83 FR 39464 - NCUA Suspension and Debarment Procedures

NATIONAL CREDIT UNION ADMINISTRATION

Federal Register Volume 83, Issue 154 (August 9, 2018)

Page Range		39464-39469
FR Document		2018-17086

On March 15, 2018, the NCUA Board (Board) proposed new suspension and debarment procedures to protect the Federal Government's interest in only doing business with presently responsible contractors. After consideration of public comments, this notice sets forth the NCUA's final procedures for suspension and debarment and establishes administrative processes for contractors subject to the procedures. The final procedures will appear on the NCUA's public website.

Federal Register, Volume 83 Issue 154 (Thursday, August 9, 2018)

[Federal Register Volume 83, Number 154 (Thursday, August 9, 2018)]
[Notices]
[Pages 39464-39469]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2018-17086]

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NATIONAL CREDIT UNION ADMINISTRATION

RIN 3133-AE85

NCUA Suspension and Debarment Procedures

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final suspension and debarment procedures.

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SUMMARY: On March 15, 2018, the NCUA Board (Board) proposed new
suspension and debarment procedures to protect the Federal Government's
interest in only doing business with presently responsible contractors.
After consideration of public comments, this notice sets forth the
NCUA's final procedures for suspension and debarment and establishes
administrative processes for contractors subject to the procedures. The
final procedures will appear on the NCUA's public website.

DATES: These final procedures are applicable September 10, 2018.

FOR FURTHER INFORMATION CONTACT: Kevin Tuininga, Associate General
Counsel for Administrative Law, Office of General Counsel, National
Credit Union Administration, 1775 Duke Street, Alexandria, Virginia
22314-3428 or telephone: (703) 518-6543.

SUPPLEMENTARY INFORMATION:
I. Background
II. Comments Received
III. The Final Procedures
IV. Regulatory Procedures

I. Background

On March 15, 2018, the NCUA Board (Board) proposed new suspension
and debarment procedures as part of its efforts to modernize its
procurement processes. These proposed procedures were intended to
implement best practices in spending funds available to the NCUA,
including those in the agency's Operating Fund and the National Credit
Union Share Insurance Fund. Although the NCUA is not required to follow
government-wide acquisition laws and regulations, those laws and
regulations have proven effective and include guidelines developed over
years of seeking public comment on expenditure processes. Suspension
and debarment remedies are now an important component of government
procurement programs. After considering comments received, the Board
has decided to adopt the procedures as proposed.

II. Comments Received

The Board received three comments on the proposal. Commenters
included two national credit union trade associations and one regional
trade association. All three commenters supported the proposal. One
commenter suggested that the agency ``consult with the [Office of the
Inspector General] regarding whether such procedures would be of
benefit to the NCUA Office of General Counsel.''
The Board values these comments and believes it should adopt the
procedures as proposed. Implementing these procedures in the near term
ensures prompt compliance with the NCUA Inspector General's
recommendations. The Board is open to further recommendations of the
Inspector General but, at this developing stage, declines to extend the
final procedures to legal services agreements. Lawyers are subject to
codes of professional responsibility related to their bar memberships,
which already impose the highest standards of ethical conduct and
include avenues for disciplinary action that can preclude further
practice of law. This approach also aligns with the current practice of
the Federal Deposit Insurance Corporation, which excludes law firms and
lawyers from its contractor suspension and debarment procedures.\1\
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\1\ 12 CFR 367.1(c).
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III. The Final Procedures

As discussed above, the Board has chosen to adopt the procedures as
proposed. For a complete discussion of all eight sections of the
procedures, please see the preamble to the proposed procedures at 83 FR
12318 (Mar 21, 2018) or https://www.thefederalregister.org/fdsys/pkg/FR-2018-03-21/pdf/2018-05626.pdf. The Board will post the final procedures on the
NCUA website.

IV. Regulatory Procedures

A. Regulatory Flexibility Act

For any final rule it adopts, the Regulatory Flexibility Act (RFA)
requires the NCUA to prepare a final regulatory flexibility analysis
that, among other things, describes the steps the agency has taken to
minimize economic impact on small entities (currently defined by the
NCUA as federally insured credit unions with under $100 million in
assets), unless the NCUA certifies that the final rule will not have a
significant economic impact on a substantial number of small entities.
As discussed in the proposal, the NCUA does not expect the final
Suspension and Debarment Procedures would ever apply to a federally
insured credit union. In addition, the NCUA does not expect that the
Procedures would have a significant economic impact on any other small
businesses, as defined in the RFA and as further established by the
Office of Advocacy of the Small Business Administration.
The final procedures closely follow the suspension and debarment
procedures of the Federal Acquisition Regulation, which already applies
to government contractors, without imposing any additional economic
burden. To the extent of any variation from the Federal Acquisition
Regulations, the final procedures contain no recordkeeping or
substantive regulatory requirements, varying only in adjudication
processes. The final procedures therefore will not have a significant
economic impact on a substantial number of federally insured credit
unions under $100 million in assets or on other small entities as
defined by the Small Business Administration. Accordingly, the NCUA has
determined and certifies that the final procedures will not have a
significant economic impact on a substantial number of small entities.
No final regulatory flexibility analysis is required.

B. Paperwork Reduction Act

The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in
which an agency creates a new paperwork burden on regulated entities or
modifies an existing burden.\2\ For purposes of the PRA, a paperwork
burden may take the form of either a reporting or a recordkeeping
requirement, both referred to as information collections. The final
procedures will not create any new paperwork burden that meets the
definition of an information collection. Thus, the NCUA has determined
that these final procedures do not increase the paperwork requirements
under the PRA and regulations of the Office of Management and Budget.
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\2\ 44 U.S.C. 3507(d).
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C. Executive Order 13132

Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on state and local interests. The
NCUA, an independent regulatory agency as

[[Page 39465]]

defined in 44 U.S.C. 3502(5), voluntarily complies with the executive
order to adhere to fundamental federalism principles. These final
procedures will not have a substantial direct effect on the states, on
the relationship between the national government and the states, or on
the distribution of power and responsibilities among the various levels
of government. The NCUA has determined that the final procedures do not
constitute a policy that has federalism implications for purposes of
the executive order.

D. Assessment of Federal Regulations and Policies on Families

The NCUA has determined that these final procedures will not affect
family well-being within the meaning of Section 654 of the Treasury and
General Government Appropriations Act, 1999, Public Law 105-277, 112
Stat. 2681 (1998).

By the National Credit Union Administration Board on August 2,
2018.
Gerard Poliquin,
Secretary of the Board.

For the reasons discussed above, the Board adopts the following
NCUA Suspension and Debarment Procedures:

NCUA Suspension and Debarment Procedures

A. Purpose

The purpose of these suspension and debarment procedures is to
establish an administrative process to protect the Government's
interest in only doing business with presently responsible contractors.
The NCUA \1\ shall only solicit offers from, award contracts to, and
consent to subcontracts with presently responsible contractors. These
procedures implement the NCUA's policies for suspension and debarment
and establish administrative proceedings for contractors subject to the
policies.
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\1\ Throughout these procedures, unless otherwise noted, the
``NCUA'' refers the NCUA in its agency capacity and also to the NCUA
Board as conservator or liquidating agent for an insured credit
union. Legal services contracts the NCUA enters into in any
capacity, through the Office of General Counsel, are not subject to
these suspension and debarment procedures.
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B. Authority

The NCUA's suspension and debarment authority derives from the
Federal Credit Union Act 12 U.S.C. 1751 et seq., and 12 U.S.C.
1766(i)(2), specifically. The NCUA is not required to follow the
Federal Acquisition Regulation but uses the principles therein for best
practice guidance. The Federal Acquisition Regulation (FAR) section on
suspension and debarment is located at 48 CFR part 9, subpart 9.4. The
NCUA also has its own Acquisition Policy Manual.

C. Definitions

1. Action Referral Memorandum (ARM). The investigative report
developed and compiled by an NCUA office recommending that the
Suspending and Debarring Official (SDO) take a suspension or debarment
action against a contractor.
2. Administrative Agreement. Administrative Agreements are usually
entered into in lieu of suspension or debarment actions. Typically the
agreements include acceptance of responsibility, voluntary exclusion by
the contractor, some provision of restitution, any contractor
responsibilities with respect to codes of conduct, training, and the
contractor's promise to report progress to the NCUA, and generally
include consequences for breach of the agreement. The terms of the
Administrative Agreement and contents will be determined on a case-by-
case basis.
3. Administrative Record. The entire record of information and
proceedings. This includes all information considered by the SDO that
is the basis of the final decision.
4. Affiliates. Business concerns, organizations, or individuals are
affiliates of each other if, directly or indirectly, (1) either one
controls or has the power to control the other, or (2) a third party
controls or has the power to control both. Indicia of control include,
but are not limited to, interlocking management or ownership, identity
of interests among family members, shared facilities and equipment,
common use of employees, or a business entity organized following the
debarment, suspension, or proposed debarment of a contractor that has
the same or similar management, ownership, or principal employees as
the contractor that was debarred, suspended, or proposed for debarment.
5. Civil Judgement. A judgement or finding of a civil offense by a
court of competent jurisdiction.
6. Contractor. Contractor means any individual or other legal
entity that: (1) Directly or indirectly (for example, through an
affiliate), submits offers for, or is awarded, or reasonably may be
expected to submit offers for, or be awarded, a Government contract or
a subcontract under a Government contract; or (2) conducts business, or
reasonably may be expected to conduct business, with the Government as
an agent or representative or another contractor.
7. Debarment. A final decision made by the SDO to exclude a
contractor from Government contracting and Government-approved
subcontracting or covered transactions for a reasonable, specified
period (usually not exceeding three years). A contractor is first
proposed for debarment and afforded an opportunity to present its
defenses and mitigating factors.
a. Fact-Based Debarment. The cause for the debarment is based on
factual circumstances (for example, history of poor performance or
willful misconduct). The NCUA must be able to prove the action by a
``preponderance of the evidence.'' Preponderance of the evidence means
that the fact(s) at issue are more likely than not (over 50%) to be
true. A contractor, based upon a preponderance of the evidence, can be
debarred for any of the following:
i. Violation of the terms of a Government contract or subcontract
so serious as to justify debarment, such as:
1. Willful failure to perform in accordance with the terms of one
or more contracts; or
2. a history of failure to perform, or of unsatisfactory
performance of, one or more contracts.
ii. Violations of a Drug-Free Workplace, as indicated by:
1. Failure to comply with the requirements of a Drug-Free
Workplace; or
2. 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.\2\
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\2\ 41 U.S.C. chapter 81.
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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, when the product was not made
in the United States.\3\
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\3\ Section 202 of the Defense Production Act; Public Law 102-
558.
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iv. Commission of an unfair trade practice.\4\
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\4\ Section 201 of the Defense Production Act; Public Law 102-
558.
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v. Delinquent Federal taxes in an amount that exceeds $3,500.
Federal taxes are considered delinquent for purposes of this provision
if the tax liability is finally determined (i.e., assessed) and the
taxpayer is delinquent in making payment.
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

[[Page 39466]]

Government, in connection with the award, performance, or closeout of
the contract or a subcontract thereunder, credible evidence of:
1. Violation of Federal criminal law involving fraud, conflict of
interest, bribery, or gratuity violations; \5\
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\5\ Title 18 U.S.C.
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2. violation of the civil False Claims Act; \6\ or
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\6\ 31 U.S.C. 3729-3733.
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3. significant overpayment(s) on the contract, other than
overpayments resulting from contract financing payments.
vii. A contractor, based on a determination by the Secretary of
Homeland Security or the Attorney General of the United States, not in
compliance with Immigration and Nationality Act employment
provisions.\7\ Such determination is not reviewable in the debarment
proceedings.
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\7\ Executive Order 12989, as amended by Executive Order 13286.
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viii. A contractor has miscertified its status as a minority- and/
or women-owned business.
ix. Any other cause of so serious or compelling a nature that it
affects the present responsibility of the contractor or subcontractor.
b. Conviction-Based Debarment. A debarment action based on a
conviction or civil judgement. A contractor can be debarred for a
conviction or civil judgement based on one or more of the following
circumstances:
i. Commission of fraud or a criminal offense in connection with (i)
obtaining, (ii) attempting to obtain, or (iii) performing a public
contract or subcontract.
ii. Violation of Federal or State antitrust statutes relating to
the submission of offers.
iii. 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.
iv. 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, when the product was not made
in the United States.\8\
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\8\ Section 202 of the Defense Production Act; Public Law 102-
558.
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v. 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.
8. Imputation. Attributing the misconduct of an individual or
organization to another individual or organization by virtue of the
latter's knowledge or implied knowledge of the misconduct. An agency
may impute the basis of a suspension or debarment through the following
relationships: Individual to organization; organization to individual;
individual to individual; and joint ventures.
9. Indictment. An indictment for a criminal offense. An information
or other filing by competent authority charging a criminal offense is
given the same effect as an indictment.
10. Presentation of Matters in Opposition (PMIO). The contractor
may submit matters in opposition to the suspension or proposed
debarment. The contractor may submit matters in person, in writing, or
through a representative. The contractor may also use a combination of
those methods.
11. Present Responsibility. A contractor is presently responsible
if the contractor is ethical, honest, competent, and has not acted in
any way that reveals a lack of business integrity or business honesty,
or an inability to satisfactorily perform Government contracts.
12. System for Award Management (SAM). SAM is the exclusion
database that applies across the Executive Branch. SAM is an official
U.S. Government system.
13. Suspension. A suspension is an immediate, but temporary
(usually 12 months), measure imposed by the SDO, rendering a contractor
ineligible to receive new Government contracts or subcontracts, pending
the outcome of a legal proceeding or investigation that could give rise
to a debarment.\9\
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\9\ If legal proceedings are not initiated within 12 months
after the date of the suspension notice, the suspension shall be
terminated unless an Assistant Attorney General requests an
extension, in which case it may be extended for six months.
Suspensions cannot extend beyond 18 months unless legal proceedings
have been initiated within that period. The NCUA shall notify the
Department of Justice of the proposed termination of the suspension,
at least 30 days before the 12-month period expires to give the
Department of Justice an opportunity to request an extension.
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a. Adequate Evidence for Suspension. The NCUA must have adequate
evidence and an immediate need to suspend a contractor. Adequate
evidence is information sufficient to support a reasonable belief that
a particular act or omission has occurred. A contractor can be
suspended upon adequate evidence of one or more the following:
i. Commission of fraud or a criminal offense in connection with (i)
obtaining, (ii) attempting to obtain, or (iii) performing a public
contract or subcontract.
ii. Violation of Federal or State antitrust statutes relating to
the submission of offers.
iii. 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.
iv. Violations of a Drug-Free Workplace, as indicated by:
1. Failure to comply with the requirements of a Drug-Free
Workplace; or
2. 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.\10\
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\10\ 41 U.S.C. chapter 81.
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v. 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, when the product was not made
in the United States.\11\
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\11\ Section 202 of the Defense Production Act; Public Law 102-
558.
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vi. Commission of an unfair trade practice.\12\
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\12\ Section 201 of the Defense Production Act; Public Law 102-
558.
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vii. Delinquent Federal taxes in an amount that exceeds $3,500.
Federal taxes are considered delinquent for purposes of this provision
if the tax liability is finally determined (i.e., assessed) and the
taxpayer is delinquent in making payment.
viii. Knowing failure by a principal, until three 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:
1. Violation of Federal criminal law involving fraud, conflict of
interest, bribery, or gratuity violations; \13\
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\13\ Title 18 U.S.C.
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2. violation of the civil False Claims Act; \14\ or
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\14\ 31 U.S.C. 3729-3733.
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3. significant overpayment(s) on the contract, other than
overpayments resulting from contract financing payments.
ix. 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.

[[Page 39467]]

An indictment for any of the foregoing will be considered adequate
evidence for suspension.

D. Responsibilities

1. NCUA Executive Director. The Executive Director has the
authority to approve the award of a contract or subcontract to an
ineligible contractor for compelling reasons. Decisions to award a
contract or subcontract to ineligible contractors must be documented in
writing in advance of an award.
2. The Suspending and Debarring Official (SDO). The Deputy General
Counsel serves as the SDO. The SDO decides whether to impose a
suspension and debarment action. The decision whether to suspend or
debar is a business decision and, unless mandated by statute or
executive order, is discretionary. The SDO decides whether to send out
a Notice of Suspension or a Notice of Proposed Debarment, issue a Show
Cause Letter, or take no action. Upon commencing a formal action, the
SDO reviews the ARM, considers any PMIO submitted or presented by the
contractor, and determines whether a fact-finding proceeding is
necessary. The SDO may negotiate an Administrative Agreement with the
contractor. The SDO's final decision is based on the ARM and the entire
Administrative Record.
3. Office of the General Counsel (OGC). OGC provides legal advice
regarding the suspension and debarment program to the NCUA. OGC reviews
the ARM, any other notices and correspondence, the Administrative
Record, the SDO decision, any Administrative Agreement and other
documents for legal sufficiency. OGC also reviews and concurs in any
decision from the OCFO, to terminate or void contracts held by
suspended, debarred, or proposed-for-debarment contractors.
4. SDO Admin. The SDO Admin is a procurement attorney in OGC. The
SDO Admin receives referral packages and coordinates with the OCFO, the
SDO, and other interested NCUA parties. The SDO Admin also coordinates
suspension and debarment actions with other agencies and enters
ineligible contractors into SAM. The SDO Admin coordinates with the
OIG, when necessary and appropriate.
5. Office of the Chief Financial Officer (OCFO). OCFO contracting
officers shall evaluate the responsibility of prospective contractors
before award, to include checking SAM. Contracting officers shall also
ensure contractor compliance with contract terms and conditions and
shall coordinate appropriately with any NCUA office and the SDO Admin
on a suspension and debarment action.
6. Office of Inspector General (OIG). The OIG's work may form the
basis for a referral for suspension or debarment. The OIG shall raise
any matters of concern resulting from audits, evaluations and
investigations. Other NCUA offices may refer areas of concern to the
OIG for investigation.
7. All NCUA Offices. All NCUA offices must report misconduct that
may give rise to a suspension and debarment action to the NCUA
contracting officer and the SDO Admin upon any indication of a cause
for suspending and debarring contractors. Situations that involve
possible criminal or fraudulent activities must also be referred to the
OIG. Along with more specific bases for debarments and suspensions
listed in Section C, the following general matters may be grounds for
suspension and debarment and should be referred: Contractor fraud,
dishonesty, or unethical behavior; repeated or severe contract
performance issues; unmitigated or undisclosed conflicts of interest;
and improper invoicing and/or questionable costs.

E. Effect of Listing ¹⁵
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\15\ The nonprocurement common rule is a model rule published in
the Federal Register and used by agencies to suspend, debar, or
exclude contractors from participation in nonprocurement activities.
Nonprocurement activities include grants, cooperative agreements,
scholarships, fellowships, loans, loan guarantees, subsidiaries,
insurance, payments for specified use, and donation agreements. FAR
and NCR-based suspension and debarment actions are recognized
equally by agencies regardless of which regulations they follow.
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1. Contractors debarred, suspended, or proposed for debarment are
excluded from receiving contracts, and the FAR provides that agencies
shall not solicit offers from, award contracts to, or consent to
subcontracts with these contractors, unless the agency head determines
there is a compelling reason for such action. Subject to any exceptions
in this policy, the NCUA shall not award new contracts, place orders
exceeding the guaranteed minimum on indefinite delivery contracts,
place orders under schedule contracts, add new work, exercise options,
or extend the duration of a contract with any contractor debarred,
suspended, or proposed for debarment. Except as otherwise provided in
applicable law, a suspension and debarment action taken by the NCUA
will exclude the contractor from all awards of other contracts within
the Executive Branch.
a. Current contracts. Any NCUA decision to terminate or void a
current contract shall be subject to review and concurrence by OGC.
b. Restrictions on subcontracting. When a contractor debarred,
suspended or proposed for debarment is proposed as a subcontractor for
any subcontract subject to NCUA consent, contracting officers shall not
consent unless the Executive Director states in writing the compelling
reasons to do so.\16\
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\16\ Also, contractors shall not enter into any subcontract in
excess of $35,000, other than a subcontract for a commercially
available off the-shelf item, with a party that is debarred,
suspended, or proposed for debarment.
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F. Procedures for Referring Matters to the SDO

1. General. The referring office shall provide any and all facts
and information giving rise to the possible suspension and debarment,
including any available documentation to the SDO Admin. Conviction-
based debarment matters should be referred within 10 working days of
discovery and, to the extent practicable, all other matters should be
referred within 30 calendar days. The referring office shall submit an
ARM to the SDO Admin. The SDO Admin will coordinate the ARM with the
SDO, the NCUA contracting officer and any other necessary party.
2. Contents of the ARM. The ARM must include the following
information, if applicable:
a. Information on the contractor:
i. Identity of respondents (contractors/affiliates/business
entities).
ii. Position(s) held by individuals within the business entity.
iii. Fictitious names or aliases.
iv. Current mailing addresses of named parties and/or last known
business address.
v. Current telephone and fax numbers for named parties.
vi. Dun and Bradstreet identifier and/or the Commercial and
Government Entity Code.
vii. SSN and/or birthdates of individuals.
viii. Listing of subsidiaries, affiliates, and parent companies.
b. Pertinent Documents.
i. NCUA-affected contract numbers and copies of the contract(s).
ii. Listing of any other contracts the entity has with other
Government agencies.
iii. Invoices and other cost and pricing information.
iv. Any indictment, legal documents, sentencing transcripts or
memoranda, any judgement and conviction, settlement agreement or final
order.
v. Explanation of current business corporate structure, if known.

[[Page 39468]]

vi. Any business-related documents (articles of incorporation).
vii. Emails and communication between the NCUA and the contractor.
c. Business activity of the contractor and nexus statement. The ARM
must contain a narrative explaining the relationship between the
conduct of the contractor and the NCUA's mission and/or activities and
include a statement of the grounds for suspension and debarment. The
narrative should focus on the contractor's integrity and present
responsibility and why the NCUA needs protection. The narrative should
show the SDO what happened in clear and concise terms. Mitigating
factors that can be addressed are whether the individual(s) cooperated
with any investigation, whether behavior was repetitive, and whether
any individuals self-disclosed. Time critical events should be
addressed (for example, whether the contractor is being considered for
new award or an option is about to be exercised).
d. Recommended course of action. The ARM shall recommend a
suspension, proposal for debarment, or show cause letter. The ARM can
also propose a period for the suspension or debarment.

G. Decision-Making Process

a. Upon receipt of a referral, the SDO Admin will ensure that the
file has all of the required elements. The SDO Admin will coordinate
with the referring office, the OIG, the NCUA contracting officer and
any other necessary party if more information is needed. The SDO Admin
will coordinate any proposed action with the Interagency Suspension and
Debarment Committee (ISDC). The ISDC is an organization composed of
suspension and debarment representatives from agencies and coordinates
lead agency status among agencies. The lead agency is usually the
agency with the highest amount of contracting dollars with the vendor.
b. The SDO Admin will then forward the ARM to the SDO. Upon the
receipt of a referral, the SDO will decide the appropriate action to
take. After consultation with OGC, the SDO may take any of the
following actions:
i. Reject the ARM and take no action. The SDO may determine there
is not enough evidence to initiate an action. The SDO will document the
decision not to take action and tell the SDO Admin. The SDO Admin will
coordinate this decision within the NCUA. Continuous monitoring of the
contractor may be recommended.
ii. Issue a Show Cause Letter. The SDO may issue a Show Cause
Letter to the contractor rather than initiating a formal suspension or
debarment action. The SDO Admin will send the Show Cause Letter to the
contractor through USPS certified mail, return receipt requested, and
forward a copy to the NCUA contracting officer and the OIG if
necessary. The letter must include all of the following:
1. A description of the alleged misconduct.
2. Notice that the misconduct may form the basis for a suspension
and debarment action.
3. A request for the contractor to admit, deny, or explain the
alleged misconduct.
4. A time for a contractor to respond (no more than 30 calendar
days from the date of receipt).
5. Notice of consequences for failure to respond to the letter or
adequately address the allegations of misconduct.
iii. Issue a Notice of Suspension or Notice of Proposed Debarment.
The SDO may begin formal proceedings by issuing a Notice of Suspension
or a Notice of Proposed Debarment. Issuance of either, immediately
renders the contractor (and any named affiliates) ineligible to receive
Executive Branch contracts and the SDO Admin will enter the
contractor's name into SAM. Notice shall be sent by USPS certified
mail, return receipt requested to the last known address of the
contractor.
1. Notice of Proposed Debarment. The notice shall inform the
contractor (and any named affiliates):
a. That it is being considered for debarment;
b. of the reasons/causes for the proposed debarment;
c. of the effect of the proposed debarment;
d. of the potential effect of a debarment (including scope of
ineligibility);
e. that the contractor has 30 calendar days from receipt of the
notice to respond with its PMIO in person, in writing, or through a
representative with information and arguments opposing the proposed
debarment; and
f. that the NCUA may conduct a fact-finding proceeding.
A copy of the ARM will be sent with the notice. A copy of the
entire Administrative Record will be made available to the contractor
upon request, unless applicable law or parallel proceedings warrant the
SDO's partial or complete redaction or withholding of the
Administrative Record.
2. Notice of Suspension. The notice shall inform the contractor
(and its affiliates) of the following circumstances:
a. That it has been suspended;
b. whether the suspension is based on indictment or other adequate
evidence that the contractor has committed misconduct warranting
immediate action;
c. that the suspension is for a temporary period, pending the
completion of an investigation (if the suspension is based on
indictment there is no time limit);
d. the cause(s) for imposing the suspension;
e. the effect of the suspension (including the scope of
ineligibility);
f. that the contractor has 30 calendar days from receipt of the
notice to respond with its PMIO in person, in writing, or through a
representative with information and argument opposing the suspension;
and
g. that the NCUA may conduct a fact-finding proceeding if the SDO
finds that material facts are in dispute.
A copy of the ARM will be sent with the notice. A copy of the entire
Administrative Record will be made available to the contractor upon
request, unless applicable law or parallel proceedings warrant the
SDO's partial or complete redaction or withholding of the
Administrative Record.
iv. Contractor's PMIO. After receiving notice of a suspension or
debarment, the contractor has 30 calendar days from receipt of the
notice to respond with its PMIO in person, in writing, or through a
representative with information and argument opposing the proposed
suspension or debarment. There is no set format for how the PMIO must
be submitted. The contractor may request a meeting with the SDO. The
SDO will decide whether to transcribe meetings and conference calls on
a case-by-case basis. The PMIO should raise all contractor defenses,
contested facts, admissions, remedial actions taken and any mitigating
factors. Mitigating factors can include explaining whether the
contractor (a) has effective standards of internal control systems or
adopted of such controls; (b) brought the misconduct to the attention
of the NCUA in a timely manner; (c) internally investigated the
misconduct; (d) cooperated fully with any NCUA investigation; (e) paid
or agreed to pay restitution; (f) took appropriate disciplinary actions
against individuals responsible for misconduct; (g) implemented or
agreed to implement new remedial measures; (h) instituted or agreed to
issue new training or ethics programs; (i) has had adequate time to
eliminate the circumstances in the organization that led to the
misconduct; and (j) whether management recognizes the seriousness of
the misconduct and has implemented programs to prevent

[[Page 39469]]

recurrence. The SDO must consider all matters in the PMIO in rendering
a final decision. A contractor's failure to respond to the notices sent
by the SDO shall be deemed an admission of the existence of the cause
for suspension or debarment. In that case, the SDO may proceed to a
final decision without further proceedings.
A fact-finding proceeding occurs if actions are not based upon a
conviction or civil judgement and when, after receipt of the PMIO, the
SDO determines there is a genuine dispute over material fact(s). A
fact-finding proceeding is called to consider the fact(s). A fact-
finder can be any individual appointed by the SDO to oversee the
proceeding. The contractor shall be afforded the opportunity to appear
with counsel, submit documentary evidence and confront agency
witnesses. The proceeding shall be transcribed unless otherwise
mutually agreed upon, and the contractor can obtain a transcript of
proceedings at its request and at its cost. The SDO shall attempt to
schedule this proceeding within 60 calendar days of the PMIO. If there
are numerous grounds for suspension and debarment, the proceeding can
be limited to the grounds in dispute having a genuine issue of material
fact. The disposition of the fact-finding proceeding will be documented
by the SDO. The standard of proof for determining the disputed facts is
preponderance of the evidence.
c. Compiling the Administrative Record. During the process, the
NCUA shall maintain and document all information considered by the SDO
to include the ARM, the PMIO (including mitigating factors) and
transcripts of any fact-finding proceedings. This is the Administrative
Record. The following records, in addition to any other similar
materials, shall also be included if considered by the SDO: Emails;
notes; contract documents; newspaper articles; and summaries of oral
briefings and contractor submissions. Any information not relied on by
the SDO should not be included. Once the SDO issues a final decision,
the contractor may request a copy of the Administrative Record. The SDO
may deny the request or withhold or redact part of the Administrative
Record if warranted under applicable law or because of parallel
proceedings.\17\ In any circumstance where the SDO redacts or withholds
all or part of the Administrative Record, the SDO will provide the
reasons for doing so to the contractor in writing.
---------------------------------------------------------------------------

\17\ Parallel proceedings occur when two or more contemporaneous
legal actions are initiated by different Government entities against
the same contractor, and involving the same material facts. Often
these arise when an agency has suspended or proposed a contractor
for debarment and the Department of Justice is investigating or
prosecuting the contractor for the same misconduct.
---------------------------------------------------------------------------

d. Final Decision. The SDO shall issue a written final decision
based on the Administrative Record. The SDO shall issue a conviction-
based debarment within 30 working days after closing the Administrative
Record and within 45 working days of closing the Administrative Record
for a fact-based suspension or debarment. The SDO has discretion to
extend these deadlines. The Administrative Record will be deemed closed
when the SDO Admin submits all evidence to the SDO for a final
decision. The SDO Admin will advise the contractor in writing promptly
after the Administrative Record has been closed, including the date it
was closed. All correspondence shall be sent USPS certified mail,
return receipt requested, by the SDO Admin. The SDO can take the
following actions in a final decision:
i. Not Debar the Contractor. The SDO may decide not to debar the
contractor. The decision shall include, if applicable, referral to the
Notice of Proposed Debarment; a summary of proceedings; the identities
of affiliates or imputed conduct; and the reasons for not debarring
(for example, an Administrative Agreement; mitigating factors; or
remedial measures taken by the contractor). The decision shall notify
the contractor that it may request a copy of the Administrative Record
and give notice of the applicability date of the decision. The SDO
Admin will remove the contractor's name from SAM.
ii. Terminate the Suspension. The SDO may decide to terminate the
suspension. The decision shall include, if applicable, referral to the
Notice of Suspension; a summary of proceedings; the identities of
affiliates or imputed conduct; and the reason for terminating the
Suspension (for example, an Administrative Agreement; mitigating
factors; or remedial measures taken by the contractor). The decision
shall notify the contractor that it may request a copy of the
Administrative Record and give notice of the applicability date of the
decision. The SDO Admin will remove the contractor's name from SAM.
iii. Debar the Contractor. The SDO may decide to debar the
contractor. This decision must be based on the preponderance of the
evidence. The decision shall include, if applicable, referral to the
Notice of Proposed Debarment; a summary of proceedings; identities of
affiliates or imputed conduct; the information considered by the SDO;
the reasons for debarring; the scope of ineligibility; the consequences
of debarment (application across the Executive Branch); and the
applicability dates of debarment. The decision shall notify the
contractor that it may request a copy of the Administrative Record. The
SDO Admin will enter the debarred contractor into SAM.
iv. Enter into an Administrative Agreement. At any time during the
proceedings, the SDO may negotiate an Administrative Agreement with the
contractor. An Administrative Agreement applies across the Executive
Branch when entered into SAM. The terms of the Administrative Agreement
and contents of the Agreement will be determined on a case-by-case
basis.
e. Contractor's Remedy. After a decision is made, a suspended or
debarred contractor may seek judicial review. OGC (in coordination with
the Department of Justice, as appropriate or required) will work with
the referring office, the SDO, and OCFO to litigate these claims.

H. NCUA Action After a Decision

If a suspension or debarment is imposed, NCUA offices must take
steps to ensure the contractor does not receive any new contracts. Upon
the applicability date of SAM listing, the NCUA must not solicit offers
from, award contracts to, or consent to contracts with ineligible
contractors. Suspended or debarred contractors may continue performing
current contracts (unless those contracts are terminated or voided) but
cannot (a) add new work, exercise options, or otherwise extend the
duration of the contract or order; (b) issue task orders exceeding the
guaranteed minimum under indefinite quantity contracts; or (c) place
orders under blanket purchase agreements or basic ordering agreements.
The NCUA must review any current contracts held by the contractor to
determine whether to terminate or void those contracts. A decision to
terminate or void a contract requires OGC concurrence.

[FR Doc. 2018-17086 Filed 8-8-18; 8:45 am]
BILLING CODE 7535-01-P

Federal Register / Vol. 83, No. 154 / Thursday, August 9, 2018 / Notices 39465

defined in 44 U.S.C. 3502(5), voluntarily section on suspension and debarment is 7. Debarment. A final decision made
complies with the executive order to located at 48 CFR part 9, subpart 9.4. by the SDO to exclude a contractor from
adhere to fundamental federalism The NCUA also has its own Acquisition Government contracting and
principles. These final procedures will Policy Manual. Government-approved subcontracting or
not have a substantial direct effect on covered transactions for a reasonable,
C. Definitions
the states, on the relationship between specified period (usually not exceeding
the national government and the states, 1. Action Referral Memorandum three years). A contractor is first
or on the distribution of power and (ARM). The investigative report proposed for debarment and afforded an
responsibilities among the various developed and compiled by an NCUA opportunity to present its defenses and
levels of government. The NCUA has office recommending that the mitigating factors.
determined that the final procedures do Suspending and Debarring Official a. Fact-Based Debarment. The cause
not constitute a policy that has (SDO) take a suspension or debarment for the debarment is based on factual
federalism implications for purposes of action against a contractor. circumstances (for example, history of
the executive order. 2. Administrative Agreement. poor performance or willful
Administrative Agreements are usually misconduct). The NCUA must be able to
D. Assessment of Federal Regulations entered into in lieu of suspension or prove the action by a ‘‘preponderance of
and Policies on Families debarment actions. Typically the the evidence.’’ Preponderance of the
The NCUA has determined that these agreements include acceptance of evidence means that the fact(s) at issue
final procedures will not affect family responsibility, voluntary exclusion by are more likely than not (over 50%) to
well-being within the meaning of the contractor, some provision of be true. A contractor, based upon a
Section 654 of the Treasury and General restitution, any contractor preponderance of the evidence, can be
Government Appropriations Act, 1999, responsibilities with respect to codes of debarred for any of the following:
Public Law 105–277, 112 Stat. 2681 conduct, training, and the contractor’s i. Violation of the terms of a
(1998). promise to report progress to the NCUA, Government contract or subcontract so
and generally include consequences for serious as to justify debarment, such as:
By the National Credit Union breach of the agreement. The terms of
Administration Board on August 2, 2018. 1. Willful failure to perform in
the Administrative Agreement and accordance with the terms of one or
Gerard Poliquin, contents will be determined on a case-
Secretary of the Board. more contracts; or
by-case basis. 2. a history of failure to perform, or
For the reasons discussed above, the 3. Administrative Record. The entire
of unsatisfactory performance of, one or
Board adopts the following NCUA record of information and proceedings.
more contracts.
Suspension and Debarment Procedures: This includes all information
ii. Violations of a Drug-Free
considered by the SDO that is the basis
NCUA Suspension and Debarment Workplace, as indicated by:
of the final decision.
Procedures 1. Failure to comply with the
4. Affiliates. Business concerns,
requirements of a Drug-Free Workplace;
A. Purpose organizations, or individuals are
or
affiliates of each other if, directly or
The purpose of these suspension and 2. such a number of contractor
indirectly, (1) either one controls or has
debarment procedures is to establish an employees convicted of violations of
the power to control the other, or (2) a
administrative process to protect the criminal drug statutes occurring in the
third party controls or has the power to
Government’s interest in only doing workplace as to indicate that the
control both. Indicia of control include,
business with presently responsible contractor has failed to make a good
but are not limited to, interlocking
contractors. The NCUA 1 shall only faith effort to provide a drug-free
management or ownership, identity of
solicit offers from, award contracts to, workplace.2
interests among family members, shared
and consent to subcontracts with iii. Intentionally affixing a label
facilities and equipment, common use
presently responsible contractors. These bearing a ‘‘Made in America’’
of employees, or a business entity
procedures implement the NCUA’s inscription (or any inscription having
organized following the debarment,
policies for suspension and debarment the same meaning) to a product sold in
suspension, or proposed debarment of a
and establish administrative or shipped to the United States, when
contractor that has the same or similar
proceedings for contractors subject to the product was not made in the United
management, ownership, or principal
the policies. States.3
employees as the contractor that was
B. Authority iv. Commission of an unfair trade
debarred, suspended, or proposed for
practice.4
The NCUA’s suspension and debarment.
5. Civil Judgement. A judgement or v. Delinquent Federal taxes in an
debarment authority derives from the amount that exceeds $3,500. Federal
Federal Credit Union Act 12 U.S.C. 1751 finding of a civil offense by a court of
competent jurisdiction. taxes are considered delinquent for
et seq., and 12 U.S.C. 1766(i)(2), purposes of this provision if the tax
6. Contractor. Contractor means any
specifically. The NCUA is not required liability is finally determined (i.e.,
individual or other legal entity that: (1)
to follow the Federal Acquisition assessed) and the taxpayer is
Directly or indirectly (for example,
Regulation but uses the principles delinquent in making payment.
through an affiliate), submits offers for,
therein for best practice guidance. The vi. Knowing failure by a principal,
or is awarded, or reasonably may be
Federal Acquisition Regulation (FAR) until 3 years after final payment on any
expected to submit offers for, or be
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awarded, a Government contract or a Government contract awarded to the
1 Throughout these procedures, unless otherwise
subcontract under a Government contractor, to timely disclose to the
noted, the ‘‘NCUA’’ refers the NCUA in its agency
capacity and also to the NCUA Board as conservator contract; or (2) conducts business, or 2 41
or liquidating agent for an insured credit union. U.S.C. chapter 81.
reasonably may be expected to conduct 3 Section
Legal services contracts the NCUA enters into in 202 of the Defense Production Act;
any capacity, through the Office of General Counsel,
business, with the Government as an Public Law 102–558.
are not subject to these suspension and debarment agent or representative or another 4 Section 201 of the Defense Production Act;

procedures. contractor. Public Law 102–558.

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39466 Federal Register / Vol. 83, No. 154 / Thursday, August 9, 2018 / Notices

Government, in connection with the 8. Imputation. Attributing the performing a public contract or
award, performance, or closeout of the misconduct of an individual or subcontract.
contract or a subcontract thereunder, organization to another individual or ii. Violation of Federal or State
credible evidence of: organization by virtue of the latter’s antitrust statutes relating to the
1. Violation of Federal criminal law knowledge or implied knowledge of the submission of offers.
involving fraud, conflict of interest, misconduct. An agency may impute the iii. Commission of embezzlement,
bribery, or gratuity violations; 5 basis of a suspension or debarment theft, forgery, bribery, falsification or
2. violation of the civil False Claims through the following relationships: destruction of records, making false
Act; 6 or Individual to organization; organization statements, tax evasion, violating
3. significant overpayment(s) on the to individual; individual to individual; Federal criminal tax laws, or receiving
contract, other than overpayments and joint ventures. stolen property.
resulting from contract financing 9. Indictment. An indictment for a iv. Violations of a Drug-Free
payments. criminal offense. An information or Workplace, as indicated by:
vii. A contractor, based on a other filing by competent authority 1. Failure to comply with the
determination by the Secretary of charging a criminal offense is given the requirements of a Drug-Free Workplace;
Homeland Security or the Attorney same effect as an indictment. or
General of the United States, not in 10. Presentation of Matters in 2. Such a number of contractor
compliance with Immigration and Opposition (PMIO). The contractor may employees convicted of violations of
Nationality Act employment submit matters in opposition to the criminal drug statutes occurring in the
provisions.7 Such determination is not suspension or proposed debarment. The workplace as to indicate that the
reviewable in the debarment contractor may submit matters in contractor has failed to make a good
proceedings. person, in writing, or through a faith effort to provide a drug-free
viii. A contractor has miscertified its representative. The contractor may also workplace.10
use a combination of those methods. v. Intentionally affixing a label
status as a minority- and/or women-
11. Present Responsibility. A bearing a ‘‘Made in America’’
owned business.
contractor is presently responsible if the inscription (or any inscription having
ix. Any other cause of so serious or
contractor is ethical, honest, competent, the same meaning) to a product sold in
compelling a nature that it affects the
and has not acted in any way that or shipped to the United States, when
present responsibility of the contractor
reveals a lack of business integrity or the product was not made in the United
or subcontractor.
business honesty, or an inability to States.11
b. Conviction-Based Debarment. A
satisfactorily perform Government vi. Commission of an unfair trade
debarment action based on a conviction
contracts. practice.12
or civil judgement. A contractor can be vii. Delinquent Federal taxes in an
debarred for a conviction or civil 12. System for Award Management
(SAM). SAM is the exclusion database amount that exceeds $3,500. Federal
judgement based on one or more of the taxes are considered delinquent for
following circumstances: that applies across the Executive
Branch. SAM is an official U.S. purposes of this provision if the tax
i. Commission of fraud or a criminal liability is finally determined (i.e.,
offense in connection with (i) obtaining, Government system.
13. Suspension. A suspension is an assessed) and the taxpayer is
(ii) attempting to obtain, or (iii) delinquent in making payment.
performing a public contract or immediate, but temporary (usually 12
months), measure imposed by the SDO, viii. Knowing failure by a principal,
subcontract. until three years after final payment on
ii. Violation of Federal or State rendering a contractor ineligible to
receive new Government contracts or any Government contract awarded to
antitrust statutes relating to the the contractor, to timely disclose to the
submission of offers. subcontracts, pending the outcome of a
legal proceeding or investigation that Government, in connection with the
iii. Commission of embezzlement, award, performance, or closeout of the
theft, forgery, bribery, falsification or could give rise to a debarment.9
a. Adequate Evidence for Suspension. contract or a subcontract thereunder,
destruction of records, making false credible evidence of:
The NCUA must have adequate
statements, tax evasion, violating 1. Violation of Federal criminal law
evidence and an immediate need to
Federal criminal tax laws, or receiving involving fraud, conflict of interest,
suspend a contractor. Adequate
stolen property. bribery, or gratuity violations; 13
evidence is information sufficient to
iv. Intentionally affixing a label 2. violation of the civil False Claims
support a reasonable belief that a
bearing a ‘‘Made in America’’ Act; 14 or
particular act or omission has occurred.
inscription (or any inscription having 3. significant overpayment(s) on the
A contractor can be suspended upon
the same meaning) to a product sold in contract, other than overpayments
adequate evidence of one or more the
or shipped to the United States, when resulting from contract financing
following:
the product was not made in the United payments.
i. Commission of fraud or a criminal
States.8 ix. Commission of any other offense
offense in connection with (i) obtaining,
v. Commission of any other offense (ii) attempting to obtain, or (iii) indicating a lack of business integrity or
indicating a lack of business integrity or business honesty that seriously and
business honesty that seriously and 9 If legal proceedings are not initiated within 12 directly affects the present
directly affects the present months after the date of the suspension notice, the responsibility of a Government
responsibility of a Government suspension shall be terminated unless an Assistant contractor or subcontractor.
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contractor or subcontractor. Attorney General requests an extension, in which
case it may be extended for six months. 10 41 U.S.C. chapter 81.
5 Title
Suspensions cannot extend beyond 18 months
18 U.S.C. unless legal proceedings have been initiated within
11 Section 202 of the Defense Production Act;
6 31 U.S.C. 3729–3733.
that period. The NCUA shall notify the Department Public Law 102–558.
7 Executive Order 12989, as amended by 12 Section 201 of the Defense Production Act;
of Justice of the proposed termination of the
Executive Order 13286. suspension, at least 30 days before the 12-month Public Law 102–558.
8 Section 202 of the Defense Production Act; 13 Title 18 U.S.C.
period expires to give the Department of Justice an
Public Law 102–558. opportunity to request an extension. 14 31 U.S.C. 3729–3733.

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Document Created: 2018-08-09 01:10:41
Document Modified: 2018-08-09 01:10:41

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
Action		Final suspension and debarment procedures.
Dates		These final procedures are applicable September 10, 2018.
Contact		Kevin Tuininga, Associate General Counsel for Administrative Law, Office of General Counsel, National Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 22314-3428 or telephone: (703) 518-6543.
FR Citation		83 FR 39464
RIN Number		3133-AE85