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Federal Suspensions and Debarments Drop in FY 2015

For several years, the Project On Government Oversight has documented the steady growth in the use of suspensions and debarments by federal agencies to keep contracts, grants, and other federal funds out of the hands of risky companies and individuals.

That sustained period of growth came to an end last fiscal year. According to statistics released last week by the Interagency Suspension and Debarment Committee (ISDC), suspensions, proposed debarments, and debarments declined by 3.7 percent in FY 2015. Federal agencies and departments reported a total of 4,987 such actions, as compared to 5,179 in the previous fiscal year. Suspensions alone dropped 9 percent.

The ISDC put an optimistic spin on its findings. It characterized the latest numbers as a “plateauing” caused by suspension and debarment programs “becoming established throughout the Executive Branch and transitioning from start up into effective programs.” It also noted the growing use of alternatives to suspension and debarment such as administrative agreements, which increased 25 percent in FY 2015.

Additionally, suspension and debarment referrals increased by 13 percent, while declinations (referrals in which the agency decides not to issue a suspension or debarment notice) declined by more than 63 percent. The Army made more than 25 percent of the 3,920 referrals in FY 2015, while the Department of Housing and Urban Development (HUD) accounted for 71 percent of the 115 declinations. (HUD reported almost 75 percent of the declinations in FY 2014.)

Raw numbers alone don’t indicate success or failure. As the ISDC cautions every year, the appropriate number is “purely a function of need” that depends on “what is necessary to protect [each] agency and the government from harm.” Still, we are a little worried that, for the fourth year in a row, the Nuclear Regulatory Commission (NRC), Social Security Administration (SSA), and Department of Labor all reported no suspensions, proposed debarments, debarments, or administrative agreements. NRC, SSA, and Labor also made no referrals in FY 2015.

Are declining suspensions and debarments an aberration or the start of a long-term trend? More importantly, should taxpayers be worried? Not if you agree with the ISDC’s assessment or consider the referral/declination trend. And there have been many positive developments in the area of contractor and corporate accountability as well. A flurry of new rules and orders have imposed more restraints and responsibilities on contractors and other federal fund recipients. The Justice Department revamped its corporate crime-fighting strategy, and the U.S. Supreme Court just issued a decision that will make it easier to fight fraud under the False Claims Act.