Suspension and debarment is another of the 12 compliance requirements included in the Compliance Supplement, published by the Office of Management and Budget. The Uniform Guidance regulations for suspension and debarment originate from 2 CFR Part 180, Executive Orders 12549 and 12689. While 2 CFR Part 180 is directed towards federal agencies, the regulations still apply to non-federal entities receiving federal contracts and awards, as defined in 2 CFR Part 200.213. The guidance in 2 CFR Part 180 provides that non-federal entities cannot enter into covered transactions with parties that are suspended or debarred from doing business with the federal government.

2 CFR Part 180 identifies two types of covered transactions: a transaction at the primary tier versus a transaction at the lower tier.  A covered transaction at the primary tier is any transaction between a Federal agency and a person. A person can be an individual or business, federal agency or non-federal agency. A covered transaction at the lower tier is where a participant, such as a non-federal entity, in a covered transaction does business with another person.

A covered transaction can be further defined as a nonprocurement transaction or procurement transaction. A subaward, regardless of amount, qualifies as a nonprocurement transaction, unless exempt by 2 CFR Part 180.215. A procurement transaction for goods or services that equals or exceeds $25,000 qualifies as a covered transaction, unless other criteria is met within 2 CFR Part 180.220. For example, a procurement transaction could be a covered transaction, regardless of amount, if the transaction requires approval by a Federal agency.

If a non-federal entity finds itself in a covered transaction at the lower tier, and in order to implement the regulations of 2 CFR Part 180, a non-federal entity must ensure the person is not excluded or disqualified. A non-federal entity has three options for performing this verification: 1) obtaining a certification from the person; 2) checking the System for Award Management (SAM) Exclusions (https://www.sam.gov/SAM/); or 3) adding language to the contract or subaward with the person.

If a non-federal entity (or participant) unknowingly finds itself doing business with a person who is excluded or disqualified, an exception could be granted if a federal agency, applicable law, or regulation provides an exception to the non-federal entity. If a participant does business with knowledge that a person is excluded or disqualified, the non-federal entity could be debarred or suspended or costs could be disallowed.

In order to comply with the Uniform Guidance regulations surrounding suspension and debarment, it is important to understand the guidance provided in 2 CFR Part 180. The guidance aids non-federal entities in not only understanding the suspension and debarment system but identifying covered transactions, including any exceptions.

If you have any questions on a suspension and debarment situation, please feel free to reach out to YHB.

Stay tuned for our next article in the series focused on Uniform Guidance compliance audits.


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About the Author

Since joining YHB in 2012, Katrina’s career focus has been on nonprofit organizations such as private schools, colleges, foundations, religious organizations, museums, and other nonprofit entities. Her service to those organizations include audit and attest as well as tax services.

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