Small Business Suspension and Debarment by the Department of Defense

NSIAD-88-60BR: Published: Dec 2, 1987. Publicly Released: Dec 2, 1987.

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In response to a congressional request, GAO reviewed the Department of Defense's (DOD) contractor debarment practices to determine whether DOD afforded small business contractors adequate opportunity to demonstrate their responsibility before suspension.

GAO found that: (1) neither DOD nor the Small Business Administration (SBA) had an information system that recorded the sizes of defense contractors or identified whether suspended contractors were small businesses; (2) of the 112 firms DOD suspended in fiscal years 1983 through 1985, 40 had contracts valued at more than $25,000, and were identified as small businesses; (3) although the remaining 67 were not included in the DOD reporting system, they were probably small businesses; (4) DOD indicated that, since it based most suspensions on indictments, a firm's size was irrelevant; and (5) although DOD applied the same suspension rules to all contractors, many of the remedial actions were difficult for small businesses to carry out.

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