How much discretion in punishing contractors should agencies have?

Dan Gordon, the outgoing administrator of the Office of Federal Procurement Policy, told senators Nov. 16 that mandatory suspensions and debarments of contractors actually undermine the judgment of the agency official who is charged to make those decisions.

“It seems to undercut the role of the suspension and debarment official to say we’re taking away your discretion,” Gordon told Sen. Claire McCaskill (D-Mo.) during a hearing held by the Homeland Security and Governmental Affairs Committee.

With mandatory suspensions or debarments, “we’re deciding no matter what you’ve done to correct the problem, no matter what remedial measures you’ve taken, you’re going to automatically suspend or debar,” he added.

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In contrast, McCaskill supports requirements for mandatory suspension or debarment of a company for a criminal indictment and conviction of a situation related to a federal contract. She said it's a matter of good character on behalf of the United States.

“I think deterrents for other contractors are really important, and it allows leverage to get better behavior out of contractors,” McCaskill said. The senator chairs the committee’s Contracting Oversight Subcommittee. She’s also chairwoman of the Armed Services Committee’s Readiness and Management Support Subcommittee, which considers contracting issues, among other areas.

Steven Shaw, deputy general counsel for contractor responsibility for the Air Force, also disagreed with McCaskill's proposal. Instead, he suggested a mandatory referral within a period of time to a debarring official after a criminal conviction. Beyond that, any termination by default of a contract should be going to the debarring official. Shaw has been the Air Force’s debarring official for the last 15 years.

He posed a few situations that may be a concern if the penalties were mandatory. New management may have taken the reins of a company with an entirely new corporate structure. Or the misconduct could have come from an instance from years ago.

“You need to be able to encourage companies to fix the problem, and if there’s mandatory debarment, I don’t know if you have that encouragement,” he said.

But mandatory suspensions or debarments may not be too far off, despite the objections of some.

The fiscal 2012 Defense Department Appropriations Act (H.R. 2219) has a new provision that would prohibit DOD from awarding a contract to a company that was convicted of a felony criminal violation under any federal law in the previous two years. DOD would be stopped from awarding a contract any corporation with unpaid federal taxes. Other appropriations bills include similar language.

The House passed the bill earlier this year. The Senate has not passed its version.

During the hearing, Gordon said the administration has proposed different option. An agency would have to abide by a mandatory suspension or debarment, unless officials conclude there were particular circumstances that would not require an automatic penalty.

“There would be a presumption that would address your concern,” he told McCaskill. But “you’d still retain the ability for the agency to say this is a special case.”