Federal Procurement
Additional Data Reporting Could Improve the Suspension and Debarment Process Gao ID: GAO-05-479 July 29, 2005Federal 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.
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.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-05-479, Federal Procurement: Additional Data Reporting Could Improve the Suspension and Debarment Process
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
July 2005:
Federal Procurement:
Additional Data Reporting Could Improve the Suspension and Debarment
Process:
GAO-05-479:
GAO Highlights:
Highlights of GAO-05-479, a report to congressional committees:
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.
Actions Taken by Six Selected Agencies in Fiscal Year 2004:
[See PDF for image]
Source: Agency-reported data.
[End of table]
What GAO Recommends:
GAO makes two recommendations: that GSA make contractor identification
numbers a required field in the EPLS database and that OMB require
sharing of data on administrative agreements and compelling reason
determinations. DOD, GSA, and OMB concurred with these recommendations.
www.gao.gov/cgi-bin/getrpt?GAO-05-479.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact William T. Woods at (202)
512-4841 or woodsw@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
FAR Provides Governmentwide Policies, and Agencies Make Specific
Exclusion Decisions:
Additional Reporting and Sharing of Information Could Improve the
Effectiveness of the Process:
Conclusions:
Recommendations:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Statutory Debarments:
Appendix III: Trends in Exclusions in EPLS for Selected Agencies:
Appendix IV: Selected Agencies' Suspension and Debarment Organizations:
Appendix V: Comments from the Department of Defense:
Tables:
Table 1: Agencies That Developed Supplements to the FAR, Adopted NCR,
or Developed Additional Guidance:
Table 2: Actions Taken by Six Selected Agencies in Fiscal Year 2004:
Table 3: Key Characteristics of Administrative Agreements:
Table 4: Statutory Debarments:
Table 5: Agencies' Suspension and Debarment Organizations:
Figures:
Figure 1: Exclusions in EPLS Governmentwide from 1995 to 2004:
Figure 2: Current Exclusions in EPLS among Six Selected Agencies, as of
November 2004:
Figure 3: Typical Elements of Selected Agencies' Suspension and
Debarment Process:
Figure 4: Trends in Exclusions in EPLS for Selected Agencies from 1995
to 2004:
Abbreviations:
CAGE: Contractor and Government Entity:
DFARS: Defense Federal Acquisition Regulation Supplement:
DLA: Defense Logistics Agency:
DOD: Department of Defense:
EPA: Environmental Protection Agency:
EPLS: Excluded Parties List System:
FAR: Federal Acquisition Regulation:
FPDS: Federal Procurement Data System:
GSA: General Services Administration:
ISDC: Interagency Suspension and Debarment Committee:
NCR: Nonprocurement Common Rule:
OMB: Office of Management and Budget:
United States Government Accountability Office:
Washington, DC 20548:
July 29, 2005:
The Honorable Susan M. Collins:
Chairman:
The Honorable Joseph I. Lieberman:
Ranking Minority Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable Tom Davis:
Chairman:
The Honorable Henry A. Waxman:
Ranking Minority Member:
Committee on Government Reform:
House of Representatives:
Federal government purchases of contracted goods and services have
grown to more than $300 billion annually.[Footnote 1] Federal agencies
are required to award contracts only to "responsible sources"--those
that are determined to be reliable, dependable, and capable of
performing required work. To protect the government's interests, the
Federal Acquisition Regulation (FAR) provides that agencies can suspend
or debar contractors from future contracts for various reasons, such as
conviction of or indictment for certain offenses, or a serious failure
to perform to the terms of a contract.[Footnote 2] The FAR provides
flexibility to agencies in developing a suspension and debarment
process. While this flexibility enables agencies to meet their
individual needs, it also highlights the importance of transparency
into their processes to help determine whether suspension and debarment
actions are protecting the government's interests.
Given the significant amount of federal dollars spent by agencies to
acquire goods and services, and the need to ensure that the government
only does business with responsible contractors, you asked us 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.
To conduct our work, we examined the FAR and the regulations of the 24
agencies that have issued supplements to the FAR governing suspension
and debarment procedures. From these 24 agencies, we selected 6 defense
and civilian agencies for in-depth review of policies and practices:
the Air Force, Army, Navy, and Defense Logistics Agency (DLA) within
the Department of Defense (DOD); the General Services Administration
(GSA); and the Environmental Protection Agency (EPA). Together, these 6
agencies accounted for about 67 percent of fiscal year 2003 federal
contract spending, as reported in the Federal Procurement Data System
(FPDS).[Footnote 3] We also analyzed data from the Excluded Parties
List System (EPLS)--a Web-based database on governmentwide exclusions
maintained by GSA--and from the selected agencies' internal data
management systems. We conducted our work from August 2004 through June
2005 in accordance with generally accepted government auditing
standards. For more information on our scope and methodology, see
appendix I.
Results in Brief:
The FAR prescribes policies governing such matters as the circumstances
under which contractors may be excluded from federal contracting, the
standards of evidence that apply to suspensions and debarments, and the
usual length of these exclusions. The FAR requires agencies to
establish a process for determining exclusions, and allows agencies to
supplement the FAR to implement the process. The supplements to the FAR
or additional guidance developed by 24 agencies generally designate
internal responsibilities for suspension and debarment procedures and
intra-agency coordination. The 6 agencies we reviewed in depth
suspended a total of 262 parties and debarred a total of 590 parties in
fiscal year 2004. Five of the 6 agencies entered into a total of 38
administrative agreements--an alternative to suspension and debarment
where contractors that meet certain requirements imposed by the agency
may remain eligible for new contracts. Agency officials said that such
agreements can serve the government's interest by improving contractor
responsibility, ensuring compliance through monitoring, and maintaining
competition. In fiscal year 2004, the Army and EPA used these
agreements the most. 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, the Air Force and
the Army, issued compelling reason determinations, known as waivers, to
continue doing business with a total of five excluded parties.
To help ensure that excluded contractors do not unintentionally receive
new contracts during a period of exclusion, the FAR requires
contracting officers to consult EPLS to identify any competing
contractors that have been suspended or debarred. We found, however,
that the data in EPLS may be insufficient for this purpose.
Specifically, although the FAR requires that agencies enter
contractors' unique identification numbers in EPLS, there is no
required field in the EPLS database for these numbers. As a result,
contractor identification numbers have not been routinely entered in
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
contractor identification numbers. In the absence of a unique
identifier in EPLS, agencies use name matching to identify excluded
contractors, a technique that may not always be reliable. Consequently,
contracting officials cannot always be fully confident that a
prospective contractor is not on the list of excluded parties. The
Interagency Suspension and Debarment Committee (ISDC) provides a forum
for sharing information among suspension and debarment officials.
However, neither ISDC nor any other entity collects or reports data on
administrative agreements or compelling reason waivers. Increased
sharing of information on the terms and effectiveness of past and
current administrative agreements would be helpful to officials in
considering new agreements. Similarly, reporting information on
compelling reason determinations would allow suspension and debarment
officials to assess the use of these waivers and would promote greater
transparency and accountability.
We are making two recommendations aimed at improving the quality and
availability of data used in the suspension and debarment process: to
make contractor identification numbers a required field in the EPLS
database and to increase sharing of data on administrative agreements
and compelling reason determinations. In comments on a draft of this
report, DOD, GSA, and OMB generally agreed with these recommendations.
EPA submitted technical comments on the draft, and we have incorporated
these comments into the report as appropriate. Written comments from
DOD are reproduced in their entirety in appendix V.
Background:
Suspensions and debarments apply governmentwide--one agency's
suspension or debarment decision precludes all other agencies from
doing business with an excluded party. Suspensions and debarments may
be either statutory or administrative. Statutory debarments, also
referred to as declarations of ineligibility, are based on violation of
law, such as statutory requirements to pay minimum wages.[Footnote 4]
Administrative debarments are based on the causes specified in the FAR,
including commission of offenses such as fraud, theft, bribery, or tax
evasion. In 1988, the Nonprocurement Common Rule (NCR) was implemented
to provide a parallel process to the FAR for suspending and debarring
parties from receiving federal grants, loans, and other nonprocurement
transactions.[Footnote 5] The FAR and NCR provide for reciprocity with
each other--that is, any exclusion under the FAR shall be recognized
under NCR, and any exclusion under NCR shall be recognized under the
FAR.[Footnote 6]
Exclusions of companies or individuals from federal contracts
(procurements) or other federal funding such as grants
(nonprocurements), as well as declarations of ineligibility, are listed
in EPLS, a Web-based system maintained by GSA.[Footnote 7] EPLS also
includes an archive of expired exclusions. Agencies are required to
report all excluded parties by entering data directly into the database
within 5 working days after the exclusion becomes effective. The FAR
includes a list of the information to be included in EPLS, such as the
contractor's name and address, contractor identification number, the
cause of the action, the period of the exclusion, and the name of the
agency taking the action.[Footnote 8]
From January 1995 to November 2004, the number of exclusion actions
taken each year by all agencies governmentwide has ranged from about
3,400 in 1995 to almost 7,000 in 2002, with an average of 5,700 actions
taken annually (see fig.1).
Figure 1: Exclusions in EPLS Governmentwide from 1995 to 2004:
[See PDF for image]
[End of figure]
In November 2004, the number of current exclusions governmentwide
totaled about 32,500, about 3,500 of which were the result of statutory
debarments. Of this governmentwide total, EPLS showed that the 6
agencies we reviewed had excluded about 2,400 parties, 617 of which
were the result of statutory debarments by EPA, based on violations of
the Clean Water and Clean Air Acts (see fig. 2). For exclusion actions
taken each year by the six selected agencies from 1995 to 2004, see
appendix III.
Figure 2: Current Exclusions in EPLS among Six Selected Agencies, as of
November 2004:
[See PDF for image]
Note: Procurement/nonprocurement actions include suspensions, and
proposed and actual debarments, as well as other exclusions related to
procurement and nonprocurement activities. Generally, statutory
debarments are based on violations of law such as those requiring
payment of minimum wages. Of the agencies we reviewed in depth, only
EPA had administered statutory debarments as of November 2004.
[End of figure]
In 1987, we reported that the suspension and debarment regulations and
procedures generally provided an effective tool for protecting the
government against doing business with fraudulent, unethical, or
nonperforming contractors.[Footnote 9] We noted, however, that there
was a need for timely access to a governmentwide list of excluded
parties. We also identified areas for improvement in the process and
recommended amendments to the FAR. The following recommendations have
been implemented: (1) that governmentwide exclusions be extended to
contractors proposed for debarment; (2) that the definition of
affiliate, i.e., related firms or those under common control, include a
description of indicators of control, such as common management or
ownership; (3) that suspended and debarred contractors also be excluded
from subcontracting under government contracts; and (4) that the extent
to which orders placed under certain contractual arrangements--such as
multiple awards schedules, basic ordering agreements, and indefinite
quantity contracts--are covered by exclusions be clarified.
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. The supplements to the FAR and additional guidance developed
by 24 agencies generally designate internal responsibilities for
suspension and debarment procedures and intra-agency coordination. As
an alternative to exclusion, agencies sometimes enter into
administrative agreements with contractors with whom they believe there
is a continuing need to do business. These agreements can encourage
changes in business practices designed to promote contractor
responsibility. In limited circumstances, an agency may continue to do
business with excluded contractors.
The FAR requires federal agencies to conduct business only with
responsible contractors and prescribes overall suspension and debarment
policies. A suspension may be imposed only when an agency determines
that immediate action is necessary to protect the government's
interests. To initiate a suspension, an agency must have adequate
evidence that the party has committed certain civil or criminal
offenses or that there is another compelling cause affecting the
contractor's present responsibility.[Footnote 10] Generally, legal
proceedings must begin within 12 months or the suspension terminates.
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.[Footnote 11] The agency debarring official is
responsible for determining whether debarment is in the government's
interest, and the FAR states that the seriousness of the contractor's
actions and any remedial measures or mitigating factors should be
considered. Generally, the period of debarment should not exceed 3
years.
Figure 3 provides a general overview of the suspension and debarment
process.
Figure 3: Typical Elements of Selected Agencies' Suspension and
Debarment Process:
[See PDF for image]
Note: There are some variations in the process among agencies, and this
figure does not include every possible scenario for a case. For
example, a case initiated as a possible suspension could result in a
determination that there is no immediate need for suspension and could
later result in a proposal for debarment.
[End of figure]
The FAR allows agencies flexibility to supplement FAR provisions and
develop guidance based on agency needs. The 24 agencies we reviewed had
included suspension and debarment policies in FAR supplements; 21 had
also adopted NCR; and 12 had developed additional guidance, such as
directives and policy memos to implement their suspension and debarment
processes (see table 1). The additional guidance generally designates
responsibilities for suspension and debarment procedures and addresses
intra-agency coordination.
Table 1: Agencies That Developed Supplements to the FAR, Adopted NCR,
or Developed Additional Guidance:
Agency: Agency for International Development;
Supplement: Yes;
NCR: Yes;
Guidance: No.
Agency: Department of Agriculture;
Supplement: Yes;
NCR: Yes;
Guidance: No.
Agency: Broadcasting Board of Governors;
Supplement: Yes;
NCR: No;
Guidance: Yes.
Agency: Department of Commerce;
Supplement: Yes;
NCR: Yes;
Guidance: No.
Agency: DOD Air Force;
Supplement: Yes;
NCR: Yes;
Guidance: Yes.
Agency: DOD Army;
Supplement: Yes;
NCR: Yes;
Guidance: Yes.
Agency: DOD DLA;
Supplement: Yes;
NCR: Yes;
Guidance: Yes.
Agency: DOD Navy;
Supplement: Yes;
NCR: Yes;
Guidance: Yes.
Agency: Department of Education;
Supplement: Yes;
NCR: Yes;
Guidance: Yes.
Agency: Department of Energy;
Supplement: Yes;
NCR: Yes;
Guidance: No.
Agency: Environmental Protection Agency;
Supplement: Yes;
NCR: Yes;
Guidance: Yes.
Agency: General Services Administration;
Supplement: Yes;
NCR: Yes;
Guidance: Yes.
Agency: Federal Emergency Management Agency;
Supplement: Yes;
NCR: No;
Guidance: No.
Agency: Department of Health and Human Services;
Supplement: Yes;
NCR: Yes;
Guidance: No.
Agency: Department of Justice;
Supplement: Yes;
NCR: Yes;
Guidance: Yes.
Agency: Department of Labor;
Supplement: Yes;
NCR: Yes;
Guidance: No.
Agency: National Aeronautics and Space Administration;
Supplement: Yes;
NCR: Yes;
Guidance: No.
Agency: National Science Foundation;
Supplement: Yes;
NCR: Yes;
Guidance: Yes.
Agency: Nuclear Regulatory Commission;
Supplement: Yes;
NCR: No;
Guidance: No.
Agency: Office of Personnel Management;
Supplement: Yes;
NCR: Yes;
Guidance: No.
Agency: Department of State;
Supplement: Yes;
NCR: Yes;
Guidance: No.
Agency: Department of Transportation;
Supplement: Yes;
NCR: Yes;
Guidance: Yes.
Agency: Department of Treasury;
Supplement: Yes;
NCR: Yes;
Guidance: Yes.
Agency: Department of Veterans Affairs;
Supplement: Yes;
NCR: Yes;
Guidance: No.
Totals;
Supplement: 24;
NCR: 21;
Guidance: 12.
Source: GAO analysis of supplements to FAR and guidance.
[End of table]
Each of the six agencies we reviewed in depth--the Air Force, Army,
Navy, Defense Logistics Agency, EPA, and GSA--has included suspension
and debarment policies in FAR supplements, adopted NCR, and developed
guidance for implementing suspension and debarment procedures:
* The Defense Federal Acquisition Regulation Supplement (DFARS)
designates suspension and debarment officials in the various DOD
organizations--including the Air Force, Army, Navy, and Defense
Logistics Agency--and a process for waiving contractor exclusions for
compelling reasons. In addition, in September 1992, the Under Secretary
of Defense for Acquisition issued guidance stating that (1) when
appropriate, before action is taken on suspension, a contractor should
be informed that DOD has extremely serious concerns with the
contractor's conduct, and the contractor should be allowed to provide
information on its behalf, and (2) DOD debarring officials should
coordinate fully within DOD, and in certain cases among civilian
agencies, to determine the possible effects of the suspensions and
debarments on other organizations as well as to receive additional
information that may affect the exclusion decision.
* EPA's Acquisition Regulation, a FAR supplement, designates the roles
of various officials and clarifies EPA's suspension and debarment
procedures. An August 1993 memorandum of understanding provides
specific responsibilities for EPA's Office of Acquisition Management
and Office of Grants and Debarment in the processing of suspension and
debarment actions. In addition, EPA has established guidance on
initiating a suspension or debarment action. EPA also included a
specific section in NCR addressing EPA's statutory disqualifications
under the Clean Air and Clean Water Acts.
* GSA also supplemented the FAR with a regulation that designates the
roles of various officials and clarifies suspension and debarment
procedures. The GSA Acquisition Manual contains similar language to the
FAR supplement. In addition, GSA's Office of Inspector General
Operations Manual outlines responsibilities for investigating cases,
coordinating with law enforcement agencies, and making referrals to
GSA's suspension and debarment officials. In November 2002, GSA issued
an internal order concerning the requirement for legal review of
suspension and debarment decisions.
Each of the agencies we reviewed established an organizational
structure that identifies the lead office, responsibilities, and
staffing to manage their suspension and debarment activities. (See app.
IV for a summary of each agency's suspension and debarment
organizational structure.) Table 2 shows specific actions reported by
the six agencies we reviewed during fiscal year 2004.
Table 2: Actions Taken by Six Selected Agencies in Fiscal Year 2004:
Agency: Air Force;
Suspensions: 94;
Proposed debarments: 246;
Debarments: 233;
Administrative agreements: 2.
Agency: Army;
Suspensions: 68;
Proposed debarments: 113;
Debarments: 90;
Administrative agreements: 9.
Agency: Navy;
Suspensions: 2;
Proposed debarments: 27;
Debarments: 33;
Administrative agreements: 0.
Agency: DLA;
Suspensions: 12;
Proposed debarments: 147;
Debarments: 133;
Administrative agreements: 1.
Agency: GSA;
Suspensions: 70;
Proposed debarments: 53;
Debarments: 33;
Administrative agreements: 4[A].
Agency: EPA;
Suspensions: 16[B];
Proposed debarments: 65[B];
Debarments: 68;
Administrative agreements: 22.
Agency: Total;
Suspensions: 262;
Proposed debarments: 651;
Debarments: 590;
Administrative agreements: 38.
Source: Agency-reported data.
[A] GSA has only recently begun to use administrative agreements and
entered into four during fiscal year 2004.[Footnote 12]
[B] These data include eight cases in which a suspension and proposed
debarment were issued simultaneously under the NCR.
[End of table]
Administrative agreements, also referred to as compliance agreements,
provide an alternative to exclusion when contractors that are being
considered for suspension or debarment have addressed the cause of the
problem through actions such as disciplining individuals, revising
internal controls, and disclosing problems to the appropriate
government agency in a timely manner.[Footnote 13] Under administrative
agreements, contractors agree to meet certain requirements and may
continue to enter into contracts with the government. 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.
Administrative agreements can be negotiated at any point in the
suspension and debarment process, such as when a contractor
independently acknowledges a problem, but the agencies we reviewed in
depth said these agreements are most commonly negotiated as an
alternative to debarment. These agreements generally follow a
consistent format, emphasize corporate ethics programs, and are in
effect for a period of 3 years. Table 3 summarizes the key contractor
requirements included in the agreements we reviewed.[Footnote 14]
Table 3: Key Characteristics of Administrative Agreements:
Key Characteristics: Written ethics policy or code;
GSA: Yes;
EPA: Yes;
Air Force: Yes;
Army: Yes;
DLA: Yes;
Navy: Yes.
Key Characteristics: Employee ethics training;
GSA: Yes;
EPA: Yes;
Air Force: Yes;
Army: Yes;
DLA: Yes;
Navy: Yes.
Key Characteristics: Compliance hotline;
GSA: Yes;
EPA: Yes;
Air Force: Yes;
Army: Yes;
DLA: Yes;
Navy: Yes.
Key Characteristics: Ethics officer or advisor;
GSA: Yes;
EPA: Yes;
Air Force: Yes;
Army: Yes;
DLA: Yes;
Navy: Yes.
Key Characteristics: Independent auditor or ombudsman to monitor
compliance;
GSA: Yes;
EPA: Yes;
Air Force: Yes;
Army: Yes;
DLA: No;
Navy: No.
Key Characteristics: Scheduled reporting to agency;
GSA: Yes;
EPA: Yes;
Air Force: Yes;
Army: Yes;
DLA: Yes;
Navy: Yes.
Key Characteristics: Contractor payment for portion of agency's
administrative costs;
GSA: No;
EPA: Yes;
Air Force: Yes;
Army: Yes;
DLA: No;
Navy: Yes.
Source: Agency reported data.
Note: GAO analysis of 8 administrative agreements.
[End of table]
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.[Footnote 15] This determination requires a written
explanation of the reason for doing business with an excluded
contractor, such as an urgent need for the contractor's supplies or
services, or that the contractor is the only known source.[Footnote 16]
Of the six agencies we reviewed, only the Air Force and the Army
reported that compelling reason waivers had been issued over the past 2
years. The Air Force reported that three waivers had been granted--in
August and September 2003 and in August 2004--to continue contracting
with the Boeing Company for launch services for military space
equipment based on national security concerns and to mitigate program
schedule and cost risks. In fiscal year 2004, the Air Force issued one
waiver for sole-source reasons, and the Army issued four waivers based
on urgent need.
Suspension and debarment constitutes exclusion of all divisions or
other organizational elements of the contractor, unless the exclusion
decision is otherwise limited.[Footnote 17] Exclusions may extend to
affiliates, if named in the suspension or debarment notice and
decision.[Footnote 18] Organizational entities of excluded contractors
that can demonstrate independence may be allowed to receive government
contracts.
Additional Reporting and Sharing of Information Could Improve the
Effectiveness of the Process:
The information in EPLS may be insufficient to enable contracting
officers to determine with confidence that a prospective contractor is
not currently suspended, debarred, or proposed for debarment. Further,
information on administrative agreements and compelling reason waivers
is not routinely shared among agencies or captured centrally in a
database such as EPLS. The Interagency Suspension and Debarment
Committee (ISDC), which monitors the suspension and debarment system,
provides a useful forum for sharing information among suspension and
debarment officials.
Incomplete or Unreliable EPLS Data Make It Difficult to Identify
Excluded Parties:
The FAR requires agencies to enter various information on contractors
into EPLS, including contractors' and grantees' Data Universal
Numbering System (DUNS) number[Footnote 19]--a unique nine-digit
identification number assigned by Dun & Bradstreet, Inc. to identify
unique business entities.[Footnote 20] We found, however, that while
the EPLS database has a field for entering contractors' DUNS numbers,
it is not a required field in the database, and the data appear to be
routinely omitted from the database. 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.[Footnote 21] 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. However, a contractor's name as
it appears in a bid or proposal may not be the same as in EPLS. For
example, the XYZ Company may submit bids or proposals using "XYZ
Company" but appear as "XYZ" in EPLS. Therefore, if the contracting
officer searched for an exact match, EPLS would not identify the
company.[Footnote 22] Searching for partial matches would fail to
identify companies that have changed their names. According to agency
suspension and debarment officials, contracting officers have
overlooked excluded contractors when using EPLS, due in part to not
being able to match contractor names. Though agency officials could not
recall specific cases, they said that this difficulty in matching names
is more likely to occur in cases in which contractors have changed
their names.
We too had difficulty matching names using EPLS. For example, because
of the various ways a contractor's name might be entered in the
database and because contractor names sometimes change over time, we
could not be assured that we identified all contractors that have been
excluded more than once. We also attempted to match contractors' names
in EPLS and FPDS--the database containing government contracting
actions--to determine whether excluded contractors had received new
contracts during a period of exclusion.[Footnote 23] Although this
effort did not produce any matches, we cannot conclude with confidence
that excluded contractors are not receiving new contracts because of
the lack of consistency regarding contractor names both between and
within the databases. This problem has been longstanding. In our 1987
report, we noted similar difficulties in matching data from the list of
excluded parties with FPDS data. Despite our findings, the problem
continues, increasing the risk that suspended or debarred contractors
will be awarded new contracts during a period of exclusion.
The overall reliability of reported data is also a concern. According
to GSA officials, responsibility for ensuring data reliability rests
with the agencies entering data into EPLS. GSA does not know, however,
whether agencies have tested the reliability of their EPLS data. The
absence of information on data reliability makes using the system for
oversight or analysis problematic. For example, when we attempted to
use EPLS to determine the average length of time of exclusions, we
found many records with an indefinite termination date. In some cases,
parties are listed as excluded for an indefinite period of time pending
the outcome of a case. In nonprocurement cases, parties also may be
excluded for an indefinite period of time.[Footnote 24] However, when a
record is entered in EPLS without a termination date, the system
defaults to record the termination date as indefinite. In the absence
of information on data reliability, there is no way to estimate the
extent to which the entries with indefinite termination dates reflect
parties that had been excluded for an indefinite period of time or
parties for which no termination date had been entered.
ISDC Provides an Opportunity to Facilitate Sharing of Information on
Administrative Agreements and Exclusion Waivers:
The Interagency Suspension and Debarment Committee (ISDC) is
responsible for coordinating policy, practices, and information sharing
on various suspension and debarment issues.[Footnote 25] The ISDC
serves as an interagency forum and conducts monthly meetings for
federal agencies' suspension and debarment officials. While ISDC is not
a decision-making body, it develops recommendations for the Office of
Management and Budget (OMB) on interagency issues, such as determining
which agency should take the lead on a case when more than one agency
does business with a particular contractor. The ISDC reports to OMB's
Office of Federal Financial Management and has been chaired by EPA's
suspension and debarment officer since 1988.
In its March 2002 report on interagency coordination, the ISDC
emphasized the importance of identifying a lead agency to coordinate
with other federal agencies that do business with a contractor before
entering into an administrative agreement. In our discussions with
several suspension and debarment officials they said that, in addition,
sharing information on past and current administrative agreements
within the broader community of suspension and debarment officials
would also be useful. They said that when an agency official is
considering taking action with respect to a particular contractor, it
would be helpful to know whether another agency had ever used an
administrative agreement with that contractor, what the terms of the
agreement were, and whether the contractor had complied with the
agreement. That information is not currently collected centrally nor
routinely made available to all suspension and debarment officials. Of
the agencies we reviewed, only the Army has taken initiative to share
information on administrative agreements. In February 2005, the Army
launched the "Army Fraud Fighter's Web Site," which includes a list of
contractors with which they have entered into administrative
agreements.[Footnote 26]
Similarly, greater sharing of information on compelling reason waivers
also would be helpful. We found that information on compelling reason
waivers was not readily available from most agencies we reviewed. To
obtain information on compelling reason waivers, we had to reconcile
the information we collected from the DOD agencies with information we
collected from GSA for those agencies. The FAR supplement for DOD
requires DOD to provide written notice of any compelling reason waiver
determination to GSA,[Footnote 27] but we had to make repeated requests
from DOD agencies and GSA in order to obtain complete information. In
our view, accountability and transparency of the process would be
enhanced were this information routinely collected and reported by all
agencies. For example, more information on the use of waivers would
allow suspension and debarment officials to evaluate patterns in the
use of waivers to determine whether they were used more commonly in
some industries than others. They could also assess the rationales
cited by agencies in granting waivers to determine whether agencies are
applying standards consistently or whether the governmentwide standards
are in need of revision.
Conclusions:
Federal agencies faced with the challenge of ensuring that they only do
business with responsible contractors may not be identifying excluded
contractors when awarding new contracts. Improving the EPLS database by
requiring agencies to enter contractor identification numbers into the
system could provide the data needed to enhance agency confidence that
excluded contractors can be readily identified. Sharing information
among agencies on administrative agreements and compelling reason
waivers could also improve the transparency and effectiveness of the
suspension and debarment process and thereby help to ensure the
government's interests are protected.
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.
Agency Comments and Our Evaluation:
We provided a draft of this report to DOD, EPA, GSA, and OMB for review
and comment. DOD provided written comments which are included in
appendix V. EPA provided technical comments on the draft, and we have
incorporated these comments into the report as appropriate. GSA and OMB
provided oral comments.
DOD generally concurred with our recommendations. In addition to
requiring the contractor identification numbers for all actions entered
into the system, DOD believes that the EPLS database should include a
field for the Contractor and Government Entity (CAGE) code, if
available. DOD stated that given the automated procurement system used
by many DOD offices, it is important to enable these offices to check
for the CAGE code of a prospective contractor in the EPLS database. DOD
also provided technical comments on the draft report, and we have
revised the draft accordingly.
GSA concurred with our recommendation that GSA modify the EPLS database
to require contractor identification numbers for all actions entered
into the system. GSA stated that it is in the process of competing the
EPLS application, and the identification number will be a required
field when the updated system becomes operational in fiscal year 2006.
In addition, the updated system will be required to interface with the
Central Contractor Registration System, which should improve the
quality of contractor data in EPLS. The new system also should have
greater capability to allow agencies to report information such as the
reasons why a party has been excluded.
OMB concurred with our recommendation that OMB require agencies to
collect and report data on administrative agreements and compelling
reason determinations to the Interagency Suspension and Debarment
Committee and make this information available to all suspension and
debarment officials.
As agreed with your offices, unless you release this report earlier, we
will not distribute it until 30 days from the date of this letter. At
that time, we will send copies of this report to the Secretary of
Defense, the Administrator of General Services, the Administrator of
the Environmental Protection Agency, the Director of the Office of
Management and Budget, and interested congressional committees. We will
also make copies available to others upon request. In addition, this
report will be available at no charge on GAO's Web site at http://
www.gao.gov.
If you have any questions about this report, please contact me at (202)
512-4841 or woodsw@gao.gov. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last
page of this report. Major contributors to this report were Amelia
Shachoy, Assistant Director, Marie Ahearn, Ken Graffam, Mehrunisa
Qayyum, Emma Quach, Jeffrey Rose, Karen Sloan, and Cordell Smith.
Signed by:
William T. Woods, Director:
Acquisition and Sourcing Management:
[End of section]
Appendix I: Scope and Methodology:
We conducted our work at six agencies--General Services Administration
(GSA), Environmental Protection Agency (EPA), and four DOD agencies--
Air Force, Army, Defense Logistics Agency (DLA), and Navy. The DOD
agencies were selected on the basis of the dollar value of contracting
actions reported in the Federal Procurement Data System (FPDS) for
fiscal year 2003---the year for which the most recent and complete data
were available at the time of our review. We selected GSA because of
its central role in federal procurement and in maintaining the Excluded
Parties List System (EPLS). We selected EPA because of its active role
in suspension and debarment, including its role in chairing the
Interagency Suspension and Debarment Committee (ISDC) and in
implementing systematic procedures for tracking the status of
suspension and debarment cases. Together, these agencies accounted for
about 67 percent of fiscal year 2003 federal contract spending, as
reported in the FPDS. We also reviewed literature and interviewed
government and nongovernment officials, academics, and private sector
organizations with relevant experience.
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. We analyzed documents and testimonial evidence at
the 6 selected agencies to determine how each agency (a) used
administrative agreements; (b) coordinated and shared suspension and
debarment information; and (c) collected data to monitor the suspension
and debarment process.
To identify any needed improvements in the suspension and debarment
process, we analyzed data from GSA's EPLS as of November 18, 2004. This
analysis included comparing the EPLS and FPDS databases to identify any
suspended or debarred contractors that received a new contract during a
period of suspension or debarment. We compared 44,634 records for
excluded parties in EPLS with 1,006,919 contractors listed in FPDS at
the end of fiscal year 2003, the latest year for which complete data
were available at the time of our review. Because EPLS records do not
require contractor identification numbers, we compared other
identifiers, such as name and address, to determine whether a contract
action in FPDS was for the issuance of a new contract during the period
of exclusion. We also analyzed the data for the length of time parties
are excluded and to determine the extent to which parties are excluded
more than once. To assess the reliability of EPLS data we (1) performed
electronic testing of the required data elements for obvious errors in
accuracy and completeness, (2) reviewed related documentation, and (3)
interviewed knowledgeable agency officials. We found the data to be
insufficiently reliable for determining whether excluded contractors
receive new contracts, for determining the termination dates of
exclusions, or for performing simple analyses such as the average
length of exclusions or the percentage of parties excluded more than
one time. We also reviewed other areas for improvements, such as
agencies' internal data reporting and the role of the ISDC.
We conducted our work from August 2004 through June 2005 in accordance
with generally accepted government auditing standards.
[End of section]
Appendix II: Statutory Debarments:
Statutory debarments, or exclusions, are based on statutory, executive
order, or regulatory authority other than the FAR. The grounds and
procedures for statutory debarments may be set forth in regulations
issued by agencies, such as the Department of Labor and EPA, which have
enforcement responsibilities but may not be the procuring agencies. The
authorities for these statutory debarments use various terminology for
exclusion, such as "ineligible," "prohibited," or "listing;" however,
the terms all encompass sanctions precluding contract awards or
involvement in a contract for a specific period of time. Table 4 lists
the authorities identified in GSA's EPLS as reasons for debarring
individuals and contractors from receiving federal contracts.
Table 4: Statutory Debarments:
Statute: Anti-Drug Abuse Act of 1988;
Description: Ineligible for federal benefits, including contracts, at
discretion of sentencing judge following conviction(s) for a federal or
state offense relating to the distribution or possession of controlled
substances. (Permanently ineligible upon conviction of third offense
for distribution.) 21 U.S.C. § 862.
Statute: Buy American Act;
Description: Debarred by an agency for violation of the Act concerning
nonuse of American-produced materials. 41 U.S.C. § 10(b).
Statute: Clean Air Act and Clean Water Act;
Description: Prohibited from receiving federal contracts following
conviction under either Act if intended performance is to be at
facility which gave rise to the conviction and violating facility is
owned, leased or supervised by convicted person at the time of award.
42 U.S.C. § 7606; 33 U.S.C. § 1368.
Statute: Davis-Bacon Act;
Description: Debarred by Comptroller General for violation of the
minimum or prevailing wage rate requirements of the Act for
construction or repair of public buildings and works. 40 U.S.C. § 276a-
2(a).
Statute: Service Contract Act;
Description: Debarred by Secretary of Labor for violation of the
minimum wage requirements of the Act, for service employees. 41 U.S.C.
§ 354.
Statute: Walsh-Healy Act;
Description: Debarred by the Secretary of Labor for violation of the
minimum wages, 40-hour work week and non-use of child labor
requirements of the Act. 41 U.S.C. §35.
Statute: Prohibition on Persons Convicted of Defense Contract Related
Felonies;
Description: Prohibited from serving in management or supervisory
capacity on DOD contracts or serving on board of directors or as a
consultant to defense contractors awarded DOD contracts following
conviction of fraud or any other felony, arising out of a contract with
DOD, 10 U.S.C. 2408.
Statute: Reorganization Plan No. 14 of 1950, 5 USC Appendix;
Description: Declared ineligible to receive federal contracts by the
Secretary of Labor under the Plan's authority and based on violations
of one or more labor standards in certain numerous federal statutes,
such as the Contract Work Hours and Safety Standards Act, 40 U.S.C.
327.
Statute: Prohibition on Entering into Contracts Against Interest of
U.S;
Description: Prohibited from receiving DOD contracts over $110,000
based on a finding by the Secretary of State that a foreign government
supporting international terrorism owns or controls a significant
interest in the contracting firm. 10 USC § 2327(b); DFARS § 209.104-
1(g).
Statute: Military Recruiting on Campus;
Description: Institutions of higher education declared ineligible to
receive contracts based on DOD finding that the institution denied
military recruitment on campus. Pub. L. 103-337, as amended by Pub. L.
104-324. This provision was repealed by Pub. L. 106-65, Oct. 5, 1999.
Currently, 10 USC 983 and DFARS 209.470-2 prohibit DOD from contracting
with an institution of higher education if DOD determines that the
institution prevents military recruitment or Senior Reserve Officer
Training Corps (ROTC) on campus.
Statute: Drug-Free Workplace Act of 1988;
Description: Suspension or debarment from receiving federal contracts
for violations of the Drug- Free Workplace Act of 1988, 41 U.S.C. 701.
Statute: Executive Order 11246, as amended;
Description: Declared ineligible for award of federal contracts by
Secretary of Labor based on failure to satisfy obligations under equal
opportunity or affirmative action clauses of a federal contract.
Source: GAO analysis of EPLS codes indicating the reason for statutory
debarment.
Note: There is no statutory requirement to suspend or debar contractors
who have unpaid federal tax debt.[Footnote 28]
[End of table]
[End of section]
Appendix III: Trends in Exclusions in EPLS for Selected Agencies:
Figure 4: Trends in Exclusions in EPLS for Selected Agencies from 1995
to 2004:
[See PDF for image]
[End of figure]
[End of section]
Appendix IV: Selected Agencies' Suspension and Debarment Organizations:
The FAR and NCR require agencies to establish a process for suspension
and debarment. The organizational structure established to manage the
process at the six agencies we reviewed is summarized in table 5.
Table 5: Agencies' Suspension and Debarment Organizations:
Agency: EPA;
Lead office: Office of Grants and Debarment;
Responsibilities: Division dedicated to investigations and case
development refers cases to suspension and debarment official;
Staffing: 1 Suspension and Debarment Officer 12 Professional Staff.
Agency: GSA;
Lead office: Office of Chief Acquisition Officer, Office of Acquisition
Integrity;
Responsibilities: Office of Inspector General handles suspension and
debarment as one aspect of its investigative work and refers cases to
the Office of Acquisition Integrity. Suspension and debarment is one
aspect of the acquisition integrity function;
Staffing: 1 Suspension and Debarment Officer 2 Professional Staff 1
Support Staff.
Agency: DLA;
Lead office: Office of General Counsel, Contracting Integrity Office;
Responsibilities: Defense Criminal Investigative Service performs law
enforcement function and makes referrals to DLA. DLA also receives
referrals from other military services' Defense Criminal Investigative
Organizations;
Staffing: 1 Suspension and Debarment Officer 1 Professional Staff.
Agency: Air Force;
Lead office: Office of Deputy General Counsel, Contractor
Responsibility Division;
Responsibilities: Division within General Counsel's office dedicated to
suspension and debarment actions. Defense Criminal Investigative
Organizations also refer cases. This Division is also responsible for
the procurement fraud program;
Staffing: 1 Suspension and Debarment Officer 3 Professional Staff Co-op
students provide support.
Agency: Army;
Lead office: Office of Judge Advocate General, Contract Appeals
Division, Procurement Fraud Branch;
Responsibilities: Suspension and debarment is one aspect of the
procurement fraud function. Additional support from the Contract
Appeals Division is available. Defense Criminal Investigative
Organizations also refer cases;
Staffing: 3 Suspension and Debarment Officers (US, Europe, Korea) 6
Professional Staff 1 Support Staff.
Agency: Navy;
Lead office: Office of General Counsel, Procurement Integrity Office;
Responsibilities: Suspension and debarment is one aspect of the
Procurement Integrity function. Defense Criminal Investigative
Organizations also refer cases;
Staffing: 1 Suspension and Debarment Officer 3 Professional Staff 1
Support Staff.
Source: GAO analysis of agency-reported data.
[End of table]
[End of section]
Appendix V: Comments from the Department of Defense:
OFFICE OF THE UNDER SECRETARY OF DEFENSE:
3000 DEFENSE PENTAGON:
ACQUISITION, TECHNOLOGY AND LOGISTICS:
WASHINGTON, DC 20301-3000:
Mr. William T. Woods:
Director, Acquisition and Sourcing Management:
U.S. Government Accountability Office:
441 G Street, N.W.:
Washington, DC 20548:
JUL 22 2005:
Dear Mr. Woods,
This is the Department of Defense (DoD) response to the GAO draft
report GAO-05-479, FEDERAL PROCUREMENT: Additional Data Reporting Could
Improve the Suspension and Debarment Process, dated July 8, 2005, (GAO
Code 120363).
As explained in the enclosure, the DoD concurs with comments regarding
the two recommendations made by the referenced report. Please direct
any questions or comments to my principal action officer, Mr. Gary
Blasser, by calling 703-695-7197 or via e-mail at Gary.Blasser@osd.mil.
Signed by:
Deidre A. Lee:
Director, Defense Procurement and Acquisition Policy:
Enclosure: As stated:
GAO DRAFT REPORT - DATED JULY 8, 2005 GAO CODE 120363/GAO-05-479:
"FEDERAL PROCUREMENT: Additional Data Reporting Could Improve the
Suspension and Debarment Process"
DEPARTMENT OF DEFENSE COMMENTS TO THE RECOMMENDATIONS:
RECOMMENDATION 1: To improve the effectiveness of the suspension and
debarment system, we recommend that the Administrator of General
Services modify the EPLS database to require contractor identification
numbers for all actions entered into the system.
RESPONSE: Concur with comments. This recommendation is consistent with
the prescription at Federal Acquisition Regulation (FAR) section
9.404(b). Presently, FAR summarizes these identification numbers as:
the Data Universal Numbering System (DUNS) Number, Social Security
Number (SSN), Employer Identification Number (EIN), or other Taxpayer
Identification Number (TIN), if available. In addition, the EPLS
database should include a field for entry, and use, of either a
Contractor and Government Entity (CAGE) Code or a NATO Contractor and
Government Entity (NCAGE) Code, if available. Maximizing use of these
identification numbers should enable acquisition personnel to more
easily and accurately identify entities that have been suspended,
proposed for debarment, or debarred.
DoD Military Departments and defense agencies account for more than 99%
of all suspension and debarment actions taken against entities.
Whenever DoD offices suspend; propose debarment; or debar an entity,
they provide the entity's name and CAGE Code or NCAGE Code to the
Defense Logistics Information Service (DLIS - http://www.dlis.dla.mil/)
DLIS lists such entities as ineligible for contract awards. Given the
automated procurement system used by many DoD offices, it is important
to enable these offices to check for the CAGE Code or NCAGE Code of a
prospective awardee in the EPLS database.
The report indicates that GAO found the EPLS database has a field for
entering an entity's DUNS Number, but it noted this is not a required
field. As a result, this data is often omitted from the EPLS database.
The DAR Council is considering an April 2005 recommendation by its
Debarment Suspension Business Ethics Subcommittee to address this issue
by making it mandatory to include the DUNS Number and CAGE/NCAGE Code
of an entity as part of any suspension or debarment recommendation sent
to a DoD Suspension and Debarment Official.
RECOMMENDATION 2: To improve the suspension and debarment process, we
recommend that the Director of the Office of Management and Budget
require agencies to collect and report 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 offices.
RESPONSE: Concur with comments. As required by 10 U.S.C. 2393(b) as
implemented by DFARS 209.405, DoD must provide written notice of a
Compelling Reason Determination to the General Services Administration
(GSA), Office of Acquisition Policy. DoD suggests it may be better if
GSA were to make a copy of each determination available, only under
that portion of the EPLS website that has access reserved for
Government employees, rather than to involve the Interagency Suspension
and Debarment Committee as referenced in the recommendation.
Notification that an agency has executed an administrative agreement
could be handled similarly, again - in a location available only to
Government employees. If so, this may require a modification of
existing regulations to establish and help maintain such a practice.
Meanwhile, DoD agencies informally share information about their
Administrative Agreements, and this has proven to be sufficient.
[End of section]
FOOTNOTES
[1] The total dollar value of contracting actions reported in the
Federal Procurement Data System (FPDS) exceeded $300 billion in fiscal
years 2003 and 2004.
[2] A suspension is a temporary exclusion of a contractor pending the
completion of an investigation and any ensuing legal proceedings. A
debarment is a fixed-term exclusion. Generally, the period of debarment
shall not exceed 3 years. Suspensions and debarments are frequently
referred to collectively as exclusions.
[3] At the time we were planning our review, fiscal year 2003 was the
latest year with complete available data.
[4] Minimum wage statutes include, for example, the Davis-Bacon Act and
the Service Contract Act. Other statutes that might be the basis for a
statutory debarment include the Buy American Act and various
environmental protection acts. Statutory debarments are further
described in appendix II. Declarations of ineligibility also may be
based on executive orders or non-FAR regulations.
[5] NCR was adopted under the rulemaking authority of the respective
agencies after the Office of Management and Budget issued guidelines,
as provided for in Executive Order No. 12549 (1986) and is described in
FAR 9.403. The policies and procedures are common to executive branch
agencies and federal agencies that elected to join the governmentwide
NCR system, but an agency can modify the common rule for specific
suspension and debarment issues unique to the agency. NCR was amended
on November 26, 2003, in 68 Fed. Reg. 66535 to resolve technical
differences between the procurement and nonprocurement systems.
[6] While this report focuses mainly on the FAR suspension and
debarment provisions, the same provisions are generally included in the
NCR.
[7] EPLS is the single repository for suspensions, proposed and actual
debarments, as well as other exclusions related to federal procurement
and nonprocurement activities. The database can be accessed at
www.epls.gov.
[8] FAR 9.404.
[9] GAO, Procurement: Suspension and Debarment Procedures, GAO/NSIAD-
87-37BR (Washington, D.C.: Feb. 13, 1987).
[10] Adequate evidence means information sufficient to support the
reasonable belief that a particular act or omission has occurred.
Indictment constitutes adequate evidence for suspension. FAR 2.101; FAR
9.407-2.
[11] A preponderance of the evidence means proof by information that,
compared with that opposing it, leads to the conclusion that the fact
at issue is more probably true than not. FAR 2.101.
[12] One of these administrative agreements was reached with WorldCom.
See GAO, GSA Actions Leading to Proposed Debarment of WorldCom, GAO-04-
741R (Washington, D.C.: May 26, 2004) for more information on the
proposed debarment of WorldCom, Inc.
[13] Voluntary exclusions are another form of alternative remedy
provided for by the NCR. These exclusions are referred to as
governmentwide exclusion agreements, which are based on the terms of
settlement between an entity and one or more federal agencies.
[14] For DOD agencies, a number of these elements are required. See,
for example, DFARS subpart 203.70.
[15] FAR 9.405; DFARS 209.405.
[16] Additionally, FAR precludes contractors from entering into
subcontracts in excess of $25,000 with a contractor that is debarred,
suspended, or proposed for debarment unless there is a compelling
reason to do so, and so notifies the contracting officer before
entering into such a subcontract. FAR 52.209-6.
[17] FAR 9.407-1(c) and 9.406-1(b).
[18] Affiliates are business concerns, organizations, or individuals
where, directly or indirectly, one controls the other or a third party
controls both. FAR 9.403.
[19] FAR 9.404(c).
[20] Unique identifiers also include an individual's Social Security
number, Employer Identification Number, or other Taxpayer
Identification Number.
[21] Contracting officers are required to consult EPLS (1) after
opening bids or receipt of proposals, and (2) immediately prior to
contract award. FAR 9.405(d)(1) and (4). Additionally, for acquisitions
where the contract value is expected to exceed the simplified
acquisition threshold, which is generally $100,000, FAR requires
offerors to certify that they are not presently debarred, suspended,
proposed for debarment, or declared ineligible for the award of
contracts by any federal agency. FAR 52.209-5 and FAR 52.212-3(h).
[22] EPLS allows either exact or partial name searches.
[23] To determine whether suspended or debarred contractors were
receiving new contracts during a period of exclusion, we compared
44,634 records for excluded parties in EPLS with 1,006,919 contracting
actions listed in FPDS for fiscal year 2003--the latest year for which
complete data were available at the time of our review.
[24] Most of these exclusions are for individual service providers,
such as physicians, who have engaged in fraud and have been excluded
from participation in federal health care programs.
[25] The ISDC was created by Executive Order 12549 in February 1986.
[26] www.jagcnet.army.mil/ARMYFRAUD.
[27] DFARS § 209.405.
[28] GAO has recently reported on contractors who have unpaid federal
tax debt. See GAO, Financial Management: Thousands of Civilian Agency
Contractors Abuse the Federal Tax System with Little Consequence, GAO-
05-637, (Washington, D.C.: June 16, 2005).
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