Overview
FAR 9.407 establishes the policies and procedures for the temporary suspension of contractors from government-wide contracting when there is "adequate evidence" of wrongdoing and immediate action is necessary to protect the Government's interest. It serves as a provisional measure to disqualify a contractor pending the completion of an investigation or legal proceedings.
Key Rules
- Standard of Proof: Suspension is based on "adequate evidence," a lower threshold than the "preponderance of evidence" required for debarment. Notably, an indictment for any of the specified causes automatically constitutes adequate evidence.
- Government-Wide Effect: A suspension by any executive agency is effective throughout the entire executive branch, preventing the contractor from receiving new awards or subcontracts unless an agency head finds compelling reasons to continue the relationship.
- Causes for Action: Specific causes include suspicion of fraud, antitrust violations, embezzlement, delinquent taxes exceeding $10,000, "Made in America" fraud, and any other offense indicating a lack of "present responsibility."
- Duration Limits: Suspension is temporary and generally cannot exceed 12 months unless legal proceedings are initiated. An extension of 6 additional months (totaling 18 months) is permitted only if requested by a prosecutor.
- Due Process: Contractors must be given immediate notice of the suspension and afforded 30 days to submit information and arguments in opposition. In cases not based on an indictment, contractors may be entitled to a hearing to resolve disputes of material fact.
- Scope and Affiliates: Suspension usually covers all divisions and organizational elements of a contractor and can be extended to affiliates if they are specifically named and given notice.
Practical Implications
- Because a suspension takes effect immediately upon the official's decision, it can result in a sudden and total loss of federal revenue, often referred to as the "corporate death penalty" for heavily dependent firms.
- Contractors must prioritize transparency and the immediate presentation of "mitigating factors" (such as removing bad actors or improving internal controls) to the Suspending and Debarring Official (SDO) to demonstrate they are currently responsible despite past irregularities.