Federal construction projects are some of the most lucrative big-ticket projects in the industry. $302 billion was spent on new public construction in 2018 alone. These projects can vary drastically and range in scope from massive highway overhauls to minor alterations to city halls. But what is universal is the fact that these projects are incredibly profitable for the companies with the expertise and resources to take them on — assuming they can avoid debarment.
In this editorial, we will explore suspension and debarment, two actions that make bidding on and being awarded new federal contracts virtually impossible. We will also discuss how you can avoid these punitive actions. Before your company is prohibited from working on public projects, consult a West Palm construction lawyer from Cotney Construction Law.
The Fallout of Suspension or Debarment
As stated on the General Services Administration website, the suspension and debarment process “protects the federal government from fraud, waste and abuse by using a number of tools to avoid doing business with non-responsible contractors.” Both suspension and debarment are actions taken to disqualify companies from participating in federal projects for a certain amount of time. This period of disqualification is temporary for suspensions (up to 12 months) and usually three years for debarment. Both have a government-wide effect that applies to all federal projects.
In the event of suspension or debarment, a number of negative consequences will be triggered. To begin, you will be published as ineligible on the System for Award Management (SAM) website, a free and invaluable source of contracts offered by the government. You will be unable to solicit or be awarded contracts and subcontracts that require government approval. You will be unable to represent or act as an individual surety for other government contractors. You will be unable to work on contracts equal to or in excess of $30,000. You will need permission in writing to enter into a primary or lower tier covered transaction with any agency in the executive branch. And finally, every relationship you have with another company doing business with the government will be “carefully examined.”
The U.S. Department of Transportation website states, “Suspension and debarment are not punitive. Instead, suspension and debarment are remedial intended to ensure that only responsible persons and companies participate in government programs.” In other words, these actions are not meant to be punishments, but you could have fooled us. Being barred from working on federal projects for any amount of time, let alone three years, is enough to bankrupt even the most financially secure of construction companies. We can’t stress enough how important it is for your company to avoid any sort of conduct that may lead to you receiving a suspension or debarment letter.
Understanding What Leads to Suspension and Debarment
We must first look at the causes of suspension and debarment. The GSA website lists a myriad of causes, as does the U.S. Department of Transportation website. Here are just a few examples:
- Antitrust violations
- Failure to pay minimum wage
- False statements and claims
- Tax evasion
“The most common basis for a suspension is an indictment for a crime.” Diverting money, misleading government agencies, and employing deceptive billing practices are just a few scenarios that can lead to a construction company being prohibited from procuring federal contracts. Operate lawfully and your company will have nothing to fear, right? Unfortunately, even contractors with honest intentions can be barred from working on federal projects.
The most common causes that lead to suspension and debarment are related to wage and hour violations. A company may not be paying their workers properly, or they may be improperly maintaining employee records. Of note, this is a common problem across the entire industry, not just with federal projects. Employers should consult a West Palm construction attorney that can not only assist with wage and hour laws but also ensure compliance with any and all laws that relate to suspension and debarment.
Safeguard Your Company’s Future
Can your company survive being debarred for three years? The truth is that even if your company does avoid bankruptcy, its reputation will be forever damaged — a punishment in its own right. Your success as a contractor depends heavily on your ability to avoid punitive actions and damage to your reputation. For this reason, the best thing you can do to safeguard your company’s future is to partner with a Boca Raton construction lawyer.
An experienced attorney from Cotney Construction Law can ensure that your company implements the necessary measures to avoid suspension and debarment: compliance programs, crisis management programs, and compliance with all state and government regulations. In the event that your company does face suspension and debarment, one of our attorneys can plead that the source of the violation has been addressed and that you are presently responsible. It may be your best chance for having your suspension or debarment terminated or modified.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.