FAR 9.406-2—Causes for debarment.
Plain-English Summary
FAR 9.406-2 explains the specific causes that can justify debarment of a contractor or subcontractor from federal contracting. It covers three broad categories: convictions or civil judgments for serious misconduct; other serious contract, workplace, tax, disclosure, trade, and immigration-related violations proven by a preponderance of the evidence; and any other cause so serious or compelling that it affects the contractor’s present responsibility. The section also addresses special rules for delinquent federal taxes, including when a tax liability is considered final and delinquent, and gives examples showing when taxes are not yet delinquent because of pending appeals, installment agreements, or bankruptcy stays. In practice, this provision is a major integrity and responsibility screen: it allows the government to protect itself from contractors whose conduct shows fraud, dishonesty, repeated poor performance, noncompliance with drug-free workplace or immigration requirements, or failure to disclose serious wrongdoing. It is not automatic punishment for every violation; instead, it is a discretionary remedy used by the suspending and debarring official when the facts show the contractor is not presently responsible.
Key Rules
Convictions and civil judgments
A contractor may be debarred based on a conviction or civil judgment for fraud, criminal offenses connected to obtaining, attempting to obtain, or performing a public contract or subcontract, antitrust violations related to submitting offers, theft-related and dishonesty offenses, false Made in America labeling, or other offenses showing a lack of business integrity that directly affects present responsibility.
Serious contract violations
Debarment may be based on a preponderance of the evidence showing a serious violation of contract or subcontract terms, including willful failure to perform or a history of failure to perform or unsatisfactory performance. The government does not need a criminal conviction for this ground.
Drug-Free Workplace violations
A contractor may be debarred for violating the Drug-Free Workplace requirements, including failure to comply with the clause at 52.226-7 or having so many workplace drug convictions among employees that the contractor has not made a good-faith effort to maintain a drug-free workplace.
False Made in America labeling
Intentionally placing a Made in America label, or a label with the same meaning, on a product not made in the United States or its outlying areas is a debarment ground. This appears both as a conviction/civil judgment ground and as a preponderance-of-evidence ground.
Unfair trade practices
Commission of an unfair trade practice, as defined in FAR 9.403 and tied to the Defense Production Act, can support debarment when the facts show conduct serious enough to warrant exclusion from federal contracting.
Delinquent federal taxes
A contractor may be debarred for delinquent federal taxes exceeding $10,000. The tax liability must be finally determined and the taxpayer must be delinquent in payment; taxes are not delinquent if liability is still under administrative or judicial challenge, if an installment agreement is being complied with, or if bankruptcy law stays collection.
Mandatory disclosure failures
A principal’s knowing failure, for up to three years after final payment, to timely disclose credible evidence of certain fraud, conflict-of-interest, bribery, gratuity, False Claims Act violations, or significant overpayments can support debarment. The duty applies in connection with award, performance, or closeout of the contract or subcontract.
False certification under arms control clause
A false certification under FAR 52.209-13, Violation of Arms Control Treaties or Agreements-Certification, is a debarment ground.
Immigration compliance determinations
A contractor may be debarred based on a determination by the Secretary of Homeland Security or the Attorney General that it is not in compliance with Immigration and Nationality Act employment provisions. That determination is not reviewable in the debarment proceeding.
Other serious causes
The section also allows debarment for any other cause of such serious or compelling nature that it affects the contractor’s present responsibility. This catch-all gives the government flexibility to address misconduct not specifically listed.
Responsibilities
Suspending and Debarring Official
Evaluate the listed causes and decide whether debarment is warranted based on the required standard of proof and the contractor’s present responsibility. For immigration-based determinations, rely on the Secretary of Homeland Security or Attorney General’s finding, which is not reviewable in the debarment proceeding.
Contractor
Maintain honesty, integrity, contract performance, workplace drug compliance, tax compliance, required disclosures, and accurate product labeling. Ensure principals timely disclose credible evidence of specified misconduct and avoid conduct that could show lack of present responsibility.
Subcontractor
Avoid the same misconduct that can trigger debarment, since several grounds expressly apply to subcontractors as well as contractors. Comply with contract terms, labeling rules, and applicable workplace and legal requirements.
Principals of the contractor
Timely disclose credible evidence of covered fraud, conflict-of-interest, bribery, gratuity, False Claims Act violations, and significant overpayments within the required period and in the required contract-related contexts.
Agency / Government
Identify and document debarment grounds, assess whether the evidence meets the applicable standard, and protect the procurement system by excluding nonresponsible firms when appropriate.
Practical Implications
This section is one of the main integrity gates in federal procurement, so misconduct outside the immediate contract can still affect eligibility if it reflects on present responsibility.
Contractors should treat disclosure obligations seriously; failure to report credible evidence of covered wrongdoing can itself become a debarment basis even if the underlying issue is not yet resolved.
Tax issues matter only when the liability is finally determined and delinquent, so contractors should track appeals, installment agreements, and bankruptcy stays carefully before assuming a tax problem is disqualifying.
Poor performance can rise to debarment if it is willful or part of a pattern, so repeated schedule slips, quality failures, or default-type behavior can create suspension/debarment risk even without fraud.
The catch-all ground means the list is not exhaustive; agencies can act on other serious conduct that shows the contractor is not presently responsible, so compliance programs should focus on overall business integrity, not just the enumerated offenses.
Official Regulatory Text
The suspending and debarring official may debar- (a) A contractor for a conviction of or civil judgment for- (1) Commission of fraud or a criminal offense in connection with- (i) Obtaining; (ii) Attempting to obtain; or (iii) Performing a public contract or subcontract. (2) Violation of Federal or State antitrust statutes relating to the submission of offers; (3) Commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, violating Federal criminal tax laws, or receiving stolen property; (4) Intentionally affixing a label bearing a "Made in America" inscription (or any inscription having the same meaning) to a product sold in or shipped to the United States or its outlying areas, when the product was not made in the United States or its outlying areas (see Section 202 of the Defense Production Act (Public Law102-558)); or (5) Commission of any other offense indicating a lack of business integrity or business honesty that seriously and directly affects the present responsibility of a Government contractor or subcontractor. (b) (1) A contractor, based upon a preponderance of the evidence, for any of the following- (i) Violation of the terms of a Government contract or subcontract so serious as to justify debarment, such as- (A) Willful failure to perform in accordance with the terms of one or more contracts; or (B) A history of failure to perform, or of unsatisfactory performance of, one or more contracts. (ii) Violations of 41 U.S.C. chapter 81 , Drug-Free Workplace, as indicated by- (A) Failure to comply with the requirements of the clause at 52.226-7 , Drug-Free Workplace; or (B) Such a number of contractor employees convicted of violations of criminal drug statutes occurring in the workplace as to indicate that the contractor has failed to make a good faith effort to provide a drug-free workplace (see 26.504 ). (iii) Intentionally affixing a label bearing a "Made in America" inscription (or any inscription having the same meaning) to a product sold in or shipped to the United States or its outlying areas, when the product was not made in the United States or its outlying areas (see Section 202 of the Defense Production Act (Public Law102-558)). (iv) Commission of an unfair trade practice as defined in 9.403 (see Section 201 of the Defense Production Act (Pub.L.102-558)). (v) Delinquent Federal taxes in an amount that exceeds $10;000. (A) Federal taxes are considered delinquent for purposes of this provision if both of the following criteria apply: (1) The tax liability is finally determined. The liability is finally determined if it has been assessed. A liability is not finally determined if there is a pending administrative or judicial challenge. In the case of a judicial challenge to the liability, the liability is not finally determined until all judicial appeal rights have been exhausted. (2) The taxpayer is delinquent in making payment. A taxpayer is delinquent if the taxpayer has failed to pay the tax liability when full payment was due and required. A taxpayer is not delinquent in cases where enforced collection action is precluded. (B) Examples. (1) The taxpayer has received a statutory notice of deficiency, under I.R.C. §6212, which entitles the taxpayer to seek Tax Court review of a proposed tax deficiency. This is not a delinquent tax because it is not a final tax liability. Should the taxpayer seek Tax Court review, this will not be a final tax liability until the taxpayer has exercised all judicial appeal rights. (2) The IRS has filed a notice of Federal tax lien with respect to an assessed tax liability, and the taxpayer has been issued a notice under I.R.C. §6320 entitling the taxpayer to request a hearing with the IRS Office of Appeals contesting the lien filing, and to further appeal to the Tax Court if the IRS determines to sustain the lien filing. In the course of the hearing, the taxpayer is entitled to contest the underlying tax liability because the taxpayer has had no prior opportunity to contest the liability. This is not a delinquent tax because it is not a final tax liability. Should the taxpayer seek tax court review, this will not be a final tax liability until the taxpayer has exercised all judicial appeal rights. (3) The taxpayer has entered into an installment agreement pursuant to I.R.C. §6159. The taxpayer is making timely payments and is in full compliance with the agreement terms. The taxpayer is not delinquent because the taxpayer is not currently required to make full payment. (4) The taxpayer has filed for bankruptcy protection. The taxpayer is not delinquent because enforced collection action is stayed under 11 U.S.C. 362 (the Bankruptcy Code). (vi) Knowing failure by a principal, until 3 years after final payment on any Government contract awarded to the contractor, to timely disclose to the Government, in connection with the award, performance, or closeout of the contract or a subcontract thereunder, credible evidence of- (A) Violation of Federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 of the United States Code; (B) Violation of the civil False Claims Act ( 31 U.S.C. 3729 - 3733 ); or (C) Significant overpayment(s) on the contract, other than overpayments resulting from contract financing payments as defined in 32.001 . (vii) Determination of a false certification under 52.209-13 , Violation of Arms Control Treaties or Agreements-Certification. (2) A contractor, based on a determination by the Secretary of Homeland Security or the Attorney General of the United States, that the contractor is not in compliance with Immigration and Nationality Act employment provisions (see Executive Order 12989, as amended by Executive Order 13286). Such determination is not reviewable in the debarment proceedings. (c) A contractor or subcontractor based on any other cause of so serious or compelling a nature that it affects the present responsibility of the contractor or subcontractor.