Federal Acquisition Regulation: Improving Consistency Between Procurement and Nonprocurement Procedures on Suspension and Debarment

<RULE> DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION <CFR>48 CFR Parts 2, 3, 9, 22, 25, 26, 33, and 52</CFR> <DEPDOC>[FAC 2025-03; FAR Case 2019-015, Item I; Docket No. FAR-2019-0015; Sequence No. 1]</DEPDOC> <RIN>RIN 9000-AN98</RIN> <SUBJECT>Federal Acquisition Regulation: Improving Consistency Between Procurement and Nonprocurement Procedures on Suspension and Debarment</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation (FAR) to improve consistency between the procurement and nonprocurement procedures on suspension and debarment, based on the recommendations of the Interagency Suspension and Debarment Committee. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Effective January 17, 2025. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> For clarification of content, contact Ms. Zenaida Delgado, Procurement Analyst, at 202-969-7207 or by email at <E T="03">zenaida.delgado@gsa.gov.</E> For information pertaining to status or publication schedules contact the Regulatory Secretariat Division at 202-501-4755 or <E T="03">GSARegSec@gsa.gov.</E> Please cite FAC 2025-03, FAR Case 2019-015. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> DoD, GSA, and NASA published a proposed rule at 89 FR 1043 on January 9, 2024, to improve consistency between procurement and nonprocurement procedures on suspension and debarment, based on the recommendations of the Interagency Suspension and Debarment Committee (ISDC). The procurement procedures on suspension and debarment are covered in the FAR. The nonprocurement procedures on suspension and debarment ( <E T="03">i.e.,</E> Nonprocurement Common Rule (NCR)) are covered in 2 CFR part 180 and agency implementing regulations. For further details please see the proposed rule. Five respondents submitted comments on the proposed rule. <HD SOURCE="HD1">II. Discussion and Analysis</HD> The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (the Councils) reviewed the public comments in the development of the final rule. A discussion of the comments and the changes made to the rule as a result of those comments are provided as follows: A. <E T="03">Summary of significant changes:</E> No changes to the FAR text have been made from the proposed to final rule that have a significant negative effect on contractors. Minor changes and clarifications have been made to the final rule. These changes are outlined below: 1. Revised FAR 9.406-1(a) to provide clarification regarding which mitigating and aggravating factors may apply to individuals. 2. Revised FAR 9.406-3(b)(1) and 9.407-3(b)(1) to clarify that if the suspending and debarring official (SDO) extends the opportunity for the contractor to submit material in opposition, then the SDO should also give a deadline for submission of materials. 3. Revised FAR 9.406-3(c)(1)(i) to allow the notice of proposed debarment, or the notice of suspension, to be sent by U.S. mail or private delivery service to the last known street address, with delivery notification service. 4. Revised FAR 9.406-3(c)(1)(ii) to allow the notice of proposed debarment, or the notice of suspension, to be sent by email to the point of contact email address in the contractor's registration in the System for Award Management (SAM), if any, or to the last known email address as confirmed by the agency. 5. Revised FAR 9.406-3(d)(1) to clarify that the official record closes upon the expiration of the contractor's time to submit information and argument in opposition, including any extensions. <HD SOURCE="HD2"> B. <E T="03">Analysis of Public Comments</E> </HD> <HD SOURCE="HD3">1. Outside the Scope of the Rule</HD> <E T="03">Comment:</E> A respondent recommended adding FAR language to address applicability of the suspension and debarment rules to Other Transaction Authority (OTA) Agreements and to grants. <E T="03">Response:</E> This comment is outside the scope of this rule. Neither OTA Agreements nor grants are covered in the FAR. <E T="03">Comment:</E> A respondent recommended adding a definition of “present responsibility.” <E T="03">Response:</E> This issue was previously considered in a notice issued by the Office of Management and Budget (OMB) regarding guidelines for Nonprocurement Debarment and Suspension at 52 FR 20360 on May 29, 1987, and it was concluded that the definition is unnecessary. The suggestion has been referred to the ISDC for further consideration. <HD SOURCE="HD3">2. Immediate Exclusionary Effect of a Notice of Proposed Debarment Under the FAR</HD> <E T="03">Comment:</E> A respondent stated that the term “notice of proposed debarment” under the FAR is misleading because the debarment is not “proposed”—it is “imposed.” Most of the respondents recommended that the immediate exclusionary effect of proposed debarment be removed from the FAR to align better with the NCR, and disagree with the Government's rationale for retaining it in the FAR. These respondents indicated that if the risk to the Government in a specific case requires immediate exclusion to protect the Government's business interests, an SDO can issue a notice of suspension under FAR 9.407. Where immediate exclusion is not necessary and the Government would not choose to suspend the contractor, the proposal for debarment should not have an exclusionary effect. Immediate exclusion is particularly unwarranted in cases where the proposed debarment is not based on a conviction or civil judgment, and fact-finding proceedings are necessary. These respondents indicated that there is no increased business risk to the Government in the procurement context than in nonprocurement transactions. The respondents stated that the Government enters into procurement contracts for public purposes of equal importance and comparative risk as some nonprocurement transactions. The respondents also pointed out that the Appropriations Act language cited in the proposed rule does not require an SDO to issue an exclusionary notice as part of the assessment of whether suspension and debarment is appropriate. The respondents stated that those statutes simply require the official to have considered whether exclusion is necessary to protect the Government, which can be done without an immediate exclusion ( <E T="03">e.g.,</E> with a pre-notice letter or proactive outreach by the contractor). <E T="03">Response:</E> DoD, GSA, and NASA acknowledge the comments but continue to think, after deliberation with the ISDC, that the policy reasons articulated in the preamble to the proposed rule for giving different effect to a proposed debarment when applied to a procurement contract versus a grant remain valid. These policy reasons are based on differences in the purpose of procurement contracts and grants, as well as occasional differences in comparative risk between these instruments. Equally important, neither the ISDC nor the Federal Acquisition Regulatory Council think that the application of a proposed debarment, long allowed by the FAR to protect the taxpayer from harm, leads to inappropriate use or overuse of immediate exclusions. In addition, the final FAR rule formally recognizes the use of pre-notice letters for the suspending and debarring official to consider as an alternative to an immediate exclusion. For these reasons, no changes have been made regarding the immediate exclusionary effect of a notice of proposed debarment. <HD SOURCE="HD3">3. Methods of Communication</HD> <E T="03">Comment:</E> A respondent expressed support for the amendments to FAR 9.406-3(b)(1) and 9.407-3(b)(1) to permit contractors and their representatives to present matters in opposition remotely. However, the respondent is concerned that permitting notices of proposed debarment, suspension, and the SDO decisions to be sent by standard U.S. mail (with no return receipt requested) or by email “[t]o the last known email address” may be inadequate to give contractors notice and an opportunity to respond. The respondent recommended aligning this provision with the NCR to require that any notice sent by U.S. mail be sent by certified mail or its equivalent to increase the likelihood that the notice will actually be received. The respondent pointed out that this recommendation is consistent with notions of due process and fundamental fairness. It is also consistent with the purpose of the proposed rule: to better align the FAR and NCR. <E T="03">Response:</E> DoD, GSA, and NASA recognize the need for broad agency flexibility due to the variety of agency missions. FAR 9.406-3(c)(1)(i) was revised to allow the written notice to be sent by U.S. mail or private delivery service to the last known street address, with delivery notification service. FAR 9.406-3(c)(1)(ii) was revised to allow the written notice to be sent by email to the point of contact email address in the contractor's SAM registration, if any, or to the last known email address as confirmed by the agency. These changes provide agencies additional tools beyond using U.S. certified mail with return receipt requested, and they are consistent with the flexibility provided by the NCR, see 2 CFR 180.975 and 180.615. <E T="03">Comment:</E> Regarding sending notices by email, a respondent recommended clarifying how SDOs will determine the “last known email address” for a contractor, its identified counsel, or agent for service of process. The respondent further recommended defining the contractor's “last known em ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 77k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━