For organizations doing business with the federal government, few administrative actions carry the immediate and far-reaching consequences of Suspension and Debarment (S&D). Using these powerful enforcement tools, a federal agency can instantly sever an organization's access to federal contracts, grants, loans and loan guarantees, and other funding sources—often with devastating financial and reputational effects. Whether your organization is a prime contractor, subcontractor, grant recipient, or a local vendor/contractor providing goods or services for a local authority funded by a federal program (e.g., Bipartisan Infrastructure Law – BIL, Inflation Reduction Act – IRA, CHIPs and Science Act, etc.) understanding S&D is not merely advisable—it's essential for organizational risk management and business continuity.

These enforcement tools have far-reaching implications, including:

  • S&D actions can immediately terminate your organization's federal revenue streams, as these administrative remedies exclude entities from receiving government contracts, grants, loans, and other assistance programs.
  • Your organization's reputation faces significant risk when listed in the public System for Award Management (SAM) exclusion database, visible to all potential business partners, creditors, and investors.
  • The impact extends beyond federal business to commercial relationships, as private sector partners increasingly conduct due diligence that includes checking federal exclusion lists.
  • Multiple business activities can trigger S&D proceedings, including not just fraud but also any perceived falsification or dishonest conduct, anti-competitive behavior, contractual breach, poor contract performance, tax delinquencies, and failure to disclose misconduct.
  • Organizations have the constitutional right to fully contest S&D actions prior to and even after adjudication of guilt, but success requires understanding complex procedural requirements and presenting compelling evidence of "present responsibility."
  • Because S&D are “business remedies” and may not be used as punishment, there is always a legal path to present responsibility.

The business consequences of S&D cannot be overstated. When an organization faces suspension or debarment, the effects ripple throughout its operations. Existing contracts and subcontracts may be terminated, revenue streams and funding sources cut off, and eligibility for future business opportunities foreclosed—not just with the agency taking action but across the entire federal government. This government-wide effect means that an exclusion action taken by a single agency effectively locks an organization out of all federal business opportunities, potentially for years.

What makes S&D particularly challenging for organizations is the relatively low threshold for action. Unlike criminal proceedings with their high burden of proof, Suspension actions require only that officials have "adequate evidence" of misconduct or determine that an entity lacks "present responsibility." This means that mere allegations under investigation can trigger a suspension. Companies have the right to review and challenge the basis for an S&D action and all unsupported government assertions. Organizations must also be prepared to vigorously demonstrate their trustworthiness through taking robust corrective actions and remedial measures by enhancing compliance programs, demonstrating leadership accountability, and instituting new effective internal controls to address any identified issues.

All companies and organizations, whether they are working with a federal agency, state or local authority, or commercial business partners that perform work with government agencies, needs to account for the risk of Suspension and Debarment as a critical component of risk management. The wide-ranging impacts—from immediate financial losses to long-term reputational damage—make it essential to implement preventive compliance measures, and to develop response strategies before problems arise.

Whether your organization wishes to proactively strengthen its compliance program to eliminate S&D risks or requires immediate assistance contesting an S&D action, Fluet's Government Contracts team can provide the specialized guidance needed to restore and protect your ability to do business with the government.