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[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).

or

(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 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 Oppor

tunity 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 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 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 in

volved 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 re

sponsibility 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 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 affiliates 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

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§ 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 prej

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(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 prompt

ly 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 § 11.603(e) regarding restrictions on subcontractors.

[39 FR 13777, Apr. 17, 1974]

§ 1-1.606 Agency procedure. Each agency shall:

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