Suspension and debarment are two tools that allow federal agencies to exclude certain companies or individuals from receiving federal contracts, subcontracts, loans, grants, and other types of federal assistance. Suspension is a summary process that can be imposed during the pendency of an investigation. Prior notice is not required to suspend a contractor as long as the contractor is promptly advised of the suspension and afforded an opportunity to oppose the suspension within thirty days. Debarment renders the contractor ineligible for federal contracts for a specified period of time not to exceed three years. It may be imposed after a contractor has been issued a notice of proposed debarment and afforded an opportunity to oppose it.
Exclusion is a risk in any procurement-fraud-related matter, as agencies have broad discretion with respect to their suspension and debarment authority. Suspension and debarment are possible consequences of both civil and criminal matters and can be imposed on both individuals and corporate entities. Grounds for suspension and debarment, however, go beyond procurement-related matters, and may be imposed even where the individual or company has not been found criminally or civilly liable.
Suspension and debarment are authorized whenever an agency official determines that the contractor’s conduct affects its “present responsibility.” See, e.g.,48 C.F.R. § 9.406-2(c). To be considered responsible, federal contractors must: (1) have adequate financial resources; (2) be able to comply with the delivery or performance schedule; (3) have a satisfactory performance record; (4) have a satisfactory record of integrity and business ethics; (5) have the necessary accounting and operational controls; (6) have the necessary equipment and facilities; and (7) be otherwise qualified and eligible. See 48 C.F.R. § 9.104-1. Any allegations of fraud, noncompliance, or that otherwise call into question a contractor’s ethics or compliance could lead to suspension or debarment. Contractors may oppose exclusion by demonstrating that they are presently responsible.