Debarred companies lose the right to contract with the federal government, and are essentially blacklisted. Even if you don’t rely on doing business with the federal government, if your company receives federal funds (which is common for life sciences companies and higher education organizations), your funding could be jeopardized if you contract with a debarred supplier.
So what kind of activity can land a company on the debarred list? Generally, it’s the consequence of fraudulent or illegal activity, but sometimes it’s the result of being a lousy employer or general mismanagement. Below are some stories on what landed some companies on the government debarred list, from mild to wild.
Skimping on payroll
Tampa based construction company Pro-Fit Development won’t be getting any construction projects from the government any time soon. The reason? They didn’t want to pay back wages to their employees. The total required of them was a measly $4,715 they owed to 11 workers. That’s less than $500 each. In the end, Pro-Fit Development will likely be losing a lot more, and would’ve saved their hides if they hadn’t skimped on payroll.
Selling lousy aluminum to NASA
A far cry from just $4,715, Sapa Profiles of Portland, Oregon was debarred after costing NASA $700 million by selling them faulty aluminium extrusions. It turns out Sapa Profiles, which supplied the parts used in the enclosures to carry satellites through the atmosphere, didn’t meet the material specifications NASA requested. This caused the satellites to fail to open properly during two launches, tanking the missions and resulting in $700 million (and over two decades of work) being wasted. It turns out Sapa had gone the extra mile to falsify the certification of the materials based on tests that never even took place.
Impersonating a veteran
B&J Multi Service Corp. of Fitchburg, Massachusetts company found themselves on the debarred list after it was uncovered that company president Brian Baumann, a Korean-born service-disabled veteran wasn’t involved with the company at all. The real owner of B&J Multi Service Corp.,Tyrone Jones, met Baumann when he built a house for him. Jones used Baumann’s name to reap the benefits available to economically disadvantaged entrepreneurs. This scheme net Jones $800K in contracts from the Department of Veterans Affairs, the U.S. Army, and Small Business Association and ultimately ended with B&J Multi Service Corp’s debarment.
Engaging in crappy business practices – literally
Diamond Environmental Services in San Marcos, California was debarred for being anything but environmentally-focused. Diamond Environmental Services, which provides portable toilets, opted to release the waste from their toilets into the sewage systems of numerous Southern California communities to avoid paying $2M dumping fees. On top of that, the company was investigated for skirting clean air regulations by altering their trucks.
Staying ahead of criminal and debarred activity
If one of your suppliers makes headline news for any of the above, you probably don’t want to do business with them. AppZen’s AI alerts you if any of your supplier names pops up in the news, so you can terminate the partnership if necessary. With AI, you can stay ahead of potential PR nightmares, and avoid losing funding from being associated with a debarred entity. With AppZen Contract Audit, your suppliers are continuously monitored for potential risk, including debarments, FCPA compliance, Sunshine Act regulations, and more to keep you in compliance and protected from potential liability.