Note that while the U.S. Agency for International Development (USAID) is an agency within DOS, USAID handles suspension and debarment matters separately from the rest of DOS; therefore, these changes would not impact the USAID suspension and debarment program.
Perhaps the ultimate enforcement action, government authorities have the ability to bar grantees and their contractors from receiving future funds as a result of noncompliances and violations of law. While not meant as punishment, grantees’ and contractors’ present responsibility is crucial to remaining eligible for future funding. As a consequence, grantees and contractors should have an understanding of the landscape of these administrative actions.
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The U.S. Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) are issuing a final rule, effective April 6, 2016, amending the FAR to include identification of (1) any immediate owner or subsidiary, and (2) all predecessors of an offeror that held a federal contract or grant within the last three years, in the FAPIIS for contracts that exceed the simplified acquisition threshold.
Since the beginning of the year, many nonprofit federal award recipients have been following the suspension of one of the U.S. Agency for International Development’s (USAID or the Agency) largest nonprofit contractors—the International Relief and Development (IRD). This month, a federal judge ruled on the matter, finding that USAID violated the law, and that the Agency must undo its January suspension. While the eight-month saga legally resolved in its favor, IRD has been damaged, and USAID (despite a judicial order requiring such) is unlikely to be able to “undo” all of the harm that the suspension caused IRD. As a consequence, we devote this month’s newsletter to some tips and guidance to avoid the irreparably harmful actions of suspension or debarment.
The U.S. Agency for International Development (USAID) recently suspended one of the largest nonprofit recipients of USAID funds—International Relief and Development (IRD)—from receiving future Federal Government awards. The suspension followed an internal USAID review through which USAID questioned IRD’s present responsibility because of USAID’s assertion that IRD engaged in performance misconduct and lacked the appropriate internal controls required for recipients of Federal funds.
On March 5, 2014, the Interagency Suspension and Debarment Committee (ISDC) released its report on the status of the federal suspension and debarment system for Fiscal Years 2012 and 2013. The report “discusses the ISDC’s progress and efforts to improve the suspension and debarment system by ensuring the fair and effective use of suspension and debarment,” “provides data for FY 2012 and FY 2013 on agency suspension and debarment activities,” and highlights “[i]ndividual agency activities and accomplishments.” The report, however, largely focuses on the number of suspensions and debarments across the federal landscape, thereby fostering a culture within the government that equates the total number of actions to progress. To this end, contractors, grantees and other recipients of federal funds must tread carefully when identifying and addressing missteps.
On December 31, 2013, the U.S. Court of Appeals for the Eleventh Circuit reversed a lower court (Northern District of Alabama) decision regarding an agency’s ability to indefinitely suspend the affiliates of an indicted government contractor. This is an update to a prior Government Contracts Update on the lower court’s initial decision.
The suspension and debarment system has faced increased scrutiny from the private and public sectors alike, which generally argue that the system is broken because the respective authorities are not following, or are inconsistently applying, the rules. In response to this criticism, Congress historically has reacted with a heavy hand, i.e. by proposing mandatory suspension or debarment for certain offenses. One of the more recently proposed examples of such Congressional action – House Oversight Chairman Rep. Darrell Issa’s Stop Unworthy Spending Act, better known as the SUSPEND Act – departs from this trend of mandating suspension and debarment in limited, specific circumstances, but still fails to address the system’s perceived weaknesses.
Affiliates of government contractors involved in suspension and debarment proceedings should note the recent decision in Agility Defense and Government Services, Inc., et al. v. U.S. Department of Defense, et al., No. CV-11-S-4111-NE, 2012 WL 2480484 (N.D. Ala. Jun. 26, 2012). In Agility Defense, the U.S. District Court for the Northern District of Alabama confirmed that the government may suspend a government contractor solely on the basis of being affiliated with another suspended government contractor. However, without initiating any further legal proceedings against each affiliate, the government’s suspension may last only 18 months. The court also reviewed the means by which affiliates can sever their ties with suspended contractors.
In a recent interview with Federal News Radio, Rob Burton, a thirty-year veteran of federal procurement law and policy and a partner in Venable’s Government Contracts Practice Group, discussed the recent upward trend in suspension and debarment actions caused by a recent push by Congress and others to increase enforcement. The radio interview can be downloaded by clicking here. It is important that companies doing business with the government be aware of these trends, their potential impact, and the resources Venable offers to quickly resolve these actions and minimize the impact on contractors.