Buffalo Law Journal Guest Columnist Anne Bowling,
Your client, who receives substantial income from federal contracts or subcontracts and intends to bid on future federal contracts or subcontracts, is staring down the barrel of criminal charges and gets offered a sweetheart plea that lets them off with a fine.
Before accepting that plea, you should warn your client about the possibility of debarment – a process through which a contractor, its officers, owners or affiliates or other members of a joint venture can be barred from contracting with or receiving assistance from a federal executive branch agency for generally a maximum of three years. Your client will want to know what debarment is and whether its guilty plea will likely lead to debarment for your client or related entities.
What is debarment?
It’s a discretionary action intended not to extract punishment but to protect the government from waste, fraud and abuse caused by an entity not “presently responsible” to do business with the government. All executive branch agencies’ procurement-related debarment processes are governed by the Federal Acquisition Regulations (FA”). Any entity debarred by one agency is barred from entering contracts with or receiving grants or other assistance from all other executive branch agencies.
Who may be debarred?
The FAR’s debarment regulations define contractors broadly to include any individual or legal entity that “directly or indirectly … submits offers for or is awarded, or reasonably may be expected to submit offers for or be awarded, a government contract or “[c]onducts business, or reasonably may be expected to conduct business with the government as an agent or representative of another contractor.”
Debarment may be extended to a contractor’s officers, directors, shareholders or other associated individuals who “participated in, knew of, or had reason to know of the contractor’s conduct.” Similarly, the actions of any officer, director, shareholder or associate individual or contractor participating in a joint venture may be imputed to a contractor or other members of the joint venture “when the conduct occurred in connection with the individual’s performance of duties for or on behalf of the contractor,” or with the contractor’s or joint venture member’s “knowledge, approval or acquiescence.”
Debarment may also be extended to a contractor’s affiliates. All individuals or entities proposed for debarment must receive notice and an opportunity to respond.