Suspension, debarment could turn more punitive under proposal

The FAR says that suspension and debarment are to be used only to protect the government, but the Labor Department is considering using them to penalize companies for disregarding Labor rules.

A proposed acquisition rule could potentially change the way suspension and debarment is used and compromise the intended use of the process, according to an industry group.

Under the proposed Federal Acquisition Regulation rule, Labor Department officials would be able to suspend or debar a company for failing to comply with rules to keep service workers in their jobs when a contract changes hands between companies. It's based on President Barack Obama’s executive order on non-displacement of qualified workers under service contracts. The Labor Department passed rules in 2011 regarding the same order. Incoming contractors have rules to follow for offering jobs to remaining employees who might otherwise lose their jobs as a result of the transition. Regulators are looking to amend the FAR now.

However, there's a problem. Under the FAR, suspension or debarment are intended only to protect the government, not to punish companies. The new rule implies that that the measures could be taken to penalize a company for not following rules that pertain only to private-sector labor.

Current Labor Department rules allow officials to suspend and debar a company for failing to comply with their regulations. On the other hand, the FAR describes suspensions and debarments as remedies, not punishments, the Professional Services Council told regulators July 2. "These remedies are not intended to be available for punishing every failure to comply with laws, regulations, and contract provisions," wrote Alan Chvotkin, PSC's executive vice president and counsel.

According to the FAR, “Agencies shall impose debarment or suspension to protect the government’s interests.”

The council recommended that, in the proposed rule, officials allow for suspensions and debarments when it’s the only option to guard the government’s interests. Officials need boundaries as to when they can suspend and debar. To do so, regulators should incorporate parts of Labor's current rules that deal with suspensions and debarments. Specifically, the council said the new FAR rule should include the limits on the suspending and debarring authorities given to officials. Officials should be able to suspend and debar only when a contractor fails to comply with the any order of the secretary or willfully commits violations of the non-displacement rule.

“These limits will ensure that the government’s interests in contracting with responsible companies are protected, while ensuring that these severe remedies are employed consistently with” the FAR’s standards for suspension and debarment, Chvotkin wrote.

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