DATE: November 4, 2002

SUBJECT: Federal Acquisition Regulation (FAR); Debarment and Suspension -- Order Placement and Option Exercise

SOURCE: Federal Register, November 4, 2002, Vol. 67, No. 213, page 67281

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)

ACTION: Proposed Rule

SYNOPSIS: It is proposed to amend FAR 9.405-1, Continuation of Current Contracts, to address the placement of orders against existing contracts with contractors that have been debarred, suspended, or proposed for debarment.

EDITOR'S NOTE: This proposed rule is a direct result of the March 15, 2002, suspension of Enron and Arthur Andersen. For more on the memorandum sent by Office of Federal Procurement Policy (OFPP) Administrator Angela Styles to the heads of departments and agencies reminding them that the current authority in paragraph (b) of FAR 9.405-1 to continue to award orders against existing contracts to contractors that have been debarred or suspended is discretionary, see the April 17, 2002, FEDERAL CONTRACTS DISPATCH "Office of Federal Procurement Policy (OFPP); Contractor Responsibility Determinations and Indefinite-Delivery Contracts."

DATES: Comments are due on or before January 3, 2003.

ADDRESSES: Submit comments to General Services Administration, FAR Secretariat (MVP), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405, or by e-mail to farcase.2002-010@gsa.gov. Cite "FAR Case 2002-010" in all correspondence related to this proposed rule.

FOR FURTHER INFORMATION CONTACT: Ralph De Stefano, 202-501-1758.

SUPPLEMENTAL INFORMATION: A contractor that is debarred, suspended, or proposed for debarment under FAR Subpart 9.4, Debarment, Suspension, and Ineligibility, is nonresponsible, and is excluded from receiving government contracts. However, contracts with the debarred or suspended contractor that are already in existence are not required to be terminated. In addition, FAR 9.405-1(b) states that an ordering activity "may continue to place orders against existing contracts, including indefinite-delivery contracts, in the absence of a termination."

On April 17, 2002, OFPP Administrator Styles sent a memorandum to the heads of departments and agencies in which she said she believes "this provision creates a significant risk that the government will not be adequately protected. Accordingly, I am asking the FAR Council to consider revising FAR 9.405-1(b) to address this risk."

This rule being proposed by the FAR Council would revise FAR 9.405-1(b) to state:

            (b) For contractors debarred, suspended, or proposed for debarment, unless the agency head makes a written determination of the compelling reasons for doing so, ordering activities shall not --
                (1) Place orders exceeding the guaranteed minimum under indefinite-quantity contracts;
                (2) Place orders against optional use Federal Supply Schedule contracts; or
                (3) Add new work, exercise options, or otherwise extend the duration of current contracts or orders.

In addition, the words "or a designee" would be removed from the phrase "agency head or a designee" in FAR 9.405, Effect of Listing, FAR 9.405-1, and FAR 9.405-2, Restrictions on Subcontracting, because paragraph (b) of FAR 1.108, FAR Conventions, states that "each authority is delegable unless specifically stated otherwise," so "or a designee" is superfluous.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2002 by Panoptic Enterprises. All Rights Reserved.

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