Suspension and Debarment OOPS 2013


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OOPS2013

1 © Crowell & Moring LLP 2013

Suspension & Debarment Mitigating the Increased Risk
Angela Styles Peter Eyre
Richard Arnholt James Peyster

OOPS2013

© Crowell & Moring LLP 2013

Introduction
• Latest Statistics and Legislative Developments • Blossoming Causes • Best Practices • Mandatory Disclosure

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182 © Crowell & Moring LLP 2013

Continued Increase in S/D Activity

Air Force Suspensions Proposed Debarments Debarments
Army Suspensions Proposed Debarments Debarments
Navy Suspensions Proposed Debarments Debarments
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FY 2010

FY 2011

83

148

159

139

111

80

133

112

170

235

125

179

25

24

78

80

38

92

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FY 2012
83 401 266
195 284 186
47 152 146

Continued Increase in S/D Activity

• More show cause letters
• More referrals
– Focus on coordination of remedies, automatic/mandatory referrals, and parallel proceedings
• More actions focused on individuals
• More active civilian agency S/D programs
– DHS, Education, Transportation, VA

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Legislative Developments
• Recent mandatory exclusions:
– VA debarment for firms that misrepresent status for purpose of VA’s Veterans First Contracting program
– Generally prohibit use of funds to enter contracts or other agreements with corporations that have unpaid federal tax liability, or that have been convicted of a felony under federal law within the preceding 24 months, unless the agency has determined that such action is not “necessary to protect the interests of the Government”
• Renewed focus on enforcement of existing mandatory exclusions?

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185 © Crowell & Moring LLP 2013

Legislative Developments
• SUSPEND Act
– On February 7, 2013, House Oversight Committee released discussion draft of legislation that would consolidate more than forty civilian agency suspension and debarment offices
– Would create centralized "Board of Civilian Suspension and Debarment" in GSA on October 1, 2014
– Focus on expedited processes and public availability of proceedings

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The Expanding and Diversifying World of Suspension and Debarment
• One size does not fit all; little coordination between agencies leads to differing goals and philosophies
• Different agencies employing significantly different approaches to S/D process
– Amount of focus on individuals vs. companies
– Frequency of use of show cause letters vs. direct notices of proposed S/D
– Different views on acceptable remedial measures

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S/D Officials Moving into New Areas of Law

• S/D Process no longer reserved for criminal convictions, FCA violations, and clear cases of fraud
• SDOs becoming bolder about expanding the interpretation of § 9.406-2(a)(5):
– “(5) Commission of any other offense indicating a lack of business integrity or business honesty that seriously and directly affects the present responsibility of a Government contractor or subcontractor.”
• This is where it starts to get scary…

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Other Areas of Expansion
• Individuals being suspended for “having reason to know” that other employees were engaging in improper conduct, but not reporting that conduct
• SDOs have stated intent to use S/D process in response to “dodgy litigation tactics” in contract disputes with the Government
• SDOs looking reviewing contractors when contracts get terminated for default due to poor performance

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Suspension and Debarment OOPS 2013