What is the System for Award Management Exclusions?
The System for Award Management (SAM) Exclusions refers to the list of individuals or entities that are excluded from receiving federal contracts, certain subcontracts, and certain federal financial and non-financial assistance and benefits. SAM is a government-wide database that consolidates various procurement systems and is used by federal agencies for managing their acquisition processes. But being on the list can have much wider, unintended consequences and implications, even if you never intend to perform Federal government jobs.
If you are a Nevada Licensed Contractor facing Federal, State or County regulatory investigation, you need to understand the potential impact of a simple fine or penalty imposed by any level of governmental agency. In a round-about way, what is seemingly a minor infraction with a local regulatory agency such as Air Quality, Nevada OSHA or even a minor criminal infraction can be used against you to deprive you of your contractors license. While this program is intended to prevent persons or companies from participating in federal procurement, even if you do no federal jobs, being on list can prevent you from working on State and County public works projects and even cost you your license. Thus, it is imperative to retain competent attorneys to represent you in even the least of administrative disciplinary or criminal proceedings as a small penalty, finding of wrongdoing or misdemeanor conviction can have a domino effect resulting in unwarranted and extreme sanctions.
Exclusions in SAM can occur for a variety of reasons, including legal or regulatory violations, non-compliance with contract requirements, or other misconduct. Individuals or entities on the SAM Exclusions list are ineligible to participate in federal procurement and assistance programs.
SAM Exclusions are meant to ensure the integrity and responsibility of those receiving federal funds or participating in federal contracts. The list helps government agencies make informed decisions when awarding contracts and financial assistance, by excluding parties with a history of unethical or illegal behavior.
Contracting officers and other government officials are typically responsible for checking the SAM Exclusions list before awarding contracts or providing assistance to ensure that they are not engaging with parties that are barred from participating in federal programs. This process helps maintain accountability and transparency in government procurement and financial assistance activities.
Defending SAM Exclusions
The best way to avoid being placed on the list is to vigorously defend any proposed sanction, citation or disciplinary by ANY governmental body. This takes away the basis for inclusion on the list. However, if it is too late or you are unsuccessful in avoiding such a sanction, you must then defend the government’s attempt to place you on the list. If will receive a notice of suspension or potential debarment, retain competent legal counsel immediately.
Mitigating factors in the defense against debarment refer to circumstances or actions that a respondent (individual or entity facing potential debarment) can present to mitigate or lessen the severity of the proposed debarment. When a government agency considers debarment, it means excluding an individual or entity from participating in federal contracts, subcontracts, and certain federal assistance programs.
Some common mitigating factors that can be presented in defense against debarment include:
Remedial Actions: Demonstrating that the respondent has taken prompt and effective corrective actions to address the issues that led to the proposed debarment can be a strong mitigating factor. This might include implementing new policies, procedures, or training programs to prevent recurrence.
Cooperation with Authorities: Cooperating fully with investigating authorities and regulatory bodies can be viewed favorably. This includes providing all necessary information, participating in investigations, and taking steps to assist authorities in resolving any issues.
Acceptance of Responsibility: Acknowledging and taking responsibility for any wrongdoing or misconduct can be seen as a positive factor. Expressing remorse and showing a commitment to ethical conduct in the future may influence the decision-maker.
Voluntary Remediation: Taking voluntary actions to correct deficiencies or address the consequences of misconduct, even before any formal action is taken, can be considered a positive step.
Implementation of Compliance Programs: Demonstrating the establishment or enhancement of compliance programs to prevent future violations can be a strong mitigating factor. This shows a commitment to maintaining a culture of compliance.
Demonstrated Changes in Leadership or Personnel: If the issues leading to potential debarment were associated with specific individuals, demonstrating changes in leadership or personnel responsible for the misconduct can be considered a mitigating factor.
Evidence of Changed Business Practices: Providing evidence that the respondent has implemented changes in business practices to ensure compliance with applicable laws and regulations can be persuasive in defense against debarment.
The process of getting removed from SAM Exclusions can be challenging. Contractors must address the issues that led to the exclusion, take corrective actions, and go through a formal process to request reinstatement. Thus, when facing the possibility of debarment, it’s crucial for the respondent to thoroughly present these mitigating factors and any other relevant information during the proceedings. The goal is to convince the decision-maker that debarment is not the only appropriate course of action and that the respondent has taken meaningful steps to address the issues at hand.
Being on the SAM Exclusion List Can Affect All of Your Projects and More
Being on the System for Award Management (SAM) Exclusions list can have significant consequences for a contractor in the state of Nevada, as well as on a national level. Here are some ways in which being on SAM Exclusions can affect a contractor in Nevada:
Ineligibility for Federal Contracts: Contractors on the SAM Exclusions list are ineligible to bid on or be awarded federal contracts. This exclusion applies not only in Nevada but across the entire United States. Federal agencies are required to check SAM before awarding contracts, and being on the exclusions list will result in disqualification.
Loss of Federal Funding and Assistance: In addition to federal contracts, being on the SAM Exclusions list can lead to the loss of eligibility for various federal financial assistance programs. This can impact grants, loans, and other forms of financial support that contractors may rely on for their projects or operations.
Reputation Damage: SAM Exclusions are public information, and being listed can harm a contractor’s reputation. Clients, partners, and stakeholders may view inclusion on the exclusions list as a sign of non-compliance, ethical issues, or other concerns, which can have long-term consequences for the contractor’s business relationships.
Impact on Subcontracting Opportunities: Contractors on SAM Exclusions may also face limitations in subcontracting opportunities. Prime contractors often vet their subcontractors to ensure compliance and may avoid working with entities listed in SAM Exclusions to mitigate risks.
Difficulty in Obtaining Surety Bonds: Surety bond providers may be hesitant to issue bonds to contractors on SAM Exclusions. Surety bonds are often required for federal contracts, and difficulty in obtaining them can further hinder a contractor’s ability to participate in government projects.
Legal Consequences: In some cases, being on SAM Exclusions may result from legal or regulatory violations. Contractors may face legal consequences, fines, or penalties related to the issues that led to their exclusion.
It’s crucial for contractors in Nevada and elsewhere to maintain compliance with applicable laws and regulations, address issues promptly, and implement robust compliance programs to avoid inclusion on the SAM Exclusions list. Proactive measures to prevent misconduct and demonstrate a commitment to ethical business practices can help contractors avoid the negative consequences associated with being on SAM Exclusions.
Impact on Nevada Contractors Licenses
NRS 338.017 and NRS 624.300 are Nevada Revised Statutes that pertain to contractors and construction-related activities in the state of Nevada. While these statutes primarily address state regulations, they may indirectly have implications for contractors in the context of the System for Award Management (SAM) Exclusions, particularly if there are legal or regulatory violations involved.
NRS 338.017: Licensing of Contractors in Nevada:
This statute outlines the requirements for licensing contractors in Nevada. Contractors engaging in construction activities in the state are generally required to be licensed under the Nevada State Contractors Board.
SAM Exclusions may become relevant if a contractor’s activities result in legal or regulatory violations that lead to their inclusion in the SAM Exclusions list. For instance, if a contractor is debarred at the federal level due to misconduct, it may impact their ability to obtain or maintain a contractor’s license in Nevada.
NRS 624.300: Grounds for Disciplinary Action Against Contractors:
NRS 624.300 specifies various grounds for disciplinary action against contractors, including violations of state laws, regulations, or ethical standards related to contracting.
If a contractor is debarred or excluded from federal contracts through SAM due to issues such as fraud, misconduct, or non-compliance, it could trigger disciplinary action under NRS 624.300. This may include suspension or revocation of the contractor’s license by the Nevada State Contractors Board.
Contractors are advised to stay informed about both federal and state regulations, maintain compliance with licensing requirements, and address any legal or regulatory issues promptly to mitigate the risk of SAM Exclusions and related consequences under state statutes.
State or county-level regulatory enforcement actions can potentially result in being placed on the System for Award Management (SAM) Exclusions if the issues that lead to regulatory enforcement also violate federal laws or regulations applicable to government contractors. Here’s how this process might unfold:
Many regulatory violations are specific to state or county laws and regulations. However, if these violations also involve federal laws or regulations related to government contracting, they may attract the attention of federal agencies overseeing procurement.
Connection to Federal Contracts:
If a contractor is involved in state or county projects that receive federal funding or if they are engaged in federal contracts, any regulatory enforcement action against them could draw scrutiny from federal authorities.
Overlap with Federal Regulations:
Some regulatory violations may have counterparts at the federal level. For instance, issues related to fraud, corruption, environmental regulations, labor laws, or safety standards may be regulated both at the state and federal levels.
Communication between Agencies:
Federal agencies, as well as state or county regulatory bodies, may communicate and share information about enforcement actions. If a contractor is found in violation of federal regulations or is debarred at the state or county level, this information may be shared with federal agencies responsible for maintaining the SAM Exclusions list.
Federal agencies may initiate debarment proceedings if they determine that a contractor’s actions warrant exclusion from federal procurement activities. The contractor would then go through a formal process to present their case and defend against debarment.
SAM Exclusions Listing:
It’s important to note that being subject to state or county-level regulatory enforcement actions does not automatically lead to SAM Exclusions. The connection between the violations and federal procurement activities is a key factor. Contractors facing regulatory enforcement actions at any level should carefully assess the potential implications for their federal engagements and take appropriate steps to address issues, cooperate with authorities, and defend against potential debarment proceedings to avoid inclusion on the SAM Exclusions list.
In summary, while NRS 338.017 and NRS 624.300 primarily address state-level licensing and disciplinary actions for contractors in Nevada, they may intersect with the implications of being on the SAM Exclusions list if the reasons for debarment involve violations of state laws or regulations. Contractors should be aware that issues leading to SAM Exclusions can have broader consequences, potentially affecting their ability to operate in specific states, including Nevada, and may lead to disciplinary actions at the state level.
If you are facing ANY disciplinary action of any nature by any agency – or are potentially facing litigation with a governmental agency arising from a contract, retain competent counsel immediately. John Henry Wright, Esq., has been litigating State, Federal and private construction contract disputes, as well as defending those facing criminal charges of every kind, for over 30 years. He is Peer rated “AV” Preeminent in both Commercial Ligation and Criminal Defense. Contact the Wright Law Group, P.C. at 702-405-0001 for a consultation.