Overview
FAR Subpart 9.4 establishes the policies and procedures for debarring or suspending contractors to ensure the Government only conducts business with responsible entities. These actions are discretionary administrative tools used to protect the public interest rather than to punish contractors, ensuring that the executive branch maintains a supply chain free from fraud, criminal activity, and serious performance failures.
Key Rules
- Governmentwide Effect: A debarment or suspension by one agency is generally effective across all executive branch agencies, creating a unified exclusion list.
- System for Award Management (SAM): All excluded parties must be listed in the SAM exclusion database. Agencies are required to enter new exclusion data within three working days and update records within five working days of a change.
- Non-Punitive Nature: Debarment and suspension must be imposed only for the Government’s protection and not for purposes of punishment.
- Compelling Reason Exception: Agencies may only solicit from, award to, or consent to subcontracts with excluded contractors if the agency head (or designee) determines in writing that there is a compelling reason to do so.
- Causes for Debarment: These include criminal convictions or civil judgments for fraud, antitrust violations, embezzlement, theft, forgery, tax evasion ($10,000+), or serious contract performance failures.
- Mitigating Factors: Before debarring, the Suspending and Debarring Official (SDO) must consider remedial measures such as internal controls, self-reporting, cooperation with the government, and restitution.
Responsibilities
- Suspending and Debarring Official (SDO): Responsible for making the discretionary determination of whether a contractor is "presently responsible" and whether exclusion is necessary to protect the Government.
- Contracting Officers (CO):
- Must review SAM exclusion records after the opening of bids/receipt of proposals.
- Must review SAM exclusion records again immediately prior to award.
- Must reject bids/proposals from excluded contractors unless a compelling reason exists.
- Must not exercise options or add new work to existing contracts with excluded parties without agency head approval.
- Agency Heads: Responsible for providing written "compelling reason" determinations for exceptions and directing whether existing contracts should be terminated upon a contractor's debarment.
- General Services Administration (GSA): Operates and maintains the SAM database and provides technical assistance to agencies.
- Prime Contractors: Prohibited from entering into subcontracts exceeding $45,000 (excluding COTS items) with debarred/suspended entities unless there is a compelling reason; they must notify the CO in writing if they choose to do so.
Practical Implications
- Due Diligence is Continuous: For Contracting Officers, checking SAM is not a "one and done" task; the requirement to check immediately before award is a critical safeguard against last-minute filings.
- Compliance Programs Save Companies: The detailed list of mitigating factors in 9.406-1 means that a contractor with a robust internal ethics and compliance program may avoid debarment even if an employee commits a crime, provided the company self-reports and cooperates.
- Freezing Contract Growth: While an exclusion does not automatically terminate existing contracts, it effectively "freezes" them. Contractors on the list cannot have options exercised, receive new orders under IDIQ contracts (beyond the minimum), or receive extensions, which can lead to the slow death of a project or business.
- Subcontractor Risk Management: Prime contractors must implement their own internal "mini-9.4" procedures to vet subcontractors. Failing to check a subcontractor's status in SAM before awarding a $45,000+ subcontract can lead to the prime being reviewed during a Contractor Purchasing System Review (CPSR).