Thursday, October 11, 2012

Too Big to Fail (or Too Big to be Suspended or Debarred)

Most of you remember 2010 when the President declared there were certain banks that were too big to fail and as a result, the Government stepped in and made costly bailouts to prevent a wreck of the entire economy. A similar thing happens in Government contracting. Normally, a suspended or debarred contractor cannot receive contracts. However, there are very large contractors who have been suspended or debarred but continue to be awarded Government contracts. All you need is for the head of some Agency to write up a "compelling reason" (see FAR 9.405).

FAR contains examples of "compelling reasons" but broadens the list be stating it is not all inclusive. Examples include:

  • Only a debarred or suspended contractor can provide the supplies or services;
  • Urgency requires contracting with a debarred or suspended contractor;
  • The contractor and a department or agency have an agreement covering the same events that resulted in the debarment or suspension and the agreement includes the department or agency decision not to debar or suspend the contractor; or
  • The national defense requires continued business dealings with the debarred or suspended contractor. 

These compelling reasons are broad enough so that the Government can pretty much do what it wants or needs to do, irrespective of whether a particular contractor has been suspended or debarred. Sometimes these compelling reasons are legitimate (how many companies can build ships, or planes, or tanks?). Other times, the justification seems contrived.

Information concerning suspended or debarred contractors is difficult to obtain. You can find the information in the Government's Excluded Party List System (EPLS) if you have the time and fortitude. Trying to find the Government's justification to override a suspension/debarment penalty however, is nearly impossible, although there is a DoD requirement to submit all compelling reason determinations to the General Services Administration (GSA).

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