The Interagency Suspension and Debarment Committee (ISDC) recently issued its annual report to Congress on federal government suspension and debarment activities for fiscal year (FY) 2018. As discussed below, this year’s ISDC report shows that, while suspension and debarment-related actions have decreased from FY 2017, the FY 2018 data still reflects “nearly double the activity reported in FY 2009,” which is the first year that the ISDC started formally tracking such data.

What is the ISDC Suspension and Debarment Report?

Created by Executive Order 12549, the ISDC is an interagency body, “consisting chiefly of representatives from Executive-branch organizations that work together to provide support for suspension and debarment programs throughout the Government.” Section 873 of Public Law 110-417 requires the ISDC to submit an annual report to Congress on, among other things, “the progress and efforts to improve the suspension and debarment system” and “a summary of each agency’s activities and accomplishments in the Government debarment system.”

What are the key takeaways from this year’s report?

As the following chart from this year’s ISDC report shows, federal agencies initiated a total of 3,356 suspension and debarment-related actions in FY 2018 (480 suspensions, 1,542 proposed debarments, and 1,334 debarments).

Suspension & Debarment Annual Report: Key Takeaways

By comparison, in FY 2017, federal agencies initiated a total of 3,640 suspension and debarment-related actions (604 suspensions, 1,613 proposed debarments, and 1,423 debarments).

As a further point of comparison, however, the following chart from this year’s report shows that “the total number of suspensions, proposed debarments, and debarments in FY 2018 represent nearly double the activity level reported in FY 2009, when the ISDC formally commenced data tracking.”

Suspension & Debarment Annual Report: Key Takeaways

Moreover, for FY 2018, federal agencies reported issuing 197 pre-notice letters to potential respondents, “approximately tripling the total of 70 first reported in FY 2009.” According to the report, pre-notice letters — “which include show cause letters, requests for information, and similar types of letters” — are “used to inform an individual or entity that the agency debarment program is reviewing matters for potential SDO [Suspending and Debarring Official] action, identify the assertion of misconduct, and give the recipient an opportunity to respond prior to formal SDO action.”

Finally, the report notes that, for FY 2018, 14 federal agencies reported “entering into 61 administrative agreements” — which “are used as an alternative to suspension and debarment and typically mandate the implementation of several provisions to improve the ethical culture and corporate governance processes of a respondent, often with the use of independent third-party monitors.” By comparison, in FY 2009, only 35 administrative agreements were utilized by five federal agencies to “resolve suspension or debarment concerns.”

Wait, I have more questions!

If you have any questions about this year’s ISDC report, or about suspension and debarment-related actions in general, please do not hesitate to contact Aron Beezley.

ALERT: SBA Issues Final Rule on Small Business Runway Extension ActThe U.S. Small Business Administration (SBA), in accordance with the Small Business Runway Extension Act of 2018, recently issued its much-anticipated final rule to modify its method for calculating average annual receipts used to prescribe size standards for small businesses.

Here are the key takeaways from SBA’s final rule:

  • SBA is changing its regulations on the calculation of average annual receipts for all of SBA’s receipts-based size standards, and for other agencies’ proposed receipts-based size standards, from a 3-year averaging period to a 5-year averaging period, outside of the SBA Business Loan and Disaster Loan Programs.
  • Importantly, for all programs other than the SBA Business Loan and Disaster Loan Programs, SBA is adopting a transition period through January 6, 2022, during which firms may choose between using a 3-year averaging period and a 5-year averaging period.
  • SBA’s final rule in this regard is effective January 6, 2020.

If you have any questions about how this final rule may impact your business, please do not hesitate to contact Aron Beezley.

SBA Proposes Merging 8(a) and All Small Mentor-Protégé ProgramsThe Small Business Administration (SBA) recently issued a proposed rule “to merge the 8(a) Business Development (BD) Mentor-Protégé Program and the All Small Mentor-Protégé Program to eliminate confusion and remove unnecessary duplication of functions within SBA.”

What are the purposes of the programs?

The mentor-protégé program currently available to companies participating in the 8(a) BD Program – a business assistance program for small disadvantaged businesses – is “used as a business development tool in which mentors provide diverse types of business assistance to eligible 8(a) BD protégés.” The “explicit purpose” of the 8(a) BD mentor-protégé relationship is to “enhance the capabilities of protégés and to improve their ability to successfully compete for both government and commercial contracts.”

Similarly, the All Small Mentor-Protégé Program, which applies to all small businesses – including 8(a) Program participants, Historically Underutilized Business Zone (HUBZone) small businesses, veteran-owned and service-disabled veteran-owned small businesses (VOSB/SDVOSBs), woman-owned and economically disadvantaged woman-owned small businesses (WOSBs/EDWOSBs) – is designed to “require approved mentors to aid protégé firms so that they may enhance their capabilities, meet their business goals, and improve their ability to compete for contracts.”

As such, the purposes of the two programs are identical.

What are the benefits of the programs?

Additionally, the benefits available under both programs are identical. Small businesses and 8(a) Program participants receive “valuable business development assistance and any joint venture formed between a protégé firm and its SBA-approved mentor receives an exclusion from affiliation, such that the joint venture will qualify as a small business provided the protégé individually qualifies as small under the size standard corresponding to the NAICS code assigned to the procurement.”

A protégé company may enter a joint venture with its SBA-approved mentor and be eligible for any contract opportunity for which the protégé qualifies. If a protégé company is an 8(a) Program participant, a joint venture between the protégé and its mentor “could seek any 8(a) contract, regardless of whether the mentor-protégé agreement was approved through the 8(a) BD Mentor-Protégé Program or the All Small Mentor-Protégé Program.”

Further, a company could be certified as an 8(a) Program participant after its mentor-protégé relationship has been approved by the SBA under the All Small Mentor-Protégé Program and be eligible for 8(a) contracts as a joint venture with its mentor once certified.

What is the SBA proposing?

Because the benefits and purposes of the two programs are identical, the SBA “believes that having two separate mentor-protégé programs is unnecessary and causes needless confusion in the small business community.” Accordingly, this proposed rule would eliminate a separate 8(a) BD Mentor-Protégé Program and continue to allow any 8(a) participant to enter a mentor-protégé relationship through the All Small Mentor-Protégé Program. More specifically, the proposed rule would “revise [13 CFR] § 124.520 to merely recognize that an 8(a) Participant, as any other small business, may participate in SBA’s Small Business Mentor-Protégé Program.”

In merging the two programs, the proposed rule would also make “conforming amendments” to the SBA’s size regulations (13 CFR part 121), the joint venture provisions (13 CFR 125.8), and the All Small Mentor-Protégé Program regulations (13 CFR 125.9).

Wait, I have more questions!

If you have any questions about this noteworthy development, please do not hesitate to contact Aron Beezley.