Excluded Parties Listings: Don’t Exclude Your Business from Federal Contracts
January 3, 2008
Obtaining federal government contracts can be lucrative and highly competitive. Some individuals and business entities, not content to have won a hard-fought battle for a good piece of business, may seek to unethically exploit a business relationship with the federal government. Those that have been caught with their hand in the cookie jar, so to speak, will probably wind up on what is commonly referred to as an Excluded Parties List.
Excluded Parties Lists should not be confused with lists created for the exclusive use of the law enforcement community or terrorist watch lists, such as the Specially Designated Nationals (SDN) list, published by the Office of Foreign Assets Control (OFAC). Individuals and entities appearing on the OFAC SDN list have had their assets blocked and all U.S. persons are prohibited from dealing with them in general (a Social Security Number Trace will reveal matches with the OFAC SDN list).
Excluded Parties Lists identify those individuals and entities who are not permitted to receive Federal contracts and certain subcontracts, or from receiving Federal financial and nonfinancial assistance and benefits. The Federal Acquisition Regulation (FAR) contains the policies and procedures for administering Excluded Parties Lists. FAR Subpart 9.402(a) states “Agencies shall solicit offers from, award contracts to, and consent to subcontracts with responsible contractors only.” To qualify as a responsible contractor, an individual or entity must have “a satisfactory record of integrity and business ethics” and must possess the necessary organization, accounting and operational controls. The General Services Administration (GSA) compiles and maintains a current list of all parties debarred, suspended, proposed for debarment, or declared ineligible by government agencies or by the General Accounting Office (GAO). There are other government agencies that maintain their own Excluded Parties Lists, with evolving attempts at coordination between them.
A well-known example of activities that landed a couple of high-profile companies on the GSA Excluded Parties List is the accounting scandal at Enron Corporation, which resulted in Enron and Arthur Andersen losing their privilege to perform federal government contract work. Also resulting from this scandal were suspensions of various individual employees of these organizations. Individuals may be excluded from federal procurement and non-procurement programs, and their names will also appear on the Excluded Parties Lists.
While the Enron/Andersen scandal may seem worlds away from the daily routine of most companies, it is just one of a myriad of ways individuals and organizations may be debarred from federal work. More common examples occur, for example, in the health care industry, where federal Medicare and Medicaid payments are made to countless medical facilities and practitioners. Health care organizations that bill these or other federal programs may jeopardize their eligibility by employing a provider who is listed on the Excluded Parties List maintained by the Office of Inspector General (OIG) of the Department of Health & Human Services.
While it is relatively simple to check for a name match on an Excluded Parties Listing, the fact that the scope of these listings is worldwide means that a name-match alone may have a high probability of being a “false hit.” Verifying name-matches in conjunction with other identifiers to confirm or deny the match is very important if using this information as the basis for a hiring decision.
If your business or industry is dependent on federal contracts or subsidies, Excluded Parties Listings can be a useful tool in ensuring sound hiring decisions. It is a small piece of due diligence in the hiring process, but the consequences to your business of ignoring it could be substantial.
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