Kusserow’s Corner: GAO Issues a Report on Federal Suspensions and Debarments

Over the last year, I have posted many articles about the problems of screening against the GSA Excluded Parties List System (EPLS), now part of the System for Awards Management (SAM). My key point is that the SAM is designed solely for use by government agencies that engage contractors; health care providers and managed care organizations (MCOs) are not government contractors. They may bill the government for medical services provided, but that does not make them contractors. Since providers and MCOs are not government agencies, screening against SAM appears to provide questionable-at-best results, in that it is not likely that HHS or CMS would have posted many debarments of contractors that would be used by them. A new report by the Government Accountability Office (GAO) helps reinforce this position. The GAO conducted a study of government agencies’ use of suspension and debarment to exclude individuals, contractors, and grantees from receiving future contracts, grants, and other federal assistance due to various types of misconduct. In 2011, GAO reviewed 10 agencies and found that agencies issuing the most procurement-related suspensions and debarments shared common characteristics: dedicated staff, detailed policies and procedures, and an active referral process. GAO recommended that six agencies—the Departments of Commerce, HHS, Justice, State, the Treasury, and the Federal Emergency Management Agency—incorporate those characteristics, and that the Office of Management and Budget (OMB) issue guidance to improve oversight and government-wide suspension and debarment efforts.

Congress asked the GAO to review actions taken to implement its 2011 recommendations. This new report examines (1) actions taken by the six agencies to incorporate characteristics of active suspension and debarment programs; (2) changes in the level of suspension and debarment activity; and (3) actions taken to improve oversight and government-wide efforts. To do its review, GAO reviewed suspension and debarment programs, interviewed agency officials, verified the accuracy of agency data, and reviewed government-wide efforts. Each agency should (1) have an accountable official in place responsible for suspension and debarment; (2) take steps to address any necessary new resources, policies, or both; and (3) have written procedures to forward matters to the suspension and debarment official for possible action.

GAO found that the six agencies reviewed had all addressed staffing issues through actions such as defining roles and responsibilities, adding positions, and consolidating suspension and debarment functions. The agencies also have issued formal policies and promulgated detailed guidance. The agencies have engaged in practices that encourage an active referral process, such as establishing positions to ensure cases are referred for possible action, and developing case management tools. The result is that suspension and debarment activity is on the rise, even among agencies that do not traditionally suspend and debar contractors and recipients of federal assistance. Suspension and debarment activities at six agencies that had “few or no” procurement-related suspensions or debarments prior to 2010 increased these actions 14-fold between 2010 and 2013—from 19 to 271. GAO did not make any new recommendations in this report. OMB commented that it is pleased with the progress that agencies have made. The other agencies did not provide substantive comments.

The number of suspension and debarment actions government-wide has more than doubled from 1,836 in fiscal year (FY) 2009 to 4,812 in FY 2013. The number of suspension and debarment actions for the six agencies increased from 19 in FY 2009 to 271 in FY 2013. The six agencies generally experienced a notable increase starting in FY 2011 when the agencies began to take action to incorporate the characteristics associated with active suspension and debarment programs. For HHS, the number of debarments was three in 2009; six in 2010; 10 in 2011; one in 2012; and 47 in 2013. The total number of suspension and debarment actions includes procurement- and non-procurement-related suspensions, proposed debarments, and debarments. These debarment figures should not be confused with exclusions imposed upon providers and managed care plans, who are not government contractors. They are only participants in the federally-funded health care programs. By contrast, there were 1,720 individuals and entities excluded from participation in federal health care programs. The point is that screening the OIG’s List of Excluded Individuals and Entities (LEIE) is necessary to avoid submitting claims that include excluded parties, in that they would be considered false and potentially fraudulent.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2014 Strategic Management Services, LLC. Published with permission.