Jessica A. Berrada is a part-time evening student at George Washington University Law School where she is a George Washington Scholar (top 15% of class, as of Spring 2018) and was the Marketing Fellow for the George Washington Law Review. At the time of writing this Note, Ms. Berrada was a short-term consultant in the World Bank Office of Suspension and Debarment. Throughout the publication process, she has been working as a full-time Legal Analyst in the World Bank Integrity Vice Presidency Unit and Summer Associate at WilmerHale. The author thanks Brahim Berrada, Lois Shelton, Mathew Aldrich, Marianne Kies, Keturah Taylor, Steven Schooner, and Collin Swan for their valuable input throughout the process of writing this Note. Ms. Berrada maintains that this Note was written in her personal capacity, and she takes responsibility for any errors. The ideas and opinions presented herein are her own and do not reflect the view of her prior or current employers.
“One who has been dealing with the government on an ongoing basis may not be blacklisted, whether by suspension or debarment, without being afforded procedural safeguards including notice of the charges, an opportunity to rebut those charges, and, under most circumstances, a hearing.”1
Advocacy Resources Corporation (ARC) was a nonprofit organization that employed people with disabilities to fulfill government contracts, including a contract with the U.S. Department of Agriculture (USDA) to fortify vegetable oil with vitamin A.2 In 2006, ARC was on the verge of bankruptcy, struggling to obtain nonprofit funding.3 Jeff Callahan — who owned a management company overseeing several businesses performing government contracts — bought ARC and personally guaranteed the funds that ARC needed to keep its operations going.4 In 2009, a USDA auditor caught a single discrepancy amid multiple shipments totaling hundreds of thousands of dollars.5 The auditor reported the discrepancy to the USDA Office of Inspector General who executed a search warrant of ARC’s facilities without any prior communication with the company.6 In response to the search, ARC retained counsel, conducted an internal investigation, preserved records, and fully cooperated with the government’s investigation.7 ARC’s internal investigation revealed that a single rogue employee was responsible for the invoice falsification.8 The employee resigned and admitted wrongdoing to both the government and ARC’s counsel.9 ARC continued shipping the government vegetable oil for almost two years until, in 2011, the USDA suspended Callahan, his management company, and ARC by posting on a public website — the predecessor to the System for Award Management (SAM.gov).10 The USDA then notified Callahan and the other parties of their suspension.11 The basis for the suspension was that Callahan and his management company “knew or should have known” of the ARC employee’s misconduct.12
The twelve-month period of suspension expired without the government finding Callahan or his companies at fault.13 However, the temporary exclusion forced Callahan into bankruptcy and shut down all companies under his management.14 In particular, the government’s publication of the exclusion on SAM.gov had long-term effects on Callahan’s ability to win new federal, state, and local contracts.15
The U.S. government spends about $500 billion each year on contracts, making it “the largest buyer of goods and services in the world.”16 SAM.gov contains 530,693 entities registered to do business with the U.S. government as of July 2018.17 In Fiscal Year (FY) 2017, federal agencies and departments suspended, debarred, or proposed for debarment 3,642 companies and individuals,18 using procedures outlined in Federal Acquisition Regulation (FAR) subpart 9.4.19
Under the FAR,20 an agency Suspending and Debarring Official (SDO) may suspend a contractor upon receiving allegations that a contractor is not presently responsible. The SDO enacts the suspension by placing the contractor in excluded status on SAM.gov21 and then notifying the contractor of its temporary exclusion. The contractor has thirty days to oppose the temporary exclusion, raise issues of material fact, and request a meeting with the SDO, after which the SDO decides whether to proceed with debarment or lift the temporary exclusion.22 In this process, contractors are excluded temporarily before receiving notice and an opportunity to be heard. The current U.S. suspension and debarment procedure causes long-lasting and far-reaching harm that violates a contractor’s liberty interests and due process rights.
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