One of the more unique aspects of the FAR 9.4 suspension & debarment (S&D) regime is the broad discretion afforded to Government agencies. As previously discussed, an S&D official (SDO) has significant latitude when deciding whether to suspend or debar a contractor. As noted in FAR 9.406-1(a), “It is the debarring official’s responsibility to determine whether debarment is in the Government’s interest . . . [t]he existence of a cause for debarment, however, does not necessarily require that the contractor be debarred.”
SDOs are also charged with determining the scope of the suspension or debarment necessary to protect the Government’s interests, ranging from the exclusion of an entire company, to the exclusion of a single division, facility, or individual. Thus, in cases where misconduct or improper activity is limited to a single division of a large contractor, it is not uncommon for an SDO to limit the suspension or debarment to the responsible sector (e.g., Booz Allen’s San Antonio office, L-3’s Special Support Programs Division, Boeing Launch Services, Launch Systems, and Delta Programs business units). Conversely, when a small company engages in misconduct, the wrongdoing often permeates the entire entity, resulting in the suspension or debarment of the entire firm.
Under certain circumstances, an SDO may determine that the exclusion must extend beyond the responsible firm in order to protect the interests of the Government. Specifically, it may be extended to “affiliates,” depending on the relationship between the contractor and the related organization or individual (FAR 9.403 provides a detailed definition of “affiliate” in this context). Under FAR 9.406-5, the serious misconduct of an officer, director, shareholder, partner, employee or other individual may be imputed to a contractor under certain circumstances (similarly, the contractor’s misconduct may be imputed to one of these individuals, if the associated individual played a role in or had knowledge of the misconduct). The FAR’s imputation provisions are applicable to joint venture arrangements as well.
If a compelling reason exists and is documented in writing, the FAR also permits agencies to waive the suspension or debarment and enter into new contracts with the contractor, just as the Air Force did when it waived Boeing’s suspension in order to procure critical goods and services that could not be obtained elsewhere.
Up Next—Suspension & Debarment Part V: Due Process
Jessica Tillipman is a contributing editor of the FCPA Blog. She’s the Assistant Dean for Field Placement and Professorial Lecturer in Law at The George Washington University Law School. She also teaches an Anti-Corruption seminar that focuses on corruption control issues in government procurement.