SUSPENSION & DEBARMENT November 3, 2011 Ric Fiore Army Suspension and Debarment Official

1. SUSPENSION & DEBARMENT November 3, 2011 Ric Fiore Army Suspension and Debarment Official

2. Overview • Suspension & Debarment Process • Suspension & Debarment in Contingency Theater • HNT Suspension & Debarment Cases

3. Suspension & Debarment Process • FAR 9.104-1: “PRESENT RESPONSIBILITY” • Contractor ethics and integrity • Ability to perform • Administrative Remedy • Part of Larger Coordinated Approach to Fraud Waste and Abuse • Purpose is to Protect US Government • Protect Integrity of Contracting Process • Ensure Contractor ethics and integrity, and performance • Ensure Delivery of Quality Goods & Services at Competitive Prices • Not Punishment: Criminal & Civil Sanctions are purview of DoJ • “If it feels good it is probably wrong!”

4. Suspension & Debarment Process • Standard is “Present Responsibility” • Reflective: Past conduct/performance as context • Prospective : Focus is on present and future • “Notwithstanding conduct/performance, can Contractor be responsible in present/future?” • Governed by FAR Par 9.4 • DFARS Appendix H • AFARS Part 5109

5. Suspension & Debarment Process • Suspension • Exclusion from contracting • Temporary and Indefinite – usually NTE 1 year • During pendency of investigation or judicial proceeding • Basis: “Adequate Evidence” of non-responsibility • Judicial: • Criminal Indictment or Information • Civil Fraud Complaint • Fact-Based: Facts/Information of non-responsibility • Due Process: Opportunity to present evidence • In person or in writing • Contesting Allegations and/or of Present Responsibility

6. Suspension & Debarment Process • Proposed Debarment • Exclusion from contracting • Temporary and Indefinite • Usually following investigation or judicial proceeding • Basis: “Preponderance of Evidence” • Judicial: • Criminal Conviction • Civil Fraud Judgment • Fact-Based: Facts/Information of non-responsibility • Due Process: Opportunity to present evidence • In person or in writing • Contesting Allegations and/or of Present Responsibility

7. Suspension & Debarment Process • Debarment • Exclusion from contracting • Permanent for Specified Period • “generally should not exceed 3 years” BUT -- • Basis: “Preponderance of Evidence” • Judicial: • Criminal Conviction • Civil Fraud Judgment • Fact-Based: Facts/Information of non-responsibility • Due Process: Written Decision • After opportunity to respond – in writing and/or in person • Judicial Review available in U.S. District Court

8. Suspension & Debarment Process • Show Cause Letters / Requests for Information • Seek Contractor response to information/allegation • Not exclusion from contracting • Can lead to Suspension or Proposed Debarment • Administrative Agreements – Discretion of SDO • Where Contractor is or can become “presently responsible” notwithstanding past misconduct • Consideration of “mitigating factors” of FAR 9.406-1 • Include Ethics Codes, Training, Systemic actions • May impose means to evaluate, including outside monitors and ombudsmen as appropriate

9. Theoretical Parallel Process Coordination of Remedies Criminal • Coordination • Information • Sharing • Notification • Consensus • for Action Targeted Response to Contractor Fraud Civil Administrative Contractual

10. Actual Parallel Process Coordination of Remedies Indictment Conviction Criminal Civil Judgment Settlement Civil Administrative Agreements Administrative Suspension Debarment Contract Termination Settlement Contractual

11. Coordination of Remedies Organization Contractor Employee (Qui Tam) Show Cause Suspension Debarment AA DOJ Civil Division DOJ Criminal Division AUSA Command Coordination of Remedies KO; Agency Fraud Program; DCIO; Local Counsel DOJ (Civil/Criminal) --Indictment/ Conviction --Civil Recovery --Declination Agency Fraud Pgm Office Defense Criminal Investigative Organization (DCIO) (CID, DCIS, NCIS, AFOSI) Procurement Irregularity Identified DOJ Main DODIG Agency SDO DCAA/AAA Audit Investigative Organization Informant Contractor Mandatory Disclosure Agency APA Review US Dist.Ct. Non-Government Inputs Department of Justice

12. Army Suspension & Debarment Statistics

13. SOUTHWEST ASIA STATISTICS (Army) Suspension & Debarment in Contingency Theater Actions thru August 2011 (since 2005) * under investigation by investigative activities / not ready for presentation to SDO)

14. Current Issues in Suspension and Debarment • Suspension & Debarment in Contingency Theaters • Commission on Wartime Contracting (CoWC) • Administrative Agreements ILO S & D • Mandatory Disclosure Program • Oversight of Set-Asides • Pot pourri

15. Suspension & Debarment in Contingency Theater • Commission on Wartime Contracting • Final Report released on 31 August 2011: • Commission Recommendation: • Facilitate the increased use of suspensions and debarments for contingency contractors … • revising regulations to lower procedural barriers • requiring written rationale for not pursuing a proposed suspension and debarment

16. Less Due Process CoWC Recommendation to lower procedural barriers to S & D • SDO Comments: • There are no procedural barriers to applying S&D in the contingency theatre contracts. • Diluting due process would not likely survive Constitutional challenge.

17. Written Rationale for no S & D CoWC Recommendation to require a written rationale for not pursuing a proposed S & D. • SDO Comments: • When is a contractor officially recommended for S&D ? • Are there Due Process issues with entering adverse information in a public database following a favorable decision, especially where Contractors may have not had an opportunity to respond?

18. Civil Jurisdiction over Contractors CoWC Recommendation to require contractor/subcontractor consent to U.S. civil jurisdiction a condition of award . . . (even for non-contract actions) • SDO Comments: • Impact on costs of goods and services: • Gov’t will pay higher costs (for insurance if its is available) • Impact on contingency operations: Limited availability of contractors/subcontractors (if no insurance is available) • Treaty Obligations for Jurisdiction/Service • Reciprocal acts by other nations

19. Program Fraud Civil Remedies Act (PFCRA) CoWC Interim Report Recommendation to raise the ceiling for access to the Program Fraud Civil Remedies Act. SDO Comments: • Dollar ceiling is not the critical limitation of PFCRA. • Limitations are excessive procedural requirements and costs. • The S.813 Panel on DoD Procurement Integrity is preparing a proposal to revise PFCRA to become a remedy at the disposal of the SDO under current suspension and debarment due process procedures. • A higher dollar limit will become a basis for United States Attorneys to raise their civil thresholds on the erroneous belief that agencies can handle higher dollar cases under PFCRA.

20. ADMINISTRATIVE AGREEMENTS • Policy: maintain the acquisition base where possible • When contractor is or can become “presently responsible” notwithstanding past misconduct – even while subject to civil or criminal proceedings • Consideration of “mitigating factors” of FAR 9.406-1 • Means to evaluate ethical culture: surveys, outside monitors and ombudsmen are important tools • At the discretion of the agency SDO. • FAR 3.10 requires companies to establish ethics and compliance programs • Preference for values-based as opposed to compliance-based programs • More than compliance – a strong ethical culture, from the top down • Hands–on ethics training by supervisors preferred

21. DoD Mandatory Disclosure Program • Replaced Voluntary Disclosure Program (“Carrot”) in December 2008 • FAR now mandates disclosure upon “credible evidence of fraud” (“Stick”) • 300 +/- disclosures received by DoDIG: < 100 referred for investigation • All disclosures are reviewed by DoDIG and DoJ • Subject matter: primarily labor mischarging • Issue: should the rule have a monetary threshold ? • Issue: Less substance required than under Voluntary Disclosure Program !

22. Oversight of Set-Asides • Level of participation by set aside awardees in task orders and oversight of the project – 51% requirement • Identity of employees working on set-aside contracts – Who do they work for? • Billing, letterhead and contact information – is the party that the contracting office works with the prime contractor or another party? • “Teaming” and “Mentoring” – where is the line between assistance and actually doing it? • Contracting personnel need to ensure that the intent of the set-aside is still met during the period of performance to guard against the use of front companies used to “pass-through” work to ineligible contractors.

23. Pot Pourri • Contract awards to debarred contractors (GAO Report 08-1174) • Compelling reasons determinations • Term of debarment: “generally ..should not exceed 3 years”

24. SDO Thoughts & Philosophy • Suspension and Debarment is NOT Punishment. • Not about putting contractors out-of-business or employees on the street. • Ensure Due Process • Fact Based Suspensions and Proposed Debarments • Show Cause letters • Resist Leveraging • Pressure for Cooperation / Plea / Settlement • Means to exclude competitors • To effect other socio-economic policies • Compliance is Discipline -- Culture is Values • Cost Contractors as Fiduciaries • Administrative Remedies for Government Employees (Military and Civilian)

25. Questions? Ric Fiore 571-256-2873 fioreul@conus.army.mil