Is your contractor banned from receiving federal funds? Don’t wait to find out

Jul 12, 2023

Originally Published: August 24, 2021

As you enter into new federally funded contracts this year, you need to know if your contractor has been banned from doing business with the federal government. Commonly referred to as suspension and debarment, these requirements are fairly easy to comply with, yet they are one of SAO's most common audit findings. We first ran this article in August 2021, and due to its importance, we're republishing it as a reminder.

Some contractors are banned from doing business with the federal government, and it’s your job to know who they are. If you use federal grant money to pay a banned contractor, you risk auditors questioning your spending. Even worse, you might have to repay that money to your federal grantors.

When contractors are banned from receiving federal funding, they are commonly referred to as “suspended or debarred.” Whenever you plan to use federal funds to pay contractors, you must verify they are not suspended or debarred before entering into a contract.

Auditors will ask to see what process your government used to verify a contractor’s suspension and debarment status. In fact, not having established controls to do so is one of the most common federal audit findings we give our clients. With a little guidance and some established controls, you’ll be able to successfully navigate suspension and debarment rules.

How does a contractor get suspended or debarred?

The U.S. General Services Administration explains contractors can be suspended or debarred for a variety of violations, including delinquent federal taxes exceeding $3,000, fraud, bribery and federal criminal law violations. Suspensions can last up to 12 months, whereas debarments are usually three years in length.

Whose status should be verified?

You should verify the suspension and debarment status of both contractors and subrecipients, depending on funding thresholds. These are outlined in the table below.

Type Threshold
Contractor (someone providing goods or services to you) $25,000 or more; paid all or in part with federal funds. Applies to each contract or total purchases from one contractor during the audit period for like-kind items.
Subrecipient (someone you are awarding federal funds) No threshold. Applies to every new subaward.

What are the common problem areas?

Auditors report that local governments are more likely to overlook suspension and debarment verification in two particular areas of contracting.

Professional service contracts with businesses that typically include architects, surveyors, engineers and consultants. For example, you must verify suspension and debarment status before entering into a contract over $25,000 with an engineering firm.

Subrecipient agreements with other local governments. Many local governments give subawards to other local governments without verifying their suspension status. While it is unlikely other local governments would be suspended or debarred, federal requirements state you must verify their suspension and debarment status. For example, if a county shares federal money with cities for their improvement projects, the county would have to verify the suspension and debarment status of each city.

Your three paths to verification

You can verify the suspension and debarment status of your contractor using one of three methods:

  1. Obtain a signed certificate from the contractor attesting it is not suspended or debarred.
  2. Insert a clause into the contract stating the contractor is not suspended or debarred.
    1. Note: If you go this route, including a suspension and debarment clause in your request for proposal is insufficient. The clause must be part of the contract. It's possible language included on a purchase order would work, but you should check with your grantor first to determine if this would be acceptable. If so, the contractor must sign the purchase order.
  3. Check the contractor's status on the U.S. General Administration's website before contracting or purchasing. Type your contractor's name into the search bar to find exclusion records.
    1. Note: Be sure you keep documentation that demonstrates you performed the search, including the date. For example, you might save a screen shot that includes the date you performed the search.

You must demonstrate you are complying with federal regulations before you purchase goods, contract for services (including purchase orders) or subaward funds. Otherwise, you can't prove you had internal controls in place over this requirement – even if it turns out the contractor or subrecipient is not suspended or debarred.

Best practices to consider

It's vitally important to communicate these requirements to all staff responsible for purchasing goods or services with federal dollars. You should also cross-train employees so that you have controls in place, even when someone is on leave. You might also consider adopting these helpful practices:

  • Use experienced, centralized staff to oversee and manage federal procurement requirements.
  • Include required federal language in all contracts, in case you use federal money as a funding source at a later date.
  • Store critical grant documentation in one central location so it won't get lost when a staff member leaves.
  • Provide annual federal grant training to all staff responsible for managing federal awards. We offer training annually through the Washington Finance Officers Association’s annual conference, as well as non-conference training.


Understanding suspension and debarment starts with reading the requirements. If you want to learn more, refer to the following resources:

  • U.S. General Services Administration’s FAQ
  • 2 CFR 200.214 Suspension and debarment
  • 2 CFR section 180.300 Responsibilities of Participants Regarding Transactions Doing Business with Other Persons

Remember, we are here to help. While your grantor is the best source for information about a federal program, you can also submit technical questions about federal awards to our HelpDesk in the client portal.

If you have other questions, comments or suggestions, feel free to email us at