Overview
FAR 9.406 outlines the policies and procedures for the debarment of contractors, a discretionary administrative action taken to protect the government's interest by ensuring it only does business with "presently responsible" entities. It defines the specific causes for debarment, the mitigating factors officials must consider, and the due process requirements afforded to contractors.
Key Rules
- Present Responsibility: Debarment is not a penalty but a tool to protect the government; the Suspending and Debarring Official (SDO) must consider the contractor's "present responsibility," including mitigating factors like internal controls, voluntary disclosure, and cooperation.
- Causes for Debarment: Action may be based on criminal convictions or civil judgments (e.g., fraud, antitrust violations, tax evasion) or a "preponderance of evidence" for serious contract violations, tax delinquency exceeding $10,000, or failure to disclose credible evidence of False Claims Act violations.
- Government-wide Effect: A debarment by one executive agency is generally effective across all executive branch agencies.
- Period of Debarment: The duration is commensurate with the seriousness of the cause, generally not exceeding three years, though specific violations (e.g., Drug-Free Workplace or Arms Control) may carry different durations.
- Imputation of Conduct: Fraudulent or improper conduct by an individual (officer, employee, or director) can be imputed to the contractor, and vice-versa, if the conduct occurred in connection with official duties or with the entity’s knowledge.
- Procedural Due Process: Contractors must receive a formal notice of proposed debarment and have 30 days to submit information and arguments in opposition to the action.
Practical Implications
- Compliance is Preventive: To avoid debarment, contractors must maintain robust internal control systems and ethics training programs, as these are primary mitigating factors used by an SDO to determine present responsibility.
- Self-Reporting is Critical: Timely disclosure of credible evidence of significant overpayments or violations of criminal law/the False Claims Act is a regulatory requirement that can prevent a "knowing failure to disclose" from becoming an independent cause for debarment.