Two contractors' suspension
from government contracting was lifted by a
district court because no contractor may be
suspended for more than 18 months unless
legal proceedings are initiated against it.
The contractors were fourth- and fifth-tier
subsidiaries of a contractor that was
suspended following an indictment for
defrauding the government with regard to
contracts to supply food to military
personnel in the Middle East. The sole basis
for the contractors' suspension was their
status as affiliates. In cross-motions for
summary judgment on the contractors' action
to terminate their 31-month suspension, the
parties disputed the proper interpretation
of FAR
9.407-4 (b), which provides in part "[i]n
no event may a suspension extend beyond 18
months, unless legal proceedings have been
initiated within that period."
The government argued proceedings against
the suspended principal contractor allowed
continued suspension of its affiliates.
Sounder
Interpretation
The court sided with the
contractors' "sounder"
interpretation that FAR
9.407-4 (b) did not distinguish between
suspensions based on an enumerated cause and
suspensions based on affiliation. Therefore,
suspected wrongdoers and suspended
affiliates must be treated equally, and an
affiliate's suspension may not exceed 18
months unless legal proceedings have been
initiated against the affiliate itself.
Here, the contractors' continued suspension
was contrary to law and violated the
Administrative Procedure Act. ( Agility
Defense & Government Services, Inc., et
al. v. Dept. of Defense, et al., DC ND
Ala, 56
CCF ¶79,842)
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