[House Report 113-669]
[From the U.S. Government Publishing Office]
113th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 113-669
======================================================================
STOP UNWORTHY SPENDING ACT
_______
December 12, 2014.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Issa, from the Committee on Oversight and Government Reform,
submitted the following
R E P O R T
[To accompany H.R. 3345]
[Including cost estimate of the Congressional Budget Office]
The Committee on Oversight and Government Reform, to whom
was referred the bill (H.R. 3345) to amend title 31, United
States Code, to consolidate suspension and debarment offices,
and for other purposes, having considered the same, report
favorably thereon with amendments and recommend that the bill
as amended do pass.
CONTENTS
Page
Committee Statement and Views.................................... 3
Section-by-Section............................................... 13
Explanation of Amendments........................................ 16
Committee Consideration.......................................... 16
Application of Law to the Legislative Branch..................... 16
Statement of Oversight Findings and Recommendations of the
Committee...................................................... 16
Statement of General Performance Goals and Objectives............ 16
Duplication of Federal Programs.................................. 16
Disclosure of Directed Rule Makings.............................. 17
Federal Advisory Committee Act................................... 17
Unfunded Mandate Statement....................................... 17
Earmark Identification........................................... 17
Committee Estimate............................................... 17
Budget Authority and Congressional Budget Office Cost Estimate... 17
Changes in Existing Law Made by the Bill as Reported............. 19
The amendments (stated in terms of the page and line
numbers of the introduced bill) are as follows:
Page 4, line 2, insert ``suspension and debarment'' after
``contrary''.
Page 5, lines 23 and 24, strike ``case management system,''.
Page 6, after line 16, insert the following:
``(B) The number and summary of agency head
determinations, if any, that allowed a
suspended or debarred contractor, grantee, or
other recipient of Federal financial assistance
to receive new Federal funds.
Page 6, line 17, strike ``(B)'' and insert ``(C)''.
Page 12, line 18, strike ``and''.
Page 12, line 24, strike the period and insert ``; and''.
Page 12, after line 24, insert the following:
``(D) the number and summary of agency head
determinations, if any, that allowed a
suspended or debarred contractor, grantee, or
other recipient of Federal financial assistance
to receive new Federal funds.
Page 16, strike lines 4 through 8 and insert the following:
``(4) Timely referrals and processing of cases.--
``(A) The regulation shall provide procedures
to strengthen timely referrals of cases,
including--
``(i) the role of the agency remedy
coordination official to act upon cases
brought to such official's attention in
a timely manner (as required in section
7 of the SUSPEND Act); and
``(ii) requirements for the Board or
the agency suspension and debarment
office to review the sufficiency of the
information in the referred cases and
to notify the agency remedy
coordination official and cognizant
Inspector General (if the case is
originated from the Office of Inspector
General) within 30 days after the
initial referral date for any
additional information if needed.
``(B) The regulation shall require all cases
to be disposed of within 6 months after the
initial referral date, unless the Chair of the
Board or the agency suspension and debarment
officer provides a written explanation and
estimated timeline to the agency remedy
coordination official and cognizant Inspector
General (if the case is originated from the
Office of Inspector General). Such written
explanation shall be updated every 3 months
until the final resolution of the case.''.
Page 17, line 14, after ``2(b)(2)'' insert ``and the merits
of any such waiver''.
Page 19, line 11, after ``by'' insert ``the Office of
Inspector General of the agency or''.
Committee Statement and Views
PURPOSE AND SUMMARY
The Federal Government seeks to protect the taxpayer by
ensuring public funds are not improperly dissipated.\1\ To that
end, federal agencies are required to award contracts and
grants only to responsible sources that are ``reliable,
dependable and capable of performing the work.''\2\
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\1\See Kate M. Manuel, Cong. Research Serv., RL34753, Debarment and
Suspension of Government Contractors: An Overview of the Law Including
Recently Enacted and Proposed Amendments, at 4 (2012).
\2\U.S. Gov't Accountability Office, GAO-11-739, Suspension and
Debarment: Some Agency Programs Need Greater Attention, and
Governmentwide Oversight Could be Improved, at 1 (2011) [hereinafter
``GAO-11-739''].
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Suspension and debarment (S&D) are two of the most powerful
tools agencies can--and should--use to protect the government's
interests\3\ and ``ensur[e] contract and program
integrity.''\4\ It is not designed to punish contractors or
grantees for past misconduct.\5\ The Committee on Oversight and
Government Reform (the Committee) recognizes the need for a
robust S&D program to maintain public trust and to provide a
level playing field for all responsible entities seeking
federal financial awards.
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\3\See id. at 22. A debarment typically lasts for a period that is
commensurate with the cause and generally does not exceed three years.
See Kate M. Manuel, Cong. Research Serv., R40633, Responsibility
Determinations Under the Federal Acquisition Regulation: Legal
Standards and Procedures, at 4 (2013). A suspension lasts as long as
any agency investigation of the underlying conduct or ensuing legal
proceeding is ongoing. Id. The effect of a suspension or debarment is
government-wide and not specific to an agency or contract. Id. If no
legal proceeding is initiated, the suspension cannot exceed 12 months
unless an extension is requested. See FAR 9.407-4 (2008). Any extension
that is granted can last no longer than 6 months. See id.
\4\Interagency Suspension and Debarment Comm. (ISDC) Rep. on
Federal Agency Suspension and Debarment Activities (Sept. 18, 2012),
available at http://www.epa.gov/isdc/pdf/
isdc_section_873_fy_2011_report_to_congress_lieberman.pdf [hereinafter
ISDC Annual Report].
\5\See Steven Gordon & Richard Duvall, United States: It's Time to
Rethink the Suspension and Debarment Process, Bloomberg BNA, 99 FCR
720, at 1 (June 18, 2013), available at http://www.hklaw.com/files/
Publication/dd6ffa6c-039a-48a7-9332-0160fec0dae4/Presentation/
PublicationAttachment/88ff0ebe0999e7-4094-b1e0-042dbc630a41/
TimeToRethinkSuspensionandDebarmentDuvallGordon.pdf.
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The Federal Government spends over $1 trillion in contracts
and grants annually (in fiscal year 2012, $517 billion in
contracts and $536 billion in grants).\6\ Yet, despite the
intense Congressional oversight efforts in recent years, the
United States Government Accountability Office (GAO) and the
Committee's hearings have found that there are serious
weaknesses in the S&D programs of numerous agencies.\7\
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\6\See U.S. Gov't Accountability Office, GAO-13-758, Federal Data
Transparency: Opportunities Remain to Incorporate Lessons Learned as
Availability of Spending Data Increases (2013) (highlights); U.S. Gov't
Accountability Office, GAO-13-707T, Suspension and Debarment:
Characteristics of Active Agency Programs and Governmentwide Oversight
Efforts (2013) (statement of John Neumann, Director, Acquisition and
Sourcing Management, U.S. Gov't Accountability Office).
\7\Protecting Taxpayer Dollars: Is the Government Using Suspension
and Debarment Effectively?: Hearing before the H. Comm. on Oversight
and Gov't Reform, 113th Cong. (2013) (statement of John Neumann,
Director, Acquisition and Sourcing Management, U.S. Gov't
Accountability Office), (statement of Scott Amey, General Counsel,
Project on Government Oversight); see also GAO-11-739, supra note 2, at
3, 6.
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These weaknesses have resulted in the award of federal
funds to companies and individuals who are not responsible
contractors or grantees--including those with criminal
convictions, federal tax liabilities, or terrorist ties. It has
also demonstrated that some agencies are either extremely
deficient in finding fraud or that their programs are
practically non-existent--either due to a lack of dedicated
staff or a lack of commitment to S&D on the part of the agency.
For example, according to the Interagency Suspension and
Debarment Committee (ISDC), the Department of Health and Human
Services (HHS), while awarding $402 billion in contracts and
grants in fiscal year 2011 (which accounted for more than one
third of the entire federal government contracts and grants
spending for the year), had a total of 10 discretionary
suspension or debarment actions.\8\ In fiscal year 2012, the
agency had a total of just 2 discretionary suspension or
debarment actions while awarding $363 billion in contracts and
grants.\9\ Similarly, the Department of Labor (Labor), the
Office of Personnel Management, and the Social Security
Administration took zero discretionary S&D actions, while
awarding approximately $11.6 billion, $1.6 billion, and $1.3
billion respectively in contracts and grants in fiscal year
2012.\10\
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\8\ISDC Annual Report, supra note 5, at 22.
\9\See FY 2012--Preliminary Data from ISDC, E-mail from ISDC to
Eric Cho, H. Comm. on Oversight and Gov't Reform (Oct. 24, 2013, 16:47
EST) (on file with recipient); USASpending.gov.
\10\See id.
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In 2011, GAO found commonalities amongst those agencies
with negligible or weak S&D activities, which do not appear to
reflect the level of activity needed to protect their agencies
and the government from harm. Common at those agencies is the
lack of: (1) a dedicated staff; (2) detailed policies and
procedures; and (3) practices that encourage an active referral
process.\11\
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\11\GAO-11-739, supra note 2, at 12.
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The S&D process at some agencies has also been further
criticized for a lack of access to the system and a lack of
transparency.\12\ Currently, there is little consistency
between agencies' S&D programs, with different agencies
employing significantly different approaches to the S&D
process. For example, there are wide disparities in such key
areas as:
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\12\See Protecting Taxpayer Dollars: Is the Government Using
Suspension and Debarment Effectively?: Hearing before the H. Comm. on
Oversight and Gov't Reform, 113th Cong. (2013).
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The use and frequency of use of show cause
letters\13\ vs. direct notices of suspension or proposed
debarment.
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\13\Show cause letters are ``pre-notice communications, which
advise an entity that it is being considered for suspension or proposed
debarment.'' ISDC Annual Report, supra note 5, at 8. 10 out of the 24
Chief Financial Officers Act (``CFO Act'') agencies used show cause
letters in fiscal year 2011. See id.
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Different views on acceptable remedial measures
such as administrative compliance agreements.
The process by which S&D cases are prepared and
referred to.
The process by which administrative records are
prepared.
The process by which informal no action decisions
are made and documented.
The use of consensus panels.
What ``informal procedures''\14\ are employed and
communication afforded to the accused.
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\14\The FAR calls for informal practices whenever possible when
dealing with a vendor. See FAR 9.406-3(b)(1) (2013) (``agencies shall
establish procedures governing the debarment decisionmaking process
that are as informal as is practicable'').
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The Stop Unworthy Spending Act (SUSPEND Act) reforms S&D
procedures and overhauls the organizational management of S&D
activity across the government.
Procedurally, it improves consistency and transparency by:
i) Combining the two separate S&D regulations
governing contracts and grants into a single,
comprehensive regulation;\15\
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\15\See How Convicts and Con Artists Receive New Federal Contracts:
Hearing before the H. Comm. on Oversight and Gov't Reform, 111th Cong.
(2009) (statement of Frederic M. Levy, Partner, McKenna Long &
Aldridge). The single regulation has been suggested by the American Bar
Association, Public Contract Law Section, Committee on Debarment and
Suspension. Its draft Report on the Study of Federal Debarment and
Suspension Processes, however, was not finalized. See id. The single
regulation will provide contractors with greater access to the
processes behind the suspension and debarment system.
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ii) Requiring consistent use of show cause letters to
ensure accused parties are heard prior to any adverse
action being taken against them;\16\
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\16\See Protecting Taxpayer Dollars: Is the Government Using
Suspension and Debarment Effectively?: Hearing before the H. Comm. on
Oversight and Gov't Reform, 113th Cong. (2013) (Testimony of Angela
Styles, Partner, Crowell & Moring).
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iii) Mandating a single government-wide case
management system to track cases and make publicly
available all final resolutions of S&D cases; and
iv) Enhancing oversight of the excluded parties
database (known as the System for Award Management or
SAM)\17\ to ensure accuracy, timeliness, and
completeness.
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\17\SAM includes the list of all known excluded entities. Under the
SUSPEND Act, the Board of Suspension and Debarment would be required to
oversee SAM contains a complete and accurate list of all excluded
entities.
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It also requires standard procedures for an expedited
review process to handle contract or grant fraud in a
contingency or time-sensitive environment, in both military and
non-military settings.
Organizationally, the SUSPEND Act consolidates more than 40
executive agency S&D offices into one centralized board--the
Board of Suspension and Debarment (the Board). This is akin to
a successful reform effectuated by the Committee almost a
decade ago, which consolidated what was then eight separate
civilian agency Boards of Contract Appeals (as part of fiscal
year 2006 National Defense Authorization Act) into a single
entity.\18\
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\18\See The Honorable Jeri Kaylene Somers, The Board of Contract
Appeals: A Historical Perspective, 60 AM. U. L. REV. 745, 755-56 (2011)
(noting the consolidation of the civilian boards ``has been extremely
successful, optimizing the role boards play in resolving contract
disputes'').
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By consolidating the S&D offices, the Board will foster
more government-wide consistency for how discretionary S&D
actions are managed and tracked and ensure agencies have
dedicated staff and resources committed to creating a robust
S&D referral program. The Board will also be able to optimize
the staff and administrative resources necessary to accommodate
S&D caseloads, thereby reducing costs and increasing
efficiencies.\19\
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\19\Currently, there are approximately 80 full time and 149 part
time attorneys and staff engaged in S&D activities in civilian
agencies. The Department of Defense has 24 full time and 8 part time
attorneys and staff. Overall, there are estimated 104 full time and 157
part time staff in 24 CFO Act agencies. See ISDC, Supplemental to CRS
Inquiry, Federal Suspension and Debarment Programs.
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However, larger (CFO Act) agencies and the military
departments can continue to operate their own independent S&D
offices if granted a waiver upon demonstration of an effective
S&D program. Specifically, those agencies need to show: (1) a
dedicated S&D staff; (2) detailed agency-specific policies and
procedures relating to S&D; (3) practices that encourage an
active S&D referral process; (4) a consolidated S&D program
with only one individual with the title of Suspension and
Debarment Officer (SDO); and (5) average annual dispositions of
50 or more S&D cases.\20\
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\20\Id. Fifty cases were chosen simply as an approximate number to
ensure that the SDO had enough caseloads to occupy him or herself full-
time. A disposition may be an adverse action, a decision not to
proceed, or any other appropriate action. In the DoD components--DLA,
Navy, Army and Air Force--suspension and debarment officers handled
3,443 S&D between fiscal years 2009 through 2011. See U.S. Gov't
Accountability Office, GAO-12-932, Suspension and Debarment: DOD has
Active Referral Processes, but Action Needed to Promote Transparency,
at 3 (2012) (note this number only includes those proposed for
debarment or suspension actions and does not track how many referrals
each military department received). DLA alone handled 1,168 cases
during fiscal years 2009 through 2011. Id. (noting DLA has three full
time attorneys working on S&D cases).
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The bill strengthens the existing ISDC by formalizing and
codifying it in statute (it currently operates pursuant to an
Executive Order) and by designating as Chair, the Administrator
of OMB's Office of Federal Procurement Policy (OFPP). The ISDC
currently operates both as a ``forum for agencies to discuss
best practices and trends, and current issues and challenges,''
and is ``a coordinating body to promote efficient handling of
actions by ensuring there is a `lead agency' when two or more
agencies have an interest in initiating suspension or debarment
proceedings.''\21\ Even with the consolidation of agency S&D
programs, it will still be necessary for the ISDC to coordinate
lead agency functions amongst the Board and the agencies
granted a waiver under the SUSPEND Act.\22\
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\21\ISDC Annual Report, supra note 5, at 1.
\22\See id.
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The bill also requires joint Agency Head/Inspector General
guidance in each agency to institutionalize efficient agency-
wide coordination of remedies for fraud and corruption related
to procurement and grant activities, including legal,
regulatory, administrative, and contractual remedies to
maximize timely recovery of funds.
Finally, the bill will strengthen the identification and
referral of contractors and grantees that repeatedly fail to
perform. Too often, a contractor is awarded a new government
contract despite a lengthy history of poor performance on
government contracts.\23\
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\23\See Kate M. Manuel, Cong. Research Serv., R41562, Evaluating
the Past Performance of Federal Contractors, at 1 (2013) (noting there
are recent reports documenting that some contractors received new
contracts despite allegedly deficient performance); see also Neil
Gordon, Healthcare.gov Reveals Flaws in Contractor Screening, POGO
BLOG, (Jan. 3. 2014), http://www.pogo.org/blog/2014/01/healthcaregov-
debacle-revelas-flaws-in-contractor-screening.html.
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BACKGROUND AND NEED FOR LEGISLATION
Government's inconsistent performance in managing S&D
GAO has consistently reported on weaknesses in agencies'
S&D programs and on the weaknesses of the system as a whole. In
2005, GAO reported that ``federal agencies may not be
consistently identifying suspended or debarred contractors when
awarding new contracts.''\24\ Specifically, GAO found the
Excluded Parties List System (EPLS) contained insufficient data
because it did not allow agencies to input contractor's unique
identification numbers.\25\ The report made two
recommendations: (1) make contractor identification numbers a
required field on the EPLS, and (2) increase data sharing on
administrative agreements.\26\
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\24\GAO-11-739, supra note 2, at 6; see also U.S. Gov't
Accountability Office, GAO-05-479, Additional Data Reporting could
Improve the Suspension and Debarment Process, (2005).
\25\GAO-05-479, supra note 27, at 3.
\26\Id.
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In 2009, GAO found that some contractors continued to
receive federal funds despite the fact that they were
ineligible to be awarded contracts.\27\ This, in part, was due
to the continuing weaknesses of the EPLS system--ineffective
management of the system and missing unique identification
numbers, even though GAO in 2005 recommended that the unique
identifiers be a required field in the system.\28\ In addition,
contracting officers often received ``no results from EPLS
searches because of typographic and user input errors.''\29\
SAM, the system now hosting the excluded parties list used by
all contracting and grant officers, remains incomplete,
inaccurate, and not user-friendly.
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\27\ GAO-11-739, supra note 2, at 6; see also U.S. Gov't
Accountability Office, GAO-09-174, Excluded Parties List System:
Suspended and Debarred Businesses and Individuals Improperly Receive
Federal Funds (2009). While the FAR recognizes that there are some
circumstances where it is appropriate to award a contract to a
suspended or debarred contractor, such circumstances must be
compelling. FAR 9.405(a).
\28\See GAO-09-174, supra note 30, at 16; GAO-05-479, supra note
27, at 3.
\29\Inspector General Report, No. D-2011-83, Additional Actions Can
Further Improve the DoD Suspension and Debarment Process, at 19 (July
14, 2011) [hereinafter Inspector General Report].
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In 2011, GAO again issued a report on the status of
agencies' S&D programs.\30\ GAO found that only 16 percent of
the cases included on EPLS were discretionary suspensions or
debarments over the last five fiscal years, suggesting a
systemic weakness in referral process.\31\ The remaining 84
percent of the cases ``were other exclusions based on
violations of laws and regulations resulting from certain
prohibited conduct.''\32\ Such exclusions are mandatory because
they are required by statute.\33\ Though GAO noted that some
agencies have effective S&D programs, many agencies do not.\34\
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\30\GAO-11-739, supra note 2.
\31\Id. at 7.
\32\Id.
\33\See Manuel, supra note 1, at 1-2.
\34\See GAO-11-739, supra note 2, at 3.
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In addition to GAO's findings, the Committee's hearings
found that the current system produces inconsistent results and
leaves each agency to devise individual procedures in handling
suspension or debarment cases. For example, though some
agencies use ``show cause'' letters in S&D proceedings, other
agencies either do not use such letters or are not fully aware
of this process.\35\ Similarly, not all agencies use
administrative agreements to help resolve suspensions and
debarments and the content of those administrative agreements
can vary significantly amongst the various agencies.\36\
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\35\See Protecting Taxpayer Dollars: Is the Government Using
Suspension and Debarment Effectively? Hearing Before the H. Comm. on
Oversight and Gov't Reform, 113th Cong. (2013) (Testimony of Angela
Styles, Partner, Crowell & Moring). Significantly, recent studies
report a ``general lack of awareness about suspension and debarment,
including limited knowledge about the procedures/criteria associated
with these actions.'' Manuel, supra note 1, at 17.
\36\See ISDC Annual Report, supra note 5, at 9.
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Recently, at an Oversight and Government Reform (OGR)
subcommittee hearing concerning the Special Inspector General
for Afghanistan Reconstruction (SIGAR), the lack of effective
S&D referral and case management in contingency settings was
seen as a significant source of waste and performance
risks.\37\
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\37\See also Commission on Wartime Contracting in Iraq and
Afghanistan, Transforming Wartime Contracting: Controlling Costs,
Reducing Risks, Final Report to Congress, 156, 157 (Aug. 2011),
available at http://cybercemetery.unt.edu/archive/cwc/20110929213820/
http://www.wartimecontracting.gov/docs/CWC_FinalReport-lowres.pdf.
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Finally, despite GAO issuing guidance to the agencies to
assess and strengthen their S&D programs, a report by the ISDC
(dated September 18, 2012) reflected persistent weaknesses
amongst some of the agencies such as HHS, Commerce, Labor, and
the Department of Veterans Affairs (VA).\38\
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\38\See generally id.
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There is also currently not enough emphasis on suspending
or debarring contractors and grantees that repeatedly fail to
perform. Time and time again, agencies award contracts to those
contractors or grantees that have a history of repeated bad
performance.\39\ The SUSPEND Act addresses this problem by
making it clear that the single regulation adopted must
strengthen the identification and referral process of those
contractors and grantees that repeatedly fail to perform.
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\39\See Protecting Taxpayer Dollars: Is the Government Using
Suspension and Debarment Effectively?: Hearing Before the H. Comm. on
Oversight and Gov't Reform, 113th Cong. (2013) (Testimony of Scott
Amey, General Counsel, Project on Government Oversight) (noting the
Army used multiple contractors in Iraq with a ``laundry list of
allegations against them''). Agencies may also waive a contractor's
exclusion which allows the contract to be awarded to a contractor or
grantee that is currently included on the EPLS. See Manuel, supra note
1, at 13.
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Dual regulations for procurement and non-procurement programs
There are currently two separate regulations governing S&D
for procurement and non-procurement programs.\40\ FAR Subpart
9.4--promulgated by the Office of Federal Procurement Policy
(OFPP) governs procurement regulations, while the non-
procurement common rule governs anything other than a
procurement. This includes such thing as ``grants, cooperative
agreements, scholarships, fellowships'' and many others.\41\ If
a contractor is excluded under one of the regulations, there is
reciprocity between both of the regulations and it counts as a
suspension or debarment Government-wide.\42\
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\40\Those two regulations are FAR Subpart 9.4 which governs
procurement and 2 CFR Sec. 180 (2013) (as governed by OMB guidance).
\41\2 CFR Sec. 180.970 (2013).
\42\GAO-11-739, supra note 2, at 5 (noting ``a suspension or
debarment under either the FAR or the NCR is recognized under the other
and a party precluded from participating in federal contracts is also
excluded from receiving grants, loans, and other assistance and vice
versa.'').
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In 2008, the Suspension and Debarment Committee of the ABA
Public Contract Law Section suggested that the two regulations
be consolidated into one regulation with the non-procurement
common rule approach being adopted, which does not exclude a
contractor upon receipt of a ``Notice of Proposed
Debarment.''\43\
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\43\How Convicts and Con Artists Receive New Federal Contracts:
Hearing before the H. Comm. on Oversight and Gov't Reform, 111th Cong.
(2009) (statement of Frederic M. Levy, Partner, McKenna Long &
Aldridge).
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Persistent problems with the system for award management
Previously, separate acquisition systems tracked different
aspects of the procurement process, described as follows. The
EPLS listed all those individuals or organizations that were
excluded from doing business with the Federal Government.\44\ A
contracting officer was required to check the EPLS before
awarding funds to a prospective vendor.\45\ The Central
Contract Registration (CCR) system was the primary supplier
database for the Federal Government. Finally, the Online
Representations and Certification Application (ORCA) collected
``vendor representations and certifications of business
information that is required by law for contract award.''\46\
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\44\See GAO-09-174, supra note 30, at 6.
\45\Id. at 1.
\46\Crater Procurement Assistance Center, Online Representations
and Certifications Application (ORCA), http://craterptac.org/
federal_procurement/orca.php (last visited Feb. 21, 2014).
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In 2012, as the first phase of the Integrated Acquisition
Environment effort, these three systems were consolidated into
the System of Award Management (SAM). Issues with SAM were
present from the start.\47\ When the system first went online
in July, it had to almost immediately be taken off-line due to
performance issues.\48\ This delayed the issuance of timely
awards and also caused some agencies to stop using the system
altogether.\49\ More recently, GSA officials identified
security vulnerabilities in SAM, some of which allowed existing
users in the system to view others' registration
information.\50\
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\47\See Matthew Weigelt, GSA's SAM continues to frustrate its
users, FCW, (Sept. 13, 2012), http://fcw.com/articles/2012/09/15/buzz-
system-for-award-management-gsa.aspx.
\48\See id.
\49\See id.
\50\See General Services Administration, System for Award
Management Security Vulnerability FAQs, http://www.gsa.gov/portal/
content/167855.
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As was the case with the EPLS, a contracting officer is
required to check the SAM exclusions list before contract
award.\51\
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\51\FAR 9.405 (2013).
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Inconsistent application of administrative agreements
Use of administrative agreements is increasing in recent
years.\52\ In a 2012 report, GAO found DoD used such agreements
in 30 cases over a three-year period.\53\ Administrative
agreements are currently unregulated; it is up to the
discretion of the SDO as to whether or not to enter into an
administrative agreement.\54\
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\52\See Gordon & Duvall, supra note 6.
\53\See id. The three-year period tracked was for fiscal years 2009
through 2011. Id.
\54\See id.
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Administrative agreements can be used in lieu of suspension
or debarment where the SDO decides it is inappropriate to take
suspension or debarment action at the time.\55\ These
agreements are designed to ensure compliance such that future
S&D action will be unnecessary.\56\ Administrative agreements
usually include ``a requirement for a code of ethics, a
training and compliance program, and a mechanism for reporting
misconduct.''\57\ Violations of administrative agreements can
lead to S&D actions.\58\
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\55\See Protecting Taxpayer Dollars: Is the Government Using
Suspension and Debarment Effectively?: Hearing before the H. Comm. on
Oversight and Gov't Reform, 113th Cong. (2013) (statement of Angela B.
Styles, Partner, Crowell & Moring).
\56\See id.
\57\See Inspector General Report, supra note 32, at 3.
\58\See id.
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Mandatory disclosure rule
In February 2007, the Civilian Agency Acquisition Council
and the Defense Acquisitions Regulations Council (Councils)
proposed amending the Federal Acquisition Regulation (FAR) to
require Government contractors to have a code of ethics and
business conduct and to promote Office of the Inspector General
(OIG) fraud hotlines by displaying posters.\59\ In May 2007,
the Department of Justice (DOJ) requested the Councils to
consider amending the FAR to require Government contractors to
notify the Government if they identify violations of criminal
law or contract overpayment. In response, the Office of Federal
Procurement Policy directed the FAR Councils to implement DOJ's
recommendations.\60\ The Councils proposed a mandatory
reporting requirement in response to another DOJ request in
late 2007.\61\ In the Supplemental Appropriations Act of 2008,
Congress further required that the FAR rule included ``timely
notification by Federal contractors of violations of Federal
criminal law or overpayments in connection with the award or
performance of covered contracts or subcontracts, including
those performed outside the United States and those for
commercial items.''\62\
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\59\See Contractor Code of Ethics and Business Conduct, 72 Fed.
Reg. 7588 (Feb. 16, 2007).
\60\See Karen L. Manos, Complying with the New Mandatory Disclosure
Rule, Gov't Contract Cost, Pricing and Accounting Report,. 1, Gov't
Contract Costs, Pricing & Accountability Report at 1,(2009), available
at http://www.gibsondunn.com/publications/Documents/Manos-
ComplyingWithMandatoryDisclosureRule.pdf.
\61\See Contractor Compliance Program and Integrity Reporting, 72
Fed. Reg. 64019 (Nov. 14, 2007).
\62\See Supplemental Appropriations Act, Pub. L. No. 110-252,
Sec. 6102, 122 Stat. 2386 (2008).
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The final rule took effect in December 2008.\63\ The
mandatory disclosure rule requires ``Government contractors and
subcontractors to disclose to the Government whenever they have
`credible evidence' of certain criminal violations, a violation
of the False Claims Act, or a significant `overpayment' in
connection with the award, performance or closeout of a
Government contract or subcontract.''\64\ The mandatory
disclosure rule was created as a response to the lack of
voluntary disclosures from contractors or subcontractors.\65\
---------------------------------------------------------------------------
\63\See Contractor Business Ethics Compliance Program and
Disclosure Requirements, 73. Fed. Reg. 67064, 67066 (Nov. 12, 2008).
\64\Manos, supra note 56, at 4.
\65\See Brian D. Miller, The Federal Acquisition Regulation
Mandatory Disclosure Rule Program at the U.S. General Services
Administration Office of the Inspector General, at 2 (2012), available
at http://www.gsaig.gov/?LinkServID=FC200536-C294-E918-1FD147DE0F340B80
&showMeta=0 (noting that at the time the mandatory disclosure rule took
effect, the program was receiving less than 10 disclosures per year).
---------------------------------------------------------------------------
The Committee is aware that some agencies with weak or
deficient S&D programs also appear to have weak mandatory
disclosure programs. These agencies either do not have a
specific point person for outside entities to disclose
reportable incidents or do not have an established process to
handle disclosures. The number of disclosures vary widely among
agencies, with no reasonable association with the volume of
contracting activities, while a handful agencies report no or
very few disclosures.\66\ Most agencies use the OIG to handle
disclosures, but some do not. For example, multiple components
within HHS handle disclosures in that agency.\67\
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\66\For example, the Department of Treasury received 0 disclosures
from the date of enactment of the mandatory disclosure rule, while the
Department of Energy and the Department of Veterans Affairs had just 1
and 3 disclosures, respectively. See E-mail from Sheldon Shoemaker,
Special Assistant to the Inspector Gen., Small Bus. Admin. to Eric Cho,
H. Comm. on Oversight and Gov't Reform (Mar. 13, 2014, 10:15 EST) (on
file with recipient).
\67\See id. The components that handle mandatory disclosures within
HHS include: the Office of Counsel to the Inspector General, the Office
of Audit Services, and the Office of Investigations. See id.
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The Committee believes that there should be a single
component within the agency, such as the OIG, with clear
procedures to handle disclosures under the mandatory disclosure
rule. Serious violations should also be referred from the OIG
to the agency's S&D official for further review.
Oversight by the House Oversight and Government Reform Committee
The SUSPEND Act is the outgrowth of Committee hearings
concerning the effectiveness of the Government's current S&D
programs in light of reports detailing the numerous flaws in
the current system.\68\ Starting in the 112th Congress, the
Committee began a detailed inquiry concerning each agency's S&D
program.
---------------------------------------------------------------------------
\68\See, e.g., GAO-11-739, supra note 2, at 6; Manuel, supra note
1, at 16-17 (noting studies found the vast majority of debarment
actions mandatory).
---------------------------------------------------------------------------
On October 6, 2011, the Committee held a hearing entitled:
``Protecting Taxpayer Dollars: Are Federal Agencies Making Full
Use of Suspension and Debarment Sanctions?'' This hearing
examined why some agencies are effective at using the S&D
remedy to weed out contractors who defraud the government while
others languish far behind. This hearing highlighted
characteristics of agencies with effective S&D programs while
illustrating the substantial weaknesses of other agencies' S&D
programs.
On June 12, 2013, the Committee held a hearing entitled:
``Protecting Taxpayer Dollars: Is the Government Using
Suspension and Debarment Effectively?'' This hearing once again
examined the continued shortcomings of the S&D system such that
inconsistent and fragmented approaches persisted and contracts
continue to be awarded to contractors or grantees where failure
has been the past result. It also took note of the recent
growth in grants spending. This hearing highlighted that the
S&D process is still in disarray and that greater and more
comprehensive reform is needed.
Though there has been some improvement with S&D in recent
years, the Committee's hearings have established the need for
further S&D reform. In a time where there are constant news
reports regarding another contractor who has defrauded the
government or repeatedly failed to perform its contracts, it
has never been more important to have a robust S&D process. In
order to better protect the taxpayer and the business interests
of the Federal Government and to provide a level playing field
for vast majority of companies and individuals that are
responsible contractors and grantees, the S&D process needs to
become more transparent, consistent, and effective.
Divergent statutory and debarment practices
In addition to weaknesses in agencies' S&D programs, there
has also been a growing amount of legislation from various
Congressional members creating mandatory statutory suspensions
and debarments.\69\ The 112th Congress enacted or considered
numerous narrowly-focused measures to bolster the S&D function.
These proposals, while well-intentioned, are often impractical
or have limited outcomes (see e.g., P.L. 112-74; P.L. 112-81;
P.L. 112-56; H.R. 2838; H.R. 3184; H.R. 3338; H.R. 3588; H.R.
3638; S. 914; S. 1196; S. 1258; S. 1363; S. 1472).\70\ They are
ineffective because they impose mandatory statutory debarments
in specific circumstances, tying the hands of the S&D offices
and transforming the system into a punitive approach that
diverges from the basic purpose of S&D, i.e. to protect the
business interests of the government.\71\ Without comprehensive
reform, these trends are likely to continue.
---------------------------------------------------------------------------
\69\See American Bar Association, Public Contract Law Section,
Committee on Debarment and Suspension, Report on the Study of Federal
Debarment and Suspension Processes Working Draft (2008) [hereinafter
ABA 2008 Working Draft]; see also Jessica Tillipman, The Congressional
War on Contractors, 45 Geo. Wash. Int'l L. Rev. 235 (2013).
\70\Some of these proposals are discussed in more detail infra.
\71\See ABA 2008 Working Draft, supra note 47, at 1; Tillipman,
supra note 47, at 236-37.
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LEGISLATIVE AND POLICY HISTORY
Office of Management and Budget guidance on S&D
On November 15, 2011, Jacob Lew, then-Director of the
Office of Management and Budget (OMB), released a Memorandum
following a GAO report directing the 24 agencies subject to the
Chief Financial Officers Act (``CFO Act'') to take action to
strengthen their S&D programs.\72\ The Memorandum specified
action to be taken in the following four areas:
---------------------------------------------------------------------------
\72\Memorandum from Jacob J. Lew, Director, U.S. Office of Mgmt. &
Budget, to the Heads of Executive Dep'ts and Agencies (Nov. 15, 2011),
available at http://www.whitehouse.gov/sites/default/files/omb/
memoranda/2012/m-12-02.pdf.
---------------------------------------------------------------------------
(1) Appoint a senior accountable official, if one has not
already been designated, who shall be responsible for: (a)
assessing the agency's suspension and debarment program,
including the adequacy of available training and resources
(including, where appropriate, full-time staff), (b) ensuring
the agency maintains effective internal controls and tracking
capabilities, taking into consideration the agency's mission,
organizational structure, and level of procurement and grant-
making activities; and (c) ensuring that the agency
participates regularly on the Interagency Suspension and
Debarment Committee.\73\
---------------------------------------------------------------------------
\73\Id.
---------------------------------------------------------------------------
(2) Review internal policies, procedures, and guidance to
ensure that the agency is protecting the Government's interests
and taxpayer funds by effectively using suspension and
debarment, when appropriate, as well as other remedies
available to the agency that are designed to ensure, before an
award is made, that potential contractors and recipients have
the requisite business integrity.\74\
---------------------------------------------------------------------------
\74\Id.
---------------------------------------------------------------------------
(3) Ensure that the agency's award official(s) review
relevant databases and other information sources prior to the
award of any Federal grants, contracts, or benefits, to prevent
awards from being made to entities that are suspended or
debarred or are otherwise non-responsible.\75\
---------------------------------------------------------------------------
\75\Id.
---------------------------------------------------------------------------
(4) Take prompt corrective action, including appropriate
action regarding the specific award and establishment of
systemic controls and procedures to prevent recurrence, when
the agency determines that it improperly made an award to a
suspended or debarred entity.\76\
---------------------------------------------------------------------------
\76\Id.
---------------------------------------------------------------------------
The Memorandum also directed the ISDC to assist the
agencies with these activities and to ``develop training and
share best practices, ensure effective interagency coordination
of suspension and debarment actions, and [to] report on
agencies' activities as required.''\77\
---------------------------------------------------------------------------
\77\Id.
---------------------------------------------------------------------------
Interagency Suspension and Debarment Committee
The ISDC is designed to be a forum where agencies can
discuss best practices, trends, current issues and challenges
and is supposed to provide expert analysis and advice.\78\ The
ISDC includes about 50 member agencies and ``[c]ommittee
members meet monthly to discuss topics of interest in
Government-wide S&D'' and to ``monitor[] participation in the
Government S&D system.''\79\ The ISDC also helps to ensure
agencies demonstrate transparency and administrative fairness
when taking suspension or debarment actions.\80\
---------------------------------------------------------------------------
\78\ISDC Annual Report, supra note 5, at 1.
\79\See Inspector General Report, supra note 32, at 5.
\80\See id.
---------------------------------------------------------------------------
The ISDC came into existence in 1986 when President Reagan
issued Executive Order 12549, Debarment and Suspension.\81\
This Executive Order restricted the jurisdiction of the ISDC to
non-procurement matters.\82\ Subsequently, the ISDC's role
began to grow and it began to coordinate S&D issues throughout
the various agencies.\83\ Currently, the ISDC also serves as
``a regulatory drafting body for revisions to the government-
wide non-procurement suspension and debarment common
rule.''\84\
---------------------------------------------------------------------------
\81\Brian Young, Ready for Primetime? The Interagency Suspension
and Debarment Committee, the Non-Procurement Common Rule, and Lead
Agency Coordination, 4 Wm. & Mary Pol'y Rev. 110, 120-21 (2012).
\82\See id. at 122.
\83\See id. at 130.
\84\Todd J. Canni, Shoot First, Ask Questions Later: An Examination
and Critique of Suspension and Debarment Practice Under the FAR,
Including a Discussion of the Mandatory Disclosure Rule, the IBM
Suspension, and Other Noteworthy Developments, 38 Pub. Cont. L.J. 547,
562 (2009).
---------------------------------------------------------------------------
In 2008, Congress passed legislation which required the
ISDC to coordinate a lead agency if more than one agency had an
interest in taking a suspension or debarment action.\85\ In
addition, the legislation required the ISDC to report every
year to Congress on the status of the S&D system.\86\
---------------------------------------------------------------------------
\85\Young, supra note 57, at 111.
\86\See Duncan Hunter National Defense Authorization Act, Pub. L.
No. 110-417, Sec. 872, 122 Stat. 4356, 4555 (2008); ISDC Annual
Report, supra note 5.
---------------------------------------------------------------------------
112th Congress's Legislative Changes to S&D
The 112th Congress enacted several measures narrowly
addressing some areas of S&D in the National Defense
Authorization Act for FY2013.\87\ These included mandating a
minimum level of staffing and maintaining adequate resources
for the S&D functions of DoD, the Defense Logistics Agency, the
Department of State, and the U.S. Agency for International
Development;\88\ amending the Small Business Act ``to restate
the grounds upon which small businesses that misrepresent their
size or status (e.g., woman-owned) are suspended, and requiring
annual reports by the Small Business Administration on the
number of contractors proposed for exclusion, among other
things,\89\ and requiring that the Department of Veterans
Affairs (VA) debar for not less than five years firms that
willfully and intentionally misrepresented their status to the
VA's Veterans First Contracting program.\90\
---------------------------------------------------------------------------
\87\See National Defense Authorization Act for FY2013, Pub. L. No.
112-239, 126 Stat. 1632-2312 (2013) [hereinafter ``NDAA FY2013''].
\88\NDAA FY2013, Pub. L. No. 112-239, 126 Stat. 1632-2312 (2013).
\89\Id. at Sec. 1682-82, 126 Stat. 2086.
\90\Honoring American's Veterans and Caring for Camp Lejeune
Families Act of 2012, Pub. L. No. 112-154, Sec. 706, 126 Stat. 1206
(2012). Others measures passed by the 112th Congress that address
suspension and debarment include the following: (a) requiring
consideration of debarment and suspension in DoD guidance regarding the
remedial actions to be taken against contractors found to have supplied
counterfeit electronic parts, see National Defense Authorization Act
for FY 2012, Pub. L. No. 112-81, Sec. 818, 125 Stat. 1493-1500 (Dec.
31, 2011); (b) prohibiting the use of funds made available under
certain appropriations measures from being used to enter contracts or
agreements with corporations that have any unpaid federal tax liability
or that have been convicted of a felony under federal law within the
preceding 24 months, unless the agency has considered excluding the
company and determined the action is not necessary to protect the
interests of the government, see Manuel, supra note 1, at 19; and (c)
requiring, as part of a study and report, the number of persons who
have been debarred or suspended because of delinquent tax debt over the
past three years, see id.
---------------------------------------------------------------------------
Section-by-Section (As Amended by the Committee)
Section 1. Short Title; table of contents
Provides the title and the table of contents.
Section 2. Consolidation of suspension and debarment offices
Consolidates more than 40 executive agency S&D offices and
programs into one centralized board named the Board of
Suspension and Debarment (the Board). Encourages cost savings
by sharing administrative resources with the pre-existing
Civilian Board of Contract Appeals, also housed in GSA.
Allows larger agencies (24 agencies under the Chief
Financial Officers Act (31 U.S.C. Sec. 901(b)), listed below)
and the military departments (5 U.S.C. Sec. 102) to continue
to operate their own independent S&D offices if granted a
waiver upon demonstration of an effective S&D program within
the agency.
The Department of Agriculture, the Department of Commerce,
the Department of Education, the Department of Energy, the
Department of Health and Human Services, the Department of
Homeland Security, the Department of Housing and Urban
Development, the Department of the Interior, the Department of
Justice, the Department of Labor, the Department of State, the
Department of Transportation, the Department of the Treasury,
the Department of Veterans Affairs, the Environmental
Protection Agency, the National Aeronautics and Space
Administration, the Agency for International Development, the
General Services Administration, the National Science
Foundation, the Nuclear Regulatory Commission, the Office of
Personnel Management, the Small Business Administration, and
the Social Security Administration.
Allows an outside entity, such as the United States Postal
Service (USPS), to enter into an agreement to transfer S&D
activities to the Board as needed.
Requires the Board to oversee the government-wide excluded
parties database (i.e., the System for Award Management (SAM))
to ensure availability of timely, accurate, and complete data,
and to promote consistent and fair treatment of all persons and
entities subject to S&D proceedings, including small businesses
with limited resources.
Mandates that the annual report to Congress (by the Board
and the Interagency Suspension and Debarment Committee (ISDC))
include the number and summary of any instance where the agency
head made a determination to override the S&D decision and
allowed a suspended or debarred entity to receive new contracts
or grants.
Section 3. Interagency Suspension and Debarment Committee
Strengthens the existing ISDC by formalizing and codifying
it in statute (it currently operates pursuant to an Executive
Order) and designating as Chair, the Administrator of OMB's
Office of Federal Procurement Policy (OFPP) and as Vice Chairs,
the Chair of the Board of Suspension and Debarment and a
designee of the Secretary of Defense.
Refines the annual ISDC report process (under Sec. 873 of
FY2009 NDAA) by requiring it to be timely and to include data
on the number of referrals, timeliness of case disposition, the
breakdown of discretionary and nondiscretionary actions, and
the number and summary of any agency waivers where a suspended
or debarred entity received new federal funds.
Section 4. Single case management system
Establishes a single government-wide web-based S&D case
management system for use by the Board and agency S&D
officials. Requires the case status and the name of the
official handling the case be updated each month.
Prohibits any release of pre-decisional information,
including the names of the entities or individuals referred to,
unless determined to be necessary to protect the interest of
the Government.
Section 5. Single regulation for procurement and nonprocurement
programs
Combines the two separate S&D regulations governing
contracts and grants into a single, comprehensive regulation
that provides:
the use of show cause letters to ensure
accused parties are heard prior to any adverse action
being taken against them;
transparent handling of all cases, including
public availability of all final resolutions;
timely and consistent referrals, including
the identification of contractors and grantees that
repeatedly fail to perform;
standard procedures for an expedited review
process to handle contract or grant fraud in a
contingency or time-sensitive environment, in both
military and non-military settings;
acceptance or rejection of referrals by the
SDO within 30 days; and
resolution of S&D cases within 6 months from
the initial referral date.
Section 6. Government Accountability Office review
Requires GAO review of the Board, agency S&D offices, and
the case management system effectiveness.
Section 7. Coordination of remedies for fraud and corruption related to
procurement and grant activities
Requires joint agency head/Inspector General guidance in
each agency to institutionalize efficient agency-wide
coordination of remedies for fraud and corruption related to
procurement and grant activities, including legal, regulatory,
administrative, and contractual remedies to maximize timely
recovery of funds.
Section 8. Transfer, redesignation, and amendment of other provision of
law relating to debarment and suspension
Provides technical or clerical amendments in the U.S.
codes.
Section 9. Definitions
Provides the definitions for the purpose of this bill.
Section 10. Authorization of appropriations
Authorizes an additional $2 million for each of FY2015
through FY2021 to carry out the functions of the Board and for
implementation of the case management system. This augments the
current GSA funding for its S&D operations (approx. six full-
time and three part-time employees).
Section 11. Effective date
Provides the effective date.
Explanation of Amendments
An amendment offered by Reps. Chaffetz and Speier was
adopted by the Committee. The amendment further strengthens the
SUSPEND Act by requiring timely referral and handling of S&D
cases.
Specifically, the amendment provides a 30-day time limit
for the referred cases to be either accepted or rejected by the
S&D official. If additional information is needed, the agency
official or the IG who prepared the case file must be notified.
It also requires all S&D cases to be resolved within 6 months
from the initial referral date. The agency official or the IG
who prepared the case file will be notified of any cases
unresolved within that time frame and be updated every 3 months
until the final resolution of the case.
The amendment further requires that the annual report to
Congress include the number and summary of any instances where
the agency head made determinations to override S&D decisions
and allowed a suspended or debarred entity to receive new
contracts or grants.
Committee Consideration
On October 29, 2013, the Committee met in open session and
ordered reported favorably the bill, H.R. 3345, as amended, by
voice vote, a quorum being present.
Application of Law to the Legislative Branch
Section 102(b)(3) of Public Law 104-1 requires a
description of the application of this bill to the legislative
branch where the bill relates to the terms and conditions of
employment or access to public services and accommodations.
This bill consolidates more than 40 executive agency suspension
and debarment offices and programs into one centralized board
named the Board of Suspension and Debarment, and encourages
cost savings by sharing administrative resources with the pre-
existing Civilian Board of Contract Appeals. As such this bill
does not relate to employment or access to public services and
accommodations.
Statement of Oversight Findings and Recommendations of the Committee
In compliance with clause 3(c)(1) of rule XIII and clause
(2)(b)(1) of rule X of the Rules of the House of
Representatives, the Committee's oversight findings and
recommendations are reflected in the descriptive portions of
this report.
Statement of General Performance Goals and Objectives
In accordance with clause 3(c)(4) of rule XIII of the Rules
of the House of Representatives, the Committee's performance
goals and objectives are reflected in the descriptive portions
of this report.
Duplication of Federal Programs
No provision of H.R. 3345 establishes or reauthorizes a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
Disclosure of Directed Rule Makings
H.R. 3345 requires the Director of the Office of Management
and Budget to develop one generally applicable regulation on
S&D for procurement and nonprocurement programs. The bill also
requires the heads of each executive agency and the Inspector
General of the agency to issue guidance that institutionalizes
efficient agency-wide coordination of remedies for fraud and
corruption related to procurement and grant activities.
Federal Advisory Committee Act
The Committee finds that the legislation does not establish
or authorize the establishment of an advisory committee within
the definition of 5 U.S.C. App., Section 5(b).
Unfunded Mandate Statement
Section 423 of the Congressional Budget and Impoundment
Control Act (as amended by Section 101(a)(2) of the Unfunded
Mandate Reform Act, P.L. 104-4) requires a statement as to
whether the provisions of the reported include unfunded
mandates. In compliance with this requirement the Committee has
received a letter from the Congressional Budget Office included
herein.
Earmark Identification
H.R. 3345 does not include any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI.
Committee Estimate
Clause 3(d)(2) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison by the
Committee of the costs that would be incurred in carrying out
H.R. 3345. However, clause 3(d)(3)(B) of that rule provides
that this requirement does not apply when the Committee has
included in its report a timely submitted cost estimate of the
bill prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act.
Budget Authority and Congressional Budget Office Cost Estimate
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause (3)(c)(3) of rule XIII of the Rules
of the House of Representatives and section 402 of the
Congressional Budget Act of 1974, the Committee has received
the following cost estimate for H.R. 3345 from the Director of
Congressional Budget Office:
January 17, 2014.
Hon. Darrell Issa, Chairman,
Committee on Oversight and Government Reform,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3345, the SUSPEND
Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
H.R. 3345--SUSPEND Act
Summary: H.R. 3345 would consolidate most federal efforts
to suspend and debar individuals or organizations from
receiving federal grants and contracts into a single office at
the General Services Administration. In general, grantees or
vendors may be prohibited or suspended from receiving federal
funds because they have engaged in dishonest, unethical, or
illegal conduct or are unable to perform their
responsibilities. The bill also would establish an Interagency
Suspension and Debarment Committee to coordinate activities,
and authorize creation of a web-based management system to
track all federal suspension and debarment cases. Finally, H.R.
3345 would authorize the appropriation of $2 million annually
over the 2015-2021 period for these activities.
Assuming appropriation of the authorized amounts and based
on information from GSA, CBO estimates that implementing H.R.
3345 would cost $10 million over the 2015-2019 period (and an
additional $4 million after 2019). Enacting the bill could
affect direct spending by agencies not funded through annual
appropriations; therefore, pay-as-you-go procedures apply. CBO
estimates, however, that any net change in spending by those
agencies would be negligible. Enacting the bill would not
affect revenues.
H.R. 3345 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would not affect the budgets of state, local, or tribal
governments.
Estimated Cost to the Federal Government: For this
estimate, CBO assumes that the bill will be enacted in fiscal
year 2014 and that the authorized amounts will be appropriated
for each year. Estimated outlays are based on information from
GSA and historical spending patterns of similar programs.
The estimated budgetary impact of H.R. 3345 is shown on the
following table. The cost of this legislation falls within
budget function 800 (general government).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------------------------
2014-
2014 2015 2016 2017 2018 2019 2019
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Authorization Level.............................. 0 2 2 2 2 2 10
Estimated Outlays................................ 0 2 2 2 2 2 10
----------------------------------------------------------------------------------------------------------------
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. Enacting the bill could affect direct spending by
agencies not funded through annual appropriations; therefore,
pay-as-you-go procedures apply. CBO estimates, however, that
any net change in spending by those agencies would not be
significant. Enacting the bill would not affect revenues.
Intergovernmental and Private-sector Impact: H.R. 3345
contains no intergovernmental or private-sector mandates as
defined in UMRA and would not affect the budgets of state,
local, or tribal governments.
Estimate Prepared by: Federal costs: Matthew Pickford:
Impact on state, local, and tribal governments; Melissa
Merrell; Impact on the private sector: Paige Piper/Bach.
Estimate Approved by: Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
TITLE 31, UNITED STATES CODE
* * * * * * *
SUBTITLE V--GENERAL ASSISTANCE ADMINISTRATION
Chap. Sec.
* * * * * * *
6401Suspension and Debarment..........................................
* * * * * * *
CHAPTER 64--SUSPENSION AND DEBARMENT
Sec.
6401. Board of Suspension and Debarment.
6402. Interagency Suspension and Debarment Committee.
6403. Single regulation for suspension and debarment for procurement and
nonprocurement programs.
6404. Uniform suspension, debarment, or exclusion from procurement or
nonprocurement activity.
Sec. 6401. Board of Suspension and Debarment
(a) Establishment.--There is established in the General
Services Administration a board for suspension and debarment to
be known as the Board of Suspension and Debarment (in this
section referred to as the ``Board'').
(b) Purposes.--The purposes of the Board are to serve as a
centralized body to manage all executive agency suspension and
debarment activities and improve the suspension and debarment
system through--
(1) the transparent and efficient handling of cases;
(2) the effective oversight of the Governmentwide
database containing the list of all excluded parties
ineligible for Federal programs pursuant to Executive
Orders No. 12549 and No. 12689, including oversight to
ensure receipt of information from other agencies and
to ensure timeliness, accuracy, and completeness of the
database;
(3) the consistent and fair treatment of all persons
and entities subject to suspension or debarment
proceedings, including small businesses with limited
resources; and
(4) active engagement with remedy coordination
officials (as defined in section 2307(i)(10) of title
10 and section 4506 of title 41) within executive
agencies for efficient referral of contractors,
grantees, or other recipients of Federal financial
assistance suspected of committing wrongful actions or
repeatedly performing poorly.
(c) Effect of Determinations of Board.--
(1) Conclusive on governmentwide basis.--The
determination by the Board on whether or not to debar
or suspend a contractor, grantee, or other recipient of
Federal financial assistance is conclusive on a
Governmentwide basis. No other agency may take a
contrary suspension and debarment action on a
Governmentwide basis with respect to the same
contractor, grantee, or other recipient based on the
facts and circumstances in the administrative record
considered by the Board.
(2) Consideration of new or additional evidence.--In
considering any new or additional evidence of
nonresponsibility of a contractor, grantee, or other
recipient of Federal financial assistance not
previously considered by the Board, an agency, in
determining whether to award another grant or contract
or other Federal financial assistance to such
contractor, grantee, or other recipient, may consider
the cumulative effect of the facts and circumstances
previously considered by the Board.
(d) Membership.--
(1) Appointment.--The Board shall consist of members
appointed by the Administrator of General Services (in
consultation with the Administrator for Federal
Procurement Policy) from a register of applicants
maintained by the Administrator of General Services, in
accordance with rules issued by the Administrator of
General Services (in consultation with the
Administrator for Federal Procurement Policy) for
establishing and maintaining a register of eligible
applicants and selecting members. The Administrator of
General Services shall appoint a member without regard
to political affiliation and solely on the basis of the
professional qualifications required to perform the
duties and responsibilities of a member.
(2) Chair.--The Administrator of General Services
shall designate one member of the Board to serve as
Chair of the Board. The position of Chair of the Board
shall be a Senior Executive Service position (as
defined by section 3132(a)(2) of title 5).
(3) Removal.--The Administrator of General Services,
with the consent of the Administrator for Federal
Procurement Policy, may remove the Chair or any other
member of the Board.
(e) Sharing of Resources.--The Administrator of General
Services shall provide to the Board such administrative
resources as are necessary for the Board to carry out its
functions. In carrying out this subsection, the Administrator
may provide for the sharing of administrative resources of the
Civilian Board of Contract Appeals, such as the Board's
information technology infrastructure, legal resources, and
facilities.
(f) Participation by Additional Entities.--The Board may
enter into an agreement with any other entity that receives
Federal funds for the Board to perform suspension and debarment
activities on behalf of the entity.
(g) Annual Report to Congress.--
(1) In general.--Not later than October 30 of each
year, the Chair of the Board shall submit to the
relevant congressional committees a report containing
the following:
(A) A summary of the activities and
accomplishments of the Board in the
Governmentwide suspension and debarment system,
including the total number of referrals,
timeliness of case disposition, and breakdown
of discretionary and nondiscretionary cases.
(B) The number and summary of agency head
determinations, if any, that allowed a
suspended or debarred contractor, grantee, or
other recipient of Federal financial assistance
to receive new Federal funds.
(C) Recommendations to improve the
suspension and debarment system.
(2) Form of report.--The Chair of the Board may
combine the report with the report required by section
6402(c)(7) of this title.
(h) Definitions.--In this section:
(1) Executive agency.--The term ``executive agency''
has the meaning provided in section 133 of title 41.
(2) Relevant congressional committees.--The term
``relevant congressional committees'' means each of the
following:
(A) The Committee on Oversight and Government
Reform of the House of Representatives.
(B) The Committee on Homeland Security and
Governmental Affairs of the Senate.
(3) Interagency Suspension and Debarment Committee.--
The term ``Interagency Suspension and Debarment
Committee'' means the committee established under
section 6402 of this title.
Sec. 6402. Interagency Suspension and Debarment Committee
(a) Establishment.--There is established the Interagency
Suspension and Debarment Committee (in this section referred to
as the ``Interagency Committee'' which shall replace the
committee constituted under sections 4 and 5 of Executive Order
No. 12549.
(b) Chair and Vice Chairs.--
(1) Chair.--The Administrator for Federal Procurement
Policy shall serve as Chair of the Interagency
Committee.
(2) Vice chairs.--There are at least 2 Vice Chairs of
the Interagency Committee. The Chair of the Board of
Suspension and Debarment shall serve as a Vice Chair.
The Secretary of Defense shall designate one official
from the Department of Defense to serve as a Vice
Chair.
(c) Duties.--The Interagency Committee shall--
(1) resolve issues regarding which of several Federal
agencies is the lead agency having responsibility to
initiate suspension or debarment proceedings, including
with respect to contracts in connection with
contingency operations;
(2) coordinate actions among interested agencies with
respect to such action;
(3) encourage and assist Federal agencies in entering
into cooperative efforts to pool resources and achieve
operational efficiencies in the Governmentwide
suspension and debarment system;
(4) recommend to the Office of Management and Budget
changes to the Government suspension and debarment
system and its rules, if such recommendations are
approved by a majority of the Interagency Committee;
(5) authorize the Office of Management and Budget to
issue guidelines that implement those recommendations;
(6) authorize the Chair of the Interagency Committee
to establish subcommittees as appropriate to best
enable the Interagency Committee to carry out its
functions; and
(7) not later than October 30 of each year, submit to
Congress an annual report on--
(A) the progress and efforts to improve the
suspension and debarment system;
(B) member agencies' active participation in
the Interagency Committee's work;
(C) a summary of each agency's activities and
accomplishments in the Governmentwide
suspension and debarment system, including the
total number of referrals, timeliness of case
disposition, and breakdown of discretionary and
nondiscretionary cases; and
(D) the number and summary of agency head
determinations, if any, that allowed a
suspended or debarred contractor, grantee, or
other recipient of Federal financial assistance
to receive new Federal funds.
(d) Definition.--In this section, the term ``contingency
operation'' has the meaning given that term in section
101(a)(13) of title 10.
Sec. 6403. Single regulation for suspension and debarment for
procurement and nonprocurement programs
(a) Single Regulation.--The Director of the Office of
Management and Budget shall maintain one generally applicable
regulation on suspension and debarment for procurement and
nonprocurement programs.
(b) Requirements.--
(1) In general.--The regulation maintained pursuant
to subsection (a) shall provide, at a minimum, for the
procedures and other requirements set forth in
paragraphs (2) through (8).
(2) Advance notice of adverse action.--The regulation
shall provide procedures for the Board to provide
advance notice of adverse action before any adverse
action may be taken against a private entity or
individual, unless the Chair of the Board of Suspension
and Debarment or the suspension and debarment officer
of an executive agency granted a waiver under section
2(b)(2) of the SUSPEND Act determines that an expedient
action is necessary to protect the interest of the
Government.
(3) Transparent handling of cases.--The regulation
shall provide procedures for transparent handling of
all cases, including public availability of--
(A) the outcome of all referred cases,
including the rationale for the decision to
take or not take an adverse action; and
(B) the administrative agreements entered
into by the Government in order to resolve a
suspension or debarment proceeding.
(4) Timely referrals and processing of cases.--
(A) The regulation shall provide procedures
to strengthen timely referrals of cases,
including--
(i) the role of the agency remedy
coordination official to act upon cases
brought to such official's attention in
a timely manner (as required in section
7 of the SUSPEND Act); and
(ii) requirements for the Board or
the agency suspension and debarment
office to review the sufficiency of the
information in the referred cases and
to notify the agency remedy
coordination official and cognizant
Inspector General (if the case is
originated from the Office of Inspector
General) within 30 days after the
initial referral date for any
additional information if needed.
(B) The regulation shall require all cases to
be disposed of within 6 months after the
initial referral date, unless the Chair of the
Board or the agency suspension and debarment
officer provides a written explanation and
estimated timeline to the agency remedy
coordination official and cognizant Inspector
General (if the case is originated from the
Office of Inspector General). Such written
explanation shall be updated every 3 months
until the final resolution of the case.
(5) Consistent standards and procedures.--The
regulation shall provide procedures to ensure
consistent standards and procedures that treat all
alleged violators fairly and expeditiously, including
small businesses with limited legal resources.
(6) Repeated failure to perform.--The regulation
shall provide procedures to strengthen the
identification and referral (for suspension or
debarment consideration) of contractors and grantees
that repeatedly fail to perform.
(7) Contingency procedures.--The regulation shall
provide procedures for an expedited review process to
handle contract or grant fraud in a non-traditional or
time-sensitive environment, either in a military or
non-military setting.
Sec. 6404. Uniform suspension, debarment, or exclusion from procurement
or nonprocurement activity
(a) Requirement for Regulations.--Regulations shall be issued
providing that provisions for the debarment, suspension, or
other exclusion of a participant in a procurement activity
under the Federal Acquisition Regulation, or in a
nonprocurement activity under regulations issued pursuant to
Executive Order No. 12549, shall have government-wide effect.
No agency shall allow a party to participate in any procurement
or nonprocurement activity if any agency has debarred,
suspended, or otherwise excluded (to the extent specified in
the exclusion agreement) that party from participation in a
procurement or nonprocurement activity.
(b) Authority To Grant Exception.--The regulations issued
pursuant to subsection (a) shall provide that an agency may
grant an exception permitting a debarred, suspended, or
otherwise excluded party to participate in procurement
activities of that agency to the extent exceptions are
authorized under the Federal Acquisition Regulation, or to
participate in nonprocurement activities of that agency to the
extent exceptions are authorized under regulations issued
pursuant to Executive Order No. 12549.
(c) Definitions.--In this section:
(1) The term ``procurement activities'' means all
acquisition programs and activities of the Federal
Government, as defined in the Federal Acquisition
Regulation. Such term includes subcontracts at any
tier, other than subcontracts for commercially
available off-the-shelf items (as defined in section
104 of title 41), except that in the case of a contract
for commercial items, such term includes only first-
tier subcontracts.
(2) The term ``nonprocurement activities'' means all
programs and activities involving Federal financial and
nonfinancial assistance and benefits, as covered by
Executive Order No. 12549 and the Office of Management
and Budget guidelines implementing that order.
(3) The term ``agency'' means an Executive agency as
defined in section 103 of title 5.
* * * * * * *
----------
DUNCAN HUNTER NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2009
(Public Law 110-417)
AN ACT To authorize appropriations for fiscal year 2009 for military
activities of the Department of Defense, for military construction, and
for defense activities of the Department of Energy, to prescribe
military personnel strengths for such fiscal year, and for other
purposes.
* * * * * * *
SEC. 2. ORGANIZATION OF ACT INTO DIVISIONS; TABLE OF CONTENTS.
(a) * * *
(b) Table of Contents.--The table of contents for this Act is
as follows:
* * * * * * *
DIVISION A--DEPARTMENT OF DEFENSE AUTHORIZATIONS
* * * * * * *
TITLE VIII--ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED
MATTERS
* * * * * * *
Subtitle G--Governmentwide Acquisition Improvements
* * * * * * *
[Sec. 873. Role of Interagency Committee on Debarment and Suspension.]
* * * * * * *
DIVISION A--DEPARTMENT OF DEFENSE AUTHORIZATIONS
* * * * * * *
TITLE VIII--ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED
MATTERS
* * * * * * *
Subtitle G--Governmentwide Acquisition Improvements
* * * * * * *
[Sec. 873. Role of Interagency Committee on Debarment and Suspension.]
* * * * * * *
Subtitle G--Governmentwide Acquisition Improvements
* * * * * * *
[SEC. 873. ROLE OF INTERAGENCY COMMITTEE ON DEBARMENT AND SUSPENSION.
[(a) Requirement.--The Interagency Committee on Debarment and
Suspension shall--
[(1) resolve issues regarding which of several
Federal agencies is the lead agency having
responsibility to initiate suspension or debarment
proceedings, including with respect to contracts in
connection with contingency operations'' before the
semicolon;
[(2) coordinate actions among interested agencies
with respect to such action;
[(3) encourage and assist Federal agencies in
entering into cooperative efforts to pool resources and
achieve operational efficiencies in the Governmentwide
suspension and debarment system;
[(4) recommend to the Office of Management and Budget
changes to the Government suspension and debarment
system and its rules, if such recommendations are
approved by a majority of the Interagency Committee;
[(5) authorize the Office of Management and Budget to
issue guidelines that implement those recommendations;
[(6) authorize the chair of the Committee to
establish subcommittees as appropriate to best enable
the Interagency Committee to carry out its functions;
and
[(7) submit to Congress an annual report on--
[(A) the progress and efforts to improve the
suspension and debarment system;
[(B) member agencies' active participation in
the committee's work;
[(C) a summary of each agency's activities
and accomplishments in the Governmentwide
debarment system; and
[(D) a summary of suspensions, debarments,
and administrative agreements during the
previous year.
[(b) Date of Submittal of Annual Reports.--The annual report
required by subsection (a)(7) shall be submitted not later than
January 31 of each year, beginning with January 31, 2014.
[(c) Definitions.--In this section:
[(1) The term ``contingency operation'' has the
meaning given that term in section 101(a)(13) of title
10, United States Code.
[(2) The term ``Interagency Committee on Debarment
and Suspension'' means the committee constituted under
sections 4 and 5 of Executive Order No. 12549.]
* * * * * * *
----------
FEDERAL ACQUISITION STREAMLINING ACT OF 1994
(Public Law 103-355)
AN ACT To revise and streamline the acquisition laws of the Federal
Government, and for other purposes.
* * * * * * *
SEC. 2. TABLE OF CONTENTS.
The table of contents for this Act is as follows:
* * * * * * *
TITLE II--CONTRACT ADMINISTRATION
* * * * * * *
Subtitle E--Miscellaneous
* * * * * * *
Part II--Acquisitions Generally
* * * * * * *
[Sec. 2455. Uniform suspension and debarment. ]
* * * * * * *
TITLE II--CONTRACT ADMINISTRATION
* * * * * * *
Subtitle E--Miscellaneous
* * * * * * *
PART II--ACQUISITIONS GENERALLY
* * * * * * *
[SEC. 2455. UNIFORM SUSPENSION AND DEBARMENT.
[(a) Requirement for Regulations.--Regulations shall be
issued providing that provisions for the debarment, suspension,
or other exclusion of a participant in a procurement activity
under the Federal Acquisition Regulation, or in a
nonprocurement activity under regulations issued pursuant to
Executive Order No. 12549, shall have government-wide effect.
No agency shall allow a party to participate in any procurement
or nonprocurement activity if any agency has debarred,
suspended, or otherwise excluded (to the extent specified in
the exclusion agreement) that party from participation in a
procurement or nonprocurement activity.
[(b) Authority To Grant Exception.--The regulations issued
pursuant to subsection (a) shall provide that an agency may
grant an exception permitting a debarred, suspended, or
otherwise excluded party to participate in procurement
activities of that agency to the extent exceptions are
authorized under the Federal Acquisition Regulation, or to
participate in nonprocurement activities of that agency to the
extent exceptions are authorized under regulations issued
pursuant to Executive Order No. 12549.
[(c) Definitions.--In this section:
[(1) The term ``procurement activities'' means all
acquisition programs and activities of the Federal
Government, as defined in the Federal Acquisition
Regulation. Such term includes subcontracts at any
tier, other than subcontracts for commercially
available off-the-shelf items (as defined in section
35(c) of the Office of Federal Procurement Policy Act
(41 U.S.C. 431(c))), except that in the case of a
contract for commercial items, such term includes only
first-tier subcontracts.
[(2) The term ``nonprocurement activities'' means all
programs and activities involving Federal financial and
nonfinancial assistance and benefits, as covered by
Executive Order No. 12549 and the Office of Management
and Budget guidelines implementing that order.
[(3) The term ``agency'' means an Executive agency as
defined in section 103 of title 5, United States Code.]
* * * * * * *
----------
TITLE 5, UNITED STATES CODE
* * * * * * *
PART III--EMPLOYEES
* * * * * * *
SUBPART G--INSURANCE AND ANNUITIES
* * * * * * *
CHAPTER 89--HEALTH INSURANCE
* * * * * * *
Sec. 8902a. Debarment and other sanctions
(a) * * *
(b) The Office of Personnel Management shall bar the
following providers of health care services or supplies from
participating in the program under this chapter:
(1) * * *
* * * * * * *
(5) Any provider that is currently debarred,
suspended, or otherwise excluded from any procurement
or nonprocurement activity (within the meaning of
[section 2455 of the Federal Acquisition Streamlining
Act of 1994] section 6404 of title 31).
* * * * * * *