June 19, 2017
Federal Debarment, Suspension Numbers Decline
Use of Administrative Agreements, Other Alternatives Growing
Published: June 19, 2017 at 08:30:00 EDT
A growing trend by federal awarding agencies toward using administrative agreements and other alternative methods to address recipient responsibility is effecting the overall number of suspensions and debarments that are issued annually by federal agencies, which declined for a second straight year in federal fiscal year (FY) 2016, according to federal reports.
Suspension and debarment are not designed to be punitive measures, but rather tools to protect the government’s interest in federal assistance. Suspensions, which generally last up to 12 months before legal proceedings are initiated, offer a quick response when necessary to protect the government’s interest and often are the result of an indictment. Debarments may be fact-based or conviction-based and are usually imposed for three years, although they may be adjusted based on aggravating and mitigating factors.
Types of actions that may lead to debarment or suspension include fraud, anti-trust law violations, embezzlement, theft, forgery, making false claims or statements, unfair trade practices or the commission of any offense that indicates a lack of integrity or honesty.
The Office of Management and Budget (OMB) in July 2015 amended the governmentwide debarment and suspension (nonprocurement) guidelines contained in 2 C.F.R. Part 180 by adding new questions addressing administrative agreements proposed in lieu of a suspension or debarment action. The amendment resulted from a final guidance implementing Section 872 of the Duncan Hunter National Defense Authorization Act of 2009 (Pub. L. 110-417) (see “New Integrity, Performance Guidance Amends Uniform Grant Guidance,” September 2015).
The Section 872 guidance added provisions, and amended several others, within OMB’s uniform grant guidance (2 C.F.R. Part 200). The Section 872 final guidance became applicable Jan. 1, 2016. Along with the changes to the uniform guidance, the Section 872 guidance also necessitated new language in 2 C.F.R. Part 180 discussing administrative agreements reached in a settlement with a nonfederal entity to resolve a suspension or debarment proceeding.
Administrative agreements are an option used for awarded contracts under the Federal Acquisition Regulation (FAR) to resolve potential debarment and suspension actions; therefore, the amendment made them more applicable to grants and cooperative agreements. An administrative agreement is an agreement between a federal agency and an entity entered into at any time during a suspension and/or debarment proceeding, and may include acceptance of responsibility by the entity, voluntary exclusion, mitigating plans, training requirements, and other required actions of, limitations on or representations made by the entity. Factors that may be considered when determining whether an administrative agreement is appropriate include the entity’s otherwise satisfactory performance; response to the wrongdoing; and willingness to cooperate, make restitution, and implement or strengthen an existing ethics program.
The use of these administrative agreements is having an effect. Earlier this year, the Interagency Suspension and Debarment Committee (ISDC), an interagency body working to provide support for suspension and debarment programs throughout the government, issued its annual report to Congress on the status of the federal suspension and debarment system. The report noted that in FY 2016, there were 718 suspensions, 1,855 proposed debarments and 1,676 debarments, which were up from FY 2009 totals, when agencies recorded 417 suspensions, 750 proposed debarments and 669 debarments. However, these numbers were down from FY 2014, when they were the highest in each category over the last several years (e.g., 1,009 suspensions, 2,241 proposed debarments and 1,929 debarments).
ISDC officials said the reduced number could be attributed to ISDC’s support of alternative tools, as appropriate, that encourage award recipients and contractors to take responsibility for their awards, without the imposition of suspension or debarment. Administrative agreements were used in a number of cases as an alternative to suspension and debarment, ISDC explained. Agencies reported entering into 44 administrative agreements in FY 2015, and 75 in FY 2016.
“The viability of an administrative agreement as the appropriate outcome of a matter will always be case specific to the circumstances of the action,” ISDC said in the report. “The tool can be effective in situations where eligibility for award would further the government’s interest provided certain verifiable actions are being taken in a prescribed timeframe, such as implementation of enhanced internal corporate governance practices and procedures and/or use of independent third-party monitors.”
Other tools agencies are using include pre-notice engagements, show-cause letters and requests for information to better assess the risk to government programs and determine what measures are necessary to protect the government’s interest without immediately imposing an exclusion. The ISDC report also noted that more nonfederal entities, particularly those that identify possible misconduct within their operations, are proactively contacting agency suspending and debarring officials (SDOs) to provide information relating to the matter.
The ISDC said it did not consider the reduction in the overall number of suspensions and debarments to be a metric of success. “Rather, the appropriate level of discretionary suspension and debarment activity in any given year is purely a function of need,” it explained.
For More Information
The ISDC report is available at https://s3.amazonaws.com/sitesusa/wp-content/uploads/sites/272/2017/03/873-Report-FY-2016.pdf.