On January 22, 2013, the Director of Defense Procurement and
Acquisition Policy ("DPAP") issued Class Deviation
2013-O0006, which continues the 2012 prohibition against the
Department of Defense ("DOD") contracting with
corporations that have unpaid delinquent tax liability or a felony
conviction. The new class deviation applies to all contracts that
are to be funded by fiscal year 2013 general appropriations for the
DOD, including commercial items contracts and all contracts
utilizing fiscal year 2013 military construction funds.
Effective immediately, the DOD cannot contract with a corporation
if the DOD is aware that the corporation: (i) has unpaid delinquent
federal tax liability, for which all judicial and administrative
remedies have been exhausted or have lapsed; or (ii) was convicted
of a federal felony criminal violation within the preceding 24
months. Similarly, military construction funds cannot be used to
enter into a contract with a corporation that was convicted of a
federal felony criminal violation within 24 months. The exception
to this rule allows the DOD to contract with corporations subject
to the prohibition only if the agency has considered suspension or
debarment of the corporation and has determined that further action
is not necessary. All offerors will be required to disclose any
unpaid federal tax liabilities, or any federal felony criminal
violations within the past two years, even if the felony charge is
unrelated to the DOD or federal procurement activities.
Potential DOD contractors must consider the implications of this
prohibition in negotiating or arriving at any settlement or plea
agreement, including a no contest plea, in response to any federal
felony criminal charge. Contractors also must ensure that they
fully disclose the existence any felony convictions or guilty or no
contest pleas within the past two years and any delinquent tax
debts when submitting proposals for fiscal year 2013 DOD contracts,
as failure to disclose such information could result in additional
liability.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
