DEBARMENT AND SUSPENSION OF PERSONS FROM ASSISTED CONSTRUCTION WORK I. COMMITTEE FINDINGS Some 340 business firms are now barred from participating directly or indirectly in some or all government procurement or surplus-disposal contracts, and about 60 of these are also excluded from contracts for most federally assisted construction work throughout the United States. 1/ In government parlance this bar is known as contractor "ineligibility," "debarment," or "suspension." Each term has a shade of distinct technical meaning but primarily denotes the end result of exclusion from various federal programs for varying periods of time. 2/ Except for a small percentage, 3/this government action is taken without opportunity for an adversary hearing and if based on suspected criminal conduct is generally without being officially notified or informed of meaningful reasons, or opportunity to learn why. 4/ At issue are the Government's operational interest in excluding the dishonest and the willful or chronic contract violators from its programs by means that do not impede on-going contracting or impair law enforcement, and the competing public interest in assuring that the debarment power is exercised in a fair and open manner because of the severe, often fatal consequences of this government sanction. 5/ The penalty of three-year debarment from some or all government contracts is explicitly required by the Buy American and Davis-Bacon Acts for certain violations of those laws, 6/ and may be administratively imposed for substantive noncompliance with the Walsh-Healey Act. 7/ Beyond this, there is no statutory authority for contractor debarment in a punitive or penal sense. 8/ There is, however, statutory authority to refuse government contracts to persons so long as they do not qualify as manufacturers or regular dealers, 9/ or are not "responsible" in their business dealings, 9a/ and the administrative power to debar or suspend persons found or believed to be incapable or untrustworthy of performing government contracts is implied from this latter authority. 10/ A further source of power administratively to debar construction contractors from certain federally assisted projects for wage and overtime pay violations is contained in regulations of the Secretary of Labor issued under Reorganization Plan No. 14 of 1950. 11/ The major problems of contractor debarment are the absence of safeguards to insure procedural fairness, the inadequacy of the rules concerning the grounds and the scope of debarment, the length and disparity of debarment periods, and the combination of prosecutive and judicial functions in decision-making regarding debarment. Our study indicates: 1. The absence of the safeguards of procedural fairness: a. Business firms suspected of fraud or other criminal conduct in their government business or contractual dealings are subject to "suspension" from further government contracts pending investigation and appropriate action by the Department of Justice, a time period that frequently exceeds 3 years. Procurement regulations do not provide for advance notice, and in some cases prohibit opportunity to know the reasons, or the evidence for the suspension. 12/ There are currently about 75 such outstanding suspensions by the Department of Defense alone, most of which have continued more than 1 year and a third of which have continued more than 5 years. 13/ b. With the exception of debarments by the Department of Labor under the Walsh-Healey Act, 14/ certain administrative debarments by the General Services Administration, 15/ and administrative debarments for racial or religious discrimination by contractors against their employees, 16/ agency procedures do not provide opportunity for adversary hearings in debarment cases. 17/ In practice, such hearings are rarely held. 18/ c. Administrative debarments by one contracting agency may be routinely extended by other agencies to their contracts without prior notice and opportunity to defend, 19/ and in some cases without any notice. 20/ d. In addition to agency or government-wide debarments officially imposed, de facto debarments or suspensions by government contracting officers, usually based on internal agency, or bureau, lists of firms of questionable performance responsibility or integrity, appear to be widespread. 21/ For the most part these lists are secret, and business firms are without notice of, or meaningful opportunity to challenge, the fact of listing or the denial of contracts on such grounds. 22/ e. In the procurement of clothing for the Armed Forces, suppliers of questionable performance reliability and business integrity are excluded or removed for indefinite periods from lists of eligible contrac |