What Sorts of Consolidation of Suspension and Debarment Functions Might Help the Process
Wednesday, July 31, 2013 at 5:08PM
David Robbins in FEMA, Government Accountability Office, HHomeland Security, SUSPEND Act, Suspension, System for Award Management

This is the second of a multi-part series of thought pieces on the state of the suspension and debarment system in federal contracting. The first, “A Full Throated Defense of the Structure of the Suspension and Debarment System,” is here.
 
Suspension and debarment are administrative actions taken by specific government agencies to protect the federal government by preventing the government from purchasing goods or services or providing grants and other federal assistance to contractors and grant recipients (together, “contractors”) that are “not presently responsible.” “Not presently responsible” is a term of art that means, generally, the contractors cannot be trusted to deal ethically and fairly with the government and, as such, there is persistent danger in doing business with these contractors. These actions are prophylactic. They involve discretion and business judgment. These exclusions are not, and should not be, collateral consequences of convictions, indictments, and the like. Agencies have the discretion to find, after a thorough review, that despite a conviction a contractor has taken substantial remedial measures and presented enough mitigating facts that exclusion from contracting is not necessary to protect the government. This can be a powerful incentive for industry to alter behavior and internal controls without ever needing an exclusion.
 
While the first part of this series defended the structure of the current system as beneficial to the government as a whole, this piece assumes that some consolidation is inevitable and attempts to set forth at least this particular practitioner’s views of what sorts of consolidation would be helpful to the overall system.
 
Among the problems often cited in Government Accountability Office reports, the discussion draft SUSPEND Act, and other reviews of the current suspension and debarment system are, in no particular order: (1)  insufficient overall suspension and debarment activity, primarily among a select group of civilian agencies; (2) perceived unreliability of the System for Award Management (SAM) data (whether because of SAM system issues or because of data entry errors); and, (3) concerns about the Government’s ability to handle contingency contracting issues, either through providing appropriate evidence from the cognizant Inspector General’s office, the willingness to issue suspensions and debarments, or the staffing to handle surges caused by natural disasters and contingent military operations.  These are important concerns and, while members of the government suspension and debarment community might have answers to why each has not been caused by our current processes and procedures, these concerns still have merit and deserve to be analyzed.
 
This analysis takes as a given that suspensions and debarment are at least something of an indicator of the effectiveness of the agency’s procurement fraud remedies program.  At the risk of sounding like a broken record, likely the best way to strengthen an agency’s suspension and debarment program is to stand up offices to focus on grant and procurement fraud related remedies by breaking down silos and timely coordinating civil, criminal, contractual and suspension/debarment remedies in every case impacting the agency. This would require changing departmental instructions to empower the office to do more than just track investigations. Instead, the office should be empowered to link up with the acquisition chain, as well as the investigative and audit functions in order to be informed early of potential problems. This early notification is vitally important because if too much time passes (as it invariably does when these offices only follow investigations) the agencies lose the ability to recover funds lost to procurement fraud for the affected programs. Once monetary recoveries must return to the Treasury, agency interest in remedying fraud diminishes because there is no return on the substantial investment of time and resources necessary to do so. Moreover, in many cases, waiting for an investigation to result in civil or criminal filings allows non-responsible contractors to continue receiving federal grants and contracts when that may not be the best course of action.
 
Agencies must have the option to stand up fraud remedies programs and to develop the trust necessary to have frank discussions about remedies and business needs. These are, at core, agency-specific discussions and remain the best way to develop a robust fraud program because these conversations build trust, focus agencies on monetary recoveries in this tough fiscal climate, and facilitate timely government-wide protection through suspension and debarment when appropriate. In this resource-constrained environment, however, a limited number of agencies may have difficulty standing up integrated procurement fraud remedies programs. Agencies might lack the billets or the funds to hire staff skilled in procurement fraud remedies work. Or they might be reluctant to make the changes necessary to empower such a program.  In these limited situations, perhaps the ability to outsource the suspension and debarment function by agreement to another entity -- either by an Economy Act-like transaction or through outsourcing (by choice) to an independent SUSPEND Act-type board -- might make sense, as long as the outsourcing agreement addresses how the board and the agency will build trust and focus on coordinating all remedies and not just suspension and debarment.
 
The accuracy of the SAM database is a more difficult issue. As a user of SAM, I can confess it is not my favorite information technology system. I have seen several instances -- though not an alarming number -- of data migration issues when case data was ported from the legacy Excluded Parties List System to SAM. Those issues, however, are not specific to (or caused by) suspending and debarring offices. Instead, those are information system enterprise issues and they are actively being worked by GSA as detailed in public reports. As a practitioner in one of the more active programs in this area I am not convinced there is a need to centralize suspension and debarment functions because of enterprise issues with SAM. However, intuitively, I can appreciate how centralizing responsibility for entering data into SAM and auditing the data with a dedicated staff to ensure accuracy may lead to more consistent results. As such, it is at least arguable that consolidation of so-called “back office” suspension and debarment functions like SAM entry and tracking could be beneficial to the system.
 
And the thorniest issue of all appears to be the ability to surge to handle allegations of fraud in contingency operations, including natural disasters as well as wartime contingency operations. Based on public reports only, there appear to be two sets of issues. First is whether agencies have the capacity to handle suspensions and debarments following a natural disaster like a Hurricane Katrina. Second, assuming the capacity exists, is the issue of whether the materials submitted for suspension and debarment consideration are complete and actionable. Again, based on public reports, it appears that FEMA and other Homeland Security entities have the bandwidth and the desire to pursue suspensions and debarments following natural disasters. This may not have been present at the time the hurricanes hit, but it certainly appears present and active today. The other part of this issue -- whether the referral packages from the cognizant contingency Inspector General’s office are sufficient to permit suspension and debarment action -- is unlikely to be resolved by consolidating suspension and debarment capabilities into a board. Improving those packages only happens with sustained interaction between the Suspending and Debarring Official (or her staff) and the referring Inspector General’s office, and a willingness by that Inspector General’s office to make the requested changes. Assuming, arguendo, that the issues lie in the quality of the referrals, changing the decision-maker to a board does not address the problem. In fact, it has the potential to exacerbate the problem, as board members detached from the specific needs of the agency may not have the same incentives to invest the time needed to improve the materials submitted by the Inspector General community. Nothing here precludes policy makers well above my level on the food chain from deciding that the best policy is to send contingency related warzone debarments to a board. There may be good reasons for doing so. From this practitioner’s viewpoint, however, that does not address a stated root cause of the concern, and it has the potential to exacerbate the problem.
 
There is certainly value in centralizing at least some of the functions common to the various suspension and debarment practices in the federal government. There may also be value in agencies electing to send certain types of actions to a board. However, and stripped down to its core, the fundamental concern about the SUSPEND Act is the mandatory consolidation of suspension and debarment functions and whether that would result in the separation of that function from broader procurement fraud remedies coordination and the specific needs of a given agency. As a veteran of the Air Force’s effort to do the hard work of knocking down silos and aligning acquisition, inspector general and procurement fraud remedies organizations focused on driving returns to the Air Force that we can use on affected contracts, as well as excluding nonresponsible contractors, it is my personal opinion that an outsourced board will not be as effective as a robust, internal-to-an-agency fraud remedies program. Consolidating all agencies into a board runs the risk of losing the advances made by the proactive suspension and debarment programs and reduces our ability to return funds lost to procurement fraud to the impacted agency. That does not mean that other agencies will not see value in consolidating the function. But this should be an agency-specific decision to send the entirety of the suspension and debarment function to a board, rather than a mandatory outsourcing.

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David Robbins, Assistant Deputy General Counsel (Contractor Responsibility), Department of the Air Force.  The views expressed herein do not necessarily reflect those of the Air Force or the Department of Defense.

Article originally appeared on The FCPA Blog (http://www.fcpablog.com/).
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