contractor who is proposed for debarment is effectively debarred as soon as the notice letter is received. It is like being sentenced before trial and it can take weeks, or months, for the contractor to convince the debarring official that the proposed debarment should be lifted. A new rule, effective January 17, 2025, amends the Federal Acquisition Regulation (FAR) to improve consistency between procurement and non-procurement procedures regarding suspension and debarment, but did not remove the exclusionary effect of a proposed debarment. The final rule, a collaboration between the Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA), is purportedly intended to make the process more transparent and fair.
The rule addresses several key areas. First, it clarifies how mitigating and aggravating factors apply to individuals, not just organizations, when considering debarment. This change enhances transparency by specifying how these factors are considered in cases involving individuals as opposed to organizations. There was a significant point of discussion about the immediate exclusionary effect of a notice of proposed debarment. Although some argued for alignment with non-procurement procedures, where exclusion is not immediate unless there is a specific risk, the rule nevertheless retains this immediate effect for procurement contracts. However, the final rule does formally recognize the use of pre-notice letters as an alternative to an immediate exclusion, giving the suspending and debarring official (SDO) flexibility by allowing the contractor to respond before being proposed for debarment.
The rule also updates notification methods. Instead of relying solely on certified mail, agencies can now send notices via U.S. mail with delivery notification or by email to the contractor’s System for Award Management (SAM) registration email. This provides more flexibility and aligns the FAR with the Non-procurement Common Rule. Notices must be sent directly to the contractor, their legal counsel, or their agent, ensuring due process.
While suggestions were made to increase transparency of the administrative record, such as sharing it with the contractor at the start of the process or within five days of a request, these were not adopted. The rule does clarify that the official record closes when the contractor’s time to submit information expires. Key definitions and terms have also been updated for consistency. The term “sanctions” is replaced with “remedies.” “Suspending and debarring official” is defined as an agency head or a designee authorized to impose suspension or debarment. A “voluntary exclusion” is defined as a contractor’s agreement to be excluded for a period of time under a settlement. The rule also clarifies that debarment applies to all divisions of a contractor, unless limited by the debarment decision.
The rule emphasizes that a cause for debarment or suspension doesn’t automatically lead to such actions; the SDO must consider the seriousness of the contractor’s actions, mitigating and aggravating factors, and remedial measures. The contractor has the burden to demonstrate present responsibility to avoid debarment. Decisions are generally required within 45 days after the official administrative record is closed.
In summary, while the immediate exclusionary effect of proposed debarment remains, the new rule brings important changes to notification methods, definitional clarity, and an opportunity to head off a debarment by responding to a pre-notice letter. It is important to take a threatened suspension or debarment seriously and to provide mitigating information to the Government as soon as possible. Contractors who can demonstrate an ethical culture have a much better chance of avoiding problems. An up-to-date Code of Business Ethics and Conduct, coupled with ethics training, is highly recommended.
