Each year, the Interagency Suspension and Debarment Committee (ISDC) reports to Congress on the status of the Federal suspension and debarment system.  With its mission of assisting agencies to build and maintain efficient and effective suspension and debarment activities, the ISDC is uniquely situated to provide comments and insight on the status of suspension and debarment practices generally. 

In its Fiscal Year 2015 report, the ISDC commented on an interesting trend in agency suspension and debarment proceedings.  Fiscal years 2010 through 2014 saw a steady trend of increased suspension and debarment activity—with actual suspensions and debarments increasing from 1,585 in FY 2010 to 2,938 in FY 2014.  The ISDC observed that “Data for FY 2015 . . . shows a plateauing of the number of suspension and debarment actions,” with suspensions and debarments remaining relatively static at 2,791.

The ISDC report describes two possible reasons for the slowdown in growth of suspension and debarment activity.  First, the report expressly suggests that the plateau “may, at least in part, be indicative of programs becoming established throughout the Executive Branch and transitioning from start up into effective programs.”  This is almost certainly correct.  In 2011, the Government Accountability Office (GAO) made recommendations on how six agencies with few or no procurement-related suspension and debarment activities could improve their programs.  In a May 2014 follow-up report, the GAO described how these agencies—which included the Departments of Commerce, Health and Human Services, Justice, State, Treasury, and the Federal Emergency Management Agency—had collectively increased their total number of suspension and debarment actions from 19 (in 2009) to 271 (in 2013) by addressing staffing shortages, establishing formal policies, and actively encouraging referrals.  Thus, it follows that the establishment and maturation of suspension and debarment programs which did not previously exist would generate a plateau of activity following an initial period of substantial growth.

A second possible cause of plateauing suspension and debarment activity is increased agency use of alternatives to suspension and debarment.  The ISDC emphasized its continued work to highlight “the full spectrum of tools available to an agency’s suspension and debarment program, ranging from pre-notice engagement, use of administrative agreements, and impositions of exclusions.”  These efforts appear to have generated results, as “agencies reported a nearly 30 percent increase from FY 2014 to FY 2015 in the use of show cause or other pre-notice investigative letters,” as well as a 25 percent increase in the use of administrative agreements over the same period.

While the flattening trend of suspension and debarment activity is illuminating by itself, the corresponding increase in agency use of suspension and debarment alternatives highlights avenues by which some contractors might be able to engage government agencies to avoid complete exclusion from government contract markets.  According to the ISDC, there were “over 50 instances during the reporting period where federal contractors or recipients proactively reached out to agency suspension and debarment offices to discuss potential issues, rather than waiting for the agency to take action.”  As the ISDC report suggests agencies are more open to utilizing suspension and debarment alternatives, contractors might consider proactive agency engagement as a strategy for addressing potential suspension and debarment issues.

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Photo of Sandy Hoe Sandy Hoe

Sandy Hoe has practiced government contracts law for more than 40 years.  His expertise includes issues of contract formation, negotiation of subcontracts, bid protests, the structuring of complex private financing of government contracts, preparation of complex claims, and the resolution of post-award contract…

Sandy Hoe has practiced government contracts law for more than 40 years.  His expertise includes issues of contract formation, negotiation of subcontracts, bid protests, the structuring of complex private financing of government contracts, preparation of complex claims, and the resolution of post-award contract disputes through litigation or alternative dispute resolution.  His clients include major companies in the defense, telecommunications, information technology, financial, construction, and health care industries.

Photo of Peter B. Hutt II Peter B. Hutt II

Peter Hutt represents government contractors in a range of complex investigation, litigation, and compliance matters, including False Claims Act and fraud investigations and litigation, compliance with accounting, cost, and pricing requirements, and contract claims and disputes.

Peter has litigated more than 25 qui…

Peter Hutt represents government contractors in a range of complex investigation, litigation, and compliance matters, including False Claims Act and fraud investigations and litigation, compliance with accounting, cost, and pricing requirements, and contract claims and disputes.

Peter has litigated more than 25 qui tam matters brought under the False Claims Act, including matters alleging cost mischarging, CAS violations, quality assurance deficiencies, substandard products, defective pricing, Iraqi procurement fraud, health care fraud, and inadequate subcontractor oversight. He has testified before Congress concerning proposed amendments to the False Claims Act.

Peter has also conducted numerous internal investigations and frequently advises clients on whether to make disclosures of potential wrongdoing.

Peter also represents clients in a wide range of accounting, cost, and pricing matters, as well as other contract and grant matters. He is experienced in addressing issues concerning pensions and post-retirement benefits, contract formation, TINA and defective pricing, claims and terminations, contract financing, price reduction clauses, subcontracting and supply chain compliance, specialty metals compliance, and small business and DBE compliance. He has litigated significant cost, accounting, and contract breach matters in the Court of Federal Claims and the Armed Services Board of Contract Appeals.

Peter is recognized for his work both in government contracts and in False Claims Act disputes by Chambers USA, which notes that he is “whip-sharp, wicked smart and will advocate to the hilt for his clients.” Chambers also notes that “Peter brings a lot of thoughtfulness and creativity to cases. He is extremely clear in his communications and very responsive.”