For years, there have been two primary mechanisms for the Federal Government to exclude individuals and contractors from doing business with it: the suspension and debarment rules under the Federal Acquisition Regulation (FAR),1 which apply to procurement contracts, and the Nonprocurement Common Rule (NCR),2 which apply to nonprocurement transactions, such as grants, cooperative agreements, and assistance agreements.3 Pursuant to Executive Order No. 12689,4 the two systems are reciprocal, meaning that if an entity is excluded under one set of rules, it is excluded under the other.5
Because the two systems are reciprocal, Government contracts practitioners have for years advocated for either merging the two rules or, at a minimum, aligning their provisions.6 On January 3, 2025, the FAR Council published a final rule partially accomplishing the latter: it better aligned the FAR with the NCR, and it updated the FAR to bring it closer into alignment with current suspension and debarment practices.7 This BRIEFING PAPER will discuss the administrative remedy of suspension and debarment under the updated FAR rules,8 highlight similarities and differences between the FAR and the NCR, and provide guidelines when facing a situation that could lead to suspension or debarment.
Background And Purpose
The Federal Government has a policy of only doing business with responsible contractors.9 This is expressed in two primary ways. First, before any contract, task order, or other award can be made, the contracting officer must affirmatively determine that the prospective contractor is responsible pursuant to FAR Subpart 9.1. This is accomplished by reviewing the standards in FAR 9.104-1 and any special standards in the solicitation pursuant to FAR 9.104-2. One such responsibility standard in FAR 9.104-1 is whether the contractor has a "satisfactory record of integrity and business ethics."10 Second, the FAR's suspension and debarment provisions in Subpart 9.4 support the general policy of doing business with responsible contractors only by assessing whether a contractor remains presently responsible, after award and during contract performance or generally, regardless of any pending awards.
Both the FAR and the NCR are clear that suspension and debarment are "serious" remedies that should be imposed "only in the public interest for the Government's protection and not for purposes of punishment."11 As noted above, the two systems are reciprocal, and both provide that any one agency can take action that precludes a contractor or individual from entering into contracts or nonprocurement transactions with every other federal agency. In other words, suspension and debarment is also Government-wide. The scope and breadth of an exclusion from Government contracting is one of the reasons that imposition of these remedies has been called a "death knell" for a contractor.12
Types Of Exclusions Under The FAR And The NCR
The FAR and the NCR have similar types of exclusions with one enduring and notable exception.
Suspension, Debarment, And "Voluntary Exclusion"
Both the FAR and the NCR allow for "suspension," which is a temporary exclusion usually because of an ongoing investigation or legal proceeding or an immediate need to protect the Government's interests.13 Under both sets of rules, an entity or individual can be suspended immediately from federal contracting or participation in nonprocurement transactions by issuance of a notice of suspension, with the exclusion taking effect even if the entity has not had an opportunity to respond.14 Similarly, both the FAR and the NCR allow for "debarment," which is an exclusion for a set time period, usually three years, after the entity or individual has had an opportunity to be heard.15 With the January 2025 update to the FAR,16 the FAR now includes the remedy of "voluntary exclusion," whereby an entity or individual agrees to be excluded from contracting or nonprocurement transactions for an agreed-upon period.17 This new FAR remedy has existed in the NCR18 and is discussed later in this PAPER.
The Conundrum Of "Proposed Debarment"
An enduring difference between the FAR and the NCR is the remedy of "proposed debarment." Despite "most respondents" to the FAR Council's proposed rule arguing that proposed debarment under the FAR should be non-exclusionary, as it is under the NCR, the FAR Council declined to adopt that change and alignment of the two systems.19 Thus, an entity or individual that receives a notice of proposed debarment under the FAR is immediately excluded from federal contracting, similar to being suspended. The FAR Council reasoned that the policy differences between contracts and nonprocurement actions justify the different treatment.20 In the proposed rule, the FAR Council described these policy reasons as follows: (1) "the necessity to continue to protect the Government's interests and taxpayer's money by minimizing business risk where procurements are involved"; (2) "[b]oth [remedies] have been in the FAR as recognized tools for decades, with different standards for use"; (3) "contracts are more likely than nonprocurement transactions, such as Federal financial assistance, to require immediate exclusion when something goes wrong"; (4) "[p]articipants in nonprocurement transactions—while subject to the terms and conditions of a Federal award—are typically required to meet overall program goals and objectives, rather than perform to an exact contractual requirement"; (5) "Federal financial assistance typically is for public purposes of support or economic stimulation, rather than for the direct benefit of the U.S. Government"; and (6) "[t]he importance of protecting the Government's interests is reflected in recurring Appropriations Act language since 2012 . . . which states that funds may not be used to enter into a contract with any corporation that was convicted of a felony criminal violation under Federal law within the preceding 24 months, unless a Federal agency has considered suspension or debarment of the corporation and has made a determination that further action is not necessary to protect the interests of the Government."21 Moreover, the FAR Council did not believe that exclusionary proposed debarment is overused, particularly with the addition of "prenotice letters" in the FAR as a non-exclusionary mechanism for investigating a contractor's present responsibility.22
Whether these policy reasons justify different treatment is debatable. Nonetheless, the difference remains in the January 2025 update.
To read this article in full, please click here.
Footnotes
*Kara M. Sacilotto is a partner in the government contracts practice at Wiley Rein LLP. She is former Chair of the American Bar Association Public Contract Law Section (ABA PCL Section), a Vice Chair of the Debarment and Suspension Committee of the ABA PCL Section, and Chair of the Suspension and Debarment Committee of the Government Contracts Section of the Federal Bar Association.
1. The FAR is codified in Title 48 of the Code of Federal Regulations. The suspension and debarment rules are in FAR Subpart 9.4.
2. The NCR, 2 C.F.R. Part 180, was issued by the Office of Management and Budget (OMB) to provide a common set of suspension and debarment rules for nonprocurement actions, identified in 2 C.F.R. § 180.970, in response to Executive Order No. 12549 (Feb. 18, 1986), Debarment and Suspension, 51 Fed. Reg. 6370 (Feb. 21, 1986). Individual agencies then adopt the NCR, with any agency-specific modifications, as part of their
3. There are statutes that impose forms of exclusion on those who violate them. Examples (non-exclusive) include criminal violations of the Clean Air Act, 42 U.S.C.A. § 7606, and the Clean Water Act, 33 U.S.C.A. § 1368; misrepresentation of status as a veteran-owned or service-disabled veteran-owned small business under 38 U.S.C.A. § 8127(g); and violations of certain labor laws such as the Davis-Bacon Act, 40 U.S.C.A. § 3144(b), the Walsh-Healey Act, 41 U.S.C.A. § 6504(b), and the Service Contract Act, 41 U.S.C.A. § 6706(b). Exclusions under these statutes are outside the scope of this Briefing Paper.
4. Executive Order No. 12689 (Aug. 16, 1989), Debarment and Suspension, 54 Fed. Reg. 34131 (Aug. 18, 1989).
5. See FAR 9.401; 2 C.F.R. §§ 180.140, 180.145.
6. See, e.g., K. Sacilotto, "One Is the Loneliest Number: A Case for Changing Suspension and Debarment Regulations To Better Address Potential Exclusion of Individuals," 47 Pub. Cont. L.J. 479, 506 (2018); R. Meunier & T. Nelson, "Is It Time for A Single Federal Suspension and Debarment Rule?," 46 Pub. Cont. L.J. 553 (2017).
7. 90 Fed. Reg. 507 (Jan. 3, 2025). The Department of Defense, the General Services Administration, and the National Aeronautics and Space Administration are charged with direction and coordination of federal procurement policy and regulatory policy under the Office of Federal Procurement Policy Act, 41 U.S.C.A. Chapter 13. The FAR Council is made up of officials from these agencies and are assisted by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council in promulgating and managing the FAR. For ease of reference, this Briefing Paper refers to these entities collectively as the FAR Council.
8. Note that FAR Subpart 9.4, "Debarment, Suspension, and Ineligibility," has received a light touch in the "Revolutionary FAR Overhaul" process initiated by Executive Order 14275, "Restoring Common Sense to Federal Procurement" (Apr. 15, 2025), 90 Fed. Reg. 16447 (Apr. 18, 2025). The changes to the suspension and debarment rules in FAR Subpart 9.4 were minimal and not substantive. See https://www.acquisition.gov/far-overhaul/far-part-deviation-guide/far-overhaul-part-9. For ongoing analysis of the overhaul process and each of the revised FAR Parts as they are posted to the Government's FAR Overhaul website, see "Decoding the FAR Overhaul," Wiley, https://www.wiley.law/decoding-the-far-overhaul; see also K. Sacilotto, "The Revolutionary FAR Overhaul Initiative: Breaking Down Executive Order 14275 And Its Implementation," 25-7 Briefing Papers 1 (June 2025).
9. FAR 9.103(a); FAR 9.402(a).
10. FAR 9.104-1(d).
11. FAR 9.402(b); see also 2 C.F.R. § 180.125(c).
12. Mainelli v. United States, 611 F. Supp. 606, 610 (D.R.I. 1985).
13. FAR 9.407-1(b)(1); 2 C.F.R. § 180.1015.
14. See FAR 9.407; 2 C.F.R. §§ 180.700–180.760.
15. See FAR 9.406; 2 C.F.R. §§ 180.800–180.885.
16. 90 Fed. Reg. 507 (Jan. 3, 2025).
17. FAR 9.403.
18. 2 C.F.R. § 180.1020.
19. 90 Fed. Reg. 507 (Jan. 3, 2025).
20. 90 Fed. Reg. at 508.
21. 89 Fed. Reg. 1043, 1044 (Jan. 9, 2024).
22. 90 Fed. Reg. 507, 508.
Originally published by Thomson Reuters.
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.
