Contractors that have a delinquent federal debt

[JLchief55]

I have a contractor that submitted a low bid on a ARRA Funded project that is currently on the "Delinquent Federal Debt" list. Where do I go to find my backup support to not award to him? He is planning on protesting the award if I don't give it to him. The only reference I found in the FAR Part 9, was that this is reason for debarment, but is not clear in that I cannot award to him.

[Navy_Contracting_4]

I have a contractor that submitted a low bid on a ARRA Funded project that is currently on the "Delinquent Federal Debt" list. Where do I go to find my backup support to not award to him? He is planning on protesting the award if I don't give it to him. The only reference I found in the FAR Part 9, was that this is reason for debarment, but is not clear in that I cannot award to him.

Have you addressed the requirement in FAR 9.103 to make an affirmative determination of responsibility?

Is the company a small business concern?

[traipse]

JLchief55,

We just went through a similar scenario. The vendor paid the debt, we awarded the contract and we moved on. Does your vendor not want to pay what they owe or do they dispute that they owe it? The simplest thing for them would be to just pay their debt. Consider circumstances when you make your responsibility determination and consider defenses to a determination that the vendor is not responsible if you go that route.

[napolik]

I have a contractor that submitted a low bid on a ARRA Funded project that is currently on the "Delinquent Federal Debt" list. Where do I go to find my backup support to not award to him? He is planning on protesting the award if I don't give it to him. The only reference I found in the FAR Part 9, was that this is reason for debarment, but is not clear in that I cannot award to him.

Your solicitation should have included FAR 52.209-5, Certification Regarding Responsibility Matters (Apr 2010). Subparagraph (a) (1)(i) (D) requires the Offeror to make the following certification

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(D) Have [_], have not [_], within a three-year period preceding this offer, been notified of any delinquent Federal taxes in an amount that exceeds $3,000 for which the liability remains unsatisfied.

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If the Offeror responds affirmatively, FAR 9.104-5 (a) says the following:

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(a) When a offeror provides an affirmative response in paragraph (a)(1) of the provision at 52.209-5, Certification Regarding Responsibility Matters, or paragraph (h) of provision 52.212-3, the contracting officer shall?

(1) Promptly, upon receipt of offers, request such additional information from the offeror as the offeror deems necessary in order to demonstrate the offeror?s responsibility to the contracting officer (but see 9.405); and

(2) Notify, prior to proceeding with award, in accordance with agency procedures (see 9.406-3(a) and 9.407-3(a)), the agency official responsible for initiating debarment or suspension action, where an offeror indicates the existence of an indictment, charge, conviction, or civil judgment, or Federal tax delinquency in an amount that exceeds $3,000.

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Since the Offeror is not currently debarred, suspended or proposed for debarment (see FAR 9.405), you must gather whatever additional information you need to reach a conclusion about the contractor?s responsibility.

I suggest you look at FAR 42.1501 -- General. This FAR section includes the following among sources of relevant information: ??; the contractor?s record of integrity and business ethics, ??.

Over the course of the past decade what constitutes a satisfactory record of integrity and business ethics has been the subject of political debates (e.g. Current and past administration rules addressing the Contracting Officer discretion / obligation to exclude contractors from federal projects for failing to comply with various statutes that have little to do with contract.). However, the debates have not made clear to me that failure to pay taxes in an amount exceeding $3,000, by itself, is grounds for debarment.

Would a single delinquency exceeding $3,000 be sufficient to doubt a contractor?s integrity and ethics? Suppose the delinquency was $100 million? Suppose there are multiple delinquencies?

You must assess these facts concerning integrity and the facts relevant to other elements of responsibility. Then, you must draw a conclusion.

If you conclude that the contractor is not responsible because of integrity and if the contractor is a small business then you must follow FAR 19.602-1 -- Referral.

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(a) Upon determining and documenting that an apparent successful small business offeror lacks certain elements of responsibility (including, but not limited to, capability, competency, capacity, credit, integrity, perseverance, tenacity, and limitations on subcontracting, but for sureties see 28.101-3(f) and 28.203©), the contracting officer shall --

(1) Withhold contract award (see 19.602-3); and

(2) Refer the matter to the cognizant SBA Government Contracting Area Office (Area Office) serving the area in which the headquarters of the offeror is located, in accordance with agency procedures, except that referral is not necessary if the small business concern --

(i) Is determined to be unqualified and ineligible because it does not meet the standard in 9.104-1(g); provided, that the determination is approved by the chief of the contracting office; or

(ii) Is suspended or debarred under Executive Order 11246 or Subpart 9.4.

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