FAR Provides Governmentwide Policies, and Agencies Make Specific Exclusion Decisions

The FAR prescribes general policies governing the circumstances under  which contractors may be excluded from federal contracting, requires  agencies to establish a process for determining exclusions, and allows  agencies the flexibility to supplement the FAR to implement the process. To initiate a debarment, an agency must  have evidence of conviction or civil judgment for certain offenses, a  preponderance of evidence that the party has committed certain offenses,  such as serious failure to perform to the terms of a contract, or any other  cause of so serious or compelling a nature that it affects the contractor’s  present responsibility. Table 2  shows specific actions reported by the six agencies we reviewed during  fiscal year 2004. Agency officials said that reaching administrative  agreements with contractors can serve the government’s interest by  improving contractor responsibility, ensuring compliance through  monitoring the requirements of the agreement, and maintaining  competition among contractors. While administrative agreements provide an alternative to exclusion,  agencies can continue to do business with excluded contractors in limited  circumstances through the use of waivers by making a determination that  there is a compelling reason to award a contract to an excluded party. In fiscal year 2004, the Air Force issued one waiver for sole- source reasons, and the Army issued four waivers based on urgent need. Further,  information on administrative agreements and compelling reason waivers  is not routinely shared among agencies or captured centrally in a database  such as EPLS. For the 6  agencies we reviewed in depth, about 99 percent of records in the EPLS  database as of November 2004 did not have DUNS contractor  identification numbers. To ensure that excluded contractors do not unintentionally receive new  contracts during the period of exclusion, the FAR and NCR require  contracting officers and awarding officials to consult EPLS and identify  any competing contractors that have been suspended or debarred. Because EPLS lacks unique identifiers for most of the cases for the six  agencies we reviewed in depth, contracting officers use the competing  contractor’s name to search the system to determine whether a  prospective contractor has been excluded from doing business with the  federal government. Recommendations

To improve the effectiveness of the suspension and debarment process,  we are making two recommendations that  the Administrator of General Services modify the EPLS database to  require contractor identification numbers for all actions entered into  the system and  the Director of the Office of Management and Budget require agencies  to collect and report data on administrative agreements and compelling  reason determinations to the Interagency Suspension and Debarment  Committee and ensure that these data are available to all suspension  and debarment officials. We selected GSA because of its  central role in federal procurement and in maintaining the Excluded  Parties List System (EPLS). Together, these agencies accounted for about 67 percent  of fiscal year 2003 federal contract spending, as reported in the FPDS. To describe the general guidance on the suspension and debarment  process and how selected agencies have implemented the process, we  examined the Federal Acquisition Regulation (FAR), Nonprocurement  Common Rule (NCR), and the regulations and guidance of the 24 agencies  that have issued supplements to the FAR governing suspension and  debarment procedures.
Why GAO Did This Study

Federal government purchases of contracted goods and services have grown to more than $300 billion annually. To protect the government's interests, the Federal Acquisition Regulation (FAR) provides that agencies can suspend or debar contractors for causes affecting present responsibility--such as serious failure to perform to the terms of a contract. The FAR provides flexibility to agencies in developing a suspension or debarment process. GAO was asked to (1) describe the general guidance on the suspension and debarment process and how selected agencies have implemented the process, and (2) identify any needed improvements in the suspension and debarment process. We examined the FAR and the regulations of 24 agencies that have FAR supplements governing suspension and debarment procedures. We selected 6 defense and civilian agencies representing about 67 percent of fiscal year 2003 federal contract spending for in-depth review.

What GAO Found

The FAR prescribes policies governing the circumstances under which contractors may be suspended or debarred, the standards of evidence that apply to exclusions, and the usual length of these exclusions. To implement these policies, 24 agencies developed FAR supplementation. In fiscal year 2004, the 6 agencies we reviewed in depth suspended a total of 262 parties and debarred a total of 590 parties. Five agencies entered into a total of 38 administrative agreements, which permit contractors that meet certain agency-imposed requirements to remain eligible for new contracts. Agency officials said that such agreements can help improve contractor responsibility, ensure compliance through monitoring, and maintain competition. In certain circumstances, agencies can continue to do business with excluded contractors, such as when there is a compelling need for an excluded contractor's service or product. In fiscal year 2004, two of the agencies we reviewed in depth--the Air Force and the Army--issued compelling reason waivers to continue doing business with excluded parties. To help ensure excluded contractors do not unintentionally receive new contracts during the period of exclusion, the FAR requires contracting officers to consult the Excluded Parties List System (EPLS)--a governmentwide database on exclusions--and identify any competing contractors that have been suspended or debarred. However, the data in EPLS may be insufficient for this purpose. For example, as of November 2004, about 99 percent of records in EPLS for the 6 agencies we reviewed in depth did not have contractor identification numbers--a unique identifier that enables agencies to conclude confidently whether a contractor has been excluded. In the absence of these numbers, agencies use the company's name to search EPLS, which may not identify an excluded contractor if the contractor's name has changed. Further, information on administrative agreements and compelling reason determinations is not routinely shared among agencies. Such information could help agencies in their exclusion decisions and promote greater transparency and accountability.