Causes for suspension
Contractors can be suspended from government contracting for a wide range of offenses—including fraud, tax delinquency, and failure to disclose violations—making robust compliance and timely disclosure essential.
Overview
FAR 9.407-2 outlines the specific causes that may lead to the suspension of a contractor from government contracting. Suspension is a serious administrative action taken when there is adequate evidence of misconduct or lack of business integrity, pending the outcome of an investigation or legal proceedings. The regulation lists various offenses, including fraud, antitrust violations, embezzlement, drug-free workplace violations, false "Made in America" labeling, unfair trade practices, significant tax delinquency, failure to disclose certain violations or overpayments, false certifications, and any other offense affecting a contractor's present responsibility. Indictment for any listed cause is considered adequate evidence for suspension. The regulation also allows for suspension based on other serious or compelling causes affecting a contractor's responsibility.
Key Rules
- Enumerated Causes for Suspension
- Contractors may be suspended for a range of offenses, including fraud, criminal offenses, antitrust violations, embezzlement, bribery, drug-free workplace violations, false labeling, unfair trade practices, significant tax delinquency, failure to disclose violations or overpayments, false certifications, and other offenses affecting business integrity.
- Indictment as Adequate Evidence
- An indictment for any of the listed causes is sufficient evidence to justify suspension.
- Other Serious or Compelling Causes
- Suspension may also be imposed for other causes that seriously affect a contractor's present responsibility, even if not specifically listed.
Responsibilities
- Contracting Officers: Must be aware of the causes for suspension and report suspected violations to the suspending and debarring official.
- Contractors: Must avoid the listed offenses, maintain compliance with all relevant laws and regulations, and timely disclose credible evidence of violations or overpayments.
- Agencies: Responsible for oversight, investigation, and taking appropriate suspension actions when warranted.
Practical Implications
- This section exists to protect the government from doing business with contractors lacking integrity or responsibility.
- Contractors must maintain robust compliance programs to avoid suspension triggers.
- Failure to disclose violations or overpayments can itself be a cause for suspension.
- Common pitfalls include inadequate internal controls, lack of timely disclosure, and failure to comply with drug-free workplace or tax requirements.