Overview
FAR 9.405 establishes the mandatory restrictions and prohibitions applied to contractors listed as debarred, suspended, proposed for debarment, or otherwise excluded in the System for Award Management (SAM). It serves to protect the Government’s interest by ensuring that agencies do not solicit from, award to, or extend existing business relationships with non-responsible entities unless a compelling reason is justified at the highest levels.
Key Rules
- General Prohibition: Agencies are prohibited from soliciting offers from, awarding contracts to, or consenting to subcontracts with listed contractors. This restriction also extends to listed entities acting as agents, representatives, or individual sureties.
- Mandatory SAM Verification: Contracting Officers must review the exclusion records in SAM at two distinct stages: (1) after the opening of bids or receipt of proposals, and (2) immediately prior to award.
- Treatment of Offers: Bids from listed contractors must be rejected, and proposals/quotations cannot be evaluated or included in the competitive range unless a "compelling reason" determination is made in writing by the agency head.
- Existing Contracts: While current contracts may continue, agencies are prohibited from exercising options, adding new work, or placing orders (beyond guaranteed minimums) with listed contractors without a written compelling reason from the agency head.
- Subcontracting Limitations: Prime contractors are generally prohibited from entering into subcontracts exceeding $45,000 (excluding COTS items) with listed entities. If a prime contractor intends to use such a subcontractor, they must provide a detailed written notification to the Contracting Officer justifying the "compelling reason."
- Thresholds and Ineligibility: Under specific statutes (e.g., 10 U.S.C. 983), agencies may be required to terminate existing contracts and are strictly barred from new awards regardless of value, except for certain commercial or micro-purchase scenarios.
Practical Implications
- Immediate Impact of "Proposed" Status: Being proposed for debarment carries the same immediate weight as an actual debarment regarding new awards, effectively freezing a contractor's ability to win new government business overnight.
- Prime Contractor Liability: Prime contractors must maintain robust internal vetting processes; failure to check SAM before awarding subcontracts over $45,000 can result in negative Contractor Purchasing System Reviews (CPSRs) and potential breach of contract issues under FAR 52.209-6.
- High Bar for Exceptions: The requirement for an "Agency Head" determination for "compelling reasons" makes exceptions extremely rare, typically reserved for national security or emergency requirements where no other source is available.