Another Perspective On Too Big to Debar:
BP, the Environmental Protection Agency, and the World Bank
*Nolan A. Kulbiski
1301 Vermont Avenue, NW #211
Washington, DC 20005
*Nolan A. Kulbiski (kulbiski@gmail.com) is a J.D. candidate at
The George Washington University Law School and the Projects
Editor of the Public Contract Law Journal.
He wishes to thank
Professors Karen Thornton, Steven Schooner, Jessica Tillipman,
and Christopher Yukins for their guidance and support in the
study of government contracts.
Kulbiski
Table of Contents
INTRODUCTION....................................................2
I. Crises of Size: “Too Big to Fail” and “Too Big to Debar” .....2
II. EPA Suspension and Debarment: The Toothless Tiger ...........8
A. Procurement Debarment and Suspension: Strong in Theory,
Weak in Practice...........................................9
B. The Terrible Trifecta: Three Weaknesses Plague Federal
Suspension and Debarment..................................12
1. Death by a Thousand Cuts: How the Overuse of Waiver Is
Eroding the Legitimacy of the Suspension and Debarment
System....................................................12
2. What Is True by Lamplight Is Not Always True by Sunlight:
Lack of Transparency and Accountability in the Federal
Suspension and Debarment System...........................15
3. A Little Knowledge Is a Dangerous Thing: Ignorance and
Misconceptions Wreak Havoc on Federal Suspension and
Debarment.................................................19
C. Muddying Already Murky Waters: EPA’s Statutory Debarment
Authority under the Clean Air and Clean Water Acts........20
ORIGINAL ANALYSIS..............................................23
III. The World Bank Sanctions Model............................23
A. Transparency and the Department of Institutional Integrity .24
B. Flexibility and the Evaluation and Suspension Officer ......27
C. Independence and the Sanctions Board........................31
CONCLUSION.....................................................33
IV. “Too Big to Debar” Is Not the Problem; Moving Forward in
the Era of Large Contractors..............................33
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INTRODUCTION
I.
Crises of Size: “Too Big to Fail” and “Too Big to Debar”
During the first decade of this century, the United States
barreled toward dual crises that were, in hindsight, both
preventable.
The first was a financial crisis that has caused
many to question the wisdom of allowing financial firms to grow
so large that they become “too big to fail.”
The second was an
environmental disaster that suggests that large corporations
like BP have become “too big to debar.”
Between 1997 and 2006, the average American home increased
in value by 124% fueled by questionable lending practices.1
At
the same time, BP committed various environmental crimes across
the United States.
For example, in 1999, a subsidiary of BP
pled guilty to illegally injecting “wastes includ[ing] paint
thinner and toxic solvents” into the ground in Alaska.2
In 2005,
an explosion at BP’s Texas City refinery killed 15 people and
injured 170 more “in America’s worst industrial accident in a
generation.”3
The Government found over 300 safety violations
and levied various fines against BP, some of which it has paid
CSI: credit crunch, THE ECONOMIST, October 18, 2007,
http://www.economist.com/node/9972489.
2 Press Release, Environmental Protection Agency, BP Exploration
[Alaska] Pleads Guilty To Hazardous Substance Crime Will Pay $22
Million, Establish Nationwide Environmental Management System
(September 23, 1999), available at yosemite.epa.gov.
3 Sarah Lyall, In BP’s Record, a History of Boldness and Costly
Blunders, N.Y. TIMES, July 12, 2010, at A1.
1
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and others of which it continues to dispute.4
In 2007, BP pled
guilty to a criminal violation of the Clean Water Act (“CWA”)
and agreed to pay $20 million in penalties after crude oil
leaked from its pipeline in Alaska.5
In 2008, home values decreased sharply and the “housing
bubble” burst.6
Large financial institutions that invested in
home loans were at risk of failure because their loans had
suddenly become worthless.7
Some warned that the failure of key
financial institutions might create a domino effect destroying
much of the modern American financial system.8
To avert this
disaster the Government declared certain institutions “too big
to fail”9 and stepped in with bailouts for firms like the
BP Agrees to Pay Record $50.6 Million Fine for Texas Explosion,
BRITISH BROADCASTING CORPORATION (Aug. 12, 2010),
http://www.bbc.co.uk/news/business-10960486 (BP continues to
contest $30 million in fines for 439 "new willful violations").
5 Press Release, U.S. Department of Justice, British Petroleum to
Pay More Than $370 Million in Environmental Crimes, Fraud Cases
(October 25, 2007), available at
http://www.justice.gov/opa/pr/2007/October/07_ag_850.html.
6
Roger C. Altman, The Great Crash, 2008: A Geopolitical Setback
for the West, FOREIGN AFFAIRS, Jan./Feb. 2009, (“Total home equity
in the United States, which was valued at $13 trillion at its
peak in 2006, had dropped to $8.8 trillion by mid-2008 and was
still falling in late 2008”).
7 Id.
8 See The Federal Reserve Bank of San Francisco, What Did the Fed
Do to Combat the Financial Crisis?, THE ECONOMY: CRISIS & RESPONSE,
http://www.frbsf.org/econanswers/response_q1more.htm (last
visited April 25, 2012).
9 Paul Krugman, Op-Ed., Financial Reform 101, N.Y. TIMES, April 1,
2010, at A23 (“"It’s easy to see where concerns about banks that
are ‘too big to fail’ come from. In the face of financial
crisis, the U.S. government provided cash and guarantees to
4
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American International Group (“AIG”) and General Motors (“GM”)
even while foreclosure rates on homes skyrocketed.10
Many Americans fear that large corporations are holding the
United States hostage.
Large corporations reap rewards when
times are flush, but, when investments fail or
the American people must pay.
laws are broken,
The events on April 20, 2010, and
its aftermath did nothing to quell those fears and reinforced
the conclusion that large corporations have become “too big to
debar.”
On April 20, 2010, the oil drilling rig, Deepwater Horizon,
exploded.11
Over the following months, the flow of oil created
one of the biggest man-made environmental disasters in
U.S.history.12
Even as the oil spilled into the Gulf of Mexico,
financial institutions whose failure, it feared, might bring
down the whole system . . . . And it also established a
dangerous precedent: big financial institutions, we now know,
will be bailed out in times of crisis.”)
10 See Diya Gullapalli, Bailout of Money Funds Seems to Stanch
Outflow, WALL ST. J., Sept. 20, 2008, at A2; Chris Isidore, Still
Fighting Over GM’s Bailout, CNN MONEY (Feb. 16, 2012),
http://www.money.cnn.com/2012/02/16/news/companies/gm_bailout/in
dex.htm.
11 Press Release, BP Press Office, BP Confirms that Transocean
Ltd Issued the Following Statement Today: Transocean Ltd.
Reports Fire on Semisubmersible Drilling Rig Deepwater
Horizon(April 21, 2010), available at
http://www.bp.com/genericarticle.do?categoryId=2012968&contentId
=7061443.
12 Marianne Lavelle, Gulf Oil Spill Worst in U.S. History;
Drilling Postponed, NAT’L GEOGRAPHIC (May 27, 2010),
http://www.news.nationalgeographic.com/news/2010/05/100527energy-nation-gulf-oil-spill-top-kill-obama/ (“Hours after the
U.S. Geological Survey (USGS) released estimates that affirm the
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there were calls to “bar BP from receiving government
contracts.”13
These calls had begun “before the spill in the
Gulf of Mexico [when] officials at the Environmental Protection
Agency (“EPA”) wanted to stop BP from getting government
contracts until it addressed various environmental and safety
violations.”14
In fact, since 2000, BP has been convicted three
times under the Clean Air Act (“CAA”) and the CWA (in 1999, for
illegal dumping in Alaska15, in 2005, for the Texas City
explosion16, and, in 2006, for a burst oil pipeline in Alaska17).
At the time of the spill, two units of BP were debarred “because
of environmental and safety violations that resulted in the
death of several workers.”18
Nonetheless, these debarments did
Deepwater Horizon spill in the Gulf of Mexico is the worst in
U.S. history, President Obama announced new limits on U.S.
offshore drilling to allow for ‘further study and deeper
reform.’”).
13 Abram Lustgarten, EPA Officials Weigh Sanctions Against BP’s
U.S. Operations, PROPUBLICA.ORG (May 21, 2010),
http://www.propublica.org/article/epa-officials-weighingsanctions-against-bps-us-operations.
14 Ron Nixon, Size Protects Government Contractors That Stray,
N.Y. TIMES, Dec. 17, 2010, at A12.
15 Environmental Protection Agency, supra note 2.
16 Richard Mauer & Anna M. Tinsley, Gulf Oil Spill: BP Has Long
Record of Legal, Ethical Violations, MCCLATCHY NEWSPAPERS (May 8,
2010), http://www.mcclatchydc.com/2010/05/08/93779/bp-has-along-record-of-legal.html#ixzz0nZaTzdqN.
17 Mark Tran, BP Shuts Leaking Alaskan Wells, THE GUARDIAN (LONDON)
(July 19, 2006),
http://www.guardian.co.uk/business/2006/jul/19/oilandpetrol.bp.
18 Nixon, supra note 14.
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not prevent BP from being the largest supplier of fuel to the
military in 2009.19
BP has not been suspended or debarred in the wake of the
Deepwater Horizon spill and continues to receive government
contracts.20
This has led to allegations that large government
contractors, such as BP, have in effect become “too big to
debar.”21
It has also led to calls for reform from officials
like Senator Russ Feingold who “do[es] not think that large
corporations should be given a free pass for behavior that would
typically result in the debarment of a smaller corporation.”22
It has also led to a proposed amendment to the military
authorization bill requiring the Secretary of Defense to
determine “whether BP or its subsidiaries should be debarred
from contracting with the Department of Defense.”23
Ben Rooney, BP Still a Top Supplier to U.S. Military,
CNNMONEY.COM (July 15, 2010),
http://www.money.cnn.com/2010/07/15/news/companies/BP_government
_contracts/index.htm.
20 See, e.g., id.
21 Rena Steinzor & Anne Havemann, Too Big to Obey:
Why BP Should
Be Debarred, 36 WM. & MARY ENVTL. L. & POL’Y REV. 81, 111-13 (2011).
22 Nixon, supra note 14.
23 H.R. 5136, 111th Cong. (2010) (“Sec. 849. Debarment of BP and
Its Subsidiaries. (a) Contracts With BP and Its Subsidiaries.
If the Secretary of Defense determines that BP or any of its
subsidiaries performing any contract with the Department of
Defense is no longer a responsible source (as defined in section
2302 of title 10, United States Code), the Secretary shall
determine, not later than 90 days after making such
determination, whether BP or its subsidiaries should be debarred
from contracting with the Department of Defense.”).
19
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BP was not seriously affected by prior debarments because
it was debarred under the EPA’s statutory debarment authority.
These debarments, under the CAA and CWA, are effective against
violating facilities, not enterprises.24
A large entity can
shift work to a non-violating facility and maintain its
eligibility for government contracts.25
BP is not the only large
contractor to receive government contracts after debarment.26
Suspensions have been revoked after contractors used their
enormous resources to put pressure on federal agencies.27
BP is
just one beneficiary of a debarment and suspension system that
allows large contractors to play by their own rules.
This Note examines the structure of the EPA’s suspension
and debarment scheme under traditional procurement authority and
2 C.F.R. § 1532.1110 (2011).
See Nixon, supra note 14.
26 Boeing was suspended in 2003 for ethical violations.
The Air
Force later waived the suspension, twice. Jennifer S. Zucker,
The Boeing Suspension: Has Increased Consolidation Tied the
Department of Defense's Hands?, ARMY LAW., April 2004, at 15 n.
14 (2004), citing Rena Merle, Boeing Gets Waiver from Air Force,
WASH. POST, Aug. 30, 2003, at E1 and Rena Merle, Boeing Wins
Contract Despite Suspension, WASH. POST, Oct. 1, 2003, at E3.
27 Todd J. Canni, Shoot First, Ask Questions Later: An
Examination and Critique of Suspension and Debarment Practice
Under the FAR, Including a Discussion of the Mandatory
Disclosure Rule, the IBM Suspension, and Other Noteworthy
Developments, 38 PUB. CONT. L.J. 547, 594 (2009) (IBM got a
suspension lifted after eight days because “the Government
presumably was willing to work with IBM to reach an expedient
resolution of the matter because of IBM's vast resources,
stature in the government contracting community, and the
leverage it possesses due to the Government's need for IBM's
products and services”).
24
25
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under its unique statutory authority.
It explores how these
systems have proven inadequate in handling the unique challenge
presented by large, influential contractors.
Finally, it
advocates an alternative procurement integrity system modeled
after the three-part procurement sanctions system of the World
Bank.28
II.
EPA Suspension and Debarment: The Toothless Tiger
To understand how BP continues to receive billions of
dollars in government contracts, one should look at the EPA
suspension and debarment scheme.
The mission of the EPA is to
protect human health and the environment.29
One of the tools
available to the EPA to accomplish this mission is the power to
suspend or debar contractors if the contractor harms human
health or the environment.30
Like many federal agencies, the EPA exercises procurement
debarment and suspension authority under 2 C.F.R. § 180, 2
C.F.R. § 1532, and FAR 9.4.
The EPA also has unique statutory
The three parts are (1) the investigatory and prosecutorial
Integrity Vice Presidency, (2) the judicial Evaluation and
Suspension Officer, and (3) the independent Sanctions Board.
29 Environmental Protection Agency, Our Mission and What We Do,
EPA.GOV, http://www.epa.gov/aboutepa/whatwedo.html, (last visited
April 11, 2012).
30 See 33 U.S.C. § 1368(a) (2010) (instructing federal agencies
to not contract with any person convicted under section
1319(c)); 42 U.S.C. § 7606(a) (2010) (instructing agencies to
not contract with any person convicted under section 7413(c)).
28
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debarment authority under the CWA31 and the CAA.32
These statutes
prohibit agencies from awarding contracts to facilities that
violate these provisions.33
This Note will first address the
weaknesses of procurement suspension and debarment and then
consider some of the unique problems that arise when the EPA
exercises its statutory debarment authority under the CWA and
CAA.
A.
Procurement Debarment and Suspension: Strong in Theory,
Weak in Practice
Agencies across the Federal Government may protect the
public through the suspension and debarment of errant
contractors.34
Procurement suspension and debarment ensures that
§ 1368.
§ 7606.
33 See § 1368(a); § 7606(a).
34 Much has been written on procurement debarment and suspension
under FAR Subpart 9.4. This Note will only address those
provisions and practices that have been exploited by large
contractors, such as BP, to avoid facing debarment and
suspension.
See generally Christopher Yukins, Suspension and
Debarment: Re-examining the Process, 13 PUB. PROC. LAW REV. 255
(2004), (generally appraising the nature and purpose of
procurement suspension and debarment in wake of several high
profile suspensions and debarments); Canni, supra note 27,
(critically examining of due process and fairness to contractors
under FAR 9.4); Michael J. Davidson & Jennifer L. LongmeyerWood, The ICE Suspension and Debarment Program Heats Up, 46
PROCUREMENT LAW. 1 (2010), (detailing the increased use of FAR 9.4
by the Department of Homeland Security, Immigration and Customs
Enforcement to debar “contractors that have knowingly hired or
harbored illegal aliens”); Robert J. Wagman, Jr., The Risks of
Doing Business with the Government Are Getting Riskier, 47 THE
ADVOC. (TEX.) 62 (2009), (summarizing the development of antifraud
enforcement under the False Claims Act as enacted in the FAR);
Sandeep Kathuria, Best Practices for Compliance with the New
31
32
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agencies “solicit offers from, award contracts to, and consent
to subcontracts with responsible contractors only.”35
Procurement suspension and debarment are “imposed only in the
public interest for the Government’s protection and not for
purposes of punishment” and, as such, “[d]ebarment and
suspension are discretionary actions . . . .”36
Consequences for
debarred contractors can be severe.37
Under FAR 9.4, a contractor can be debarred for a wide
variety of offenses that fall under three broad categories:
convictions and civil judgments,38 various contract-related
Government Contractor Compliance and Ethics Rules Under the
Federal Acquisition Regulation, 38 Pub. Cont. L.J. 803 (2009),
(detailing the 2008 amendments to the FAR affecting initial
compliance program requirements and mandatory disclosure
provisions); Brian D. Shannon, Debarment and Suspension
Revisited: Fewer Eggs in the Basket?, 44 Cath. U. L. Rev. 363
(1995), (historically accounting for the development of federal
suspension and debarment through the mid-1990s).
35 FAR 9.402(a).
36 FAR 9.402(a)-(b).
37 FAR 9.405(a) (“Contractors debarred, suspended, or proposed
for debarment are excluded from receiving contracts, and
agencies shall not solicit offers from, award contracts to, or
consent to subcontracts with these contractors”).
38 FAR 9.406-2(a) (allowing debarment of a contractor for “(1)
Commission of fraud or a criminal offense in connection with—(i)
Obtaining; (ii) Attempting to obtain; or (iii) Performing a
public contract or subcontract. (2) Violation of Federal or
State antitrust statutes relating to the submission of offers;
(3) 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; (4) Intentionally affixing a label
bearing a “Made in America” inscription . . . to a product . . .
when the product was not made in the United States or its
outlying areas . . . ; or (5) Commission of any other offense
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offenses,39 and “any other cause of so serious or compelling a
nature that it affects the present responsibility of the
contractor or subcontractor.”40
The debarring official (“DO”)
exercises discretion and must “determine whether debarment is in
the Government’s interest” considering a variety of factors.41
indicating a lack of business integrity or business honesty that
seriously and directly affects the present responsibility of a
Government contractor or subcontractor.”).
39 FAR 9.406-2(b) (allowing debarment of “(1) A contractor, based
upon a preponderance of the evidence, for any of the following—
(i) Violation of the terms of a Government contract or
subcontract so serious as to justify debarment . . . . (ii)
Violations of the Drug-Free Workplace Act of 1988 . . . . (iii)
Intentionally affixing a label bearing a “Made in America”
inscription . . . to a product . . . when the product was not
made in the United States or its outlying areas . . . . (iv)
Commission of an unfair trade practice as defined in 9.403….(v)
Delinquent Federal taxes . . . . (vi) Knowing failure by a
principal . . . to timely disclose to the Government, in
connection with the award, performance, or closeout of the
contract or a subcontract thereunder, credible evidence of—(A)
Violation of Federal criminal law involving fraud, conflict of
interest, bribery, or gratuity violations . . . ; (B) Violation
of the civil False Claims Act . . . ; or (C) Significant
overpayment(s) on the contract . . . . (2) A contractor, based
on a determination by the Secretary of Homeland Security or the
Attorney General of the United States, that the contractor is
not in compliance with Immigration and Nationality Act . . . .”)
40 FAR 9.406-2(c).
41 FAR 9.406-1(a) (“Before arriving at any debarment decision,
the debarring official should consider factors such as the
following: (1) Whether the contractor had effective standards of
conduct and internal control systems in place . . . . (2)
Whether the contractor brought the activity cited . . . to the
attention of the . . . Government . . . . (3) Whether the
contractor has fully investigated the circumstances surrounding
the cause for debarment . . . . (4) Whether the contractor
cooperated fully with Government agencies . . . . (5) Whether
the contractor has paid [for] . . . all . . . liability . . . .
(6) Whether the contractor has taken appropriate disciplinary
action against the individuals responsible . . . . (7) Whether
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The FAR
allows agencies to develop their own rules for
suspension and debarment42 but requires all DOs to issue a
“notice of proposal to debar”43 to the contractor before the
decision is made and a “notice of debarring official’s
decision”44 afterwards.
B.
The Terrible Trifecta: Three Weaknesses Plague Federal
Suspension and Debarment
There are three weaknesses in the FAR and in its
application by agencies.
The following weaknesses render
procurement suspension and debarment useless against BP and
other large contractors: the overuse of waiver, a lack of
transparency, and a lack of governmentwide education about
suspension and debarment.
1.
Death by a Thousand Cuts: How the Overuse of Waiver Is
Eroding the Legitimacy of the Suspension and Debarment
System
The first weakness, the “waiver” provision, arises after a
DO has debarred a contractor.
Using waiver an agency can ignore
a debarment if the “the agency head determines that there is a
the contractor has implemented . . . remedial measures . . . .
(8) Whether the contractor has instituted . . . new or revised
review and control procedures and ethics training programs. (9)
Whether the contractor has had adequate time to eliminate the
circumstances . . . that led to the cause for debarment. (10)
Whether . . . management recognizes and understands the
seriousness of the misconduct . . . and has implemented programs
to prevent recurrence.”).
42 FAR 9.406-3(a)-(b).
43 FAR 9.406-3(c).
44 FAR 9.406-3(e).
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compelling reason,” freeing that agency to “solicit offers from,
award contracts to, or consent to subcontracts with” debarred
contractors.45
For example, Boeing received two large contracts
from the U.S. Air Force after two of its debarred units received
such waivers.46
There is a danger that the use of waivers to
spare large contractors the consequences of suspension and
debarment may erode the public’s confidence in the efficacy of
suspension and debarment.
Even worse, the threatened use of
waiver may prevent DOs from seriously investigating the
debarment of large contractors at all.47
Other agencies can waive debarments made by the EPA under
the EPA’s procurement and statutory authority.48
Thus, even if
the EPA debarred a large contractor, the head of any agency can
override the suspension or debarment simply by stating “in
writing the compelling reasons justifying continued business
dealings between that agency and the contractor.”49
This
FAR 9.405(a).
Zucker, supra note 26, at 22 (“Accordingly, on 29 August 2003,
the AF waived its suspension and awarded Boeing a $ 56.7 million
cost-plus-award-fee contract to deploy a Delta II rocket
carrying the Global Positioning Satellite (GPS) system . . . .
On 30 September 2003, the AF again waived its suspension of
Boeing's space units. This time it justified the waiver on
national defense requirements and awarded a single Buy II EELV
launch to Boeing for the launch of a NRO satellite”).
47 See Nixon, supra note 14.
48
For more detail on statutory debarment. See infra Part II.C.
Muddying Already Murky Waters: EPA’s Statutory Debarment
Authority under the Clean Air and Clean Water Acts.
49 FAR 9.406-1(c) (debarment); FAR 9.407-1(d) (suspension).
45
46
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provision is put to frequent use by the Department of Defense
for a variety of reasons listed in DFARS 209.405.50
This policy
is designed to assist an agency that would otherwise be unable
to procure mission critical goods or services from a debarred
contractor where no other source is reasonably available.51
In spite of the necessity of waiver in certain contexts,
the overuse of waiver has negative effects on the integrity of
the entire procurement system.
First, when the Government
continues to contract with an entity that has been declared by
the Government to be nonresponsible it runs counter to the
policy announced in FAR 9.402(a).52
Moreover, when a large
contractor is debarred, the effect of the debarment on the
contractor is neutralized by generous invocation of waiver.53
“(i) Only a debarred or suspended contractor can provide the
supplies or services; (ii) Urgency requires contracting with a
debarred or suspended contractor; (iii) The contractor and a
department or agency have an agreement covering the same events
that resulted in the debarment or suspension and the agreement
includes the department or agency decision not to debar or
suspend the contractor; or (iv) The national defense requires
continued business dealings with the debarred or suspended
contractor.”
51 Canni, supra note 27, at 606 (Waiver is designed to prevent
agencies from finding “themselves in a precarious position where
they might be unable to procure critical items including
military weapons, parts, and equipment . . . [by allowing]
agencies to continue their mission, even if that requires
continued business dealings with a contractor deemed
nonresponsible”).
52 “Agencies shall solicit offers from, award contracts to, and
consent to subcontracts with responsible contractors only.”
53 Griff Witte, Federal Ban Doesn’t Hurt Worldcom Much, WASHINGTON
POST, October 24, 2003 (“In the nearly three months since federal
50
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For example, in 2003, three of Boeing's units were debarred for
procurement violations.54
However, these debarments, through
limited to three units, were effectively nullified when the Air
Force twice waived Boeing's suspension.55
In fact, the use of
waivers for large contractors is one symptom, and one means of
accommodating a government contractor marketplace that has
become increasingly dominated by a few large firms.56
2.
What Is True by Lamplight Is Not Always True by Sunlight57:
Lack of Transparency and Accountability in the Federal
Suspension and Debarment System
Transparency is one of the pillars of a good public
procurement system.58
In order to maintain transparency,
authorities suspended WorldCom Inc. from receiving new and
renewed contracts because of its ongoing accounting troubles,
U.S. agencies have granted the telecommunications giant more
than $100 million worth of government work through a littleknown waiver process”).
54 Zucker, supra note 26, at 14.
55 Id. at 22.
56 26Id. at 24-26 (“The military currently needs mega-defense
contractors just as much as these contractors need the military
. . . . In other words, the top five companies received the
following percentage of the DOD's prime contract awards: 49.8%
of Research, Development, Test, and Evaluation, 40.6% of
Supplies and Equipment, and 15.5% of Other Services and
Construction. Even the temporary suspension of one of these
giants would leave one, at best two, prime contractors capable
of providing critical products and services to the DOD”).
57 Joseph Joubert, Joubert: A Selection from His Thoughts, Dodd,
Mead & Co., 1899.
58 Steven L. Schooner, Desiderata: Objectives for a System of
Government Contract Law, 11 PUB. PROCUREMENT L. REV. 103, 104 (2002)
(“At a macro level, the author prefers to begin with three
“pillars” that, in my opinion, underlie the United States
procurement system: system transparency; procurement integrity;
and competition”).
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accountability mechanisms run throughout federal procurement
law.59
When large contractors appear to have special influence
over the suspension and debarment process, the perceived
legitimacy of the process is threatened.
For example, in March
2008, the EPA suspended IBM over “allegations that IBM
improperly obtained sensitive source selection and contractor
bid or proposal information.”60
The EPA began intense
negotiations with IBM and the suspension was lifted within eight
days61 after the EPA had negotiated a favorable interim
agreement.62
success.63
The EPA justifiably claimed this outcome a
However, the contracting community was not reassured
Schooner, supra note 58, at 106 n. 19 quoting Jody Freeman,
The Private Role in Public Governance, 75 N.Y.U. L. REV. 543,
586-87 (2000) (“Numerous laws designed to ensure transparency,
rationality, and accountability in decision making, including
the Administrative Procedure Act (APA) and the Freedom of
Information Act, apply to agencies, and not to private
actors.”).
60 Canni, supra note 27, at 592.
61 Canni, supra note 27, at 595.
62
IBM withdrew from the competition, placed five individuals on
administrative leave, agreed to monitoring, and paid the costs
of the investigation. Text of the agreement is available at
http://download.101com.com/pub/fcw/media/htdocs/ui/st_images/Apr
il%203%202008%20IBM%20Interim%20Agreement.pdf.
63 Matthew Weigeit, IBM Case: A Question of Due Process, FEDERAL
COMPUTER WEEK, April 11, 2008, available at
fcw.com/articles/2008/04/11/ibm-case-a-question-of-dueprocess.aspx. (“EPA lifted the suspension eight days later, but
the question of how it came to pass in the first place lingered.
Now, EPA’s debarment official has an answer: It happened because
the system worked as intended. ‘Nothing is broken,’ said Robert
Meunier, EPA’s debarring official and chairman of the
Interagency Suspension and Debarment Committee. Shrugging off
59
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that justice had been done but was frightened by a series of
apparently arbitrary, opaque, and unaccountable decisions.64
The
lack of transparency transformed an otherwise good outcome into
a public-relations issue that undermined contractor confidence
in the fairness of the procurement system.
DOs tend to be conservative in exercising their discretion,
including the discretion to suspend and debar large contractors,
especially when exercising that discretion could lead to intense
scrutiny.65
A busy DO may have greater incentives to make sure
an agency’s vital needs are met or that small contractors are
debarred, rather than picking a fight with a large contractor.66
Even if debarring officials do not feel particularly intimidated
by large contractors, they may simply have other priorities.
It
calls for reform of the system from some quarters, Meunier said
no changes are necessary.”).
64 Christopher J. Dorobek, Editorial: EPA/IBM Case: We Still Have
Questions, FEDERAL COMPUTER WEEK, April 18, 2008, available at
fcw.com/articles/2008/04/18/editorial-epaibm-case-we-still-havequestions.aspx (accompanied by an editorial cartoon featuring a
vendor standing at a gallows about to be hanged by a vaguely
disinterested agency bureaucrat).
65 STEVEN KELMAN, PROCUREMENT AND PUBLIC MANAGEMENT—THE FEAR OF DISCRETION AND
THE QUALITY OF GOVERNMENT PERFORMANCE 26 (1990) (“Because exercise of
discretion generates the congressional investigations and media
stories, contracting officers tend to be safe rather than sorry.
Given their lack of program responsibility for what is procured,
they have little to compensate them for taking risks.”).
66 For a discussion of the difficulty involved in incentivizing
governmental behavior. See generally Steven L. Schooner, Fear
of Oversight: The Fundamental Failure of Businesslike
Government, 50 AM. U. L. REV. 627 (February, 2001).
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is well known that the Federal Government is, or soon will be,
facing a severe procurement workforce shortage.67
DOs need options in crafting sanctions to compel errant
contractors while doing minimal damage to Government interests.
Currently, suspension and debarment are the primary sanctions
available to DOs.68
DOs have discretion over the length of
debarment69 and some discretion over the scope of debarment.70
However, debarment in any form is often a harsh remedy.
Of
course, DOs also have the option to negotiate administrative
agreements, as the EPA did after suspending IBM.
The use of administrative agreements should be encouraged,
not just as a means of resolving suspensions and debarments, but
as an alternative sanction in its own right.
Debarment is a
blunt tool, often ill-suited to the complicated realities of the
relationship between the Government and large contractors.
When
debarment of a large contractor seems inimical to the
“[A]ll agencies face the prospect of losing many of their
skilled acquisition personnel over the next 5 years --with a
significant portion of the government's acquisition workforce
becoming eligible to retire by fiscal year 2008.” Steven
Schooner, Contractor Atrocities at Abu Ghraib: Compromised
Accountability in a Streamlined, Outsourced Government, 16 STAN.
L. & POL’Y REV. 549, 559 n. 32 (2005), quoting U.S. GOV’T
ACCOUNTABILITY OFFICE, FEDERAL PROCUREMENT: SPENDING AND WORKFORCE TRENDS
(2003).
68 FAR 9.400.
69 FAR 9.406-4 (“Debarment shall be for a period commensurate
with the seriousness of the cause(s). Generally, debarment
should not exceed 3 years”).
70 FAR 9.406-5.
67
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Government’s interests DOs should be encouraged, and required,
to craft more nuanced agreements designed to maintain the
fairness and transparency of the procurement system while
protecting the Government’s business interests.
3.
A Little Knowledge Is a Dangerous Thing: Ignorance and
Misconceptions Wreak Havoc on Federal Suspension and
Debarment
The lack of transparency in the suspension and debarment
system makes the process mysterious and confusing for the
contracting community.
The lack of communication and awareness
regarding suspension and debarment within many agencies makes
the process mysterious and frightening for many agency employees
and officials.
For example, a February 2010 Department of
Homeland Security (DHS), Office of Inspector General report
found suspension and debarment were significantly underused.71
This was attributed directly to procurement officials’ antipathy
to the suspension and debarment process.72
The Office of Inspector General found “23 instances where
contracts were terminated for default or cause but were not
reviewed to determine whether a suspension and debarment
referral was warranted” and “ 21 instances where contracts were
terminated for default, the reasons for which were not recorded
in government-wide databases.” DEPT. OF HOMELAND SECURITY, OFFICE OF
INSPECTOR GENERAL, OIG-10-50, DHS’ USE OF SUSPENSION AND DEBARMENT ACTIONS
FOR POORLY PERFORMING CONTRACTORS (2010), available at
www.dhs.gov/xoig/assets/mgmtrpts/OIG_10-50_Feb10.pdf.
[hereinafter DHS Report].
72 “The Department of Homeland Security has suspension and
debarment policies and procedures in place. However, the
department is reluctant to apply the policies and procedures
against poorly-performing contractors. Department procurement
71
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DHS is not the only agency to confront this issue.73
Willard D. Blalock, Chair of the Interagency Suspension and
Debarment Committee, acknowledged the underutilization of
suspension and debarment and stated that “[t]he current
suspension and debarment system is appropriate” but that “[w]hat
is required is the will to use it.”74
Federal agencies will have
to look for creative ways to increase agency officials’
willingness and ability to use the suspension and debarment
tools at their disposal.
C.
Muddying Already Murky Waters: EPA’s Statutory Debarment
Authority under the Clean Air and Clean Water Acts
All executive agencies are granted authority to engage in
procurement debarment as discussed above.
Congress occasionally
grants unique debarment authority to specific agencies in order
to advance various public policies.
The EPA has been granted
such a statutory debarment authority under the CAA and CWA.
The
officials characterized the suspension and debarment process as
being too resource intensive, punitive, and as negatively
impacting the size of the contractor pool.” Id.
73 “Recent audits by agency Inspector Generals have prompted some
member agencies to re-examine their suspension and debarment
programs to determine what can be done to make them more
effective in ensuring that the agency conducts business only
with responsible contractors and grantees.” Government
Contractor Accountability Measures: Hearing Before the Senate
Commission on Wartime Contracting in Iraq and Afghanistan,
Statement of Willard D. Blalock, Chair Interagency Suspension
And Debarment Committee, February 28, 2011, available at
www.wartimecontracting.gov/docs/hearing2011-02-28_testimonyBlalock.pdf.
74 Id.
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regulations promulgated pursuant to these acts provide for the
debarment of companies that violate these acts.75
An EPA
“listing official” is put in charge of listing facilities found
to be in violation of these statutes, this listing precludes all
federal agencies from making an award of a contract to be
performed at a listed facility.76
This statutory debarment
scheme has come to increasingly mirror procurement debarment and
therefore suffers from all of the same weaknesses77 (overuse of
waiver,78 lack of independent debarring officials,79 and lack of
flexible sanctions80).
2 C.F.R. § 1532.1100.
2 C.F.R. § 1532.1130.
77 Robert F. Meunier (EPA Debarring Official), EPA Final Policy
Guidance: Listing of Persons Ineligible for Award under Section
306 of the Clean Air Act and Section 508 of the Clean Water Act,
The American Law Institute (2004) (“Since 1995, the
responsibility for implementing the mandatory contract and
assistance ineligibility provisions under Section 306 of the
Clean Air Act (CAA) and Section 508 of the Clean Water Act (CWA)
has been delegated to the EPA Debarring Official pursuant to
Agency reorganization plans. The integration of EPA's statutory
and discretionary debarment programs was envisioned, in part, to
enhance consistency in the development of policy and achieve
operational efficiency amongst EPA's debarment functions.”)
78 DFARS 209.405 (The Department of Defense offers the following
compelling reasons for waiver: “(1) only a debarred or suspended
contractor can provide the supplies or services; (2) Urgency
requires contracting with a debarred or suspended contractor;
(3) The contractor and a department or agency have an agreement
covering the same events which resulted in the debarment or
suspension and the agreement includes the department or agency
decision not to debar or suspend the contractor; or (4) The
national defense requires continued business dealings with the
debarred or suspended contractor.”).
79 Environmental Protection Agency website,
www.epa.gov/ogd/sdd/debarment.htm (Last visited April 14, 2012)
75
76
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This statutory debarment scheme suffers from an additional
weakness.
Its sanction is limited to violating facilities, as
opposed to violating contractors.81
For example, at the time of
the Gulf Oil Spill in 2010 two of BP’s facilities had been
debarred under the EPA’s statutory debarment authority.82
This
did little to keep a large firm like BP from being the
Department of Defense’s largest supplier of fuel.83
Large
contractors in possession of debarred facilities fulfill
government contracts with products and services originating at
other facilities, as BP has continued to do.
The federal suspension and debarment system is not broken.
Most of the time the right contractors are suspended or debarred
for the right reasons and the public interest is served.
However, overuse of waiver, a lack of transparency, and a dearth
of education have hampered the effectiveness of a basically good
(Both the FAR 9.4 and the statutory debarment programs are
administered by the Office of Administration and Resources
Management).
80 2 C.F.R. § 1532.1110 (2011) (“If you are convicted of any
offense described in § 1532.1105, you are automatically
disqualified from eligibility to receive any contract,
subcontract, assistance, sub-assistance, loan or other
nonprocurement benefit or transaction that is prohibited by a
Federal department or agency under the Governmentwide debarment
and suspension system…if you: (a) Will perform any part of the
transaction or award at the facility giving rise to your
conviction (called the violating facility); and (b) You own,
lease or supervise the violating facility.”).
81 Id.
82 Nixon,supra note 14.
83 Rooney, supra note 19.
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system.
With a few simple reforms the Government could hold
large contractors accountable, increase the integrity of the
public procurement system, and reassure the public.
ORIGINAL ANALYSIS
III. The World Bank Sanctions Model
Organizations such as the World Bank have encountered
similar challenges and have already developed some innovative
means to secure their procurement systems against unscrupulous
contractors of all sizes.84
While the World Bank is not a
governmental actor, it “is the largest development bank in the
world with a core mission of providing financial assistance to
developing countries.”85
The World Bank has “disbursed over $568
billion as development finance”86 and “procures over $1 billion
annually in goods and services for its own internal business.”87
The World Bank has developed a reputation for going up against
large corporations like “Satyam Computer Services, Ltd. . . . a
corporate behemoth with $2 billion in annual sales, [that was
debarred] from receiving contracts from the Bank's internal
corporate procurement group.” Todd Canni, Debarment Is No Longer
Private World Bank Business: An Examination of the Bank's
Distinct Debarment Procedures Used for Corporate Procurements
and Financed Projects, 40 Pub. Cont. L.J. 147, 147-48 (2010),
citing Richard Behar, World Bank Admits Top Tech Vendor Debarred
for 8 Years, FOX NEWS (Dec. 24, 2008), available at
www.foxnews.com/story/0,2933,470964,00.html.
85 Canni, supra note 84 at 149.
86 Sope Williams, The Debarment of Corrupt Contractors from World
Bank-Financed Contracts, 36 PUB. CONT. L.J. 277, 281, citing World
Bank, The World Bank Annual Report 2005: Year in Review 9
(2005).
87 See CORPORATE PROCUREMENT UNIT, WORLD BANK GROUP, CORPORATE PROCUREMENT
VENDOR GUIDE 2, available at
84
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In order to effectively use its funds the World Bank developed a
sophisticated sanctions program designed to take account of: (a)
“the need for economy and efficiency in the implementation of
[projects]”; (b) its “interest in giving all eligible
bidders…the same information and equal opportunity to compete in
providing goods, works and non-consulting services financed by
the Bank”; (c) its “interest in encouraging the development of
domestic contracting and manufacturing industries in the
borrowing country”; and (d)
“the importance of transparency in
the procurement process.”88
There are three relevant values embedded in the World
Bank’s sanctions program: transparency, flexibility, and
independence.
These values are each important to the role of
the three separate parts of the sanctions system: the Department
of Institutional Integrity, the Evaluation and Suspension
Officer, and the Sanctions Board.
A.
Transparency and the Department of Institutional Integrity
The World Bank recognizes the importance of transparency to
the effective fulfillment of its mission.89
The World Bank’s
siteresources.worldbank.org/EXTCORPPROCUREMENT/Resources/VendorG
uide.pdf?& resourceurlname=VendorGuide.pdf.
88 WORLD BANK, GUIDELINES: PROCUREMENT UNDER IBRD LOANS AND IDA CREDITS,
January 2011, available at go.worldbank.org/1KKD1KNT40.
89 “The World Bank recognizes that transparency and
accountability are of fundamental importance to the development
process and to achieving its mission to alleviate poverty.
Transparency is essential to building and maintaining public
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Integrity Vice Presidency (“INT”) has reaffirmed this commitment
to transparency.90
INT performs investigatory and prosecutorial
functions in the procurement integrity process.91
Some federal
agencies have units similar to the World Bank’s INT.92
This is
dialogue and increasing public awareness about the Bank’s
development role and mission. It is also critical for enhancing
good governance, accountability, and development effectiveness.
Openness promotes engagement with stakeholders, which, in turn,
improves the design and implementation of projects and policies,
and strengthens development outcomes. It facilitates public
oversight of Bank-supported operations during their preparation
and implementation, which not only assists in exposing potential
wrongdoing and corruption, but also enhances the possibility
that problems will be identified and addressed early on.” WORLD
BANK, THE WORLD BANK POLICY ON ACCESS TO INFORMATION, July 1, 2010,
available at go.worldbank.org/L3HF51WOX0.
90 “This policy is based on the principles, underlying the WB’s
Access to Information Policy, adapted to reflect the unique
mandate and functioning of INT, which rely on its ability to
safeguard the integrity of the investigative and sanctions
processes, and the confidentiality of protected information in
its possession: (i) Maximizing access to information. (ii)
Safeguarding the deliberative process, and the integrity of
INT’s investigations. (iii) Providing clear procedures for
making information available, including a consistent process for
redacting protected information. (iv) Recognizing requesters’
right to an appeals process.” WORLD BANK, THE DISCLOSURE OF INFORMATION
POLICY OF THE INTEGRITY VICE PRESIDENCY, February 3, 2011, available at
go.worldbank.org/VVY6KYS720.
91 WORLD BANK, WORLD BANK SANCTIONS PROCEDURES, Section 3.01, January 1,
2011, available at go.worldbank.org/CVUUIS7HZ0 [hereinafter
World Bank Sanctions Procedures]. (“(a) INT may seek to
initiate sanctions proceedings, if: (i) as a result of
investigation by INT, the Integrity Vice President believes that
there is sufficient evidence to support a finding of one or more
Sanctionable Practices in connection with a Bank Project; or
(ii) the Integrity Vice President makes a preliminary
determination that a Material Term of the VDP Terms & Conditions
has been violated by a VDP participant.”).
92
“The United States Air Force, the United States Army, and the
Department of Housing and Urban Development placed their
suspension and debarment functions within their Offices of
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an effective means to increase transparency and the appearance
of impartiality, it should be used by more agencies.93
This commitment to transparency in the suspension and
debarment process stands in sharp contrast to federal practice.
The lack of information released after the suspension of IBM by
the EPA, discussed above, turned an enforcement coup into a
cause for alarm in the contracting community.
More recently,
the Government has given no account for why it continues to
spend billions of dollars with BP after it has been found
legally responsible for repeated environmental disasters.
Even
if the Government has good reason to continue to do business
with BP, it would be in the Government’s best interest to
articulate those reasons publicly rather than allow the public
to assume the worst.
In order to facilitate this kind of exchange the Government
should adopt a policy similar to that of the INT.
The
Government should adopt a policy that includes proactive
disclosure, a consistent redaction process, information on
request, and a requester appeals process.94
These systems are
General Counsel, which have dedicated staffs with the legal
expertise and training necessary to pursue, investigate, and
defend suspension and debarment actions.” DHS Report.
93 “An Air Force official also noted that this organizational
placement eliminates any perceived conflict of interest.“ DHS
Report.
94 See, WORLD BANK, THE DISCLOSURE OF INFORMATION POLICY OF THE INTEGRITY VICE
PRESIDENCY supra note 90.
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not completely foreign to the Federal Government.
agencies have begun meaningful reform.
Certain
The Air Force promotes
internal transparency and education through “[i]nitial awareness
training” on suspension and debarment that “is
administered/documented for all new employees” and the
Department of Transportation maintains a website designed to
inform its own employees and the public on the agency’s
suspension and debarment activities.95
The spread of these
policies would go a long way toward increasing contractor trust
in the suspension and debarment system.
B.
Flexibility and the Evaluation and Suspension Officer
After INT has conducted its investigation, it presents a
Statement of Accusations and Evidence to the Evaluation and
Suspension Officer (“EO”).
The World Bank has four EOs.96 The
EO’s primary responsibility is to determine whether the “INT’s
accusations in the Statement of Accusations and Evidence are
supported by sufficient evidence” and if so to ”issue a Notice
of Sanctions Proceedings . . . .”97
In the Notice of Sanctions
“The Department of Transportation’s website provides extensive
details on the suspension and debarment program and supplements
the Federal Acquisition Regulation. The website provides
extensive information on the Department of Transportation’s
suspension and debarment program. The site contains a
“Frequently Asked Questions” section where it provides guidance
to agency personnel as well as to individuals who have been
referred for suspension and/or debarment.” DHS Report.
96 World Bank, web.worldbank.org (last visited April 1, 2011).
97 World Bank Sanctions Procedures, Section 4.01(a).
95
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Proceedings the EO “shall recommend . . . an appropriate
sanction to be imposed on each Respondent, selected from the
range of possible sanctions . . . .”98
The EO has no discretion in whether to issue a Notice of
Sanctions Proceedings if the INT’s accusations are “supported by
sufficient evidence.”
However, in making his or her selection
of possible sanctions the EO has a good deal of discretion.
The
base sanction is a three-year debarment with conditional
release.99
That sanction can be adjusted significantly.
The
least severe is “a formal ‘Letter of Reprimand’ of the
Respondent’s conduct.”100
The next option is a “Conditional Non-
Debarment,” wherein “[r]espondent is required to comply with
certain remedial, preventative or other conditions as a
condition to avoid debarment . . . .”101
If these options are
too lenient then the EO may seek debarment which “shall extend
across the operations of the World Bank Group.”102
The EOs are
given further flexibility to recommend a “Debarment with
Conditional Release” wherein the Respondent is “released from
World Bank Sanctions Procedures, Section 4.01(c).
WORLD BANK, WORLD BANK SANCTIONING GUIDELINES, January 1, 2011,
available at http://go.worldbank.org/CVUUIS7HZ0.
100 World Bank Sanctions Procedures, Section 9.01(a).
101 World Bank Sanctions Procedures, Section 9.01(b) (“Conditions
may include (but are not limited to) verifiable actions taken to
improve business governance, including the introduction,
improvement and/or implementation of corporate compliance or
ethics programs, restitution or disciplinary action against or
reassignment of employees.”).
102 World Bank Sanctions Procedures, Section 9.01(c).
98
99
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debarment only if the Respondent demonstrates compliance with
certain remedial, preventative or other conditions for release,
after a minimum period of debarment.”103
Finally, the EO can
require the Respondent “to make restitution to the Borrower or
to any other party or take actions to remedy the harm done by
its misconduct.”104
The World Bank recently put these flexible sanctions to use
against C. Lotti and Associati Societa’ di Ingegneria S.p.A.
(“Lotti”), an Italian company that “acknowledged misconduct in a
World Bank investigation relating to a Bank-financed public
works project in the water sector in Indonesia.”105
The World
Bank negotiated an innovative agreement whereby Lotti agreed to
a debarment with conditional release.106
Lotti is debarred for
27 months “but can be released from debarment if it demonstrates
compliance with certain remedial, corrective and preventive
measures such as implementation of an acceptable corporate
compliance program and cooperation with the World Bank’s [INT]
World Bank Sanctions Procedures, Section 9.01(d) (“Conditions
may include (but are not limited to) verifiable actions taken to
improve business governance, including the introduction,
improvement and/or implementation of corporate compliance or
ethics programs, restitution or disciplinary action against or
reassignment of employees.”).
104 World Bank Sanctions Procedures, Section 9.01(e).
105 Press Release, World Bank, Enforcing Accountability: Italian
Company Lotti to pay US$350,000 in restitution to Indonesia
after acknowledging fraudulent misconduct in a World Bankfinanced project, No:2011/279/INT, December 22, 2010, available
at go.worldbank.org/FX15OX4LX0.
106 Id.
103
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investigations.”107
In addition, Lotti agreed “to pay an
estimated US$350,000 in restitution to Indonesia” and has been
cross-debarred by other multilateral development banks.108
This
is the kind of creative sanctions that federal agencies should
use to deal with contractors that are too big to debar.
As with the INT, several agencies (The Environmental
Protection Agency, the U.S.
Navy, and the U.S. Air Force)
already have officials analogous to the World Bank’s EO.
This
is an effective model to increase both the appearance of
fairness and the reality of consistent treatment.109 An unbiased
debarment official should be a requirement for any agency
actively engaged in suspension and debarment.
Federal agencies have the authority to craft similar
flexible sanctions in the form of administrative agreements.
Agencies should be encouraged to use administrative agreements
proactively as a substitute for suspension and debarment rather
than reactively as a means of resolving already imposed
suspensions and debarments.
The Government should adopt
guidance similar to the World Bank Group Sanctioning
Id.
Id.
109 “According to officials we interviewed, having a single
suspension and debarment official who is not affiliated with the
acquisition community provides a fair and unbiased platform to
evaluate referrals and maintain program continuity” DHS Report.
107
108
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Guidelines110 that would outline a variety of different
sanctions111 and provide further guidance on when and how to
apply different sanctions.112
Such a reform would transform
debarring officials into sanctioning officials who would have at
their disposal a wide variety of procurement-related sanctions.
The EPA could use flexible sanctions to craft procurement
related responses to environmental bad actors.
If the EPA
believes that it cannot effectively debar BP it could issue a
conditional non-debarment.
The EPA could make specific demands
of BP and enforce those demands with the threat of a debarment
should those conditions not be met.
Adopting a governmentwide
policy regarding flexible sanctions would encourage a more
proactive use of these sanctions at the agency level.
C.
Independence and the Sanctions Board
The World Bank emphasizes the importance of independence to
the legitimacy of its sanctions system and the Sanctions Board
is the most important means for maintaining that independence.113
World Bank Sanctioning Guidelines, supra note 99.
I.e., debarment with condition release, debarment,
conditional non-debarment, letter of reprimand, permanent
debarment, and restitution and other remedies.
112 I.e., aggravating factors related to the severity of the
misconduct, harm caused by the misconduct, interference with
investigation, and past history of adjudicated misconduct; and
mitigating factors like minor role in misconduct, voluntary
corrective action taken, and cooperation with investigation.
113 “The Sanctions Board makes a de novo decision based on the
written submissions and the hearing. The two-tiered sanctions
system, divided between the EOs and the Sanctions Board, gives
110
111
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The Sanctions Board consists of seven members, four are external
to the World Bank.114
The Chair is also an external member in
order to enhance the perceived independence of the Board.115
The
Sanctions Board has the final responsibility to “determine,
based on the record, whether or not it is more likely than not
that the Respondent engaged in one or more Sanctionable
Practices.”116
It must also “impose an appropriate sanction or
sanctions on the Respondent” and is “not [to] be bound by the
recommendation of the Evaluation Officer.”117
Both the EO and the Sanctions Board are instructed to take
a wide variety of factors into consideration when making
sanctions determinations.118
The Sanctions Board does not take
the Respondent notice of the allegations and two opportunities
to respond. It also allows decisionmakers who are independent
of the investigators to temporarily suspend and debar
Respondents in order to protect the integrity of the World Bank.
Notice, an opportunity to respond, and a decision by an
independent decisionmaker are considered to be the basics of
procedural justice, and the World Bank’s sanctions system
operates to provide these protections.” Pascale Hélène Dubois
(World Bank Evaluation and Suspension Officer) & Aileen
Elizabeth Nowlan, Global Administrative Law and the Legitimacy
of Sanctions Regimes in International Law, 36 YALE J. INT’L L.
ONLINE 15, 19 (2010).
114 WORLD BANK, WORLD BANK SANCTIONS REGIME: AN OVERVIEW, October 8, 2010,
available at http://go.worldbank.org/EB6JXKU4Z0(last visited
April 14, 2012).
115 WORLD BANK, SANCTIONS BOARD MEMBERS, October 8, 2010, available at
http://go.worldbank.org/ZL06WOFFD0(last visited April 14, 2012).
116 World Bank Sanctions Procedures, Section 8.01.
117 World Bank Sanctions Procedures, Section 8.01(b).
118 World Bank Sanctions Procedures, Section 9.02 (“(a) the
severity of the misconduct; (b) the magnitude of the harm caused
by the misconduct; (c) interference by the sanctioned party in
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into consideration business concerns and “[t]he decision of the
Sanctions Board [is] final,” and is not subject to reversal by
any World Bank official either for policy or business reasons.119
This level of independence from political and business
concerns grants the World Bank Sanctions Program a high level of
perceived legitimacy.
No contractor is ever too big to debar at
the World Bank because the Sanctions Board is insulated from
such considerations.
Whereas, in the federal system closed
doors and insiderism have bred a high level of suspicion on the
part of contractors.
It is a tall order to ask any agency to
cede authority to an independent body, controlled by outsiders.
However, agencies need to weigh the potential loss of control
against potential gains in legitimacy and effectiveness that
would accrue from conducting the process in the light of an open
board as opposed to the shadows of a bureaucrat’s office.
CONCLUSION
IV.
“Too Big To Debar” Is Not the Problem; Moving Forward in
the Era of Large Contractors
the Bank’s investigation; (d) the sanctioned party’s past
history of misconduct…; (e) mitigating circumstances…; (f)
breach of the confidentiality of the sanctions proceedings…; (g)
the period of temporary suspension already served by the
sanctioned party; and (h) any other factor that the Evaluation
Officer or Sanctions Board, as the case may be, reasonably deems
relevant to the sanctioned party’s culpability or responsibility
in relation to the Sanctionable Practice.”).
119 World Bank Sanctions Procedures, Section 8.03(a).
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The Federal Government needs large contractors.
The
Federal Government needs state of the art aircraft, watercraft,
and other military equipment that only large firms can provide.
The Federal Government needs hardware, software, and technology
that only the biggest and best firms can currently provide.
The
Federal Government needs lots of fuel delivered where it needs
it, when it needs it.
But, just because the Federal Government
needs firms like BP does not mean that the Federal Government is
powerless to take effective action against BP when it breaks the
law.
In order to recognize the potential importance of these
reforms one can think about what would have occurred if the
reforms proposed above were in place before the oil spill.
First, an independent investigation would have been conducted by
an office like the World Bank’s INT.
The results of this
investigation would have been open to public scrutiny.
Next, an
independent sanctions officer would have crafted a tailored
administrative agreement with BP.
This agreement would have
been designed to ensure meaningful future compliance by BP while
maintaining important governmental interests.
Finally, this
agreement would have been subject to approval by an independent
board with members from various constituencies.
This board
would be charged with protecting the public interest in the
sanctioning process.
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Kulbiski
Compare that outcome with the status quo, where BP has not
been held accountable, where the public remains in the dark, and
where nothing prevents the same thing from happening again.
By
implementing some of the reforms already in place at the World
Bank (transparency, flexibility, and independence) federal
agencies, like the EPA, could be empowered to take action to
rein in the abuses of large contractors.
BP may or may not be
“too big to debar” but it is not too big to be held accountable.
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