On July 5, 2011, DoD, GSA, and NASA issued a final rule changing several clauses in Parts 9 and 52 of the Federal Acquisition Regulation (the “FAR”) so as to make Federal contractors responsible for ensuring that subcontractors at all tiers (with a few exceptions noted below) are not on the Excluded Parties System List (the “EPSL”), e.g., they are not suspended or debarred. Failure to complete thorough vetting of subcontractors to make sure they are not debarred, suspended, or proposed for debarment, and to provide notice where appropriate to the contracting officer, could result in a violation of the False Statements Act,1 subjecting the contractor to criminal and civil liability, as well as suspension and debarment. Accordingly, all contractors and subcontractors should ensure that their internal controls adequately address this requirement.

The history, principal substantive changes, and impact on contractors are discussed below.