U. S. Department of Housing and Urban Development

Office of Inspector General for Investigation

Inspections and Evaluations Division

HUD’s Departmental Enforcement Center’s

Compliance Division

Evaluation of Suspension and Debarment Referrals

November 4, 2010

IED‐11‐001R
ii 

Executive Summary 

The Office of Inspector General (OIG), Inspections and Evaluations Division, conducts 

independent, objective examinations of U.S. Department of Housing and Urban Development 

(HUD) activities, programs, operations, and organizational issues. 

We conducted an evaluation of HUD’s Departmental Enforcement Center (DEC), specifically, 

the Compliance Division. We wanted to know whether DEC processed suspension and 

debarment referrals in a timely manner. We also wanted to identify ways to improve case 

management for suspensions and debarments. 

The Compliance Division is responsible for administering HUD’s administrative sanctions 

program as established at 2 CFR (Code of Federal Regulations) Parts 180 and 2424. The 

division imposes suspensions and debarments against individuals or entities for criminal and/or 

serious departmental program violations. 

 Suspensions are imposed for a temporary period, pending the completion of an 

investigation or legal proceedings. Suspension may be enacted based on adequate 

evidence, such as indictment or conviction. Depending upon the outcome of the 

investigation or legal proceedings, suspension could lead to debarment. 

 Debarments are serious actions imposed by HUD. The general duration of a debarment 

is 3 years, but it could be longer, even for an indefinite period, depending upon the 

seriousness of the violation. 

A suspension or debarment results in the immediate exclusion from participation in HUD and all 

other Federal Government procurement and nonprocurement programs for a specified period.1 

Between October 1, 2006, and December 9, 2009, DEC’s Compliance Division received a total 

of 978 suspension and/or debarment referrals (cases) from HUD OIG, various HUD program 

offices, and the U.S. Department of Justice. We observed the following based on our review of 

62 cases: 

 Suspension and debarment referrals were not processed in a timely manner. In 36 cases, 

the Compliance Division took between 12 and 681 days after receipt of a referral and/or 

charging document to process suspension and debarment notices. Immediate actions to 

suspend and/or debar individuals or entities were not taken in 11 of 47 cases, although the 

standards of evidence under Federal regulations had been met. Notices of final 

determination for debarments were sent to 13 individuals between 12 and 316 days 

beyond the 45-day requirement. Lastly, the division took from 96 to 740 days to close 16 

of 18 cases in which it was determined that a suspension or debarment was not warranted. 

 

1

 U.S. Department of Housing and Urban Development’s Homes and Communities, “Compliance Division,” 

http://www.hud.gov/offices/enforce/sidebar/decrelationships.cfm (content current as of November 4, 2010) 
iii 

 Federal requirements for entry of excluded parties were not met. Regulations at 2 CFR 

180.520(c) require DEC to enter information on excluded (suspended or debarred) 

individuals or entities into the Excluded Parties List System (EPLS), a governmentwide 

electronic database, generally within 5 working days after taking action. Information on 

14 (40 percent) of 35 individuals, against whom DEC took a suspension and/or 

debarment action, was not entered in EPLS within the time permitted. The number of 

days elapsed for entry of information on the excluded individuals ranged from 6 to 114 

days for suspensions and 1 to 394 days for debarments. 

 Record keeping system needs improvement. Of the 83 referrals selected for review, the 

Compliance Division was unable to locate 21 of the related case files and had to 

reconstruct two case files that were provided. Also, DEC’s policies and procedures for 

the retention and disposition of related suspension and debarment records had not been 

formalized. 

Delays in the processing of suspension and debarment actions and late entry of information on 

excluded individuals or entities into EPLS ultimately places HUD and other Federal agencies at 

an increased risk of awarding contracts, grants, and other subsidies to unethical, dishonest, and 

irresponsible parties. To improve the effectiveness of HUD’s administrative sanctions program, 

steps must be taken by DEC to ensure that suspension and debarment actions are processed 

consistently and in a timely manner. These steps include development of formalized written 

policies and procedures for the Compliance Division and department wide guidance. Also, a 

uniform record keeping system that provides for a complete historical record of the suspension 

and debarment process should be established. 

We provided a draft copy of the report to HUD’s General Counsel on October 12, 2010. The 

DEC generally agreed with our observations and concurred with the recommendations. OIG 

considers the DEC’s planned corrective actions to be responsive to the four recommendations. 

However, the recommendations remain open pending verification of corrective actions taken. 

The complete text of the DEC’s October 27, 2010, response is included in appendix A. 
iv 

Table of Contents

Introduction ......................................................................................................................................5 

Scope and Methodology ..................................................................................................................7 

Observations 

Observation 1: Suspension and Debarment Referrals Were Not Processed in a Timely 

Manner .......................................................................................................................................8 

Observation 2: Federal Requirements for Entry of Excluded Parties Were Not Met .............12 

Observation 3: Record Keeping Needs Improvement ............................................................13 

Recommendations ..........................................................................................................................14 

Comments and OIG Response .......................................................................................................16 

Appendix A – HUD Departmental Enforcement Center’s Comments ..........................................17 

Appendix B – Suspension and/or Debarment Referrals – October 1, 2006, 

 Through December 9, 2009 .....................................................................................................20 

Appendix C –Suspension and Debarment Process ........................................................................21 
5 

Introduction 

Departmental Enforcement Center 

The U.S. Department of Housing and Urban Development’s (HUD) Departmental Enforcement 

Center (DEC) was established in September 1998 to combine the enforcement actions of the 

Office of Public and Indian Housing (PIH), the Office of Community Planning and Development 

(CPD), the Office of Fair Housing and Equal Opportunity (FHEO), and the Office of Housing 

into one authority. DEC is part of the Office of General Counsel (OGC) and is comprised of the 

Office of the Director, the Compliance Division, the Operations Division, and five satellite 

offices. 

The Compliance Division is responsible for administering HUD’s administrative sanctions 

program as established at 2 CFR (Code of Federal Regulations) Parts 180 and 2424. The 

division imposes administrative sanctions—suspensions and debarments—against individuals or 

entities for criminal and/or serious departmental program violations. A suspension or debarment 

results in the exclusion of an individual or entity from participation in HUD and all other future 

Federal procurement and nonprocurement transactions for a specified period. The DEC Director, 

as the suspension and debarment official, has discretion to suspend and/or debar an individual or 

entity. The table below provides the differences between a suspension and a debarment.2

Suspension Debarment

When to take action Temporary status of ineligibility pending

the outcome of the investigation or legal

proceeding

A specific period as a final determination

that a person is not presently

responsible

Causes a. Must have adequate evidence (an

indictment) that there may be a

cause for debarment of a person,

and

Preponderance of evidence (a conviction

or civil judgment) that the person has

engaged in conduct that warrants

debarment  

   b. Immediate action is necessary to

protect the Federal Government’s

interest

Period Usually 1 year Usually 3 years, could be indefinite

Effective Upon the issuance of a notice of

suspension

Upon the issuance of a notice of final

determination

Burden of proof Suspended person Federal agency

Opportunity to contest Yes, 30 days from notice Yes, 30 days from notice

Timeframe for

suspension and

debarment official to

take action

Within 45 days of closing of official

record

Within 45 days of closing of official

record

 

2

 2 CFR Part 180, OMB [Office of Management and Budget] Guidelines to Agencies on Governmentwide 

Debarment and Suspension (Nonprocurement) 
6 

The Compliance Division processes two types of suspension and debarment referrals (cases): 

criminal-based and fact-based. Criminal-based cases are generally referred to the division by the 

HUD Office of Inspector General’s (OIG) Office of Investigation, and the related court 

documents are submitted with the referral. The amount of work required for processing a 

criminal-based case is normally minimal, involving some background research and information 

verification. Fact-based cases are usually referred by HUD’s program offices and HUD OIG’s 

Office of Audit. A referral for a fact-based case, for example, can originate from a newspaper 

article, which would require the analyst to “build the case” (i.e., research and gather additional 

information) to ensure that there is adequate evidence to pursue an administrative sanction. Factbased cases generally require more time to process than a criminal-based case. 

DEC Case Statistics 

Between October 1, 2006, and December 9, 2009, DEC’s Compliance Division received 978 

suspension and/or debarment referrals. In fiscal year (FY) 2007, the division received 278 cases 

that were divided among six full-time analysts. In FY 2008, the division experienced an increase 

of 23 percent in cases, while the number of full-time analysts remained the same. In FY 2009, 

the workload decreased by 15 percent, and the division lost a full-time analyst. Currently, the 

Compliance Division has a total of four full-time analysts.3

 The following table provides a 

breakdown of cases by analyst. 

FY FY 10/01/2009

to

DEC analyst 2007 2008 12/09/2009

%

Change 2008 2009

%

Change

Full time 43 83 93% 83 80 ‐4% 15

Full time 50 74 48% 74 63 ‐15% 12

Full time 48 56 17% 56 68 21% 11

Full time 86 33 ‐62% 33 19 ‐42% 6

Full time 36 42 17% 42 13 ‐69% ‐

Full time 2 25 1150% 25 ‐ ‐  ‐

Part time 6  ‐ ‐  ‐  ‐  ‐  ‐

Intern 6 28 367% 28 39 39% 23

Intern ‐  ‐ ‐  ‐ 6 ‐  ‐

Intern ‐ ‐ ‐ ‐ 2 ‐   ‐

Intern 1 ‐ ‐ ‐ ‐  ‐   ‐

Unassigned ‐ ‐  ‐ ‐ ‐  ‐  2

Total cases 278 341 23% 341 290 ‐15% 69

Total full‐time analysts 6 6 0% 6 5 ‐17% 4

Of the 978 referrals, 841 (86 percent) were from HUD OIG’s Office of Investigation and Office 

of Audit. The remaining 137 cases were referred by OGC, HUD Homeownership Centers, PIH, 

DEC satellite offices, CPD, FHEO, HUD field and regional offices, other, and the U.S. 

Department of Justice (DOJ). See appendix B for a breakdown of the referrals.

 

3

 As of September 30, 2010, an additional 969 cases had been referred to the DEC. 
7 

Five Phases for Processing Referrals 

The process used by the Compliance Division to determine whether a referral for administrative 

sanction warrants a suspension and/or debarment consists of the following phases: 

 Phase 1 - suspension notice development 

 Phase 2 - suspension concurrence 

 Phase 3 - opening pending 

 Phase 4 - debarment concurrence 

 Phase 5 - governmentwide exclusion 

The 5 phases contain a total of 11 steps, starting with receipt of the referral for administrative 

sanction. If a suspension or debarment is deemed appropriate, the process ends with entry of 

information on the excluded individual or entity into the Excluded Parties List System (EPLS).4

 

The division uses the Compliance Tracking System (CTS) to store information and to track the 

status of referred cases. During each phase, information pertaining to a referral is entered into 

the system by the assigned analyst. See appendix C for a detailed description of the suspension 

and debarment process. 

Scope and Methodology 

We interviewed officials and staff of DEC’s Compliance Division to gain an understanding of 

their operations and the suspension and debarment process. We also reviewed applicable laws 

and regulations related to Federal Government suspensions and debarments for nonprocurement 

transactions. The evaluation fieldwork was performed at DEC’s Compliance Division located in 

Washington, DC. 

Between October 1, 2006, and December 9, 2009, the Compliance Division received a total of 

978 suspension and/or debarment referrals (cases) from HUD OIG, various HUD program 

offices, and DOJ. The 978 cases consisted of 321 completed cases, 291 closeouts, and 366 cases 

in process.5 We sampled 83 cases for review to determine whether suspension and debarment 

referrals were processed in a timely manner and to identify ways to improve case management. 

The division was unable to provide 21 of 83 case files requested for review (see observation 3). 

Therefore, the results of this evaluation are based on review of 62 cases (21 completed cases, 18 

closeouts, and 23 cases in process) and the related CTS entries. 

We conducted the evaluation in accordance with the Quality Standards for Inspections issued by 

the President’s Council on Integrity and Efficiency. 

 

4

 EPLS is a governmentwide electronic database, operated by the General Services Administration, which identifies 

those parties excluded from receiving Federal contracts or certain subcontracts and from certain types of Federal 

financial and nonfinancial assistance and benefits. EPLS is accessible by the public at https://www.epls.gov/. 5

 A completed case is when all suspension and/or debarment actions are complete and no more actions are 

necessary. A closeout case occurs when it is determined that a suspension and/or debarment action is not warranted 

and no actions are taken. A case in process is still in the suspension and the debarment process. 
8 

Observations 

Observation 1 - Suspension and Debarment Referrals Were Not Processed in 

a Timely Manner

Review of 62 cases disclosed that suspension and debarment referrals were not processed in a 

timely manner by DEC’s Compliance Division. Specifically, suspension and debarment notices 

were not issued promptly after receipt of a referral and/or charging document. Immediate 

actions to suspend and/or debar individuals or entities were not taken in some cases, although the 

standards of evidence under Federal regulations had been met. Notices of final determination 

were not issued promptly. Lastly, cases in which it was determined that a suspension or 

debarment was not warranted were not closed in a timely manner. A delay in suspension and 

debarment decisions ultimately places HUD and other Federal agencies at an increased risk of 

awarding contracts, grants, and other subsidies to unethical, dishonest, and irresponsible parties. 

Suspension and Proposed Debarment Notices 

Notices of suspension, notices of proposed debarment and suspension, and notices of proposed 

debarment were not issued in a timely manner after receipt of referrals and/or charging 

documents. Regulations at 2 CFR 180.715 state that after deciding to suspend an individual, the 

suspension official promptly sends out a notice of suspension.6

 In 36 cases reviewed, the 

Compliance Division took between 12 and 681 days to process the notices. 

Immediate Action Was Not Taken 

Immediate actions to suspend and/or to debar individuals or entities were not taken by the 

Compliance Division in 11 of 47 cases referred by the HUD OIG Office of Investigation. 

Regulations at 2 CFR 180.705 and 180.850 provide the standards of evidence for suspensions 

and debarments. The regulations permit suspension upon the receipt of an indictment and 

debarment upon conviction or receipt of a civil judgment. 

Example #1: A title agent was indicted on February 3, 2009, for closing fraudulent loans. The 

referral for suspension from HUD OIG was received by the Compliance Division on October 19, 

2009. A notice of suspension could have been issued because the indictment constituted 

adequate evidence to immediately stop the title agent from doing business with HUD; however, 

the division chose to wait until November 27, 2009, when the judgment and conviction 

document was provided by OIG, to proceed with a proposed debarment. The notice of proposed 

debarment was not issued until May 7, 2010, which was 198 days after the division received the 

referral. 

Example #2: A real estate agent, who knowingly and willingly submitted fraudulent 

documentation for unqualified borrowers of Federal Housing Administration-insured loans, was 

 

6

 Other than requiring the suspension official to promptly send out a notice of suspension, the regulations are silent 

as to the amount of time that is permitted for sending out the notices. Regardless, notices should be sent promptly to 

individuals or entities when it is determined a suspension is warranted or a debarment and/or suspension is 

proposed. 
9 

indicted on June 20, 2008. The referral for administrative sanction from HUD OIG was received 

by the Compliance Division, along with the “information” and “plea agreement” documents, on 

July 30, 2008. A notice of suspension could have been issued immediately; however, the 

division has not taken action to date. There is a note in the case file that states, “Hold for 

Sentence 9/10/10.” 

Example #3: Two HUD program recipients were indicted on August 22, 2007, and convicted on 

September 19, 2008, of theft of government funds and false statements. The referral for 

administrative sanction from HUD OIG was received by the Compliance Division on October 1, 

2008. The indictment and conviction constituted adequate evidence to suspend and/or debar the 

two individuals. However, the Compliance Division took 174 days to issue a notice of proposed 

debarment and suspension, which was issued on March 25, 2009. The two HUD program 

recipients appealed the proposed debarment and suspension. They were subsequently debarred 

for 3 years, effective August 31, 2009, which was 330 days after the division received the case. 

Notice of Final Determination 

Notices of final determination for debarment were not issued in a timely manner due to late 

follow-up by the assigned analyst with the docket clerk regarding the hearing status of 

respondents. Regulations at 2 CFR 180.870 state that the debarring official must issue a written 

decision regarding whether to debar within 45 days of closing of the official record. The official 

record closes upon the debarring official’s receipt of final submissions, information, and findings 

of fact, if any. A debarment is not effective until the debarring official issues a decision. We 

reviewed 15 cases in which notices were sent by DEC’s Compliance Division to exclude 

individuals, and of those notices, only two met the 45-day requirement. The remaining 13 

notices were sent to the debarred individuals between 12 and 316 days beyond the 45-day 

requirement (see the following table). 

Notice of

proposed

debarment date

45‐day final

determination

date

Debarment

effective

date

Days exceeding

45‐day

requirement

1 7/30/2007 9/13/2007 10/11/2007 28

2 6/30/2009 8/14/2009 9/10/2009 26

3 5/14/2008 6/28/2008 7/30/2008 32

4 4/29/2009 6/13/2009 9/30/2009 107

5 4/29/2009 6/13/2009 4/29/2010 316

6 10/26/2006 12/10/2006 12/22/2006 12

7 1/25/2008 3/10/2008 3/26/2008 16

8 4/23/2009 6/7/2009 9/25/2009 108

9 1/15/2010 3/1/2010 4/29/2010 58

10 12/10/2007 1/24/2008 2/26/2008 32

11 7/13/2007 8/27/2007 11/15/2007 78

12 11/15/2007 12/30/2007 2/11/2008 41

13 10/1/2008 11/15/2008 12/9/2008 24
10 

Example (# 8 above): A straw buyer was indicted on February 27, 2007. The straw buyer was 

suspended and then proposed for debarment. The notice of proposed debarment and 

continuation of existing suspension was issued on April 23, 2009. The analyst did not ask the 

docket clerk whether the respondent had requested a hearing until it was brought to the analyst’s 

attention by HUD OIG on September 25, 2009, which was 152 days after issuance of the notice. 

Further, the respondent did not appeal the proposed debarment. The notice of final 

determination was issued that day. The effective date of the debarment exceeded the 45-day 

final determination date by 108 days. It was an oversight on the part of the analyst. 

Closeout Cases 

Closeout cases were not closed in a timely manner. On average, DEC’s Compliance Division 

took 309 days to close a case when it was determined that a suspension or debarment action was 

not warranted. We reviewed 18 closeout cases, of which only 2 were closed within 60 days. 

The remaining 16 (88 percent) cases took from 96 to 740 days to close as shown in the table 

below. 

45

days

or less

46 ‐ 

60

days

61 ‐ 

100

days

101 ‐ 

200

days

201 ‐ 

365 days

366

days or

more

Average

days Range

0 2 1 6 3 6 309 50 ‐ 740

days

Delays in Processing 

Delays in processing of suspension and debarment referrals by DEC’s Compliance Division were 

not only caused by limited staff resources and the lack of formal written policies and 

procedures,7 but also by inadequate coordination and communication between the division and 

its customers/partners. 

HUD OIG: Cases were not always referred to the Compliance Division in a timely manner. Of 

the 62 cases reviewed, 53 (47 by the Office of Investigation and 6 by the Office of Audit) were 

referred by HUD OIG. Thirty-one (66 percent) of the 47 cases referred involving an indictment 

and/or conviction were submitted more than 30 days after the individuals or entities had been 

either indicted or convicted. 

For example, a housing authority official was indicted on August 26, 2008, and convicted on 

March 27, 2009. However, the division did not receive the referral for suspension from OIG 

until September 17, 2009, which was 352 days after the submission due date for the indictment 

and 141 days after the submission due date for the conviction.8

 A referral for debarment was not 

 

7

 Regulations at 2 CFR Part 180 require DEC to establish policies and procedures for the agency’s nonprocurement 

debarment and suspension programs and activities that are consistent with OMB guidance. Lack of internal policies 

leaves the timeliness of suspension and debarment open to interpretation. 

8

 OIG policy at the time required submission of referrals for administrative sanctions as soon as practicable during 

an investigation. To determine a due date for submission based on the date of indictment or conviction, we used 30 

days. 
11 

made by OIG. The DEC analyst retrieved the judgment and conviction document from Public 

Access to Court Electronic Records (PACER)9 and proceeded with a proposed debarment. 

Further, HUD OIG did not respond to the division’s requests in a timely manner and sometimes 

not at all. For example, in two cases, when the assigned analyst requested additional information 

from OIG, responses were not received. The analyst had to seek alternative means to obtain the 

needed information. 

HUD Office of Program Enforcement and Hearing Official:

10 The waiting period for appeals 

was protracted. When the notice of proposed debarment is issued, the respondent has 30 days to 

contest the proposed debarment. The respondent may request an informal hearing. We reviewed 

five cases in which the respondents chose to contest their proposed debarments. The waiting 

period for the hearings took an average of 140 days, with one case taking 206 days. 

Also, the deliberation period between the hearing and the suspension and debarring official 

determination was lengthy. According to 2 CFR 180.870, the debarring official must issue a 

written decision regarding whether to debar within 45 days of closing of the official record. The 

official record closes upon the debarring official’s receipt of final submissions, information, and 

findings of fact, if any. We noted that the suspension and debarring official did not make a 

decision within the required 45-day timeframe in three of the five cases reviewed. On average, 

the suspension and debarring official took 57 days to reach a decision; in one case it took 75 

days. 

HUD program offices: Obtaining concurrence from HUD program offices increased the 

processing time for suspension and debarment referrals considerably. When the notice of 

suspension or notice of proposed debarment is drafted, the notice goes through HUD’s Office of 

Program Enforcement (OPE) for legal sufficiency review. In some cases, the concurrence from 

the respective HUD program office is recommended before proceeding to the suspension or 

proposed debarment action. If this is the case, the assigned analyst contacts the appropriate 

HUD program office to obtain concurrence. 

 Example #1: A Section 8 landlord was indicted on February 27, 2007, and the HUD OIG 

referral was received by DEC’s Compliance Division on March 19, 2007. The notice of 

suspension was processed within a reasonable amount of time by the division. Also, the 

notice of proposed debarment and continuation of existing suspension was drafted in a 

timely manner after the judgment and conviction became available in PACER. However, 

before the division could proceed with the proposed debarment, concurrence from PIH 

was needed according to OPE’s recommendation. A considerable amount of time (64 

days) had passed before the Compliance Division requested PIH’s approval. 

 

9

 PACER is an electronic public access service that allows users to obtain case and docket information from Federal 

appellate, district, and bankruptcy courts and the PACER Case Locator via the Internet. PACER is provided by the 

Federal judiciary in keeping with its commitment to providing public access to court information via a centralized 

service. 

10 OPE, within HUD OGC, provides legal support to the Compliance Division. OPE reviews all suspension and 

debarment notices for legal sufficiency before sending them to the respondents. In addition, OPE schedules 

hearings for individuals or entities who wish to appeal a suspension or debarment. Further, OPE attorneys represent 

HUD during hearings. 
12 

Communications started on November 29, 2007. The response from PIH was not 

received by the division until January 17, 2008, 48 days later. 

 Example #2: A housing authority contractor was indicted on January 22, 2008. Before 

the Compliance Division could proceed with a proposed debarment, concurrence from 

PIH was needed. The concurrence was requested on March 27, 2008. The response was 

not received until September 17, 2008, 170 days later. E-mail trails revealed that the 

division’s request was forwarded to multiple PIH officials before concurrence was 

obtained. 

Interagency Suspension and Debarment Committee and other Federal agencies: Coordination 

with the Interagency Suspension and Debarment Committee (ISDC) and other Federal agencies 

also increased the processing time for suspension and debarment referrals. When the indictment 

cites more than one Federal agency, the agencies involved may consider designating one agency 

as the lead agency to pursue the suspension or debarment action. ISDC was established by 

Executive Order 12549 to coordinate the efforts of the lead agency. However, we found that the 

coordination was protracted and by the time the approval was obtained from other agencies, the 

suspension was no longer feasible. 

As discussed above, a housing authority contractor was indicted on January 22, 2008. Before 

DEC could proceed with a proposed debarment, the Director of the Compliance Division 

suggested that concurrence be obtained from the U.S. Department of Education (ED). The 

analyst contacted the point of contact at ED and the vice chair of ISDC. Communications started 

on March 27, 2008, with concurrence obtained on January 8, 2009, more than 281 days later. 

During this period, the DEC analyst drafted the suspension notice. However, because 

coordination took too long, the analyst was asked to put the case on hold until the subject was 

convicted. 

Observation 2 - Federal Requirements for Entry of Excluded Parties Were 

Not Met 

Information on 14 (40 percent) of 35 individuals against whom DEC took a suspension and/or 

debarment action were not entered into EPLS by the Compliance Division within 5 working days 

as required.11 As a result, there was an increased risk that the Federal Government’s interests 

were not protected. The suspended or debarred individuals could potentially have been awarded 

contracts or financial subsidies from HUD or other Federal agencies since a search of EPLS 

would not reveal that these individuals had been excluded. 

 

11 Regulations at 2 CFR 180.520(c) generally requires Federal agency officials who take actions to exclude persons 

or officials who are responsible for identifying disqualified persons to enter information about those persons into 

EPLS within 5 working days after (1) taking an exclusion action, (2) modifying or rescinding an exclusion action, 

(3) finding that the person is disqualified, or (4) finding that there has been a change in status of a person who is 

listed as disqualified. 
13 

Late Entries 

Of the 62 cases reviewed, DEC took suspension and/or debarment actions against 35 individuals 

or entities. Searches in EPLS revealed that information for 14 (40 percent) of the 35 excluded 

individuals or entities had not been entered into the database in a timely manner. 

For the 14 individuals, 16 suspensions (7) and/or debarments (9) were not entered into EPLS 

within the 5 working days as required. The days elapsed ranged from 6 to 114 days for 

suspensions and 1 to 394 days for debarments. For two individuals (#4 and #7 below), entry of 

suspension and debarment information entered in EPLS occurred after OIG informed the 

Compliance Division that the information was missing. The following table provides the results 

for the 14 individuals. 

Suspension Debarment

Date    Date   

Suspended Due in EPLS

Entered

into EPLS

Days

elapsed Debarred Due in EPLS

Entered

into EPLS

Days

elapsed

1 3/25/2009 4/1/2009 4/23/2009 16 8/31/2009 9/7/2009 3/22/2010 140 

2 9/10/2009 9/17/2009 1/7/2010 80 

3 10/1/2008 10/8/2008 10/7/2008 0 9/30/2009 10/7/2009 1/7/2010 66 

4 7/9/2010 7/16/2010 8/4/2010 13 

5 10/24/2007 10/31/2007 10/24/2007 0 9/25/2009 10/2/2009 1/7/2010 69 

6 9/6/2007 9/13/2007 9/11/2007 0 2/26/2008 3/4/2008 3/5/2008 1 

7 12/19/2008 12/26/2008 1/5/2009 6 1/29/2009 2/5/2009 8/11/2010 394 

8 10/1/2008 10/8/2008 10/7/2008 0 12/9/2008 12/16/2008 1/5/2009 14 

9 4/3/2009 4/10/2009 4/14/2009 2 

10 7/24/2009 7/31/2009 1/7/2010 114 

11 9/10/2009 9/17/2009 1/7/2010 80   

12 4/30/2010 5/7/2010 6/2/2010 18 

  

13 1/14/2009 1/21/2009 2/3/2009 9 

14 7/27/2009 8/3/2009 1/7/2010 113 

The late EPLS entries were caused by (1) clerical oversight due to limited staff resources, (2) 

lack of formal policies and procedures, and (3) password confusion. On January 7, 2010, the 

Compliance Division became aware that EPLS entries had not been entered for about 6 months 

due to password confusion. A review was conducted by the division, and all EPLS entries for 

that period were made. 

Observation 3 - Record Keeping Needs Improvement 

Suspension and debarment case files consist of correspondence, memorandums, and other 

documents pertaining to the suspension or debarment of an individual. These records may also 

contain sensitive and/or personally identifiable information. Of the 83 referrals selected for 

review, the Compliance Division was unable to locate 21 of the related case files and had to 
14 

reconstruct two case files that were provided.12 Also, DEC’s policies and procedures for the 

retention and disposition of related suspension and debarment records had not been formalized.13 

Without controlled access and handling to safeguard against a breach of information, sensitive 

and/or personally identifiable information may be disclosed. Absent a complete record of the 

deliberative process used to take or deny a suspension or debarment action, there is an increased 

risk that DEC did not consider all relevant information. Also, insufficient record keeping makes 

it difficult for DEC to provide a basis for its actions. 

 

Missing Case Files 

The Compliance Division was unable to provide case files for 21 (25 percent) of 83 suspension 

and/or debarment referrals selected for review. The 21 missing case files represented 7 

completed cases, 9 closeouts, and 5 cases in process. Seven of the case files were archived; 

however, the division could not retrieve the files because their location was unknown. In 

addition, 2 of the 63 case files provided by the division were reconstructed because the original 

files could not be located. Both cases were assigned to the same analyst. 

According to Compliance Division officials, limited staff resources have made it difficult for the 

division to “...keep up with the demand for filing and archiving of records that is inherent with 

an office that has the volume of work...[the division has]. In this situation, it is inevitable that 

records will on occasion be misfiled and/or misplaced.” Further, there are instances in which 

entry of information into CTS does not require a corresponding hardcopy record. 

Recommendations 

Delays in the processing of suspension and debarment actions and late entry of information on 

excluded individuals or entities into EPLS ultimately places HUD and other Federal agencies at 

an increased risk of awarding contracts, grants, and other subsidies to unethical, dishonest, and 

irresponsible parties. Further, missing case files makes it difficult for DEC to support suspension 

or debarment actions taken or denied. To improve the effectiveness of HUD’s suspension and 

debarment program, steps must be taken by DEC to ensure timely suspension and debarment 

actions. 

We recommend that the Director of HUD’s Departmental Enforcement Center 

1. Develop formal written policies and procedures for the Compliance Division to ensure 

that suspension and debarment referrals are processed consistently and in a timely 

 

12 GAO/AIMD-00-21.3.1, November 1999. Under GAO’s [the Government Accountability Office] Standards for 

Internal Controls in the Federal Government, internal controls and all transactions and other significant events need 

to be clearly documented, and the documentation should be readily available for examination. The documentation 

should appear in management directives, administrative policies, or operating manuals and may be in paper or 

electronic form. All documentation and records should be properly managed and maintained. 

13 Regulations at 36 CFR 1220.32 require agencies to create and maintain authentic, reliable, and usable records and 

ensure that they remain so for the length of their authorized retention period. 
15 

manner in accordance with 2 CFR Parts 180 and 2424. The policies and procedures 

should require but are not limited to 

A. Sending suspension and debarment notices to excluded individuals or entities 

promptly after receipt of referrals and/or charging documents. 

 

B. Following the standards of evidence (i.e., indictment for suspension and conviction or 

civil judgment for debarment) provided under the Federal regulations for taking 

suspension and debarment actions. 

C. Sending notices of final determination for debarments to excluded individuals or 

entities within 45 days of closing of the official record as required. 

D. Entry of information on suspended and debarred individuals or entities into EPLS 

within 5 working days as required. 

2. To effectively address the volume of cases referred to the Compliance Division with its 

limited staff resources, ensure that the policies and procedures include ways to improve 

the efficiency of the suspension and debarment process. The Director should incorporate 

internal controls and process validation for the various phases and steps involved, 

ensuring that individuals or entities are suspended and debarred in a timely manner (e.g., 

establish queues by case type, implement deadlines for phase and step(s) completion, 

prepare results/status reports for management oversight, perform periodic reconciliation 

of suspension and debarment information to EPLS). 

3. Develop department wide guidance that provides general procedures to ensure that 

suspension and debarment actions are processed consistently and in a timely manner. 

The guidance should outline the responsibilities and department wide procedures to be 

followed. For example, when the Compliance Division requests information or seeks 

concurrence for a suspension or debarment action from a customer/partner, there should 

be a timeframe established for response to the division’s request. 

4. Establish a uniform record keeping system that provides for a complete historical record 

of the suspension and debarment process and results and ensures that the records, 

regardless of format, are protected in a safe and secure environment and removal or 

destruction is carried out only as authorized in accordance with established records 

schedules for retention and disposition. 
16 

Comments and OIG Response 

We provided a draft copy of the report to HUD’s General Counsel on October 12, 2010. The 

DEC generally agreed with our observations and concurred with the related recommendations 

(appendix A). We recognize the DEC’s efforts to improve its processing of suspension and 

debarment referrals and consider the planned corrective actions to be responsive to 

recommendations 1 through 4. However, the recommendations remain open pending 

verification of corrective actions. OIG will follow-up with the DEC to determine the status of 

the corrective actions taken. 
17 

Appendix A – HUD Departmental Enforcement Center’s Comments14

 

14 Names of individuals contained within in the body of the response have been redacted. 
18 
19 
20 

Appendix B – Suspension and/or Debarment Referrals – October 1, 2006, Through 

December 9, 2009 

Referral source Number of cases

HUD OIG  

   Office of Investigation 763 841

   Office of Audit 78

HUD OGC 52

HUD Homeownership Centers (HOC)    

35

   Atlanta HOC 12

   Philadelphia HOC 12

   Denver HOC 9

   Santa Ana HOC 2

HUD PIH 22

HUD DEC satellite offices

   Chicago satellite office 4 6

   Los Angeles satellite office 2

HUD CPD 3

HUD FHEO 1

HUD field office referral 3

HUD regional office referral 1

Other 9

DOJ 5

Total 978
21 

Appendix C – Suspension and Debarment Process 

The process described by DEC’s Compliance Division to determine whether a referral for 

administrative sanction warrants a suspension and/or debarment consists of 5 phases, with a total 

of 11 steps. The first phase begins with step 1, the receipt of a referral for administrative 

sanction. If an administrative sanction is deemed appropriate, the process is completed during 

the fifth phase with step 11, entry of information on an excluded (suspended or debarred) 

individual or entity into EPLS. 

Phase I – Suspension Notice Development Phase 

Step 1. Receipt of Referral 

When a referral is received from a “customer” (e.g., HUD program office), the Director of the 

Compliance Division reviews the referral and assigns it to an analyst. The administrative 

assistant then enters the header information (name, address, occupation of the participant, etc.) 

into CTS. The referral is then forwarded to the assigned analyst. 

Step 2. Verification of Information 

The analyst assembles the administrative folder (case file) and then enters basic information into 

CTS and verifies the information as an official chronological record. At the same time, the 

analyst reviews the referral for essential documents and legal charging documents such as 

indictment, information, judgment, etc. For fact-based cases, the analyst reviews the information 

submitted and determines whether additional information is needed to support the administrative 

sanction. If additional documents are required, the analyst contacts the appropriate program 

officials to locate the necessary documents. 

For all referrals, the analyst quickly establishes a HUD nexus by answering three questions: 

1) Is the individual or entity in the referral a HUD participant?15 

2) What was the covered transaction(s)? 

3) Does the referral relate to a mandatory grant award? (If yes, then this could potentially 

be a closeout because of Executive Order 12549.16 If the case becomes a closeout due to 

the grant source being nondiscretionary, a closeout memorandum will be sent to the 

originating source of the referral.) 

In cases in which an individual or entity was previously suspended by DEC, a termination of 

suspension letter is prepared and sent to that individual or entity. 

Next, the analyst researches and verifies other pertinent background information such as the last 

known address with the Federal Bureau of Prisons or the U.S. Marshals Service if the defendant 

 

15 Participant means any person who submits a proposal or who enters into a covered transaction, including an agent 

or representative of a participant. 

16 Executive Order 12549, “Debarment and Suspension,” explicitly states that it does not cover “direct Federal 

statutory entitlements or mandatory awards.” 
22 

is in custody. Also, the analyst performs a search for affiliates in Lexis-Nexis and the respective 

department of state Web page where the individual or entity is located. 

If the indictment also cites, along with HUD, other Federal agencies, coordination with other 

Federal agencies and ISDC may be needed.17 If a particular Federal agency is contemplating a 

legal action, HUD would wait on the sanction. 

Phase II – Suspension Concurrence Phase 

Step 3. Concurrence From HUD Program Office 

If an individual or entity violated the rules of a HUD program, concurrence for suspension needs 

to be obtained from the respective HUD program office. For example, if a Section 8 landlord is 

indicted, concurrence is obtained from PIH before a suspension notice can be prepared. 

Step 4. Creation of Notice of Suspension 

The analyst creates the notice of suspension and forwards it to the Director of the Compliance 

Division for review. The Director initials the notice and forwards it to OPE for a legal 

sufficiency review. 

Step 5. Hearing 

The suspension notice allows the individual or entity (respondent) to contest a suspension within 

30 days after the respondent received the notice.18 If a respondent wishes to contest the 

suspension, OPE appoints an attorney to represent HUD. During a hearing, the respondent 

presents information and his/her argument to the hearing official. The hearing official then 

decides whether a genuine dispute over facts exists. If a genuine dispute over facts does not 

exist, the suspending official determines that the respondent should be suspended. 

If during the hearing the respondent raises a genuine dispute over facts to the suspension, the 

respondent has an additional opportunity to contest the suspension. The suspending official must 

conduct a fact-finding proceeding to resolve the dispute. 

Step 6. Suspending Official’s Determination 

After the hearing, the hearing official will make a recommendation to the suspending official. 

The suspending official will then make a decision regarding whether to suspend the respondent. 

 

17 ISDC was created by Executive Order 12549. It facilitates lead agency coordination, serves as a forum to discuss 

current suspension- and debarment-related issues, and assists in developing unified Federal policy. ISDC serves as a 

regulatory drafting body for revisions to the governmentwide nonprocurement suspension and debarment common 

rule. 

18 The respondent is a person against whom a Federal agency has initiated a debarment or suspension action. 
23 

Phase III – Opening Pending Phase 

The opening pending phase is the period between the issuance of a suspension and receipt of the 

conviction. During this period, the analyst routinely monitors the criminal case through the 

PACER Web site. This monitoring is required since the forwarding of conviction/sentencing 

documents can be overlooked by the referrer. 

DEC’s Compliance Division processes two types of referrals, criminal-based and fact-based. 

The criminal-based cases are generally referred by HUD OIG’s Office of Investigation, and the 

court documents are usually submitted with the referrals. With criminal-based cases, minimal 

background research and information verification are required. On the other hand, the fact-based 

cases are usually referred by HUD’s program offices and OIG’s Office of Audit. The referral 

can start out as an article in the newspaper, which requires the analyst to “build the case” by 

researching additional information to ensure that adequate evidence exists to pursue an 

administrative sanction. The criminal-based cases can be processed more quickly as the factbased cases require additional time. 

Phase IV – Debarment Concurrence Phase 

Step 7. Creation of Proposed Debarment Notice 

After the receipt of the conviction, the analyst creates the proposed debarment notice. While 

preparing the notice, the analyst determines whether the individual’s or entity’s actions warrant a 

debarment of 3 years or longer. In the case of longer debarments, the analyst must substantiate 

reasons for a longer debarment in a memorandum to the DEC Director. After the proposed 

debarment notice has been reviewed and sent to the respondent, the analyst contacts the docket 

clerk in OPE within 45 days to find out whether the respondent has requested a hearing. 

Step 8. Hearing 

The proposed debarment notice allows the respondent to contest a proposed debarment within 30 

days after the respondent received the notice. As with suspension, if a respondent wishes to 

contest the proposed debarment, OPE appoints an attorney to represent HUD. During a hearing, 

the respondent presents information and his/her argument to the hearing official. The hearing 

official then decides whether a genuine dispute over facts exists. If a genuine dispute over facts 

does not exist, the debarring official determines that the respondent should be debarred. 

If during the hearing, the respondent raises a genuine dispute over facts to the debarment, the 

respondent has an additional opportunity to contest the proposed debarment. The debarring 

official must conduct a fact-finding proceeding to resolve those facts. 

Step 9. Debarring Official’s Determination 

After the hearing, the hearing official will make a recommendation to the debarring official. The 

debarring official will then make a decision regarding whether to debar the respondent. 
24 

Step 10. Creation of Debarment Notice 

After 45 days, the analyst checks with the docket clerk from OPE to find out the status of the 

appeal. If the respondent has not appealed, the final debarment notice is prepared and mailed to 

the respondent. If the respondent has appealed the debarment, the analyst contacts the docket 

clerk to obtain the status of the hearing. At the conclusion of the appeal process, the docket clerk 

provides a copy of the debarring official’s determination to the analyst. 

Phase V – Governmentwide Exclusion 

Step 11. Excluded Parties List System 

After an individual or entity has been suspended or debarred, the information on the excluded 

individual or entity is entered into EPLS.