Perhaps the greatest government contracting pitfall to avoid is suspension and debarment – a tool used by agencies to exclude contractors that engage in misconduct from receiving federal contracts and grants. However, despite the harsh consequences associated with exclusion proceedings, the number of suspensions and debarments is actually on the rise, having more than doubled since FY 2009 to an alarming total of 4,812 in FY 2013. For some background and practical advice on suspension and debarment proceedings, you can read our article.
The sharp rise in debarments is not a coincidence. Rather, it is part of a measured plan by the Federal government to target contractors that engage in misconduct and develop an organized, uniform system to deal with them. In 2011, the Government Accountability Office (“GAO”) reviewed the practices of six government agencies with billions of dollars in contracting obligations, but virtually zero suspensions and debarments arising out of those contracts. Following the review, GAO recommended that the agencies make changes to increase contractor accountability, including adding staff dedicated to monitoring contractor misconduct, drafting detailed policies concerning exclusion, and initiating an active referral process.
Recently, GAO published the results of its study, detailing how the agencies that implemented the recommendations saw marked increases in their suspension and debarment related activities (specifically, the number of suspensions and debarments for these agencies collectively rose from just 19 in FY 2009 to 271 in FY 2013).
So, what does this mean for contractors? In short, be alert and proactive. While we commonly think of exclusion proceedings as applying to only the worst actors, the results of the GAO’s study make clear that increased organization and awareness at the agency level will lead to increased enforcement and a continued rise in suspension and debarment activities. The best way to steer clear of the agency’s exclusion enforcement arm is to be vigilant about compliance – including implementing and maintaining a pragmatic and practical business ethics and compliance program.