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Is the Federal Suspension and Debarment System Broken?

Is the federal suspension and debarment system broken? The Senate Homeland Security and Governmental Affairs Committee (HSGAC) attempted to answer that question yesterday. That hearing follows a hearing on suspension and debarment held last month by a House Oversight and Government Reform subcommittee. Both hearings featured almost the same witnesses, but hopefully the House and Senate will independently tackle the long-standing problems in the system and enhance protections against non-responsible contractors.

One concern is whether the definition of “presently responsible” in the Federal Acquisition Regulation allows the government to take action against contractors (suspension and debarment isn’t punishment for past misconduct—it’s based on a contractor’s current ability to be responsible). At the first sign of action by the Department of Justice (DOJ) or an agency, contractors (at least those that are not small businesses) fire a few employees, beef up training and compliance measures, and make all kinds of promises to the government in order to avoid the possibility of losing future contract awards. But is that system working in the interest of the government and taxpayers?

In recent months, the government has issued several reports highlighting problems in the federal government’s suspension and debarment system. Despite a decade of concerns, little has changed to protect the public from risky contractors.

Possibly because of the hearings on the Hill, it appears that the Obama administration has finally bought into the fact that the system needs improvement. According to an Office of Management and Budget (OMB) memo released on Tuesday:

Some agencies have long-standing and robust suspension and debarment programs. However, for too long, too many Federal agencies have failed to adequately use the suspension and debarment tools that are placed at their disposal or have failed even to maintain the most basic program capabilities required to suspend or debar non-responsible parties.

The memo directs agencies to appoint a “senior accountable official” to maintain a suspension and debarment program and improve policies and practices in this area.

In fiscal year 2010, there were 5,114 suspensions or debarments, but only one—the 18-day suspension of GTSI Corporation— involved a top federal contractor, which raises concerns about contractors being too big too fail. A recent survey by the Council of the Inspectors General on Integrity and Efficiency illustrated that agencies are not effectively utilizing suspension and debarment to protect the billions of dollars in Recovery Act spending.

Additionally, according to the DOJ Inspector General (IG), from 2005 to 2010, the DOJ awarded 77 contracts to suspended or debarred contractors, only made 17 referrals for suspension and debarment, and did not have a formal system to track the status of suspension and debarment referrals. The DOJ IG noted that there were “deficiencies in DOJ’s suspension and debarment process and … officials are not uniformly checking the EPLS [Excluded Parties List System] immediately prior to making awards.”

The problem with suspended or debarred contractors receiving new contract awards isn’t new.  The Government Accountability Office (GAO) revealed in 2009 that it had identified a number of contractors who had received new contracts despite being in the EPLS—the list of suspended or debarred companies and individuals. Also, a July 2011 Department of Defense IG report found “incentive requests totaling $4.17 million from prime contractors who were inappropriately subcontracting to a related party and prime contractors” listed on the EPLS.

Another DoD IG report from July concluded that improvements to the suspension and debarment system are needed, including a better process for referring poorly performing contractors for potential suspensions or debarments, improved training regarding referring poorly performing contractors, and improvements in checking the EPLS before awarding contracts. What made this report particularly interesting was the fact that “[t]he DoD IG has not performed an audit on S&D since 1993, and that audit only focused on S&D reporting procedures for subcontractors.”

Then, there is the recently sunsetted Commission on Wartime Contracting (CWC), which warned in its final report that “agencies sometimes do not pursue suspensions or debarments in a contingency environment” (see Recommendation 11, p. 156). Although the CWC looked at the unique situation of contractor responsibility in contingency operations, POGO believes its conclusions apply throughout the government.

GAO recently reviewed the suspension and debarment process and testified before Congress, recommending that certain agencies “take steps to improve their suspension and debarment programs ensuring that they incorporate the characteristics we identified as common among agencies with more active programs, including assigning dedicated staff resources, developing detailed implementing guidance, and promoting the use of a case referral process.” (Although not required to follow the Federal Acquisition Regulation (FAR), the GAO recently proposed a policy stating that it will follow the FAR’s prohibition on awarding contracts to entities in the EPLS. Let’s hope that the GAO uses this important tool to protect the public.)

So, despite past and present claims by the Interagency Suspension and Debarment Committee (ISDC) that the suspension and debarment system is working, other government watchdogs obviously have a difference of opinion. In fact, the ISDC is part of the problem. It took two years to put together its report on the suspension and debarment system, and it has been deficient in providing leadership in promoting enhancements to the system.

We have recently witnessed some contractor accountability and transparency improvements with regard to EPLS and FAPIIS (the government’s new contractor and grantee responsibility database), but when large companies with questionable track records continue to receive contracts, we have to ask if the system is working as intended.

By: Scott H. Amey, J.D.
General Counsel, POGO

scott amey Scott Amey is General Counsel for the Project On Government Oversight. Some of Scott's investigations center on contract oversight, human trafficking, the revolving door, and ethics issues.

Topics: Contract Oversight

Related Content: Federal Contractor Misconduct

Authors: Scott H. Amey, J.D.

Submitted by Dfens at: December 6, 2012
Yeah, the USAF is doing such a damn good job keeping their contractors in line. That's why it took 25 years to develop the F-22 when all of its predicessors, the aircraft that are actually fighting, took 1/10th as long to design and make operational. That's why the C-130 AMP, a program that we will never see a single airplane from, has cost $10 billion and the price keeps going up. That's why our tankers are falling out of the sky from old age while they try again and again and again to get a contract in place for a replacement airplane. Sure, the USAF is a glittering example of whats wrong with the defense procurement system -- contractor debarment included. Talk about lipstick on a pig! submitted Nov. 22, 2011
Submitted by Scott Amey at: December 6, 2012
There are two sides to every story. No claim that suspension or debarment is a jobs killer, but it "is capital punishment for government contractors." submitted Nov. 21, 2011
Submitted by DCAV8R at: December 6, 2012
You limit your article only to DOJ and 'some agencies that don't use suspension and debarment'. A bit short sighted. Why didn't you balance your story with the agencies that DO use suspension and debarment quite effectively (Air Force, EPA, DHS)? And the memo that OMB just came out with was based primarily off of those three agencies. You also fail to mention that suspension and debarment are not punishment, but rather a protection for the government and the tax payer. You seem to be of the opine that 'one size fits all' and that every bad contractor should be suspended and debarred when in reality, most need the equivalent of PBJ (Probation before Judgement)-- This is the problem with 'reporters' today. You only report what you want to get a rise out of people. Print a fair and balanced story and you might get more support. submitted November 21, 2011
Submitted by Dfens at: December 6, 2012
Like hell they won't pay. They paid their own weapon development costs for hundreds of years. This current, profit on development system has only been in place since the 1990's. That's total BS you're spreading, and the same exact BS the defense contractors pass along so freely because they are making record profits with this current system and the only ones losing are the US taxpayer and the miniscule 15% of our so called "armed forces" that actually fight. There are certain vehicles that are too expensive to develop on the contractor's dollar, like ships, especially large ships like aircraft carriers. Traditionally the Naval Warfare College designed those and hired contractors only to provide the labor to build these ships. This is the way we've financed the development of our nations weapons for hundreds of years. Who are you to say now that "they won't pay?" Hell, every innovative weapon system our troops use now was developed by private funds. The unmanned aircraft that have done so much in Iraq and Afghanistan -- all developed by private funds. The .50 cal sniper rifle -- developed by private funds. The C-130J -- developed by private funds. The S-97 is right now being developed by Sikorsky's private funds, as opposed to the V-22 that has killed dozens of our troops and was developed at your expense. Do your research before you write. submitted Nov. 19, 2011
Submitted by Niko Borosky at: December 6, 2012
Defens: they won't pay, and the government knows it. Further, the govt likes the present system because it appears to give the government control. Of course, this commingling of taxpayer funds and private R&D breeds a hellacious conflict of interest which dooms fiscal responsibility in just about any project. Further, it bolsters defense contractors' belief that they are entitled to this government "investment." submitted Nov. 18, 2011
Submitted by Dfens at: December 6, 2012
We pay contractors more to drag out development and to jack up the cost of weapons, then you wonder if the "suspension and debarment system is broken?" Hell, it's not broken. It is doing exactly what it was designed to do. It makes it look as if the DoD almost gives a damn about how they spend our money. What we need is real solutions, not more whitewash. How about making the contractors pay for their own weapon development costs? submitted Nov. 18, 2011

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