Agencies cracking down on troubled vendors

Tuesday - 9/18/2012, 7:35pm EDT

The pressure by the Obama administration and Congress on agencies to increase the use of suspensions and debarments for contractors is having a significant impact.

The Office of Management and Budget reported today the number of suspensions and debarments increased to 3,326 in fiscal 2011 from 1,900 in 2009.

"While the vast majority of government contractors compete fairly to deliver the best value to the American people, it is critical that the government take a hard line against those who would defraud taxpayers," wrote Joe Jordan, administrator of the Office of Federal Procurement Policy, in a blog posted today. "The report shows the Obama administration has made significant progress in cracking down on bad actors. Just as significant as the progress are the management actions that underlie it, and indicate an increased agency commitment to protecting taxpayer resources."

The Interagency Suspension and Debarment Committee (ISDC) issued its annual report to Congress Sept. 18 showing that agencies suspended 928 companies, proposed 2,512 for debarment and debarred 2,398 vendors in 2011. All of these figures are up from the 2010 report.

"Over the last 20 months, the ISDC has accelerated efforts to make sure agencies are properly positioned to give appropriate consideration to suspension and debarment as tools to fight waste and abuse," wrote David Sims and Duc Nguyen, chairman and vice chairman of the committee, respectively, in the report to Congress. "Special attention has been given to helping agencies that either lack or have weak suspension and debarment programs and leveraging the experiences of agencies with well-established programs."

The Department of Housing and Urban Development suspended the most contractors with 240, while the Office of Personnel Management debarred 765 vendors in 2011.

The report follows a November 2011 memo from OMB encouraging agencies to use suspension and debarment more often and effectively. The Government Accountability Office also found in October 2011 that many agencies were not using these tools to protect themselves from poorly performing contractors.

Sims, who is the Interior Department's program manager for suspension and debarment, told the Federal Drive in June that agencies need to make a "business risk decision" before applying the tools.

Contractor death penalty?

But others say suspension and debarment goes too far in penalizing contractors without due process. Rob Burton, a former OFPP deputy administrator and currently an attorney with the Venable law firm in Washington, has said suspending a contractor is a de facto debarment and there is not enough opportunity for the affected company to have their say before they are given what some call the contractor's death penalty.

Despite industry concerns, agencies are putting more resources toward these efforts.

The committee reported all 24 CFO Act agencies have a senior accountable official in charge of suspension and debarment now and have taken one or more steps such as creating new internal monitoring mechanisms, simplifying processes for making referrals and implementing new policies that require automatic referral to the SDO in certain situations.

Additionally, the ISDC has consulted with at least 13 agencies, including the departments of Commerce, Health and Human Services, and Justice, on how to improve their programs.

"The ISDC is working with suspension and debarment offices to establish a process for agencies to share and consider determinations that suspension and debarment is not necessary to protect the government's interest," the report stated. "Conducting lead agency coordination whenever practicable can help to avoid duplicative and potentially inconsistent actions on the same factual information."

The committee also found more agencies are using "show cause" letters as a way to let companies know they are in trouble. Agencies in total issued 120 letters with the Defense Department issuing the most with 41 and the General Services Administration coming in second with 21.

"Through this increased management attention and building capability where it did not exist before, agencies are now better equipped to protect the public from wrongdoers before critical agency resources are unnecessarily wasted," Jordan wrote.

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