Is It Time for a Single Federal Suspension & Debarment Rule?

Robert F. Meunier (rmeunier@debarmentsolutions) is President and CEO of Debarment Solutions Institute, LLC (DSI). DSI provides guidance to the business, non-profit,  governmental, and legal communities regarding all aspects of the Federal Suspension and Debarment program. Mr. Meunier was Chair of the Office of Management and Budget’s  Interagency Suspension and Debarment Committee (ISDC) from 1988 until his retirement from federal service in 2008. Mr.  Meunier also served for thirteen years as the Environment Protection Agency (EPA) Suspension and Debarment Official (SDO) from 1995 to 2008.

Trevor B. A. Nelson (tnelson@law.gwu.edu) has been an attorney for over eight years with the Department of the Army, Office of The Judge Advocate General Corps, Procurement Fraud Division. Mr. Nelson also participates for the Army on the ISDC.

The authors would like to thank and are deeply grateful to Christopher R. Yukins, and Rodney Grandon for their diligent reviews of drafts of this Article. The views expressed in the Article are solely  those of the authors and do not reflect the official policy or position of the ISDC, EPA, U.S. Army, Department of Defense, or U.S. Government, or the views of the reviewers.

As part of the Reagan administration’s initiatives to curb fraud, waste, and abuse, the President’s Council for Integrity and Efficiency created an interagency task force to study the feasibility and desirability of a comprehensive debarment and suspension system encompassing the full range of Federal activities. The task force concluded, in its 1982 report, that such a system was both desirable and feasible.¹

I.  Introduction

In the early 1980s, the federal government improved the way in which executive branch agencies address waste, fraud, abuse, and poor performance in government-funded transactions by standardizing executive branch discretionary suspension and debarment procedures (sometimes referred to as “blacklisting”) in two separate rulemakings — one governing federal procurement transactions under the Federal Acquisition Regulation² (FAR),³ and the second governing federal assistance, loans, and benefits under a jointly issued regulation called the Non-procurement Common Rule (NCR).⁴ The Office of Management and Budget (OMB) coordinated both initiatives.⁵ These rules were the direct result of several decades of criticism by the legal and business communities and the Administrative Conference of the United States regarding the federal suspension and debarment process.⁶ Following several court decisions that began to lay a constitutional foundation for a fundamentally fair debarment process,⁷ congressional oversight committees and the inspectors general community weighed in to bring about today’s regulatory scheme.⁸

In recent years, many in the private bar have called for additional improvements to these rules.⁹ Among the concerns raised are that, while the FAR and the NCR contain many of the same procedural and substantive requirements for initiating action and issuing decisions, amendments to each rule have resulted in materially different treatment being accorded to recipients of a proposed debarment notice; opposing positions with regard to the treatment of tax deficiencies as a basis for debarment; differences related to denial of fact-finding if an action is based on a federal versus state or local criminal proceeding; the use of show cause notices among the agencies; options of resolving matters under administrative agreements; varying practices related to application of the sanction below the contract or assistance recipient level; effect of the sanctions on individuals; and differences on the bases triggering mandatory disclosure as a cause for debarment.¹⁰ While the two rules were always written in language common to their own universe, the fact that they both are designed to achieve the same ends and require reciprocity for recognition and enforcement of each other’s sanctions causes one to wonder why there are two rules in the first place.¹¹

In this Article, the authors provide historical information about the current dual rule suspension and debarment system as context for understanding why the government has been unable or unwilling to address some of the incongruent debarment provisions and variant practices that perplex legal practitioners and the business community. The authors also explore the feasibility of, and potential path toward, creating a Uniform Suspension and Debarment Rule (USDR).

The purpose of this Article is not to contest or support the cause of creating a USDR, but rather to highlight important issues that need to be addressed in any attempt to standardize and improve suspension and debarment practices in the executive branch. If creating a single debarment rule will advance that goal, all the better. But a single rule is not required to achieve uniformity. Nevertheless, a USDR would guarantee a degree of uniformity and eliminate much of the confusion and inconsistencies that currently exists and deserves serious consideration.

Part II of this Article examines the historical perspective of suspension and debarment underlying the government-wide administrative exclusionary system under the FAR for contracts, and under the NCR for assistance, loans, and benefits.¹² Part III addresses the importance of resolving conceptual issues in the procurement versus assistance arenas before attempting to harmonize the rules or promulgating a USDR.¹³ Parts IV and V highlight the major areas of importance and obstacles to resolving technical differences between subpart 9.4 of the FAR and the NCR. This step in the decision-making process is offered on the premise that reaching conceptual agreement first about the legitimate goals, procedures, and desired outcomes of the suspension and debarment process, while acknowledging the practical realities of the procurement and assistance universes, will lay a proper foundation for finally resolving technical differences between the two rules. If that occurs, it may not matter as much whether the final product is packaged as a single rule that speaks a language common to both communities or in separate rules expressed in the vernacular of each.¹⁴