Avoiding Suspension and Debarment: The Benefits of Early Cooperation

Article By: Paxton Ouellette, Associate

In early 2026, the U.S. Department of Justice (“DOJ”) issued a press release stating that it had resolved a False Claims Act (“FCA”) matter involving U.S. Navy supply chain contractor Teledyne RISI Inc., also known as Teledyne Electronic Safety Products (“Teledyne”).

In the announcement, DOJ explained that Teledyne had agreed to pay $1.5 million to resolve allegations that, between November 2011 and June 2012, it supplied ejection-seat components containing microelectronics that did not meet Navy-approved specifications. The parts at issue – Digital Recovery Sequencers – were obtained from a third-party broker that was neither an Original Equipment Manufacturer nor an authorized reseller of the part. Special Agent-in-Charge John E. Helsing of the Department of Defense Office of Inspector General succinctly summed up the issue, stating: “Non-conforming parts in the DoD supply chain presents a risk to our warfighters and threaten our Nation’s security.”

The DOJ/Teledyne settlement provides insight into what contractors can do when they find themselves facing potential exclusion – including proposed and actual suspension or debarment – from federal contracting and how early action can help avoid or mitigate those outcomes.

Recent Trends: Alternative Remedies Besides Exclusion

Although the Teledyne settlement resolved the government’s claims without an admission of liability, the case highlights several recurring themes in defense contracting enforcement: the government’s continued focus on supply chain integrity, the importance of strict adherence to technical specifications, and the tangible benefits of cooperation. Specific to this last point, DOJ emphasized that Teledyne received cooperation credit under Justice Manual § 4-4.112 for its proactive engagement in connection with the FCA allegations.

According to Law360, data from FY2016 through FY2025 shows the total number of suspensions and debarments is steadily trending downward, with a slight exception in 2022. Thus, FY2016 saw 2,229 total exclusions (284 firms, 1,738 individuals, and 307 special entities), whereas in FY2025, there were 258 total exclusions (78 firms, 135 individuals, and 45 special entities). The data shows an 88.5% decrease in exclusions over the past ten years. However, this marked decline in exclusions does not signal a retreat from enforcement; rather, it reflects a shift in how enforcement authorities are managing contractor risk. While suspension and debarment remain powerful tools, they are increasingly deployed as a last resort – reserved for contractors that fail to demonstrate present responsibility.

In practice, agencies are turning more frequently to parallel and alternative remedies, like the FCA settlement described above, administrative agreements, and compliance-based resolutions – all of which are options that allow the government to address misconduct while preserving contractor participation in the federal marketplace. This approach aligns with the policy objectives underlying the Federal Acquisition Regulation (“FAR”), which emphasizes that suspension and debarment are protective, not punitive, in nature.

The Teledyne resolution is a good example of this in play. Despite allegations involving nonconforming parts in a sensitive defense supply chain, the matter was resolved through a monetary settlement with cooperation credit. While DOJ’s announcement does not reference suspension, debarment, or any administrative resolution—such determinations are made independently by agency suspension and debarment officials and often are not publicly disclosed—the emphasis on cooperation credit suggests the matter was likely resolved in a manner consistent with preserving the contractor’s present responsibility. A search in SAM.gov shows that Teledyne is an active contractor and the publicly available data disclosures on exclusions do not list Teledyne.

In turn, the resolution reinforces a key point: early cooperation can materially influence the government’s enforcement posture.

What Qualifies as Cooperation Under DOJ Guidance?

DOJ’s formal guidance on cooperation, located in Justice Manual § 4-4.112, was added in 2019. This section formalizes awarding cooperation credit in FCA matters. Notably, it gives DOJ’s Civil Division attorneys a structured framework for evaluating a defendant’s cooperation and reducing penalties or damages accordingly. Contractors that comply may receive reduced penalties and, perhaps more critically, mitigate the risk of collateral consequences such as exclusion. In this way, DOJ’s framework creates a strong incentive structure favoring self-policing and remediation over adversarial enforcement.

To receive credit, a contractor must provide meaningful, proactive assistance, such as:

• Voluntary self-disclosure of misconduct;
• Identifying individual wrongdoers;
• Preserving, collecting, and producing relevant documents efficiently;
• Providing key facts beyond what DOJ already knows;
• Assisting in the interpretation of complex data or systems;
• Making employees available for interviews; and
• Disclosing internal investigation findings.

These actions are not mandatory, and a contractor does not need to comply with all to receive credit.

It is also important that the contractor institutes remedial measures. Particularly, DOJ looks for:

• Implementation or enhancement of compliance programs;
• Disciplinary action against responsible personnel;
• Changes to internal controls; and
• Steps to prevent recurrence.

These requirements emphasize assisting the government’s investigation and preventing another violation, rather than merely complying with pre-existing disclosure requirements and reacting passively to government demands.

The Interaction Between Cooperation and Responsibility

 The concepts of cooperation and responsibility go hand-in-hand. As FAR 9.402(a) explains, “Agencies shall solicit offers from, award contracts to, and consent to subcontracts with responsible contractors only. Debarment and suspension are discretionary actions that, taken in accordance with this subpart, are appropriate means to effectuate this policy.” In other words, suspension and debarment are tools used to prevent contracting with a non-responsible contractor.

While the FAR allows the government to use these tools for its own protection, the “existence of a cause for debarment, however, does not necessarily require that the contractor be debarred.” FAR 9.406-1(a). Before arriving at a final decision, the suspension and debarment official considers several factors, such as:

• Whether the contractor (including an individual) brought the activity cited as a cause for debarment to the attention of the appropriate Government agency in a timely manner;
• Whether the contractor has fully investigated the circumstances surrounding the cause for debarment (or the individual cooperated with the investigation) and, if so, made the result of the investigation available to the suspending and debarring official;
• Whether the contractor (including an individual) cooperated fully with Government agencies during the investigation and any court or administrative action; and
• Whether the contractor has taken appropriate disciplinary action against the individuals responsible for the activity which constitutes cause for debarment.

FAR 9.406-1(a) and the Justice Manual make clear that cooperation and remediation efforts map directly onto the core inquiry in suspension and debarment proceedings: whether a contractor is presently responsible. In assessing present responsibility, agencies evaluate not only the underlying misconduct, but also the contractor’s response and inclination to prevent future misconduct – including its willingness to disclose issues, remediate deficiencies, and implement effective compliance controls. Robust cooperation can therefore serve as affirmative evidence that the contractor no longer poses a risk to the government.

Bottom Line: The decline in suspensions and debarments should not be misconstrued as leniency. Agencies continue to scrutinize contractor conduct closely, and where a contractor fails to remediate, lacks adequate internal controls, or demonstrates a pattern of misconduct, suspension and debarment remain firmly on the table. The difference is that, increasingly, once issues are brought to light, contractors are taking positive steps to cooperate with the government in resolving the issue and working to prevent future issues.