FAR 26.505—Suspension of payments, termination of contract, and debarment and suspension actions.
Plain-English Summary
FAR 26.505 explains what a contracting officer may do when there is evidence that a contractor is not complying with the Drug-Free Workplace requirements in FAR 52.226-7. It covers three main enforcement actions: suspending contract payments, terminating the contract for default, and referring the matter for suspension or debarment action under FAR subpart 9.4. The section also identifies the specific triggers for these actions, namely failure to comply with the Drug-Free Workplace clause or a pattern of employee drug convictions that shows the contractor did not make a good-faith effort to maintain a drug-free workplace. In addition, it allows a limited waiver by the agency head, but only when necessary to avoid severe disruption to agency operations or harm to the Federal Government or the public, and that waiver authority cannot be delegated. In practice, this section gives agencies a strong enforcement tool for workplace drug policy compliance while requiring written findings, procedural compliance, and referral to suspension/debarment officials when action is taken.
Key Rules
Written finding required
Before taking enforcement action, the contracting officer must make a written determination. For payment suspension, the standard is adequate evidence to suspect a cause exists; for default termination, the contracting officer must determine in writing that a cause actually exists.
Payment suspension allowed
If there is adequate evidence to suspect one of the listed causes, the contracting officer may suspend contract payments under the procedures in FAR 32.503-6(a)(1). This is a discretionary remedy, not an automatic one.
Default termination permitted
If the contracting officer determines in writing that one of the listed causes exists, the contract may be terminated for default. This is a stronger remedy and requires a firmer factual basis than payment suspension.
Mandatory referral to SDO
When action is initiated under either payment suspension or default termination, the contracting officer must refer the matter to the agency suspending and debarring official, following agency procedures and FAR subpart 9.4.
Limited grounds for action
The only listed causes are failure to comply with the Drug-Free Workplace clause at 52.226-7, or a level of employee drug convictions that shows the contractor did not make a good-faith effort to provide a drug-free workplace.
Agency-head waiver only
The agency head may waive the determination to suspend payments, terminate for default, or debar/suspend a contractor, but only if necessary to prevent severe disruption to agency operations that would harm the Federal Government or the public. This waiver authority cannot be delegated.
Responsibilities
Contracting Officer
Make the required written determination before acting; suspend payments when adequate evidence to suspect a listed cause exists; terminate for default when a listed cause is determined to exist; and refer the case to the agency suspending and debarring official when action is initiated.
Contractor
Comply with the Drug-Free Workplace clause at FAR 52.226-7; maintain a workplace drug policy and related controls; and make a good-faith effort to provide a drug-free workplace to avoid payment suspension, default termination, and suspension/debarment exposure.
Agency Suspending and Debarring Official
Receive referrals from the contracting officer and handle the matter under agency procedures and FAR subpart 9.4, including considering whether suspension or debarment action is appropriate.
Agency Head
May grant a waiver of the determination to suspend payments, terminate for default, or debar/suspend only when necessary to prevent severe disruption to agency operations and only in accordance with agency procedures; may not delegate this authority.
Agency
Follow internal procedures for payment suspension, default termination, referral, and waiver processing, and ensure actions are coordinated with FAR subpart 9.4 and FAR 32.503-6(a)(1).
Practical Implications
This section gives the government a fast enforcement path when drug-free workplace compliance is in doubt, so contractors should treat FAR 52.226-7 compliance as an active contract administration issue, not just a paper certification.
The difference between "adequate evidence to suspect" and a written determination that a cause exists matters: payment suspension can happen on a lower threshold than default termination, so contractors may face financial disruption before a final adverse finding.
A contracting officer cannot stop at suspending payments or terminating the contract; the case must also be referred for possible suspension or debarment, which can affect future contracting eligibility.
The waiver is narrow and rare. Contractors should not assume an agency can simply waive enforcement because performance is important; the standard is severe disruption to agency operations and harm to the government or public.
Common pitfalls include failing to document the basis for action, overlooking the mandatory referral to the suspending and debarring official, and confusing the drug-free workplace enforcement rules with broader suspension/debarment procedures under FAR subpart 9.4.
Official Regulatory Text
(a) After determining in writing that adequate evidence to suspect any of the causes at paragraph (d) of this section exists, the contracting officer may suspend contract payments in accordance with the procedures at 32.503-6 (a)(1). (b) After determining in writing that any of the causes at paragraph (d) of this section exist, the contracting officer may terminate the contract for default. (c) Upon initiating action under paragraph (a) or (b) of this section, the contracting officer shall refer the case to the agency suspending and debarring official, in accordance with agency procedures, pursuant to subpart 9.4 . (d) The specific causes for suspension of contract payments, termination of a contract for default, or suspension and debarment are- (1) The contractor has failed to comply with the requirements of the clause at 52.226-7 , Drug-Free Workplace; or (2) The number of contractor employees convicted of violations of criminal drug statutes occurring in the workplace indicates that the contractor has failed to make a good faith effort to provide a drug-free workplace. (e) A determination under this section to suspend contract payments, terminate a contract for default, or debar or suspend a contractor may be waived by the agency head for a particular contract, in accordance with agency procedures, only if such waiver is necessary to prevent a severe disruption of the agency operation to the detriment of the Federal Government or the general public (see subpart 9.4 ). The waiver authority of the agency head cannot be delegated.