Suspension and debarment often misunderstood, contractors told

April 18, 2012 by

Though viewed by industry as a punishment, the government’s suspension and debarment procedure for errant contractors is designed to be an “instantaneous” way to protect taxpayers from irresponsible spending, a panel of procurement officials agreed on Thursday. They parted company, however, on whether the current rules afford sufficient due process to affected companies.

Speaking at the first Acquisition Excellence conference staged jointly by the General Services Administration and the American Council for Technology and Industry Advisory Council, current and former procurement officials expressed concern that suspension and debarment has become “a hot topic” in Congress. Government Executive was one of four media partners for the conference.

It’s being used to go after “bad actors in all sorts of endeavors, from failure to pay taxes to fraud convictions,” said William Woods, director of acquisition and sourcing management at the Government Accountability Office, which in October 2011 published a study comparing frequency of suspensions and departments at 10 agencies. Most of the contractors tagged as suspended on GSA’s Excluded Parties List System are there for reasons unrelated to federal contracting such as drug trafficking or violations of export controls, he said.

Seven of the fiscal 2012 appropriations bills contained language requiring use of suspensions and debarments, added Rob Burton, a top White House procurement administrator during the George W. Bush administration and now a partner at Venable LLP. But the purpose of suspension and debarment is “not complicated,” said Dan Gordon, former administrator of procurement policy for the Obama White House who is now associate dean for government contracts law at The George Washington University Law School. “The purpose is to protect the taxpayers, not to replace or supplement the Justice Department’s administration of justice — they take care of the bad guys,” he said. Gordon warned that many misread the GAO report to imply that the more an agency suspends and debars, the better, as if “what this country needs is to hang more contractors high from a tree.”

What the process requires is “a matter of checking, of being careful,” Gordon said. “The system works pretty well,” and doesn’t require new legislation or regulation. The interagency committee on suspension and debarment can help by sharing best practices among specialized staff at agencies, he added.

Burton disagreed, calling the current regulations “flawed in a fundamental way because they allow for no due process.” He described how his private sector clients can suddenly receive a letter informing them they can’t do business with the federal government and “they get no opportunity to present their own information or defend themselves.” He added the current rules “would not pass constitutional muster.”

Joseph Neurauter, GSA’s top suspension and debarment official, stressed that the tool is not intended as punishment for contractors, though he acknowledged it can jeopardize an individual’s job. “It’s about minimizing risk for the federal government,” which is why the suspension is “instantaneous,” he said. His job is to view the problem from the point of view of agency acquisitions teams, Neurauter added. But he does regularly send letters to individuals who are suspended and invite them to meet informally and “show cause” as to why they should regain eligibility for government contracts.

Asked about new legislation that would impose suspension and debarment consideration for war zone contractors involved in human trafficking, Woods said “that’s a policy call for Congress.” Gordon said he is “always concerned when Congress sets up an automatic system of suspension and debarment because it undercuts the process by precluding discretion by officials looking at the full picture.”

At other sessions of the all-day conference that assembled several hundred federal employees and contractors at the Grand Hyatt in Washington, GSA chief Martha Johnson opened proceedings by stressing the value of sustainability as a key to reframing procurement in an age of limited budgets. A related session was titled, Sustainable Acquisition: Is It a Dream or Is It Real?

At lunch, Lesley Field, acting White House administrator for federal procurement policy, and colleagues presented achievement awards to federal contracting professionals in categories of buying smarter, effective vendor communication and strategic sourcing.

In a nod to the challenge of preparing the next generation of acquisition officers, Steve Ressler, founder of the social networking tool GovLoop, moderated a panel of young federal contract specialists from several agencies who are in the Rising Acquisition Professionals program. It was set up in 2010 by the Office of Federal Procurement Policy and the Federal Acquisition Institute.

Other sessions focused on how tight budgets are affecting ongoing relationships among agency contracting officers, program managers and industry. Speakers stressed the importance of engagement and dialogue early in the acquisition process, and many complained that too many agency staff members are fearful of tapping the expertise of contractors for fear of violating the Federal Acquisition Regulation and favoring one potential bidder over others, possibly provoking a bid protest.

“Government and industry too often talk past each other on early engagement,” said Mark Day, director of the Office of Strategic Programs at GSA’s Federal Acquisition Service. “Government asks the wrong questions, asking about prices before we know the cost drives, and then they write requirements that drive costs up.” Contractors, in turn, too often target the title not the role, Day added, and he recommended they talk to the official actually writing the requirements. “Early engagement is a mystery to the government side, and they’re scared of it,” Day said. “But it is an opportunity to find the sweet spot between what the government needs, what the contractor can provide and what the FAR allows.”

– by Charles S. Clark, Government Executive, Mar. 30, 2012 at http://www.govexec.com/contracting/2012/03/suspension-and-debarment-often-misunderstood-contractors-told/41638.

SAM deployment likely to be delayed; GSA might replace DUNS

October 25, 2011 by

A General Services Administration (GSA) effort to consolidate federal online acquisition systems will likely receive no development money during the current fiscal year, causing GSA officials to anticipate a delay in the project.

However, GSA officials are going forward with a planned sources sought notice, to be released shortly, seeking private sector input on the viability of replacing mandatory federal vendor acquirement of a DUNS number from Dun & Bradstreet with a government-generated unique identifier.

If the government does replace DUNS with its own unique identifier system for vendors, the transition would likely be tied to the third phase of the online acquisition system consolidation effort, said Kathleen Turco, head of GSA’s office of governmentwide policy, during an Oct. 21 interview.

The integration effort seeks to consolidate 9 currently separate systems into one, to be known as the System for Award Management, or SAM. IBM received a $74.4 million contract in 2010 to develop the SAM architecture; part of the consolidation effort includes unifying the currently disparate databases into a single, unified one.

Because GSA received $7 million in development funds during fiscal 2011, which ended on Sept. 30, it will be able to proceed with the first phase of the consolidation, which will tie together Central Contractor Registration, Online Representations and Certifications Application and the Excluded Parties List System.

Starting in May, front-end users will find that they have to log onto SAM only once to access the functionalities of all three systems, Turco said.

However, a request for $15 million in development, modernization and enhancement money for the current fiscal year has bumped up against spending constraints; the Senate Appropriations Committee markup of GSA’s fiscal 2012 spending bill denied the request in total. The House version would appropriate about $3 million in DME money for the project, Turco said. Congress has yet to pass any fiscal 2012 appropriations bill; the federal government is operating under a continuing resolution that expires on midnight of Nov. 18.

As a result of the House and Senate marks, Turco said GSA will likely postpone roll out of phase 2, under which GSA plans to consolidate FedBizOps, the Electronic Subcontracting Reporting System, and the Assistance Program Catalog. Originally, GSA had planned to unveil that phase in the spring of 2013; if GSA receives sufficient funding for fiscal 2013, it would be able to complete that phase in spring 2014, Turco said.

The third phase would consolidate FPDS , Wage Determinations Online and the Past Performance Information Retrieval System. The earliest phase 3 could now be completed–it was originally planned for spring 2014–is now spring 2015, Turco said.

It’s in conjunction with phase 3 that GSA would likely also transition from using DUNS as a unique vendor identifier to a government-generated number, if GSA decides to do so, Turco added.

Vendors wishing to do business with the government must receive a unique identifier–in some cases, more than one, depending on the number of physical locations and legal divisions a company has–and GSA has long contracted with Dun & Bradstreet for government vendors to receive Data Universal Numbering System identifier for free.

But, the government pays Dun & Bradstreet $18 million a year for the service, making it the single most expensive element of the Integrated Acquisition Environment, the name GSA gives to 9 systems set for consolidation into SAM.

“We’ve had a lot of push on us from the Hill and many vendors have said to us ‘Why is it only Dun and Bradstreet?’” Turco said.

However, replacing DUNS would be no easy task, she acknowledged, since DUNS are used in financial systems to pay vendors and have become deeply integrated into IAE feeder systems.

– by David Perera, Fierce Government IT, Oct. 24, 2011 – http://www.fiercegovernmentit.com/story/turco-sam-deployment-likely-be-delayed-gsa-might-replace-duns/2011-10-22?utm_medium=nl&utm_source=internal

DoD contracts went to excluded vendors

February 4, 2011 by

The Pentagon obligated millions of dollars in payments to contractors that were on lists of “excluded parties” because of previous fraud, a report made public Wednesday said.

The report, produced by the Defense Department’s office of the undersecretary of defense for acquisition, technology and logistics, found that between 2007 and 2009, DoD did business with at least 16 vendors who were either suspended or debarred at the time the funds were obligated. Congress mandated the report in the 2010 Defense appropriations bill.

The spending included nearly $3.4 million to five vendors who were suspended and almost $2 million to 11 debarred vendors.

DoD’s report explained that in some cases, contracting officers knowingly continued ordering from the excluded vendors “to ensure mission accomplishment and for safety and mission requirements.” In others, however, Defense officials failed to check the vendors against the governmentwide Excluded Parties Listing System.

“The Federal Acquisition Regulation was misinterpreted and/or training was inadequate with regard to EPLS – an issue subsequently addressed by commanders,” the report stated.

The report found that DoD and the justice system have adequate remedies to pursue and prosecute contractor wrongdoing, but said the review that led up to the report revealed the need for new guidance on EPLS within the DoD contracting community.

The report stated that the director of Defense Procurement and Acquisition Policy’s new guidance also will include instructions for using the new Federal Awardee Performance and Integrity Information System (FAPIIS).

Sen. Bernie Sanders (I-Vt.), who inserted language into the 2010 Defense spending bill mandating the report, made the information public. He seized on the report’s broader revelation that DoD had continued contracting with companies who had been subject to criminal or civil fraud judgments at some point.

The report found that DoD spent $345 million on payments to vendors that had been criminally convicted during the three-year period, $4.9 billion to vendors with civil judgments against them during that time and nearly $46 million to contractors that had reached out-of-court settlements related to fraud.

“With the country running a $14 trillion national debt, my goal is to provide as much transparency as possible about what is happening with taxpayer money,” Sanders said in a statement. “The sad truth is that virtually all of the major defense contractors in this country for years have been engaged in systemic fraudulent behavior, while receiving hundreds of billions of dollars of taxpayer money.”

The government in recent years has been aggressive in combating fraud. The Small Business Administration suspended GTSI for small business contracting violations.

The Environmental Protection Agency suspended IBM in 2008 as well for alleged procurement integrity violations.

DoD said its Panel on Contracting Integrity would examine the new report and make further recommendations to Defense leadership based on their review.

– By Jared Serbu, Feb. 2, 2011, Federal News Radio

FAR Councils Issue Final Rule Unveiling A New Measure Designed To Ensure Only Responsible Contractors Obtain Contract Awards

April 16, 2010 by

The Federal Awardee Performance and Integrity Information System, (“FAPIIS”), takes effect on April 22, 2010. Responding to heightened Congressional concerns regarding the performance and integrity of companies receiving federal contracts, FAPIIS is intended to enhance the government’s ability to prevent non-responsible contractors from receiving contract awards. FAPIIS will serve as a “one-stop” repository containing all data reflecting on a contractor’s responsibility.

Contracting officers, in fulfilling their obligation to make a responsibility determination prior to contract award, will be required to review the FAPIIS data pertaining to the contractor. That information will include: contracting officers’ non-responsibility determinations; default terminations; defective pricing determinations; administrative agreements with suspension and debarment officials; contractor criminal convictions, civil liability, and adverse administrative actions involving a finding of fault and liability in connection with the award or performance of a government contract; and certain settlements in criminal, civil, or administrative proceedings.

The Civilian Agency Acquisition Council and Defense Acquisition Regulations Council believe that arming contracting officers with this information will “significantly enhance the Government’s ability to evaluate the business ethics and quality of prospective contractors competing for Federal contracts and to protect taxpayers from doing business with contractors that are not responsible sources.” (See FR 14059, March 23, 2010, available at: http://edocket.access.gpo.gov/2010/2010-6329.htm).

Responsibility for providing and updating the data in FAPIIS will rest, at least in part, on contractors, who may be required to certify their compliance with the new rule.

Responsibility Determinations Under Current Law

Currently, before the award of any federal government contract, contracting officers are required to make an “affirmative determination of responsibility.” (FAR 9.103(b)). To make this determination, contracting officers are required to “possess or obtain information sufficient to be satisfied that a prospective contractor currently meets the applicable standards . . . .” (FAR 9.105-1). In practice, contracting officers typically review the Excluded Parties List System (“EPLS”), www.epls.gov, the Past Performance Information Retrieval System (“PPIRS”), www.ppirs.gov, and any other information they receive pertaining to the contractor’s responsibility, including information obtained through pre-award surveys. FAPIIS will significantly expand the nature and volume of data to be considered by contracting officers and will store that information in a single repository.

FAPIIS Applies to All Contracts that Exceed the Simplified Acquisition Threshold, Including Commercial Item Contracts and Contracts With Small Businesses

FAR 9.104-6 will require contracting officers to review the FAPIIS database, located at http://www.ppirs.gov/fapiis.html, prior to any contract award that exceeds the simplified acquisition threshold. The rule is applicable to commercial item and commercial-off-the-shelf (COTS) procurements, and to contracts awarded to small business concerns. The FAPIIS database will provide the contracting officer access to the data maintained in the EPLS, the PPIRS, and the additional information now required by the new rule. Contracting officers will be required to document the contract file to explain how the information was considered in any responsibility determination, as well as the action that was taken as a result of the information.

Additionally, prior to proceeding with award, contracting officers must notify the agency official responsible for initiating debarment or suspension, if information is identified in FAPIIS that appears appropriate for that official’s consideration.

Contractor Reporting Requirements

The rule will impose new reporting requirements on contractors in connection with all federal contract solicitations exceeding $500,000. Under FAR 52.209-7, offerors will be required to report information pertaining to legal proceedings in connection with the award or performance of a federal government contract.

Specifically, offerors will be required to report whether within the last five years they or a principal were involved in any proceedings that resulted in: (1) a criminal conviction; (2) a finding of fault and liability in a civil proceeding that results in a payment of greater than $5,000; (3) a finding of fault and liability in an administrative proceeding that results in a fine of greater than $5,000, or reimbursement, restitution, or damages greater than $100,000; and (4) a settlement in a criminal, civil, or administrative proceeding where fault is admitted and a decision on the merits could have led to any of the results above.

FAR 52.209-7 also will require offerors to indicate whether they have active federal contracts and grants with a total value greater than $10 million. If so, by submission of their offer, the contractor is deemed to certify that the data they have submitted under FAPIIS is current, complete and accurate as of the date of submission of the offer. In addition, contracts exceeding $500,000 awarded to contractors with active federal contracts and grants with a total value greater than $10 million will contain FAR 52.209-8, “Updates of Information Regarding Responsibility Matters.” That clause will require the contractor to update the data it is required to submit to FAPIIS on a semi-annual basis through the life of the contract.

The Rule Offers Some Protection to Contractors

The rule does provide some limited protections to contractors. If the FAPIIS database contains adverse information, contracting officers will be required to give offerors the opportunity to provide additional information to demonstrate their responsibility before making a non-responsibility determination, unless the contractor already has been suspended or debarred. Consistent with the current protections provided to small business concerns, where the contracting officer determines that such a concern is not responsible, the contracting officer is required to refer the concern to the Small Business Administration, which will decide whether to issue a Certificate of Competency.

In addition, FAPIIS will notify contractors whenever the government posts new information to the contractor’s record, and the contractor will have an opportunity to post comments and respond.

The Rule Presents Challenges to the Government and Contractors Alike

Contracting officers are now charged with reviewing and analyzing a potentially large database of conclusory and often negative information in order to determine whether the contractor is responsible. While the new rule serves the legitimate purpose of preventing taxpayer dollars from going to non-responsible contractors with whom the funds may not achieve their intended purpose, the rule appears to be fraught with potential issues for the government and contractors alike including:

  • Misuse of Information: FAPIIS collects a significant amount of information, some relevant, that contracting officers are required to evaluate. Yet, the rule provides no guidance to contracting officers as to how to utilize this information other than to say use “sound judgment.” Many contracting officers may lack the experience and/or training necessary to assess the weight to afford to the various types of information contained in FAPIIS.
  • Disclosure of Contractor Information: While FAPIIS is restricted to the government and to contractors, who may access their own data, the information housed in FAPIIS likely is to be the target of Freedom of Information Act (“FOIA”) requests by private citizens and watchdog groups leading to the potential disclosure of contractor-sensitive data.
  • Delay to the Acquisition Process: As a result of the amount of information contracting officers may need to review as a result of FAPIIS, and their efforts to collect additional information from contractors so as to document the file with an explanation for their award decision, including to support awards to contractors with apparent adverse matters in their database, the acquisition process is likely to be further protracted by this new rule.
  • Increase in Suspension and Debarment Inquiries/Actions: The rule is likely to generate a significant increase in referrals to suspension and debarment officers from contracting officers whose only guidance is to refer “information . . . that appears appropriate for that official’s consideration.” Such an increase in referrals, in turn, is likely to result in additional inquiries from agency suspension and debarment officials to contractors in the form of requests for information and show cause letters. Contractors will be required to incur the cost and disruption of preparing present responsibility submissions, in many cases likely stemming from dated and insignificant matters.
  • Increase in Bid Protests: Bid protests alleging erroneous and unreasonable agency decisions as to responsibility determinations are likely to increase. Not only will contract performance under these protested contracts be delayed, but the government and contractors will be required to spend considerable sums of money to resolve them.
  • Decreased Contractor Incentive to Enter Into Administrative Agreements: The rule may act to discourage contractors from entering into administrative agreements concerning suspension and debarment because such agreements or the substance thereof will be published in FAPIIS and ostensibly could be used by a contracting officer to find a contractor non-responsible for a procurement, despite the additional undertakings to which the contractor agreed, including remedial measures, enhancements to their compliance program, and new internal controls.
  • De Facto Debarment: The compilation of apparent negative data in FAPIIS may result in agencies repeatedly denying a contractor awards based on responsibility concerns without following the debarment procedures set forth in FAR Subpart 9.4, in violation of law and the contractor’s due process rights.

Time will reveal whether these concerns regarding FAPIIS are more theoretical than actual, and whether the rule serves to enhance the ability of the government to do business only with responsible contractors. It may be that the rule will require revision, both as to the nature of the information contained in the database as well as to the instructions provided to contracting officers in using that data.

In the interim, contractors should revise their procedures and compliance practices to include the collection and reporting of FAPIIS information. Additionally, contractors need to be alerted to new information posted by the government to their FAPIIS database and to the use of that information by contracting officers. Contractors should be prepared quickly to address new postings and to respond to contracting officer inquiries with additional information that is relevant and may provide proper context for any adverse information contained in FAPIIS. Failure to take such steps could result in a variety of negative consequences, ranging from non-responsibility determinations and the loss of contract awards to the submission of inaccurate data and improper certifications.

© 2010 McKenna Long & Aldridge LLP

Officials mark rules for major contractor database

March 26, 2010 by

The broad database contains specific information on contractors’ and grantees’ reliability and history of work with the government

by Matthew Weigelt – Mar 23, 2010 – The Obama administration has settled on the details of a contractor database, as it intends to gather more information to keep a closer eye on government contractors.

Officials have finalized its regulation of the Federal Awardee Performance and Integrity Information System (FAPIIS), according to today’s Federal Register.

“We’ll be able to see, before any new contract is awarded, whether a company plays by the rules, how well they’ve performed in the past: Did they finish the job on time? Did the company provide good value? Did the company blow their budget? It’s your money, so you deserve to know how it’s spent and who these contracts are going to,” President Barack Obama said March 10.

Obama and other administration officials have started tougher oversight of the private sector because, they believe, it works too closely with the federal government.

The FAPIIS database contains specific information on the federal contractors and grantees’ reliability and history of work with the government. The database is available for use in award decisions at www.ppirs.gov.

FAPIIS is intended to significantly enhance the scope of information available to contracting officers as they evaluate prospective contractors competing for their contracts. Officials also hope to protect taxpayers by not having work done by contractors who are not responsible, according to the Federal Register notice.

Contracting officers now must consider all the information in FAPIIS and Past Performance Information Retrieval System (PPIRS) when making a “responsibility determination” about a company. The officers also must notify the agency official responsible for debarments or suspensions if the information appears appropriate for the official’s consideration, the rule states.

On the other side, contractors are required to confirm the information related to criminal, civil and administrative proceedings in which they were found at fault. They then must report the information to FAPIIS. They also have to update their profile every six months throughout the life of a contract. Contractors update the information in the Central Contractor Registration database.

In the fiscal 2009 National Defense Authorization Act, Congress required the administration to establish FAPIIS as a one-stop shop for contractor data. Lawmakers say information on companies was spread too widely in too many separate databases.

In the past, contracting officers historically had access to readily available government information only on suspensions and debarments as they determined a bidding company’s past work. That information was included in the Excluded Parties List Systems.

Since the summer of 2009, agencies have been required to submit electronic records of contractor performance into the PPIRS. The goal is to have a large amount of information from the agencies available to contracting officers across the government. To expand the amount of data in the FAPIIS, officials intend to collect state-level information on contractors in connection with the award or performance of a contract or grant with a state, according to the notice.

“This rulemaking and the associated launch of FAPIIS are part of an ongoing initiative by the administration to increase consideration of contractor integrity and the quality of a contractor’s performance in awarding federal contracts,” the notice states.

About the Author: Matthew Weigelt is acquisition editor for Federal Computer Week.

© 1996-2009 1105 Media, Inc. All Rights Reserved