National Association of Government Contractors

Trend of Fewer Contractor Debarments Continue

The number of contractors excluded from government work decreased for the third year in a row, with experts citing increased federal experience in targeting bad players.
In fiscal 2017, federal agencies issued 3,640 suspensions, debarments, and proposals for debarment -- 14 percent fewer than the 4,249 actions taken in 2016, the report released from the Interagency Suspension and Debarment Committee found. 
The drop from four years ago is even starker. In 2014, agencies suspended contractors, debarred them, and proposed them for debarment a total of 5,179 times -- 42 percent more than in 2017.
The reduction may be a result of a changing federal approach to potentially troublesome companies with officials giving them advanced notice to fix problems and singling out individual executives rather than entire firms for punishment, according to an attorney who specializes in federal contracting.
Agencies suspend, debar or propose to debar federal contractors to stop those companies from doing business with the government for a temporary period. The actions are designed to protect the government from companies “whose conduct indicates either a lack of business honesty or integrity or serious, poor performance,” according to the annual report.
Contractors often view suspensions and debarments as punishments that can be tantamount to death sentences, causing them to potentially lose millions of dollars of business.
One reason for the drop-in exclusions may be a multiyear trend in which the federal government suspended and debarred individual corporate officials and workers, as opposed to contracting companies.
The decrease in contractor exclusions over the last year coincided with a rise in the number of agency “pre-notice” letters, which are used to inform potential exclusion targets that agency suspension and debarment officials are reviewing their cases – and gives them a chance to respond.
Agencies sent 193 letters in 2017, 21 percent more than the 160 sent the year before. By contrast, in 2009, just 90 such letters were sent by agencies.
“Use of these letters helps the agency better assess the risk to Government programs and determine what measures are necessary to protect the Government’s interest without immediately imposing an exclusion action,” according to the report.

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