§ 1-1.601 General.

Debarment, suspension, and placement in ineligibility status are measures which may be invoked by the Government either to exclude or to disqualify bidders and contractors from participation in Government contracting or subcontracting. These measures should be used for the purpose of protecting the interests of the Government and not for punishment. To assure the Government the benefits to be derived from the full and free competition of interested bidders, these measures should not be instituted for any time longer than deemed necessary to protect the interests of the Government, and should preclude awards only for the probable duration of the period of non-responsibility.

§ 1-1.601-1 Definitions.

(a) "Debarment" means, in general, an exclusion from Government contracting and subcontracting for a reasonable, specified period of time commensurate with the seriousness of the offense or failure or the inadequacy of performance. However, in connection with Executive Order 11246 of September 24, 1965, as implemented by the rules, regulations, and relevant orders of the Secretary of Labor in 41 CFR Part 60, the term "debarment" also means an exclusion by reason of ineligibility under the Secretary's rules from Government contracting or subcontracting for an indefinite period of time pending the elimination of the circumstances for which the exclusion was imposed.

(b) "Suspension" means a disqualification from Government contracting and subcontracting for a temporary period of time because a concern or individual is suspected upon adequate evidence (see § 1-1.605) of engaging in criminal, fraudulent, or seriously improper conduct.

(c) A "debarment list" or "debarred bidders list" means a list of names of concerns or individuals against whom any or all of the measures referred to in this section have been invoked.

(d) "Bidders" means, wherever the term is used in this subpart, any offerors bidding pursuant to an invitation for bids or a request for proposals.

(e) "Affiliates" means business concerns which are affiliates of each other when either directly or indirectly one concern or individual controls or has the power to control another, or when a third party controls or has the power to control both.

[37 FR 23337, Nov. 2, 1972]

§ 1-1.602 Establishment and maintenance of a list of concerns or individuals debarred, suspended, or declared ineligible.

(a) Each executive agency shall establish and maintain, on the bases contained in § 1-1.602-1, a consolidated list of concerns and individuals to whom contracts will not be awarded and from whom bids or proposals will not be solicited as provided in § 11.603.

(b) The list shall show as a minimum the following information:

(1) The names of those concerns or individuals debarred or ineligible (in alphabetical order) with appropriate cross reference where more than one name is involved in a single action;

(2) The basis of authority for each action;

(3) The extent of restrictions imposed; and

(4) The termination date for each debarred listing.

(c) Each executive agency shall determine, in its discretion, as the interests of the national security may require, the necessity for and degree of classification of its list and correspondence relating thereto. If the agency determines that its list shall not be classified, the list should be marked "For Official Use Only" or with a word or phrase of equivalent meaning to prevent inspection of the contents by any and other than personnel required to have access thereto.

(d) The list shall be kept current by issuance of notices of additions and deletions.

§ 1-1.602-1 Bases for entry on the debarred, suspended, and ineligible bidders list.

Entry shall be made on the debarred, suspended, and ineligible list of firms or individuals on the following bases:

(a) Those listed by the Comptroller General in accordance with the provisions of section 3 of the Walsh-Healey Public Contracts Act (41 U.S.C. 37), which have been found by the Secretary of Labor to have violated any of the agreements or representations required by that Act.

(b) Those listed by the Comptroller General in accordance with the provisions of section 3 of the Davis-Bacon Act (40 U.S.C. 276a-2(a)), as found by the Comptroller General to have violated said Act.

(c) Those listed by the Comptroller General in accordance with the provisions of Part 5, section 56(b) of the Regulations of the Secretary of Labor issued pursuant to authority granted under Reorganization Plan 14 of 1950, as found by the Secretary of Labor to be in aggravated or wilful violation of the prevailing wage or overtime pay provisions of any of the following statutes

(1) Davis-Bacon Act (40 U.S.C. 276a). (2) Anti-Kickback Act (18 U.S.C. 874, 40 U.S.C. 276b, c).

(3) The Contract Work Hours Standards Act (40 U.S.C. 327-330).

(4) National Housing Act (12 U.S.C. 1703).

(5) Hospital Survey and Construction Act (42 U.S.C. 291).

(6) Federal Airport Act (49 U.S.C. 1101).

(7) Housing Act of 1949 (42 U.S.C. 1401).

(8) School Survey and Construction Act of 1950 (20 U.S.C. 251).

(9) Defense Housing and Community Facilities and Services Act of 1951 (42 U.S.C. 1591).

(10) Federal Civil Defense Act of 1950 (50 App. U.S.C. 2281 (i)).

(11) Area Redevelopment Act of 1961 (42 U.S.C. 2518).

(12) Delaware River Basin Compact (sec. 15.1, 75 Stat. 714).

(13) Health Professions Educational Assistance Act of 1963 (sec. 721, 77 Stat. 167).

(14) Mental Retardation Facilities Construction Act (secs. 101, 122, 135, 77 Stat. 282, 284, 288).

(15) Community Mental Health Centers Act (sec. 205, 77 Stat. 292).

(d) Those the executive agency determines to debar administratively for any of the causes and under all of the appropriate conditions listed in § 11.604.

(e) Those listed by the Director of the Office of Federal Contract Compliance of the Department of Labor on the Contract Ineligibility List, which gives the names of prime contractors and subcontractors that have been declared ineligible to participate in Government contracting or subcontracting by reason of noncompliance with the Equal Opportunity clause.

(f) Those the executive agency determines to suspend administratively for the reasons and under the conditions set forth in § 1-1.605.

(g) Those determined by an executive agency in accordance with section 3(b) of the Buy American Act (41 U.S.C. 10b(b)) to have failed to comply with the provisions of section 3(a) of that Act under any contract containing the specific provision required by said section 3(a) and made by the agency for construction, alteration, or repair of any public building or public work.

[29 FR 10104, July 24, 1964, as amended at 37 FR 23337, Nov. 2, 1972]

§ 1-1.603 Treatment to be accorded firms or individuals in debarred, suspended, or ineligible status.

Firms or individuals listed by the agency as debarred, suspended, or ineligible shall be treated as follows:

(a) Total restrictions. A contract shall not be awarded to a concern or individual that is listed on the basis of § 1-1.602-1 (a), (b), (d), or (e), or to any concern, corporation, partnership, or association in which the listed concern or individual has actual control or a controlling interest; nor shall bids or proposals be solicited therefrom. However, when it is determined essential in the public interest by the head of an agency or his designee, an exception may be made with respect to a particular procurement action when a concern or individual is listed as debarred on the basis of § 1-1.602-1(d).

(b) Restrictions under statutes designated in the regulations of the Secretary of Labor. A contractor listed on

the basis of § 1-1.602-1(c), or any concern, corporation, partnership, or association in which that contractor has actual control or a controlling interest, shall be ineligible for a period of 3 years (from the date of publication by the Comptroller General) to receive any contracts subject to any of the statutes listed in § 1-1.602-1(c).

(c) Buy American Act restrictions. As specified in the Buy American Act (41 U.S.C. 10b(b)), contracts shall not be awarded for construction, alteration, or repair of public buildings or public works in the continental United States or elsewhere to concerns or their affiliates or individuals listed on the basis of § 1-1.602-1(g); nor shall bids or proposals therefor be solicited therefrom. However, firms or individuals listed on this basis may be awarded contracts and may be solicited for bids or proposals for other than construction, alteration, or repair of public buildings or public works in the continental United States or elsewhere.

(d) Restrictions for noncompliance with the Equal Opportunity clause. A concern or individual debarred for noncompliance with the Equal Opportunity clause shall not be awarded a Government contract.

(e) Restrictions on subcontracting. If a concern or individual listed on the debarred bidders list is proposed as a subcontractor, the contracting officer shall decline to approve subcontracting with that firm or individual in any instance in which consent is required of the Government before the subcontract is made, unless it is determined by the agency to be in the best interest of the Government to grant approval.

[37 FR 23337, Nov. 2, 1972]

§ 1.1-604 Causes and conditions applicable to determination of debarment by an executive agency.

Subject to the following conditions, each executive agency is authorized to debar a firm or individual in the public interest for any of the following

causes:

(a) Causes. (1) Conviction for commission of a criminal offense as an incident to obtaining or attempting to

obtain a public or private contract, or subcontract thereunder, or in the performance of such contract or subcontract.

(2) Conviction under the Organized Crime Control Act of 1970, or conviction of embezzlement, theft, forgery, bribery, falsification or destruction of records, receiving stolen property, or any other offense indicating a lack of business integrity or business honesty which seriously and directly affects the question of present responsibility , as a Government contractor.

(3) Conviction under the Federal Antitrust Statutes arising out of the submission of bids or proposals.

(4) Violation of contract provisions, as set forth below, of a character which is regarded by the agency involved to be so serious as to justify debarment action:

(i) Willful failure to perform in accordance with the specifications or within the time limit provided in the contract.

(ii) A record of failure to perform or of unsatisfactory performance in accordance with the terms of one or more contracts: Provided, That such failure or unsatisfactory performance has occurred within a reasonable period of time preceding the determination to debar. Failure to perform or unsatisfactory performance caused by acts beyond the control of the firm or individual as a contractor shall not be considered to be a basis for debarment. (iii) Violation of the contractural provision against contingent fees.

(iv) Acceptance of a contingent fee, which is paid in violation of contractual provisions against contingent fees.

(5) Any other cause affecting responsibility as a Government contractor of such serious and compelling nature as may be determined by the head of the agency to warrant debarment.

(6) Debarment by some other executive agency.

(b) Conditions. (1) Debarment for any of the causes set forth in (a) of this § 1-1.604 shall be made only upon approval of the head of the executive agency or his duly authorized representative.

(2) The existence of any of the causes set forth in (a) of this § 1-1.604 does not necessarily require that a firm or individual be debarred. In each instance, whether the offense or failure, or inadequacy of performance, be of a criminal, fraudulent, or serious nature, the decision to debar shall be made within the discretion of the executive agency and shall be rendered in the best interests of the Government. Likewise, all mitigating factors may be considered in determining the seriousness of the offense, failure, or inadequacy of performance, and in deciding whether debarment is warranted.

(3) The existence of a cause set forth in (a)(1), (2) and (3) of this § 1-1.604 shall be established by criminal conviction by a court of competent jurisdiction. In the event that an appeal taken from such conviction results in a reversal of the conviction, the debarment shall be removed upon the request of the bidder (unless other cause for debarment exists).

(4) The existence of a cause set forth in (a)(4) and (5) of this § 1-1.604 shall be established by evidence which the executive agency determines to be clear and convincing in nature.

(5) Debarment for the cause set forth in (a)(6) of this § 1-1.604 (debarment by another agency) shall be proper provided that one of the causes for debarment set forth in (a)(1) through (5) of this § 1-1.604 was the basis for debarment by the original debarring agency. Such debarment may be based entirely on the record of facts obtained by the original debarring agency, or upon a combination of such facts and additional facts.

(c) Period of debarment. (1) Debarment of a firm or individual for causes other than failure to comply with the provisions of the Equal Opportunity clause (see § 1-1.602-1(e)) shall be for a reasonable, definitely stated period of time commensurate with the seriousness of the offense or the failure or inadequacy of performance. As a general rule, a period of debarment shall not exceed 3 years. However, when debarment for an additional period is deemed necessary, notice of the proposed additional debarment shall be

furnished to that concern or individual in accordance with § 1-1.604-1. Except as precluded by statute, a debarment may be removed or the period thereof may be reduced by the head of the agency or by his authorized representative, upon the submission of an application, supported by documentary evidence, setting forth appropriate grounds for the granting of relief; such as newly discovered material evidence, reversal of a conviction, bona fide change of ownership or management, or the elimination of the causes for which the debarment was imposed.

(2) Debarment of a firm or individual for failure to comply with the provisions of the Equal Opportunity clause generally shall continue until removed by the Director of the Office of Federal Contract Compliance, Department of Labor, or by the agency itself with the concurrence of the Director of the Office of Federal Contract Compli

ance.

[29 FR 10104, July 24, 1964, as amended at 37 FR 23337, Nov. 2, 1972]

§ 1-1.604-1 Procedural requirements relating to the imposition of debarment. (a) Initiation of debarment action. An agency seeking to debar a concern or individual (or any affiliate thereof) for cause shall furnish that party with a written notice: (1) Stating that debarment is being considered, (2) setting forth the reasons for the proposed debarment, and (3) indicating that such party will be accorded an opportunity for a hearing if he so requests within a stated period of time.

(b) Hearings. An opportunity for a hearing conducted in a manner prescribed by agency regulations shall be accorded to any concern or individual which the agency proposes to debar. Such regulations shall establish procedural safeguards which satisfy the demands of fairness, and which, at a minimum, shall provide that information in opposition to the proposed action may be presented, in person or in writing, and, if desired, through an appropriate representative. However, where one agency has imposed debarment upon a concern or individual, a second agency may also impose a simi

lar debarment for a concurrent period without according an opportunity for a hearing provided that the second agency furnishes notice of the proposed similar debarment to that party, and accords that party an opportunity to present information in his behalf to explain why the proposed similar debarment should not be imposed in whole or in part.

(c) Scope of debarment. (1) A debarment may include all known affiliates of a concern or individual. (See § 11.603(a)).

(2) Each decision to include a known affiliate within the scope of a proposed debarment is to be made on a case by case basis, after giving due regard to all the relevant facts and circumstances.

(3) The criminal, fraudulent, or seriously improper conduct of an individual may be imputed to the business concern with which he is connected, where such grave impropriety was accomplished within the course of his official duty or was effected by him with the knowledge or approval of that concern. Likewise, where a concern is involved in criminal, fraudulent, or seriously improper conduct, any individual who was involved in the commission of the grave impropriety may be debarred.

§ 1-1.605 Suspension of bidders.

(a) Agencies electing to utilize a suspension procedure shall employ the procedure set forth in this section.

(b) Suspension is a drastic action and, as such, shall not be based upon an unsupported accusation. In assessing whether adequate evidence exists for invoking a suspension, consideration should be given to the amount of credible evidence which is available, to the existence or absence of corroboration as to important allegations, as well as to the inferences which may properly be drawn from the existence or absence of affirmative facts. This assessment should include an examination of basic documents, such as contracts, inspection reports, and correspondence. A suspension may be modified whenever it is determined to be in the interest of the Government to do so.

§ 1-1.605-1 Causes and conditions under which executive agencies may suspend contractors.

(a) An agency may, in the interest of the Government, suspend a firm or individual:

(1) Suspected, upon adequate evidence, of

(i) Commission of fraud or a criminal offense as an incident to obtaining, attempting to obtain, or in the performance of a public contract:

(ii) Violation of the Federal antitrust statutes arising out of the submission of bids and proposals; or

(iii) An act in violation of the Organized Crime Control Act of 1970, or commission of embezzlement, theft, forgery, bribery, falsification, or destruction of records, receiving stolen property, or any other offense indicating a lack of business integrity or business honesty which seriously and directly affects the question of present responsibility as a Government contractor; or

(2) For other cause of such serious and compelling nature, affecting responsibility as a Government contractor, as may be determined by the agency to warrant suspension. However, suspensions related to matters involving the EEO clause shall be handled in accordance with regulations which may be prescribed by the Secretary of Labor.

(b) A suspension invoked by an agency for any of the causes set forth in (a)(1) and (2) of this § 1-1.605-1 may be the basis for the imposition of a concurrent suspension by another agency.

[29 FR 10104, July 24, 1964, as amended at 37 FR 23338, Nov. 2, 1972; 39 FR 13777, Apr. 17, 1974]

§ 1-1.605-2 Period and scope of suspension.

(a) Period of suspension. All suspensions shall be for a temporary period pending the completion of an investigation and such legal proceedings as may ensue. In the event that prosecutive action has not been initiated by the Department of Justice within 12 months from the date of the notice of suspension, the suspension shall be terminated unless an Assistant Attor