Federal Contracts and Grants: Agencies Have Taken Steps to Improve Suspension and Debarment Programs
Published: 2014-05-21T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: To protect the government's interests, agencies can use suspension and debarment to exclude individuals, contractors, and grantees from receiving future contracts, grants, and other federal assistance due to various types of misconduct. In 2011, GAO reviewed ten agencies and found that agencies issuing the most procurement related suspensions and debarments shared common characteristics: dedicated staff, detailed policies and procedures, and an active referral process. GAO recommended that six agencies—the Departments of Commerce, Health and Human Services, Justice, State, the Treasury, and the Federal Emergency Management Agency—incorporate those characteristics, and that OMB issue guidance to improve oversight and government-wide suspension and debarment efforts.
GAO was asked to review actions taken to implement the 2011 recommendations. This report examines (1) actions taken by the six agencies to incorporate characteristics of active suspension and debarment programs; (2) changes in the level of suspension and debarment activity; and (3) actions taken to improve oversight and government-wide efforts. To do so, GAO reviewed suspension and debarment programs, interviewed agency officials, verified the accuracy of agency data, and reviewed government-wide efforts.
GAO is not making any new recommendations in this report. OMB commented that it is pleased with the progress that agencies have made and with the work of the ISDC.The other agencies did not provide substantive comments.
section_title: What GAO Found
paragraphs: The six agencies GAO reviewed all took action to incorporate characteristics associated with active suspension and debarment programs. Since GAO made recommendations to do so in 2011, the agencies have addressed staffing issues through actions such as defining roles and responsibilities, adding positions, and consolidating suspension and debarment functions. The agencies also have issued formal policies and promulgated detailed guidance. Finally, the agencies have engaged in practices that encourage an active referral process, such as establishing positions to ensure cases are referred for possible action, and developing case management tools.
The number of suspension and debarment actions government-wide has more than doubled from 1,836 in fiscal year 2009 to 4,812 in fiscal year 2013. The number of suspension and debarment actions for the six agencies increased from 19 in fiscal year 2009 to 271 in fiscal year 2013 (see table below). The six agencies generally experienced a notable increase starting in fiscal year 2011 when the agencies began to take action to incorporate the characteristics associated with active suspension and debarment programs.
The Office of Management and Budget (OMB) and the Interagency Suspension and Debarment Committee (ISDC) have taken action to strengthen government-wide suspension and debarment efforts. In November 2011, OMB directed agencies to address weaknesses and reinforce best practices in their suspension and debarment programs. The ISDC reported to Congress in September 2012 that, per OMB direction, the 24 standing member agencies of the ISDC had
an accountable official in place responsible for suspension and debarment;
taken steps to address resources, policies, or both; and
procedures to forward matters to the suspension and debarment official for possible action.
The ISDC has promoted best practices, coordinated mentoring and training, and helped coordinate lead agency responsibility when multiple agencies have an interest in pursuing suspension and debarment of the same entity. Reported increases in the number of suspension or debarment actions suggest that its efforts have been effective. ISDC officials emphasized that increased activity has been coupled with an increased capability to use suspension and debarment appropriately while adhering to the principles of fairness and due process.

section_title: Letter
paragraphs: Suspensions and debarments are tools that agencies may use to protect  the government’s interests by excluding individuals, contractors, and  grantees from receiving federal contracts, grants, and other forms of  financial assistance based on various types of misconduct. In 2011, we  reviewed suspension and debarment efforts at selected agencies and  found that the agencies with the most procurement-related suspensions  and debarments shared common characteristics, including a suspension  and debarment program with dedicated staff, detailed policies and  procedures, and practices that encourage an active referral process. We  made recommendations to the Departments of Commerce, Health and  Human Services (HHS), Justice, State, the Treasury, and the Department  of Homeland Security’s (DHS) Federal Emergency Management Agency  (FEMA)—six agencies with billions of dollars in annual contracting  obligations that lacked these characteristics and had virtually no  procurement-related suspensions and debarments for fiscal year 2009.  We also recommended that the Office of Management and Budget (OMB)  issue guidance to improve suspension and debarment programs at all  agencies and enhance government-wide oversight.
You asked us to review the status of the six agencies’ suspension and  debarment programs and government-wide efforts in this area. For this  report, we analyzed (1) actions taken by the six agencies to incorporate  characteristics associated with active suspension and debarment  programs; (2) changes in the six agencies’ level of suspension and  debarment activity; and (3) actions taken to improve oversight and  government-wide suspension and debarment efforts.
To identify the actions the six agencies have taken to incorporate the  characteristics associated with active suspension and debarment  programs, we reviewed the agencies’ suspension and debarment  programs including staffing levels, training, guidance, and the case  referral process. We reviewed relevant agency documents and  interviewed suspension and debarment and inspector general officials.  We also used information we obtained from the agencies since 2011  through our annual recommendation follow-up efforts.
To provide information on changes in the level of suspension and  debarment activity at the six agencies, we reviewed data on the number  of suspensions, proposed debarments, and debarments reported in the  Interagency Suspension and Debarment Committee’s (ISDC) annual  reports to Congress for fiscal years 2009 through 2013. For the purposes  of this report, we reviewed both procurement and nonprocurement-related  actions. To assess data reliability, we asked the agencies to verify the  data reported to ISDC and identify steps taken to ensure data consistency  and accuracy. We found the data sufficiently reliable for the purposes of  summarizing changes over time in the agencies’ level of suspension and  debarment activity. We were not able to use data from the official  government system used to track suspension and debarment data as we  did in our 2011 report because the General Services Administration  (GSA) could not provide the data in time to meet the timeframes of this  review due to system upgrades. Further, numerous data fields were  changed in the new system and extensive manipulation would be  required to ensure consistency over time. As a result, we were not able to  aggregate related actions such as those involving affiliates and related  parties to identify the number of cases as we did in our 2011 report. As  such, the number of actions we report is not comparable to the number of  cases we reported in 2011.
To identify actions taken to improve oversight and government-wide  suspension and debarment efforts, we reviewed guidance issued by OMB  in 2011, and reports issued by the ISDC for fiscal years 2011 through  2013. We interviewed officials from OMB’s Office of Federal Procurement  Policy, the ISDC, and the six agencies to obtain their views on federal  agencies’ suspension and debarment activity, as well as ongoing  management steps taken by the ISDC to support government-wide efforts  and the results of those efforts. To gain insight into how government-wide  guidance and actions may have affected suspension and debarment  efforts at an agency not included in GAO’s 2011 review, we selected the  Department of Veterans Affairs (VA), an agency with high contract dollar  obligations and relatively few suspensions and debarments for fiscal  years 2006 through 2010. For VA, we reviewed their suspension and  debarment policy, guidance, procedures, and data. We also interviewed  VA officials to determine actions taken to improve VA’s suspension and  debarment program.
We conducted this performance audit from March 2014 to May 2014 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: The Federal Acquisition Regulation (FAR) establishes the policies and  procedures governing suspension and debarment actions related to  federal contracts. The Nonprocurement Common Rule (NCR)  establishes the policies and procedures governing suspension and  debarment for discretionary nonprocurement awards (i.e., grants,  cooperative agreements, scholarships, or other assistance). The FAR  and the NCR specify numerous causes for suspensions and debarments,  including fraud, false statements, theft, bribery, tax evasion, and any  other offense indicating a lack of business integrity. A suspension is a  temporary exclusion pending the completion of an investigation or legal  proceeding which generally may not last longer than 18 months, while a  debarment is an exclusion for a reasonable, specified period depending  on the seriousness of the cause, but generally should not exceed 3 years.  A suspension or debarment under either the FAR or NCR has  government-wide effect for all purposes, so that a party precluded from  participating in federal contracts is also precluded from receiving grants,  loans, and other assistance, and vice versa.
OMB has the authority to issue guidelines for nonprocurement  suspensions and debarments and the Office of Federal Procurement  Policy within OMB provides overall direction for government-wide  procurement policies, including those on suspensions and debarments  under the FAR. ISDC, established in 1986, monitors the government- wide system of suspension and debarment. The ISDC consists of  representatives from 24 federal agencies, as well as 18 independent  agencies and government corporations. The Duncan Hunter National  Defense Authorization Act for Fiscal Year 2009 augmented and clarified  certain ISDC functions to include providing assistance to help agencies  achieve operational efficiencies in their suspension and debarment  programs. The ISDC was also made responsible for coordinating lead- agency responsibility when multiple agencies have a potential interest in  pursuing suspension and debarment of the same entity.
In 2011, we made recommendations to improve agency and government- wide suspension and debarment efforts. We reviewed 10 agencies and  found that the four agencies with the most procurement-related  suspension and debarment cases shared common characteristics: a  suspension and debarment program with dedicated staff, detailed policies  and procedures, and practices that encourage an active referral  process. Agencies are required to establish procedures for referring  appropriate matters to their suspension and debarment official for  consideration. The six agencies with few or no procurement-related  suspensions or debarments for the period we reviewed—Commerce,  HHS, Justice, State, Treasury, and DHS’s FEMA—did not have these  characteristics regardless of each agency’s volume of contracting activity.  To improve their suspension and debarment programs, we recommended  these agencies take action to incorporate the characteristics associated  with active programs.
We also reported that government-wide efforts to oversee and coordinate  suspensions and debarments faced a number of challenges. For  example, we reported that the ISDC relies on agencies’ participation and  resources to fulfill its missions. To improve suspension and debarment  programs at all agencies and enhance government-wide oversight, we  recommended that OMB issue government-wide guidance that (1)  describes the elements of an active suspension and debarment program,  and (2) emphasizes the importance of coordinating with the ISDC.
section_title: Agencies Took Action to Incorporate Characteristics Associated with Active Suspension and Debarment Programs
paragraphs: We found that the Departments of Commerce, HHS, Justice, State, the  Treasury, and DHS’s FEMA all took action since we made  recommendations in 2011 to incorporate characteristics associated with  active suspension and debarment programs.agencies have addressed staffing issues through actions such as defining  roles and responsibilities, adding positions, and consolidating the  suspension and debarment function into one office. The six agencies also  have taken actions such as issuing formal policy and promulgating  detailed guidance. Finally, the six agencies have engaged in practices  that encourage an active referral process, including establishing positions  to ensure cases are referred, developing case management tools that   Since 2011, all six  allow for referral tracking and case reporting, and establishing training  programs. Table 1 summarizes the actions that agencies have taken  since 2011.
section_title: Suspension and Debarment Activity at Agencies Has Increased
paragraphs: We found that all six agencies reported an increase in the number of  suspension and debarment actions from fiscal year 2009 to 2013 as  shown in table 2. The agencies generally experienced a notable increase  starting in fiscal year 2011 when they began to take action to incorporate  the characteristics associated with active suspension and debarment  programs.
Agency officials told us that the actions taken since 2011 to incorporate  the characteristics associated with active suspension and debarments  programs have resulted in an increased level of suspension and  debarment activity at their respective agencies, though officials  emphasized different factors. For example, officials from the Departments  of Commerce, State, and the Treasury stated that improved coordination  between the Office of the Inspector General and the Suspension and  Debarment Official coupled with increased training and awareness  resulted in more referrals and the processing of more actions. While the  number of actions Treasury reported for fiscal years 2009 through 2013  has been modest, officials told us that 62 actions have been processed in  the first 5 months of fiscal year 2014 and they expect continued increases  in the number of referrals. Justice officials stated that one factor that may  have contributed to an increased number of referrals and actions is the  Attorney General’s January 2012 memorandum to all litigating authorities  and the Director of the Federal Bureau of Investigation, reminding them to  consider whether the facts of a case could be used as a basis for an  exclusion or debarment and to coordinate with agency suspension and  debarment authorities. HHS officials noted that an increased number of  actions have resulted in part from the Office of Inspector General  providing additional resources for training investigators and auditors on  how to make suspension and debarment referrals involving procurement  and nonprocurement matters. Officials from DHS attributed an increase in  the number of actions at FEMA and across DHS to having a centralized  suspension and debarment office, a directive establishing common  standards, increased staffing, and training.
section_title: Suspension and Debarment Programs Have Received Attention Government-wide
paragraphs: The number of suspension and debarment actions government-wide has  increased in recent years, more than doubling from 1,836 in fiscal year  2009 to 4,812 in fiscal year 2013, as shown in figure 1. ISDC officials do  not consider the overall number of suspensions and debarments as the  only measure of success, and emphasized that increased suspension  and debarment activity has been coupled with agencies’ increased  capability to use suspension and debarment appropriately and adhere to  the principles of fairness and due process as laid out in the governing  regulations. According to ISDC officials, the programmatic improvements  made by many agencies are due in part to increased management  attention within individual agencies, guidance from OMB, and support  from the ISDC.
OMB and ISDC have taken a number of actions to strengthen  government-wide suspension and debarment efforts. In response to  GAO’s recommendations, on November 15, 2011, OMB directed  agencies to take a number of actions to address program weaknesses  and reinforce best practices in their suspension and debarment programs,  including the following:
Appoint a senior accountable official, if one has not already been  designated, to be responsible for assessing the agency’s suspension  and debarment program and the adequacy of available resources,  ensuring that the agency maintains effective internal controls and  tracking capabilities, and ensuring that the agency participates  regularly on the ISDC.
Review internal policies, procedures, and guidance to ensure that  suspension and debarment are being considered and used effectively.
ISDC reported in September 2012 that each of the 24 agencies said it  had an accountable official in place responsible for suspension and  debarment activities, including assessing the adequacy of available  training and resources;  taken steps to address resources, policies, or both—in some cases by  dedicating greater staff resources to handle referrals and manage  cases and in others by entering into agreements to be mentored by  the managers of successful programs; and procedures to forward possible actions to the suspending and  debarring official.
The ISDC also has increased its efforts to coordinate government-wide  suspension and debarment efforts by promoting best practices and  coordinating mentoring and training activities. For example, the ISDC  maintains an online library of documents aimed at promoting  standardization and has efforts to help agencies develop their suspension  and debarment programs to ensure appropriate attention to administrative  due process in accordance with the governing regulations. ISDC officials  cite robust participation in the ISDC, including agencies with mature  suspension and debarment programs, which has enabled the ISDC to  assist agencies in making program improvements and, in some cases,  standing up programs where none existed before. The ISDC also  conducts training for member agencies, including cosponsoring with the  Council of the Inspectors General on Integrity and Efficiency an annual  debarment workshop. Also, ISDC members provide instructors for the  debarment training courses offered by the Federal Law Enforcement  Training Centers.understanding of suspension and debarment and holds monthly meetings  to discuss topics, including specific suspension and debarment actions  and selected agencies’ suspension and debarment procedures and  tracking tools.
Finally, the ISDC undertakes outreach to promote  The six agencies we reviewed reported that they highly value the  functions performed by the ISDC as a focal point for government-wide  suspension and debarment efforts. For example, Treasury officials told us  that they designed their suspension and debarment program around the  best practices identified by the ISDC, taking advantage of templates,  guidance, and mentoring available through the committee. Officials from  several agencies noted that the ISDC is instrumental in managing an  informal process to help agencies coordinate lead agency responsibility  when multiple agencies have a potential interest in pursuing suspension  and debarment of the same entity. According to officials from the  agencies we reviewed, the ISDC regularly distributes information on new  potential cases reported by the agencies. The agencies take into  consideration factors such as financial, regulatory, and investigative  interests in determining which agency should take the lead in the case.  Several of the agencies we reviewed reported that this process helps  identify the most appropriate lead, while also involving other agencies that  may have a stake in a particular action. Officials from several agencies  also reported that ISDC monthly meetings provide an important forum  through which suspension and debarment officials can seek advice from  agency counterparts on a range of issues.
In addition to speaking with officials from the six agencies we reviewed in  2011, we also reviewed the VA’s suspension and debarment program to  determine if government-wide efforts had affected the program. Based on  our review, we found that the VA currently has the characteristics  associated with active suspension debarment programs. For example, VA  has a Debarment and Suspension Committee with a staff of about 10  positions that review all referrals for procurement-related suspension and  debarment actions, conduct fact-finding, and present facts and  recommendations to the Suspension and Debarring Official. Officials  reported that VA has taken action to improve its suspension and  debarment program in part in response to government-wide efforts. For  example, VA’s Suspension and Debarment Committee is currently  drafting standard operating procedures to reflect leading practices. VA  officials reported that the number of procurement-related suspension and  debarment actions at VA has increased from 34 in fiscal year 2011 to 73  in fiscal year 2013.
section_title: Agency Comments
paragraphs: We provided a draft of this report to OMB and the Departments of  Commerce, Health and Human Services, Justice, Homeland Security,  State, the Treasury, and Veterans Affairs for review and comment. In an  email response, the Associate Administrator of the Office of Federal  Procurement Policy commented that OMB is pleased with the progress  agencies have been making to strengthen their capabilities to consider  the use of suspension and debarment when necessary. Further, OMB  credits the work of the Interagency Suspension and Debarment  Committee in helping to make many of the achievements possible. None  of the seven agencies we reviewed provided substantive comments, but  the Departments of Commerce, Health and Human Services, and  Homeland Security provided technical comments which we incorporated,  as appropriate.
We are sending copies of this report to interested congressional  committees; the Director of the Office of Management and Budget; the  Attorney General and the Secretaries of Commerce, Health and Human  Services, Homeland Security, State, the Treasury, and Veterans Affairs.  The report also will be available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-4841 or woodsw@gao.gov. 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  report were Marie Mak, Director; Tatiana Winger, Assistant Director;  Kristine R. Hassinger; Angie Nichols-Friedman; and Russ Reiter.