9.405-1
Continuation of current contracts
Agencies may continue existing contracts with debarred or suspended contractors only with proper review, but cannot extend or add new work without a written compelling reason from the agency head.
Overview
FAR 9.405-1 addresses how agencies should handle ongoing contracts with contractors who have been debarred, suspended, proposed for debarment, or voluntarily excluded from federal contracting. It outlines the circumstances under which agencies may continue, terminate, or limit actions on existing contracts and orders with such contractors, and provides specific rules for contractors declared ineligible under 10 U.S.C. 983.
Key Rules
- Continuation of Existing Contracts
- Agencies may continue contracts or subcontracts in place at the time of debarment, suspension, proposed debarment, or voluntary exclusion, unless the agency head decides otherwise. Any termination or modification must be reviewed by contracting, technical, and legal personnel.
- Restrictions on New Actions
- Unless the agency head provides a written determination of compelling reasons, agencies cannot: (i) place orders exceeding the guaranteed minimum under indefinite quantity contracts; (ii) place orders under Federal Supply Schedules, BPAs, or BOAs; or (iii) add new work, exercise options, or extend current contracts/orders with affected contractors.
- Ineligible Contractors under 10 U.S.C. 983
- Covered agencies must terminate existing contracts and refrain from awarding new contracts or orders to contractors declared ineligible under 10 U.S.C. 983, except for contracts at or below the simplified acquisition threshold or for commercial products/services.
Responsibilities
- Contracting Officers: Must review ongoing contracts with affected contractors, seek legal and technical input before termination, and ensure no new work or orders are placed unless justified in writing by the agency head.
- Contractors: Must comply with any agency decisions regarding continuation, modification, or termination of contracts.
- Agencies: Must document compelling reasons for exceptions and ensure compliance with statutory ineligibility requirements.
Practical Implications
- This section ensures agencies do not automatically terminate all contracts with debarred or suspended contractors, but imposes strict limits on new work or extensions. It requires careful review and documentation, reducing risk of improper contract continuation and ensuring statutory compliance. Common pitfalls include failing to obtain required agency head determinations or improperly extending contracts.