Keen observers of federal suspension and debarment practice have noticed a recent change at the Department of Labor (DOL):  After years of inactivity, DOL’s discretionary suspension and debarment program suddenly came to life in 2017 and has been issuing suspensions and debarments at a steady clip ever since. [1]  Now, according to a recent announcement, DOL is poised to turn up its suspension and debarment activity yet another notch.  Starting this month and continuing through April 2020, DOL will be instituting a pilot program aimed at promoting and expediting its suspension and debarment activity, with the stated goal of “reduc[ing] the processing time on discretionary suspension and debarment actions from months to days.” 

Overview

In a press release issued last week, DOL describes the new pilot program as the latest step in its effort to “ensure accountability and protect the federal government” from non-responsible contractors.  A key feature of the program is its emphasis on additional information sharing between DOL’s Office of Inspector General (“OIG”) and Office of the Assistant Secretary for Administration and Management (“OASAM”) in referrals for discretionary suspension and debarment action.  According to its press release, DOL expects that this increased coordination “will allow [suspension and debarment] decisions to be made faster than ever before.”

The pilot program is an extension of DOL’s recent push to enhance its discretionary suspension and debarment efforts, a trend that is clearly illustrated by the numbers.  From FY2010 to FY2016, DOL reported a total of just two suspensions and one debarment.  But in recent years, this number has spiked.  In FY2017 and FY2018, DOL reported 29 discretionary suspensions and 32 discretionary debarments.  And the trend continues.  DOL says that its OIG referred a “record number” of 156 individuals and entities for suspension or debarment in FY2018, and DOL already has issued 32 discretionary suspensions and five discretionary debarments in the first quarter of FY2019 alone.

Analysis & Observations

The practical details of the implementation and effect of DOL’s pilot program will become clearer in the coming months.  But for now, the announcement highlights certain initial considerations that warrant attention from both contractors doing business with DOL and the suspension and debarment community more broadly.

Promoting Efficiency While Preserving Opportunities for Engagement

A key objective of DOL’s pilot program is to reduce the processing time for discretionary suspensions and debarments to mere days.  The goal of increased information sharing and efficiency is an admirable one for all agencies, particularly if it reduces suspension or debarment actions (which are supposed to be based on present responsibility) that are premised upon stale conduct occurring years prior.  However, it is critical that this desire for efficiency does not deprive contractors of a meaningful opportunity to engage with SDOs concerning a present responsibility review.

Undoubtedly, DOL does not intend for its pilot program to have any effect on contractors’ constitutionally guaranteed due process rights, including sufficient notice and opportunity for meaningful comment, as codified in both the FAR (48 C.F.R. Subpart 9.4) and the nonprocurement common rule (2 C.F.R. Part 180).  But it also is important to ensure the quest for efficiency does not prevent the often productive pre-notice engagement between contractors and SDOs.  SDOs across the government are increasingly making use of pre-notice letters (e.g., show cause notices, requests for information, etc.), and many contractors reach out to SDOs as a proactive, cooperative measure even before the initiation of any suspension or debarment proceedings.  The resulting dialogue from this early engagement often can protect the government’s interests without eliminating a supplier or service provider from the pool of eligible contractors.  This process serves an important and useful purpose and hopefully will not be cast aside in the name of efficiency.

Using the Suspension and Debarment Remedy Judiciously

DOL’s recent and dramatic uptick in suspensions and debarments is generally consistent with increased focus on suspension and debarment as a government remedy over the past five or so years.  All taxpayers can appreciate the government’s watchful protection of the public fisc, and suspension and debarment are powerful tools that, when used appropriately, can effectively support this important responsibility.  In the case of DOL, the recent surge in suspension and debarment activity to “record numbers” appears to be the product of a genuine effort to fulfill the agency’s “commitment and duty to be a good steward of taxpayer resources.”

That said, agencies must also recognize that suspension and debarment are extraordinary remedies that must be used judiciously.  Indeed, the most recent annual report of the Interagency Suspension and Debarment Committee (ISDC) cautioned that suspension and debarment should be “used only as a last resort.”  The ISDC’s words serve as a reminder that while suspension and debarment statistics can be a useful metric for assessing the vitality of a given agency’s program, a focus on numbers should not be an end to itself.

 

[1] DOL also is vested with statutory authority to issue mandatory debarments, absent a waiver by the Secretary, for violations of the Davis-Bacon Act, Service Contract Act, and Walsh-Healy Act.  This statutory debarment authority is not the subject of the pilot program.

Tags: debarment, Department of Labor, DOL, due process, Interagency Suspension and Debarment Committee, suspension
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Photo of Frederic Levy Frederic Levy

Fred Levy is senior counsel in the firm’s Government Contracts and White Collar Defense and Investigations Practice Groups. He is a leading suspension and debarment lawyer, focusing his practice on the resolution of complex compliance and ethics issues. He has successfully represented numerous…

Fred Levy is senior counsel in the firm’s Government Contracts and White Collar Defense and Investigations Practice Groups. He is a leading suspension and debarment lawyer, focusing his practice on the resolution of complex compliance and ethics issues. He has successfully represented numerous high-profile corporations and individuals under investigation by the government in civil and criminal matters, including False Claims Act cases, and in suspension and debarment proceedings to ensure their continued eligibility to participate in federal programs. He has also conducted numerous internal investigations on behalf of corporate clients and advises corporations on voluntary or mandatory disclosures to federal agencies. Fred regularly counsels clients on government contract performance issues, claims and terminations, and litigates matters before the boards of contract appeals and in the Federal Circuit.

Related to his work involving program fraud, Fred counsels clients in the area of contractor “responsibility.” He is involved in the development and implementation of contractor ethics and compliance programs that meet the standards of the Federal Acquisition Regulation, Federal Sentencing Guidelines, and Sarbanes-Oxley, and he regularly conducts ethics and compliance training.

Fred is a principal editor of Guide to the Mandatory Disclosure Rule, and of The Practitioner’s Guide to Suspension and Debarment, 4th Edition. He is a vice-chair of the Debarment and Suspension Committee of the ABA Public Contract Law Section, and a former co-chair of that committee and of the Procurement Fraud Committee. He is a graduate of Columbia College and Columbia Law School.

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Photo of Michael Wagner Michael Wagner

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and…

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and enforcement actions.

Mike regularly represents contractors in federal and state compliance and enforcement matters relating to a range of procurement laws and regulations. He has particular experience handling investigations and litigation brought under the civil False Claims Act, and he routinely counsels government contractors on mandatory and voluntary disclosure considerations under the FAR, DFARS, and related regulatory regimes. He also represents contractors in high-stakes suspension and debarment matters at the federal and state levels, and he has served as Co-Chair of the ABA Suspension & Debarment Committee and is principal editor of the American Bar Association’s Practitioner’s Guide to Suspension & Debarment (4th ed.) (2018).

Mike also has extensive experience representing companies pursuing and negotiating grants, cooperative agreements, and Other Transaction Authority agreements (OTAs). In this regard, he has particular familiarity with the semiconductor and clean energy industries, and he has devoted substantial time in recent years to advising clients on strategic considerations for pursuing opportunities under the CHIPS Act, Inflation Reduction Act, and Bipartisan Infrastructure Law.

In his counseling practice, Mike regularly advises government contractors and suppliers on best practices for managing the rapidly-evolving array of cybersecurity and supply chain security rules and requirements. In particular, he helps companies assess and navigate domestic preference and country-of-origin requirements under the Buy American Act (BAA), Trade Agreements Act (TAA), Berry Amendment, and DOD Specialty Metals regulation. He also assists clients in managing product and information security considerations related to overseas manufacture and development of Information and Communication Technologies & Services (ICTS).

Mike serves on Covington’s Hiring Committee and is Co-Chair of the firm’s Summer Associate Program. He is a frequent writer and speaker on issues relating to procurement fraud and contractor responsibility, and he has served as an adjunct professor at the George Washington University Law School.

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