Someone help me out here. Hypothetically speaking that is.

If a private company with a small business status that holds several subcontracts issued by several different prime contractors performing a service for government agencies, I.E. Military branches, USEPA, US Army Corps of Engineers etc., and is found guilty for one, all, or any of the following, where is it encoded, What FAR, Title, Law etc, that this small company would\ could or is it mandated they would have there subcontract(s) terminated for such as =
* Sexual harrassment \ misconduct, discrimination
* Insurance fraud (Insurance was necessary to
carry out Gov't subcontracts)
* Falsifying Employee Drug Tests
* Utilizing a workforce with known narcotics use,
* Dealing drugs from "the" highest level in the
company.
* Operating a facility without a proper license &
having activities outside of any
intentions,snow jobbed a regulator or perhaps a
city council person

And would the offense need to be confirmed at the state or federal court level, or merely under investigation?

By joel hoffman on Sunday, September 03, 2000 - 11:03 am:

Please review FAR 3.7 and FAR, Part 9, in general. If a firm has been convicted of any of various criminal acts, it can be disbarred - Disbarment means the Gov't won't do business with a firm either as a prime as as a subcontractor. The Government would most likely inform the contractor that the subcontractor is objectionable. Contracts can be even be rescinded, so the prime will probably not argue, too much. Happy Sails! Joel

By Vern Edwards on Monday, September 04, 2000 - 10:31 am:

You are talking about subcontracts to government prime contracts, is that right? If so, the answer to your question does not depend on government laws or regulations, but on the terms of the subcontracts in question.

The Federal Acquisition Regulation does not prescribe rules for the termination of subcontracts. It does not even require that the prime contractor include termination clauses in its subcontracts. The termination clauses are not mandatory flowdown clauses.

It is up to prime contractors to decide on what if any basis they will terminate their subcontracts. Some prime contractors include clauses in subcontracts that allow them to terminate a subcontract "without cause." Most primes probably use the government's termination clauses, appropriated modified.

In short, the small business should read its contracts with the government prime contractors and see what they say about termination.

What your small business should be very concerned about is whether the offenses in question will render them "nonresponsible," in accordance with FAR Subpart 9.1. A government contracting officer can declare a prime contractor nonresponsible because it has proposed to use a subcontractor that is nonresponsible, a fact that will make the small business a very unattractive prospective subcontractor.

A criminal conviction or the loss of a civil suit for any of the offenses that you listed could (probably would) render a firm "nonresponsible." Under the right circumstances, it could result in suspension or debarment.

By joel hoffman on Monday, September 04, 2000 - 11:03 am:

FAR 9.409 (b) requires a clause 52.249-6 Protecting the Government's Imterest in Subcontracting with Contractors Barred, Suspended or Proposed for Debarment in contracts exceeding $25k.

If a proposed Subcontractor already falls under one of those categories, the Contractor is prohibited from subcontracting with them, without compelling reason and the Government's concurrence on a subcontract, exceeding $25k.

If the Government had no leverage at all, debarred subcontractors would simply arrange for "front" primes to obtain contracts for them.
Happy Sails!

By joel on Monday, September 04, 2000 - 11:05 am:

Sorry - the Clause is 52.209-6. Happy Sails! Joel

By joel hoffman on Monday, September 04, 2000 - 11:08 am:

Meant to add that the Government can require the Contractor to take corrective action, pursuant to the above clause. Happy Sails! Joel

By Vern Edwards on Tuesday, September 05, 2000 - 03:01 am:

Joel:

The clause prohibits the prime from entering into subcontracts with firms that have been debarred, suspended, or proposed for debarment, unless there is a compelling reason to do so. If the contractor does so without authorization, then it will have breached its contract with the Government.

If the prime breached its contract by awarding a subcontract to a firm that had been debarred, etc., then I guess that the Government could either force the prime to terminate the subcontractor by threatening to terminate the prime for default, or refuse to pay the prime for work done by that sub. (I suppose that the prime would have to terminate the sub for convenience and pay the sub off in order to keep him from suing the prime for breach of contract.)

But if the sub was debarred, suspended, or proposed for debarment after it had been awarded the subcontract, then I don't think the Government would have any contractual basis for demanding that the prime terminate the sub. Do you?

By joel hoffman on Tuesday, September 05, 2000 - 08:45 am:

Vern, I believe you are correct. Existing contracts and subcontracts probably are not affected by debarment.

I think the Government would have only recourse under the clause for improper subcontract awards after a firm has been debarred, suspended, or proposed for debarment. Happy Sails! Joel

By Susan McCullough on Thursday, September 07, 2000 - 01:40 pm:

Government prime contractors are required to include the Equal Opportunity clause (52.222-26) in subcontracts over the triggering threshold ($10K). Paragraph (b)(9) of that clause reads: "If the OFCCP determines that the Contractor is not in compliance with this clause or any rule, regulation, or order of the Secretary of Labor, this contract may be canceled, terminated, or suspended in whole or in part and the Contractor may be declared ineligible for further Government contracts, under the procedures authorized in Executive Order 11246, as amended. In addition, sanctions may be imposed and remedies invoked against the Contractor as provided in Executive Order 11246, as amended; in the rules, regulations, and orders of the Secretary of Labor; or as otherwise provided by law."

So in the case of discrimination, there would be a basis for the prime to terminate a subcontract, if the OFCCP makes the necessary determination.

Susan