None of these causes provide for automatic suspension or  debarment. DOD Components Have Active Processes to Refer Identified Cases of Contractor Misconduct for Appropriate Action

All four DOD components we examined—the Air Force, Army, DLA, and  DON—use multiple sources to identify numerous cases of actual or  alleged contractor misconduct and follow their procedures to refer them  for appropriate action, including possible suspension and debarment. Our analysis of selected cases  confirmed that DOD follows its procedures for identifying and referring  cases involving contractor misconduct or poor performance. Analysis of Contractor Misconduct Cases Shows That DOD Follows Its Identification and Referral Processes

DOD follows its procedures for identifying and referring cases involving  contractor misconduct or poor performance, based on our analysis of
A random sample of 75 contractors suspended, proposed for  debarment, or debarred during fiscal years 2009 through 2011;
The 48 contractors identified in the 2011 DOD contracting fraud report  as having received contract funding after criminal convictions,  settlement agreements, or civil judgments; and
A random sample of 62 contractors that had three or more contracts  terminated for default. We found that  DOD generally had reviewed these contractors for possible suspension  and debarment or other action. DOD Follows the FAR in Taking Suspension and Debarment Actions, but Is Not Notifying GSA about Compelling Reason Determinations

Once a case of contractor misconduct is referred to the SDO, DOD  components follow the FAR in taking action. SDOs make decisions on a  case-by-case basis, in accordance with the discretion provided by the  FAR. As such, suspension and debarment periods vary based on the  circumstances of the case, as do the reasons for removing contractors  from the EPLS. We found that required notices were in all 75 case files. This  demonstrated that DOD components had provided the contractors with  information on the suspension and debarment process and the  appropriate FAR citation to the cause for which they were being  suspended or debarred. The FAR also provides that a debarment period should be commensurate  with the seriousness of the cause and generally should not exceed 3  years, but provides the SDO with discretion to extend that period if it is  necessary to protect the government’s interest. Of these, 211 (almost 50  percent) were for a period of more than 3 years. Such agreements were used in a total of 30 cases during  fiscal years 2009 through 2011. DOD Has Not Complied with Requirement to Submit Compelling Reason Determinations to GSA

Contractors that are suspended, proposed for debarment, or debarred are  excluded from receiving new contracts, and agencies may not solicit  offers from, award contracts to, or consent to subcontracts with these  contractors, unless the agency designee determines on a contract-by- contract basis that there is a compelling reason for such action. DOD components made 14 compelling reason  determinations during fiscal years 2009 through 2011. DOD officials stated that  they were uncertain why these determinations had not been forwarded to  GSA. Recommendation for Executive Action

We recommend that the Secretary of Defense direct the Under Secretary  of Defense for Acquisition, Technology, and Logistics to ensure that each  DOD component is aware of and complies with the requirement to notify  the GSA of determinations that a compelling reason exists to do business  with a suspended or debarred contractor. Appendix I: Scope and Methodology

To determine the extent the Department of Defense (DOD) has  processes for identifying and referring cases of possible suspension and  debarment and how DOD components make suspension and debarment  decisions, we reviewed the Federal Acquisition Regulation (FAR), as well  as regulations, procedures, processes, and policies as they pertain to  suspension and debarment for the Department of the Navy (DON)  (including the U.S. Marine Corps), Departments of the Air Force, and  Army, and the Defense Logistics Agency (DLA). We identified the total universe of suspension, proposed  debarment, and debarment actions for fiscal years 2009 through 2011 by  the four DOD components by downloading the EPLS data from EPLS  public website. 2. 3.
Why GAO Did This Study

DOD spends more than any other federal agency on contracts for goods and services and must be able to protect itself from irresponsible contractors. Once a case of misconductsuch as fraudis identified, DOD can use suspensions and debarments to prevent irresponsible contractors from receiving new contracts. As requested, GAO determined (1) the extent to which DOD has processes for identifying and referring cases of contractor misconduct for possible suspension or debarment, and (2) how DOD makes suspension and debarment decisions once cases have been referred for potential action. GAOs review focused on four DOD componentsthe Departments of the Air Force, Army, Navy (including the U.S. Marine Corps), and Defense Logistics Agencywhich together took a total of 3,443 suspension and debarment actions during fiscal years 2009 through 2011, accounting for nearly 100 percent of all such actions in DOD. GAO reviewed DOD and component regulations, procedures, and policies; reviewed case files; analyzed information from federal databases; and interviewed DOD and component officials.

What GAO Found

The four Department of Defense (DOD) components GAO examined have active processes for referring identified cases of contractor misconduct for appropriate action, including suspension or debarment. The components identify numerous cases of actual or alleged contractor misconduct each year from various internal and external sources. The figure below shows the process for identifying and referring cases to the suspension and debarment official for consideration.
DOD received hundreds of leads on contractor misconduct from sources such as lawsuits against contractors or contractor disclosures in fiscal years 2009 through 2011, although it is not possible to know the full extent of potential leads. Some cases are referred to suspension and debarment officials for their consideration or to other agencies for further action. GAOs analysis of selected cases shows that DOD follows its procedures for identifying and referring cases involving contractor misconduct or poor performance for possible suspension and debarment.
Once a case is referred, DOD generally makes suspension and debarment decisions in accordance with the discretion provided by the Federal Acquisition Regulation (FAR). GAO found in reviewing 75 case files that DOD generally maintained adequate records, informed the contractor of the cause and rationale for its decisions, and provided notice of the action to the contractor as required by the FAR. Given the discretion provided by the FAR, suspension and debarment periods vary based on the circumstances of the case, as do the reasons for removing contractors from the suspension and debarment list. For example, the FAR provides that the period of debarment generally should not exceed 3 years, but notes that the debarment period must be for a period commensurate with the seriousness of the cause. GAO found that nearly half the contractors DOD debarred during fiscal years 2009 through 2011 had debarment periods that exceeded 3 years.
The FAR prohibits all agencies from doing business with suspended or debarred contractors unless there is a compelling reason for doing so. The four DOD components made 14 compelling reason determinations during fiscal years 2009 through 2011. In none of these cases, however, did the components provide notice of their compelling reason determinations to the General Services Administration (GSA), as required by statute and regulation, until GAO raised this as an issue. Component officials said they were uncertain why these determinations which can promote transparency to the public were not forwarded to GSA.

What GAO Recommends

GAO recommends that DOD ensure that DOD components are aware of and comply with the requirement to notify GSA when awarding contracts to suspended or debarred contractors based on compelling reason determinations. DOD concurred with this recommendation.