No Relief for the Non-Responsible Contractor: FAR Council Proposing Better Alignment between FAR and NCR Suspension and Debarment Regimes

On January 9, 2024, the FAR Council issued a proposed rule, seeking to amend the Federal Acquisition Regulation (FAR) in order to enhance consistency and alignment between the suspension and debarment procedures in the FAR and in the Nonprocurement Common Rule (NCR) system (contained in 2 CFR Part 180).  The FAR and NCR are two separate suspension and debarment regulatory regimes, with the former governing procurement matters and the latter governing grants, cooperative agreements, contracts of assistance, and loan guarantees.  While these suspension and debarment regimes are similar, the proposed rule would remove some differences—definitional and procedural—between the FAR and NCR.  

Specifically, the proposed rule would add definitions to the FAR to align it with the NCR, including for the terms “administrative agreement,” “conviction,” “pre-notice letter,” and “voluntary exclusion.”  The proposed rule would also add seven new aggravating and mitigating factors to the FAR, which are equivalent to existing factors in the NCR, for suspension and debarment officials to consider when making contractor present-responsibility determinations.  These factors include whether the contractor has a pattern or prior history of wrongdoing, whether the wrongdoing was pervasive within the contractor's organization, and whether the contractor’s principals tolerated the offense. 

The proposed rule would also allow greater flexibility for communications between the contractor and suspension and debarment officials (SDOs).  For example, contractors would be permitted to present their matters by phone or internet, and officials would be permitted to issue notices of proposed debarment or suspension by mail, fax, email, or certified mail.  In addition, the deadline for an SDO to render a decision based on a contractor’s conviction or civil judgment would be extended from 30 working days to 45 calendar days.  And, finally, the FAR would be revised to provide that SDOs are vested with wide discretion to impose immediate sanctions in certain instances, and that an indictment or other official finding by federal, state, or local bodies that determines factual and/or legal matters would constitute “adequate evidence” for suspension actions.

Importantly, the proposed rule would not impact the FAR’s immediate exclusion of a contractor upon the SDO’s issuance of notice of proposed debarment, which is not the case under the NCR.  According to the FAR Council, this distinction recognizes that contracts are more likely than nonprocurement transactions to require immediate exclusion of the contractor in order to protect the government’s interests and taxpayer dollars.  In this proposed rule, the FAR Council is also preserving both suspension and debarment tools, allowing for SDO discretion in selecting the method that is more appropriate for the particular situation.

The proposed rule would not create any new solicitation provisions or contract clauses, nor would it change the applicability or burden of any existing provisions or clauses included in solicitations or contracts that are valued at or below the simplified acquisition threshold or for commercial products or services.  However, the proposed rule would revise the FAR to require a contractor to respond with specific facts and other information, including identification of all affiliates, which the NCR already requires from respondents. Ultimately, the proposed rule would impose minor changes to the government’s suspension and debarment process, with the aim of reducing differences between the FAR and NCR, and further aligning suspension and debarment procedures government-wide.