[Code of Federal Regulations]
[Title 39, Volume 1]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 39CFR601.113]

[Page 183-187]
 
                        TITLE 39--POSTAL SERVICE
 
                 CHAPTER I--UNITED STATES POSTAL SERVICE
 
PART 601_PURCHASING OF PROPERTY AND SERVICES--Table of Contents
 
Sec.  601.113  Debarment, suspension, and ineligibility.

    (a) General. Except as provided otherwise in this part, contracting 
officers may not solicit proposals from, award contracts to, or consent 
to subcontracts with debarred, suspended, 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. Factors such as common ownership, common 
management, and contractual relationships may be considered. 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) Judicial Officer. This includes the acting Judicial Officer.
    (7) Suspension. An exclusion from contracting and subcontracting for 
a reasonable period of time due to specified reasons or the pendency of 
a debarment proceeding.
    (8) 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) Establishment and Maintenance of Lists. (1) The vice president 
of Supply Management will establish, maintain, and distribute to 
purchasing offices a list of suppliers debarred or suspended by the 
Postal Service.
    (2) The General Services Administration (GSA) compiles and maintains 
a consolidated list of all persons and entities debarred, suspended, 
proposed for debarment, or declared ineligible by Federal agencies or 
the Government Accountability Office. GSA posts the list on the Internet 
and publishes a hardcopy of the list.
    (3) The vice president of Supply Management will notify the GSA of 
any Postal Service debarment, suspension, and change in the status of 
suppliers, including any of their affiliates, on the Postal Service 
list.

[[Page 184]]

    (d) Treatment of Suppliers on Postal Service or GSA Lists. (1) 
Contracting officers will review the Postal Service and GSA lists before 
making a contract award.
    (2) Suppliers on the Postal Service list 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 of Supply Management, or his or her designee, 
after consultation with the General Counsel, has approved such action. 
Suppliers on the Postal Service list 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 obtain and 
review the Postal Service list in order to exclude debarred or suspended 
suppliers from performing any part of a Postal Service contract.
    (3) Suppliers on the GSA list are assigned a code by GSA which is 
related to the basis of ineligibility. The vice president of Supply 
Management maintains a table describing the Postal Service treatment 
assigned to each code. Suppliers on the GSA list who are coded as 
ineligible are excluded from receiving contracts and subcontracts, and 
contracting officers may not solicit proposals or quotations from, award 
contracts to, or, when the contract provides for such consent, consent 
to subcontracts with such suppliers, unless the vice president of Supply 
Management, or designee, after consultation with the General Counsel, 
has approved such action. Suppliers on the GSA list 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 obtain and review the GSA list in order to exclude debarred 
or suspended suppliers from performing any part of a Postal Service 
contract.
    (4) Suppliers on the GSA list are assigned codes for which the table 
provides other Postal Service guidance, and are considered according to 
that guidance. When so indicated on the table, contracting officers must 
obtain additional information from the entity responsible for 
establishing the supplier's ineligibility, if such information is 
available.
    (5) The debarment, suspension, 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 debarred, suspended, or 
determined to be ineligible. Except for service changes under mail 
transportation contracts, contracting officers may not add new work to 
the contract by supplemental agreement, by exercise of an option, or 
otherwise, except with the approval of the vice president of Supply 
Management or designee.
    (e) Causes for Debarment. (1) The vice president of 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.

[[Page 185]]

    (v) Any other offense indicating a lack of business integrity or 
business honesty.
    (vi) Any other cause of a serious and compelling nature that 
debarment is warranted.
    (2) The existence of a conviction in paragraph (e)(1)(i) or (ii) of 
this section can be established by proof of a conviction in a court of 
competent jurisdiction. If 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 
(e)(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 debarring official.
    (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 fraudulent, criminal, 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.
    (f) 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 of 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 of Supply

[[Page 186]]

Management that debarment is not warranted or necessary.
    (g) 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 3 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 of 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 of 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 
of Supply Management will consider when deciding the matter. When a 
debarment is removed or the debarment period is reduced, the vice 
president of Supply Management must state in writing the reason(s) for 
the removal of the debarment or the reduction of the period of 
debarment.
    (h) Procedural Requirements for Debarment. (1) After securing the 
concurrence of the General Counsel, the vice president of 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, 
within 30 days of the notice, the supplier may submit, in person or in 
writing, or through a representative, 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 of 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 of 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 of, 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. The hearing will be governed by rules 
of procedure promulgated by the Judicial Officer. The vice president of 
Supply Management may reject any findings of fact, in whole or in part, 
when they are clearly erroneous.
    (3) When the vice president of Supply Management proposes to debar a 
supplier already debarred by another government agency for a period 
concurrent with such debarment, the debarment proceedings before the 
Postal Service may be based entirely upon the record of evidence, facts, 
and proceedings before the other agency, upon any additional facts the 
Postal Service deems relevant, or on the decision of another government 
agency. In such cases, the findings of facts by another government 
agency may be considered as established, but, within 30 days of the 
notice of proposed debarment, the supplier may submit, in person or in 
writing, or through a representative, any additional facts, information, 
or argument to the vice president of Supply Management, and to explain 
why debarment by the Postal Service should not be imposed.

[[Page 187]]

    (4) Questions of fact to be resolved by a hearing before the 
Judicial Office will be based on the preponderance of the evidence.
    (5) After consideration of the circumstances and any information and 
argument submitted by the supplier, the vice president of 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:
    (i) The decision was procured by fraud or other criminal misconduct 
or
    (ii) The decision was obtained in violation of the regulations 
contained in this part or an applicable public law enacted by Congress.
    (i) Causes for Suspension. The vice president of Supply Management 
may suspend any supplier, including any of its affiliates, if:
    (1) 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, receipt of stolen property, or any other offense 
indicating a lack of business integrity or business honesty; or
    (2) If the Postal Service has notified a supplier of its proposed 
debarment under this Part.
    (j) Period of Suspension. A suspension will not exceed 1 year in 
duration, except a suspension may be extended for reasonable periods of 
time beyond 1 year by the vice president of 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 of Supply Management, under 
paragraph (h)(5) of this section.
    (k) Procedural Requirements for Suspension. (1) The vice president 
of 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 10 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 30 days of notice of suspension or an extension, a 
supplier may submit to the vice president of Supply Management in 
writing, any information or reason(s) the supplier believes makes a 
suspension or an extension inappropriate, and the vice president of 
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.