Government Contracting: Suspension Doesn’t Only Mean Loss of Federal Business

Written on January 13, 2020

Companies participating in the public sector market may not always have the federal government as their largest public sector customer. Some companies find that their largest public sector clients are state, or even local, governments. It is important to remember that violations on a federal contract can have serious implications for all your company’s public sector business. Even if the amount of federal business is small in terms of your firm’s overall sales, it is vital to understand the terms of each federal contract and help ensure that proper compliance systems are in place. Your federal business may not look small to federal contract compliance officials. In addition to fines and penalties, companies that violate the terms of their federal contract can find themselves in front of a suspension or debarment official. A negative outcome puts your state and local government business at risk. Almost all states use the federal suspension and debarment list to determine whether a company is eligible for an award. If your firm is on the list, it will essentially be banned from any new business with state and local governments that use the list. In addition, competing companies have also been known to tell state and local officials when an incumbent has landed on the list. This could jeopardize existing business. The subcontractor route is also closed to you as well, as at least prime contractors at the federal level are forbidden from doing business with suspended or debarred companies. It is a definite best practice to ensure good compliance with all public sector contracts. While they may have different terms, most are united in refusing to do business with a suspended or debarred company.

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