Suspension & Debarment Part III: Mechanics and Mitigating Factors

Now that we have firmly established that neither suspension nor debarment may be used to “punish” contractors, let’s go over the mechanics of FAR 9.4.

Suspension permits an agency suspension or debarment official (“SDO”) to temporarily exclude a contractor from the procurement system based on “adequate evidence” of a violation of the offenses listed at FAR 9.407-2 (such as bribery).  A contractor may also be suspended if it is indicted for violating one these offenses. Typically, suspensions are imposed pending the completion of the Government investigation or legal proceedings related to the conduct for which the contractor was suspended.  Suspensions may not exceed 18 months unless legal proceedings have been initiated within that period.

Debarment permits SDOs to exclude contractors that have been convicted of or found civilly liable for the offenses listed at FAR 9.406-2(a) (bribery is listed here as well).   A contractor may also be debarred if it has been found, by a preponderance of the evidence, that the contractor committed one of the offenses listed at FAR 9.406-2(b).  Generally, debarment lasts for a period commensurate with the seriousness of the misconduct, though typically not exceeding three years.

In addition to the specific offenses that provide grounds for suspension and debarment (“S&D”), FAR 9.4 grants SDOs broad discretion to suspend or debar for “any other cause of so serious or compelling a nature that it affects the present responsibility of a Government contractor or subcontractor.”

When determining whether a contractor is responsible enough to contract with the Government, the FAR makes clear that an SDO should not limit its review solely to the contractor’s past misconduct.  Instead, SDOs should also consider a contractor’s remedial measures and other mitigating factors, including, but not limited to: the effectiveness of a contractor’s ethics and compliance program, the company’s internal controls, the contractor’s timely disclosure to/cooperation with the Government, the termination/discipline of the employees responsible for the misconduct, the contractor has paid or agreed to pay all liability and made full restitution, and the contractor has implemented programs to prevent the misconduct’s recurrence.

The consideration of these mitigating factors is crucial to an SDO’s determination of whether a contractor should be suspended or debarred. As stated in FAR 9.406-1, the “existence of a cause for debarment . . . does not necessarily require that the contractor be debarred.”  Thus, even if a contractor engages in S&D-triggering behavior, an SDO will look to these factors to determine the contractor’s present responsibility and whether its remedial measures are sufficient to prevent similar misconduct in the future.

Up Next--Suspension & Debarment Part IV: Discretion

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Suspension & Debarment Part II: ‘Seriously, S&D May Not be Used to Punish Contractors,' can be found here.

Suspension and Debarment Part I: An Introduction, can be found here.

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Jessica Tillipman is a contributing editor of the FCPA Blog. She's the Assistant Dean for Outside Placement and a Professorial Lecturer in Law at The George Washington University Law School. She also teaches an Anti-Corruption seminar that focuses on corruption control issues in government procurement.