Agencies Becoming More Aggressive in Pursuit of Contractor Wrongdoing

By Canni, Todd J.; Levy, Frederic M. | National Defense, May 2013 | Go to article overview

Agencies Becoming More Aggressive in Pursuit of Contractor Wrongdoing


Canni, Todd J., Levy, Frederic M., National Defense


After years of congressional complaints, federal agencies are responding to concerns about how they handle contractor debarments and suspensions. New civilian debarment offices have emerged and are becoming active.

Agencies are becoming more aggressive in their pursuit of cases. In the past, most suspension debarment officials focused on cases supported by some judicial action as an underpinning for a suspension or proposed debarment--Law Section Debarment and Suspension Committee indictments, pleas, convictions, deferred prosecution agreements, civil judgments and settlement agreements. It is now more common to see more "fact-based cases" in which ethics issues fall short of criminal conduct, questionable business practices and contract performance issues. Such cases are based on mere allegations of wrongdoing and may be supported only by investigative interviews, contractor disclosures or contracting officer decisions.

As agencies become more comfortable handling fact-based cases, such actions are coming earlier in the investigative or judicial process.

This development presents significant issues for contractors. Companies now may face suspension or debarment proceedings before they have had the time to ascertain relevant facts, let alone disclose them to the government or remediate the circumstances that allowed the events to occur. This is especially true for cases involving contracts performed overseas or in a war zone, where information flow is slow and compliance may not necessarily be a top priority.

Contractors are at an increased risk of finding themselves or their personnel before agency debarring officials. This is equally true for small and large contractors.

The consequences can be ineligibility for new awards and collateral reputational harm. Such inquiries can be costly to address. Even a seemingly isolated compliance issue involving no more than a handful of people can lead a suspension debarment official to determine that the issue is emblematic of a broader, systemic problem. To resolve the debarment matter, particularly through an administrative agreement, the SDO may require the contractor to assess companywide ethics and compliance programs. These reviews would be conducted by an independent expert, and a company would have to agree in advance to implement the expert's recommendations, and to retain an outside monitor to oversee and verify implementation and compliance. SDOs will insist that such costs be treated as unallowable under government contracts.

With decreased procurement dollars and many programs at risk of extinction, there is increased pressure to capture new business. Employees feel this pressure even if management does not explicitly exert it. These circumstances will inevitably put individuals, even the most ethical, in a position where they are confronted with the decision of whether to cross the legal line or, more likely, with having to decide how far to venture into gray areas of ethical and legal behavior. Contractors should take a close look at their business capture approaches, including the use of non-public information and the recruitment of personnel from the government and competitors.

[ILLUSTRATION OMITTED]

Individuals come into contact with information from their government customers, competitors, consultants and colleagues. Contractors must ensure they have programs, training and internal controls in place to ensure personnel are intimately familiar with the restrictions on using sensitive, non-public information, including company proprietary information, competitor proprietary information, government non-public information, source selection information and bid or proposal information. These programs not only should cover employees, but also consultants.

When provided or confronted with access to such information, employees must understand that they cannot assume it was obtained properly and lawfully, and the organization should install protocols to ensure the origins of sensitive information are identified, recorded and tracked. …

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Agencies Becoming More Aggressive in Pursuit of Contractor Wrongdoing
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