Suspension and Debarment of Federal Contractors and Grantees

December 1, 2011 § Leave a comment

As a follow on to the April 2011 Government Accountability Office (GAO) report “Improper Payments: Recent Efforts to Address Improper Payments and Remaining Challenges,” the Office of Management and Budget (OMB) issued Memorandum M-12-02: Suspension and Debarment of Federal Contractors and Grantees as a means to address outstanding issues with agency suspension and debarment programs.

According to the memo, the government provides over $1 trillion a year to contractors and grantees that the government has a fiduciary responsibility to protect. As part of this responsibility, the government implemented suspension and debarment as a way to protect taxpayer resources and ensure the integrity of federal processes for acquisitions and discretionary assistance, loan, and benefit programs. Suspension and debarment aims to keep taxpayer dollars away from recipients who lack business integrity due to past conduct.

Although sound policies and procedures exist for suspension and debarment, the April GAO report found half of the agencies it reviewed did not possess the characteristics of a robust suspension and debarment program such as dedicated staff, internal guidance, and processes for referring cases to officials for action. To address these deficiencies and avoid putting taxpayer resources at risk of waste, fraud, and abuse, the OMB memo directs federal departments and agencies that are subject to the Chief Financial Officers (CFO) Act to do the following:

  • Appoint a senior accountable official responsible for assessing the agency’s  suspension and debarment program; ensuring the agency maintains effective internal controls and tracking capabilities; and ensuring the agency regularly participates in the Interagency Suspension and Debarment Committee (ISDC)
  • Review internal policies, procedures, and guidance to ensure that the agency is protecting the government’s interests and taxpayer funds by effectively using suspension and debarment, when appropriate as well as other available remedies
  • Ensure the agency’s award official(s) review relevant databases and other information sources prior to the award of any federal grants, contracts, or benefits to prevent awards from being made to entities that are suspended or debarred or are otherwise non-responsible
  • Take corrective action when the agency determines that it improperly made an award to a suspended or debarred entity

The memo also charges the ISDC with developing training and sharing best practices, assisting in agency coordination of suspension and debarment actions, and reporting on agency activities. With greater participation in the ISDC from CFO Act agencies, the ISDC will better serve as a support structure for helping agencies build and maintain suspension and debarment programs.

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