[Federal Register Volume 83, Number 55 (Wednesday, March 21, 2018)]
[Proposed Rules]
[Pages 12318-12326]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-05626]


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NATIONAL CREDIT UNION ADMINISTRATION

48 CFR Part 9

RIN: 3133-AE85


NCUA Suspension and Debarment Procedures

AGENCY: National Credit Union Administration (NCUA).

ACTION: Proposed Suspension and Debarment Procedures with request for 
comments.

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SUMMARY: The NCUA Board (Board) proposes to adopt suspension and 
debarment procedures to establish an administrative process protecting 
the Federal Government's interest in only doing business with presently 
responsible contractors. This proposal sets forth the NCUA's proposed 
policies for suspension and debarment and establishes administrative 
proceedings for contractors subject to the policies.

DATES: Comments must be received on or before May 21, 2018.

ADDRESSES: You may submit comments by any of the following methods 
(Please send comments by one method only):
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     NCUA website: http://www.ncua.gov/Legal/Regs/Pages/PropRegs.aspx. Follow the instructions for submitting comments.
     Email: Address to regcomments@ncua.gov. Include ``[Your 
name]--Comments on Proposed Suspension and Debarment Procedures'' in 
the email subject line.
     Fax: (703) 518-6319. Use the subject line described above 
for email.
     Mail: Address to Gerard Poliquin, Secretary of the Board, 
National Credit Union Administration, 1775 Duke Street, Alexandria, 
Virginia 22314-3428.
     Hand Delivery/Courier: Same as mail address.
    Public Inspection: You can view all public comments on the NCUA's 
website at http://www.ncua.gov/Legal/Regs/Pages/PropRegs.aspx as 
submitted, except for those that cannot be posted for technical 
reasons. The NCUA will not edit or remove any identifying or contact 
information from the public comments submitted. You may inspect paper 
copies of comments at the NCUA's headquarters at 1775 Duke Street, 
Alexandria, Virginia 22314, by appointment weekdays between 9 a.m. and 
3 p.m. To make an appointment, call (703) 518-6546 or send an email to 
OGCMail@ncua.gov.

[[Page 12319]]


FOR FURTHER INFORMATION CONTACT: Kevin Tuininga, Associate General 
Counsel for Administrative Law, Office of General Counsel, National 
Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 
22314-3428 or telephone: (703) 518-6543.

SUPPLEMENTARY INFORMATION:
I. Background
II. The Proposed Procedures
III. Regulatory Procedures

I. Background

    The NCUA is updating and modernizing its procurement processes to 
ensure it implements best practices in spending funds available to it, 
including those in the agency's Operating Fund and the National Credit 
Union Share Insurance Fund. Although the NCUA is not required to follow 
government-wide acquisition laws and regulations, it believes those 
laws and regulations include best practices developed over years of 
seeking public comment on expenditure processes. Suspension and 
debarment remedies have proven to be an important component of 
government procurement processes. Thus, the NCUA believes it should 
adopt suspension and debarment procedures to protect both itself and 
other Executive Branch agencies.

II. The Proposed Rule

    This proposed rule sets forth standards and procedures governing 
suspension and debarment of NCUA contractors, including subcontractors, 
management officials, key employees and affiliated business entities of 
such contractors, to protect the Federal Government's interest in only 
doing business with presently responsible contractors. The NCUA is not 
required to follow the Federal Acquisition Regulation (FAR) but uses 
its principles for best practice guidance. The FAR section on 
suspension and debarment is located at 48 CFR part 9, subpart 9.4.
    This proposed rule is similar to the suspension and debarment 
procedures other federal entities use, which have been developed after 
extensive public comment and withstood judicial scrutiny. However, the 
rule may depart in certain respects from the procedures used by other 
federal entities. With respect to due process provisions, the NCUA 
seeks to provide at least the same protections to contractors that 
other agencies have provided in developing their suspension and 
debarment procedures.

II. Summary of the Proposed Rule

    The proposed rule is comprised of eight sections. Section A 
describes the purpose of the proposed procedures, which is to ensure 
the NCUA solicits offers from and awards contracts to only presently 
responsible contractors. While not precisely defined, the proposed 
procedures use the term ``presently responsible'' in a manner 
consistent with its traditional use in the suspension and debarment 
context: A contractor must be able to ``contract with the government in 
a responsible manner on a going-forward basis.'' \1\ In other words, 
based on available evidence, ``the contractor [must] be trusted to 
perform in accordance with contract requirements, governing law, and 
overall, to conduct itself ethically.'' \2\ In addition to requiring 
this standard of its prime contractors, the NCUA will apply the present 
responsibility threshold in determining whether to consent to 
subcontracts.
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    \1\ Robert F. Meunier, Trevor B. A. Nelson, IS IT TIME FOR A 
SINGLE FEDERAL SUSPENSION AND DEBARMENT RULE? 46 Pub. Cont. L.J. 
553, 587 n.176 (2017).
    \2\ Id.
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    Section A also specifies in footnote 2 that the procedures apply to 
both the NCUA in its agency capacity and the NCUA Board in its capacity 
as conservator or liquidating agent for an insured credit union. While 
the NCUA is not required to follow the FAR in any capacity, the Board 
believes the purpose of suspension and debarment remedies are important 
for all of its work, regardless of context. In liquidations, for 
example, contracting expenses are paid as administrative expenses, the 
most senior position in the claims priority of 12 CFR 709.5(b). The 
National Credit Union Share Insurance Fund, uninsured shareholders, and 
pre-liquidation contractors, on the other hand, are lower priority 
creditors that only receive funds to the extent they remain after 
administrative expenses are paid. Thus, the Board believes it is 
equally important to protect the integrity of the contracting process 
in the conservatorship and liquidation contexts. The procedures would 
not apply to any legal services contracts, whether provided on behalf 
of the NCUA as agency or the NCUA Board as conservator or liquidating 
agent, as those contracts are managed through separate procedures 
administered by the NCUA's Office of General Counsel.
    Applying suspension and debarment remedies to a conservator or 
liquidating agent is a departure from the general rule in the NCUA's 
Acquisition Policy Manual. Although the Board may follow many 
principles of its Acquisition Policy Manual as conservator or 
liquidating agent, those activities are not expressly subject to the 
Manual to avoid any hindrance of special rights the Federal Credit 
Union Act (FCU Act) grants to the liquidating agent or conservator, 
including contract repudiation rights. The Board does not have similar 
concerns with respect to suspension and debarment processes because 
they are, in effect, remedial, and will not materially restrict the 
Board's statutory contracting rights as conservator or liquidating 
agent. However, as with any other aspect of these proposed procedures, 
the Board welcomes public comment on this bifurcated approach.
    Section B sets forth the NCUA's authority for proposing and 
adopting agency-specific suspension and debarment procedures. This 
section identifies the FCU Act generally and, specifically, 12 U.S.C. 
1766(i)(2) as relevant authority. Other provisions of the FCU Act, 
including 12 U.S.C. 1789, also directly support the Board's action.
    Section C covers the definitions of terms used in the proposed 
procedures. Among other key terms, Section C defines ``affiliates'' and 
``imputation'' for purposes of the procedures and describes the 
``present responsibility'' concept. The definitions are based on 
commonly accepted definitions for similar terms in the FAR and in 
federal contracting generally.
    In addition, Section C sets forth the circumstances that warrant a 
fact-based debarment, a conviction-based debarment, and a suspension. 
Fact-based debarments would require the NCUA to establish relevant 
circumstances by a preponderance of the evidence. Suspensions, in 
contrast, are permitted under an ``adequate evidence'' standard, 
meaning information sufficient to support a reasonable belief that a 
particular act or omission has occurred. The adequate evidence standard 
amounts to a minimal standard of proof, akin to probable cause and 
requiring some degree of corroboration but not to a preponderance 
level. Although they can be imposed under a lesser evidentiary 
standard, suspensions are generally of shorter duration than 
debarments.
    Section D lists the responsibilities of various NCUA employees in 
implementing the proposed procedures. Pursuant to this section, the 
Deputy General Counsel serves as the suspending and debarring official 
(SDO) who has responsibility to make final decisions under the 
procedures. Locating this responsibility outside of the NCUA's Office 
of the Chief Financial Officer (OCFO) protects objectivity and 
contractor due process by separating suspension and debarment decisions 
from the division

[[Page 12320]]

that generally awards and administers contracts.
    The procedures require all NCUA offices to refer circumstances that 
may warrant suspension and debarment to the NCUA contracting officer 
and the Office of General Counsel attorney assigned to coordinating 
suspension and debarment proceedings (SDO Admin). However, the NCUA 
expects most referrals to originate with NCUA contracting officers, who 
are responsible for overseeing the bulk of the NCUA's contracting 
activities. The procedures require that circumstances involving 
potential criminal activity also be referred to the NCUA's Office of 
Inspector General.
    The proposed procedures identify a non-exhaustive list of 
circumstances that should be referred to the NCUA contracting officer, 
the SDO Admin, and the OIG (as applicable). These circumstances include 
the following:
    1. Contractor fraud, dishonesty or unethical behavior;
    2. repeated or severe contract performance issues;
    3. unmitigated or undisclosed conflicts of interest; and
    4. improper invoicing or questionable costs.
    These general referral criteria are in addition to circumstances 
where an NCUA office might discover evidence of more specific 
circumstances that may support fact-based or conviction-based 
debarments or suspensions, as identified in Section C.
    Even after a referral results in suspension or debarment, the 
proposed procedures give the Executive Director authority to approve 
the award of a contract or subcontract to an ineligible contractor for 
``compelling reasons'', documented in writing. This provision does not 
expressly limit the Executive Director's discretion, as such 
circumstances are difficult to anticipate. However, the NCUA expects to 
encounter such compelling reasons on rare occasions, if ever.
    Section E explains the impact of a suspension or debarment. A 
suspended or debarred contractor or subcontractor will be ineligible to 
receive contract solicitations, awards, or subcontracting consents from 
Executive Branch agencies. The FAR permits other agencies to proceed 
with an award only if the agency's head determines there is a 
compelling reason for an exception.\3\ The proposed procedures would 
subject the NCUA to this same limitation with respect to contractors 
suspended or debarred by other Executive Branch agencies. Thus, the 
NCUA in any capacity, subject only to the Executive Director's 
authority discussed above, will not solicit, award, or consent to 
contracts or subcontracts involving suspended or debarred contractors, 
regardless of the agency that issued the suspension or debarment.
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    \3\ 48 CFR 9.405(a).
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    In general, the FAR permits agencies to continue contracts or 
subcontracts entered into before the NCUA initiates suspension or 
debarment proceedings. A proceeding is deemed initiated when entered 
into the System for Award Management,\4\ which provides notice to other 
agencies. As with prime contractors, when another agency has debarred, 
suspended, or proposed for debarment a subcontractor for any 
subcontract that requires the NCUA's consent, the NCUA's contracting 
officers may not consent unless the NCUA's Executive Director provides 
compelling reasons in writing.
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    \4\ The System for Award Management is the General Services 
Administration's government-wide support system for contract awards, 
which includes a list of parties excluded from Executive Branch 
contracts.
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    Section F recites the process for NCUA offices to refer matters to 
the SDO Admin and the SDO for a determination. It specifies the 
contents of action referral memorandums and periods for referrals to 
the SDO Admin. The general referral period within which an NCUA office 
should refer a matter to the SDO Admin is 30 days but, for referrals 
based on convictions (defined to include criminal convictions or civil 
judgments), the procedures impose a shorter, 10-day, referral period. 
Section F also lists pertinent documents that should be included with 
an action referral memorandum, which together comprise the referral 
materials.
    Section G describes the decision-making process the NCUA proposes 
to use once a matter has been presented to the SDO. This section 
requires the SDO Admin to coordinate any proposed action with the 
Interagency Suspension and Debarment Committee, composed of suspension 
and debarment representatives from federal agencies. The Board believes 
this coordination process will ensure the NCUA works with other 
agencies and is fully informed of circumstances that may affect ongoing 
or pending procurements.
    Section G includes a list of potential actions the SDO can take 
after considering a presented matter and action referral memorandum, 
including rejecting the memorandum, issuing a show cause letter or 
notice of suspension, or issuing a notice of proposed debarment. Each 
option lists requirements and the contents to be included in related 
notices to contractors. For notices of suspension or proposed 
debarment, the contractor will receive the action referral memorandum 
and may have access to the entire administrative record, on request, 
unless the law or parallel proceedings warrant its partial or complete 
redaction or withholding.
    The procedures provide a maximum of 30 days from receipt of a 
notice for a contractor to respond. In the case of a notice of 
suspension or notice of proposed debarment, the contractor may respond 
with a presentation of matters in opposition (PMIO). The PMIO can be 
presented in person or in writing and may occur through a 
representative. The contractor may also request meetings with the SDO. 
The SDO may transcribe meetings and conference calls at the SDO's 
discretion. The proposed procedures require the SDO to consider all 
matters in the PMIO in the SDO's final decision. If a contractor fails 
to respond to notices the SDO issues, the existence of the basis for 
suspension or debarment is deemed admitted.
    The proposed procedures provide for a fact-finding proceeding only 
for fact-based actions (those not based on a conviction or civil 
judgment) where the SDO determines one or more genuine issues of 
material fact exist. In such a case, the SDO will appoint an individual 
to oversee the proceeding, generally scheduled within 60 days of 
receiving the PMIO, at which the contractor can appear with counsel, 
submit evidence, and examine agency witnesses. The procedures set 
recommended timeframes and requirements for fact-finding proceedings, 
including the form of a final decision and composition of the 
administrative record.
    Fact-finding proceedings are transcribed unless otherwise mutually 
agreed upon, and the contractor can obtain a transcript of the 
proceedings at its request and at its cost. The standard of proof for 
determining the disputed facts is preponderance of the evidence. These 
processes and requirements are consistent with the long-established due 
process FAR-based agencies have established in suspension and debarment 
procedures.
    From the point of referral through a final determination, the NCUA 
will maintain and document all information considered by the SDO to 
include the action referral memorandum, the PMIO (including mitigating 
factors) and transcripts of any fact-finding proceedings. This is the 
administrative record.
    The SDO's final determination is issued in writing, based on the 
administrative record. Decisions will

[[Page 12321]]

generally be issued within 30 or 45 working days after closing the 
administrative record, depending on whether the proceeding is 
conviction based or fact based. The administrative record will be 
deemed closed when the SDO Admin submits all evidence to the SDO for a 
final decision. The SDO Admin will advise the contractor in writing 
promptly after the administrative record has been closed, including the 
date it was closed.
    The final decision may reflect a determination (i) not to debar the 
contractor; (ii) to terminate a suspension; or (iii) to debar the 
contractor. Further, the SDO and the contractor are free to negotiate 
an administrative agreement resolving all or some issues at any point 
in the proceedings. Other than as limited by law, the proposed 
procedures set no limitations on the parties' discretion with respect 
to the terms and conditions of administrative agreements.
    Section G also specifies the contractor's right to seek judicial 
review of an adverse decision from the SDO. On this issue, the Board 
invites comment on whether to permit additional administrative appeal 
rights within the NCUA. Although Interpretive Ruling and Policy 
Statement 11-1 provides that ``the NCUA Board serves as the final 
administrative decision maker for major disputes that are not otherwise 
covered by this IRPS or Parts 709, 745, 792 or 747'' of NCUA 
regulations, the Board does not intend at this time for this general 
appeal right to apply to suspension and debarment procedures.\5\ 
Nevertheless, the Board is open to providing some further level of 
appeal within the agency, based on the administrative record. While 
additional appeal rights can require additional resources and 
significantly extend final determinations, they could also strengthen 
the administrative record against challenges in court. If the Board 
were to grant additional administrative appeals, it would adopt 
processes within the final procedures that are similar to those 
permitted for creditor claim appeals and insurance determination 
appeals in 12 CFR 709.8(c)(1) and 745.202, respectively.
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    \5\ https://www.ncua.gov/Legal/Documents/IRPS/IRPS2011-1.pdf.
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    Section H specifies permitted activities after imposition of a 
suspension or debarment. Until such condition is removed, a contractor 
may continue to perform current contracts (unless an agency terminates 
or voids them), subject to the following conditions (except as 
otherwise provided in the procedures):
    1. New work may not be added.
    2. Options may not be exercised.
    3. Duration may not be otherwise extended.
    4. New task orders may not be issued (except up to a guaranteed 
minimum).
    5. New orders may not be placed.
    The procedures would apply to actions initiated by the NCUA on or 
after the effective date of a final rule adopting the procedures, 
regardless of the date of the activities or circumstances that give 
rise to subsequent NCUA action under the procedures. Once the Board 
adopts a final version, the procedures will be posted on the NCUA's 
website, in addition to being published in the Federal Register. The 
Board invites comment on any and all of the matters discussed above and 
on any additional matters addressed in the draft procedures included at 
the end of this notice.

III. Regulatory Procedures

A. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) requires the NCUA to prepare 
an analysis to describe any significant economic impact a proposed rule 
may have on a substantial number of small entities (currently defined 
by the NCUA as federally insured credit unions with under $100 million 
in assets). In this case, the NCUA does not expect that the proposed 
Suspension and Debarment Procedures would ever apply to a federally 
insured credit union. In addition, the NCUA does not expect that the 
Procedures would apply to a substantial number of small businesses, as 
defined in the RFA and as further established by the Office of Advocacy 
of the Small Business Administration.
    The proposed rule closely follows the suspension and debarment 
procedures of the Federal Acquisition Regulation, which already applies 
to government contractors, without imposing any additional economic 
burden. To the extent of any variation from the Federal Acquisition 
Regulations, the proposed Procedures contain no recordkeeping or 
substantive regulatory requirements, varying only in adjudication 
processes. The proposed rule therefore will not have a significant 
economic impact on a substantial number of federally insured credit 
unions under $100 million in assets or on other small entities as 
defined by the Small Business Administration. Accordingly, the NCUA has 
determined and certifies that the proposed rule will not have a 
significant economic impact on a substantial number of small entities. 
No regulatory flexibility analysis is required.
    Notwithstanding the NCUA's determination that this rule will not 
have a significant economic impact on a substantial number of small 
entities, the NCUA Board invites comments regarding less burdensome 
alternatives to this rule that will meet the NCUA's objectives as 
described in the preamble.

B. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in 
which an agency creates a new paperwork burden on regulated entities or 
modifies an existing burden.\6\ For purposes of the PRA, a paperwork 
burden may take the form of either a reporting or a recordkeeping 
requirement, both referred to as information collections. The proposed 
rule will not create any new paperwork burden that meets the definition 
of an information collection. Thus, the NCUA has determined that the 
terms of this proposed rule do not increase the paperwork requirements 
under the PRA and regulations of the Office of Management and Budget.
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    \6\ 44 U.S.C. 3507(d).
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C. Executive Order 13132

    Executive Order 13132 encourages independent regulatory agencies to 
consider the impact of their actions on state and local interests. The 
NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), 
voluntarily complies with the executive order to adhere to fundamental 
federalism principles. This proposed rule would not have a substantial 
direct effect on the states, on the relationship between the national 
government and the states, or on the distribution of power and 
responsibilities among the various levels of government. The NCUA has 
determined that this proposed rule does not constitute a policy that 
has federalism implications for purposes of the executive order.

D. Assessment of Federal Regulations and Policies on Families

    The NCUA has determined that this proposed rule will not affect 
family well-being within the meaning of Section 654 of the Treasury and 
General Government Appropriations Act, 1999, Public Law 105-277, 112 
Stat. 2681 (1998).


    By the National Credit Union Administration Board on March 15, 
2018.
Gerard Poliquin,
Secretary of the Board.

    For the reasons discussed above, the Board proposes to adopt the 
following

[[Page 12322]]

NCUA Suspension and Debarment Procedures:

NCUA Suspension and Debarment Procedures

A. Purpose

    The purpose of these suspension and debarment procedures is to 
establish an administrative process to protect the Government's 
interest in only doing business with presently responsible contractors. 
The NCUA \1\ shall only solicit offers from, award contracts to, and 
consent to subcontracts with presently responsible contractors. These 
procedures implement the NCUA's policies for suspension and debarment 
and establish administrative proceedings for contractors subject to the 
policies.
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    \1\ Throughout these procedures, unless otherwise noted, the 
``NCUA'' refers the NCUA in its agency capacity and also to the NCUA 
Board as conservator or liquidating agent for an insured credit 
union. Legal services contracts the NCUA enters into in any 
capacity, through the Office of General Counsel, are not subject to 
these suspension and debarment procedures.
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B. Authority

    The NCUA's suspension and debarment authority derives from the 
Federal Credit Union Act 12 U.S.C. 1751 et seq., and 12 U.S.C. 
1766(i)(2), specifically. The NCUA is not required to follow the 
Federal Acquisition Regulation but uses the principles therein for best 
practice guidance. The Federal Acquisition Regulation (FAR) section on 
suspension and debarment is located at 48 CFR part 9, subpart 9.4. The 
NCUA also has its own Acquisition Policy Manual.

C. Definitions

    1. Action Referral Memorandum (ARM). The investigative report 
developed and compiled by an NCUA office recommending that the 
Suspending and Debarring Official (SDO) take a suspension or debarment 
action against a contractor.
    2. Administrative Agreement. Administrative Agreements are usually 
entered into in lieu of suspension or debarment actions. Typically the 
agreements include acceptance of responsibility, voluntary exclusion by 
the contractor, some provision of restitution, any contractor 
responsibilities with respect to codes of conduct, training, and the 
contractor's promise to report progress to the NCUA, and generally 
include consequences for breach of the agreement. The terms of the 
Administrative Agreement and contents will be determined on a case-by-
case basis.
    3. Administrative Record. The entire record of information and 
proceedings. This includes all information considered by the SDO that 
is the basis of the final decision.
    4. Affiliates. Business concerns, organizations, or individuals are 
affiliates of each other if, directly or indirectly, (1) either one 
controls or has the power to control the other, or (2) a third party 
controls or has the power to control both. Indicia of control include, 
but are not limited to, interlocking management or ownership, identity 
of interests among family members, shared facilities and equipment, 
common use of employees, or a business entity organized following the 
debarment, suspension, or proposed debarment of a contractor that has 
the same or similar management, ownership, or principal employees as 
the contractor that was debarred, suspended, or proposed for debarment.
    5. Civil Judgement. A judgement or finding of a civil offense by a 
court of competent jurisdiction.
    6. Contractor. Contractor means any individual or other legal 
entity that: (1) Directly or indirectly (for example, through an 
affiliate), submits offers for, or is awarded, or reasonably may be 
expected to submit offers for, or be awarded, a Government contract or 
a subcontract under a Government contract; or (2) conducts business, or 
reasonably may be expected to conduct business, with the Government as 
an agent or representative or another contractor.
    7. Debarment. A final decision made by the SDO to exclude a 
contractor from Government contracting and Government-approved 
subcontracting or covered transactions for a reasonable, specified 
period (usually not exceeding three years). A contractor is first 
proposed for debarment and afforded an opportunity to present its 
defenses and mitigating factors.
    a. Fact-Based Debarment. The cause for the debarment is based on 
factual circumstances (for example, history of poor performance or 
willful misconduct). The NCUA must be able to prove the action by a 
``preponderance of the evidence.'' Preponderance of the evidence means 
that the fact(s) at issue are more likely than not (over 50%) to be 
true. A contractor, based upon a preponderance of the evidence, can be 
debarred for any of the following:
    i. Violation of the terms of a Government contract or subcontract 
so serious as to justify debarment, such as:
    1. Willful failure to perform in accordance with the terms of one 
or more contracts; or
    2. a history of failure to perform, or of unsatisfactory 
performance of, one or more contracts.
    ii. Violations of a Drug-Free Workplace, as indicated by:
    1. Failure to comply with the requirements of a Drug-Free 
Workplace; or
    2. such a number of contractor employees convicted of violations of 
criminal drug statutes occurring in the workplace as to indicate that 
the contractor has failed to make a good faith effort to provide a 
drug-free workplace.\2\
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    \2\ 41 U.S.C. Chapter 81.
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    iii. Intentionally affixing a label bearing a ``Made in America'' 
inscription (or any inscription having the same meaning) to a product 
sold in or shipped to the United States, when the product was not made 
in the United States.\3\
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    \3\ Section 202 of the Defense Production Act; Public Law 102-
558.
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    iv. Commission of an unfair trade practice.\4\
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    \4\ Section 201 of the Defense Production Act; Public Law 102-
558.
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    v. Delinquent Federal taxes in an amount that exceeds $3,500. 
Federal taxes are considered delinquent for purposes of this provision 
if the tax liability is finally determined (i.e. assessed) and the 
taxpayer is delinquent in making payment.
    vi. Knowing failure by a principal, until 3 years after final 
payment on any Government contract awarded to the contractor, to timely 
disclose to the Government, in connection with the award, performance, 
or closeout of the contract or a subcontract thereunder, credible 
evidence of:
    1. Violation of Federal criminal law involving fraud, conflict of 
interest, bribery, or gratuity violations; \5\
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    \5\ Title 18 U.S.C.
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    2. violation of the civil False Claims Act; \6\ or
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    \6\ 31 U.S.C. 3729-3733.
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    3. significant overpayment(s) on the contract, other than 
overpayments resulting from contract financing payments.
    vii. A contractor, based on a determination by the Secretary of 
Homeland Security or the Attorney General of the United States, not in 
compliance with Immigration and Nationality Act employment 
provisions.\7\ Such determination is not reviewable in the debarment 
proceedings.
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    \7\ Executive Order 12989, as amended by Executive Order 13286.
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    viii. A contractor has miscertified its status as a minority- and/
or women-owned business.

[[Page 12323]]

    ix. Any other cause of so serious or compelling a nature that it 
affects the present responsibility of the contractor or subcontractor.
    b. Conviction-Based Debarment. A debarment action based on a 
conviction or civil judgement. A contractor can be debarred for a 
conviction or civil judgement based on one or more of the following 
circumstances:
    i. Commission of fraud or a criminal offense in connection with (i) 
obtaining, (ii) attempting to obtain, or (iii) performing a public 
contract or subcontract.
    ii. Violation of Federal or State antitrust statutes relating to 
the submission of offers.
    iii. Commission of embezzlement, theft, forgery, bribery, 
falsification or destruction of records, making false statements, tax 
evasion, violating Federal criminal tax laws, or receiving stolen 
property.
    iv. Intentionally affixing a label bearing a ``Made in America'' 
inscription (or any inscription having the same meaning) to a product 
sold in or shipped to the United States, when the product was not made 
in the United States.\8\
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    \8\ Section 202 of the Defense Production Act; Public Law 102-
558.
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    v. Commission of any other offense indicating a lack of business 
integrity or business honesty that seriously and directly affects the 
present responsibility of a Government contractor or subcontractor.
    8. Imputation. Attributing the misconduct of an individual or 
organization to another individual or organization by virtue of the 
latter's knowledge or implied knowledge of the misconduct. An agency 
may impute the basis of a suspension or debarment through the following 
relationships: Individual to organization; organization to individual; 
individual to individual; and joint ventures.
    9. Indictment. An indictment for a criminal offense. An information 
or other filing by competent authority charging a criminal offense is 
given the same effect as an indictment.
    10. Presentation of Matters in Opposition (PMIO). The contractor 
may submit matters in opposition to the suspension or proposed 
debarment. The contractor may submit matters in person, in writing, or 
through a representative. The contractor may also use a combination of 
those methods.
    11. Present Responsibility. A contractor is presently responsible 
if the contractor is ethical, honest, competent, and has not acted in 
any way that reveals a lack of business integrity or business honesty, 
or an inability to satisfactorily perform Government contracts.
    12. System for Award Management (SAM). SAM is the exclusion 
database that applies across the Executive Branch. SAM is an official 
U.S. Government system.
    13. Suspension. A suspension is an immediate, but temporary 
(usually 12 months), measure imposed by the SDO, rendering a contractor 
ineligible to receive new Government contracts or subcontracts, pending 
the outcome of a legal proceeding or investigation that could give rise 
to a debarment.\9\
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    \9\ If legal proceedings are not initiated within 12 months 
after the date of the suspension notice, the suspension shall be 
terminated unless an Assistant Attorney General requests an 
extension, in which case it may be extended for six months. 
Suspensions cannot extend beyond 18 months unless legal proceedings 
have been initiated within that period. The NCUA shall notify the 
Department of Justice of the proposed termination of the suspension, 
at least 30 days before the 12-month period expires to give the 
Department of Justice an opportunity to request an extension.
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    a. Adequate Evidence for Suspension. The NCUA must have adequate 
evidence and an immediate need to suspend a contractor. Adequate 
evidence is information sufficient to support a reasonable belief that 
a particular act or omission has occurred. A contractor can be 
suspended upon adequate evidence of one or more the following:
    i. Commission of fraud or a criminal offense in connection with (i) 
obtaining, (ii) attempting to obtain, or (iii) performing a public 
contract or subcontract.
    ii. Violation of Federal or State antitrust statutes relating to 
the submission of offers.
    iii. Commission of embezzlement, theft, forgery, bribery, 
falsification or destruction of records, making false statements, tax 
evasion, violating Federal criminal tax laws, or receiving stolen 
property.
    iv. Violations of a Drug-Free Workplace, as indicated by:
    1. Failure to comply with the requirements of a Drug-Free 
Workplace; or
    2. Such a number of contractor employees convicted of violations of 
criminal drug statutes occurring in the workplace as to indicate that 
the contractor has failed to make a good faith effort to provide a 
drug-free workplace.\10\
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    \10\ 41 U.S.C. Chapter 81.
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    v. Intentionally affixing a label bearing a ``Made in America'' 
inscription (or any inscription having the same meaning) to a product 
sold in or shipped to the United States, when the product was not made 
in the United States.\11\
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    \11\ Section 202 of the Defense Production Act; Public Law 102-
558.
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    vi. Commission of an unfair trade practice.\12\
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    \12\ Section 201 of the Defense Production Act; Public Law 102-
558.
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    vii. Delinquent Federal taxes in an amount that exceeds $3,500. 
Federal taxes are considered delinquent for purposes of this provision 
if the tax liability is finally determined (i.e. assessed) and the 
taxpayer is delinquent in making payment.
    viii. Knowing failure by a principal, until three years after final 
payment on any Government contract awarded to the contractor, to timely 
disclose to the Government, in connection with the award, performance, 
or closeout of the contract or a subcontract thereunder, credible 
evidence of:
    1. Violation of Federal criminal law involving fraud, conflict of 
interest, bribery, or gratuity violations; \13\
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    \13\ Title 18 U.S.C.
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    2. violation of the civil False Claims Act; \14\ or
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    \14\ 31 U.S.C. 3729-3733.
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    3. significant overpayment(s) on the contract, other than 
overpayments resulting from contract financing payments.
    ix. Commission of any other offense indicating a lack of business 
integrity or business honesty that seriously and directly affects the 
present responsibility of a Government contractor or subcontractor.
    An indictment for any of the foregoing will be considered adequate 
evidence for suspension.

D. Responsibilities

    1. NCUA Executive Director. The Executive Director has the 
authority to approve the award of a contract or subcontract to an 
ineligible contractor for compelling reasons. Decisions to award a 
contract or subcontract to ineligible contractors must be documented in 
writing in advance of an award.
    2. The Suspending and Debarring Official (SDO). The Deputy General 
Counsel serves as the SDO. The SDO decides whether to impose a 
suspension and debarment action. The decision whether to suspend or 
debar is a business decision and, unless mandated by statute or 
executive order, is discretionary. The SDO decides whether to send out 
a Notice of Suspension or a Notice of Proposed Debarment, issue a Show 
Cause Letter, or take no action. Upon commencing a formal action, the 
SDO reviews the ARM, considers any PMIO submitted or presented by the

[[Page 12324]]

contractor, and determines whether a fact-finding proceeding is 
necessary. The SDO may negotiate an Administrative Agreement with the 
contractor. The SDO's final decision is based on the ARM and the entire 
Administrative Record.
    3. Office of the General Counsel (OGC). OGC provides legal advice 
regarding the suspension and debarment program to the NCUA. OGC reviews 
the ARM, any other notices and correspondence, the Administrative 
Record, the SDO decision, any Administrative Agreement and other 
documents for legal sufficiency. OGC also reviews and concurs in any 
decision from the OCFO, to terminate or void contracts held by 
suspended, debarred, or proposed-for-debarment contractors.
    4. SDO Admin. The SDO Admin is a procurement attorney in OGC. The 
SDO Admin receives referral packages and coordinates with the OCFO, the 
SDO, and other interested NCUA parties. The SDO Admin also coordinates 
suspension and debarment actions with other agencies and enters 
ineligible contractors into SAM. The SDO Admin coordinates with the 
OIG, when necessary and appropriate.
    5. Office of the Chief Financial Officer (OCFO). OCFO contracting 
officers shall evaluate the responsibility of prospective contractors 
before award, to include checking SAM. Contracting officers shall also 
ensure contractor compliance with contract terms and conditions and 
shall coordinate appropriately with any NCUA office and the SDO Admin 
on a suspension and debarment action.
    6. Office of Inspector General (OIG). The OIG's work may form the 
basis for a referral for suspension or debarment. The OIG shall raise 
any matters of concern resulting from audits, evaluations and 
investigations. Other NCUA offices may refer areas of concern to the 
OIG for investigation.
    7. All NCUA Offices. All NCUA offices must report misconduct that 
may give rise to a suspension and debarment action to the NCUA 
contracting officer and the SDO Admin upon any indication of a cause 
for suspending and debarring contractors. Situations that involve 
possible criminal or fraudulent activities must also be referred to the 
OIG. Along with more specific bases for debarments and suspensions 
listed in Section C, the following general matters may be grounds for 
suspension and debarment and should be referred: Contractor fraud, 
dishonesty, or unethical behavior; repeated or severe contract 
performance issues; unmitigated or undisclosed conflicts of interest; 
and improper invoicing and/or questionable costs.

E. Effect of Listing 15
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    \15\ The nonprocurement common rule is a model rule published in 
the Federal Register and used by agencies to suspend, debar, or 
exclude contractors from participation in nonprocurement activities. 
Nonprocurement activities include grants, cooperative agreements, 
scholarships, fellowships, loans, loan guarantees, subsidiaries, 
insurance, payments for specified use, and donation agreements. FAR 
and NCR-based suspension and debarment actions are recognized 
equally by agencies regardless of which regulations they follow.
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    1. Contractors debarred, suspended, or proposed for debarment are 
excluded from receiving contracts, and the FAR provides that agencies 
shall not solicit offers from, award contracts to, or consent to 
subcontracts with these contractors, unless the agency head determines 
there is a compelling reason for such action. Subject to any exceptions 
in this policy, the NCUA shall not award new contracts, place orders 
exceeding the guaranteed minimum on indefinite delivery contracts, 
place orders under schedule contracts, add new work, exercise options, 
or extend the duration of a contract with any contractor debarred, 
suspended, or proposed for debarment. Except as otherwise provided in 
applicable law, a suspension and debarment action taken by the NCUA 
will exclude the contractor from all awards of other contracts within 
the Executive Branch.
    a. Current contracts. Any NCUA decision to terminate or void a 
current contract shall be subject to review and concurrence by OGC.
    b. Restrictions on subcontracting. When a contractor debarred, 
suspended or proposed for debarment is proposed as a subcontractor for 
any subcontract subject to NCUA consent, contracting officers shall not 
consent unless the Executive Director states in writing the compelling 
reasons to do so.\16\
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    \16\ Also, contractors shall not enter into any subcontract in 
excess of $35,000, other than a subcontract for a commercially 
available off the-shelf item, with a party that is debarred, 
suspended, or proposed for debarment.
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F. Procedures for Referring Matters to the SDO

    1. General. The referring office shall provide any and all facts 
and information giving rise to the possible suspension and debarment, 
including any available documentation to the SDO Admin. Conviction-
based debarment matters should be referred within 10 working days of 
discovery and, to the extent practicable, all other matters should be 
referred within 30 calendar days. The referring office shall submit an 
ARM to the SDO Admin. The SDO Admin will coordinate the ARM with the 
SDO, the NCUA contracting officer and any other necessary party.
    2. Contents of the ARM. The ARM must include the following 
information, if applicable:
    a. Information on the contractor:
    i. Identity of respondents (contractors/affiliates/business 
entities).
    ii. Position(s) held by individuals within the business entity.
    iii. Fictitious names or aliases.
    iv. Current mailing addresses of named parties and/or last known 
business address.
    v. Current telephone and fax numbers for named parties.
    vi. Dun and Bradstreet identifier and/or the Commercial and 
Government Entity Code.
    vii. SSN and/or birthdates of individuals.
    viii. Listing of subsidiaries, affiliates, and parent companies.
    b. Pertinent Documents.
    i. NCUA-affected contract numbers and copies of the contract(s).
    ii. Listing of any other contracts the entity has with other 
Government agencies.
    iii. Invoices and other cost and pricing information.
    iv. Any indictment, legal documents, sentencing transcripts or 
memoranda, any judgement and conviction, settlement agreement or final 
order.
    v. Explanation of current business corporate structure, if known.
    vi. Any business-related documents (articles of incorporation).
    vii. Emails and communication between the NCUA and the contractor.
    c. Business activity of the contractor and nexus statement. The ARM 
must contain a narrative explaining the relationship between the 
conduct of the contractor and the NCUA's mission and/or activities and 
include a statement of the grounds for suspension and debarment. The 
narrative should focus on the contractor's integrity and present 
responsibility and why the NCUA needs protection. The narrative should 
show the SDO what happened in clear and concise terms. Mitigating 
factors that can be addressed are whether the individual(s) cooperated 
with any investigation, whether behavior was repetitive, and whether 
any individuals self-disclosed. Time critical events should be 
addressed (for example, whether the contractor is being considered for 
new award or an option is about to be exercised).
    d. Recommended course of action. The ARM shall recommend a 
suspension, proposal for debarment, or show cause letter. The ARM can 
also

[[Page 12325]]

propose a period for the suspension or debarment.

G. Decision-Making Process

    a. Upon receipt of a referral, the SDO Admin will ensure that the 
file has all of the required elements. The SDO Admin will coordinate 
with the referring office, the OIG, the NCUA contracting officer and 
any other necessary party if more information is needed. The SDO Admin 
will coordinate any proposed action with the Interagency Suspension and 
Debarment Committee (ISDC). The ISDC is an organization composed of 
suspension and debarment representatives from agencies and coordinates 
lead agency status among agencies. The lead agency is usually the 
agency with the highest amount of contracting dollars with the vendor.
    b. The SDO Admin will then forward the ARM to the SDO. Upon the 
receipt of a referral, the SDO will decide the appropriate action to 
take. After consultation with OGC, the SDO may take any of the 
following actions:
    i. Reject the ARM and take no action. The SDO may determine there 
is not enough evidence to initiate an action. The SDO will document the 
decision not to take action and tell the SDO Admin. The SDO Admin will 
coordinate this decision within the NCUA. Continuous monitoring of the 
contractor may be recommended.
    ii. Issue a Show Cause Letter. The SDO may issue a Show Cause 
Letter to the contractor rather than initiating a formal suspension or 
debarment action. The SDO Admin will send the Show Cause Letter to the 
contractor through USPS certified mail, return receipt requested, and 
forward a copy to the NCUA contracting officer and the OIG if 
necessary. The letter must include all of the following:
    1. A description of the alleged misconduct.
    2. Notice that the misconduct may form the basis for a suspension 
and debarment action.
    3. A request for the contractor to admit, deny, or explain the 
alleged misconduct.
    4. A time for a contractor to respond (no more than 30 calendar 
days from the date of receipt).
    5. Notice of consequences for failure to respond to the letter or 
adequately address the allegations of misconduct.
    iii. Issue a Notice of Suspension or Notice of Proposed Debarment. 
The SDO may begin formal proceedings by issuing a Notice of Suspension 
or a Notice of Proposed Debarment. Issuance of either, immediately 
renders the contractor (and any named affiliates) ineligible to receive 
Executive Branch contracts and the SDO Admin will enter the 
contractor's name into SAM. Notice shall be sent by USPS certified 
mail, return receipt requested to the last known address of the 
contractor.
    1. Notice of Proposed Debarment. The notice shall inform the 
contractor (and any named affiliates):
    a. That it is being considered for debarment;
    b. of the reasons/causes for the proposed debarment;
    c. of the effect of the proposed debarment;
    d. of the potential effect of a debarment (including scope of 
ineligibility);
    e. that the contractor has 30 calendar days from receipt of the 
notice to respond with its PMIO in person, in writing, or through a 
representative with information and arguments opposing the proposed 
debarment; and
    f. that the NCUA may conduct a fact-finding proceeding.
    A copy of the ARM will be sent with the notice. A copy of the 
entire Administrative Record will be made available to the contractor 
upon request, unless applicable law or parallel proceedings warrant the 
SDO's partial or complete redaction or withholding of the 
Administrative Record.
    2. Notice of Suspension. The notice shall inform the contractor 
(and its affiliates) of the following circumstances:
    a. That it has been suspended;
    b. whether the suspension is based on indictment or other adequate 
evidence that the contractor has committed misconduct warranting 
immediate action;
    c. that the suspension is for a temporary period, pending the 
completion of an investigation (if the suspension is based on 
indictment there is no time limit);
    d. the cause(s) for imposing the suspension;
    e. the effect of the suspension (including the scope of 
ineligibility);
    f. that the contractor has 30 calendar days from receipt of the 
notice to respond with its PMIO in person, in writing, or through a 
representative with information and argument opposing the suspension; 
and
    g. that the NCUA may conduct a fact-finding proceeding if the SDO 
finds that material facts are in dispute.
    A copy of the ARM will be sent with the notice. A copy of the 
entire Administrative Record will be made available to the contractor 
upon request, unless applicable law or parallel proceedings warrant the 
SDO's partial or complete redaction or withholding of the 
Administrative Record.
    iv. Contractor's PMIO.
    After receiving notice of a suspension or debarment, the contractor 
has 30 calendar days from receipt of the notice to respond with its 
PMIO in person, in writing, or through a representative with 
information and argument opposing the proposed suspension or debarment. 
There is no set format for how the PMIO must be submitted. The 
contractor may request a meeting with the SDO. The SDO will decide 
whether to transcribe meetings and conference calls on a case-by-case 
basis. The PMIO should raise all contractor defenses, contested facts, 
admissions, remedial actions taken and any mitigating factors. 
Mitigating factors can include explaining whether the contractor (a) 
has effective standards of internal control systems or adopted of such 
controls; (b) brought the misconduct to the attention of the NCUA in a 
timely manner; (c) internally investigated the misconduct; (d) 
cooperated fully with any NCUA investigation; (e) paid or agreed to pay 
restitution; (f) took appropriate disciplinary actions against 
individuals responsible for misconduct; (g) implemented or agreed to 
implement new remedial measures; (h) instituted or agreed to issue new 
training or ethics programs; (i) has had adequate time to eliminate the 
circumstances in the organization that led to the misconduct; and (j) 
whether management recognizes the seriousness of the misconduct and has 
implemented programs to prevent recurrence. The SDO must consider all 
matters in the PMIO in rendering a final decision. A contractor's 
failure to respond to the notices sent by the SDO shall be deemed an 
admission of the existence of the cause for suspension or debarment. In 
that case, the SDO may proceed to a final decision without further 
proceedings.
    A fact-finding proceeding occurs if actions are not based upon a 
conviction or civil judgement and when, after receipt of the PMIO, the 
SDO determines there is a genuine dispute over material fact(s). A 
fact-finding proceeding is called to consider the fact(s). A fact-
finder can be any individual appointed by the SDO to oversee the 
proceeding. The contractor shall be afforded the opportunity to appear 
with counsel, submit documentary evidence and confront agency 
witnesses. The proceeding shall be transcribed unless otherwise 
mutually agreed upon, and the contractor can obtain a transcript of 
proceedings at its request and at its cost. The SDO shall attempt to 
schedule this proceeding within 60 calendar days of the PMIO. If there 
are numerous grounds for suspension and debarment,

[[Page 12326]]

the proceeding can be limited to the grounds in dispute having a 
genuine issue of material fact. The disposition of the fact-finding 
proceeding will be documented by the SDO. The standard of proof for 
determining the disputed facts is preponderance of the evidence.
    c. Compiling the Administrative Record. During the process, the 
NCUA shall maintain and document all information considered by the SDO 
to include the ARM, the PMIO (including mitigating factors) and 
transcripts of any fact-finding proceedings. This is the Administrative 
Record. The following records, in addition to any other similar 
materials, shall also be included if considered by the SDO: Emails; 
notes; contract documents; newspaper articles; and summaries of oral 
briefings and contractor submissions. Any information not relied on by 
the SDO should not be included. Once the SDO issues a final decision, 
the contractor may request a copy of the Administrative Record. The SDO 
may deny the request or withhold or redact part of the Administrative 
Record if warranted under applicable law or because of parallel 
proceedings.\17\ In any circumstance where the SDO redacts or withholds 
all or part of the Administrative Record, the SDO will provide the 
reasons for doing so to the contractor in writing.
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    \17\ Parallel proceedings occur when two or more contemporaneous 
legal actions are initiated by different Government entities against 
the same contractor, and involving the same material facts. Often 
these arise when an agency has suspended or proposed a contractor 
for debarment and the Department of Justice is investigating or 
prosecuting the contractor for the same misconduct.
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    d. Final Decision. The SDO shall issue a written final decision 
based on the Administrative Record. The SDO shall issue a conviction-
based debarment within 30 working days after closing the Administrative 
Record and within 45 working days of closing the Administrative Record 
for a fact-based suspension or debarment. The SDO has discretion to 
extend these deadlines. The Administrative Record will be deemed closed 
when the SDO Admin submits all evidence to the SDO for a final 
decision. The SDO Admin will advise the contractor in writing promptly 
after the Administrative Record has been closed, including the date it 
was closed. All correspondence shall be sent USPS certified mail, 
return receipt requested, by the SDO Admin. The SDO can take the 
following actions in a final decision:
    i. Not Debar the Contractor. The SDO may decide not to debar the 
contractor. The decision shall include, if applicable, referral to the 
Notice of Proposed Debarment; a summary of proceedings; the identities 
of affiliates or imputed conduct; and the reasons for not debarring 
(for example, an Administrative Agreement; mitigating factors; or 
remedial measures taken by the contractor). The decision shall notify 
the contractor that it may request a copy of the Administrative Record 
and give notice of the effective date of the decision. The SDO Admin 
will remove the contractor's name from SAM.
    ii. Terminate the Suspension. The SDO may decide to terminate the 
suspension. The decision shall include, if applicable, referral to the 
Notice of Suspension; a summary of proceedings; the identities of 
affiliates or imputed conduct; and the reason for terminating the 
Suspension (for example, an Administrative Agreement; mitigating 
factors; or remedial measures taken by the contractor). The decision 
shall notify the contractor that it may request a copy of the 
Administrative Record and give notice of the effective date of the 
decision. The SDO Admin will remove the contractor's name from SAM.
    iii. Debar the Contractor. The SDO may decide to debar the 
contractor. This decision must be based on the preponderance of the 
evidence. The decision shall include, if applicable, referral to the 
Notice of Proposed Debarment; a summary of proceedings; identities of 
affiliates or imputed conduct; the information considered by the SDO; 
the reasons for debarring; the scope of ineligibility; the consequences 
of debarment (application across the Executive Branch); and the 
effective dates of debarment. The decision shall notify the contractor 
that it may request a copy of the Administrative Record. The SDO Admin 
will enter the debarred contractor into SAM.
    iv. Enter into an Administrative Agreement. At any time during the 
proceedings, the SDO may negotiate an Administrative Agreement with the 
contractor. An Administrative Agreement applies across the Executive 
Branch when entered into SAM. The terms of the Administrative Agreement 
and contents of the Agreement will be determined on a case-by-case 
basis.
    e. Contractor's Remedy. After a decision is made, a suspended or 
debarred contractor may seek judicial review. OGC (in coordination with 
the Department of Justice, as appropriate or required) will work with 
the referring office, the SDO, and OCFO to litigate these claims.
    H. NCUA Action after a Decision. If a suspension or debarment is 
imposed, NCUA offices must take steps to ensure the contractor does not 
receive any new contracts. Upon the effective date of SAM listing, the 
NCUA must not solicit offers from, award contracts to, or consent to 
contracts with ineligible contractors. Suspended or debarred 
contractors may continue performing current contracts (unless those 
contracts are terminated or voided) but cannot (a) add new work, 
exercise options, or otherwise extend the duration of the contract or 
order; (b) issue task orders exceeding the guaranteed minimum under 
indefinite quantity contracts; or (c) place orders under blanket 
purchase agreements or basic ordering agreements. The NCUA must review 
any current contracts held by the contractor to determine whether to 
terminate or void those contracts. A decision to terminate or void a 
contract requires OGC concurrence.

[FR Doc. 2018-05626 Filed 3-20-18; 8:45 am]
BILLING CODE 7535-01-P