Purchasing of Property and Services; Supplier Debarment, Suspension, and Ineligibility, 65342-65346 [2014-26111]

Agencies

• Postal Service

[Federal Register Volume 79, Number 213 (Tuesday, November 4, 2014)]
[Rules and Regulations]
[Pages 65342-65346]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-26111]


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POSTAL SERVICE

39 CFR Part 601


Purchasing of Property and Services; Supplier Debarment, 
Suspension, and Ineligibility

AGENCY: Postal Service.TM

ACTION: Final rule.

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SUMMARY: The Postal Service is revising its regulations governing 
supplier debarment, suspension, and ineligibility to reflect that the 
Postal Service has eliminated its separate list of debarred, suspended, 
or ineligible suppliers, and now uses the list maintained by the 
General Services Administration (GSA) under its System for Award 
Management (SAM).

DATES: Effective date: December 4, 2014.

FOR FURTHER INFORMATION CONTACT: Paul McGinn, 202-268-4368.

SUPPLEMENTARY INFORMATION: The Postal Service (USPS[supreg]) is 
revising 39 CFR 601.113, governing supplier debarment, suspension, and 
ineligibility. The Postal Service has eliminated its own separate list 
of debarred, suspended, and ineligible suppliers, and now uses the 
GSA's System for Award Management (SAM) to determine whether a 
particular supplier is suspended, debarred, or ineligible, and to 
notify the public when the USPS suspends or debars a supplier. 
Necessary changes have been made to the language of Sec.  601.113, 
including replacement of the term ``debarment, suspension, and 
ineligibility'' with ``suspension, debarment, and ineligibility'' to 
reflect the sequence of events followed in that

[[Page 65343]]

process. These changes are explained in more detail below.
    Additionally, 39 CFR 601.108(c), concerning SDR Official 
disagreement resolution, has been revised to provide a new address for 
lodging supplier disagreements.

Explanation of Changes

Section 601.108: SDR Official Disagreement Resolution

    Paragraph (c) of this section has been revised to provide a new 
address for a supplier to lodge a disagreement with the Supplier 
Disagreement Resolution Official (SDRO).

Section 601.113: Debarment, Suspension, and Ineligibility

    Throughout this section, references to the Postal Service's List of 
Debarred, Suspended, and Ineligible Suppliers have been replaced by 
references to the General Services Administration's (GSA) System for 
Award Management (SAM).
    The title of Sec.  601.113 Debarment, suspension, and ineligibility 
has been changed to Suspension, debarment, and ineligibility, and 
throughout this section, the term ``debarred, suspended, and 
ineligible'' and variants thereof have been replaced by the term 
``suspended, debarred, and ineligible.''
    Paragraph (c)(1) states that the Postal Service uses SAM to 
determine whether a supplier has been suspended, debarred, or proposed 
for debarment.
    Paragraph (c)(2) states that SAM maintains a consolidated database 
of all persons and entities suspended, debarred, proposed for 
debarment, or declared ineligible by Federal agencies or the Government 
Accountability Office (GAO), which is accessible to the public at 
https://www.sam.gov.
    Paragraph (c)(3) states that, through a representative, the Postal 
Service's vice president, Supply Management, will use SAM to report 
Postal Service suspension, debarment, and proposed debarment decisions, 
including changes in the status of any suspended or debarred supplier 
or affiliate.
    The title of paragraph (d)(1) has been changed to Treatment of 
suppliers included in the SAM Exclusions database, and this paragraph 
has been revised to delete the reference to the Postal Service list.
    Old paragraph (d)(2) has been deleted because of the discontinuance 
of the Postal Service list, and paragraphs (d)(3), (d)(4), and (d)(5) 
have been renumbered. Earlier discussion and references in these 
paragraphs to the Postal Service list have been deleted. These 
paragraphs have all been revised to reference SAM rather than previous 
lists.
    Paragraph (e) has been retitled Causes for suspension. No further 
changes have been made to this paragraph.
    Paragraph (f) has been retitled Period of suspension. No further 
changes have been made to this paragraph.
    Paragraph (g) has been retitled Procedural requirements for 
suspension. No further changes have been made to this paragraph.
    Paragraph (h) has been retitled Causes for debarment. No further 
changes have been made to this paragraph.
    Paragraph (i) has been retitled Mitigating factors. No further 
changes have been made to this paragraph.
    Paragraph (j) has been retitled Period of debarment. No further 
changes have been made to this paragraph.
    Paragraph (k) has been retitled Procedural requirements for 
debarment. In addition, language has been added to lay out in greater 
detail the procedural steps of the debarment process, including the 
requirement that the supplier may submit, in person or in writing, 
information and argument in opposition to the proposed debarment.
    Old paragraph (k)(3) has been deleted and (k)(4) and (k)(5) have 
been renumbered.

List of Subjects in 39 CFR Part 601

    Government procurement, Postal Service.

    Accordingly, 39 CFR part 601 is amended as follows:

PART 601--PURCHASING OF PROPERTY AND SERVICES

0
1. The authority citation for 39 CFR part 601 continues to read as 
follows:

    Authority:  39 U.S.C. 401, 404, 410, 411, 2008, 5001-5605.


0
2. In Sec.  601.108, revise paragraph (c) to read as follows:


Sec.  601.108  SDR Official disagreement resolution.

* * * * *
    (c) Lodging. The disagreement under Sec.  601.107 or contest of 
decision under Sec.  601.105 must be lodged with the SDR Official in 
writing via facsimile, email, hand delivery, or U.S. Mail. The 
disagreement under Sec.  601.107 or contest of decision under Sec.  
601.105 must state the factual circumstances relating to it and the 
remedy sought. A disagreement under Sec.  601.107 must also state the 
scope and outcome of the initial disagreement resolution attempt with 
the contracting officer. The address of the SDR Official is: Supply 
Management, Room 1141 (Attn: SDR Official), United States Postal 
Service Headquarters, 475 L'Enfant Plaza SW., Washington, DC 20260-
1141; email Address: SDROfficial@usps.gov; Fax Number: (202) 268-0075.
* * * * *

0
3. Revise Sec.  601.113 to read as follows:


Sec.  601.113  Suspension, debarment, and ineligibility.

    (a) General. Except as provided otherwise in this part, contracting 
officers may not solicit proposals from, award contracts to, or, when a 
contract provides for such consent, consent to subcontracts with 
suspended, debarred, or ineligible suppliers.
    (b) Definitions.--(1) Affiliate. A business, organization, person, 
or individual connected by the fact that one controls or has the power 
to control the other or by the fact that a third party controls or has 
the power to control both. Indications of control include, but are not 
limited to, interlocking management or ownership, identity of interests 
among family members, shared facilities and equipment, contractual 
relationships, common use of employees, or a business entity organized 
following the suspension, debarment, or proposed debarment of a 
supplier which has the same or similar management, ownership, or 
principal employees as the supplier that was suspended, debarred, or 
proposed for debarment. Franchise agreements are not conclusive 
evidence of affiliation if the franchisee has a right to profit in 
proportion to its ownership and bears the risk of loss or failure.
    (2) Debarment. An exclusion from contracting and subcontracting for 
a reasonable, specified period of time commensurate with the 
seriousness of the offense, failure, or inadequacy of performance.
    (3) General Counsel. This includes the General Counsel's authorized 
representative.
    (4) Indictment. Indictment for a criminal offense. An information 
or other filing by competent authority charging a criminal offense is 
given the same effect as an indictment.
    (5) Ineligible. An exclusion from contracting and subcontracting by 
an entity other than the Postal Service under statutes, executive 
orders, or regulations, such as the Davis-Bacon Act, the Service 
Contract Act, the Equal Employment Opportunity Acts, the Walsh-Healy 
Public Contracts Act, or the Environmental Protection Acts and related 
regulations or executive orders, to which the Postal Service is subject 
or has adopted as a matter of policy.
    (6) Suspension. An exclusion from contracting and subcontracting 
for a

[[Page 65344]]

reasonable period of time due to specified reasons or the pendency of a 
debarment proceeding.
    (7) Supplier. For the purposes of this part, a supplier is any 
individual, person, or other legal entity that:
    (i) Directly or indirectly (e.g., through an affiliate) submits 
offers for, is awarded, or reasonably may be expected to submit offers 
for or be awarded, a Postal Service contract, including a contract for 
carriage under Postal Service or commercial bills of lading, or a 
subcontract under a Postal Service contract; or
    (ii) Conducts business or reasonably may be expected to conduct 
business with the Postal Service as a subcontractor, an agent, or as a 
representative of another supplier.
    (c) Suspension, debarment, and ineligible list. (1) The Postal 
Service uses the General Services Administration's System for Award 
Management (SAM) to determine if suppliers are suspended, debarred, or 
proposed for debarment.
    (2) SAM maintains a consolidated database of all persons and 
entities suspended, debarred, proposed for debarment, or declared 
ineligible by Federal agencies or the Government Accountability Office. 
SAM is accessible by the public on GSA's Web site at https://www.sam.gov.
    (3) Through a representative, the vice president, Supply Management 
will use the SAM Exclusions database to report Postal Service 
suspensions, debarments and proposed debarment decisions; including 
changes in the status of suppliers and any of their affiliates. 
Inquiries concerning listed suppliers should be directed to the agency 
or other authority that took the action.
    (d) Treatment of suppliers included in the SAM Exclusions database. 
(1) Contracting officers will review the SAM Exclusions database before 
making a contract award.
    (2) Suppliers included in the SAM Exclusions database are excluded 
from receiving contracts and subcontracts, and contracting officers may 
not solicit proposals or quotations from, award contracts to, or, when 
a contract provides for such consent, consent to subcontracts with such 
suppliers, unless the vice president, Supply Management, or his or her 
designee, after consultation with the General Counsel, has approved 
such action.
    (3) Suppliers included in the SAM Exclusions database may not 
provide goods or services to other persons or entities for resale, in 
whole or part, to the Postal Service and such other persons or entities 
are obligated to review the consolidated GSA list in order to exclude 
suppliers suspended or debarred by the Postal Service from performing 
any part of a Postal Service contract.
    (4) The suspension, debarment, or ineligibility of a supplier does 
not, of itself, affect the rights and obligations of the parties to any 
valid, pre-existing contract. The Postal Service may terminate for 
default a contract with a supplier that is suspended, debarred, or 
determined to be ineligible. Contracting officers may not add new work 
to any contract with a supplier that is suspended, debarred, or 
determined to be ineligible by supplemental agreement, by exercise of 
an option, or otherwise (unless the work is classified as an 
insignificant or significant minor service change to a mail 
transportation contract), except with the approval of the vice 
president, Supply Management, or designee after consultation with the 
General Counsel.
    (e) Causes for suspension. (1) The vice president, Supply 
Management, may suspend any supplier, including any of its affiliates, 
for causes such as the following:
    (i) If the supplier commits, is indicted for, or is convicted of 
fraud or a criminal offense incidental to obtaining, attempting to 
obtain, or performing a government contract, violates a Federal 
antitrust statute arising out of the submission of bids and proposals, 
or commits or engages in embezzlement, theft, forgery, bribery, 
falsification or destruction of records, or receipt of stolen property, 
or any other offense indicating a lack of business integrity or 
business honesty;
    (ii) For any other cause of such serious and compelling nature that 
suspension is warranted; or
    (iii) If the Postal Service has notified a supplier of its proposed 
debarment under this part.
    (f) Period of suspension. A suspension will not exceed one year in 
duration, except a suspension may be extended for reasonable periods of 
time beyond one year by the vice president, Supply Management. The 
termination of a suspension will not prejudice the Postal Service's 
position in any debarment proceeding. A suspension will be superseded 
by a decision rendered by the vice president, Supply Management, under 
paragraph (k)(5) of this section.
    (g) Procedural requirements for suspension. (1) The vice president, 
Supply Management will notify a supplier of a suspension or an 
extension of a suspension and the reason(s) for the suspension or 
extension in writing sent to the supplier by Certified Mail, return 
receipt requested, within ten days after the effective date of the 
suspension or extension. A copy of the notice will be furnished to the 
Office of the Inspector General.
    (2) The notice will state the cause(s) for the suspension or 
extension.
    (3) Within thirty days of notice of suspension or an extension, a 
supplier may submit to the vice president, Supply Management, in 
writing, any information or reason(s) the supplier believes makes a 
suspension or an extension inappropriate, and the vice president, 
Supply Management, in consultation with the General Counsel, will 
consider the supplier's submission, and, in their discretion, may 
revoke a suspension or an extension of a suspension. If a suspension or 
extension is revoked, the revocation will be in writing and a copy of 
the revocation will be sent to the supplier by Certified Mail, return 
receipt requested. A copy of the revocation will be furnished to the 
Office of the Inspector General.
    (h) Causes for debarment. (1) The vice president, Supply 
Management, with the concurrence of the General Counsel, may debar a 
supplier, including its affiliates, for cause such as the following:
    (i) Conviction of a criminal offense incidental to obtaining or 
attempting to obtain contracts or subcontracts, or in the performance 
of a contract or subcontract.
    (ii) Conviction under a Federal antitrust statute arising out of 
the submission of bids or proposals.
    (iii) Commission of embezzlement, theft, forgery, bribery, 
falsification or destruction of records, making false statements, tax 
evasion, or receiving stolen property.
    (iv) Violation of a Postal Service contract so serious as to 
justify debarment, such as willful failure to perform a Postal Service 
contract in accordance with the specifications or within the time 
limit(s) provided in the contract; a record of failure to perform or of 
unsatisfactory performance in accordance with the terms of one or more 
Postal Service contracts occurring within a reasonable period of time 
preceding the determination to debar (except that failure to perform or 
unsatisfactory performance caused by acts beyond the control of the 
supplier may not be considered a basis for debarment); violation of a 
contractual provision against contingent fees; or acceptance of a 
contingent fee paid in violation of a contractual provision against 
contingent fees.
    (v) Any other offense indicating a lack of business integrity or 
business honesty.

[[Page 65345]]

    (vi) Any other cause of a serious and compelling nature that 
debarment is warranted.
    (2) The existence of a conviction in paragraph (h)(1)(i) or (ii) of 
this section can be established by proof of a conviction in a court of 
competent jurisdiction. If an appeal taken from such conviction results 
in a reversal of the conviction, the debarment may be removed upon the 
request of the supplier, unless another cause or another basis for 
debarment exists.
    (3) The existence of any of the other causes in paragraphs 
(h)(1)(iii), (iv), (v), or (vi) of this section can be established by a 
preponderance of the evidence, either direct or indirect, in the 
judgment of the vice president of Supply Management.
    (4) The criminal, fraudulent, or improper conduct of an individual 
may be imputed to the firm with which he or she is or has been 
connected when an impropriety was committed. Likewise, when a firm is 
involved in criminal, fraudulent, or other improper conduct, any person 
who participated in, knew of, or had reason to know of the impropriety 
may be debarred.
    (5) The criminal, fraudulent, or other improper conduct of one 
supplier participating in a joint venture or similar arrangement may be 
imputed to other participating suppliers if the conduct occurred for or 
on behalf of the joint venture or similar arrangement, or with the 
knowledge, approval, or acquiescence of the supplier. Acceptance of the 
benefits derived from the conduct will be evidence of such knowledge, 
approval, or acquiescence.
    (i) Mitigating factors. (1) The existence of any cause for 
debarment does not necessarily require that a supplier be debarred. The 
decision to debar is within the discretion of the vice president, 
Supply Management, with the concurrence of the General Counsel, and 
must be made in the best interest of the Postal Service. The following 
factors may be assessed in determining the seriousness of the offense, 
failure, or inadequacy of performance, and may be taken into account in 
deciding whether debarment is warranted:
    (i) Whether the supplier had established written standards of 
conduct and had published internal control systems at the time of the 
activity that constitutes cause for debarment or had adopted such 
procedures prior to any Postal Service investigation of the activity 
cited as a cause for debarment.
    (ii) Whether the supplier brought the activity cited as a cause for 
debarment to the attention of the Postal Service in a prompt, timely 
manner.
    (iii) Whether the supplier promptly and fully investigated the 
circumstances involving debarment and, if so, made the full results of 
the investigation available to appropriate officials of the Postal 
Service.
    (iv) Whether the supplier cooperated fully with the Postal Service 
during its investigation into the matter.
    (v) Whether the supplier paid or agreed to pay all criminal, civil 
and administrative liability, and other costs arising out of the 
improper activity, including any investigative or administrative costs 
incurred by the Postal Service, and made or agreed to make full 
restitution.
    (vi) Whether the supplier took appropriate disciplinary action 
against the individual(s) responsible for the activity that could cause 
debarment.
    (vii) Whether the supplier implemented and/or agreed to implement 
remedial measures, including those identified by the Postal Service.
    (viii) Whether the supplier instituted and/or agreed to institute 
new and/or revised review and control procedures and ethics programs.
    (ix) Whether the supplier had adequate time to eliminate 
circumstances within the supplier's organization that could lead to 
debarment.
    (x) Whether the supplier's senior officers and mid-level management 
recognize and understand the seriousness of the misconduct giving rise 
to debarment.
    (2) The existence or nonexistence of mitigating factors or remedial 
measures such as those above is not determinative whether or not a 
supplier should be debarred. If a cause for debarment exists, the 
supplier has the burden of demonstrating, to the satisfaction of the 
vice president, Supply Management that debarment is not warranted or 
necessary.
    (j) Period of debarment. (1) When an applicable statute, executive 
order, or controlling regulation of other agencies provides a specific 
period of debarment, that period applies. In other cases, debarment by 
the Postal Service should be for a reasonable, definite, stated period 
of time, commensurate with the seriousness of the offense or the 
failure or inadequacy of performance. Generally, a period of debarment 
should not exceed three years. When debarment for an additional period 
is deemed necessary, notice of the proposed additional period of 
debarment must be furnished to the supplier as in the case of original 
debarment.
    (2) Except as precluded by an applicable statute, executive order, 
or controlling regulation of another agency, debarment may be removed 
or the period may be reduced by the vice president, Supply Management 
when requested by the debarred supplier and when the request is 
supported by a reasonable justification, such as newly discovered 
material evidence, reversal of a conviction, bona fide change of 
ownership or management, or the elimination of the causes for which 
debarment was imposed. The vice president, Supply Management may, at 
his or her discretion, deny any request or refer it to the Judicial 
Officer for a hearing and for findings of fact, which the vice 
president, Supply Management will consider when deciding the matter. 
When a debarment is removed or the debarment period is reduced, the 
vice president, Supply Management must state in writing the reason(s) 
for the removal of the debarment or the reduction of the period of 
debarment.
    (k) Procedural requirements for debarment. (1) After securing the 
concurrence of the General Counsel, the vice president, Supply 
Management will initiate a debarment proceeding by sending the supplier 
a written notice of proposed debarment. The notice will be served by 
sending it to the last known address of the supplier by Certified Mail, 
return receipt requested. A copy of the notice will be furnished to the 
Office of Inspector General. The notice will state that debarment is 
being considered; the reason(s) for the proposed debarment; the 
anticipated period of debarment and the proposed effective date; and 
that, within thirty days of the notice, the supplier, individually or 
through a representative, may submit in person or in writing 
information and argument in opposition to the proposed debarment. In 
the event a supplier does not submit information or argument in 
opposition to the proposed debarment to the vice president, Supply 
Management within the time allowed, the debarment will become final 
with no further review or appeal.
    (2) If the proposed debarment is based on a conviction or civil 
judgment, the vice president, Supply Management, with the concurrence 
of the General Counsel, may decide whether debarment is merited based 
on the conviction or judgment, including any information received from 
the supplier. If the debarment is based on other circumstances or if 
there are questions regarding material facts, the vice president, 
Supply Management may seek additional information from the supplier 
and/or other persons, and may request the Judicial Officer to hold a 
fact-finding hearing on such matters.

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The hearing will be governed by rules of procedure promulgated by the 
Judicial Officer. The vice president, Supply Management may reject any 
findings of fact, in whole or in part, when they are clearly erroneous.
    (3) Questions of fact to be resolved by a hearing before the 
Judicial Officer will be based on the preponderance of the evidence.
    (4) After consideration of the circumstances and any information 
and argument submitted by the supplier, the vice president, Supply 
Management, with the concurrence of the General Counsel, will issue a 
written decision regarding whether the supplier is debarred, and, if 
so, for the period of debarment. The decision will be mailed to the 
supplier by Certified Mail, return receipt requested. A copy of the 
decision will be furnished to the Office of the Inspector General. The 
decision will be final and binding, unless the decision was procured by 
fraud or other criminal misconduct, or the decision was obtained in 
violation of the regulations contained in this part or an applicable 
public law enacted by Congress.

Stanley F. Mires,
Attorney, Federal Requirements.
[FR Doc. 2014-26111 Filed 11-3-14; 8:45 am]
BILLING CODE 7710-12-P