United States: Highlights From The Interagency Suspension And Debarment Committee's 2018 Report To Congress

The Interagency Suspension and Debarment Committee (ISDC) released its annual report to Congress on July 31, 2018.¹ The following are some of the key takeaways from this year's report. 

A 14 Percent Decrease in Suspension and Debarment in 2017 Versus 2016

In each of the past three years (2017, 2016, and 2015), the number of suspensions, debarments, and proposed debarments (collectively, "exclusions") has steadily declined. There were 14 percent fewer exclusions in 2017 compared with the previous year. There were 42 percent fewer exclusions in 2017 than in 2014. Thus we are seeing a stark reversal of the trend observed from 2011-2014 of yearly increases in exclusions. 

The increased exclusions from 2011 through 2014 occurred in the shadow of not-so-subtle encouragement from Capitol Hill and the Government Accountability Office (GAO). For instance, in a November 16, 2011 hearing of the Committee on Homeland Security and Government Affairs, Senator Lieberman stated that the authority to suspend and debar government contractors "is a tool that is used all too rarely," adding that "it strains the imagination to think that these agencies have not encountered more companies that have overbilled the government, engaged in fraud, or failed to perform their obligations."² Additionally, GAO released a report in 2011finding that six agencies either had no suspension and debarment functions or had programs that were deficient.³

The ISDC Report explains that the recent decreases in exclusionary activity does not signal a return to earlier times, when agencies rarely exercised their authority to suspend and debar bad actors. Instead, the ISDC points out that, even with a 14 percent decrease in exclusions relative to the prior year, exclusions in 2017 are "nearly double the activity reported in FY 2009, when the ISDC formally commenced data tracking and when suspension and debarment programs either did not exist or had significant weaknesses at a number of Cabinet agencies. Suspensions and debarments are based on need and accordingly will naturally fluctuate from year to year."

Steady, Continued Use of Pre-Notice Letters

It has become increasingly standard practice for Suspension and Debarment Officials (SDOs) to send a Pre-Notice Letter (such as a Show Cause Notice) to an individual or a company before imposing suspension or issuing a Notice of Proposed Debarment. SDOs issued 193 pre-notice letters in 2017, up from 160 in 2016. 

A pre-notice letter gives an individual or a company the opportunity to engage pro-actively with the SDO to explain why they should not be suspended or debarred, and to describe remedial measures and enhancements to ethics and compliance programs. The increase in pre-notice letters is a positive development for contractors facing suspension or debarment exposure. SDOs now at the helm of mature and well developed suspension and debarment functions do not feel pressure to prove their willingness to take aggressive action, and are instead showing themselves to be increasingly comfortable engaging in pre-exclusion process with respondents, during which time respondents may be able to leverage the mitigating factors in the Federal Acquisition Regulation and demonstrate that they should not be suspended or debarred. 

The ISDC Considers Changing the Exclusionary Effect of Proposed Debarment 

Currently, a proposed debarment issued under the FAR results in an immediate exclusion, similar to the effect of a suspension. A proposed debarment issued under the Nonprocurement Common Rule, however, does not result in an exclusion. The ISDC has announced its belief that "standardizing practices between the procurement [FAR] and nonprocurement communities can help to reduce procedural inconsistency" and the ISDC stated that it "is considering the benefits and drawbacks of utilizing the nonprocurement approach." The report does not elaborate on what those benefits and drawbacks might be. Removing the exclusionary effect of a proposed debarment would require amending FAR 9.405(a), which specifies that a proposed debarment operates as an exclusion.

At a minimum, it seems likely that removing the exclusionary effect of a proposed debarment would lead to an increase in the number of suspensions. This is because an SDO that wants to exclude a respondent before providing an opportunity to respond would be able to do so only through suspension. Suspension requires both adequate evidence and a finding that immediate action is necessary to protect the government's interest, FAR 9.407-1(b)(1), whereas there is no clearly articulated standard for proposed debarment. This may lead to an increase in contractors challenging their suspensions where SDOs fail to document an immediate need to take action.

CONCLUSION

Many agencies now have robust suspension and debarment practices. This has resulted in a leveling out of exclusionary actions and a concomitant increase in engagement between SDOs and contractors prior to exclusion. SDOs are willing, where appropriate, to issue Show Cause notices rather than follow a "shoot-first-ask-questions-later" approach. Contractors, for their part, are willing to reach out to SDOs proactively, to disclose issues and show that they have responded in ways that strengthen present responsibility. ISDC's unique proposal to advocate for consistency in the effect of proposed debarments issued under the FAR and the Nonprocurement Common Rule demonstrates the ISDC's increasing assertiveness in its mandate of enhancing transparency, fairness, and consistency in suspension and debarment practice. 

Footnotes

1 See the report, Interagency Suspension and Debarment Committee (ISDC).

2 Weeding Out Bad Contractors: Does the Government Have the Right Tools?, before the S. Comm. on Homeland Security and Government Affairs, 112^th Cong. 1-2, Hrg. 112-358 (2011) (statement of Joseph I. Lieberman).

3 U.S. Gov't Accountability Office, GAO-11-739, Suspension And Debarment: Some Agency Programs Need Greater Attention, and Government Oversight Could Be Improved (2011).

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