The Corporate Debarment & Accountability Act

Making Federal Dollars a Privilege—Not a Subsidy for Repeat Corporate Misconduct

Executive Summary

The federal government spends well over a trillion dollars each year through contracts, grants, loans, and other award programs.¹¹ That money builds bridges, supplies hospitals, modernizes defense systems, and accelerates research. But it also creates a recurring public integrity problem: companies that commit serious fraud, bribery, bid-rigging, or other major misconduct can continue to receive federal dollars—sometimes through subsidiaries, rebrandings, acquisitions, or fragmented oversight across agencies.^{1 13 19}

The United States already has tools meant to prevent this. The Federal Acquisition Regulation (FAR) allows agencies to suspend or debar contractors to protect the government and ensure the government deals only with "responsible" entities—not to punish, but to safeguard public programs.³ Similarly, nonprocurement programs (grants, cooperative agreements, loans, and other forms of federal assistance) rely on governmentwide exclusion rules under 2 CFR Part 180 and related executive orders.^{8 9 10}

The problem is not that the framework doesn't exist—it's that it is unevenly used, inconsistently coordinated, and too easy to evade:

• GAO has repeatedly found wide variation among agencies in how actively they use suspension and debarment tools—often tied to staffing, referral practices, and leadership attention.¹³
• GAO has also documented that agencies have taken steps to improve, but that oversight and consistency remain key challenges in a system where each agency may run its own program differently.¹⁴
• Meanwhile, public evidence of corporate misconduct is abundant. Large enforcement settlements and penalties recur across industries, and investigative reporting has highlighted patterns where major institutions can negotiate resolutions while continuing to do business.¹⁸
• Public sentiment reflects this frustration: polling and public-opinion research show that Americans widely believe powerful corporations are not punished proportionately when they break the law.¹⁷

The Corporate Debarment & Accountability Act (the "Act") responds with a simple, credibility-restoring principle:

If a company commits major public-integrity offenses and cannot demonstrate present responsibility, it should not receive taxpayer-funded contracts, grants, or federally backed benefits—unless the government can justify a narrow, documented exception.^{1 3 9}

What the Act does

1. Creates a governmentwide Corporate Accountability Board (CAB) to coordinate debarment decisions and standards across procurement and nonprocurement programs, building on existing interagency coordination models.^{1 9 14 15}
2. Establishes a tiered accountability ladder (from probationary restrictions to long-term exclusion) for "major public-integrity offenses," aligned to existing grounds for debarment and suspension already recognized in federal rules.^{1 4 6}
3. Closes common evasion pathways by strengthening coverage of affiliates, successors, and reorganized entities, so exclusion decisions follow the reality of control and continuity—not just the name on the letterhead.^{1 19}
4. Preserves due process with clear notice, an opportunity to respond, and fact-finding procedures consistent with the FAR and constitutional guardrails recognized by courts.^{5 21 27}
5. Builds in "self-cleaning" and remediation—a structured way for a firm to regain eligibility by demonstrating corrected governance, restitution, compliance reforms, and independent monitoring (rather than relying on ad hoc settlement optics).^{1 5 24}
6. Improves transparency by requiring timely posting of administrative agreements and exclusion rationales in the systems already used for federal responsibility determinations and exclusions.^{5 12}

Why this matters now

Federal money is not merely a market transaction—it is a public trust. When repeat corporate misconduct doesn't materially affect eligibility for public dollars, the government unintentionally signals that compliance is optional and penalties are manageable. The Act restores deterrence without criminalizing procurement: it modernizes a protective, administrative eligibility framework to ensure taxpayer funds go to responsible actors—and to encourage reform pathways for firms willing to change.^{3 5 13}

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The Problem Statement

1) A protective system exists—but it is fragmented and unevenly activated

Federal suspension and debarment is designed to protect governmental interests by limiting awards to responsible sources.³ For procurement, the FAR provides causes for debarment and suspension that include fraud, bribery, antitrust violations, theft, falsification, tax evasion, and other conduct indicating a lack of business integrity that directly affects present responsibility.⁴ Suspension is an interim protective tool; debarment is a longer-term eligibility decision, both intended to be applied governmentwide across the executive branch absent a documented exception.^{3 5}

For assistance programs (nonprocurement), governmentwide debarment and suspension is grounded in executive orders and implemented through uniform rules (including 2 CFR Part 180), establishing a governmentwide system of exclusions for covered transactions.^{8 9 10}

Despite this architecture, oversight and activity levels vary widely:

• GAO found that agencies with active programs shared practical attributes (dedicated staff, detailed guidance, and robust referral practices), while agencies lacking these characteristics often had virtually no activity, regardless of their spending footprint.¹³
• GAO also identified a need for stronger governmentwide oversight and coordination to improve consistency and effectiveness.^{13 14}

In short: the system is real, but its application is inconsistent, creating uneven accountability and predictable "soft spots."

2) Exclusions data is visible, but the integrity picture is incomplete

The government maintains a public exclusions capability through SAM.gov, which lists entities suspended, debarred, proposed for debarment, voluntarily excluded, or otherwise ineligible—along with causes and effect information.¹² However, the public-facing "exclusion record" structure is not designed to serve as a complete accountability narrative; it is a compliance tool for eligibility screening.¹²

Separately, the FAR requires that administrative agreements used to resolve debarment proceedings be uploaded for disclosure through the government's integrity information systems (e.g., the FAPIIS pathway referenced in FAR procedures).⁵ In practice, transparency is present but dispersed, and the public—and often even acquisition personnel—lack a consolidated, plain-language picture of repeat patterns, successor strategies, or cross-agency risk.

3) Evasion through successor entities and affiliates is a known integrity risk

Even when agencies act, corporate structure can be used to outmaneuver accountability. Mergers, asset transfers, renamings, and the use of subsidiaries can complicate the practical effect of exclusions if affiliation and successor principles are not consistently applied or coordinated across agencies.^{1 19}

4) Public confidence is eroding—because accountability appears optional

The public strongly perceives that large, powerful organizations can break rules and still "win" through settlements, deferred prosecution, or negotiated outcomes.^{17 18} While those mechanisms may be legally appropriate in context, the credibility crisis emerges when eligibility for public dollars does not systematically reflect the same seriousness that the government applies to integrity in principle.^{3 13}

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The Proposed Reform

Overview

The Corporate Debarment & Accountability Act consolidates and standardizes existing suspension and debarment authority across procurement and nonprocurement programs, with three structural pillars:

1. Unified Coordination: A Corporate Accountability Board (CAB) to issue guidance, coordinate determinations, and maintain centralized records across all federal spending.
2. Tiered Framework: A clear ladder from "probationary status" (enhanced monitoring, restrictions on new awards) through temporary exclusion and long-term debarment, calibrated to offense severity and response.
3. Remediation Pathway: Structured "self-cleaning" with enforceable milestones—governance reforms, independent monitoring, restitution, and demonstrated compliance—to regain eligibility.

Governance and Coordination: The Corporate Accountability Board

Purpose: The CAB centralizes coordination while respecting existing agency authorities and debarment structures (such as agency SDOs or suspension and debarment officials).^{14 15}

Structure:

• Permanent Chair (designated by the President or OMB/GSA) plus rotating agency representatives from major federal procuring and assistance-granting agencies.
• Supported by OMB's Office of Federal Procurement Policy (OFPP) and GSA's suspension and debarment infrastructure.

Functions:

• Issue binding guidance on thresholds, procedures, and tiered responses (aligned across procurement and nonprocurement).
• Maintain a Consolidated Accountability Ledger (supplementing SAM.gov exclusions) to track major misconduct patterns, remediation status, and cross-agency risk flags.
• Coordinate major debarment cases to prevent inconsistency (e.g., one agency debars while another continues awards).
• Publish annual reports on debarment activity, including patterns, evasion attempts, and remediation outcomes.

The Tiered Accountability Ladder

Rather than a binary exclude/don't-exclude decision, the Act establishes a graduated system:

Tier 1 — Probationary Restrictions (for moderate misconduct or first offenses with corrective action):

• Entity remains eligible for existing contracts/grants but cannot receive new awards during the probationary period (typically 6–12 months).
• Must submit compliance certifications and accept enhanced monitoring.
• Successful completion clears the record; failure escalates to Tier 2.

Tier 2 — Temporary Exclusion (for serious misconduct without aggravating factors or for Tier 1 failures):

• Full suspension from new and existing federal awards for a defined period (typically 1–3 years).
• Can be lifted early if entity completes structured remediation (see below).
• Applies governmentwide unless a waiver is documented and published.

Tier 3 — Long-Term Debarment (for repeat major offenses, leadership culpability, or refusal to remediate):

• Exclusion for 3–7 years (or longer for egregious patterns).
• Reinstatement requires CAB review and evidence of fundamental governance change.
• Covers all affiliates, successors, and alter-ego entities (see anti-evasion provisions below).

Trigger Offenses (aligned to existing FAR and nonprocurement grounds):

• Fraud, bribery, bid-rigging, antitrust violations, theft, or embezzlement involving federal funds or contracts.
• False statements, falsified records, or material contract violations.
• Tax evasion, violations of labor or environmental laws directly tied to federal performance.
• Repeated failures to comply with prior administrative agreements or consent orders.

Closing Evasion Pathways: Affiliation and Successor Coverage

The Act strengthens existing affiliation and successor concepts from FAR and nonprocurement rules:

Affiliation Presumptions:

• Subsidiaries, parent companies, and entities under common control are presumed subject to the same exclusion status unless they can demonstrate operational independence and separate governance.
• Officers or principals who led the misconduct remain individually ineligible and may trigger affiliation with new entities they join or control.

Successor Liability:

• Mergers, asset sales, or reorganizations do not automatically clear exclusion status if the CAB determines continuity of operations, management, or benefit.
• The burden is on the successor entity to demonstrate it is genuinely distinct and did not acquire the predecessor to evade accountability.

Cross-Checking Mechanisms:

• CAB coordinates with FAPIIS, SAM.gov, and agency integrity databases to flag related entities.
• Prospective contractors/grantees must disclose ownership and control structures as part of responsibility determinations.

Due Process and Fairness Safeguards

The Act preserves constitutional and procedural protections already embedded in FAR and nonprocurement rules:^{5 21 27}

1. Notice and Opportunity to Respond: Entities receive written notice of proposed actions with specific factual bases and an opportunity to submit evidence, explanations, and corrective-action plans.
2. Fact-Finding and Review: A designated official (SDO or CAB-appointed adjudicator) reviews the record and issues a written determination with findings of fact.
3. Administrative Appeal: Entities may appeal to the CAB or an independent review panel, with decisions subject to judicial review under the Administrative Procedure Act.
4. Public Interest Waivers: Agencies may grant temporary waivers for critical national security or public health needs, but these must be published with justification and are time-limited.

Self-Cleaning and Remediation: The Pathway Back

Drawing on EU and World Bank models,^{24 25} the Act allows entities to regain eligibility through structured remediation:

Core Requirements:

1. Governance Reforms: Replace responsible leadership; implement board-level compliance oversight; adopt enforceable codes of conduct.
2. Restitution and Accountability: Pay damages, penalties, or restitution; cooperate fully with investigations.
3. Independent Monitoring: Engage a CAB-approved compliance monitor (at entity's expense) for a defined period (typically 18–36 months).
4. Transparency and Reporting: Submit quarterly compliance reports to the monitor and CAB; demonstrate measurable improvements.

Verification:

• The monitor issues a final certification; CAB reviews and may lift exclusions early or grant provisional reinstatement.
• Failure to meet remediation benchmarks extends the exclusion or escalates to a higher tier.

Incentive Alignment:

• Firms that voluntarily self-report misconduct and initiate remediation before enforcement may receive reduced tiers or expedited clearance.
• Successful remediation is publicly noted in SAM.gov and the Consolidated Accountability Ledger, providing reputational credit.

Transparency and Public Accountability

The Act enhances existing disclosure systems:

1. Consolidated Accountability Ledger (maintained by CAB, accessible via SAM.gov):

   • All suspension/debarment actions with plain-language summaries.
   • Links to administrative agreements, consent orders, and settlement documents (already required to be posted per FAR).⁵
   • Remediation status and reinstatement timelines.
   • Affiliation and successor links.

2. Annual Reporting:

   • CAB publishes an annual report (modeled on ISDC reports)¹⁵ detailing:
     • Number of actions by tier and offense type.
     • Evasion attempts detected and addressed.
     • Remediation completions and early reinstatements.
     • Disparities or gaps in agency enforcement.

3. Public Comment Mechanism:

   • Stakeholders (competitors, watchdog groups, affected parties) may submit evidence of misconduct or evasion for CAB review.

Legal and Policy Foundations

The Act does not create new criminal liabilities or punitive sanctions. It standardizes and modernizes an existing administrative framework rooted in:

• FAR Part 9, Subpart 9.4: Debarment, Suspension, and Ineligibility^{3 4 5}
• 2 CFR Part 180: Nonprocurement Debarment and Suspension⁸
• Executive Orders 12549 and 12689: Governmentwide exclusion authority^{9 10}
• OMB Memoranda: Guidance on active suspension and debarment use¹¹
• ACUS Recommendations: Best practices for fair and effective debarment procedures²⁰

Constitutional Basis: Suspension and debarment are eligibility determinations, not punishment, and have consistently been upheld as within executive authority to protect public programs, provided due process is observed.²⁷

International Precedents:

• United Kingdom: Procurement Act 2023 codifies exclusion grounds and remediation pathways^{22 23}
• European Union: exclusion grounds and "self-cleaning" pathways for rehabilitation, balancing integrity with proportionality²⁴
• World Bank: cross-debarment models that treat integrity as a condition of eligibility for development finance and procurement²⁵

These models demonstrate that eligibility-based integrity enforcement is a standard governance tool—not a radical innovation.

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Impact Analysis

1) Integrity ROI: fewer losses, fewer repeats, better deterrence

Because debarment is a protective eligibility tool—not a punitive measure—its value is in risk reduction: fewer awards to entities with demonstrated integrity failures, fewer repeat-problem contractors, and stronger incentives for compliance investment.^{3 13}

The Act increases deterrence without expanding criminal law by making a clear administrative reality: major misconduct can reliably lead to loss of access to federal dollars, unless the entity demonstrates present responsibility through verifiable corrective actions.^{1 5}

2) Better markets: leveling the field for responsible firms

Uneven enforcement can create a perverse advantage: firms that underinvest in compliance may gain short-term competitiveness if the consequences are unlikely. Standardizing referrals, thresholds, and outcomes helps honest contractors—especially smaller, responsible firms—compete on performance rather than tolerance for risk.^{13 14}

3) Stronger remediation and compliance—because reinstatement is structured

A key design feature is the balance between exclusion and rehabilitation. Compliance-based remediation (independent monitoring, governance reform, and enforceable benchmarks) is increasingly recognized as a practical pathway for institutional correction.²⁶ The Act makes remediation a credible, measurable route back to eligibility, rather than a vague promise.

4) Transparency upgrades with existing infrastructure

The Act does not require building a parallel universe. It leverages existing systems:

• SAM exclusions for eligibility screening¹²
• FAR-required posting of administrative agreements in the integrity disclosure workflow⁵
• Annual reporting structures already used for governmentwide oversight¹⁵

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Conclusion

Federal spending is a public trust. The United States already recognizes, in law and policy, that the government should deal only with responsible entities—and that suspensions and debarments protect public programs from fraud, waste, abuse, and integrity risk.^{3 9}

What is missing is not authority, but consistent execution and evasion-resistant design. GAO has documented uneven program activation across agencies and emphasized the importance of active referrals, staffing, guidance, and governmentwide coordination.^{13 14} Meanwhile, public confidence continues to erode when serious misconduct appears compatible with continued access to taxpayer-funded business.^{17 18}

The Corporate Debarment & Accountability Act offers a practical repair: a coordinated, tiered, due-process-respecting framework that turns integrity from a slogan into an operational eligibility standard—while still allowing responsible remediation and reinstatement.

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Reference List

1. Document A: 8 - Corporate Debarment and Accountability Act - Uploaded source text
   Link: sandbox:/mnt/data/8%20-%20Corporate%20Debarment%20and%20Accountability%20Act.docx

2. Document B: Corporate Debarment and Accountability Source Library - Uploaded source text
   Link: sandbox:/mnt/data/Corporate%20Debarment%20and%20Accountability%20Source%20Library.md.docx

3. Federal Acquisition Regulation (FAR) 9.402 — Policy
   Link: https://www.acquisition.gov/far/9.402

4. FAR 9.406-2 — Causes for debarment
   Link: https://www.acquisition.gov/far/9.406-2

5. 48 CFR § 9.406-3 — Procedures - LII/eCFR mirror; includes administrative agreements posting requirements
   Link: https://www.law.cornell.edu/cfr/text/48/9.406-3

6. FAR 9.407-3 — Procedures (suspension)
   Link: https://www.acquisition.gov/far/9.407-3

7. FAR 9.406-4 — Period of debarment
   Link: https://www.acquisition.gov/far/9.406-4

8. 2 CFR Part 180 — Nonprocurement Debarment and Suspension
   Link: https://www.ecfr.gov/current/title-2/subtitle-A/chapter-I/part-180

9. Executive Order 12549 — Debarment and Suspension - National Archives codification
   Link: https://www.archives.gov/federal-register/codification/executive-order/12549.html

10. Executive Order 12689 — Debarment and Suspension
    Link: https://www.presidency.ucsb.edu/documents/executive-order-12689-debarment-and-suspension

11. OMB Memorandum M-12-02 — Suspension and Debarment of Federal Contractors and Grantees - Nov. 5, 2011
    Link: https://obamawhitehouse.archives.gov/sites/default/files/omb/memoranda/2012/m-12-02.pdf

12. SAM.gov — Exclusions Search - Public interface
    Link: https://sam.gov/SAM/pages/public/exclusionSearch/exclusionsView.jsf

13. GAO-11-739 — Suspension and Debarment: Some Agency Programs Need Greater Attention
    Link: https://www.gao.gov/products/gao-11-739

14. GAO-14-513 — Federal Contracts and Grants: Agencies Have Taken Steps to Improve Suspension and Debarment Programs
    Link: https://www.gao.gov/products/gao-14-513

15. Interagency Suspension and Debarment Committee (ISDC) — Annual Reports and Reporting
    Link: https://www.acquisition.gov/isdc/annual-reports-and-reporting

16. Good Jobs First — Violation Tracker - Corporate misconduct/penalties database
    Link: https://violationtracker.goodjobsfirst.org/

17. Files for Progress — "Punishment for Corporate Crime" memo/poll - 2021
    Link: https://filesforprogress.org/memos/punishment-for-corporate-crime

18. International Consortium of Investigative Journalists (ICIJ) — "Corporate repeat offenders get leniency under global deals" - FinCEN Files
    Link: https://www.icij.org/investigations/fincen-files/corporate-repeat-offenders-get-leniency-under-global-deals/

19. Contractors Perspective — "Suspension and Debarment: Successor Liability Concerns"
    Link: https://contractorsperspective.com/suspension-and-debarment-successor-liability-concerns/

20. Administrative Conference of the United States (ACUS) — Recommendation 96-2 - Suspension and Debarment
    Link: https://www.acus.gov/recommendation/suspension-and-debarment-federal-programs

21. Associated General Contractors of America — "Preserve Due Process for Federal Constructors"
    Link: https://www.agc.org/sites/default/files/Files/Industry%20Priorities/Preserve%20Due%20Process%20For%20Federal%20Constructors.pdf

22. UK Procurement Act 2023 - Legislation
    Link: https://www.legislation.gov.uk/ukpga/2023/54/contents/enacted

23. GOV.UK — Procurement Act 2023 Guidance: Exclusions and Debarment
    Link: https://www.gov.uk/government/publications/procurement-act-2023-guidance-documents-procurement-act-2023-guidance-html/exclusions-and-debarment-html

24. EU Directive 2014/24/EU — Public Procurement - Article 57: exclusion grounds & self-cleaning
    Link: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32014L0024

25. World Bank — Cross-Debarment Agreement - 2010
    Link: https://www.worldbank.org/en/news/press-release/2010/04/09/world-bank-and-other-development-banks-agree-to-cross-debarment

26. Baylor Law Review (Scholarship Archive) — Compliance-based prosecution / corporate crime
    Link: https://scholarship.law.baylor.edu/cgi/viewcontent.cgi?article=1278&context=blr

27. Old Dominion Dairy Products v. Secretary of Defense, 631 F.2d 953 (D.C. Cir. 1980) - Justia
    Link: https://law.justia.com/cases/federal/appellate-courts/F2/631/953/86778/

Changelog

• December 28, 2024 — Initial draft published