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81–744 PDF 2013

PROTECTING TAXPAYER DOLLARS: IS THE GOVERNMENT USING SUSPENSION AND DEBARMENT 

EFFECTIVELY? 

HEARING 

BEFORE THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

JUNE 12, 2013 

Serial No. 113–35 

Printed for the use of the Committee on Oversight and Government Reform 

( 

Available via the World Wide Web: http://www.fdsys.gov 

http://www.house.gov/reform 

(II) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

DARRELL E. ISSA, California, Chairman 

JOHN L. MICA, Florida 

MICHAEL R. TURNER, Ohio 

JOHN J. DUNCAN, JR., Tennessee 

PATRICK T. MCHENRY, North Carolina 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

TIM WALBERG, Michigan 

JAMES LANKFORD, Oklahoma 

JUSTIN AMASH, Michigan 

PAUL A. GOSAR, Arizona 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

TREY GOWDY, South Carolina 

BLAKE FARENTHOLD, Texas 

DOC HASTINGS, Washington 

CYNTHIA M. LUMMIS, Wyoming 

ROB WOODALL, Georgia 

THOMAS MASSIE, Kentucky 

DOUG COLLINS, Georgia 

MARK MEADOWS, North Carolina 

KERRY L. BENTIVOLIO, Michigan 

RON DESANTIS, Florida 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

JOHN F. TIERNEY, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

JACKIE SPEIER, California 

MATTHEW A. CARTWRIGHT, Pennsylvania 

MARK POCAN, Wisconsin 

TAMMY DUCKWORTH, Illinois 

ROBIN L. KELLY, Illinois 

DANNY K. DAVIS, Illinois 

PETER WELCH, Vermont 

TONY CARDENAS, California 

STEVEN A. HORSFORD, Nevada 

MICHELLE LUJAN GRISHAM, New Mexico 

LAWRENCE J. BRADY, Staff Director 

JOHN D. CUADERES, Deputy Staff Director 

STEPHEN CASTOR, General Counsel 

LINDA A. GOOD, Chief Clerk 

DAVID RAPALLO, Minority Staff Director 

(III) 

C O N T E N T S 

Page 

Hearing held on June 12, 2013 ............................................................................... 1 

WITNESSES 

Mr. John Neumann, Acting Director, Acquisition and Sourcing Management, 

U.S. Government Accountability Office 

Oral Statement ................................................................................................. 4 

Written Statement ............................................................................................ 6 

The Honorable Angela B. Styles, Partner, Crowell & Moring 

Oral Statement ................................................................................................. 14 

Written Statement ............................................................................................ 16 

Mr. Scott Amey, General Counsel, Project on Government Oversight 

Oral Statement ................................................................................................. 24 

Written Statement ............................................................................................ 26 

APPENDIX 

The Honorable Gerald E. Connolly, a Member of Congress from the State 

of Virginia, Opening Statement .......................................................................... 66 

(1) 

PROTECTING TAXPAYER DOLLARS: IS THE 

GOVERNMENT USING SUSPENSION AND DEBARMENT EFFECTIVELY? 

Wednesday, June 12, 2013, 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, 

Washington, D.C. 

The committee met, pursuant to call, at 9:37 a.m., in Room 2154, 

Rayburn House Office Building, Hon. Darrell Issa [chairman of the 

committee] presiding. 

Present: Representatives Issa, Mica, Duncan, McHenry, Jordan, 

Chaffetz, Walberg, Lankford, DesJarlais, Gowdy, Farenthold, 

Woodall, Meadows, Cummings, Maloney, Norton, Tierney, Clay, 

Connolly, Speier, Duckworth, Kelly, Cardenas, Horsford. 

Staff Present: Alexia Ardolina, Majority Assistant Clerk; Alexa 

Armstrong, Majority Staff Assistant; Kurt Bardella, Majority Senior Policy Advisor; Richard A. Beutel, Majority Senior Counsel; 

Molly Boyl, Majority Parliamentarian; Lawrence J. Brady, Majority 

Staff Director; Ashley H. Callen, Majority Senior Counsel; John 

Cuaderes, Majority Deputy Staff Director; Adam P. Fromm, Majority Director of Member Services and Committee Operations; Linda 

Good, Majority Chief Clerk; Laura L. Rush, Majority Deputy Chief 

Clerk; Scott Schmidt, Majority Deputy Director of Digital Strategy; 

Peter Warren, Majority Legislative Policy Director; Rebecca Watkins, Majority Deputy Director of Communications; Meghan 

Berroya, Minority Counsel; Jennifer Hoffman, Minority Press Secretary; Carla Hultberg, Minority Chief Clerk; Elisa LaNier, Minority Deputy Clerk; Dave Rapallo, Minority Staff Director; Donald 

Sherman, Minority Counsel; Mark Stephenson, Minority Director of 

Legislation; Cecelia Thomas, Minority Counsel. 

Chairman ISSA. The Oversight Committee exists to secure two 

fundamental principles. First, Americans have a right to know that 

the money Washington takes from them is well spent. And second, 

Americans deserve an efficient, effective government that works for 

them. 

Our duty on the Oversight and Government Reform Committee 

is to secure these rights and to protect American tax dollars. Our 

solemn responsibility is to hold government accountable to taxpayers, because taxpayers have a right to know what they get from 

their government. 

It is our job to work tirelessly in partnership with citizen watchdogs to protect these rights and to deliver the facts to the American 

people and bring genuine reform to the Federal bureaucracy. 

2 

In recent years, we have seen a massive expansion of government and its growth in spending. That is a given, as our economy 

has grown. But there is a culture that has been created that feels 

it is entitled to taxpayer dollars. The entitlement philosophy has 

grown both in the area of contracts and in grants. Today, among 

other things, we will examine the growth in grants. Grants are a 

circumvention of both competitive bidding and specific appropriation by Congress. 

Today when we talk about suspensions and debarment, what we 

are really talking about is a common sense process that does what 

the American people already expect government to do: ensure that 

the vendors we use, whether for grants or contracts, in fact meet 

the expectation of the law. And when they don’t, don’t use them 

again. 

We need to have a culture of zero tolerance for fraud, for criminals, for tax cheats, for those receiving taxpayer money through 

grants and contracts. We must have a standard that meets the expectation of the American people. 

When I was a small child and all my life growing up, we have 

heard the expression, fool me once, shame on you. And we all know 

that fool me twice, shame on me. One of the problems in suspension and debarment is in fact that the system does not prevent fool 

me twice. In some cases, fool me twice occurs within the same 

agency; in some cases it occurs within different agencies who do 

not communicate about bad actors. 

I wish I could say that this is the first debarment hearing that 

has been held by this committee. But this is at least biannually a 

hearing that we come back to again and again, because the problem isn’t fixed. Several months ago, I publicly put forward draft 

legislation for a comprehensive suspension and debarment reform 

bill entitled Stop Unworthy Suspending Act, or Suspend Act. It has 

been posted on the committee’s website since February, and I believe it is becoming time to move it forward, especially when we 

look at specific events that have led to us having less faith in our 

government. We need to restore that faith. 

Year after year, Washington takes more money and Americans 

have seemingly less to show for it. Time and time again, we see 

contracts being re-issued when failure has been the previous result. 

So on this issue, one that I am proud to say has been bipartisan, 

has been in fact one where we on this dais know there is a problem, Administration after Administration has said, give us a little 

more time, and we will fix it, I believe that the time to believe that 

it will be fixed without legislation has expired. Today’s hearing is 

to probe into any final details before this committee seeks to move 

comprehensive legislation to ensure suspension and debarment is 

reformed. 

With that, I recognize the ranking member for his opening statement. 

Mr. CUMMINGS. Thank you very much, Mr. Chairman. 

This is indeed a bipartisan issue. As I was sitting here, I could 

not help but think about the neighborhood that I live in and that 

I left a few hours ago, where we have young men who make one 

mistake, get a record, and then are punished for the rest of their 

3 

life, jobs they can’t get, opportunities they cannot take advantage 

of. 

I am sure when they hear about big companies doing things 

wrong, and then finding themselves right back doing business with 

the government, they ask the question, where is the justice, or is 

it just us? 

So Mr. Chairman, I thank you for calling this important hearing. 

Today we will examine how the government is using suspension 

and debarment in Federal spending to protect taxpayers from potential waste, fraud and abuse. Suspension and debarment are 

mechanisms by which the Federal Government protects taxpayers 

by prohibiting the award of new contracts or grants to individuals 

and businesses that are bad actors. Debarment is automatic upon 

conviction of certain crimes. 

But Federal agencies also have the authority to suspend or debar 

an individual or business in cases where there has not been a conviction or an indictment, but where there is, nevertheless, ample 

evidence of unethical behavior or incompetence. A report issued by 

GAO in 2011 found that some agencies have failed for years to suspend or debar a single individual or business. For example, GAO 

found that FEMA had no suspensions or debarments from 2006 to 

2010, despite the fact that congressional committees found numerous instances of contract waste, fraud, abuse and poor performance 

in the aftermath of Hurricane Katrina. What is wrong with that 

picture? 

In another example, the Department of Justice suspended or 

debarred only eight contractors from 2006 to 2010. Making matters 

worse, a 2011 Inspector General’s audit found that from 2005 to 

2010, the Department issued 77 contracts and contract modifications to some of the same entities the Department suspended or 

debarred. Something is absolutely wrong with that picture. 

Although a 2012 report by the Interagency Suspension and Debarment Committee noted that marginal improvements have been 

made since the release of the GAO report in 2011, it also stated 

that persistent weaknesses remain throughout various agencies. 

The vast majority of individuals and businesses who participate 

in the Federal marketplace are honest and do their upmost to fulfill the terms of their Federal contracts. It is not ethical or fair 

when these competent government contractors lose government 

business to those who have performed ineffectively, inefficiently 

and dishonestly. 

Our goal is not to punish contractors, but to protect taxpayers. 

Taxpayers deserve to know that the Federal contracts and grants 

are not awarded to those who have acted dishonestly, irresponsibly 

or incompetently. 

Having powerful suspension and debarment tools does little good 

if they are not being used effectively. The GAO report found that 

the civilian agencies with the highest numbers of suspensions and 

debarments share certain characteristics. First, they dedicate fulltime staff to suspension debarment process. Second, they have detailed guidance in place. And finally, they have a robust case referral process I think we need to carefully examine these best practices. 

4 

The draft Suspend Act that the Chairman is sponsoring seems, 

and I think that it is something we should be able to do in a bipartisan way, it is an effort to shed light and make this whole debarment process much more efficient and transparent, and make it accountable, and make sure that those who are suspended and 

debarred are effectively dealt with. 

I look forward to working with the Chairman to further improve 

this legislation. As our Nation’s economic recovery continues, it is 

important that we guard against unnecessary spending and make 

sure that we are doing every single thing in our power to protect 

taxpayer funds. 

I look forward to the testimony of our witnesses today. With that, 

I yield back. 

Chairman ISSA. I thank the gentleman. 

Members may have seven days to submit opening statements 

and other extraneous material for the record. 

We now welcome our witnesses. Mr. John Neumann is Acting Director of Acquisitions and Sourcing Management at the Government Accountability Office. Welcome. 

The Honorable Angela Styles is a partner at Crowell & Moring’s 

Washington, D.C. office, and of course the former Administrator of 

Federal Procurement Policy in the Office of Management and 

Budget. 

Mr. Scott Amey is the General Counsel at the Project on Government Oversight. 

Welcome all. Pursuant to the rules of the committee, would you 

please rise, raise your right hands to take the oath. 

Do you solemnly swear or affirm that the testimony you are 

about to give will be the truth, the whole truth and nothing but 

the truth? 

[Witnesses respond in the affirmative.] 

Chairman ISSA. Let the record reflect that all witnesses answered in the affirmative. Please be seated. 

I am pleased to say you are all pretty experienced at this. So 

your entire opening statements will be placed in the record. We 

would like you to stay as close as you can to five minutes or less, 

to leave plenty of time for questioning, because ultimately, we will 

read your opening statements or in most cases have. But we certainly would like to be able to get your insight to specific questions. 

Mr. Neumann? 

WITNESS STATEMENTS 

STATEMENT OF JOHN NEUMANN 

Mr. NEUMANN. Thank you. Chairman Issa, Ranking Member 

Cummings and members of the committee, I am pleased to be here 

today to discuss the Federal Government’s use of suspensions and 

debarments. 

In 2012 alone, the Federal Government spent more than $517 

billion on contracted goods and services. As you know, to protect 

the government’s interest, Federal agencies are required to award 

contracts only to responsible contractors, those with a satisfactory 

record of integrity and business ethics and capable of performing 

required work. 

5 

One way to protect the government’s interest is through the use 

of suspensions and debarments to exclude firms or individuals from 

receiving contracts when they engage in misconduct. My statement 

today highlights two key points. First, agencies we reviewed with 

the most suspension and debarment activity shared certain characteristics. Secondly, Federal Government efforts to oversee and coordinate the use of suspensions and debarments faced challenges. 

Let me expand a little bit on my first point. In 2011, when we 

looked at 10 different agencies, we found that the four agencies 

with the most suspension and debarment activity shared three 

characteristics. They each had dedicated program and dedicated 

staff, detailed policies and procedures and practices that encouraged an active referral to process. 

The first of these characteristics is the dedicated program and 

staff. This is needed to carry out the essential functions of an agency’s program. Each of the four agencies we reviewed with active 

programs had dedicated staff that were focused on reviewing cases 

of contractor misconduct and poor performance for possible suspension and debarment. 

Secondly, these agencies had detailed policies and procedures 

that went well beyond the guidance in the Federal Acquisition Regulation. And lastly, we found that those agencies with active programs each had practices to encourage referrals of contractor misconduct to be considered for appropriate action. This referral process required senior agency officials to promote a culture of acquisition integrity, so that suspension and debarment is understood and 

utilized by all staff. 

The remaining six agencies we looked at in 2011 lacked these 

characteristics and had few or no suspensions or debarments of 

Federal contractors despite having billions of dollars in contract 

spending. 

The second point that I would like to highlight is on Federal Government efforts to oversee and coordinate the use of suspensions 

and debarments. At the time of our review in 2011, the Interagency 

Suspension and Debarment committee faced a number of challenges. 

This committee, as you know, is charged with monitoring and coordinating the suspension and debarment system across the Federal Government. However, it relied on voluntary participation and 

an informal coordination process that not all agencies participated 

in. We noted that agencies without active suspension and debarment programs generally were not represented at the committee’s 

monthly coordination meetings. 

In response to our recommendation, OMB issued guidance that 

directed Federal agencies to appoint a senior official to ensure regular agency participation in the Interagency Committee meetings, 

among other actions. Since then, several agencies have taken steps 

to address our findings and recommendations. 

Chairman Issa, Ranking Member Cummings and members of the 

committee, this concludes my prepared statement. I am pleased to 

respond to any questions that you may have. 

[Prepared statement of Mr. Neumann follows:] 

6 


Insert offset folio 1 here 81744.001

For Release on Delivery 

Expected at 9,30 a.m. EDT Wednesday, June 12, 2013 

GAO-13-707T 

United States Government Acconntability Office 

Testimony 

Before the Committee on Oversight and 

Government Reform, House of 

Representatives 

SUSPENSION AND 

DEBARMENT 

Characteristics of Active 

Agency Programs and 

Govemmentwide Oversight 

Efforts 

Statement of John Neumann, Acting Director 

Acquisition and Sourcing Management 
7 


Insert offset folio 2 here 81744.002

P-t*NE 

SUSPENSION AND DEBARMENT 

Characteristics of Active Agency Programs and 

Governmentwide Oversight Efforts 

What GAO Found 

While each agency's suspension and debarment program that GAO reviewed in 

2011 was unique, agencies with the most suspension and debarment activity 

shared certain characteristics. These included a dedicated suspension and 

debarment program and staff, detailed policies and procedures, and practices 

that encouraged an active referral process. 

Dedicated suspension and debarment program and staff. Each of the 

four agencies with the most suspension and debarment activity had a 

dedicated suspension and debarment program and staff, which 

according to agency officials, cannot be accomplished without the 

specific focus and commitment of an agency's senior officials. 

Detailed policies and procedures. The four most active agencies also 

developed agency-specific guidance that goes well beyond the 

suspension and debarment guidance in the Federal Acquisition 

Regulation (FAR). For example, these agencies had guidance that 

included details on conducting investigatory research, coordinating with 

other organizations, and evaluating contractor misconduct. 

Practices that encourage an active referral process. In addition, each of 

the four agencies engaged in practices that encourage an active referral 

process. For example, the General Services Administration (GSA) Office 

of Inspector General looked for and referred cases based on 

investigations and legal proceedings. 

GAO also conSistently found these characteristics among the four Department of 

Defense (DOD) components that it examined in 2012. In contrast, agencies that 

GAO reviewed in 2011 that did not have these characteristics generally had few 

or no suspensions or debarments of federal contractors. GAO recommended that 

these agencies take steps to improve their suspension and debarment programs 

ensuring that they incorporate the characteristics identified as common among 

agencies with more active programs. Several agencies have taken actions to 

implement these recommendations. 

GAO also reported in 2011 that governmentwide efforts to oversee and 

coordinate the use of suspensions and debarments faced challenges. 

Specifically, the Interagency Suspension and Debarment Committee (ISDC) 

relied on voluntary participation and not all agencies coordinated through the 

committee. To better coordinate and oversee suspensions and debarments, 

GAO recommended that the Office of Management and Budget's (OMB) Office of 

Federal Procurement Policy (OFPP) issue governmentwide guidance to ensure 

that agencies are aware of the elements of an active suspension and debarment 

program and the importance of cooperating with ISDC. In response, OMB 

directed the agencies to appoint a senior official responsible for the agency's 

suspension and debarment program and directed that this official ensure that the 

agency participates regularty on the ISDC. In its September 2012 annual report, 

ISDC noted improvements by most agencies to promote more active and 

effective suspension and debarment programs. 

_____________ United States GovemmentAccountabllity Office 
8 


Insert offset folio 3 here 81744.003

GAO u.s. GOVERNMENT ACCOUNTABILITY OFFICE 

441 G St. N.W. 

Washington, DC 20548 

Chairman Issa, Ranking Member Cummings, and Members of the 

Committee: 

I am pleased to be here to discuss the federal government's use of 

suspensions and debarments. Spending on contracted goods and 

services was more than $517 billion in 2012. To protect the government's 

interests, federal agencies are required to award contracts only to 

responsible sources-those that are determined to have a satisfactory 

record of integrity and business ethics, and are capable of performing 

required work. One way to protect the government's interest is through 

the use of suspensions and debarments, which are actions taken to 

exclude firms or individuals from receiving contracts or assistance based 

on various types of misconduct. The Federal Acquisition Regulation 

(FAR) prescribes overall policies and procedures governing the 

suspension and debarment of contractors by agencies and directs 

agencies to establish appropriate procedures to implement them. 

Even though the FAR specifies numerous causes for suspensions and 

debarments, including fraud, theft, bribery, tax evasion, or lack of 

business integrity, the existence of one of these does not necessarily 

require that the party be suspended or debarred. There are various tools 

that protect the government's interests, including civil and criminal 

penalties that may be imposed for contracting fraud and other violations. 

Suspensions and debarments are not a punishment, but instead are to 

ensure that agencies only award contracts to responsible contractors. 

Agencies are to establish procedures for prompt reporting, investigation, 

and referral to the agency suspension and debarment official. Parties that 

are suspended, proposed for debarment, or debarred are precluded from 

receiving new contracts, and agencies must not solicit offers from, award 

contracts to, or consent to subcontracts with these parties, unless an 

agency head determines that there is a compelling reason for such 

action. 

My testimony today is based on reports we issued in August 2011 and 

September 2012 and addresses (1) characteristics of suspension and 

debarment programs at selected agencies and (2) governmentwide 

efforts to oversee and coordinate the use of suspensions and 

debarments. 

Page 1 GAO·13-707T 
9 


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In 2011, we assessed suspension and debarment programs at 10 

agencies from among those having more than $1 billion in contract 

obligations in fiscal year 2009. ' These agencies included: 

Defense Logistics Agency (DLA); 

Department of Commerce (Commerce); 

Department of Health and Human Services (HHS); 

Department of Homeland Security's (DHS) U.S. Immigration and 

Customs Enforcement (ICE) and Federal Emergency Management 

Agency (FEMA); 

Department of Justice (Justice); 

Department of the Navy (Navy); 

Department of State (State); 

Department of the Treasury (Treasury); and 

General Services Administration (GSA). 

In 2012, we reviewed the extent to which the Department of Defense 

(DOD) had processes for identifying and referring cases of contractor 

misconduct for possible suspension and debarment at the Departments of 

the Air Force, Army, and Navy, and DLA2 The reports that this statement 

is based on include detailed information about our scope and 

methodology. Our work was performed in accordance with generally 

accepted government auditing standards. 

1 GAO, $uspens;on and Debannent: Some Agency Programs Need Greater Attention, 

and Govemmentwide Oversight Could aelmproved, GAO-11-739 (Washington, D.C.: 

Aug. 31, 2011). 

2 GAO, Suspension and Debarment: 000 Has Active Referral Processes, but Acffon 

Needed to Promote Transparency, GAO-12-932 (Washington, D.C,: Sept. 19,2012). 

Page 2 GAO·13·707T 
10 


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Agencies with Greater 

Suspension and 

Debarment Activity 

Share Common 

Characteristics 

Missing at Agencies 

with Less Activity 

Dedicated suspension and 

debarment program and 

staff, 

Detailed policies and 

procedures. 

Practices that encourage 

an active referral process, 

While each agency suspension and debarment program we reviewed in 

2011 was unique, the four with the most suspension and debarment 

activity-DLA, Navy, GSA, and ICE-shared certain characteristics, 

These include: 

a dedicated suspension and debarment program and staff, 

detailed policies and procedures, and 

practices that encourage an active referral process. 

Officials from these four agencies stated that having dedicated staff 

cannot be accomplished without the specific focus and commitment of an 

agency's senior officials. The existence of dedicated staff was evident at 

selected agencies in our 2011 governmentwide review. For example GSA 

had dedicated staff to refer suspension and debarment cases and 

coordinate with internal offices. In our review of DOD in 2012, each of the 

four DOD components we reviewed also had dedicated staff, including 

attorneys and support staff, to monitor and ensure the coordination of 

remedies for each significant investigation of contracting fraud. 

Each of the four agencies wnh the most suspension and debarment activity 

in our 2011 review also developed agency-specific guidance that goes well 

beyond the suspension and debarment guidance in the FAR. For example, 

ICE's suspension and debarment program procedures included detailed 

guidance on conducting online database research, coordinating with other 

DHS components, preparing for legal review, and tracking cases in their 

database. DOD components we reviewed in 2012 also had guidance on the 

process for evaluating contractor misconduct. Several of the reports we 

reviewed by inspectors general and others regarding agency suspension 

and debarment programs cned the importance of agency-specific, detailed 

policies and procedures to an active agency suspension and debarment 

program. 

The FAR directs agencies to refer appropriate matters to their suspension 

and debarment officials for consideration, and it allows agencies to 

develop ways to accomplish this task that suit their missions and 

structures. For example, in 2011 we noted that GSA's Office of Inspector 

General looked for and referred cases based on investigations and legal 

Page 3 GAO·13-707T 
11 


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proceedings. Also, ICE uses a case management system that allowed for 

tracking and followup on all referrals for consideration of suspension and 

debarment This was also evident in 2012, when we found that all four 

DOD components we examined-the Air Force, Army, Navy, and DLAhad active processes to refer identified cases of contractor misconduct for 

appropriate action. Specifically, they used multiple sources to identify 

numerous cases of actual or alleged contractor misconduct and followed 

their procedures to refer them for appropriate action, including possible 

suspension and debarment According to agency Officials, when senior 

agency officials communicate the importance of suspension and 

debarment through their actions, speeches, and directives, they help to 

promote a culture of acquisition integrity where suspension and 

debarment is understood and utilized by staff. 

The remaining six agencies we reviewed in 2011-HHS, FEMA, 

Commerce, Justice, State, and Treasury-did not have these three 

characteristics and had few or no suspensions or debarments of federal 

contractors. Based on our review of agency documents and interviews 

wrth agency officials, none of these six agencies had dedicated 

suspension and debarment staff, detailed policies and guidance other 

than those to implement the FAR, or practices that encouraged an active 

referral process. We recommended that these agencies take steps to 

improve their suspension and debarment programs ensuring that they 

incorporate the common characteristics we identified among agencies 

with more active programs, including assigning dedicated staff resources, 

developing detailed implementing guidance, and promoting the use of a 

case referral process. Most of these agencies have taken actions to 

implement these recommendations. For example: 

HHS created the Office of Recipient Integrity Coordination that reports 

to the Suspension and Debarment Official and dedicated three full-time 

staff pOSITions to this office. HHS has also developed detailed pOlicies 

and procedures. To promote case referrals, the revised policies and 

practices will be reinforced through communication and training. 

DHS recently completed the transition to a department-wide 

suspension and debarment policy and program and designated a 

suspension and debarment official to establish, maintain, supervise, 

and exercise oversight of the suspension and debarment program. 

At Justice, the Senior Procurement Executive in a memorandum to its 

Procurement Chiefs emphasized suspension and debarment as a 

powerful administrative tool and summarized the law and the 

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Govemrnentwide 

Efforts to Coordinate 

and Oversee 

Suspensions and 

Debarments 

department's procedures that govern suspensions and debarments. In 

addition, the department aligned all of its suspension and debarment 

activities under one division. 

State issued detailed policies and procedures for suspending or 

debarring contractors in its Debarment and Suspension Program 

Handbook. This handbook also describes the department's process 

for referring contractor misconduct or poor performance for 

consideration by the suspension and debarment official. 

The Interagency Suspension and Debarment Committee (lSDC), 

established in 1986, monitors and coordinates the governmentwide 

system of suspension and debarment. The committee consists of 

representatives from agencies designated by the Director of the Office of 

Management and Budget (OMB).3 ISDC provides support to help 

agencies implement their suspension and debarment programs and 

serves as a forum for agencies to coordinate suspension and debarment 

actions. In 2011, we found that governmentwide efforts to oversee and 

coordinate suspensions and debarments faced a number of challenges. 

For example, according to ISDC officials, ISDC relied on voluntary 

agency participation in its informal coordination process, which worked 

well when used. However, we found that not all agencies coordinated 

through ISDC, and agencies without active suspension and debarment 

programs generally were not represented at monthly coordination 

meetings. 

Since our 2011 report, the ISDC has taken actions to improve 

coordination and emphasize suspension and debarment 

governmentwide. For example, the ISDC has acted as a clearinghouse to 

provide training expertise; provided agencies with a sample practice 

manual and action documents, fact-finding procedures, and a case law 

compendium; and established a standing subcommittee dedicated to 

training. In addition, the ISDC established a subcommittee to review 

opportunities to improve practices and processes for coordinating 

suspension and debarment actions among agencies. In its September 

2012 annual report, the ISDC noted improvements by most agencies to 

promote more active and effective suspension and debarment programs. 

3 Standing members include each of the 24 agencies covered by the Chief Financial 

Officers Act. Nine independent agencies and government corporations also participate. 

Page 5 GAO·13·707T 
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Contacts and 

Acknowledgments 

(121157) 

These included formally establishing suspension and debarment 

programs, dedicating staff resources, and simplifying processes for 

making referrals. 

In 2011, we also noted that the suspension and debarment process could 

be improved governmentwide by building upon the existing framework to 

better coordinate and oversee suspensions and debarments. We 

recommended that the OMB's Office of Federal Procurement Policy 

(OFPP) issue governmentwide guidance to ensure that agencies are 

aware of the elements of an active suspension and debarment program 

and the importance of cooperating with ISDC. In response, in November 

2011, the OMB directed the departments and agencies that are subject to 

the Chief Financial Officers Act to appoint a senior official who shall be 

responsible for, among other things, assessing the agency's suspension 

and debarment program, including the adequacy of available training and 

resources. OMB also directed that this official ensure that the agency 

participates regularly on the ISDC. 

Chairman Issa, Ranking Member Cummings, and Members of the 

Committee, this concludes my statement. I would be pleased to respond 

to any questions that you or other members of the Committee may have. 

For questions about this statement, please contact John Neumann at 

(202) 512-4841 or NeumannJ@gao.gov. In addition, contact points for 

our Offices of Congressional Relations and Public Affairs may be found 

on the last page of this report. Individuals who made key contributions to 

this testimony are Russ Reiter, Bradley Terry, and Mary Quinlan. 

Pages GAO·13·707T 
14 

Mr. MICA. [Presiding] Thank you, and we will withhold questions 

until we have heard from all of the witnesses. 

Let’s recognize now Angela Styles, Partner in Crowell & Moring. 

Welcome, and you are recognized. 

STATEMENT OF ANGELA STYLES 

Ms. STYLES. Thank you very much, Congressman Mica, Congressman Cummings and members of the committee. It is an honor 

to be invited to testify here today. 

There is little question that changes to the suspension and debarment system are needed. I commend the committee for taking 

a hard, bipartisan look. 

Federal suspension and debarment officials exercise a powerful 

and highly discretionary authority that directly affects the credibility of our entire procurement system. It has to be fair and it has 

to be transparent. The dialogue created by your draft legislation 

has already created greater attentiveness to fair process, consistency and timeliness. 

Because a significant portion of my legal practice involves the 

representation of companies and individuals in suspension and debarment proceedings before many Federal agencies, both civilian 

and defense, I have a unique perspective on the multitude of processes, procedures, standards of review and remedies, both written 

and I think very important to the committee, unwritten ones as 

well. 

While the Federal Acquisition Regulation, the FAR, and the nonprocurement rule establish a high level framework, much of the 

system operates using unwritten practices and tools. While many 

civilian agencies are bolstering suspension and debarment programs in response to your congressional oversight, it is hard to be 

confident that the current written processes or the unwritten practices ensure fairness, meaning that all companies and individuals 

facing debarment are given a similar opportunity to properly 

present their case, and that the correct result is obtained. 

It is important, however, to separate the process from the people. 

We have been extraordinarily fortunate over the years to have 

dedicated, objective and fair-minded civil servants running the suspension and debarment processes across the Department of Defense, the General Services Administration and the Environmental 

Protection Agency. The creativity and openness of the suspension 

and debarment officials at these three agencies has for many, many 

years facilitated fairness and objectivity. 

For the long term, however, the system cannot be sustained on 

the fairness and objectivity of individual suspension and debarment 

officials alone. Across the government, the processes, procedures, 

standards of review, remedies and tools must be consistent and 

transparent. The lack of access and transparency is an impediment 

for companies that are working to improve ethics and compliance 

programs. When problems do arise at companies, and they arise 

even at the most responsible of contractors, the agencies need to 

be able to work in partnership with contractors toward continual 

improvements. 

DOD, EPA and GSA learned long ago that by having an open 

door for contractors to discuss compliance and ethics concerns, both 

15 

parties could agree on expectations and appropriate changes to contractor programs. 

From my perspective, the greatest concern are the unwritten 

processes across agencies. They create significant issues of fairness. 

I have seen this most specifically in five areas where the processes 

vary significantly across agencies and are not transparent to all the 

parties. I discuss it extensively in my written statement, but this 

includes show-cause letters, requests for information, access to the 

administrative record, the public release of information, administrative agreements and lead agency determinations. These five different areas are not articulated in the FAR. They are not available 

to the public to understand how the suspension and debarment 

process actually works on a day to day basis. 

In conclusion, I think there is little question that changes are 

needed, and changes can add significantly to consistency among the 

agencies and transparency. I think making our procurement process better through ensuring that our suspension and debarment 

process works better will give taxpayers significantly greater confidence that the government is buying from contractors with the 

highest ethical standards. 

And I don’t mean contractors that are just meeting the law. We 

need contractors that understand what value-based procurement 

programs are, ethics and compliance programs within their companies and they need to do more than simply meet the requirements 

of the law. They need to lead our U.S. companies in what it means 

to be a responsible company. 

That concludes my prepared statement and I am happy to answer any questions you may have. 

[Prepared statement of Ms. Styles follows:] 

16 


Insert offset folio 9 here 81744.009

STATEMENT OF ANGELA B. STYLES 

PARTNER, CROWELL & MORING LLP 

BEFORE THE HOUSE COMMITTEE 

ON 

OVERSIGHT AND GoVERNMENT REFOR'VI 

JUNE 12,2013 

Chairman Issa, Congressman Cummings and Members of the Committee, I appreciate the 

opportunity to appear before you today to discuss the current federal suspension and debarment 

process from the legal practitioner's perspective. I commend the Committee for taking a hard 

look at transparency and fairness in the system. Federal suspension and debarment officials 

exercise a powerful and highly discretionary authority that directly affects the credibility of our 

entire procurement system. 

As the chair of Crowell & Moring's government contracts group, a significant portion of 

my practice involves the representation of companies and individuals in suspension and 

debarment proceedings before federal agencies ranging from the Department of the Air Force to 

the Federal Communications Commission. Over the past four decades, Crowell's 55 government 

contract lawyers have represented clients in suspension and debarment proceedings before 

virtually every federal agency. Through these representations, we have gained a unique 

perspective on the multitude of processes, procedures, standards of review and remedies, both 

written and unwritten. 

While the Federal Acquisition Regulation ("FAR") and the non-procurement mles 

establish a high-level framework, much of the system operates using unwritten practices and 

tools. From Show Cause letters to administrative agreements, innovative civil servants have 

created valuable tools for making the suspension and debarment process fair and flexible. A 

problem, however, is that the unwritten processes lack transparency and consistency across 

agencies. With many civilian agencies bolstering suspension and debarment programs in 

response to congressional oversight, it is hard to be confident that the current written processes 

ensure (1) fairness (that all companies and individuals facing debarment are given a similar 

opportunity to properly present their case) and (2) the correct result is obtained. 

It is important, however, to separate the process from the people. We have been 

extraordinarily fortunate over the years to have dedicated, objective and fair-minded civil 

servants running the suspension and debarment processes across the Department of Defense 

("DoD"), the General Services Administration ("GSA"), and the Environmental Protection 

Agency ("EPA"). The creativity and openness of the Suspension and Debarment Officials 

("SDOs") at these three agencies have for many, many years facilitated fairness and objectivity. 

I have great confidence in the abilities, objectivity and fairness of SDOs working in these three 

agencies. I am less confident, however, that the agencies new to suspension and debarment can 

ensure fairness and consistency without some modifications to the current system. For the long 
17 


Insert offset folio 10 here 81744.010

tenn, the system cannot be sustained on the objectivity and fairness of individual SDOs alone. 

Across the government, the processes, procedures, standards of review, remedies, and tools must 

be consistent and transparent. The certainty created by transparency and consistency will only 

serve to bolster confidence in the process and the procurement system as a whole. In this regard, 

I applaud the Cornmittee for proposing draft legislation to address transparency and consistency 

in the civilian agencies. From the practitioner's side, we have noticed a greater attentiveness to 

fair process, consistency, and timeliness since consideration of the legislation was announced in 

February. 

The Suspension and Debarment Process 

The actual process of suspension and debannent varies widely across federal agencies. 

In some agencies, like the Department of the Anny or the Environmental Protection Agency, the 

SDO acts as a hearing officer that detennines the outcome after a presentation of facts by 

lawyers within the agency assigned to the case. Other SDOs, such as the Department of the Air 

Force and the General Services Administration, prepare and consider the suspension and 

debarment cases themselves. Still others, like the Department of the Interior, have the Office of 

the Inspector General prepare the case and make recommendations directly to the SDO. 

Unfortunately, the actual roles and processes are not well articulated in regulation, making it 

virtually impossible to know or understand how the suspension or debarment process is intended 

to work or will work in practice. Indeed, for many of the civilian agencies, it appears that the 

processes are entirely ad hoc, even where more specific written procedures exist. 

For some agencies, it is a struggle for even the most seasoned suspension and debarment 

lawyer to discern even the name and contact infonnation of the agency's SDO, much less the 

process they would use to consider a suspension or debarment matter. This is particularly 

frustrating when a contractor wants to proactively contact an agency SDO to discuss a legal, 

ethics or compliance issue of concern to the agency. While the Committee on Interagency 

Suspension and Debarment ("IS DC") maintains a list of agency contacts for agencies that 

participate on the Committee, the list does not identify the SDO and only appears to be updated a 

few times a year (http://www.epa.gov/isdc/member.htrn). There have been a number of 

occasions where I have had clients that want to proactively contact an SDO, only to spend hours 

detennining the correct official and days trying to contact the individual. For many companies, 

the system at most civilian agencies remains impenetrable. 

This lack of access and transparency is certainly an impediment for companies that are 

working to improve ethics and compliance programs and systems. When problems do arise at 

companies, and they do arise with even the most responsible of contractors, the companies and 

the agency need to be able to work in partnership towards continual improvements. DoD, EPA 

and GSA learned long ago that by having an open door for contractors to discuss compliance and 

ethics concerns both parties could agree on expectations and appropriate changes to contractor 

programs. This can't happen when it takes days to find and contact an SDO, much less when the 

process for consideration is ad hoc or difficult to discern. Even where an agency has 

promulgated specific infonnation regarding process or procedures, it could take a cryptologist to 

interpret. One of my favorites is the Department of Health and Human Services ("HHS") 

Acquisition Regulation: 

2 
18 


Insert offset folio 11 here 81744.011

When an apparent cause for debarment becomes known, the initiating official 

shall prepare a report containing the information required by 309.470-2, along 

with a written recommendation, and forward it through appropriate acquisition 

channels, including the HCA, to the Associate DAS for Acquisition in accordance 

with 309.470-1. The debarring official shall initiate an investigation. .. . The 

ASFRIOGAPNDA shall promptly send a copy of the determination through 

appropriate acquisition channels to the initiating official and the Contracting 

Officer. If the debarring official determines that debannent procedures shall 

commence, the debarring official shall consult with OGC-GLD and then notify 

the contractor in accordance with FAR 9.406-3(c) .... The OGC-GLD shall 

represent HHS at any fact-finding hearing and may present witnesses for HHS 

and question any witnesses presented by the contractor. 

48 C.F.R. § 309.406-3. Who is the "initiating official," the "appropriate acquisition 

channel," the "Associate DAS for Acquisition," the "ASFRIOGAPAlDA," or the "OGCGLD"? If you are a responsible contractor that wants to discuss a compliance or ethics 

issue with the HHS SDO, you have already given up. 

Of greatest concern is when the differences in processes and the lack of transparency 

create issues of fairness. I have seen this most specifically in five areas where the processes vary 

significantly across agencies and are not transparent to all parties: 

* 

* 

* 

* 

* 

Show Cause Letters 

Access to the Administrative Record 

Public Release of Information 

Administrative Agreements 

Lead Agency Determinations 

Show Cause LetterslReguests for Information 

When an agency receives negative information regarding a company or individual, the 

current FAR provides only two options: (I) suspend or (2) propose for debannent. Either action 

results in the public listing of the exclusion on the System for Award Management ("SAM") and 

a prohibition on receiving additional federal awards and new work under existing awards. In 

addition, suspension or debannent can trigger the loss of security clearances, the termination of 

key licenses, and the loss of state, local, and commercial business. The options are 

unquestionably draconian when the cause for suspension or debarment is not based on a criminal 

or civil judgment. The reputational and economic damage occurs before the company or 

individual has an opportunity to present any evidence or mitigating factors. The FAR is also 

inconsistent with the non-procurement rule which allows an SDO to propose an entity or 

individual for debannent without posting the exclusion on SAM or prohibiting additional awards 

while the matter is under review. 

Because the FAR options of suspension or proposed debannent are particularly harsh, 

several agencies have instituted the use of "Show Cause Letters." In lieu of invoking the official 

3 
19 


Insert offset folio 12 here 81744.012

FAR debarment or suspension process, many SDOs issue a Show Cause Letter as a first step in 

the suspension and debarment process. The Show Cause Letter initiates an informal process 

through which the SDO and the company exchange information regarding the issue of concern, 

hold meetings, and attempt to reach resolution. The process allows companies a fair opportunity 

to present explanatory and exculpatory information. Where Show Cause Letters are used 

(primarily the Department of Defense and the General Services Administration), the SDO 

reaches a full understanding of the facts and remedial measures that have been taken to prevent 

recurrence, thus significantly informing the appropriate remedy. 

Unfortunately, Show Cause Letters are not found in the FAR or any other regulation. As 

a result, the process is not known, understood, or used on a government-wide basis. Many 

civilian agencies believe that when presented with negative, but unproven, facts regarding a 

contractor, the only available actions are suspension or debarment, with little flexibility to avoid 

draconian and public exclusion from federal awards. Given the clear need for a process that, like 

the non-procurement rule, allows an entity or individual to defend against unproven facts before 

implementing a public exclusion, the Show Cause Letter process should be made available on a 

consistent government-wide basis through promulgation in the FAR. 

Access to the Administrative Record 

Most agencies, prior to issuing a Show Cause Letter, a suspension, or a proposed 

debarment, develop an administrative record to support the proposed action. However, when a 

company or individual receives notification of the proposed action from the SDO, the 

notification rarely, if ever, advises the company or individual that a more complete 

administrative record supporting the proposed actions exists. Only if a company or contractor 

hires an attorney familiar with the suspension and debarment process will they know to ask for a 

copy of the administrative record to assist in the preparation of a response. 

To ensure that all parties are treated fairly in this process, the requirement for and 

availability of an administrative record should be articulated clearly in the FAR. Notably, 

however, I have never once been denied access to an administrative record to support a proposed 

action, even where the action was simply a Show Cause Letter. 

Public Release of Information 

Another area of significant uncertainty in the suspension and debarment process is the 

varying agency practices related to the public release of information. Some agencies, like the 

EPA, believe most records created in the process are subject to release under the Freedom of 

Information Act ("FOIA"). Other agencies are significantly more protective of information, 

concluding that their processes fall under FOIA law enforcement exemption seven. While 

contractors are able to protect trade secrets and confidential commercial or financial information 

supplied during this process under FOIA exemption 4, the possibility of information being 

released to the public significantly impedes the open exchange of information between the 

contractor and the SDO. In particular, when a contractor proactively approaches an SDO to 

discuss a potential compliance or ethics issue, the protection of information from public release 

would significantly enhance the exchange of meaningful information. 

4 
20 


Insert offset folio 13 here 81744.013

We have also recently noted a significant and disturbing trend where agencies release 

infonnation related to ongoing suspension and debannent proceedings directly to legislative staff 

on congressional committees. The infonnation is then subsequently released to the press. This 

trend appears to be a highly inappropriate end-run around the FOIA process. For the suspension 

and debarment process to work and for responsible contractors to feel comfortable interacting 

with agency SDOs, confidential infonnation can and should be protected. 

Administrative Agreements 

Over time, federal agencies with active suspension and debarment processes have created 

additional remedies beyond simple debarment. Recognizing that debarment can result in the loss 

of a valuable (and often difficult to replace) contractor and can reduce competitive options and 

increase prices, many SDOs have looked for alternatives to debannent where the government can 

also be assured it is doing business with an ethical contractor. Through the use of 

"Administrative Agreements" between SDOs and contractors, a contractor can avoid debannent 

by committing to specific changes to ethics and compliance programs, including at times 

monitors. These agreements allow SDOs to keep a closer eye on the implementation of remedial 

measures following an ethical or compliance lapse and instead of losing a valuable contractor 

through debarment, the SDOs effectuate significant enhancements to compliance and ethics 

programs. The required enhancements in Administrative Agreements go far beyond the creation 

of a simple ethics program, training, or compliance with the FAR. Through periodic reporting 

from the contractor or a monitor, the SDOs create more ethical partners. 

Again, however, there are problems with consistency and transparency related to this 

very effective tool. First, "Administrative Agreements" are mentioned only in passing in the 

FAR, 48 C.F.R. §§ 9.406-3(f); 9.407-3(e);1409.407-3(d). With the exception of the Department 

of the Air Force, which notably posts all Administrative Agreements online, the tenns and 

conditions for use in administrative agreements are difficult, if not impossible to fmd. See 

http://www.safgc.hq.af.rnillorganizations/gcr/adminagreements/index.asp. 

Second, the actual tenns of an administrative agreement vary widely among and even 

within the same agency. Without explanation, the variances include: (1) independent monitoring 

agreements; (2) independent reviews of compliance and ethics programs, (3) payment of 

investigation costs; (4) removal of certain employees or offices; (5) preferred supplier programs; 

and (6) training requirements. It is unclear when or why particular tenus or conditions are used 

or not used. Finally, not all agencies offer Administrative Agreements, leading to the distinct 

possibility that one agency would debar a company based upon the same set of facts that a 

different agency would resolve by entering into an Administrative Agreement. 

Public infonnation about standard tenns and conditions and when they should be used 

would significantly facilitate the process for agencies and contractors. 

5 
21 


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Lead Agency Determinations 

The FAR states that "[ w ]hen more than one agency has an interest in the debarment or 

suspension of a contractor, the Interagency Committee on Debarment and Suspension, 

established under Executive Order 12549, and authorized by Section 873 of the National Defense 

Authorization Act for Fiscal Year 2009 (Pub. L. 110-417), shall resolve the lead agency issue 

and coordinate such resolution among all interested agencies prior to the initiation of any 

suspension, debarment, or related administrative action by any agency." 48 C.F.R. § 9.402. 

While it is a nice theoretical concept that the ISDC can resolve lead agency issues, there have 

been two significant problems in implementation. First, not all agencies believe they have any 

requirement to inform the ISDC before considering the suspension or debarment of a contractor. 

Second, the FAR provides no guidance on how lead agency determinations will be made. 

We have confronted a number of problems for contractors under the current lead agency 

process. For a contractor that is proactively seeking to provide agency SDOs with information 

regarding a compliance or ethics issue, it is often quite difficult to determine the appropriate 

agency to approach. While the historical practice has been to approach the agency with the 

largest dollar value of contracts, that practice does not appear appropriate when the problem 

relates to a specific contract with a specific agency. As several of our clients have discovered, 

approaching the wrong agency can have dire consequences if the agency fails to "officially 

assert" lead agency with the ISDC. Without clear lead agency guidance, contractors can be 

lulled into believing a particular agency is considering the case while another agency takes a 

suspension or proposed debarment action without input from the approached agency or the 

contractor. This inappropriately places the burden on contractors to determine whether an SDO 

has taken appropriate steps to ensure it has lead agency and, in some cases, to educate SDOs 

about the lead agency process. 

Miscellaneous Issues 

There are two additional miscellaneous issues of note. First, the current system for 

suspension and debarment is not appropriately structured to deal with the suspension or 

debarment of individuals. As the pressure to debar has increased, many agencies have also 

increased the number of individual debarments. Unfortunately, however, under the current 

mitigating factors, there is very little opportunity to mitigate factors that might support an 

individual debarment. The standards, as written, are exclusively for the mitigation of corporate 

activity: 

It is the debarring official's responsibility to determine whether debarment 

is in the Government's interest. The debarring official may, in the public interest, 

debar a contractor for any of the causes in 9.406-2, using the procedures in 9.406-

3. The existence of a cause for debarment, however, does not necessarily require 

that the contractor be debarred; the seriousness of the contractor's acts or 

omissions and any remedial measures or mitigating factors should be considered 

in making any debarment decision. Before arriving at any debarment decision, the 

debarring official should consider factors such as the following: 

6 
22 


Insert offset folio 15 here 81744.015

(1) Whether the contractor had effective standards of conduct and internal 

control systems in place at the time of the activity which constitutes cause for 

debarment or had adopted such procedures prior to any Government investigation 

of the activity cited as a cause for debarment. 

(2) Whether the contractor brought the activity cited as a cause for 

debannent to the attention of the appropriate Government agency in a timely 

manner. 

(3) Whether the contractor has fully investigated the circumstances 

surrounding the cause for debarment and, if so, made the result of the 

investigation available to the debarring official. 

(4) Whether the contractor cooperated fully with Government agencies 

during the investigation and any court or administrative action. 

(5) Whether the contractor has paid or has agreed to pay all criminal, civil, 

and administrative liability for the improper activity, including any investigative 

or administrative costs incurred by the Government, and has made or agreed to 

make full restitution. 

(6) Whether the contractor has taken appropriate disciplinary action 

against the individuals responsible for the activity which constitutes cause for 

debarment. 

(7) Whether the contractor has implemented or agreed to implement 

remedial measures, including any identified by the Government. 

(8) Whether the contractor has instituted or agreed to institute new or 

revised review and control procedures and ethics training programs. 

(9) Whether the contractor has had adequate time to eliminate the 

circnmstances within the contractor's organization that led to the cause for 

debannent. 

(10) Whether the contractor's management recognizes and understands the 

seriousness of the misconduct giving rise to the cause for debarment and has 

implemented programs to prevent recurrence. 

The existence or nonexistence of any mitigating factors or remedial 

measures such as set forth in this paragraph (a) is not necessarily determinative of 

a contractor's present responsibility. Accordingly, if a cause for debarment exists, 

the contractor has the burden of demonstrating, to the satisfaction of the debarring 

official, its present responsibility and that debarment is not necessary. 

48 C.F.R. § 9.406-1. These factors leave little room for an individual to prove present 

responsibility to avoid debarment. 

Second, the move from the Excluded Parties List System (www.epls.gov) to the System 

for Award Management (www.sam.gov)hasbeenwroughtwithproblems.Importantly.it 

appears to be taking days and even weeks for agencies to remove companies listed as suspended, 

7 
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Insert offset folio 16 here 81744.016

debarred, or proposed for debannent from SAM. In one instance, in spite of multiple efforts, it 

took one agency almost two weeks to remove a company from being listed on SAM. 

Considering the highly public natures of listings on SAM, failure to promptly remove a company 

can result in the loss of millions of dollars in revenue from public and private procurements. 

SAM clearly needs resources and proactive management of suspension and debannent 

information. 

Conclusion 

Again, it is an honor to be invited to testify here today. There is little question that some 

minor changes to the suspension and debarment system could add significantly to the 

consistency among agencies and transparency. While the consolidation of civilian agency SDO 

functions could serve that same purpose, I believe it could also be achieved through changes to 

the current FAR and non-procurement rules (including the consolidation of these two sets of 

rules) and significant training of the agencies with less experience using this powerful authority. 

This concludes my prepared remarks. I am happy to answer any questions you may have. 

8 
24 

Mr. MICA. Thank you. We will hold questions. 

We will now turn to our next and last witness, Scott Amey. He 

is General Counsel, Project on Government Oversight. Welcome 

and you are recognized. 

STATEMENT OF SCOTT AMEY 

Mr. AMEY. Thank you, Congressman Mica, Ranking Member 

Cummings and members of the committee. 

Thank you for inviting me to testify today about the state of the 

Federal Government’s suspension and debarment system, from exposing outrageously priced spare parts to initiating the creation of 

the FAPIIS system, which was born out of this committee, POGO 

has promoted a good government agenda. Today’s hearing, and improved attempts to prevent the government from doing business 

with risky contractors, contractors with criminal, civil and administrative misconduct records or poor performance histories, is essential to improving Federal and grant spending that now exceeds $1 

trillion annually. 

Everyone agrees that the Federal Government should not do 

business with companies that have defrauded the government or 

violated laws or regulations or performed poorly on contracts or 

had their contracts terminated for default or cause. But in reality, 

the government is awarding contracts and grants to such companies. The government has a two-tier system to protect the public, 

pre-award responsibility determinations and suspension and debarment. I discuss both in my written testimony, but I will focus today 

on the failures of the suspension and debarment system. 

The suspension and debarment system is a vital tool in protecting agencies, government missions and programs and taxpayers. Despite a complex framework outlined in the Federal Acquisition Regulations, and comprehensive programs within certain 

agencies, we are still finding flaws in the system. Excluded activities are still receiving new contracts or grants. Companies can be 

viewed presently responsible by just firing a few employees or 

promising to enhance training or compliance measures. 

Many agencies are not effectively using the suspension and debarment tools at their disposal, with NRC, Social Security, Commerce, HHS and Labor having 10 or fewer suspensions or 

debarments in recent years. Inconsistences are the norm. And we 

often hear about government reports and audits and media stories 

alleging criminal activity or poor performance one day, and a new 

multi-million dollar contract or grant awarded to the same entity 

within days. 

Additionally, the length of suspension can range from anywhere 

from a few days to years. Referrals of the suspension and debarment actions can be slow. I am still confused at how BP was considered responsible for years after the Gulf oil spill disaster, but 

was only suspended two weeks after it pleaded guilty to numerous 

criminal counts. BPs suspension has lasted over six months. It will 

be interesting to see how much longer it will last, and if it will be 

waived or lifted prior to a new solicitation for oil or petroleum 

products or services. 

This is the perception, that the larger contractors are too big to 

suspend or debar. Since 2000, POGO estimates that there have 

25 

been approximately 82,000 suspension or debarment actions levied 

against companies and individuals. But the number of large contractors that have been sanctioned under the system can be counted on two hands. 

As far as the Suspend Act, earlier this year, Chairman Issa released a discussion draft of a bill entitled the Stop Unworthy 

Spending, or the Suspend Act. I applaud the chairman’s handling 

of this draft bill and the outside the box thinking that was put into 

it. 

We have heard for years that the suspension and debarment system is fine. But yet nearly every government report reports that 

there are flaws in the system. Past efforts to reform the system 

have been cause for mandatory suspension or debarment for certain procurement or tax-related offenses. Those efforts were shortsighted and unrealistic. SDOs need flexibility to review a contractor’s present level of responsibility and mandate suspension or debarment only when necessary and not to just punish a contractor. 

I agree with the chairman and the draft language in the bill that 

the consolidation of the suspension and debarment offices and resources will improve consistency and be a better use of the limited 

resources that are appropriated for suspension and debarment activities. The bill also attempts to expedite review, which is crucial. 

Section 5 looks to coordinate agency actions. 

For years, POGO has been concerned with the lack of coordination between IGs and others within the acquisition and oversight 

world. POGO provides the following recommendations that should 

be considered as the Suspend Act is being finalized. 

Mandate that IGs or other investigative units make referrals to 

SDOs after opening an investigation and making findings that reasonably support a basis for suspension or debarment. SDO 

shouldn’t have to wait until the Justice Department has closed a 

file to make a responsibility determination. 

Require SDOs to make suspension or debarment determinations 

within a set period of time after receiving a government referral. 

The determination should include a description of the referral, the 

SDOs justification for suspending or debarring the entity or not 

taking action, and any description that is concluded in a settlement 

or agreement. 

A record should be publicly available so that SDOs are held accountable to the public. Enhance annual reporting to Congress of 

the spending and suspension debarment workforce, the total number of referrals, declinations, fact-based suspensions or debarments, 

administrative actions, anything that comes from those offices 

clarifies that suspension and debarment activities are inherently 

governmental functions that must be performed by government employees. 

Release past performance data. In the past, past performance 

data is currently released by GAO and Federal courts in bid protest 

decisions and the proactive release of such information would benefit government officials, competitors and the public. 

Thank you for inviting me to testify. I look forward to working 

with the committee to further explore how we can strengthen the 

suspension and debarment process. 

[Prepared statement of Mr. Amey follows:] 

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Insert offset folio 17 here 81744.017

PROJECT 

GOVERNl\~ENT OVERSIGHT 

Testimony of Scott Arney, General Counsel 

Project On Government Oversight (POGO) 

before the 

House Committee on Oversight and Government Reform 

"Protecting Taxpayer Dollars: Is the Government 

Using Suspeusion and Debarment Effectively?" 

June 12, 2013 

Good morning Chainnan Issa, Ranking Member Cummings, and Members of the Committee. 

Thank you for inviting me to testify today about the state of the federal government's suspension 

and debannent system. I am Scott Arney, General Counsel with the Project On Government 

Oversight (POGO), a nonpartisan public interest group. Founded in 1981, POGO investigates 

and exposes corruption and other misconduct in order to achieve a more accountable federal 

government. 1 I am pleased to testify before you on the issue of contractor responsibility, 

specifically the status of the suspension and debannent system. 

Throughout its thirty-two-year history, POGO has created a niche in investigating, exposing, and 

helping to remedy waste, fraud, and abuse in government spending. Since the 1990s, there have 

been several major shifts in federal procurement, including increased contract spending,2 a 

stretched acquisition workforce/ spending on services outpacing spending on goods,4 and a host 

of acquisition refonns5 implemented to make spending easier. The result is that the government 

is sometimes doing business with risky contractors--contractors with criminal, civil, and 

administrative misconduct records or poor performance histories. 

Recently, we have seen contracts awarded to companies that have defrauded the government or 

violated laws or regulations, perfonned poorly on contracts, or had their contracts terminated for 

default or cause. Continuing to award contracts to such contractors undermines the public's 

1 For more information on POGO, please visit www.pogo.org. 

2 According to USASpending.gov, $517 billion was spent on federal contracts in FY 2012 up from $206 billion in 

FY 2000. http://www.usaspending.gov/explore(DownloadedJune7, 2013) 

3 Office of Management and Budget, Office of Federal Procurement Policy, Acquisition Worliforce Development 

Strategic Plan: Fiscal Years 2010-2014, October 2009, p. 1. 

http://www.whitehouse.gov/omb/assetsiprocuremencworkforce/A WF _Plan_I 0272oo9.pdf (Downloaded June 7, 

2013) 

4 In FY 2012, contracts for services totaled $307 billion and contracts for goods totaled $210 billion. 

USASpending.gov 

5 The Federal Acquisition Streamlining Act of 1994 (FASA) (Public Law 103-355), the Federal Acquisition Reform 

Act of 1996 (FARA) (public Law 104-106), and the Services Acquisition Reform Act of 2003 (SARA) (Public Law 

108-136). 
27 


Insert offset folio 18 here 81744.018

confidence in the fair-play process and exacerbates distrust in our government. It also results in 

bad deals for the government and hinders mission accomplishment. 

Even Stan Soloway, the president of contractor industry association the Professional Services 

Council, has stated that responsibility is an important factor when making contracting decisions. 

In an April 2007 column in Washington Technology, Mr. Soloway wrote: "After all, no one 

advocates the award of government contracts to proven crooks," and that "[nlo one wants to see 

his or her tax dollars go to companies or individuals that routinely and blithely violate the Jaw.,,6 

He argues, however, that there are due process concerns and other questions that place 

contractors at a disadvantage. 

The government has two systems that allow it to vet contractors and protect the public: I) preaward responsibility detenninations and 2) suspension and debarment. I will discuss both, but 

my focus will be on the failures of the suspension and debarment system. 

Pre-A ward Responsibility Determinations 

Vetting contractors prior to a contract award to determine whether they are truly responsible is 

required by law.7 One of POGO's proudest achievements was convincing the government that 

contractor responsibility infonnation was inadequate, and that genuine responsibility 

detenninations were not being made as required by the Federal Acquisition Regulation (FAR). 

FAR Subpart 9.103 states, in part: 

(a) Purchases shall be made from, and contracts shall be awarded to, responsible 

prospective contractors only. 

(b) No purchase or award shall be made unless the contracting officer makes an 

affinnative determination of responsibility. In the absence of infonnation clearly 

indicating that the prospective contractor is responsible, the contracting officer 

shall make a determination of nonresponsibility.8 (Emphasis added) 

According to FAR Subpart 9.104-1, agencies must ensure that contractors: 

(c) Have a satisfactory performance record (see 9.104-3(b) and Subpart 42.15). 

A prospective contractor shall not be detennined responsible or nonresponsible 

solely on the basis of a lack of relevant perfonnance history, except as provided in 

9.104-2; 

(d) Have a satisfactory record of integrity and business ethics (for example, 

see Subpart 42.15).9 (Emphasis added) 

6 Stan Soloway, 'The debate on contractor responsibility flares anew," Washington Technology, April 9, 2007. 

http://www.washingtontechnology.comlprintl25_05/30430-l.html (Downloaded June 7, 2013) 

1 FAR Subpart 9.105-1. https:llacquisition.gov/far/currentlhtmlJSubpart%209 I.html#wpl084058 

8 FAR Subpart 9.103. -

9 FAR Subpart 9.104-1. 

2 
28 


Insert offset folio 19 here 81744.019

Despite those requirements, POGO is concerned that pre-award contractor responsibility 

determinations have fallen by the wayside, Federal agencies seem more concerned with 

awarding contracts quickly than with ensuring the government gets the best goods or services at 

the best practicable price from responsible contractors. 

In an effort to place a spotlight on contractor accountability issues. POGO created a Federal 

Contractor Misconduct Database (FCMD) in 2002. 10 The database includes information on 

nearly 1,300 criminal, civil, and administrative instances of misconduct for over 170 of the 

federal government's largest contractors. The instances cited in the FCMD have resulted in 

$59.4 billion in fines, penalties, settlements, and restitution paid since 1995. Although the 

government is recovering federal funds through prosecutions and enforcement actions, more can 

be done to ensure contract dollars are not awarded to risky contractors prior to a contract award. 

POGO's FCMD served as the model for the government's Federal Awardee Performance and 

Integrity Information System (FAPnS). 11 FAPIIS was created to provide the government with a 

tool to make genuine responsibility determinations. Despite its shortcomings and the difficulties 

encountered in getting it operational, POGO is pleased that FAPIIS became publicly available in 

April 2011. 12 Two years later, it appears that the FAPIIS data is providing the contracting 

officers what they need to make well-reasoned responsibility determinations and contract 

awards. 

Despite government efforts to provide government employees with information about entities 

seeking federal contracts and grants, some excluded contractors and grantees still receive new 

federal awards. In October 2011, the Department of Defense (DoD) created a stir when it 

released its Report to Congress on Contracting Fraud,13 which examined the extent to which the 

Pentagon awarded contracts to companies that defrauded the government. The report found that 

over a ten-year period more than 300 DoD contractors had "entered into settlement agreements 

or had civil judgments rendered against them" and 54 DoD contractors were criminally charged 

with fraud. 14 

In 2009, the Government Accountability Office (GAO) highlighted 25 instances in which 

companies and individuals suspended or debarred for committing "egregious offenses" were 

10 Project On Government Oversight, "Federal Contractor Misconduct Database." 

http;//www.contractormisconduct.org; Project On Government Oversight, "Federal Government's Largest 

Contractors Have Paid Billions in Fines. Penalties," March 13, 2013. http://www.pogo.org/aboutlpressroomlreleasesl20 13/20 130313-federal-governments-Iargest-contra ctors.html 

11 Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 (Pub. Law 110-417, Sec. 872), October 

14,2008. http://frwebgate.access.gpo.gov/cgibinlgetdoc.cgi?dbname=ll 0_con£-public_laws&docid=f:pubI417.11 O.pdf 

12 President Ohama signed into law the Supplemental Appropriations Act of 2010, which contained a provision 

sponsored by Senator Bernie Sanders (D-VT) that requires the GSA to post all FAPIIS information, except past 

performance reviews, on a puhlicly available website. http://www.gpo.gov/fdsys/pkgIFR-201l-01-24/pdf/201lI 323.pdf (Downloaded February 22, 2011) 

13 Departruent of Defense, Under Secretary of Defense for Acquisition, Technology and Logistics, Report to 

Congress on Contracting Fraud, October 2011. http://www.sancters.senate.gov/imo/mediaidoc/l02011%20-

%20DOD%20Fraud%20Report.pdf (Downloaded June 7, 2013) (Hereinafter Report to Congress on Contracting 

Fraud) 

14 Report to Congress on Contracting Fraud, p. 3. 

3 
29 


Insert offset folio 20 here 81744.020

awarded new contracts. 15 Contracting officials either failed to check the Excluded Parties List 

System (EPLS) database before awarding the contract, or, if they did check it, the clunky EPLS 

search engine failed to tum up the name of the suspended or debarred entity.16 Additionally, 

some contractors learned that they could game the system by creating a new entity. Either way, 

contracts were being awarded to entities that were in timeout. 

Suspension and Debarment 

The federal government can suspend or debar a contractor or grantee. 17 Contractors that are 

determined to be nonresponsible can be suspended from receiving new contracts or grants for up 

to eighteen months (unless legal proceedings have been initiated within that period).18 

Debarment can last up to three years. 19 Suspension and debarment prevents a contractor from 

receiving new contracts, but allows them to continue working on existing contracts.20 Suspension 

or debarment is "imposed only in the public interest for the Government's protection and not for 

purposes of punishment. ,,21 

Unfortunately, the suspension and debarment system is riddled with problems. First, it is 

inconsistently applied from agency to agency, and contracts and grants are awarded to suspended 

or debarred entities. As discussed earlier, despite beiug on the exclusions list, some suspended or 

debarred entities still receive federal dollars. 

Another concern is whether the definition of responsible in the Federal Acquisition Regulation 

(FAR) allows the government to take action against an entity.22 At the first sign of action by the 

Department of Justice (DOJ) or an agency, contractors (at least those that are not small 

businesses) fire a few employees, beef up training and compliance measures, and make all kinds 

of promises to the government in order to avoid the possibility of losing future contract awards. 

But is that system working in the interest of the government and taxpayers? 

In 2011, reports by the Government Accountability Office (GAO)23 and the Department of 

Defense Inspector General (DoD IG)24 made it clear that many agencies are not effectively using 

IS Government Accountability Office, Excluded Parties List System: Suspended and Debarred Businesses 

and Individuals Improperly Receive Federal Funds (GAO-09-174), February 2009, pp. 3, 8, 9, 28. 

http://www.gao.gov/new.itemsld09174.pdf(Downloaded February 22, 2011) 

16 The EPLS was integtated into the General Services Administration's "System for Award Management" (SAM). 

https:lfwww.sam.gov/portallpublic/SAM 

17 FAR Subpart 9.4. https:lfacquisition.gov/far/currentlhtmllSubpart%209_4.html 

J8 FAR Subparts 9.407-4. 

19 FAR Subparts 9.406-4. 

20 FAR Subpart 9.405-1. 

21 FAR Subpart 9.402(b). 

22 FAR Subpart 9.1. 

23 Government Accountability Office, Suspension and Debarment: Some Agency Programs Need Greater Attention, 

and Governmentwide Oversight Could Be Improved (GAO-I 1-739), August 2011. 

http://www.gao.gov/assetsl590/585277.pdf(DownloadedJune 7, 2013) (Hereinafter Suspension and Debarment: 

Some Agency Programs Need Greater Attention) 

24 Department of Defense Inspector General, Additional Actions Can Further Improve the DoD Suspension and 

Debarment Process (0-2011-083), July 14,2011. http://www.dodig.millauditlreportslfylllll-083.pdf(Downloaded 

June 7, 2013) (Hereinafter Additional Actions Can Further Improve the DoD Suspension and Debarment Process) 

4 
30 


Insert offset folio 21 here 81744.021

the suspension and debarment tools at their disposal. According to the GAO, the most successful 

agencies-i.e. those with the most suspensions and debarments-share three characteristics: a 

"dedicated suspension and debarment program with full-time staff, detailed policies and 

procedures, and practices that encourage an active referral process.,,25 Similarly, the DoD IG 

found that the Defense Logistics Agency (DLA) suspended and debarred poorly performing 

contractors far more frequently than the Army, Navy, and Air Force because DLA contracting 

personnel were more involved in and more familiar with the suspension and debarment process 

than their counterparts in the Services.26 

In September 2012, the Interagency Suspension and Debarment Committee (ISDC) issued its 

most recent accounting of agencies' suspension and debarment actions, as well as an assessment 

of the pro~ess the agencies were making in strengthening their suspension and debarment 

programs. _7 Of the 24 agencies it examined, the ISDC found that all were implementing stronger 

policies, including formally establishing suspension and debarment programs, increasing 

personnel resources for existing programs, creating new internal monitoring mechanisms, 

simplifying referral processes, and implementing new automatic referral policies.28 As a result, 

the ISDC found that the total number of suspensions, proposed debarments, and debarments in 

fiscal year 2011 increased 39 percent over the previous fiscal year and 119 percent over FY 

2009.29 

Although the ISDC's limited data shows an uptick in the use of the suspension and debarment 

system, the Council of the Inspectors General on Integrity and Efficiency (CIGIE) found that 

suspensions and debarments are on the rise but are far lower than they were at the peak in the 

early and mid-2000s. 

25 Suspension and Debarment: Some Agency Programs Need Greater Attention, pp. 11-17. 

26 Additional Actions Can Further Improve the DoD Suspension and Debarment Process, pp. 14-17. 

27 Interagency Suspension and Debarment Committee, Fiscal Year 2011 Report to Congress on Federal Agency 

Suspension and Debarment Activities, September 18, 2012. 

http://www.federalnewsradio.com/pdfS/2012_suspension_debarmencreport.pdf (Downloaded June 7, 2013) 

(Hereinafter ISDC FY 2011 Report) 

28 ISDC FY 2011 Report, p. 2 (letter). 

29 ISDC FY 2011 Report, p. 8; Interagency Suspension and Debarment Committee, Fiscal Years 2009 and 2010 

Report to Congress on Federal Agency Suspension and Debarment Activities, June 15,2011, p. 4. 

http://www. whitehouse.gov/sites/defaultlfiles/omb/procurementlreports/isdc-report-to-<:ongress-61411.pdf 

(Downloaded June 10,2013) (Hereinafter ISDC FY 2009-2010 Report) 

5 
31 


Insert offset folio 22 here 81744.022

Suspension and Debannent Actions Since FY 2000 

----------------------------------------------------------------

12,000 -,------------------------

10,000 +------------dit-------------

8,000 +--.,.....-"""'"'..---=--+-~----------

6,000 +-------~c_I'----~._------___;_ 

4,000 +-_____________ L-__ -=---,,... __ 

i 2,000 +-------------------------

2000 " " " " " " 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 " " " " " " 

..... CIGIE, PCIE/ECIE 

__ ISOC 

Source: CIGIE, President's Council on Integrity & Efficiency (PCIE), and Executive Council on Integrity & 

Efficiency (ECIE), Annual Progress Report to the President, Fiscal Years 2000-2011; Report by the Interagency 

Suspension and Debarment Committee on Federal Agency Suspension and Debarment Activities, Fiscal Years 2009-

2011. 

Despite the recent increase in suspension and debannent actions, there are some agencies that 

still are not utilizing the suspension or debannent tool. I would like to think that those agencies 

have top-notch contractors that are not involved in illegal or questionable activities, but history 

proves otherwise. The Nuclear Regulatory Commission (NRC) and Social Security 

Administration (SSA) have zero suspensions, proposed debannents, debannents, and 

administrative agreements, and Commerce, Health and Human Services, and Labor have 10 or 

fewer such actions in FY 2011.30 Although high totals are not indicative of a better suspension 

and debannent system, the infrequent use by some agencies and errors by others suggest that the 

government was not using the system to its fullest extent. 

Additionally, according to the DOJ Inspector General (DOJ IG), from FY 2005 to 2010, the DOJ 

awarded 77 contracts to suspended or debarred parties, only made 17 referrals for suspension and 

debannent, and did not have a formal system to track the status of suspension and debannent 

referrals.31 The DOJ IG noted that there were "deficiencies in DOl's suspension and debannent 

process and ... officials are not uniformly checking the EPLS immediately prior to making 

aWards . ..32 

30 ISDC FY 2011 Report, p. 22, Appendix 3. 

31 Department of Justice, Office of the Inspector General, Audit Division, Audit of Administrative 

Suspension, Debarment, and Other Internal Remedies Within the Department of Justice (Audit Report 12-01), 

October 2011, p. iii. http://www.justice.gov/oig/reportsl20111a1201.pdf(DownloadedJune 10,2013) (Hereinafter 

Audit of Administrative Suspension, Debarment) 

32 Audit of Administrative Suspension, Debarment, pp. iii. 

6 
32 


Insert offset folio 23 here 81744.023

The overall decrease in suspensions and debarments since FY 2000 has raised many questions 

about contractor in-house ethics and compliance programs, government referrals and 

enforcement, and whether contractors are too bi~ to suspend or debar. Unfortunately, unlike the 

previous report that covered FY 2009 and 2010, 3 the ISDC's latest report did not include the 

number of each agency's suspension and debarment referrals and declinations. We are perplexed 

as to why the ISDC omitted this information, which provides valuable insight into the 

productivity and rigorousness of a particular agency's suspension and debarment program, and 

we hope that the ISDC considers including this information in future reports. 

But even when referrals are made to a Suspension and Debarment Official (SDO), that doesn't 

mean the SDO acts on them. The Special Inspector General for Afghanistan Reconstruction 

(SIGAR) has issued government-wide warnings about individuals and entities that allegedly 

supported the insurgency in Afghanistan34 and made referrals to Pentagon SDOs, but they 

haven't had much of an impact. In December 2012, a bi-partisan group of Senators sent an 

urgent letter to the Army warning that, due to a backlog of SIGAR suspension and debarment 

referrals before the Army SDO (60 as of November), companies and individuals suspected of 

actively supporting terrorism in Afghanistan are still receiving taxpayer money.35 According to 

the Senate letter, the DoD set a goal of completing suspension and debarment referrals from 

Inspectors General within 30 days, but according to SIGAR's October 2012 quarterly report, it 

takes federal agencies an average of more than 10 times that long (323 days) to act on its 

referrals.36 In January 2013, Army Secretary John McHugh responded to the Senate.37 Secretary 

McHugh blamed the backlog on SIGAR, claiming it has not provided enough evidence to 

support debarment.38 He cited FAR Subpart 9.406, which requires "a preponderance" of 

evidence in order to debar. What Secretary McHugh's letter does not explain, however, is 

whether SIGAR's referrals provided enough evidence to sup~ort suspension, for which the FAR 

imposes a much lower burden of proof ("adequate evidence" \ 

Outsourcing government functions to the private sector and the changes in contracting laws have 

made adequately safeguarding taxpayers' interests an incredibly daunting challenge. Since 2000, 

POGO approximates that there have been 82,000 suspension and debarment actions levied 

against companies and individuals, but the number of large contractors that have been sanctioned 

under the system can be counted on two hands. The government's reliance on large contractors is 

often difficult to overcome, and therefore large contractors are in a powerful position to avoid 

suspension or debarment actions. 

33 ISDC FY 2009-2010 Report, p. 5. 

34 Special Inspector General for Afghanistan Reconstruction, Immediate Action needed to Prevent Individuals and 

Entities Actively Supporting the Insurgency in Afghanistan from Obtaining Contracts, Grants, or Cooperative 

Agreements, October 17, 2012, p. 4. http://www.sigar.millpdf/investigations/2012-10-17-alert-12-3-ndda84l.pdf 

(Downloaded June 10, 2013) 

35 Senator Jeanne Shaheen, "Bipartisan Group of Senators Call on Army to Address Concern over Contractors with 

Links to Terrorist Groups," December 6, 2012. http://www.shaheen.senate.gov/newsipress/releasel?id=beebf6cbce3b-4449-a3fb-b94d6c20043d (Downloaded June 10,2013) 

36 Special Inspector General for Afghanistan Reconstruction, Quarterly Report to the United States Congress, 

October 30, 2012, p. 50. http://www.sigar.millpdf/quarterlyreportsl2012-10-30qr.pdf (Downloaded June 10, 2013) 

37 Army Secretary John M. McHugh, Letter to Senator Jeanne Shaheen, January IS, 2013. 

http://www.pogoarchives.orglmlco/sigar-army-response-20130131.pdf (Hereinafter McHugh Letter) 

38 McHugh Letter, pp. 1-2. 

39 FAR Subparts 9.407-2. 

7 
33 


Insert offset folio 24 here 81744.024

The need for competition can also prevent actions from being taken against large contractors-if 

one contractor is suspended or debarred, competition is seriously diminished or nonexistent. 

Even when suspension or debarment is used against large contractors, we have seen numerous 

cases in which the government still fails to provide true accountability. For example, the Air 

Force issued a waiver (also known as a compelling reason determination)40 in order to continue 

doing business with Boeing in 2005 after it was revealed that Boeing unlawfully possessed and 

used a competitor's proprietary documents in connection with the competition for the Air Force 

Evolved Expendable Launch Vehicle (EEL V) contract.41 

The inconsistent length of the suspension has been another area of concern. Suspensions have 

lasted a mere few days or weeks in the cases of General Electric,42 IBM, and GTSI, a few 

months in the cases of Agility, Booz Allen, and L-3, or more than a year in the case of Boeing.43 

MCIIWorldCom's suspension was lifted only three days before the expiration of the 

government's long-distance telephone contract with the company.44 When POGO asked about 

the reasons for these questionable decisions, government officials told us that such actions were 

necessary in order to promote competition. 

The massive 2010 oil spill in the Gulf of Mexico led to discussions about whether to debar 

British oil giant BP. Even before the Gulf disaster, BP was on thin ice with Environmental 

Protection Agency (EPA) suspension and debarment officials due to safety and environmental 

compliance problems at its drilling and production facilities.45 But BP is also a main supplier of 

fuel to U.S. military operations in the Middle East, and when the EPA considered debarring BP 

in 2009, pressure from DoD caused the EPA to back off.46 Based on that dilemma and the thenongoing investigation and prosecution by the Justice Department, the EPA SDO waited two 

weeks after BP pleaded gUilty to 14 criminal counts and agreed to pay more than $4.5 billion in 

penalties before taking action to protect taxpayers. 47 It is interesting that the company was 

considered responsible prior to its suspension, which finally was handed down more than 30 

months after the oil disaster. BP's suspension has lasted over six months and it will be interesting 

40 FAR Subpart 9.405(d)(2). 

41 Renae Merle, "Boeing Cleared To Bid on Launches," Washington Post, Match 5, 2005, p. EI. 

http://www.washingtonpost.comlwp-dyniarticles/A8571-2005Mat4.html(Downloaded June 10, 2013) 

42 LA Times, "Pentagon Lifts GE Suspension," June 06,1992. http://articles.latimes.comlI992-06-06Ibusinesslfi630_I-l;e-matketing (Downloaded June 10,2013) 

43 Project On Government Oversight, "Federal Contractor Misconduct Database." 

http://www.contractormisconduct.org/index.cfmll,73,224,htrn1?pnContractorID=O&pstDispositionTypeID=I&prtC 

ourtTypeID=O&mcType=O&eaType=O&ContractType=O&dollatAmt=-1 %2FI &dateFrom=01 %2FOI %2FI995&dateTo=06%2F09%2F2013&submit=sort 

44 Project On Government Oversight, "GSA's Deal with WorldCom: Bad Business for Taxpayers," January 8, 2004. 

http://pogoatchive.pub30.convio.netlpogo-fileslalertslcontract-oversightlco-fcm-20040108.html 

45 For more information visit BP's page in POGO's Federal Contractor Misconduct Database. 

http://www.contractormisconduct.org/index.cfmll.73.221.html?ContractorID=61&ranking=48 

46 Kim Chipman, "EPA May Prohibit BP From Getting Government Contracts After Gulf Oil Spill," Bloomberg 

News, May 21, 2010. http://www.bloomberg.comlnewsl2010-05-211epa-may-prohibit-bp-from-getting-governmentcontracts-after-gulf-oil-spill.htrn1 (Downloaded February 22, 2011) 

47 Project On Government Oversight, EPA Sends a Message With BP Suspension, November 28,2012. 

http://www.pogo.orglblog/2012l11120121128-epa-sends-message-with-bp-suspension.html 

8 
34 


Insert offset folio 25 here 81744.025

to see how much longer it will last and if it will be waived or lifted prior to a new solicitation for 

oil or petroleum products or services. 

Additionally, large contractors have the financial means, plus high-priced attorneys that enable 

them negotiate an alternative to suspension or debarment. The possibility of delays, litigation, 

and reductions in competition can mean the difference between the maximum penalty and a 

lesser sanction that allows the company to keep doing business with the federal government. As 

a result, large contractors have an unfair advantage over smaller contractors when it comes to 

avoiding suspension and debarment. 

Based on the subjective nature of the suspension and debarment system as well as questionable 

referrals and use of it, today's hearing is vital to examining whether improvements should be 

made. 

SUSPEND Act 

Early this year, Chairman of the House Oversight and Government Reform Committee Darrell 

Issa (R-Calif.), released a discussion draft of a bill entitled the "Stop Unworthy Spending 

(SUSPEND) Act.,,48 The bill would end individual civilian agencies' suspension and debarment 

programs and vest these functions in a centralized body called the Board of Civilian Suspension 

and Debarment. As of October 1, 2014, the Board would consolidate more than 41 civilian 

suspension and debarment offices. Chairman Issa expects that the SUSPEND Act will require 

less staffing and administrative resources than all of the current individual suspension and 

debarment programs, and provide much-needed transparency, consistency, and expedited 

review. 49 

So far, reaction to the draft bill has been mixed, 50 but POGO supports many of the draft 

proposals. Consolidation of suspension and debarment offices will ensnre adequate staffing and 

resources and provide consistency, which should ensure that all contractors and grantees are 

presently responsible. 

Consistency is needed because we often hear about government reports and audits or media 

stories alleging criminal activity or poor performance one day and new rnulti-million-dollar 

contracts or grants awarded to the same entity within days. Unfortunately, the reaction in the past 

has been for Congress to draft legislation that mandates suspension or debarment for certain 

offenses. That reaction is short-sighted and is not a realistic solution that benefits the federal 

government or taxpayers. SDOs need flexibility to review a contractor's present level of 

responsibility and mandated suspensions or debarments only act to punish those involved. 

48 "Stop Unworthy Spending (SUSPEND) Act." http://oversight.house.gov/wpcontentluploads120 13102IDrafcSUSPEND _AcL2-5. pdf (Downloaded June 10, 2013) 

49 House Committee on Oversight and Government Reform, "Issa: Stop Giving Taxpayer Dollars to Tax Cheats, 

Criminals, and Fraudsters," February 7, 2013. http://oversight.house.gov/releaselissa-stop-giving-taxpayer-dollarsto-tax-cheats-criminals-and-fraudstersl 

50 Matthew Weigelt, "Proposal would take suspension, debarment powers from agencies," Federal Computer Week, 

February 8, 2013. http://fcw.comlartic1es/20J3/02l08/debar-suspend-bill.aspx (Downloaded June 10,2013) 

9 
35 


Insert offset folio 26 here 81744.026

Recommendations 

POGO provides the following recommendations that should be considered as the SUSPEND Act 

is being finalized: 

1. Mandate that IGs or other investigative units make referrals to SDOs after opening an 

investigation and making findings that reasonably support a basis for suspension or 

debarment. SDOs shouldn't wait until the Justice Department has closed a file to make a 

responsibility determination. 

2. Require SDOs to make a suspension or debarment determination within a set period of 

time after receiving a government referral. The determination should include a 

description of the referral, the SDO's justification for suspending or debarring the entity 

(or taking no action), and a description of any concluded agreement or settlement. These 

records should be publicly available so that SDOs are held accountable to the public. 

3. Enhance annual reporting to Congress to include summaries of spending and the 

suspension and debarment workforce; the total number of referrals, initiated fact-based 

cases, and administrative actions; and details about all referrals. The ISDC should 

provide consistent disclosures to Congress so that improvements can be made to the 

suspension and debarment system. 

4. Suspension and debarment decisions and waivers/compelling reason determinations 

should be made publicly available. They are vital for contractor accountability and 

transparency because they explain why and how often the government does business with 

contractors and grantees, especially those considered risky, non-responsible entities. With 

over $1 trillion of taxpayer money spent every year on federal contracts and grants, we 

should have insight into the suspension and debarment system and, when waivers are 

granted, access to all the facts to ensure they were carefully considered and that the 

waiver was used only when necessary. 

5. Classify suspension and debarment activities as inherently governmental functions (as 

governed by FAR Subpart 7.5) that must be performed by civil servants rather than 

contractors. Suspension and debarment functions require an analysis of Inspector General 

referrals, fact-based allegations, and contractor data and records that are highly sensitive 

and include proprietary matters. Such data should remain in the hands of public servants. 

6. Always release past performance data. Past performance data is currently released by the 

GAO and federal courts in bid protest decisions. The proactive release of such 

information would benefit government officials, competitors, and the public-potentially 

reducing the number of bid protests that are filed each year. 

We would do well to heed the warning of former Senator Russell Feingold (D-WI), who used the 

term "agency capture" to describe the government's growing subservience to the companies it 

does business with or regulates: 

10 
36 


Insert offset folio 27 here 81744.027

An agency should never be in a position where it is so dependent on a contractor 

to perform certain functions that it cannot take appropriate actions to suspend or 

debar that contractor. .. I do not believe we should let corporations become 'too 

big to fail,' and I think the same should be true for our contractors. If they can't 

be trusted to run their businesses with integrity and to use U.S. taxpayer dollars 

honestly, then they should not be eligible to receive new contracts. We need to 

hold government contractors to a high standard.5

] 

Thank you for inviting me to testify today. I look forward to working with the Committee to 

further explore how we can strengthen the suspension and debarment system. 

51 Statement of the Honorable Russell D. Feingold, Senate Judiciary Subcommittee on Administrative Oversight and 

the Courts on Protecting the Public Interest: Understanding the Threat of Agency Capture, August 3, 2010. 

http://www.judiciary.senate.govlhearingsltestimony.cfm?id=e655f9e280ge5476862f735daI6Ia459&wiUd=e655f9 

e280ge5476862f735daI6Ia459-O-1 (Downloaded February 22, 2011) 

11 
37 

Mr. MICA. Thank you. We will start a quick round of questioning. 

Mr. Neumann, this looks like we are spending about a trillion 

dollars a year, it looks like, of government money on contracts and 

also grants. Is it as bad in grants as it is in contracts as far as not 

compliance with getting rid of the bad players? About half a trillion 

of each, isn’t it? And is it as bad in contracts as in grants? Did you 

look at both? 

Mr. NEUMANN. In 2011, we did look at the total number of exclusions for both grants and contracts. But our work focused on agency actions taken under the Federal Acquisition Regulation for contracts. The same practices apply for non-procurement. 

Mr. MICA. So you really didn’t look at that aspect as one, just in 

general, you looked at the failure to comply with getting the bad 

actors out of the process? 

Mr. NEUMANN. Certainly we looked at the agency suspension and 

debarment programs. 

Mr. MICA. Let me ask you this.This is another one of these 

groundhog attempts by government where we keep going back and 

back and trying to clean this up and nothing is done. There have 

been attempts in the past, mechanisms put in place to try to make 

again the bad actors be identified and excluded. Is it your belief 

that only legislation now can remedy this? GSA had some ability 

to do this. OMB had some ability to take steps. 

Mr. NEUMANN. I think based on our work there are a number of 

improvements that agencies can take. 

Mr. MICA. Do we need a law with teeth in it to make certain that 

these things get done? 

Mr. NEUMANN. We certainly need agency action. 

Mr. MICA. Well, okay, they already have the ability for the agency to act, for agencies to act. It appears, and you were with OMB, 

Ms. Styles, OMB directed agencies to appoint senior officials responsible to the agency’s suspension and debarment program. Has 

that taken place in all the agencies? Are you aware, Ms. Styles or 

Mr. Neumann? Go ahead? Yes, no, maybe? 

Ms. STYLES. I can tell you from the outside perspective, not consistently, no. And to the extent that they have been appointed, it 

is actually very difficult to figure out who they are in certain agencies. 

Mr. MICA. Is that your observation too? 

Mr. NEUMANN. Yes. That is our observation as well. 

Mr. MICA. They have the ability and can administratively go 

after some of these things. Then we have some of these programs. 

How much money has GSA spent on either the SAM program or 

EPLS program? Do you know? 

Mr. NEUMANN. We didn’t look at that. 

Mr. MICA. They are trying to merge these two. One was to set 

up a list of bad players, right. And that has not been effective. That 

is the crux of most of the testimony that we are here for. 

Now, who is responsible for again moving forward? Is it GSA and 

OMB? And neither have done that, is that correct, Mr. Neumann? 

Mr. NEUMANN. Both OMB and GSA have roles in decisions about 

that. 

38 

Mr. MICA. But obviously people aren’t reporting, contracts are 

being given and hundreds of millions of dollars to bad players, is 

that correct? 

Mr. NEUMANN. We do know that there have been some mistakes 

made in the past where contractors that were debarred were given 

contracts. 

Mr. MICA. Who is the worst? Mr. Cummings mentioned FEMA, 

you have HHS and Commerce, lack effective programs. Who is the 

worst? 

Mr. NEUMANN. What we found was that there were six agencies 

at that time that had taken few or no suspension or debarment actions and didn’t even have policies or procedures in place or dedicated staff. 

Mr. MICA. In spite of, again, the requirement, administrative requirement to report, in spite of the requirement to set up a system 

to maintain a current list, the list hasn’t been current, right? Or 

complete? 

Mr. NEUMANN. The GSA has continued to experience problems 

with that. GAO has reported on that over the years. We understand they have taken steps to work with the agencies to improve 

that. But there are still reports of problems. 

Mr. MICA. And you were at OMB, Ms. Styles. What are they 

doing at OMB? That is part of their, that is Office of Budget and 

Management, just ignoring again either the requirements to report 

or keeping a list that would be referred to and people disbarred or 

suspended being prohibited from getting these contracts or awards? 

Ms. STYLES. At this point, they issued the 2011 memo, and they 

have policy responsibility for the EPLS, which is now in the system 

for award management, or SAM. The data is in SAM, it is just not 

as thorough and complete, and it is difficult to manage. 

Mr. MICA. I have a question. You have looked at some of the legislation and commented on it. Does it have enough teeth to get the 

job done and make these agencies comply? 

Mr. AMEY. There may be a few minor tweaks that need to be implemented. But for the most part, I think you are hitting on the 

problem. Unfortunately the suspension and debarment system has 

been around for many years, but it has been through executive 

order, it has been through some regulations, it has been through 

kind of a stovepipe mentality that the agencies are required. 

You won’t find anywhere in the U.S. Code other than a note in 

the financial chapter of the U.S. Code in Section 31 where there 

is a note on how the ISDC is even supposed to run. So I think that 

is part of the problem, we created a system but we didn’t supply 

sufficient guidance on how that system should operate. 

Mr. MICA. Well, again, every one of these hearings are absolutely 

stunning, of the unresponsiveness of agencies and simple things 

like keeping a list and then debarring or disallowing people who 

are bad players and ripped of the government. 

Mr. Cummings? 

Mr. CUMMINGS. Mr. Amey, the thing I am concerned about is ineffective and inefficient. Period. And I state it quite often, we in 

Congress have a lot of motion, commotion, emotion and no results. 

At the same time, the public, who pays us, depends upon us to 

carry out government in a responsible way, are shortchanged. 

39 

The question becomes when you look at, based on your research, 

do you get the impression that there are just some folks that just 

don’t give a damn about whether somebody who is a bad actor continues to have opportunities over and over again? Is it that the 

policies are not in place? 

And then I want you to comment on the chairman’s bill, again, 

I want you to note if there are any deficiencies in it, again we want 

to know. It looks like a very good bill to me. 

But you get tired of going down the same road over and over 

again and nothing, when I say nothing, nothing happens. And so 

what this says to the bad actors is that we could continue to do 

the stuff that we do and keep coming right back to the government 

and saying, keep me in business, not for a year or two, but for generations. So help me with this. Start with the Suspend Act. I think 

that is a good place to start. 

Mr. AMEY. I think the Suspend Act has some great qualities to 

it. We would support it. There are a few minor tweaks. I think 

there is some room for Improvement in trying to get referrals in 

quicker. The biggest thing is the IGs or the oversight community 

conducts investigations and they may have met the burden to make 

a referral over to an SDO to have them start the suspension and 

debarment process. 

Unfortunately, I hate to say it, but in reality the suspension and 

debarment process is being used as a punishment in its current 

state, because so many times we have to wait for the Justice Department to close its file and get a conviction or some kind of civil 

action against the company before an SDO takes action. I don’t 

think we should be doing that. We need to protect the taxpayer. 

They are two separate systems. One is accountability and to hold 

them criminally or civilly accountable. But the other is to protect 

the American taxpayer. The BP example is the best that I can 

think of, where I don’t know why two weeks after they finally 

pleaded guilty that they were considered non-responsible. I am 

sure the EPA was looking at them and I know there were some 

issues with lead agency discussions. Obviously BP is a major supplier of oil and petroleum products and services to the Federal Government. So at that point, the military, the last thing they need, 

especially from a competition standpoint, is to be down a vendor. 

However, it just boggles my mind that we had to wait nearly 30 

months after the oil disaster before we could hold BP accountable 

and consider them non-responsible, which now they have been considered non-responsible for the last six months. 

As far as the answer to your overall question, the FAR does provide a very complex system that should be followed. Do I think people want to provide bad companies with contracts or grants? No. 

Part of it is laziness, part of it may be they checked the excluded 

parties list or the SAM system a month ago and all the vendors 

checked out, but they didn’t check the day that the award was 

given. So at that point, a contractor may have been suspended or 

debarred in that time frame. 

Contractors know how to game the system. Until we end up with 

a system of unique identifiers and be able to track companies and 

their owners, we are going to have a problem. It is very difficult, 

the contractors know so, okay, we are suspended or debarred, but 

40 

we will open up a new entity under my wife’s name, my uncle’s 

name, my brother’s name. So at that point, there is some gaming 

of the system. That is where you kind of have some of the flaws 

that GAO and some of the IGs and ISDC have pointed out through 

the years. 

Mr. CUMMINGS. Mr. Neumann, what is the most common cause 

for debarment? In other words, maybe you can answer that, Ms. 

Styles, I don’t know, what is the most common reason, one, two, 

three? 

Mr. NEUMANN. We didn’t do analysis on the reasons that were 

used. 

Mr. CUMMINGS. Why don’t you tell me a few? You know some of 

them, right? That is your job. 

Mr. NEUMANN. Certainly contract fraud, bribery, theft, tax evasion, any other contractor misconduct, or even poor performance, 

are all reasons for suspending or debarring contractors in cases 

that we have looked at. 

Mr. CUMMINGS. So somebody can be debarred for poor performance? 

Mr. NEUMANN. Yes, they can. 

Mr. CUMMINGS. How is that measured, Ms. Styles? In other 

words, what is poor performance in one person’s mind may not be 

poor performance in another. We have a lot of situations where we 

see contractors come in, and this is to me, it bothers me tremendously, we saw it in the Coast Guard, I was chairman of the Coast 

Guard subcommittee, they will come, they will do a bid for one 

price, and I know they do change orders. Not change orders, but 

changes need to be made. But some of them were just ridiculous. 

Almost a third more for the cost of a ship or whatever. You begin 

to wonder about some of those things. 

Is that the kind of stuff, talk to me, Mr. Amey. 

Mr. AMEY. I don’t’ think that is enough to get you suspended or 

debarred. It is a possibility, especially if that type of information 

is captured in the FAPIIS system, then at that point at least it 

raises red flags for contracting officers. You have a frontloaded part 

of the system and you have a backloaded part of the system. 

So you are trying to get as much information to your contracting 

officers pre-award to make sure that we are only truly working 

with those who are responsible. 

Mr. CUMMINGS. I see. Thank you very much. 

Chairman ISSA. [Presiding] Thank you. 

I am going to follow up on the ranking member. Ms. Styles, when 

we look at suspension versus debarment, in your experience, and 

I know Mr. Amey knows this from the outside, suspension is often 

used for a poor performer, because piling on additional contracts by 

definition only makes the matter worse. In other words, if you are 

growing into ineffectiveness, if you are growing in a way in which 

you can’t handle the contracts you already have, suspension is 

more often looked at as, if you will, temporary versus permanent. 

Is that roughly what we should understand for the record? 

Ms. STYLES. Absolutely. There are actually measures less than 

suspension. So there are show cause letters from agencies to understand why they would have a termination for default. I have seen 

them in instances where there is poor performance on one contract, 

41 

where the agency has had them come in to the suspension and debarment official and explain why the company should not be 

debarred permanently because of a poor performance issue. We are 

seeing it more and more. 

So the agencies are becoming more active and following the information that actually is available on FAPIIS on termination for default specifically. 

Chairman ISSA. Mr. Amey, you mentioned BP. I want to broach 

that for a moment, because in any legislation, we want to make 

sure that we get the best value for the American taxpayer. The 

failure of BP to oversee a drilling rig in the Gulf versus the delivery of finished product fuel, wouldn’t you agree that one of the 

challenges, when you get into very large companies, is you can 

have perfect performance over here, no logical reason for suspension or debarment, and you can have, over here, an entity that 

should not get access to do what they were doing again at a minimum until they prove that that bad outcome has been prevented. 

Would you say that bifurcating is inherently part of it? I am 

using them as a large, very separated entity. I could be using Lockheed Martin or Raytheon or any number of other entities who operate in very different areas. It is one of the areas of concern for procurement officers. 

Mr. AMEY. Yes, and there are ways to get around that in the suspension and debarment system. Boeing was suspended, but it was 

only a unit of Boeing, so the whole company was not suspended. 

It was only, I think, their missile division unit and some certain 

individuals that headed up that department. So there are ways to 

kind of massage that issue, especially for the larger contractors. 

But in the case of BP, BP had, in our Federal contractor misconduct data base, BP I think is either one or two in the number 

of instances of misconduct. They had numerous instances of other 

environmental violations, some procurement related and some nonprocurement related instances. 

Chairman ISSA. Yes, and I am not picking on BP other than from 

a legislative standpoint. You were very kind to call it minor 

tweaks. But we are concerned that this kind of legislation happens 

once in a generation. So whatever we leave off or we do wrong, you 

and the oversight, if you will, the sunlight community and the GAO 

and our IGs are all going to be dealing with for generations if we 

miss something. 

That was an area that I think the ranking member and I would 

share that we are not asking for input as much for big companies. 

I think when we look at Raytheon’s space activities in some program versus their being a vendor to Boeing in others, those are so 

big it is pretty easy to go through them. We can have an exception 

at some level. 

But it is really the person who is delivering office supplies that 

is a crook versus the person delivering office supplies that makes 

a mistake, and making sure that we divine the difference, so that 

we are not losing valuable vendors. I am very concerned that we 

are writing thinking about big companies. I want to make sure that 

it works for the smallest vendor too, both to catch them when they 

are wrong, but not over-punish them when it is in fact a benign 

occurrence. 

42 

Mr. AMEY. That is where the flexibility is needed in the system, 

whether it is within your board or within the individual suspension 

and debarment offices, to look at the facts before them, look at the 

record that they received from the other oversight agencies within 

the Federal Government, talk to the company to make sure that 

you have a fair, level playing field. 

I think actually with the consolidation you may actually find you 

are going to get more of that. A few years ago I talked to a suspension and debarment official and he said, if I would have known 

that other agencies had entered administrative agreements with 

this same company, I wouldn’t have been the fourth. So at that 

point, there wasn’t a sharing of information that was helpful to realize what the full record and the track record of that company 

was. 

Chairman ISSA. Mr. Neumann, the proposal Mr. Amey gave of, 

if IGs were able to make direct referrals and that they were immediately considered, at least for suspension, figuring 74 major IGs 

and, as we consolidate, the understanding, do you believe that that 

would be helpful to the process, to essentially empower IGs to 

make findings due to their audits? 

Mr. NEUMANN. Yes, we do. You saw in our 2011 report that 

agencies with active programs often got referrals from the IG. So 

they are very important to the referral process. 

Chairman ISSA. Ms. Styles, having been at OMB, there is an 

OMB think, which is, let us manage it, we can manage it. How 

much should we let to Office of Management and Budget and others, versus how much do we have to put strictly into legislation, 

in your opinion? 

Ms. STYLES. Since the ISDC was created by executive order, it 

would probably be helpful for that to be in statute. I do think because OMB effectively manages the FAR Council and the non-procurement rules, which means the grant process as well, that they 

are the right place to make consistent government-wide changes 

that need to happen to the rules and processes and tools. That is 

the only place it can really happen from a consistent basis. 

Chairman ISSA. Do you see any conflict in essentially secondguessing the grant process and exceptions to suspension and debarment? Do you see that it can be bifurcated at OMB sufficiently that 

you are not sort of encouraged to get the money out there, and at 

the same time encouraged to spend it well, and at the same time 

being pushed for bad actors? 

Ms. STYLES. The management and budget processes over there 

have been bifurcated for a long time. So I think they run pretty 

well separately in terms understanding their roles and responsibilities there. 

I do think that the procurement and the grant processes need to 

be put together, which I know is part of your legislation. It makes 

no sense whatsoever to have two different processes that are absolutely inconsistent for the same suspension and debarment process. 

Chairman ISSA. My time is expired. I will comment, strictly for 

the record, that one of the challenges that I think we face is that 

when you define something as a grant more broadly, not just suspension and debarment, versus procurement, you often go from a 

system that does a really good job of saying, you have to justify the 

43 

winner to a beauty contest with grants. That is a separate problem 

for this committee to make sure that grants are as objective as possible, rather than subjective. 

But that is another hearing. And I am told next we go to Ms. 

Kelly. 

Ms. KELLY. Thank you, Mr. Chairman. Good morning. 

Mr. Neumann, you have looked at a number of agencies with a 

variety of suspension and debarment programs. I would like to talk 

to you about what you have learned about best practices. Your 

2011 report notes that agencies with the most suspensions and 

debarments have dedicated full-time staff. Should all agencies have 

full-time staff to manage their suspension and debarment programs? 

Mr. NEUMANN. Not all the agencies necessarily have full-time 

staff, but they do have dedicated staff that are tasked with looking 

for and considering cases for suspension and debarment. 

Ms. KELLY. So even though they are not full-time, that is the 

only thing they focus on, you are saying? 

Mr. NEUMANN. They do have other duties, but they do spend a 

portion of their time doing that. The main agencies we looked at 

in 2011 did have full-time staff. But our characteristic that we 

thought was important to note was that they dedicated program 

and staff with full Management commitment. 

Ms. KELLY. The report also mentioned that agencies with the 

most suspensions and debarments also had detailed policies or 

guidance involving the suspension and debarment process. What do 

you feel are the key policies that lead to an active S&D program? 

Mr. NEUMANN. There are many different policies and guidance 

out there at each of the agencies that are unique to the agency. It 

allows people in the agency to understand who to refer cases of 

contractor misconduct or serious poor performance or faulty appropriate officials. So those policies and procedures went beyond what 

is in the FAR to actually implement it. So someone at EPA knows 

exactly who to refer the case to. 

Ms. KELLY. Okay, thank you. You indicated that agencies with 

the most suspensions and debarments also have an active referral 

process. What are the elements of an active referral process? 

Mr. NEUMANN. For example, in DOD, we looked at 2012, we 

looked a little more deeply at the four components at DOD, we 

found that they actively met with the IG community, they trained 

contracting officers and other officials that had access to contractor 

records to get referrals. And they coordinated with the Department 

of Justice. 

Ms. KELLY. Okay. Lastly, your statement also mentions other efforts underway to improve coordination of suspension and debarment programs. Can you please elaborate on those? 

Mr. NEUMANN. We were pleased to see that OMB had taken action to direct agencies to participate in the Interagency Suspension 

and Debarment Committee. That committee is only as effective as 

its member agencies’ participation. So that is very important. I 

think that is one of the key things to having a system of suspension and debarment, is having that coordination between the agencies, so that they can coordinate on many things, including sharing 

44 

practices, deciding who should be a lead agency and bringing more 

transparency to the process of suspension and debarment. 

Ms. KELLY. Thank you very much. I yield. 

Mr. CUMMINGS. Would the gentlelady yield? 

Ms. KELLY. Yes. 

Mr. CUMMINGS. I was just talking to the chairman about the 

whole idea of, when you have the debarment and then you have 

suspension. I was just wondering, do you have a situation where 

you, folks are, say for example, it appears that somebody deserves 

debarment. And so those who are making the decision say to themselves, well, you know, we don’t want to be so harsh. So they end 

up giving them the suspension. In other words, if it sounds like 

somebody should be debarred, do they have longer suspension? Do 

you follow me, Ms. Styles? 

Ms. STYLES. Yes. So most agencies, DOD, GSA, have been dealing with this through show cause letters. So instead of suspending 

a company, because if you suspend the company it becomes public, 

their stock prices drop, and a lot of times suspension and debarment officials have only read an article in the paper, or they don’t 

feel like they have enough facts in a particular situation. 

So they have created their own process. They issue a show cause 

letter, which is not a suspension, and they ask the company to 

come in and tell them what is going on. 

Mr. CUMMINGS. And this is all private, right? 

Ms. STYLES. Yes, sir. 

Mr. CUMMINGS. Okay. So then the company comes in and they 

talk about what the issue is and then they either let them go or 

what? 

Ms. STYLES. They oftentimes have actual filings. So it depends, 

the process varies by agency. Some of them may require an actual 

filing with the agency, some of them allow you just to come in and 

discuss the issue, make a presentation in person. Some agencies 

have both. 

At that point in time, the suspension and debarment official decides whether he wants to go ahead with an official suspension or 

proposed debarment process, or if he believes the company is presently responsible and usually he will give the company a letter 

stating that they are presently responsible. 

Mr. CUMMINGS. Just one last thing. Talk about communications 

between agencies. Mr. Amey, you were talking about that. How 

much communication do we have between the agencies? Then I will 

finish. 

Mr. AMEY. My experience is that it was very little until we got 

the FAPIIS data base. But even then, are we getting the right and 

the quantity of information that we need in there for the contracting officers as well as the suspension and debarment officials, 

to make the proper rulings. 

Mr. CUMMINGS. Thank you, Mr. Chairman. 

Chairman ISSA. Thank you. 

We now go to the gentleman from Tennessee, Mr. Duncan. 

Mr. DUNCAN. Thank you, Mr. Chairman. 

Mr. Amey, in every industry, the more it is regulated, the more 

it ends up in the hands of a few big giants, because the little guys 

just aren’t able to get the contracts or the favorable regulatory rulVerDate Aug 31 2005 15:48 Jul 09, 2013 Jkt 000000 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 C:\81744.TXT APRIL
45 

ings or various other things, or comply with all the rules and regulations and red tape. We end up with this big government, big business duopoly. We see that now in the Dodd-Frank law, because it 

was passed to get back at some of the big Wall Street banks and 

financial firms. Yet over 200 small banks have gone out of business. 

I noticed in your testimony you say large contractors have a financial means, plus high-priced attorneys that enable them to negotiate an alternative to suspension or debarment. The possibility 

of delays, litigations and reductions in competitions can mean the 

difference between the maximum penalty and a lesser sanction. As 

a result, large contractors have an unfair advantage over smaller 

contractors when it comes to avoiding suspension and debarment. 

What do you think the Congress can do to prevent or rectify this 

problem of too big to suspend or debar, this favoritism that is going 

toward the big giants? 

Mr. AMEY. I think the regulations that we have in the FAR will 

work if they are utilized properly. There is a provision that allows 

for waivers or compelling reasons determinations. So at that point, 

even a suspended or debarred contractor can still get new business. 

And we saw it with Boeing, during their suspension, they received 

multiple waivers. 

So if it is a large contractor and we do need them for the competition, then at that point the government can get around it. But 

at least they have the safety that they have been suspended, but 

we are going to grant them a waiver and if so, I think that waiver 

or justification should be publicly available so that we can all see 

it. 

When they are too big to suspend or debar, it is a problem. When 

MCI WorldCom was suspended, their suspension was lifted just 

days before the next big huge national telecommunications contract 

was awarded. When I called people within the agency, they said, 

we needed them to compete. So at that point, we have seen some 

tradeoffs in the system. 

Small businesses are at a disadvantage because mainly they are 

operated by a small number of operators, owners or have a small 

number of employees. So it is more difficult for them to take action, 

like in a large business where you can let go an executive or managers or whoever it may be that was at fault. We just don’t see that 

with small or mid-size contractors. And they don’t have the legal 

resources to fight, as Ms. Styles mentioned, of going in, receiving 

the show cause letter and then going in and doing what they need 

to do to protect their business. Unfortunately they are not in the 

same position as a large contractor with the resources they have. 

Mr. DUNCAN. Well, I hope that we keep that in mind as this legislation progresses. But before my time runs out, I want to ask you 

about something else. In your testimony you talk about the Inspector General for Afghanistan reconstruction and how all these companies and people that were still getting taxpayer money even 

though they had actively supported terrorism in Afghanistan and 

you mentioned the December letter sent by a bipartisan group of 

Senators and the January 2013 reply from Secretary McHugh, in 

which he said there was not enough evidence. 

46 

What is the situation since then? Have you looked at any of 

those to see if there was enough evidence? That sound terrible, to 

keep giving taxpayer money to companies and people that are actively supporting terrorists. 

Mr. AMEY. You are correct. We haven’t looked at it because it 

hasn’t been publicly available. I have had some meetings with people in SIGARs office. And they are still upset that the SDO within 

the Army wasn’t acting on these. I do think that this is where, 

when the Secretary of the Army responded, he said, well, we didn’t 

have enough evidence based on the evidentiary standard for debarment. But he didn’t refer to whether there is enough evidence that 

for the lower standard for suspension. 

So the fallout of that has been that the SIGAR has actually 

asked for suspension and debarment authority. And that is another 

issue that this committee may want to consider. But should IGs, 

as kind of the investigator, the prosecutor, the judge and the jury 

then, have that much power. SIGAR, at least SIGIR, the Special 

Inspector General for Iraq Reconstruction, are a little different. We 

are spending billions of dollars very quickly in a contingency environment. 

Therefore I think it is worth putting on the table on whether 

they should have some kind of authority when they find certain 

evidence against contractors in those environments on whether 

they should have the authority to hold those contractors accountable. 

Mr. DUNCAN. Thank you very much. 

Lastly, very quickly, Mr. Neumann, why are there so many persistent problems with the SAM data base? Are those being corrected, do you think? A lot of complaints, apparently. 

Mr. NEUMANN. We have seen problems in the past with the data 

base from excluded parties, and this continues in the SAM. We understand that there are numerous technical glitches, including inability to search on DUNS number, which is a unique identifier for 

companies. So that is something that definitely needs to be corrected. We hope that GSA is working toward that. 

Mr. DUNCAN. We spend fortunes on all this technology, yet we 

seem to just take anything, if somebody says computer glitch, we 

seem to accept things that we should never accept. 

Thank you, Mr. Chairman. 

Chairman ISSA. Thank you. And perhaps we should let the NSA 

do it. They seem to be able to deal with big data bases. 

[Laughter.] 

Chairman ISSA. Ms. Styles, following up just on what the gentleman had asked, the proposal of special IGs dealing in foreign nations being able to essentially bypass ordinary due process and be 

the judge, jury and hangman, what do you think about that from 

OMB? Is that a process that you would support, essentially support 

Congress agreeing to in the case in which you are dealing with an 

overseas special operation generally in relation to a war zone? And 

I might mention that Abraham Lincoln would have supported it. 

Ms. STYLES. I actually think the Army does it overseas as well. 

I think they have special people overseas to do it. In that situation, 

and I think many of your civilian agencies would tell you the same 

thing, they know and understand the situation, and their contracVerDate Aug 31 2005 15:48 Jul 09, 2013 Jkt 000000 PO 00000 Frm 00050 Fmt 6633 Sfmt 6633 C:\81744.TXT APRIL
47 

tors are better, and they are able to assess the situation and deal 

with it in a more appropriate way, because they are there and they 

are close to that contractor. 

Chairman ISSA. Thank you. The gentleman from California. 

Mr. CARDENAS. Thank you very much, Mr. Chairman. 

The Federal Acquisition Regulation requires Federal agencies to 

ensure that contractors have a satisfactory performance record and 

a satisfactory record of integrity and business ethics before they 

make purchases and award contracts to these individuals or companies. Does the GSA suspension and debarment data base document a contractor’s past performance record on prior government 

contracts? 

Mr. NEUMANN. There is some past performance information 

available. But there is information on FAPIIS, rather, that includes 

the administrative agreements and other things. But GSA does 

manage these data bases. I can get back to you with more specifics 

on that. 

Ms. STYLES. There is a past performance information system 

data base that is just not publicly available. So it is part of the system that they are putting together. But it is not information that 

is made publicly available, it is only available to contracting officers. 

Mr. CARDENAS. Are we dealing with one system or various systems? 

Ms. STYLES. It is one system that we put together collectively. So 

it is all trying to be put into this system for award management. 

Mr. CARDENAS. So different departments could actually know 

who is a good actor, bad actor, et cetera? 

Ms. STYLES. Yes, sir. 

Mr. AMEY. But there are questions about past performance information on whether it is genuine and helpful? In the past we have 

heard some examples of great inflation for past performance, and 

contracting officers will give the minimum grade that doesn’t get 

them sued or involve litigation. So at that point, and I think it is 

either a GAO or recent IG report that even talked about the past 

performance information isn’t where we really need it to be to be 

very helpful to contracting officers. 

Mr. CARDENAS. And when you are talking about the government 

having to be concerned with being sued, once again, it was mentioned earlier, the bigger the corporation you are dealing with, the 

higher likelihood that they are going to fight with lawyers, et 

cetera and trying to protect their name. 

Mr. AMEY. The larger a corporation and also it depends on the 

government’s reliance on those contractors. There are a lot of contractors that we are giving hundreds of millions of dollars to, and 

there are a few that we are giving billions of dollars to annually. 

So at that point it is very difficult to hold those contractors accountable when you need them and different agencies need them 

on a daily basis. 

Even with suspension and debarment, a contractor can still work 

on their existing contracts but they are not permitted to get new 

contracts. There are even questions there when there are options 

or extensions of those should suspension and debarment, the rules 

say it can apply and they can exercise it. But there are questions 

48 

on does that hurt government mission in the fact that you are taking someone out of the equation that was there that you are going 

to have a drop off and a learning curve to bring someone else in. 

So at times the system handcuffs the government. 

Mr. CARDENAS. Yes, and the experienced legislators know that 

when you have legislation there is a big difference between the 

words can and shall, a big, big difference. So it is very permissible, 

when the word can is there, and it is open to interpretation. 

POGO has recommended that the contractor performance and responsibility system would be improved if contracting data were 

made public and posted on a public website. Mr. Amey, how would 

making past performance information publicly available improve 

the government-wide suspension and debarment process? 

Mr. AMEY. In multiple ways. I think it would be more helpful actually to the contractor community, because we do see a lot of bid 

protests and bid protests slow down the system. So at that point 

it would be nice for contractors when, if they lose a contract, that 

they are going to know right off the bat before debriefing anything 

else, here is what the past performance ratings were for this specific contractor, for this specific program, to have it publicly available. I would assume that we would see a decline, at least on past 

performance bid protests. 

Also for the public. It is very difficult in the public side to hear 

about contractors who break the law, or violate regulations or, 

whether it is in a government report or in the news media. And 

then continually hear that they are performing well and the government keeps using them. The Army, especially in Iraq, has used 

multiple contractors that have had a laundry list of allegations 

against them. It is very difficult, I think public perception-wise, 

contractor-wise, to feel that we do have a level playing field for everyone in the system, both small businesses, mid-size businesses as 

well as large contractors. 

Mr. CARDENAS. When it comes to resources for holding companies 

responsible for their actions and/or their standard, whether or not 

they are meeting our standard, are your resources increasing or declining to enforce that? 

Mr. AMEY. Mine or the government’s? 

Mr. CARDENAS. Our government’s resources. Because this is a 

process. It takes men and women hours and data bases, et cetera, 

it takes funding for us to be able to defend the government’s position with these multi-billion dollar contracts, well, hundreds of billions of dollars in contracts that go across the board in any given 

year. 

Mr. AMEY. It has kind of been an up and down system. A few 

years ago, many years ago, we cut back on the size of the acquisition work force, which is your contracting officers, which is our first 

line of defense. We have been cutting back on the IG community, 

which, there is return on the dollar for the investment that they 

make of their time in trying to fight waste, fraud and abuse. 

But as government is trying to make ends meet, I don’t see resources increasing in those areas, and in a lot of instances, they are 

probably going to shrink to minimal levels. So it is something that 

we have to be wary of. 

49 

Mr. CARDENAS. So less resources means it is harder to actually 

hold the contractors accountable? 

Mr. AMEY. It can be, but that is where the consolidation of all 

these systems is trying to make it a little easier by having kind of 

a one stop shop where a contractor can go to get information on 

past performance, get information on present responsibility, track 

records, administrative agreements, which should be, in this day 

and age, is we are trying to automate the process to make it a lot 

easier, so it is a lot less staff time, a lot less paper shuffling back 

and forth. 

But as people have mentioned, the same system has increased a 

lot in money, it is over budget and behind schedule. It has even 

been shut down because it wasn’t working efficiently. So at that 

point even the systems that we are creating aren’t working. I actually think the SAM system is a step back. The EPLS worked well 

if you knew how to use it. Now I even struggle, and I use these 

systems on an everyday basis, trying to find who is excluded in the 

new SAM system. 

Mr. CARDENAS. Thank you, Mr. Chairman. I yield back. 

Chairman ISSA. Thank you. The question for the committee 

might be, did we debar the person who failed on the SAM system. 

[Laughter.] 

Chairman ISSA. We are not going to say IBM publicly. I promise 

you. 

We now recognize the gentleman from Utah, Mr. Chaffetz. 

Mr. CHAFFETZ. Thank you, Mr. Chairman. I appreciate your 

holding this, and thank you all for being here. 

Mr. Neumann, I want to ask you, the GAO did this great study 

back in 2007, April 19th of 2007. It says, thousands of Federal contractors abuse the Federal tax system. And right at the beginning, 

right at the very top it says, roughly there are $7.7 billion owed 

from Federal contractors that had unpaid Federal taxes. It went on 

to say that that was an understated number and gave some reasons why. 

Is there any sort of update to this? Is there a way to look at this 

on a more regular basis since the 2007 report? 

Mr. NEUMANN. I am not aware of any recent work that GAO has 

done to update that, but I can check and get back to you for the 

record. 

Mr. CHAFFETZ. That would be real helpful, because Mr. Chairman, it says in the second sentence, specifically, 27,000 DOD contractors, 33,000 civilian agency contractors, and 3,800 GSA contractors owed, then if you tally them up, about $7.7 billion. Mr. Amey, 

I think you wanted to add something? 

Mr. AMEY. If I may. Those reports were great. This issue has 

even come up recently with going after government employees that 

haven’t paid their taxes, and it recently came up with contractors 

that haven’t paid their taxes. That has been one of the systems 

that they have said, okay, then we need probably mandatory disclosure or mandatory suspension or debarment, is if you are a tax 

cheat. 

So that has been kind of the knee jerk reaction on the Hill. But 

it would be nice, even from my perspective, to get an update on 

50 

those reports, to hold those contractors accountable in the present 

day. 

Mr. CHAFFETZ. Yes, and I would share with the panel, as the 

chairman knows, we passed out two bills, one that requires Federal 

workers, if they haven’t paid their Federal taxes, they should be 

prohibited from getting jobs and should be relieved of their duties 

if they are unable to get on any sort of payment plan. And also specifically, we did one very specific to contractors. If they haven’t paid 

their Federal taxes, they should be prohibited from getting additional Federal contracts. 

Mr. AMEY. And there were some issues with those reports, because I think they required IRS cooperation, which isn’t always 

easy, to be able to get access to those records. But also, in the responsibility determinations, there are annual—— 

Ms. STYLES. I was going to add, there is an annual certification 

now. So what happened since that report is that there was added 

an annual certification. Actually you will find in SAM, you can pull 

it up for any contractor, that makes a certification that they don’t 

have any delinquencies over $3,000. So that has been helpful. People have to fill it out, and they have to go and look and know and 

realize that they have to go pay it before they can become a contractor. 

Mr. CHAFFETZ. Let me shift gears, if I could. I want to talk about 

the Department of Defense, where so many of these big problems 

are. My understanding is that DOD has set a goal of completing 

suspension and debarment referrals from the Inspectors General 

within 30 days. But the reality is these are taking close to 323 

days, is the last average that we saw. So here you have the Special 

Inspector General, Mr. Chairman, on September 18th, 2012, sending us a letter saying that we have contractors that are affiliated 

with the Haqqani network, the Taliban, and/or al Qaeda, we as a 

responsible group here, the Special Inspector General for Afghan 

Reconstruction, sends this over to the Department of Defense and 

says, here are the problems. 

And yet, not a one of them gets reviewed, let alone debarred, 

along this process. So how do we solve that? Why not just give the 

SIGAR, in that type of setting, given the fact that we are funding 

the very terrorists that are killing our men and women, instead of 

dealing with the bureaucratic mess that is the Department of Defense? Mr. Amey? 

Mr. AMEY. It is a really good question. I think there is a fear factor involved there with the checks and balances in the system, to 

make sure that the IG isn’t the one making the findings, and then 

also the one making the decision on the future viability of that 

company or individual. 

Mr. CHAFFETZ. My understanding is, Mr. Chairman, the Department of Defense has one person dedicated to this. So we have tens 

of thousands of Americans serving overseas and yet we have billions of dollars going out the door and we have exactly one person 

to review this. Why do we allow that person to just ignore what 

the SIGAR is able to find is pretty appalling. 

Mr. AMEY. I hope in my best dreams that they are not ignoring 

the problem. It is not an easy process. 

51 

Mr. CHAFFETZ. Yes, but if we were talking about the Army, by 

the way, just the Army, and this person sits in the United States 

of America, doesn’t even sit in Afghanistan. 

Mr. AMEY. I believe there are some suspension and debarment 

officials within Iraq and Afghanistan. 

Mr. CHAFFETZ. If you can name one, if you can show me an 

email, point them out to us, get them back to us. Because it is not 

happening. And it is a travesty. 

Mr. AMEY. I can’t disagree with you more that 323 days seems 

overly excessive. So at that point I hope there is a way to turn 

these around. That is one of my suggestions for the Suspend Act, 

is to get referrals. At that point, if there is an argument over the 

evidence that the SIGAR provided to the Army SDO, but at least 

we should have some kind of decision on why it is taking so long, 

some kind of transparency in the system to report back on, are you 

considering them, have you made no decision at all. 

Mr. CHAFFETZ. Mr. Chairman, as I yield back, perhaps what we 

should do is give the Department of Defense an opportunity to 

challenge it. But if unchallenged within 30 days, then they do go 

under suspension and debarment, make the Pentagon probatively 

say no, we want to keep this person to make a case for it, we just 

can’t keep taking these chances. 

I appreciate the generosity of time and yield back. 

Chairman ISSA. I thank the gentleman. 

We now go to the gentlelady from Illinois, Ms. Duckworth. 

Ms. DUCKWORTH. Thank you, Mr. Chairman, and thank you so 

much for holding this hearing today. I applaud your efforts to bring 

more accountability, efficiency and transparency to the Federal 

contracting process. 

The conversation we are having today is absolutely critical for 

fiscal responsibility of taxpayer dollars and good government oversight efforts. I am very much looking forward to working with you 

both on improving contracting practice at civilian agencies, which 

is the focus of today’s hearing, and hopefully taking a closer look 

at the problems at the Department of Defense. 

The wars in Iraq and Afghanistan have showcased some of the 

difficulties in managing contractors who perform government contracts overseas. So far, we have talked about debarment and the 

lack of debarment for folks here in the United States. But as my 

colleague, Mr. Chaffetz, pointed out, we have a lot of contractors 

overseas who are also in need of debarment. For example, in 2007, 

the State Department came under criticism for its handling of the 

prime contractor, First Kuwaiti General Trading and Contracting 

Company, which was tasked with building the American embassy 

in Iraq. 

This committee raised concerns at that time about the poor workmanship performed by this contractor, as well as its past record of 

corruption, which may have been purposely overlooked. Suspension 

and debarment is one tool that the government has at its disposal 

to help ensure accountability when dealing with contractors. However, a tool like this is only effective if it is actually used. 

Mr. Neumann, GAO’s recent findings shows that there has been 

little use of suspension and debarment against military contractors 

with poor performance records and documented ethical violations, 

52 

especially overseas. Are there special circumstances when we are 

dealing with these overseas contractors that might account for 

that? 

Mr. NEUMANN. At the time of my review, we did find that the 

Army and other DOD components had good processes and procedures in place. But they do have limited staff. They have dedicated 

staff, but they get thousands of referrals every year. So that is 

something that I would defer to the Army as to what accounts for 

the time that it takes them. 

But it certainly seems that they should be investigating all leads. 

We found that they did do that in the cases we looked at, when 

they had sufficient evidence that there was misconduct or some 

other wrongdoing. 

Ms. DUCKWORTH. Have they actually debarred anyone overseas? 

Ms. NEUMANN. I don’t recall if they had any specific cases. I 

think there were some that involved overseas contractors when we 

looked at 75 cases. I would have to check our files to see how many 

of those, if any, were for overseas contractors. 

Mr. AMEY. I believe there is one that I know of. I think there was 

a company, Agility, that has been suspended. I think it is even involved in current, ongoing litigation. But you raise a good point, 

and it was raised by the Commission on Wartime Contracting, I 

think they held a hearing on it, and some of their annual reports 

and their final report on the under-utilization, in contingency environments of the suspension and debarment system. Again, justifications for declinations, of holding contractors accountable. They 

did present in the report the unique circumstances that continency 

contracting presents. 

And then in the case of First Kuwaiti, they were the largest contractor that was building the Baghdad Embassy. SO it wasn’t like, 

if you were, they could continue to work on that contract, but there 

would be some real questions about being able to use them in that 

environment where they have the logistics there, they have the 

people there. 

The one thing you do have to weigh in all this is fairness and 

due process for the contractors. But it is also fairness for the Federal Government, because you don’t want to eliminate competition 

or place the government at a disadvantage by ruling out contractors. And there is only a certain number of contractors that can do 

big picture work. That is unfortunately the way we bundle contracts now. 

Ms. DUCKWORTH. But that is how we got to $800 million overpaid for food contracts in Afghanistan to Supreme. Why do you 

think certain agencies will refuse to initiate sanctions against a 

company that flagrantly disregards the law? I am thinking specifically of the case of Academie Blackwater, which continued to be 

used as government contractors after criminal investigation by the 

U.S. Attorney at the Eastern District of North Carolina found out 

they engaged in repeated systematic violations of U.S. laws and 

regulations that protect national security over an extended period 

of time. At what point do you say, well, you are the only game in 

town so we are just going to continue to work with you even though 

we know you are breaking national laws? At some point you have 

to stop. 

53 

Mr. AMEY. You are correct. It ends up being a question of competition for the Federal Government. But it also ends up being a 

question of present responsibility. What you are looking at is this 

time. The time you get a referral and you are looking at a contractor, or a grantee and you are saying, are they currently, presently responsible. Usually what happens is, once an allegation 

comes out against the company, they fire people, they bring in a 

corporate compliance monitor, they probatively self-police and do 

the best they can to mitigate any further, and mitigate a suspension or debarment because they don’t want that to hurt their bottom line. 

So a lot of times what SDOs are looking at is only, are you currently responsible now. Sometimes it may not matter what they did 

a week ago or six months ago. 

So again, suspension and debarment is not a punishment and 

therefore the SDOs are somewhat limited. Unfortunately I do think 

that we buy too much into the promises that are given by the contractors, and I would like to see the use of suspension and debarment. If we do need them again, then grant them a waiver. And 

let’s bring them back in and let’s justify it. They’re suspended from 

future contracts, but we need them and here is why, and let somebody justify and go on the record, so at least then we know why 

contractors with poor performance or that have defrauded the government are still receiving taxpayer dollars, rather than having us 

all sit here and scratch our heads. 

Ms. DUCKWORTH. Thank you, gentlemen, Ms. Styles. 

Mr. WALBERG. [Presiding] I thank the gentlelady and recognize 

myself for my five minutes of questioning. 

Ms. Styles, you stated in your written testimony that the actual 

process of suspension and debarment varied widely across Federal 

agencies. You also mentioned that the lack of access and transparency not only creates an impediment for companies that are 

working to improve ethics and compliance programs, but also creates issues of fairness. 

Can you describe for us further and suggest some changes that 

might be made to improve this process? 

Ms. STYLES. Absolutely. I think what you find is you have a written system, you have the Federal Acquisition Regulation and you 

have non-procurement rules. The problem is that the active suspension and debarment agencies over time have really created 

some flexible processes to get information and to be fair to contractors. But if you are a company that either is proposed for debarment or suspended, or you are a company, believe it or not, lots 

and lots of companies probatively go in to suspension and debarment officials to talk about compliance and ethics issues. 

So if something happens at their company, if there is an article 

in the newspaper, if they are under investigation, the first thing 

they do and the first thing we recommend is that they go in and 

talk to their suspension and debarment official about how they discovered the activity, how they detected it, how they fixed it, how 

they remediated, what they have done to enhance their compliance 

programs. So there is a lot of interaction that is going on between 

the active suspension and debarment offices and the contractors to 

recognize the fact that some bad things can happen in good compaVerDate Aug 31 2005 15:48 Jul 09, 2013 Jkt 000000 PO 00000 Frm 00057 Fmt 6633 Sfmt 6633 C:\81744.TXT APRIL
54 

nies who want to improve compliance programs, and you also have 

situations with medium size companies and small companies that 

get into trouble, didn’t realize that they needed to have a compliance program, that they needed to have an ethics program. 

So they actually work with the suspension and debarment officials through these unwritten practices and using the tools like administrative agreement to make the companies better contractors. 

Mr. WALBERG. How different are the procedures between various 

SDO offices? 

Ms. STYLES. They are vastly different. It is like night and day. 

Mr. WALBERG. Describe an example of working with two different 

entities on very similar issues. 

Ms. STYLES. So you could work with the EPA or the Army, which 

has a more hearing-like process, they have a suspension and debarment official that actually acts more like a hearing officer. They 

have people that work within the office that present the case and 

that work with them, a lot of times the inspector general is involved in presenting the case. 

You have agencies with significantly more informal practices. So 

the General Services Administration, the Small Business Administration, in many respects the Air Force or the Defense Logistics 

Agency, they are much more informal. They will issue a show cause 

letter for you to come in, they will ask for some written statements. 

So the practices, I think the difficulty with the system right now 

and the way that it can be improved is by putting a lot of these 

unwritten policies, procedures, practices, tools into the FAR, into a 

place that anybody can understand they are available, even the 

other civilian agencies that may not know that there is a show 

cause letter or that you could have an administrative agreement. 

So that even a medium or small company would have fair access 

to the system and understand. 

Mr. WALBERG. So you would say consistency would be very helpful for contractors? 

Ms. STYLES. Absolutely. It would be very helpful just to be able 

to understand the process. Because you can’t read the rules and 

understand the process right now. 

Mr. WALBERG. Seems common sense. Let me follow up. In your 

written testimony you mentioned you have confronted a number of 

problems for contractors under the current lead agency process. 

What were the problems and how should we address them? 

Ms. STYLES. The main problem that we see is that there is no 

actual written in the FAR articulation of what a lead agency is. So 

one agency will take the lead for the entire Federal Government. 

So one agency makes a decision if a contractor or individual will 

be suspended or debarred for the entire Federal Government. As 

you know, many contractors work with a variety of agencies. 

It is hard to understand how that actually happens. I have seen 

it in process where one agency sends an email to all the other 

agencies on the Interagency Suspension and Debarment Committee, telling them, I am taking lead agency, if you are interested 

or if you think you should take lead agency, let me know. It is not 

something that we as contractors have a lot of access or information to. 

55 

But what is important are the companies that want to 

probatively go in and talk to their suspension and debarment official when there is an issue. That is exactly what you want. You 

want early engagement between the contractors and the agencies. 

You can’t figure out on your own which lead agency you should approach. 

So we have had situations where we have approached the agency, where a contractor has the most, highest dollar value contracts. 

We assumed we were the right agency. We had extensive discussions and filings with the suspension and debarment official only 

to have a completely different agency debar the company the next 

day for the same issues. So that agency didn’t tell the other agencies that they were considering the suspension and debarment matter of this particular company. So all the effort that this company 

went through to prove what they had done to remediate was for 

naught, because then they were publicly suspended. 

Mr. WALBERG. Okay. Thank you. My time is expired. I recognize 

Ms. Norton. 

Ms. NORTON. Thank you, Mr. Chairman. I appreciate this hearing. 

Mr. Amey, I have a question for you based on a report from the 

Commission on Wartime Contracting 2011. The only experience I 

know personally about debarment and contracts comes from my 

own experience as Chair of the Equal Employment Opportunity 

Commission. We worked with the Office of Federal Contract Compliance. 

Lots of folks wanted debarment and suspension and it rarely 

happened. But actually the OFCCP was very effective in combating 

discrimination because it did a lot of monitoring and nobody wanted to lose a contract or be held up as somebody who discriminated. 

So it did a quite effective job. 

I was looking for some, recognizing that debarment, for example 

is a kind of nuclear weapon, I was trying to think of something 

short of that that would get people’s attention. I note that this 

Commission on Wartime Contracting from a couple years ago recommended something that seems to me to be very mild and at the 

very least, it would have occurred, they recommended that the 

State Department, because they were talking about State Department funds, document in writing their justification for overturning 

from debarment officials the people whose job it is to evaluate this. 

Their recommendations were suspension or debarment. Put it in 

writing, and in writing you might have thought that if you were 

going to overturn it, that that would signal not only to them but 

to other contractors, you better watch out. It is not as easy as you 

think. 

But I understand that the State Department responded that simply putting in writing their reasons, and surely they had reasons, 

would have been overly burdensome. So I am flummoxed at that. 

Do you agree that such a requirement to put in writing why you 

are overturning a recommendation of those closest to the facts 

would be unduly burdensome? 

Mr. AMEY. I do not agree with that statement of the State Department. I would like to even see it expanded further, that we see 

summary data, at least, at a minimum, but all data from those 

56 

SDOs offices on what it went through, what was presented by either the government or by the contractors that made them make 

any decisions, whether it is a declination or not. I think even if 

they are going to suspend or debar a contractor, I think there 

should be some kind of public display of that information so it does 

put contractors on notice. 

I think it would actually help in the sense that it would act as 

a deterrent. 

Ms. NORTON. Surely, in writing, to see they will call you out. 

Particularly since this information is already available. It is not 

like they would have to gather it, assuming they did not make an 

arbitrary decision. They simply have to put down the data, as you 

indicate, and the reasons for their decision. 

Mr. AMEY. Correct. 

Ms. NORTON. Are you aware of why they would have considered 

such a requirement, or the other two witnesses, why they would 

have considered a requirement burdensome? Would either of you 

consider such a requirement burdensome? 

Ms. STYLES. Most of the suspension and debarment agencies that 

I work with do have something in writing to the record about what 

they found. 

Ms. NORTON. Sure. They will make arbitrary decisions. So the 

notion of putting it out there as a possible deterrent, especially 

when, as you have indicated, it is difficult to impart. Really in the 

case of the State Department, it amazed me, you were talking 

about $200 billion in contingency contracting and about a quarter 

of it, $60 billion, more than a quarter of it, was attributed to fraud 

and waste and abuse. They should have been reaching out for some 

way to correct this. But I suspect they were left with nothing to 

do except continue as they were going along. 

Do you see the same kind of waste in taxpayer dollars if this continues, and would you take action to see to it that this recommendation of two years ago from the Commission, where it was 

in fact implemented? 

Mr. AMEY. Certainly. Unfortunately I think we see a lot of the 

commissions and panels that are created produce hundred-page 

books and reports and then they are not acted upon. There are a 

lot of recommendations and I know that there were some efforts 

last year to pass, especially in the Senate, with Senator McCaskill 

and Senator Webb, to pass a lot of the recommendations that were 

in the Wartime Commission’s final report. And Unfortunately a lot 

of them, some got into the Defense Authorization bill but some fell 

on deaf ears. 

It is an open issue and that is the kind of information that you 

hope to bring together, especially with the open process that the 

Suspend Act has had. I do applaud the chairman for the way that 

you have gone about putting it out and having a discussion draft 

that people can comment on. I think it is going to end up at the 

end of the day a better piece of legislation, because it will add a 

lot of debate to the current draft bill to where we can pull on the 

other experiences, the IG reports, GAO and what other commissions and panels have recommended. 

Ms. NORTON. Ms. Styles said the information already exists. So 

Mr. Chairman, I will expect to see that information duly available 

57 

and recorded, since there is not a compilation of new information. 

I believe calling people out, expecting things to overturn what 

those closest to the facts have said is the least, otherwise you leave 

the impression you are making arbitrary decisions. 

Chairman ISSA. [Presiding] Would the gentlelady yield? 

Ms. NORTON. I would be glad to, Mr. Chairman. 

Chairman ISSA. I agree with the gentlelady that this is an issue 

that this bill may be timely to send some form of a message in. Ms. 

Styles, from your experience, would it be helpful if either through 

the letter of a new law or through, if you will, the report language, 

we made it clear that the harvesting, maintenance and future reference for this kind of material would be essential to the evaluation? 

Ms. STYLES. Absolutely. I think the agencies need to keep an administrative record. 

Chairman ISSA. Not agencies. Harvesting collection, in other 

words, centralizing. I think back to no policeman in Detroit would 

fail to want to know that there was an arrest or investigation in 

Cleveland, even if it didn’t lead to an indictment. That is sort of 

the way I view it, is that information, even if you can’t use it in 

court, is valuable to know whether you have somebody you need to 

look at more thoroughly. 

Ms. STYLES. Absolutely. You can take a look at the EPA suspension and debarment opinions that are actually public and published 

and it helps you as a practitioner and it should help other people 

understand how the decisions are made and where the lines are 

drawn. So to the extent you can make information public without 

harming companies that the suspension and debarment official actually decided didn’t do anything wrong, that is always the risk 

that I see. 

Chairman ISSA. Thank you. I thank the gentlelady. 

We now go to the gentlelady from California, Ms. Speier. 

Ms. SPEIER. Mr. Chairman, thank you. 

I am flummoxed in some respects that this issue has been 

around for as long as it has. We have really done very little to address it. It is a system that is basically voluntary in terms of suspension and debarment, one in which the entity that has responsibility and has limited resources and an incomplete and unreliable 

data base. And we wonder why it is not working. 

This is really documented from, I believe, the General Accounting 

Office. Here is Boeing. This is no small company. Big company. 

Boeing has just charged the taxpayers of this Country $2,200 for 

a bearing sleeve that retails for $10. This is metal tube assembly. 

Boeing charged the taxpayers $12,000 and the retail cost is $1,100. 

Now, at some point, a big company like Boeing needs more than 

a slap on the hand. Now, the likelihood of us debarring Boeing is 

pretty remote, correct? But as long as suspension and debarment 

are really not options, what is going to get the attention of a Boeing? To me the only thing that is going to get the attention of a 

Boeing is slapping them with hefty fines. I am curious, Mr. Amey, 

if you have any comment on that. 

Mr. AMEY. Unfortunately I would have to disagree. I don’t think 

fines work. Boeing has a lot of money in the bank, and they paid 

millions of dollars in fines, when they were suspended. They were 

58 

suspended many years ago. That plus a personal conflict of interest 

that occurred with a high senior level official at the Air Force that 

went to work for Boeing in violation of conflict of interest standards, they were fined, and if I remember correctly, it was in the 

$600 million range. 

But since that fine has been paid, there have been multiple spare 

parts horror story reports out by the DOD IG, that has shown that 

they have over billed on spare parts, on screws, nuts, bolts, and the 

products that you just named in the most current report. So it is 

possible to suspend Boeing, even if it is just a portion of Boeing. 

That is what happened when it was suspended before. They suspended their missile division. They didn’t suspend the whole company. But it did prevent at least that division of Boeing, that is a 

very large company, from receiving new Federal contracts. But 

then it was waived. 

Ms. SPEIER. So where are we? 

Mr. AMEY. We are in a position where at least, if you go to suspend them, it is on record, it is, as Ms. Styles said earlier, it is kind 

of a public nightmare for them. It is a problem on Wall Street for 

a company to be suspended or debarred, and it puts everybody on 

notice that, before I award the next multi-million dollar contract to 

Boeing, I need to ask a few questions, I need to make sure that 

their compliance and their performance standards, as well as their 

level of professionalism and integrity, are at the top of the charts. 

Ms. SPEIER. Mr. Chairman, I guess my question is, are some of 

these companies too big to suspend and debar? I think that is the 

situation we are in. Because in the end, even if we suspend them 

or debar them, in the case of Boeing, it was waived. 

I am also concerned, Mr. Amey, maybe you can help me on this, 

John Sopko, who is the SIGAR, recently came to our Congressional 

Watchdog Caucus. It was pretty astonishing. We could have him 

come and speak to us for a full hearing and learn a great deal. He 

said, and with great frustration, that the Army is refusing to look 

at the classified evidence that SIGAR found to support suspension 

and debarment. My question to you, Mr. Amey, is do you think the 

Inspector General should have this authority? How else are we 

ever going to get some kind of accountability here? 

Mr. AMEY. It presents a very unique situation, due to the fact of 

the SIGAR is operating in a contingency operation. So I may separate it from, do we want to grant all IGs the power to suspend or 

debar contractors? I would probably say no. But with SIGIR and 

SIGAR, we have had hundreds of millions of dollars pour into Iraq 

and Afghanistan. The money is being spent very quickly. There is 

a lack of oversight over the money. We are building things that 

aren’t being used, we are building things that are being turned 

over, we are funding the insurgency. 

So at that point, I think there needs to be, if we don’t grant them 

the suspension and debarment authority, I think we need to tweak 

the system to be able to speed it up. Waiting 323 days for the SDO 

to make decisions on referrals is ridiculous. There needs to be more 

consistency in that system and speed in that system. The legislation may get there, and I think there is a point in the legislation 

that talks about this, only involves civilian agencies. But other 

agencies may enter agreements. 

59 

So that may be something where we may want to have SIGAR, 

SIGIR, have a special inspector general for contingency operations, 

whatever it is, mandatorily have to enter into an agreement with 

a board or with an SDO to be able to get those decisions reviewed 

quicker. Because as you mentioned, it is problematic, especially 

when it is overseas money that is just going out the door with very 

little result. 

Ms. SPEIER. Thank you. I yield back. 

Chairman ISSA. I thank the gentlelady, and I think your points 

are good. 

Before you came in, we had multiple questions along this line. 

I think the ranking member and I came to an understanding that 

at least in report language, we are going to have a finding in the 

bill that this needs to be addressed. Whether we address it in explicit language or more, the next time a special IG is appointed, 

these powers must be managed, there will be some agreed-on language. Mr. Cummings and I have come to a general understanding. 

We will work out the details. We would love your input. 

We now go to the gentleman from- you know, you have to sit in 

the front row when you come in early, because Lacy will get ahead 

of you. 

[Laughter.] 

Chairman ISSA. The gentleman from Nevada rather than Missouri. Lacy, I always see you when you come in. The gentleman is 

recognized. Thank you. 

Mr. HORSFORD. Thank you, Mr. Chairman. 

This is actually a very important hearing, and I want to commend you, Mr. Chairman, and the ranking member. Because when 

you follow the money, you see where there can be efficiencies identified and implemented. We desperately need to find efficiencies. 

Contracting is one of the major areas. 

I want to ask, the amount of contracting and grant award dollars have increased from approximately $200 billion in fiscal year 2000 

to over $1 trillion in fiscal year 2012. In 2009, the GAO found 25 

instances in which companies and individuals suspended or 

debarred for committing serious offenses were later awarded new 

contracts. Contracting officials either failed to check the suspension 

and debarment data base before awarding the contract, or if they 

did check it, the data base failed to turn up the name of the suspended or debarred entity. 

So if we had this huge increase in contracts and awards, did we 

have a corresponding increase in the workforce that is required to 

monitor whether or not these are eligible entities? 

Mr. NEUMANN. GAO has done a lot of work looking at the acquisition workforce and certainly has found that there have been new 

challenges there, particularly at certain agencies, in identifying the 

right size and the training skill set needed for the acquisition 

workforce. So that certainly is an issue. 

Mr. HORSFORD. So the POGO actually made a recommendation 

that the ISDC reports to Congress should include summaries of 

size and spending on the suspension and debarment workforce. 

Why is this important? 

Mr. AMEY. We have seen some, first off, the ISCDs first report 

that was due in 2009 was delayed two years. At that point we sort 

60 

of had to sit and wait for it. At least they got the fiscal year 2011 

report out in time. But I think there is an effort, especially with 

the legislation that is on the table with the Suspend Act, is trying 

to make the government more effective and efficient. Currently I 

don’t know what the total number is of SDOs that are in the Department of Defense, that are in the civilian agencies. Earlier there 

was a discussion on there are some full-time, there are some parttime. So that means they are sharing hats. Is that the best system? 

POGO a few years ago even found contractors, the GSA had contractors come in and support their suspension and debarment 

work, doing research and analytical research into the contractors 

that have allegations before them. So there is even a contractor 

workforce that is in this community, which is a little scary. That 

is one of the reasons why we have recommended that we have to 

figure out how much we are spending on this workforce, how many 

people are in this workforce, add consistency to the current system 

to make it run better. 

And then also more than likely, have to put this in the hands 

of government employees, because a lot of the data that is front of 

the SDO office is proprietary or needs to be protected. Therefore, 

especially after the week we have had with NSA and the ties to 

Booz Allen and Mr. Snowden, we do have to at some point ask 

some questions about who is in our workforce and what do they 

cost. 

Mr. HORSFORD. So definitely including that within a proposed 

legislation would be important, a workforce element within what 

we are trying to achieve here. 

Let me ask, 1,300 criminal, civil and administrative instances of 

misconduct for over 170 of the Federal Government’s largest contractors. Out of the information that I was able to glean, what are 

the largest type of offenses that we are seeing contractors making? 

And specifically I want to know, there was an ad hoc hearing conducted where members heard from low wage workers who are employed by these Federal contractors who are being paid minimum 

wage with no benefits, even though the contractor was required to 

pay prevailing wage or Davis-Bacon wage rates and failed to do so. 

Is that an issue? If so, where can we find the documentation for 

that, and what are the other type of offenses that these contractors 

are making? 

Mr. AMEY. The information you are referring to is in the Project 

on Government Oversight’s Federal Contractor Misconduct data 

base. We collect annually the data on the top 100 government contractors. So even though it is top 100, people have moved in and 

out. That is why it is 172. 

And you are hitting an issue. A few years ago, suspension and 

debarment only applied for procurement. Then it was expanded 

and it went non-procurement. So you could have a labor violation, 

a tax violation, an anti-trust violation, a worker, labor issues, consumer protections. So our data base includes all that. 

Born out of that, out of this committee in 2008, they passed a 

law to create a Federal Awardee Performance and Integrity Information System, it is called FAPIIS. That system is supposed to 

gather information. But it was only limited to procurement. So 

what I would recommend is, and you may want to go back and look 

61 

at the scope of the FAPIIS legislation and see if it needs to be expanded to include the type of information you are referring to to 

make sure that that is on the radar of a contracting officer prior 

to award to see what the track record is. 

And also to the suspension and debarment officials in trying to 

make a determination of present responsibility. You want them to 

have the most accurate, complete and up to date report as possible 

on the contractors that we are working with to avoid risky contractors that put government agency mission and projects in jeopardy. 

Mr. HORSFORD. Thank you, Mr. Chairman. I hope that we can 

be as inclusive as possible with your proposed legislation and take 

some of these other provisions into account, your draft, as being 

considered by the full committee. Thank you. 

Chairman ISSA. Thank you. The ranking member and I will be 

meeting in a few days to work out the final tweaks as a result of 

this. We would welcome your input for that. 

We now go to the always noticed gentleman from Missouri, Mr. 

Clay. 

Mr. CLAY. Thank you, Mr. Chairman. I don’t mind bringing up 

the rear. I will try not to take all of the five minutes. 

Mr. Neumann, Chairman Issa has a draft bill that would call for 

a board of civilian suspension and debarment that would consolidate more than 41 civilian agency and government corporation’s 

suspension and debarment functions into one centralized board. 

This board would be responsible for, among other things, ensuring 

the excluded parties list is current, as well as employing a transparent case Management system that would allow the public to be 

informed of all cases. 

How effective do you believe this board would be in improving efficiency and transparency? 

Mr. NEUMANN. Given that GAO has found that there have been 

problems with the current process and the inconsistency between 

agencies on the activity level of their suspension and debarment 

programs, GAO would welcome any changes that would make improvements to that overall process and ensure consistency and 

transparency. 

I think it is important to note that there are certain characteristics that agencies will still need to have in place in order to get the 

referrals to whoever is managing the suspension and debarment 

process, including having a very active referral process involving 

IGs and other officials at the agency level and be trained on that, 

so they know what cases should be referred for appropriate action. 

Mr. CLAY. But having a central clearinghouse, so to say, with 

timeliness being one of the major factors here, do you think that 

would make this process more efficient and transparent? 

Mr. NEUMANN. It certainly would build on some of the existing 

responsibilities of the current voluntary system under the Interagency Suspension and Debarment Committee. That committee has 

the charge to monitor and oversee this government-wide system. As 

we noted, it has been ineffective in the past. While there has been 

some improvements made, I think we still want to see some more 

improvement there overall. 

62 

Mr. CLAY. How likely is it that having a single point of authority 

for maintenance of the excluded parties data base would resolve 

the accuracy problems it has had over the years? 

Mr. NEUMANN. Do you mean the accuracy of the data base? 

Mr. CLAY. Yes. 

Mr. NEUMANN. The problems with the data base I think are longstanding. So there would be, there needs to be some look at how 

to improve that particular data base. GAO has noted that as far 

back as 2005 and again in 2009, even when we did regional work, 

there are still problems with the data base. 

So I think that any efforts to take a look at the problems and 

have someone take steps to improve it would be welcome. 

Mr. CLAY. I thank you for your responses. 

Mr. Chairman, that is all I have and I yield back. 

Chairman ISSA. I thank the gentleman. 

I will just follow up with a quick question round that came from 

the earlier questions. Ms. Styles, the process which is undocumented of show cause, our legislation currently does not formalize 

that nor address the reality that it is and likely will continue to 

be done unless we either formalize it or prohibit it. Would you suggest that as we are preparing a final bill, that we do just that, either formalize it or prohibit it? 

Ms. STYLES. I think it should be formalized, absolutely. It is a 

very good process. In situations where an SDO wants more information, they just don’t always have the facts. They want to make 

sure they are dealing with an ethical contractor, but they don’t 

want to suspend them unnecessarily. 

Chairman ISSA. Mr. Neumann? 

Mr. NEUMANN. Yes, we saw that as the Department of Defense 

used those very efficiently to get more information, in some cases 

to either get the contractor to improve its ethics programs, or in 

other cases to get enough evidence to do a suspension or debarment. So those were very effective tools that they used. 

Chairman ISSA. Mr. Amey? 

Mr. AMEY. I believe the SDOs believe it is as well. The ISDC has 

been reporting it, on how many administrative agreements or how 

many settlements that they have entered into, non-prosecution 

agreements, different things that help them gather information 

about contractors. So I think the community finds it to be an important tool as well. 

Chairman ISSA. So getting a three for three that would should 

formalize it. Let me just ask one question. Is this an appropriate 

place to tie in a specific, if you will, right of IGs to at a minimum 

create a mandated show cause? In other words, less than a direct 

authority to suspend or debar, the idea that IGs’ findings in audits 

and other work would automatically empower a show cause so that 

they would have a direct part of this, their investigation would link 

directly to this process? Ms. Styles? 

Ms. STYLES. I think at most of the effective agencies they already 

do. So they refer them and it automatically causes the show cause 

process to start. So it actually would be putting in the statute a 

process that already exists. 

Chairman ISSA. And you had earlier said that the best part of 

our bill is that we take an executive order and put it in statute. 

63 

Ms. STYLES. That is correct. 

Chairman ISSA. Okay. Unless I have any further thoughts from 

any of the three of you, I want to thank you for your generosity 

of time, and for helping us in what is likely to be a very shortly 

put forward piece of legislation. We stand adjourned. 

[Whereupon, at 11:30 a.m., the committee was adjourned.] 

(65) 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

66 

Æ 


Insert offset folio 28 here 81744.028

Statement of Congressman Gerald E. Connolly (VA-II) 

Committee on Oversight and Government Reform 

Protecting Taxpayer Dollars: Is the Government Using Suspension and Debarment Effectively? 

June 12, 2013 

Chainnan Issa and Ranking Member Cummings, thank you for holding today's important hearing to 

examine the Federal Government's use of suspensions and debannents, and refonn proposals seeking to 

enhance the effectiveness of this procurement tool. I commend the Chainnan for convening a 

substantive hearing that is focused on refining the processes and procedures that protect the Federal 

Government's interest in only awarding contracts and grants to responsible finns and individuals. 

In recent years, serious concerns have been raised by the U.S. Government Accountability Office 

(GAO), Offices ofInspectors General (OIG), the Commission on Wartime Contracting, and relevant 

Congressional Committees, with respect to the effectiveness of agency policies and procedures that 

govern the suspension and debarment of contractors. At an October 2011 hearing held by this 

Committee's fonner Subcommittee on Technology, Procurement, and Intergovernmental Relations, 

GAO reported that 10 agencies accounting for more than $1 billion in annual contract spending failed to 

devote sufficient attention to their respective suspension and debarment programs. 

Astonishingly, the Departments of Health and Human Services and Commerce awarded $94 billion in 

contracts and grants from fiscal year 2006 through 2010, yet together accounted for no suspension and 

debarment activity over that time period. In addition, the Federal Government continues to face 

challenges in coordinating suspension and debarment activities across Federal agencies, with the 

Interagency Suspension and Debarment Committee relying on voluntary agency participation, while the 

comprehensive contracting data base that every Federal contracting and grant officer relies on - the 

System for Award Management - continues to be plagued by bugs and unreliable data. 

On a positive note, agencies have proactively instituted refonns to strengthen suspension and debarment 

programs, while the Council of Inspectors General on Integrity and Efficiency has stepped up its efforts 

to raise the visibility and utilization of the suspension and debarment tool as a key mechanism to protect 

the financial interests of a given agency. However as our witnesses will testify before us today, there is 

still much work to be done. I look forward to discussing their recommendations and how we can move 

forward to ensure that every agency is appropriately and fully utilizing suspension and debarment 

programs not to punish contractors, but rather to protect our Nation's financial interests. 

I believe there is consensus that suspension and debarment activities must become more efficient, 

transparent, and accountable. However, I am also cognizant of the importance in proceeding in a 

considered manner that avoids unintended consequences, including undermining existing suspension 

and debarment activities that may be working well in certain agencies. Today's hearing is a constructive 

first step in this process, and I am committed to working with the Chairman and the Ranking Member to 

advance suspension and debarment refonns in a bipartisan and open manner, featuring extensive 

stakeholder input from agencies, industry, GAO, OIGs, and public interest groups.