Due process for contractors under attack

Stan Soloway (soloway@pscouncil.org) is president and CEO of the Professional Services Council.

I have what is proving to be the increasingly quaint notion that things such as due process and fairness matter. Unfortunately, others disagree and are seeking to change laws in ways that are unfair and poorly thought out.

Specifically, the Commission on Wartime Contracting recommends altering suspension and debarment standards to require that a company be “proposed for debarment” — which means, by definition, the company is immediately prevented from obtaining new contracts — if the company is ever indicted. Last I checked, indictments, though serious, are not convictions. That is tantamount to declaring guilt before all facts are known.

Contrary to the assertion that an indictment is, as one advocate put it, “a pretty good indication” of an unethical corporate culture, it also might well mean nothing of the sort. As such, the immediate, presumptive imposition of such a major penalty violates the most basic presumption of law and fairness even in government contracts.

The commission is not alone in making such proposals. A few months ago, Sen. Bernie Sanders (I-Vt.) excoriated the Defense Department for awarding contracts to companies that, in recent years, had paid administrative fines for a range of violations. The senator did not assess which, if any, cases involved clear and consistent patterns of abuse. Nor did he assess the companies’ responses to the incidents or the relative severity of the violations that led to the fines. Yet all of those factors matter.

To some extent, the disconnect is based in a fundamental misunderstanding of the role and purpose of suspension and debarment. Contrary to popular belief, suspension and debarment are not designed to punish companies for wrongdoing. As explicitly stated in the Federal Acquisition Regulation, they serve as a tool for the government to use when the government determines that a company does not have adequate internal controls and processes to ensure that it can act responsibly and ethically in performing government contracts.

The existence of an indictment or allegation is only one early indicator of potential problems. But it's equally important to consider the severity of an allegation, whether it reflects a broad corporate culture or is reflective of aberrant behavior by an individual or limited group, and whether the company has responded appropriately to the incident. After all, no matter how much emphasis an institution places on ethical business behavior, no one can guarantee that an employee will never violate the law. That’s why the institution’s response to problems is as important as the problem itself.

And that’s what makes the proposed revisions so disturbing. They would require the immediate suspension of a company before the legal process has played out and before appropriate government officials can evaluate answers to other important questions. However short in duration, suspension is significant, costly and, on some levels, indelible.

To its credit, the Obama administration strongly pushed back against the commission’s proposal. Dan Gordon, the administrator of the Office of Federal Procurement Policy, correctly explained to the commission the real purpose of suspension and debarment and expressed the administration’s view that, overall, the processes work as intended, although improvements can and will be made.

All of this comes at a time when many inside and outside government are concerned about a growing tendency to suspend or debar first and dig deeper second. That’s why we would do well to step back from the brink and reassess this trend and the commission’s proposal. Serious questions and concern should arise when legislative proposals gain traction, even when they contradict some of the most basic tenets on which our nation’s legal system was built.