Overview
FAR 9.403 provides the foundational terminology necessary to interpret and apply the rules governing contractor suspension, debarment, and ineligibility. It establishes the scope of who is considered a "contractor" and defines the legal triggers and administrative mechanisms used to protect the government's interest in dealing only with responsible entities.
Key Rules
- Expansive Definition of Contractor: The term includes any individual or legal entity that submits offers, receives awards, or "reasonably may be expected" to do so, covering both direct contractors and subcontractors.
- Affiliation based on Control: Entities are considered affiliates if one controls (or has the power to control) the other, or if a third party controls both. Evidence of control includes interlocking management, shared facilities/equipment, or "identity of interests" among family members.
- Broad Interpretation of Conviction: A conviction is not limited to a jury verdict; it includes pleas of nolo contendere, deferred prosecutions, and any resolution that is the functional equivalent of a judgment, provided there is an admission of guilt.
- Administrative and Voluntary Resolutions:
- Administrative Agreement: A formal settlement used to resolve suspension or debarment proceedings.
- Voluntary Exclusion: A contractor's written agreement to be excluded governmentwide, typically as part of a settlement.
- Pre-notice Letter: A discretionary, non-mandatory communication from a Suspending and Debarring Official (SDO) that notifies a contractor of a matter without immediately resulting in exclusion.
- Unfair Trade Practices: Specifically includes violations of the Tariff Act of 1930, export control agreement violations, or knowingly false certifications regarding foreign content.
Practical Implications
- Contagion Risk: Because of the "Affiliates" definition, the debarment of one company can legally extend to sister companies or parent organizations if shared management or facilities suggest common control.
- Pre-Award Scrutiny: Since the definition of "contractor" includes those who "reasonably may be expected" to bid, the government can initiate suspension or debarment actions against entities that have not yet secured a federal contract.
- Due Diligence: Contractors must realize that "Legal Proceedings" include those where the government is a party to a civil suit; a settlement in a civil fraud case can serve as the basis for a "Civil Judgment" that triggers debarment proceedings.