When you enter into a contract with the federal government such as a GSA Multiple Award Schedule (MAS), you might be wondering—what are the consequences if something goes wrong, and how do I prevent anything bad from happening? We get these concerns a lot, and you’re not alone. While there are different ways the government deals with violation of contract terms, suspension and debarment is often used if there is fraud involved or a falsification of records, among other reasons.
Suspension and debarment is something GSA contractors want to avoid at all costs. If you clicked on this blog, you might be worried this could happen to you. Don’t panic—yet. We’ll break down what suspension and debarment is, what it means for contractors, and how you can implement good business practices to avoid it.
Just like your company may have internal procedures and ethics to keep everyone in check, the federal government wants to eliminate fraud, waste, and abuse in the procurement process. This can be achieved through the suspension and debarment process which is outlined in Federal Acquisition Regulation (FAR) 9.4. Although the two terms are lumped together, they each have their own separate definitions.
Suspension is a temporary exclusion used only when the government needs immediate protection. Suspension is an intermediate action and is used when facts about possible wrongdoing are still being developed through an investigation and court proceedings.
If a contractor is suspended and is found to have willfully and maliciously defrauded the government, they will be debarred. Debarment is an exclusion that lasts for a specific period of time. When the government issues a debarment, they will let a contractor know for how long. Debarment is used as a final action and is issues when an investigation or legal proceedings have finished.
This is a common question among contractors, because it can greatly affect their contract. The answer is, it really depends. Suspensions can generally last up to 12 months before court proceedings are initiated and can stay in effect until the proceedings have concluded. So, they can go on for as long as an investigation or court lasts which can be an undetermined amount of time. Debarments are generally 3 years long, but they can be longer or shorter depending on each case. The time period is ultimately decided by the Suspension and Debarment Officer (SDO) assigned to the case.
What are the consequences of suspension or debarment? We won’t sugarcoat it, it’s not good and can greatly affect your ability to do business with the government. If you are suspended or debarred:
So, to prevent this from happening to you, what are the causes of suspension and debarment and how can you avoid it?
The causes for suspension and debarment are as follows:
The most common cause for debarment with GSA contractors is fraud. A close second is false statements/falsification of records.
A contractor will be notified of a suspension or debarment through:
All 3 of these notifications have the same effect—immediate governmentwide exclusion from federal contracts and grants.
If you receive a suspension or debarment notice, you will have 30 days to respond and submit arguments with supporting documents against the action. GSA suggests you ask for the administrative record so you can find more information pertaining to the action. You can respond on your own or hire legal counsel, and if you need more time to respond, you should contact the agency immediately.
Your response should center around present responsibility. What does this mean? Present responsibility helps the Suspension and Debarment Officer (SDO) determine that despite your prior misconduct, you can be trusted to perform in accordance with contract requirements, government law, and overall conduct yourself ethically. To verify this, the SDO will focus on your:
You should also request a meeting with the SDO and bring all relevant individuals. Even if you are represented by legal counsel, the contractor in question should do most of the talking. The SDO will want to hear from the contractor and people who work for the contractor.
According to the FAR, contractors can be suspended or debarred. But what does the definition of “contractor” mean in this situation? A contractor is any individual or organization that:
We know—all of this sounds scary, messy, and just all around something you want to stay far away from. There are things you can do to avoid this happening to you. The first thing you can do is establish a strong ethics and compliance program. This includes written policies, procedures, and standards of conduct such as a Code of Ethics and Business Conduct. You’ll also want to identify high risk areas based on your industry, location, and activities you engage in and routinely conduct audits in these areas.
Other things you can do to prevent suspension and debarment include:
While avoiding suspension and debarment may seem like an extreme measure, it’s definitely a good business practice to implement some of the procedures above so you can ensure your company has a strong background in ethics and compliance. There are also other things you can be doing to make sure you are remaining compliant with your GSA Schedule such as properly reporting your sales, submitting modifications whenever there’s a change to your contract, and preparing for Contractor Assessment Visits (CAVs).
If you want to learn more about keeping up with your GSA contract, check out our blogs, “Don’t Lose Your GSA Schedule Contract,” and “How to Maintain Your GSA Schedule: An Essential Checklist.” If you have questions about suspension and debarment, or you need help managing your contract, you can reach out to one of our consultants and they would be happy to assist you.