Two New Acts Expand Agency Debarment and Suspension Authority
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The 2012 Consolidated Appropriations Act (CAA) and National Defense Authorization Act (NDAA) expand the government's suspension and debarment authority over contractors. The CAA prohibits agencies from contracting with companies convicted of a felony or with tax delinquencies without considering debarment. The NDAA authorizes CENTCOM to recommend banning contractors found to support insurgents. Unlike previous regulations, the CAA does not limit covered felonies and the NDAA does not impose time limits on bans for supporting insurgents. These new laws significantly alter which companies are eligible for government contracts.
Two New Acts Expand Agency Debarment and Suspension Authority
- 1. February 8, 2012 Two New Acts Expand Agency Debarment and Suspension Authority Government Contracts Client Alert The 2012 Consolidated Appropriations Act (CAA) and the National Defense Authorization This Alert provides only Act (NDAA) broaden the reach of the government’s suspension and debarment authority. general information and The CAA prohibits covered federal agencies from contracting with any corporation that has been convicted of a felony within the past 24 months or is delinquent in its tax should not be relied upon as payments unless the agency has considered the corporation for debarment or legal advice. This Alert may suspension. Section 841 of the NDAA authorizes the head of the United States Central be considered attorney Command (CENTCOM) to recommend a ban on government contracting for any advertising under court and company CENTCOM finds is supporting insurgency operations. bar rules in certain Unlike the pre-existing regulations, the CAA does not limit the types of felonies triggering jurisdictions. the pre-award referral for debarment or suspension consideration; the NDAA does not place a time limit on the new ban applicable to contractors found to support insurgents. For more information, contact While questions remain about the implementation details of these new statutory your Patton Boggs LLP provisions, there is no question that they will fundamentally alter the government’s attorney or the authors listed determination of who is eligible to receive contracts. below. The Consolidated Appropriations Act of 2012 Mary Beth Bosco The 2012 CAA prohibits covered agencies from using funds to contract with a company [email protected] that has unpaid federal tax delinquencies or felony convictions unless the company has been considered for suspension or debarment and the agency determines that further action is unnecessary to protect the interests of the government. The CAA does not limit the types of felony convictions (which include plea agreements) that trigger its WWW.PATTONBOGGS.COM application. One interesting question posed by the CAA is its applicability. Whether by inadvertent omission or otherwise, the act did not include the debarment/suspension consideration provision in all of its funding sections. For example, the funding provisions for the General Services Administration, the Department of Homeland Security, and the Treasury Department are among the agencies apparently not covered by the provision. The CAA’s Department of Defense (DoD) funding provisions do contain the debarment/suspension consideration provision. The Office of the Under Secretary of Defense issued implementing procedures in a January 23, 2012 Memorandum. Effective as of the date of the Memorandum, DoD procurements funded by the CAA will contain a new contractor certification. The certification requires offerors to represent whether or not they have any unpaid tax liability or have been convicted of a crime within the preceding 24 months. (A federal tax delinquency is one for which all challenges have been exhausted and no payment plan exists.) Receipt of an affirmative representation requires the contracting activity to consult with the agency debarring and suspending official. The agency may then award a contract to the offeror only upon a written determination by the debarring and suspending official that he or she has considered the matter and
- 2. has determined that debarment or suspension is not necessary to protect the Government’s interest. The Civilian Agency Acquisition Council followed DoD with a January 27, 2012 Memorandum “encouraging” covered agencies to approve a class deviation from the FAR award and debarment/suspension regulations to implement the requirements of the 2012CAA . This Memorandum referred the civilian agencies to the procedures adopted by DoD in its January 23 Memorandum. One issue of immediate note in connection with the CAA provisions is the fact that the FAR definition of conviction contains plea agreements. Consequently, contractors considering settlement of any criminal proceedings (whether contract-related or not) must now weigh the potential implications of such a settlement in connection with 2012 procurements against the cost and risk of continued litigation. The 2012 National Defense Authorization Act Concurrent with the CAA, Congress passed the 2012 NDAA. This statute also contained provisions altering long-standing debarment and suspension procedures. Section 861 of the NDAA authorizes CENTCOM to recommend to the head of any contracting agency that a contractor be banned from government contracting if it is “actively supporting an insurgency or otherwise actively opposing” U.S. or coalition forces. It further provides for CENTCOM to recommend default termination of a contract where it finds that the contractor failed to exercise due diligence to ensure that none of the funds it received from the government were provided to an entity actively supporting an insurgency or opposing U.S. or coalition forces. The bill also requires CENTCOM to establish a “program to use available intelligence” to review persons or entities suspected of supporting insurgents or opposing the military. The NDA provisions are significant for several reasons. First, they vest in CENTCOM an unprecedented and apparently unlimited authority to investigate contractors and subcontractors and effectively end their ability to contract with the government. The act’s language does not limit the time period of the “ban” on contracting and thus appears to bypass the normal debarment and suspension process. The NDA does not contain any provision for notice to the contractor or an opportunity to be heard before imposition of the ban. It also envisions prime contract termination for a subcontractor’s activity that CENTCOM finds to aid an insurgent group or be counter to U.S. or coalition interests, even if the activity is unrelated to the contract. Given its breadth and ramifications, exercise of this authority will have huge consequences for contractors working on contingency operations. This Alert provides only general information and should not be relied upon as legal advice. This Alert may also be considered attorney advertising under court and bar rules in certain jurisdictions. WASHINGTON DC | NORTHERN VIRGINIA | NEW JERSEY | NEW YORK | DALLAS | DENVER | ANCHORAGE DOHA, QATAR | ABU DHABI, UAE