FAR 9.405-1—Continuation of current contracts.
Plain-English Summary
FAR 9.405-1 explains what agencies may and may not do when a contractor becomes debarred, suspended, proposed for debarment, or voluntarily excluded, and it also addresses a separate category of contractors declared ineligible under 10 U.S.C. 983. The section covers continuation of existing contracts and subcontracts, the limits on placing new orders under indefinite-delivery contracts, Federal Supply Schedule contracts, blanket purchase agreements, and basic ordering agreements, and the prohibition on adding new work, exercising options, or extending current contracts or orders unless there is a written agency-head determination of compelling reasons. It also requires careful review by contracting, technical, and legal personnel before deciding whether to terminate or continue existing work. In addition, for covered agencies, it requires termination of existing contracts and bars new awards or orders to contractors declared ineligible under 10 U.S.C. 983, with narrow exceptions for acquisitions at or below the simplified acquisition threshold and for commercial products and commercial services. In practice, this section is about balancing procurement integrity and mission continuity: agencies must avoid doing business with excluded or ineligible contractors, but they may sometimes continue already-existing contractual relationships when the law and agency leadership permit it.
Key Rules
Existing contracts may continue
If a contractor is debarred, suspended, proposed for debarment, or voluntarily excluded, agencies may still continue contracts and subcontracts already in existence when the exclusion action took effect. The agency head may direct otherwise, so continuation is permitted but not automatic.
Termination requires careful review
Before deciding whether to terminate or continue an affected contract, the agency should review the matter with contracting personnel, technical personnel, and counsel. This is meant to ensure any termination or continuation decision is legally proper and operationally sound.
No new orders or extensions absent approval
For excluded contractors, ordering activities generally may not place orders above the guaranteed minimum under indefinite-quantity contracts, use Federal Supply Schedule contracts, blanket purchase agreements, or basic ordering agreements, or add new work, exercise options, or extend the duration of current contracts or orders. These actions require a written determination by the agency head stating compelling reasons.
Agency-head written determination
The exception to the ordering and extension restrictions is a written agency-head determination of compelling reasons. Without that written finding, the default rule is to avoid expanding or extending the relationship with the excluded contractor.
Ineligible contractors must be terminated
For contractors declared ineligible under 10 U.S.C. 983, covered agencies must terminate existing contracts and may not place new orders or award new contracts, except for acquisitions at or below the simplified acquisition threshold and for commercial products and commercial services.
Special rule for covered agencies
The mandatory termination and no-new-awards rule for 10 U.S.C. 983 ineligible contractors applies to covered agencies as defined in FAR 9.110-1. Agencies must confirm whether they are covered before applying this restriction.
Responsibilities
Agency Head
May direct whether existing contracts or subcontracts may continue after a contractor is debarred, suspended, proposed for debarment, or voluntarily excluded. Must make a written determination of compelling reasons if the agency wants to place otherwise prohibited orders, add new work, exercise options, or extend current contracts or orders. For 10 U.S.C. 983 ineligible contractors, covered agencies must ensure existing contracts are terminated and no new awards or orders are made except where the regulation allows.
Contracting Officer / Ordering Activity
Must follow the exclusion and ineligibility restrictions when deciding whether to continue performance, place orders, add work, exercise options, or extend contracts. Must not take prohibited actions unless the required written determination exists, and must coordinate termination or continuation decisions with technical personnel and counsel.
Technical Personnel
Provide program and performance input before the agency decides whether to terminate or continue an affected contract. Their role is to help assess mission impact, performance status, and the practical consequences of termination or continuation.
Agency Counsel
Review proposed termination or continuation actions to ensure legal propriety. Counsel helps confirm that the agency’s proposed action complies with FAR restrictions and any applicable statutory requirements.
Covered Agency
For contractors declared ineligible under 10 U.S.C. 983, must terminate existing contracts and must not place new orders or award new contracts except for the stated exceptions involving simplified acquisitions and commercial products or commercial services.
Contractor
Must understand that exclusion or ineligibility can stop new business and may affect existing performance, options, and order placement. The contractor remains subject to termination, non-exercise of options, and limits on future ordering or contract expansion.
Practical Implications
This section does not automatically cancel every existing contract when a contractor is excluded, but it sharply limits any expansion of the relationship. Contracting officers should distinguish between continuing already-awarded work and taking new actions that increase scope, time, or ordering volume.
A common pitfall is assuming an IDIQ, FSS, BPA, or BOA can still be used normally after exclusion. Without a written agency-head determination of compelling reasons, ordering above the guaranteed minimum and placing new orders under those vehicles is generally prohibited.
Another frequent mistake is exercising an option or extending a period of performance without checking whether the contractor is excluded or ineligible. Those actions are specifically restricted and can create compliance and protest risk.
For 10 U.S.C. 983 ineligibility, agencies must treat the rule as mandatory for covered agencies, not discretionary. The exceptions for simplified acquisitions and commercial products/services are narrow and should be documented carefully.
In practice, agencies should build a quick review process involving the contracting officer, program office, and counsel whenever a contractor becomes excluded or ineligible, so they can decide whether to terminate, continue, or limit performance without violating procurement rules.
Official Regulatory Text
(a) Contractors debarred, suspended, proposed for debarment, or voluntarily excluded . (1) Notwithstanding the debarment, suspension, proposed debarment, or voluntary exclusion, of a contractor, agencies may continue contracts or subcontracts in existence at the time the contractor was debarred, suspended, proposed for debarment, or voluntarily excluded, unless the agency head directs otherwise. A decision as to the type of termination action, if any, to be taken should be made only after review by agency contracting and technical personnel and by counsel to ensure the propriety of the proposed action. (2) For contractors debarred, suspended, proposed for debarment, or voluntarily excluded, unless the agency head makes a written determination of the compelling reasons for doing so, ordering activities shall not— (i) Place orders exceeding the guaranteed minimum under indefinite quantity contracts; (ii) Place orders under Federal Supply Schedule contracts, blanket purchase agreements, or basic ordering agreements; or (iii) Add new work, exercise options, or otherwise extend the duration of current contracts or orders. (b) Ineligible contractors. A covered agency, as defined in 9.110-1 , shall terminate existing contracts and shall not place new orders or award new contracts with contractors that have been declared ineligible pursuant to 10 U.S.C. 983 (see 9.110 ), except for contracts at or below the simplified acquisition threshold or contracts for the acquisition of commercial products and commercial services.