For most Americans, tax season is happily behind them and Memorial Day festivities signaled the start of summer. A recent GAO report, however, may give cause for some federal contractors to revisit their tax policies before lighting up the grill next weekend.
Contracting Officers are required to take in a wealth of information prior to awarding a contract. One piece of information each contracting officer is supposed to review is the tax status of offerors. If an offeror is delinquent in paying taxes, the contracting officer has several subsequent review steps to take. But contracting officers do not not always conduct this review, so Congress asked GAO to review the impact of these missing steps.
Under a new FAR provision effective in February 2016, the Government typically will not enter into a contract with any corporation that has an unpaid Federal tax liability that is not being contested or timely repaid. The same new FAR provision prohibits the Government, in most cases, from awarding a contract to a company recently convicted of a Federal felony.
The new FAR provision requires a corporate offeror to represent whether it has any unpaid tax liabilities or recent felony convictions. If the answer to either question is “yes,” the Government cannot award a contract unless it has first considered suspension or debarment of the offeror, and determined that suspension or debarment is unnecessary to protect the Government’s interests.