Suspension and Debarment How does it work?

1. Randy Sawyer, ICE SDO Suspension and Debarment How does it work?

2. CONTEXT • Communication • 4 Remedies • What, Why, Who, When, Where

3. Authority and Types Authority • Inherent - Necessarily incidental to effective administration of the statutory scheme • Express - Derives from statute or Executive Order Type • Administrative – discretionary • Statutory – “thou shall be debarred”

4. A Privilege Not a Right Perkins v. Lukens Steel Co., 310 U.S. 115 • Contracting with the Government is a privilege not a right. The Government enjoys unrestricted power to determine with whom it wishes to conduct business.

5. PURPOSE Not punishment! The Government must protect the public interest by conducting business or conferring benefits only with presently responsible parties.

6. Basic Authorities • Federal Acquisition Regulation (FAR or 48 C.F.R. § 9) • Nonprocurement Common Rule (2 C.F.R. § 180) • There are some differences, but both provide similar protection to the government. The rules are reciprocal.

7. Definition of Contractor(FAR 9.403) • “Contractor” means any individual or other legal entity that— • (1) Directly or indirectly (e.g., through an affiliate), submits offers for or is awarded, or reasonably may be expected to submit offers for or be awarded, a Government contract, including a contract for carriage under Government or commercial bills of lading, or a subcontract under a Government contract; or • (2) Conducts business, or reasonably may be expected to conduct business, with the Government as an agent or representative of another contractor.

8. Definition of Participant(2 C.F.R. § 180.980) • “Participant” means any person who submits a proposal for or who enters into a covered transaction, including an agent or representative of a participant.

9. What is Suspension and Debarment? • Suspension • An action taken to address an immediate need to mitigate risk to the Government • Standard of Proof = Adequate evidence + immediate need • Debarment • An action taken for a specified amount of time to address issues of present responsibility • Standard of Proof = Preponderance of evidence

10. Suspension: FAR 9.407 & 2 C.F.R. § 180.700 Suspension is a serious action, imposed based on “adequate evidence” and when immediate action is necessary to protect the Government’s interest. Is for a temporary period pending the completion of the investigation and any ensuing legal proceedings.

11. Debarment: FAR 9.406 & 2 C.F.R. § 180.800 May be imposed only upon a debarring official’s finding that: 1. a cause for debarment exists; and, 2. debarment is in the government’s interest. A cause for debarment may be established either upon 1. a criminal conviction or civil judgment; or, 2. a “preponderance of the evidence.” The burden is on the contractor to present evidence of present responsibility.

12. Suspension & Debarment Causes Suspend: FAR 9.407-2 & 2 C.F.R. 180.700 Debar: FAR 9.406-2 & 2 C.F.R. 180.800 • Criminal and Civil Violations • Violations Relating to Public Contracts and Transactions(fraud; anti-trust; theft; bribery; false statements; etc.) • Violations of Certain Statutes (Made in America; Drug Free Workplace; CWA, CAA, etc.) • Other Offenses Indicating a Lack of Business Honesty

13. Suspension & Debarment Causes (cont.) • Performance of Public Contracts and Transactions (willful failure to perform; history of failure to perform) • Certain Labor and Trade Violations (FAR 9.403) • Additional Causes Under 2 C.F.R § 180.700 and .800 • Failure to pay a single substantial debt • Violation of a material provision of any settlement of a debarment or suspension action • Other Serious or Compelling Causes

14. Period of SuspensionFAR 9.407-4 and 2 C.F.R. § 180.760 For a temporary period. Initially no more than 12 months. If legal proceedings are not initiated within 12 months after the suspension notice, it may be extended an additional 6 months if an Assistant Attorney General requests. Suspension may not exceed 18 months unless legal proceedings have been initiated within that period.

15. Period of Debarment The period of debarment is commensurate with the seriousness of the cause. FAR 9.406-4 and 2 C.F.R. §180.865 both state the period is generally not more than 3 years. However, some violations have statutorily imposed longer or shorter periods. Mitigating circumstances and remedial measures may be considered. The period of suspension must be considered.

16. Adequate Evidence • FAR 9.403 & 2 C.F.R. § 180.700 • Information sufficient to support reasonable belief that a particular act or omission has occurred. Sufficient: • Indictment, search warrant, IG report, IG audit Not sufficient: • News article, civil settlement w/o admission guilt

17. Immediate Need • Not defined in the FAR or the NCR • No specific finding necessary, may be inferred from facts and circumstances and obvious from the record • Decision to suspend is prudent given the risk potential under the circumstances

18. Scope of Suspension & Debarment Fraudulent, criminal, or other seriously improper conduct may be imputed: • from individual to contractor; • from contractor to individual; or • from a contractor in a joint venture or similar arrangement to other participating contractors.

19. Imputed Conduct and Debarment • Knowledge • Not defined but authorized under FAR 9.406-5 and 2 C.F.R. § 180.630 • Hold another entity responsible for acts of offending entity such that both entities are deemed culpable or blameworthy of the offending act • Reason to know. Not - should have known.

20. Affiliates • Control • Relationship between one entity and another that extends government business risk beyond the offending party itself • FAR 9.403 & 2 C.F.R. § 180.905 • Nothing to do with culpability or blameworthiness • Solely about subject to control of another person who is culpable

21. De-Facto Debarment Withholding a Government contract or assistance award from an otherwise eligible entity based on its lack of business integrity without resorting to the debarment process; or, Repeatedly using the CO “responsibility determination” to deny awards in place of an official debarment decision.

22. Referrals normally include: • Signed referral for suspension or debarment • Copies of investigative reports • Summary of pertinent evidence and status of legal proceedings • Docket number and court • Referrals can be conviction-based or fact-based

23. Referrals (con’t) • Status of Respondent company (new owner) • Status of Respondent individual (in custody, employed) • Respondent information (name, DOB, address, SSN, DUNS) • Link analysis, if performed • Did Respondent Cooperate? • Any other appropriate exhibits or documents

24. Initial Steps by SD • Basic research/analysis • Establish Nexus • Actionable misconduct on grants and awards with a lower standard for suspensions • Prepare Administrative file/SD file • Include affiliates/impute? Which rule to use? • Interagency Suspension and Debarment Committee (ISDC) Lead Agency email • Database tracking

25. Administrative Options • “Request For Information” or “Show Cause” letter • Suspension (adequate) • Propose for Debarment (preponderance) • No Action/Transfer to another Agency • Find Responsible/Voluntary Exclusion • Debar • Administrative Compliance Agreement

26. Research Websites • Central Contractor Registration (CCR); https://www.sam.gov/portal/SAM/#1 • Dun & Bradstreet (D&B); http://www.dnb.com/us/ • System for Award Management (SAM); https://sam.gov/portal/SAM/#1 • Agency contract writing program can be checked to see if your agency has any current contracts • Federal Procurement Data System (FPDSNG); http://www.fpdsng.com • Electronic Data Gathering, Analysis, and Retrieval System (EDGAR); http://www.sec.gov/edgar.shtml • Business Identification Number Cross Reference System (BINCS); http://www.bpn.gov/bincs/ • USAspending.gov; http://www.usaspending.gov • State Websites, Ex. http://sos.iowa.gov/ • Public Access to Court Electronic Records (PACER); https://pacer.login.uscourts.gov/cgi-bin/login.pl

27. Process • Write Action Referral Memoranda (ARM) and Notice Letter for legal review and SDO signature/concurrence. Discuss aggravating and mitigating circumstances. Determine debarment period. • SAM entry (FAR based) and send USPS Certified. • No response is default debarment. Write Decision Letter and reference initial ARM. Response requires addressing all points raised. Assertions vs. proof. • With reply: Debar; Administrative Compliance Agreement; Voluntary Exclusion; Find Responsible.

28. Remedial Measures/Mitigating Circumstances FAR subpart 9.406-1 & 2 C.F.R § 180.860 • Effective internal controls and standards • Brought activity to GOV attention – timely manner • Fully investigated – shared investigation results • Fully cooperated during investigation

29. Remedial Measures/Mitigating Circumstances (con’t) FAR subpart 9.406-1 & 2 C.F.R § 180.860 • Paid criminal, civil and admin fines – prison/probation • Appropriate disciplinary action • Remedial measures & internal control procedures • Adequate time to reflect • Recognize and understand seriousness of misconduct

30. Aggravating Circumstances • Actual or potential harm or impact? • Frequency of incidents/duration? • Pattern of wrongdoing? • Excluded/convicted before for same/similar activity? • To what extent Respondent involved? • Accepted Responsibility? • Individual’s position in company? • Action pervasive within company?

31. Best Practices • Actionable Referrals • Proper Guidance • Clear Communication

32. Questions?