[Federal Register Volume 83, Number 154 (Thursday, August 9, 2018)]
[Notices]
[Pages 39464-39469]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-17086]


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NATIONAL CREDIT UNION ADMINISTRATION

RIN 3133-AE85


NCUA Suspension and Debarment Procedures

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final suspension and debarment procedures.

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SUMMARY: On March 15, 2018, the NCUA Board (Board) proposed new 
suspension and debarment procedures to protect the Federal Government's 
interest in only doing business with presently responsible contractors. 
After consideration of public comments, this notice sets forth the 
NCUA's final procedures for suspension and debarment and establishes 
administrative processes for contractors subject to the procedures. The 
final procedures will appear on the NCUA's public website.

DATES: These final procedures are applicable September 10, 2018.

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. Comments Received
III. The Final Procedures
IV. Regulatory Procedures

I. Background

    On March 15, 2018, the NCUA Board (Board) proposed new suspension 
and debarment procedures as part of its efforts to modernize its 
procurement processes. These proposed procedures were intended to 
implement best practices in spending funds available to the NCUA, 
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, those laws and 
regulations have proven effective and include guidelines developed over 
years of seeking public comment on expenditure processes. Suspension 
and debarment remedies are now an important component of government 
procurement programs. After considering comments received, the Board 
has decided to adopt the procedures as proposed.

II. Comments Received

    The Board received three comments on the proposal. Commenters 
included two national credit union trade associations and one regional 
trade association. All three commenters supported the proposal. One 
commenter suggested that the agency ``consult with the [Office of the 
Inspector General] regarding whether such procedures would be of 
benefit to the NCUA Office of General Counsel.''
    The Board values these comments and believes it should adopt the 
procedures as proposed. Implementing these procedures in the near term 
ensures prompt compliance with the NCUA Inspector General's 
recommendations. The Board is open to further recommendations of the 
Inspector General but, at this developing stage, declines to extend the 
final procedures to legal services agreements. Lawyers are subject to 
codes of professional responsibility related to their bar memberships, 
which already impose the highest standards of ethical conduct and 
include avenues for disciplinary action that can preclude further 
practice of law. This approach also aligns with the current practice of 
the Federal Deposit Insurance Corporation, which excludes law firms and 
lawyers from its contractor suspension and debarment procedures.\1\
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    \1\ 12 CFR 367.1(c).
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III. The Final Procedures

    As discussed above, the Board has chosen to adopt the procedures as 
proposed. For a complete discussion of all eight sections of the 
procedures, please see the preamble to the proposed procedures at 83 FR 
12318 (Mar 21, 2018) or https://www.gpo.gov/fdsys/pkg/FR-2018-03-21/pdf/2018-05626.pdf. The Board will post the final procedures on the 
NCUA website.

IV. Regulatory Procedures

A. Regulatory Flexibility Act

    For any final rule it adopts, the Regulatory Flexibility Act (RFA) 
requires the NCUA to prepare a final regulatory flexibility analysis 
that, among other things, describes the steps the agency has taken to 
minimize economic impact on small entities (currently defined by the 
NCUA as federally insured credit unions with under $100 million in 
assets), unless the NCUA certifies that the final rule will not have a 
significant economic impact on a substantial number of small entities.
    As discussed in the proposal, the NCUA does not expect the final 
Suspension and Debarment Procedures would ever apply to a federally 
insured credit union. In addition, the NCUA does not expect that the 
Procedures would have a significant economic impact on any other small 
businesses, as defined in the RFA and as further established by the 
Office of Advocacy of the Small Business Administration.
    The final procedures closely follow 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 final procedures contain no recordkeeping or 
substantive regulatory requirements, varying only in adjudication 
processes. The final procedures 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 final procedures will not have a 
significant economic impact on a substantial number of small entities. 
No final regulatory flexibility analysis is required.

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.\2\ 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 final 
procedures will not create any new paperwork burden that meets the 
definition of an information collection. Thus, the NCUA has determined 
that these final procedures do not increase the paperwork requirements 
under the PRA and regulations of the Office of Management and Budget.
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    \2\ 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

[[Page 39465]]

defined in 44 U.S.C. 3502(5), voluntarily complies with the executive 
order to adhere to fundamental federalism principles. These final 
procedures will 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 the final procedures do 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 these final procedures 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 August 2, 
2018.
Gerard Poliquin,
Secretary of the Board.

    For the reasons discussed above, the Board adopts the following 
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

[[Page 39466]]

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.
    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.

[[Page 39467]]

    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 
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.

[[Page 39468]]

    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 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

[[Page 39469]]

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, 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 applicability 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 applicability 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 
applicability 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 applicability 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. 2018-17086 Filed 8-8-18; 8:45 am]
BILLING CODE 7535-01-P