One Less Loophole

“I’M CHECKING FOR LOOPHOLES”
-W.C. FIELDS IN RESPONSE TO A FRIEND WHO CAUGHT HIM READING THE BIBLE.

AUTHORED BY ATTORNEY JERRELL E. WILLIAMS

Federal laws have many loopholes, but one loophole, regarding the protection of government interest when subcontracting with contractors debarred, suspended, or proposed for debarment, just got closed.
Before August 4, 2011, by operation of Federal Acquisition Regulation (FAR) 52.209-6 (Protecting the Government’s Interest When Subcontracting with Contractors Debarred, Suspended, or Proposed for Debarment), prime contractors on federal projects had to obtain prior written confirmation from subcontractors as to whether the subcontractors had been suspended, debarred, or proposed for debarment by the Federal Government, and subcontracts above $30,000 could not be awarded to contractors that had been suspended, debarred, or proposed for debarment, unless a compelling reason could be shown, but these requirements stopped at the first-tier level. In other words, there was a “loophole” that allowed contractors that had been suspended, debarred, or proposed for debarment to receive such subcontracts below the first-tier, without the Federal Government knowing.
Now, since August 4, 2011, under the new federal rules, subcontracts for federal projects, over $30,000, may not be awarded to suspended or debarred subcontractors at any level, and the requirement to obtain written confirmation as to whether the subcontractors had been suspended or debarred flows down to lower tier subcontractors. However, an exemption—a loophole—was created for subcontracts for commercially available off-the-shelf items (COTS). That is, contractors that had been suspended, debarred, or proposed for debarment may be awarded a COTS subcontract.
What should you do, besides avoiding being suspended, debarred, or proposed for debarment by the Federal Government? Your contracting company should: 1) make sure it has adequate subcontracting policies and procedures in place to obtain the necessary written representations from prospective subcontractors regarding whether they have been suspended, debarred, or proposed for debarment, and 2) consult an attorney to determine whether your subcontracts should include the new FAR contract clauses and to ensure that your subcontracts have the current clauses.

Articled authored by attorney Jerrell Williams. These articles are meant to bring awareness to these topics and are not intended to be used as legal advice.
For more information, contact Mike at 757-446-8626 or Bill Franczek at 757-446-8600.
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