FAR Council Finalizes Revisions to FAR Part 9’s Suspension and Debarment Regulations

We previously covered last year’s proposed rulemaking on this topic and discussed the various ways in which the FAR Council planned to better align the FAR’s suspension and debarment provisions (found in Part 9) with the Nonprocurement Common Rule (NCR) (2 C.F.R. Part 180). Ensuring the FAR more closely tracks the NCR should help increase transparency and reduce confusion for entities holding both federal procurement contracts and financial assistance awards.

The FAR Council has adopted most of the anticipated changes described in the proposed rule. Below, we offer thoughts on some of the particularly noteworthy aspects of the newly updated regulations.

• Immediate exclusionary effect of proposed debarment. Under the FAR, a party is automatically excluded from federal opportunities when it receives a notice of proposed debarment. This is not the case under the nonprocurement regulations, so a party that receives such a notice under the NCR will have an opportunity to respond before being excluded from covered transactions.
  
  • The FAR Council had a chance to update the FAR to better align with the NCR in this respect—and afford contractors greater procedural protections before excluding them from procurements. As expected, commenters pressed hard for this change. But the agencies declined, explaining that they consulted with the Interagency Suspension and Debarment Committee (ISDC) and “continue to think . . . the policy reasons articulated in the [proposed rule] . . . remain valid.” That is, the FAR Council and the ISDC believe that the different purposes and risks associated with procurement v. nonprocurement transactions justify retaining the immediate exclusionary effect of a notice of proposed debarment under the FAR. 
  
  
  • Contractors and practitioners who had hoped the FAR would be revised to align with the NCR will be disappointed by the government’s refusal to implement this change. But, as the final rule points out, they can take some comfort in the fact that the updated regulations “formally recognize” the suspending and debarring official’s (SDO) option to issue a pre-notice letter as an alternative to immediate exclusion. 

• Definitions. The final rule updates FAR Part 9 to add or revise definitions of several key terms. All of these definitions were included in the proposed rule and are unchanged in the final rule. Newly defined terms in the FAR are “administrative agreement,” “conviction” (which was previously only defined in FAR 2.101), “pre-notice letter,” and “voluntary exclusion,” and the new regulations will substantially revise Part 9’s existing definition of “civil judgment.” (See our prior article for a discussion of the proposed—and now final—definitions of each of these terms.) 
  
  • There is one key term the agencies declined to clarify: “present responsibility.” Noting that a commenter had recommended defining this term, the agencies indicated the Office of Management and Budget “previously considered” this and “concluded that the definition is unnecessary.” There may be an update here in the future, though—the final rule states that the suggestion has been passed along to the ISDC “for further consideration.”
  
  
• Mitigating and aggravating factors. As proposed, the FAR Council has added specific aggravating factors to FAR Part 9’s existing list of mitigating factors for SDOs to consider. As we noted previously, SDOs have always had the discretion to consider these aggravating factors—but the final rule makes it explicit. One concern is that the existence of an enumerated list of aggravating factors may increase the likelihood that an SDO will identify one or more of them as applicable to the contractor. At any rate, this change does serve to better align the FAR with the NCR and provides greater transparency to contractors regarding the factors the SDO may take into account when deciding whether an exclusion is necessary. 
  
  • Additionally, the final rule specifically indicates which factors may be relevant to individuals (as opposed to just organizations/entities), addressing a gap highlighted by a respondent who noted the lack of clarity on this point. The FAR Council agreed to revise the list of factors in the interest of transparency. These updates may provide clarity to individuals with little experience in complex suspension and debarment proceedings.

Overall, the final revisions to FAR Part 9’s suspension and debarment regulations may not be groundbreaking, but they should ease the prior tension between the NCR and the FAR.  And, moving forward, the increased consistency between the two sets of regulations should provide both contractors and SDOs with clearer guidance on suspension and debarment proceedings.

Authored by Christine Reynolds, Michael Mason, Bill Ferreira, and Lauren Colantonio.