Adoption of this recommendation should substantially correct the

evils of existing suspension practices.

Recommendation 3:

The purpose of this recommendation, together with Recommendation 1, is to discontinue all forms of summary exclusion from govern

ment contracting and participation in federally assisted work or project taken without opportunity for a trial-type hearing to adjudicate material issues of fact, and, subject to Recommendation 4 discussed below, to permit summary suspensions only in accordance with the procedures of Recommendation 2. Recommendation, if carried out, together with Recommendation 4, should effectively curtail de facto and secret agency debarments of the type described in notes 21 and 22 of the Report and related text.

Recommendation 4:

To

The procedural safeguards of Recommendations 1-3 will not of themselves prevent secret or de facto debarment or blacklisting. close this gap, it is arguably necessary to provide a show-cause procedure as a condition precedent to denial of any contract solely or primarily on business responsibility grounds to any person not debarred under the procedures of Recommendation 1. However, in government procurement contracting there are other safeguards sufficient to obviate a change of this sweep. The Small Business Administration has procedures to protect the arbitrary contract rejection of smallbusiness firms on grounds of capacity and credit; 55/ and rejection

on the ground of delinquency in delivery or unsatisfactory performance

is either subject to challenge under the "Disputes" clause of the

related contract or to satisfactory resolution by informal discussions. But agency or contracting officer doubts of a firm's honesty

or integrity are in a different category. Moreover, this is the most common reason for secret debarment or blacklisting, and with the curtailment of the suspension practice contemplated by Recommendations 2 and 3, additional safeguards appear necessary.

Recommendation

4 provides a show-cause type procedure which has the advantage of not interfering with contracting operations and at the same time affording reasonable prior explanation of the bases of the Government's doubts. A duty to explain doubts of business honesty or integrity before denial of contracts on this ground should deter arbitrary action and permit reasonable opportunity to bidders, prior to contract award, to show why the doubts are unfounded. In practice, Recommendation 4 would tend to channel into the debarment arena of

Recommendations 1 and 2 where they belong.

Some agencies object to Recommendation 4 in the belief that

it would delay procurement.

It is important to note that the recom

mendation does not require any form of adversary hearing prior to individual bid rejection on the ground of the bidder's lack of

trustworthiness. It does require the contracting officer to decide that question in good faith and with judgment that is as informed as

35

the time within which contract award must be made will permit. When contracts must be awarded is for the agency to decide.

So viewed, the Committee is of the opinion that the recommendation would not cause undue or harmful delay in government contracting and would provide a needed restraint on secret blacklisting. Recommendation 5:

This recommendation provides for agency rules of practice

and procedure in debarment-type cases, which rules should be published, should be uniform to the extent practicable, and should provide for fair and speedy decisions. The Committee has received no objection

to it.

The Committee intends that the burden of proof and other technicalities of a trial-type hearing would be dealt with by agency rules. We think such rules should provide that the Government in a trial-type debarment hearing has the burden of proof in the sense of coming forward with a prima facie case. 56/

Recommendation 6:

This recommendation provides that decisions to debar be made in writing, set forth findings, conclusions and reasons, and be furnished to the debarred individual or firm. It further provides for the publication or public availability of such decisions in cases of debarment following a trial-type hearing except for good cause found by the agency head or his designee in accordance with published rule. The Committee believes adoption of this recommendation will

aid case-by-case growth of administrative law and policy in this field.

Recommendation 7:

This recommendation calls for the grounds and scope of debar

ment to be set forth in published agency regulations which should be uniform to the extent practicable. The matters covered by paragraph (b) of the recommendation are particularly in need of such regulation since agency practices vary considerably. A number of agency

comments have noted difficulties in drafting the regulations contemplated by Recommendation 7(b), particularly standards for debarment of business affiliates of debarred individuals and firms and for imputing fraud, and argue that these matters are better left to the case-by-case approach. The Committee agrees that it cannot all be left to regulations and therefore has revised the recommendation to provide that the subject matter of 7(b) be covered by regulations to the extent feasible. Recognition of the validity of the case-by-case approach to some of these problems underscores the need for public availability of debarment decisions, at least in contested cases, if there is to be orderly development and consistent application of law and policy in this field. These considerations have also lead the Committee to adopt Recommendation 6, discussed above.

The curtailment of the suspension power by Recommendations 2 and 3 necessitates the provision of a ground for debarment based on substantial evidence of fraud or other conduct indicating a serious and present lack of business integrity or business honesty. Such is one of the purposes of Recommendation 7(c). The test of substantial evidence of fraud would be developed administratively on a case-by-case

basis that would not involve application of the standards of proof necessary to criminal conviction; nor would it otherwise be circumscribed by the technical rules of evidence. It is intended that the evidence merely establish that the cheating or wrong doing has taken place without regard to criminal intention. For example, if it can

be established by substantial evidence that a contractor or subcontractor did offer to pay money to a government inspector in return for the latter's acceptance of non-conforming goods, that showing would be sufficient to warrant debarment on this ground without showing criminal intention or establishing the fact of such an offer beyond a reasonable doubt. For in cases in which criminal or civil prosecution for fraud is unsuccessful, it does not necessarily follow that the individual or firm in question has requisite integrity for government contracting and should not be debarred. To aid in making these determinations Recommendation 7 (c) further provides that "substantial evidence may include a criminal or civil judgment or any findings of fact there in relating materially to the grounds of debarment."

Recommendation 8:

This recommendation provides that, except as provided by statute or executive order, debarments should be for a reasonable, definitely stated period of time commensurate with the seriousness of the cause therefor, but not to exceed three years; and that debarments should be removed upon a showing of current responsibility.