In a recent client update, we discussed
proposed legislation, entitled the Comprehensive Contingency
Contracting Reform Act of 2012, that would provide for the
automatic suspension of a contractor in a variety of situations,
including when the federal government merely alleges fraud against
a contractor in a civil or criminal proceeding related to a federal
contract. We noted that the proposed legislation was roundly
criticized by representatives of the affected agencies: the
Department of Defense, the Department of State and the U.S. Agency
for International Development. See "Shift to 'Automatic' Ineligibility
Determinations Poses Increased Risk to Federal
Now a new bill changes the automatic
suspension into an automatic referral to suspension and
debarment officials for final decision making.
The following persons would be subject to these referrals:
A person who has been charged with a federal criminal offense
relating to the award or performance of a contract of a covered
A person who has been alleged, in a civil or criminal
proceeding brought by the United States, to have engaged in
fraudulent actions in connection with the award or performance of a
contract of a covered agency.
A person who has been determined by the head of a contracting
agency of a covered agency to have failed to pay or refund amounts
due or owed to the federal government in connection with the
performance of a contract of the covered agency.
The words "brought by the United States" within the
second basis for referral suggest that referrals will not extend to
all qui tam cases brought by relators but only to those in which
the government has intervened in a qui tam action or has brought an
independent lawsuit. This would be a welcome and rational
limitation, assuming this interpretation prevails.
The third basis,
however, is cause for contractor concern because it seems to
include legitimate disputes over amounts due or owed to
the federal government. It appears agency heads could have
the power to force a contractor to drop a good-faith dispute to
avoid suspension. Federal contractors will need to monitor
proposed implementing regulations to ensure that referral power
cannot be wielded in a way that is unfair or that otherwise
undermines existing Contract Disputes Act procedures.
In addition, the
bill would require agencies to upgrade their suspension and
debarment capabilities, requiring each agency to have at least one
dedicated, full-time suspension and debarment official with
authority independent from the agency's inspector general or
acquisition department. (Under current law, only the U.S.
Navy, the U.S. Air Force, and the Environmental Protection Agency
have such officials on staff.) The bill also would require
that agencies limit the duties of suspension and debarment
officials to only (1) direction, management, and oversight of
suspension and debarment activities, (2) direction, management and
oversight of fraud remedies activities, and (3) membership and
participation in the Interagency Committee on Debarment and
The bill picked
up five key sponsors in addition to the original sponsors, Senators
Claire McCaskill (D-Mo.) and Jim Webb (D-Va.). The additional
sponsors are Senators Joe Lieberman (I-Conn.), Susan Collins,
(R-Maine), Al Franken (D-Minn.), Richard Blumenthal (D-Conn.) and
Bernie Sanders (I-Vt.).
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
On March 30, 2013, the U.S. District Court for the District of Columbia issued a decision imposing certain socio-economic contract requirements on subcontractors operating hospitals associated with the University of Pittsburgh Medical Centers.
The Department of Defense has issued a new instruction that establishes internal DOD policies for detecting, avoiding, and remediating counterfeit parts in the DOD supply chain, and allocates responsibility among various DOD offices and functions for administering or developing those counterfeit prevention policies.
In 1997, the Virginia Supreme Court sent a chill down the spines of many companies operating under teaming agreements with a Virginia choice of law provision. In W.J. Schafer Associates, Inc. v. Cordant, Inc., 493 S.E. 2d 514 (Va. 1997), that court held a teaming agreement to be unenforceable on the ground that "agreements to agree in the future" are "too vague and too indefinite to be enforced."