§ 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 Govermnent. 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 debar

ment shall be furnished to that concern or individual in accordance with § 11.604-1. 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 Compliance.

[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 debar

ment.

(a) Initiation of debarment action. An agency secking 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 similar 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

20-126 0-74---4

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 § 1-1.603(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

(1) Commission of fraud or a criminal offense as an incident to obtaining, at

tempting 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 sus pension.

(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 Attorney General requests continuance of the suspension. If such a request is received the suspension may be continued for an additional six months. Notice of the proposed removal of the suspension shall be given to the Department of Justice 30 days prior to the expiration of the 12-month period. In no event shall a suspension continue beyond 18 months unless prosecutive action has been initiated within that period. Whenever prosecutive action has been initiated, the suspension may

continue until the legal proceedings are completed. Upon removal of a suspension, consideration may be given to debarment in accordance with § 1.604 of this subpart.

(b) Scope of suspension. (1) Suspension may include all known affiliates of a concern (firm) or individual.

(2) A decision to include known affillates in a proposed suspension is an individual determination and, as such, must be made on a case by case basis.

(3) The criminal, fraudulent, or seriously improper conduct of an individual may be imputed to the business firm with which he is connected when the impropriety involved was performed within the course of his official duty, or with knowledge or approval of the business firm.

§ 1-1.605-3 Notice of suspension.

A firm or individual that has been suspended shall be furnished immediately with a notice of the suspension, by registered mail, by the head of the agency or his designee. The notice of suspension shall state that:

(a) The suspension is based on (1) an outstanding indictment, or (2) adequate evidence that the firm or individual has committed irregularities of a serious nature in business dealings with the Government, or (3) adequate evidence of irregularities which seriously reflect on the propriety of further dealings of the firm or individual with the Government. (The notice shall identify the indictment or describe the nature of the irregularities, in general terms, without disclosing the Government's evidence);

(b) The suspension is for a temporary period pending the completion of an investigation and such legal proceedings as may ensue;

(c) Bids and proposals will not be solicited from the firm or individual and, if received, will not be considered, and awards of contracts may not be made unless it is determined by the head of the agency or his authorized representative to be in the best interest of the Government;

(d) The firm or individual will not be eligible for the award of a subcontract and whenever the firm or individual is proposed as a subcontractor, the contracting officer will 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;

(e) The suspension is effective throughout the agency; and

(f) A request for hearing will be considered unless the suspension is based upon an outstanding indictment or upon advice from either the Department of Justice or the Department of Labor that such a hearing would prejudice the substantial interests of the Government, and the hearing will be held within 20 calendar days if the request is granted. [39 FR 13777, Apr. 17, 1974]

(a) Request for hearing. A hearing may be requested upon receipt of the notice of suspension unless the basis for suspension is an outstanding indictment against the firm or individual.

(b) Coordination with Department of Justice. The formal advice of the Department of Justice concerning the impact of release of evidentiary material on possible civil or criminal action against a firm or individual shall be requested upon receipt of a request for a hearing, except when the basis for suspension is already known to involve possible civil or criminal prosecution against the firm or individual. If such advice is orally given, the Department of Justice shall be requested to promptly confirm the advice in writing. The agency head or his designee shall grant the request and hold a hearing or deny the request, as provided in paragraphs (d) and (e) of this § 1-1.605-4.

(c) Coordination with the Department of Labor. The formal advice of the Associate Solicitor (for General Legal Services) of the Department of Labor shall be sought concerning the possible impact of the release of evidentiary material on Department of Labor proceedings against a firm or individual when a suspension is based upon a contractor's violations of labor standards subject to legal proceedings before administrative law judges of the Department of Labor. The agency head or his designee shall grant the request and hold a hearing

or shall deny the request, as provided in paragraphs (d) and (e) of this § 1-1.605

4.

(d) Hearing granted. If a decision is made to grant a hearing, the firm or individual shall be immediately informed and the hearing shall be held not later than 20 calendar days after receipt of the request. The head of the agency or his authorized representative shall promptly decide after the hearing whether to continue or terminate the suspension and shall promptly notify the firm or individual of this decision by registered mail.

(e) Hearing denied. If it is determined, based upon the advice received from the Department of Justice or the Department of Labor, that to hold a hearing would adversely affect possible civil or criminal prosecution or possible Labor proceedings against the firm or individual, this determination will be reduced to writing and made a part of the formal record. Notice shall then be furnished to the firm or individual within 20 calendar days after receipt of the request for a hearing that substantial interests of the Government would be prejudiced if a hearing were held but that any information or argument in opposition to the suspension may be presented in person, in writing, or through representation. Any information or argument submitted will be promptly considered by the head of the agency or his authorized representative and, if such action is deemed warranted, the suspension shall be terminated. The firm or individual shall promptly be notified by registered mail whether the suspension is to be continued or terminated.

[39 FR 13777, Apr. 17, 1974]

§ 1-1.605-5 Restrictions during period of suspension.

During a period of suspension of a firm or individual, the following policies and procedures shall be applicable:

(a) Bids and proposals shall not be solicited from suspended contractors. If received, bids and proposals shall not be considered and awards for contracts shall not be made to suspended contractors unless it is determined by the agency to be in the best interest of the Government.

(b) Suspended contractors will be subject to the provisions of § 1-1.603 (e) regarding restrictions on subcontractors. [39 FR 13777, Apr. 17, 1974]

§ 1-1.606 Agency procedure. Each agency shall:

(a) Establish internal procedures and methods for giving effect to this Subpart 1-1.6.

(b) Notify the General Services Administration (GSA) of the name and address of its central office where debarment information should be sent.

(c) Furnish to GSA a copy of the notice of debarment (at time of issuance) on those debarments made under provisions of § 1-1.604(a), or the Buy American Act, and provide GSA with information as to any removals of such debarments.

(d) Check the list of debarred bidders furnished by GSA, and consider firms or individuals listed thereon for inclusion upon its own list, in accordance with the provisions of this Subpart 1-1.6.

(e) As needed, request from GSA a copy of the notice on any debarment case appearing on the list herein provided to be compiled and distributed by GSA. If desired, direct inquiry concerning any debarment case may be made of the agency which originated the action.

(f) Make its list available to all contracting officers within the agency.

§ 1-1.607 General Services Administration responsibility.

In addition to the agency procedure provided in § 1-1.606, GSA will:

(a) Compile and distribute to the designated central office address of each agency a listing of the administrative debarments and debarments under the Buy American Act made by the agencies, including the basis of action, in order that each executive agency may be informed of actions taken by each other agency. In general application, this listing will be for information purposes only and it is not intended to take the place of, or be an addition to, the lists maintained by the various agencies.

(b) Furnish to any agency, on specific request, a copy of the notice reflecting the basis for debarment action taken by another agency for causes contained in § 1-1.604 (a) or under the Buy American Act.

(a) This subpart, which implements programs developed cooperatively with the Small Business Administration (SBA) and the Government agencies having procurement responsibility, sets forth (1) procurement policy with reference to small business concerns; (2) policy governing the relationship of procurement agencies with SBA; (3) SBA certificate of competency program; (4) small business set-aside procedures; (5) small business subcontracting policies; and (6) information concerning SBA's size standards.

(b) This subpart applies only in the United States. As used in this subpart the term United States means the States. its territories and possessions, Puerto Rico, the Trust Territory of the Pacific Islands, and the District of Columbia. [29 FR 10104, July 24, 1964, as amended at 35 F.R. 8482, June 2, 1970]

§ 1-1.701 Definitions.

The definitions in this section apply throughout this Subpart 1-1.7. Those definitions relating to SBA size standards for procurement purposes are based on the governing regulations of SBA on the subject (13 CFR Part 121).

§ 1-1.701-1 Small business concern (for Government procurement).

(a) General. A small business concern for the purpose of Government procurement is a concern, including its affiliates, which is independently owned and operated, is not dominant in the field of operation in which it is bidding on Government contracts, and can further qualify under the criteria set forth in this § 1-1.701. "Concern" means any business entity organized for profit with a place of business located in the United States which makes a significant contribution to the U.S. economy through payment of taxes and/or use of American products, material, and/or labor, etc. "Concern" includes but is not limited to an individual, partnership, corporation, joint venture, association, or cooperative. For the purpose of making affiliation findings (see § 1-1.701-2) any business entity, whether organized for profit or not, and any foreign entity; i.e., any entity located outside the United States,