Suspension in Government Contracting

government contracts

An Overview of Suspension in Federal Contracting

Like debarment, suspension is an administrative measure the government uses to protect itself from doing business with contractors deemed not sufficiently responsible. It renders a company or individual ineligible to receive a contract or assistance award for a period of 12 to 18 months. With spending increasingly on the rise, the government has been more vigilant in utilizing exclusion proceedings like this. As such, an awareness and understanding of this mechanism, what it is and how to defend against it, is critical for contractors in the current federal marketplace.

Causes For Suspension

Federal Acquisition Regulation (FAR) Part 9.407 governs suspension specifically and outlines the following reasons a contractor may be suspended.

  • Commission of fraud or a criminal offense in connection with (i) obtaining; (ii) attempting to obtain; or (iii) performing a public contract or subcontract.
  • Violation of Federal or State antitrust statutes relating to the submission of offers.
  • Commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, violating Federal criminal tax laws, or receiving stolen property.
  • Violation of the Drug-Free Workplace Act.
  • Intentionally affixing a label bearing a “Made in America” inscription (or any inscription having the same meaning) to a product sold in or shipped to the United States or its outlying areas, when the product was not made in the United States or its outlying areas.
  • Commission of an unfair trade practice.
  • Delinquent Federal taxes in an amount that exceeds $3,500.
  • Knowing failure to disclose violations of criminal law.
  • Commission of any other offense indicating a lack of business integrity or business honesty that seriously and directly affects the present responsibility of a Government contractor or subcontractor.

Suspension Standard

A suspension is based on adequate evidence of the contractor’s misconduct and can last for 12-18 months or until the completion of any ongoing investigation or legal proceeding that generated the finding of misconduct. In assessing the adequacy of the evidence, agencies consider how much information is available, how credible it is given the circumstances, whether important allegations are corroborated, and what inferences can reasonably be drawn as a result. Adequate evidence could be an indictment, a civil or criminal judgment for any business integrity issue, or failure to adequately perform a government contract.

Scope of Suspension

This measure can be asserted against any person or entity doing business with the government. And, suspension may arise as a result of imputed third party actions. Meaning, companies may be suspended for the acts of their agents or employees, employees may be suspended due to their individual conduct, and joint contracting parties may be suspended if improper conduct occurred for or on behalf of the joint venture or with the knowledge, approval, or acquiescence of the participating contractors.

Conclusion

Suspension is much like debarment in that suspended contractors are placed on the System For Award Management excluded parties list, are wholly excluded from participating in federal awards and arise from the same general causes.  The key difference, however, is that suspension is a temporary measure of shorter duration to provide an immediate need for protection to the government.  Like debarment, the existence of a cause for suspension does not require the institution of suspension proceedings; suspension officials may consider mitigating factors. Contractors facing a notice of suspension therefore should take great care to respond timely and adequately and should ensure immediate corrective action of the misconduct.

Kristi Morgan AronicaKristi Morgan Aronica, Government Contracts Attorney
kristi@weitzmorgan.com
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