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Debarment Under the “Catch-All” Regulation

On Behalf of | Oct 15, 2012 | Business Litigation

Government contractors do not like to think about debarment . . . and with good reason.  For a government contractor, debarment is like dreaded terminal illness.  It is unpleasant to contemplate.  Nonetheless, as unpleasant as it is, government contractors need to know a few basics about debarment: one of which is the “catch-all” regulation.

Probably, most contractors know that if a contractor is convicted of a crime related to federal procurement, then the government can propose the contractor for debarment without any other facts in the record.  The conviction is sufficient.  It is a prima facie basis for debarment.  The same is true of a civil judgment for procurement fraud; that too is prima facie basis for debarment.  But, how many contractors know about the catch-all regulation, which greatly expands a debarring official’s authority?

The catch-all regulation says that the government may debar a contractor for any cause of “. . . so serious or compelling a nature that it affects the present responsibility of the contractor . . . .”  (FAR 9.406-2(c))  Think about this broad language.  It seems to give a debarring official unbridled discretion to debar a contractor for any reason that the official thinks, in his or her subjective judgment, is serious or compelling.  The regulation lacks objective standards.  It is vague and overly broad, and one court, the U.S. Court of Appeals for the D.C. Circuit, held that the government can invoke the catch-all regulation only if a preponderance of the evidence shows that the contractor committed a crime related to federal procurement.  However, some debarring officials continue to apply the catch-all regulation more broadly, even though the evidence does not prove the commission of the crime.   If a contractor is proposed for debarment under the catch-all regulation, the contractor should consider challenging the regulation on the ground that it is unconstitutionally vague and over-broad.

The author, John W. Polk, is Special Counsel to Berenzweig Leonard LLP, a business law firm located in the Washington, D.C. region.  He can be reached at [email protected].