Subcontracting with Firms that are Debarred or Suspended: A Compliance Guide

Blog
June 3, 2022

Government contractors, with only a few exceptions, cannot award subcontracts to companies that are debarred, suspended or proposed for debarment. This prohibition is codified in FAR 52.209-6 “Protecting the Government’s Interest When Subcontracting with Contractors Debarred, Suspended, or Proposed for Debarment.” This is virtually a universal requirement as, per FAR Part 9.409, the clause is required in all contracts that exceed $35,000 in value and applies to subcontracts that exceed $35,000 in value.

While most contractors are aware of the prohibition against subcontracting with suspended or debarred companies, many do not know the process that must be followed in order to comply with the requirements of FAR 52.209-6. This conclusion is supported by the fact that failure to comply with FAR 52.209-6 is a common finding in Contractor Purchasing System Reviews.

One of the reasons for the lack of compliance is that the requirements, or at least DCMA’s interpretation of the requirements, have changed over the years. Back in the day, all procurement personnel were trained to search the excluded parties web-site and include a screen shot showing that the company was not suspended or debarred in the purchasing file. Many contractors still follow this process.  However, and perhaps this is counter-intuitive, DCMA has determined that checking the excluded parties website is not required by the clause and significantly will not, in and of itself, comply with the clause.

DCMA bases their position on the wording of the clause which requires the potential subcontractor “to disclose to the contractor, in writing, whether as of the time of award of the subcontract, the subcontractor, or its principals is or is not debarred, suspended, or proposed for debarment by the Federal Government.” Merely checking the Excluded Parties List does not satisfy this requirement.

DCMA further confused the issue when, for a period of time, to pass a CPSR, contractors were required to verify the subcontractor was not debarred or suspended (3) three separate times. DCMA based this position on FAR Part 9.405 which prohibits contracting officers from soliciting offers or evaluating proposals from excluded/suspended firms and from awarding contracts to such firms. DCMA interpreted this language to required three separate checks: one upon receipt of the proposal, one when evaluating the proposal and one prior to awarding the contract. However, the requirements of FAR Part 9.405 apply to Contracting Officers, not contractors.

The requirements applicable to contractors are in the clause, which only requires the contractor to obtain a “day-of-award” certification. That said, Aronson recommends two checks. Subcontractors should be required to certify that they are not debarred or suspended as part of their proposal. This is usually accomplished in the normal representations and certifications. Then, the “day-of-award” certification should be included in the subcontract as follows;

By signing this subcontract, Subcontractor certifies that as of the date of award, Subcontractor or any of its Principals are not debarred, suspended, proposed for debarment or declared ineligible for the award of contracts by any Federal agency

This will address the requirement for a date of award disclosure and should satisfy the CPSR requirements.

For all your Govcon compliance matters, please contact Aronson’s Govcon Experts at govconhelp@aronsonllc.com.