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Corporations with Tax Liabilities or Felony Convictions

Don’t do business with Companies that Have an Unpaid Delinquent Tax Liability or a Felony Conviction.   Seems like common sense, right?  However, this information may not be immediately known to a contracting officer.  In accordance with Public Law 112-74 and Public Law 112-55, concerning appropriated funds for FY2012, contracting officers at some agencies may not make an award to companies that have an unpaid tax liability or felony convictions within the preceding 24 months.

Q:  What agencies are potentially affected?

A: The following table includes a list of affected agencies and the prohibitions listed in their Fiscal Year 2012 appropriation bills:

Agency New Provision Covering Criminal Violations (CVP) New Provision Covering Tax Liabilities (TLP)
Details Citation Citation
Agriculture & Related Agencies Agent/officer/corporation conviction of federal or state law Section 738 of P.L. 112-55 Section 739 of P.L. 112-55
Commerce Corporation conviction of federal law only Section 543 of P.L. 112-55 Section 544 of P.L. 112-55
Justice Corporation conviction of federal law only Section 543 of P.L. 112-55 Section 544 of P.L. 112-55
Defense Corporation conviction of federal law only Section 8125 of P.L. 112-74 Section 8124 of P.L. 112-74
Energy Agent/officer/corporation conviction of federal law only Section 504 of P.L. 112-74 Section 505 of P.L. 112-74
Treasury Agent/officer/corporation conviction of federal law only Section 631 of P.L. 112-74 Section 630 of P.L. 112-74
General Government (see statute for specifics) Agent/officer/corporation conviction of federal law only Section 631 of P.L. 112-74 Section 630 of P.L. 112-74
Interior & Related Agencies Agent/officer/corporation conviction of federal law only Section 433 of P.L. 112-74 Section 434 of P.L. 112-74
Veterans Affairs Corporation conviction of federal or state law Section 514 of P.L. 112-74 N/A (no prohibition)

 

Q: How does this affect the Multiple Award Schedule Program?

A:  No Prohibition at the Schedule Level.
Schedule contracts are not awarded using appropriated funds. So there are no prohibitions against awarding a Schedule contract to a company with unpaid tax liability or felony conviction.

GSA did consider incorporating a provision in all Schedule contract solicitations but did not, because:
• not all customer agencies have these prohibitions
• each affected agency has a different variation of the prohibition (see chart above)
• affected agencies have their own deviated provisions that they are required to use

It was decided that it would not be feasible or even practical to implement the prohibitions at the Schedule level.

Q: I want to place a Schedule order using appropriated FY12 funds. What do I have to do to comply with the prohibitions in the appropriation bills?

A: Require Representation by the Contractor.
Agencies affected by Public Laws 112-55 or 112-74 were advised by the Civilian Agency Acquisition Council (CAAC) to seek a FAR deviation and create a provision that would help the agencies comply with the prohibitions in the appropriation bills. These deviated provisions, which require contractors to represent whether they have unpaid tax liability or felony convictions, are to be incorporated into every solicitation that uses FY12 funds of affected agencies.  A company’s response to this provision will tell you if you can award to them or if you need to talk to your Suspension and Debarment Official (SDO).  

For an agency that successfully sought a deviation on representation concerning this, see the Department of Defense’s class deviation, issued on January 23, 2012: http://www.acq.osd.mil/dpap/policy/policyvault/USA007336-11-DPAP.pdf or http://www.acq.osd.mil/dpap/dars/class_deviations.html

For a copy of some of the other agencies' deviated provisions, visit here.

Q: What do I do if a contractor under my RFQ has an unpaid delinquent tax liability or a felony conviction?

A: Get to Know your SDO!
To avoid having the contractor’s issue becomes your own liability, follow your agency’s guidance on what to do if a contractor represents itself as having unpaid tax liability and/or felony conviction.  More than likely, your agency guidance will require you to get in touch with your SDO. Only your SDO can help you make a determination as to whether an award may be made given the facts and circumstances involved.

Bottom Line.
Some agencies are prohibited from contracting with firms with unpaid tax liability and/or felony convictions. When in doubt, seek your SDO out! Even if there is a “compelling” reason to make an award, no award can be made until a determination has been made by your SDO.   

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