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New U.S. Labor Department Pilot Program Aims to Fast Track Discretionary Suspensions and Debarments

Early last week, the U.S. Department of Labor (DOL) announced a new pilot program to speed up discretionary suspensions and debarments of individuals and contractors “from months to days.”1 The pilot program will begin in April 2019 and continue through April 2020.

Suspensions and debarments are often the consequence of fraud, theft, bribery, or other related conduct by government contractors. In the labor context, discretionary suspensions and debarments may result for conduct related to discrimination based on race, religion, gender identity, sex, or national origin (to include failure to adhere to fair pay practices or provide equal access to job opportunities), as well as sexual harassment.2 DOL enforces labor standards against contractors with other agencies, and, like any other federal agency, DOL also suspends and debars its own contractors for various reasons.

The pilot program’s goal is to reduce the processing time for discretionary suspensions and debarments through the sharing of information based on indictments or convictions. Under the pilot program, the Office of Inspector General at DOL will now include additional information in its referrals to the Office of the Assistant Secretary for Administration and Management (OASAM) based on indictments or convictions, allowing OASAM to process suspensions and debarments “faster than ever before.” Discretionary suspensions and debarments make individuals or organizations ineligible for federal contracting and transactions with the federal government generally for up to 12 months for a suspension and up to three years for a debarment. Mandatory suspensions and debarments that are set by law, such as those for violations of the Service Contract Act or Davis-Bacon Act, are not affected by the pilot program.

The pilot program will likely strengthen DOL’s recent increased enforcements efforts. DOL announced that discretionary suspensions increased from a total of two during the seven years of Fiscal Year (FY) 2010 through FY2016 to 29 during FY2017 to FY2018. Additionally, discretionary debarments jumped from one during FY2010 through FY2016 to 32 during FY2017 to FY2018. DOL announced that in just the first quarter of FY2019, DOL has issued 32 discretionary suspensions and five discretionary debarments.

DOL’s new pilot program increases the stakes for all government contractors under review for their labor practices. A government investigation that uncovers sexual harassment, unlawful discrimination, or other prohibited labor practices may now result in a contractor’s discretionary suspension and debarment being fast tracked if the conduct forms part of an indictment or conviction.

The new pilot program emphasizes the importance for contractors working with any government agency to ensure their labor policies and practices are compliant with federal regulations. In addition to suspension or debarment, labor violations may result in the cancellation of the contract and/or withholding of contract payments in amounts sufficient to remedy damages to employees.3 Liquidated damages and/or other penalties may also be assessed.4 Finally, the announcement of the pilot program may encourage other government agencies to test a similarly aggressive approach to discretionary suspensions and debarments when learning of indictments or convictions for wrongdoing.

Visit our website to learn more about V&E’s Government Contracts practice. For more information, please contact Vinson & Elkins lawyers Jamie Tabb, Elizabeth Krabill McIntyre, or Dan Wallmuth.

1 https://www.dol.gov/newsroom/releases/osec/osec20190402.

2 E.O. 11246, sec. 202(1); 41 C.F.R. § 60-1.27 (Sanctions); 41 C.F.R. § 60-1.4 (Equal Opportunity Clause);

3 41 C.F.R. § 60-20.8 (Harassment and hostile work environments). 41 C.F.R. § 60-1.27; 48 C.F.R. § 52.222-41(k).

4 29 U.S.C § 260.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.