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COALITION FOR GOVERNMENT PROCUREMENT Winter Seminar Contracting in a Time of Corporate Scrutiny

COALITION FOR GOVERNMENT PROCUREMENT Winter Seminar 2003 Contracting in a Time of Corporate Scrutiny Suspension and Debarment: How Federal and Non-Federal Contract Actions Can Impact Your Government Business
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COALITION FOR GOVERNMENT PROCUREMENT Winter Seminar 2003 Contracting in a Time of Corporate Scrutiny Suspension and Debarment: How Federal and Non-Federal Contract Actions Can Impact Your Government Business Thomas P. Barletta STEPTOE & JOHNSON LLP Washington, DC (202) January 30, 2003 BACKGROUND Government wants to do business with responsible contractors (FAR 9.1; 9.402(a)) Includes a satisfactory record of integrity and business ethics Present Responsibility : Certain actions or events can raise questions about a contractor s business honesty and integrity and lead the government to examine whether the contractor is presently responsible and should be excluded from doing business with the government Finding that a contractor is not presently responsible can result in exclusion from doing business with government (FAR Subpart 9.4) Suspension Debarment BASES FOR SUSPENSION AND DEBARMENT Include, but are not limited to, matters related directly to Government contracts Examples of Bases for Debarment FAR Conviction or civil judgment for: Fraud or other criminal offense in connection with a government contract Antitrust violations Embezzlement, theft, bribery, falsification or destruction of records, false statements, tax evasion, or stolen property Improperly affixing Made in America label Commission of any other offense indicating a lack of business integrity or business honesty that seriously and directly affects the present responsibility of a Government contractor or subcontractor Other bases for debarment include: Willful failure to perform government contract Any other course of so serious or compelling nature that it affects the present responsibility of a Government contractor See Enron Examples of Bases for Suspension FAR Causes for Suspension: Generally track those for debarment Adequate evidence rather than conviction or civil judgment with respect to various offenses Indictment is adequate evidence (see Arthur Andersen) EXAMPLES OF CAUSES FOR SUSPENSION/DEBARMENT Contract-Related Allegations of fraud (false claims/false statements) in connection with, e.g., contract pricing, contract billing, or product quality/testing Non-Contract Environmental crimes EFFECTS OF SUSPENSION OR DEBARMENT Ineligible for award of new prime contracts and, as a practical matter, subcontracts Current contracts Generally continue in effect but cannot be renewed or extended Proposed FAR rule would prohibit issuance of additional delivery orders under IDIQ or FSS contracts or exercise of options» DOD already prohibits such orders (DFARS ) GSA List of Parties Excluded from Federal Procurement and Non- Procurement Programs Collateral consequences Non-procurement transactions State and local government procurement Export licenses Security clearances Certifications (FAR ) SCOPE AND DURATION OF SUSPENSION OR DEBARMENT Government-wide Company-wide Risk of extension to affiliates Suspension: Temporary - often pending completion of a parallel proceeding Debarment: Three years Individuals as well as companies can be suspended or debarred ADMINISTRATION AND PRACTICE Debarring Official Referrals Contracting agency; IG or other law enforcement authorities Disclosures by contractor Lead Agency Procedures (FAR 9.406; 9.407) Judicial review of suspension/debarment decisions: Arbitrary and capricious/ failure to consider mitigating factors. AVOIDING SUSPENSION AND DEBARMENT Conduct business in compliance with law and ethical standards Code of Business Conduct The Ten Mitigating Factors (FAR ) Effective standards of conduct and internal controls Timely disclosure of cause(s) to government Contractor investigation of cause(s) Cooperation in government investigation Paid all criminal, civil or administrative liability and made restitution Appropriate disciplinary action against responsible individuals Remedial measures New or revised internal review and control procures and ethics training Adequate time Management recognition and acknowledgment of causes and commitment to prevent reoccurrence ADMINISTRATIVE SETTLEMENT AGREEMENTS Code of Business Conduct Ethics Training Designated Ethics Official Other Substantive Terms as Appropriate Internal Controls and/or Remedial Measures Hotline/Helpline Internal Audits Policies and Procedures Specialized or subject matter training Quarterly Reporting to Debarring Official
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