Overview of Federal and Multilateral Debarment Procedures for Contractors

or debarment from contracting with the federal government, cross-debarment by multilateral development banks, and the suspension or revocation of certain export privileges. Debarment Under federal guidelines governing procurement, an individual or company that violates the FCPA or other criminal statutes may be barred from doing business with the federal government. The Federal Acquisition Regulations (FAR) provide for the potential suspension or debarment of companies that contract with the government upon conviction of or civil judgment for bribery, falsification or destruction of records, the making of false statements, or “[cJommission of any other offense indicating a lack of busi- ness integrity or business honesty that seriously and directly affects the present responsibility of a Government contrac- tor or subcontractor.” These measures are not intended to be punitive and may be imposed only if “in the public’s interest for the Government's protection.”*“ Under the FAR, a decision to debar or suspend is dis- cretionary. The decision is not made by DOJ prosecutors or SEC staff, but instead by independent debarment authorities within each agency, such as the Department of Defense or the General Services Administration, which analyze a num- ber of factors to determine whether a company should be sus- pended, debarred, or otherwise determined to be ineligible for government contracting, Such factors include whether the contractor has effective internal control systems in place, self-reported the misconduct in a timely manner, and has taken remedial measures.*® If a cause for debarment exists, the contractor has the burden of demonstrating to the satis- faction of the debarring official that it is presently responsible and that debarment is not necessary.** Each federal depart- ment and agency determines the eligibility of contractors with whom it deals. However, if one department or agency debars or suspends a contractor, the debarment or suspension applies to the entire executive branch of the federal govern- ment, unless a department or agency shows compelling rea- sons not to debar or suspend the contractor?” Although guilty pleas, DPAs, and NPAs do not result in automatic debarment from U.S. government contracting, FCPA Penalties, Sanctions, and Remedies committing a federal crime and the factual admissions underlying a resolution are factors that the independent debarment authorities may consider. Moreover, indictment alone can lead to suspension of the right to do business with the government.* The US. Attorney’s Manual also provides that when a company engages in fraud against the government, a prosecutor may not negotiate away an agen- cy’s right to debar or delist the company as part of the plea bargaining process. In making debarment determina- tions, contracting agencies, including at the state and local level, may consult with DOJ in advance of awarding a con- tract. Depending on the circumstances, DOJ may provide information to contracting authorities in the context of the corporate settlement about the facts and circumstances underlying the criminal conduct and remediation measures undertaken by the company, if any. This information shar- ing is not advocacy, and the ultimate debarment decisions are squarely within the purview of the independent debar- ment authorities. In some situations, the contracting agency may impose its own oversight requirements in order for a company that has admitted to violations of federal law to be awarded federal contracts, such as the Corporate Integrity Agreements often required by the Department of Health and Human Services. Cross-Debarment by Multilateral Development Banks Multilateral Development Banks (MDBs), like the World Bank, also have the ability to debar companies and individuals for corrupt practices.” Each MDB has its own process for evaluating alleged corruption in connection with MDB-funded projects. When appropriate, DOJ and SEC work with MDBs to share evidence and refer cases. On April 9, 2010, the African Development Bank Group, the Asian Development Bank, the European Bank for HOUSE_OVERSIGHT_022572