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Focus on Regulation

Debarments Continue to Rise

Federal agency debarments rose almost 14% in Fiscal Year (FY) 2014 according to an annual report recently published by the Interagency Suspension and Debarment Committee.  The jump from 1,696 debarments in FY 2013 to 1,929 debarments in FY 2014 continues a five-year trend in which the number of annual debarments has almost doubled.

The large increase in recent years is due to pressure that the Congress and the Government Accountability Office (GAO) have placed on federal agencies to implement effective suspension and debarment programs.  Several agencies that were scrutinized by GAO in 2011 for seldom exercising their suspension and debarment authority to protect the Government’s interest now have very active suspension and debarment programs.

In this environment, federal contractors both large and small can lessen the risk of suspension and debarment by implementing robust ethics and compliance programs and internal controls.  Contractors that may be thinking about ways to improve their ethics and compliance programs and internal controls could ask the following five questions:

  1. What type of ethics training does the company currently offer employees and how often?
  2. Does the company have written policies that give employees clear, accurate, and practical guidance on ethics issues and standards of conduct?
  3. Do employees understand the company’s process for reporting potential misconduct and are they encouraged to use it?
  4. What are the company’s procedures for investigating and responding to alleged misconduct?
  5. Does the company have a designated Ethics and Compliance Officer who has a clearly defined role and responsibilities?

Revisiting these questions periodically demonstrates strong commitment to ethical standards of conduct and effective internal controls.  The benefits of both cannot be understated as the number of annual debarments continues to rise.