Suspension and Debarments on the Rise

logo_epasealOn March 5, the Interagency Suspension and Debarment Committee (“ISDC”) released a consolidated report to Congress on suspension and debarment developments for government fiscal years 2012 and 2013. The report documents an overall rise in the number of suspensions and debarments, from 4,639 in FY2012 to 4,842 in FY2013. The number of case referrals to an agency’s Suspension and Debarment Officer also increased from 3,700 in FY12 to 3,942 in FY13; and the number of agencies’ decisions not to pursue action decreased from 200 to 154. The report focused particularly on the activities of defense agencies.

Among the trends identified in the report suggest that some agencies may be using suspension and debarment as a punitive measure.  For example, according to the report, the Navy is now pursuing fact-based, nondiscretionary debarments of contractors who are terminated for default or who mischarge costs against Navy contracts. Similarly, the Defense Logistics Agency is resorting increasingly to suspension and debarment, rather than traditional contractual remedies, as a penalty for nonconforming parts.

The ISDC report concludes that the reported numbers represent a “significantly increased number of suspension and debarment actions” since it first began collecting this data in FY2009. The trends contained in this report indicate that suspensions and debarments may continue to increase, as agencies rely more upon suspension and debarment as alternatives to basic contractual remedies. The report also shows that at least some agencies are incorporating additional transparency measures and due process safeguards into suspension and debarment proceedings – developments that should afford contractors more opportunity to present their cases against suspension or debarment.  Given the trends identified in the report, it is more important now than ever for contractors be aware of the possibility of suspension and debarment.