On March 28, 2015, the Department of State (“State”) issued a proposed rule to update various procedural aspects of the agency’s suspension and debarment actions. The proposed rule appears intended to streamline the suspension and debarment process and reinforce the independence of the agency’s suspension and debarment official (“SDO”). Yet despite these laudable aims, the proposed rule raises substantial questions about the scope and implementation of the contemplated changes.
The proposed rule would amend the debarment-related portion of the Department of State Acquisition Regulation (“DOSAR”), State’s agency-specific procurement regulations. While many of the proposed changes are technical or administrative in nature, two are worthy of particular mention.
A. Replacing Fact-Finding Panel with Individual Fact-Finder
First, under the proposed rule, fact-finding in suspension or debarment cases would be conducted by an individual “fact-finding official,” rather than by the three-person panel required under existing rules. According to State, this change would have the benefit of “simplifying the fact-finding process” but would not impact the nature or amount of process afforded to parties subject to suspension and debarment proceedings.
Standing alone, the proposal to replace a panel with a designated fact-finding official seems reasonable, especially if doing so would increase the efficiency of fact-finding efforts. Yet the proposed rule offers no criteria or standards for the selection of the fact-finding official, instead stating only that the fact-finding official would be “the individual designated by the debarring official to conduct additional proceedings as necessary concerning disputed material facts.” This absence of any guidelines is particularly striking when compared to the existing rule, which specifically provides that the fact-finding panel is to be comprised of “one representative each from the Office of the Legal Adviser, the contracting activity, and the requirements office,” with the representative from the Office of the Legal Adviser serving as the panel chairperson. At bottom, even though State’s decision to concentrate fact-finding authority in the hands of a single individual may be defensible, the absence of any standards or guidelines for the selection of that individual is potentially troubling.
B. Ensuring Independence of SDO Decisionmaking
A second proposed change to the DOSAR is the elimination of certain requirements to consult with State’s Office of the Inspector General (“OIG”) during the course of investigating and referring matters for potential debarment action. State’s existing rules provide that if a matter involving fraud or criminal activity is referred to OIG, then:
The Office of the Inspector General shall investigate the matter, as appropriate, and provide a copy of its investigation report to the Procurement Executive for consideration of debarment action, if and when appropriate. The contracting officer shall provide to the Procurement Executive and the Office of the Inspector General a copy of his or her intended actions in response to the office of the Inspector General report.
In recent years, such close involvement of the OIG in debarment matters has led to concerns about a lack of independence between SDOs and agency officials responsible for acquisition and investigative functions. In the 2013 National Defense Authorization Act (“NDAA”), Congress enacted legislation that specifically provided that the SDOs for certain agencies, including State, “may not report to or be subject to the supervision of [that agency’s] acquisition office or Inspector General.” And several recent court cases challenging suspension and debarments have argued—in some cases with great success—about the inappropriateness of exclusion actions that revealed the involvement of acquisition or investigative officials.
State may have taken note of this trend, as the proposed rule eliminates the requirement to consult with the OIG when investigating and referring matters for possible debarment action. Although the OIG may provide valuable investigative support, this rule change appears intended to ensure the independence of the SDO when making actual exclusion decisions, and is likely to be welcomed by those in the contracting community.
Curiously, however, this change fixes only one-half of the problem, as State continues to designate its Procurement Executive as the agency’s SDO even though the 2013 NDAA specifically forbade the State SDO from reporting or being subject to the agency’s acquisition office. Other agencies subject to this same provision have taken steps to ensure that their SDOs are not also responsible for procurement activities. For example, USAID formerly designated the director of its Office of Acquisition and Assistance to serve as SDO, but after this arrangement was challenged in federal court, the agency moved the SDO to a different office—and terminated a suspension in order “[t]o ensure compliance with the National Defense Authorization Act of 2013.” This recent precedent makes State’s decision to continue to have its Procurement Executive serve as the SDO all the more remarkable.
In sum, although State’s proposed rule appears well-intentioned, it leaves unaddressed important questions about the scope and implementation of its procedural changes. Contractors doing business with the Department of State would be wise to continue to monitor these changes, especially given the increasingly complex regulatory environment and the growing reliance on suspension and debarment actions. Obviously, no contractor plans to find itself in the midst of a responsibility inquiry, but it is crucial to ensure that contractor rights are adequately protected in the event that this does occur.