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Federal Highway Administration Suspension & Debarment Procedures & Implementation

The Federal Highway Administration (FHWA) is a Department of Transportation (DOT) agency responsible for providing highway transportation programs in collaboration with state and local governments and other public and private stakeholders. The FHWA is one of the prominent agencies through which an unprecedented $550 billion of federal investment in US infrastructure from 2022 until 2026 will be expended as part of the bipartisan Infrastructure Investment and Jobs Act. Naturally, during this unprecedented period of infrastructure investment in U.S. history, contractors working on FHWA contracts have a heightened interest in avoiding the agency's suspension and debarment process altogether. However, such contractors may nevertheless wish to understand the FHWA directive governing its suspension and debarment procedures in case they become subject to the process.

Suspensions and debarments are discretionary administrative agency actions that exclude firms with unsatisfactory integrity, or business ethics records from participating in federal contracts or programs. Suspensions are temporary disqualifications from government contracting that generally last no longer than a year. Meanwhile debarments are typically for a longer period of up to three years but may be extended depending upon any aggravating circumstances. Notably, if a contractor is suspended for a period before being debarred, the debarment period is assumed to begin retroactively from the date of initial suspension. Since suspension and debarment actions are administered on a government-wide basis, companies excluded by a federal agency are excluded from doing business with all federal agencies. The General Services Administration (GSA) maintains a list of these excluded companies, made available to the public through the System of Award Management (SAM). Federal contractors are required to certify their exclusion status and those of all lower-tier subcontractors.

FHWA Order 2000.2B outlines the procedures for implementing suspension and debarment actions against companies violating integrity and business ethics in FHWA procurements. For procurement-related suspension and debarment actions, the directive is governed by the Federal Acquisition Regulation (FAR) Subpart 9.4 and DOT Order 4200.5E applying to all FHWA offices with procurement authority. The FHWA suspension and debarment official (SDO) may suspend a contractor to protect immediate public interest if she determines that there is adequate evidence or an indictment to suggest that the contractor has committed a debarable offense listed in 2 CFR Part 180 or 48 CFR Subpart 4.9. The suspension and debarment process begins with a referral from the Office of Inspector General (OIG) or an FHWA Division Office. The Office of Chief Counsel coordinates with the SDO to take final action on each such referral. The FHWA notifies the entity by certified mail to issue a suspension or debarment action. Contractors should be aware that each such notification package also contains a formal letter stating the basis of the action and outlining the entity’s rights to challenge the action. Depending on the specific circumstances, contractors subject to such actions may receive one of three suspension and debarment notices.

o Notice of Suspension: A notice of suspension may be issued when the SDO determines that an immediate exclusion is warranted based on adequate evidence for debarment. Additionally, for non-procurement suspensions, the SDO must determine that immediate action is necessary to protect the public interest.

o Notice of Proposed Debarment: A notice of debarment may be issued when the SDO determines that there is sufficient evidence to debar.

o Notice of Suspension and Proposed Debarment: Contractors may receive a notice of suspension and proposed debarment in cases where an indictment, conviction, civil judgment, or other such factual basis listed in 2 CFR Part 180 or 48 CFR Subpart 4.9 justify the debarment action and immediate action is necessary to protect the public interest.

The FHWA gives the respondents 30 days from the receipt of the certified letter to challenge the proposed suspension or debarment action. The SDO may extend this period to contest the action upon a written request of the respondent. In response to factual challenges, the FHWA SDO has the authority to change the length of the suspension or debarment action or end it altogether. Depending on the specific situation, if genuine disputes of material facts exist and such a determination is documented by the SDO, the respondent is given the opportunity to present their case before a DOT Administrative Law Judge that is independent of the SDO. Understanding the FHWA's suspension and debarment process is crucial for contractors facing such issues during this period of significant federal infrastructure investment. While contractors strive to avoid such actions altogether, familiarizing themselves with the procedures, timeframes, and response rights ensures they can effectively contest a suspension or debarment if necessary.

This Federal Procurement Insight is provided as a general summary of the applicable law in the practice area and does not constitute legal advice. Contractors wishing to learn more are encouraged to consult the TILLIT LAW PLLC Client Portal or Contact Us to determine how the law would apply in a specific situation.

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The Federal Acquisition Regulation (FAR) requires prospective contractors to be deemed responsible before they are awarded federal contracts. FAR subpart 9.1 prescribes policies, standards, and procedures for determining whether prospective contractors and subcontractors are responsible. FAR 9.103 requires contracting officers to make an affirmative determination of responsibility before award. This affirmative determination must be reasonable and factually supported. Prime contractors may also be required to demonstrate the responsibility of their proposed subcontractors when necessary. FAR 9.104 states general and special standards that prospective contractors must meet to demonstrate responsibility to receive contracts.

General Standards

The general standards listed in FAR 9.104 require prospective contractors to:

  • Either have adequate financial resources to perform the contract at issue or have the ability to obtain them.
  • Have the ability to comply with the required or proposed performance or delivery schedule, taking into consideration all existing commercial and governmental commitments.
  • Have a satisfactory past performance record. Notably, the responsibility determination of prospective contractors cannot solely be made based on a lack of relevant performance history, subject to exceptions of FAR 9.104–2.
  • Have a satisfactory record of integrity and business ethics.
  • Possess or have the ability to obtain the necessary organization, experience, accounting and operational controls, and technical skills.
  • Be otherwise qualified and eligible to receive an award under applicable laws and regulations.
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Companies must meet specific responsibility standards before being awarded U.S. federal contracts. The Federal Acquisition Regulation (FAR) lists prospective contractors’ general and special responsibility standards. FAR 9.103(b) requires contracting officers (CO) to make affirmative determinations of responsibility that are reasonably and factually supported. Disappointed contractors with adequate standing may challenge these determinations through post-award bid protests. Such responsibility determination challenges may be brought to the Court of Federal Claims (COFC) by alleging that the responsibility determination decision lacks a rational basis under the Administrative Procedure Act (APA) or involves a regulatory violation. Alternatively, such challenges may be brought to the Government Accountability Office (GAO) under its bid protest adjudication authority. However, both forums consider responsibility determinations firmly committed to the CO’s discretion, making such protests challenging to sustain. Nevertheless, the GAO will consider bid protests alleging that the CO’s determination of responsibility either unreasonably failed to consider relevant information or that the awardee could not meet the definitive criteria established by the solicitation.

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Suspensions are discretionary agency actions that exclude firms with unsatisfactory honesty, integrity, or business ethics records from participating in federal contracts or programs. Government officials may suspend contractors, along with their affiliates, for a variety of reasons, including the commission of fraud, criminal offenses, unfair trade practices, or other offenses. The Federal Acquisition Regulation (FAR) § 9.407-1(b)(1) describes suspensions as serious actions implemented when a completion of investigation or legal proceedings is pending. In that sense, suspensions may be seen as precursors to more permanent debarment actions. Suspension actions are thus imposed based on adequate evidence that immediate action is necessary to protect government interests. Federal contractors are required to demonstrate responsibility before receiving contracts, and unsuccessful offerors may challenge responsibility of awardees through post-award bid protests. Meanwhile, if existing contractors are deemed non-responsible, the government may initiate suspension and debarment proceedings against the non-responsible contractor.

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It is common for individuals to switch roles between the public and private sectors in the federal contracts industry. Also known as the "revolving door" in industry parlance, this practice often leads to government officials leaving their positions to work for federal contractors or contractor employees obtaining roles in government agencies that regulate or award contracts to their former employers. As one can imagine, this practice can and often does lead to actual or perceived conflicts of interest at various stages of the procurement process. The Federal Acquisition Regulation (FAR) subpart 9.5 describes three types of organizational conflicts of interest (OCI) that may arise during the procurement lifecycle. These include biased ground rules, unequal access to non-public information, and impaired objectivity. Moreover, FAR § 3.1101 defines personal conflict of interest as a situation in which a covered employee has a financial interest, personal activity, or relationship that could impair the employee's ability to act impartially and in the government's best interest when performing under the contract.

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Federal Highway Administration Suspension & Debarment Procedures & Implementation

TILLIT LAW Federal Procurement Insights