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Responsibility Determination Disregarded Bid Rigging Violations

The Court of Federal Claims enjoined performance of a construction contract because the contracting officer's determination that the awardee was responsible, notwithstanding its violation of foreign bid rigging laws, was arbitrary and capricious. Prior to the submission of proposals, the Japan Fair Trade Commission issued an administrative order and assessed fines against the awardee for violation of a Japanese antimonopoly law and bid rigging. Later, the Japanese government suspended the awardee's business for violation of the antimonopoly law. The awardee never disclosed the violations in connection with the procurement. The protester argued the awardee should have disclosed this conduct as part of its FAR 52.209-5 certifications, and that if the violations had been disclosed, the CO would have been required to conclude the awardee was non-responsible under FAR 9.104. The government responded the CO was unaware of the negative information when he made his initial responsibility determination, and that he reevaluated his determination after receiving the information and found the awardee to be responsible. At a hearing, the CO "testified that because bid rigging is common in Japan it does not rise to a level serious enough to render the [awardee] not responsible."


The court granted the protester's motion for a preliminary injunction, finding in light of the "ethical and statutory" violations, it was "doubtful" the awardee was legally eligible for the contract and "crystal clear" the CO did not make an adequate determination of the awardee's eligibility. The CO testified he relied on legal advice in making his decision, but the government claimed the advice was privileged and never revealed it to the court. Further, the CO testified he reevaluated the responsibility determination, but his testimony also suggested he was under the impression he could not disrupt the award. Although the government may "accept the violations as appropriate for foreign policy reasons or other legitimate reasons of national or military policy," the "policy call" on the appropriate ethical standard must be made by a higher-level government official, and not the CO. The court ordered the government to either resolicit the contract or to designate a new CO to make a new responsibility determination. If the government selected the second option, a Naval flag officer or presidential appointee was to provide the CO "with a clear statement with regard to [the government's] policy regarding the level of business integrity required in order to find a contractor responsible." (Watts-Healy Tibbitts A JV v. U.S., et al., FedCl, 52 CCF 78,979)



(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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