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District Court Enjoins Debarment Decision

The District Court for the District of Columbia preliminarily enjoined a debarment decision because the debarring official's rationale for the decision was likely flawed and the plaintiff established he would suffer some degree of irreparable harm. The plaintiff was a chief executive officer of a freight forwarder that settled a qui tam False Claims Act suit and pleaded guilty to knowingly and willfully making a material false statement to the government. Subsequently, the plaintiff was debarred for a period of three years. In his debarment decision, the DO stated the plaintiff's "conduct as ... CEO and sole shareholder was of so serious or compelling a nature as to affect his present responsibility to be a [g]overnment contractor or subcontractor pursuant to FAR 9.406-2(c)" and "[a] separate and independent basis for [the plaintiff's] debarment rest[ed] on the imputation of [the contractor]'s criminal, fraudulent, and seriously improper conduct to [the plaintiff]" under FAR 9.406-5(b). The contractor itself was not debarred.

Flawed Decision

The court granted the plaintiff's motion for a preliminary injunction, finding the two most important factors for interim injunctive relief were present. First, the plaintiff was likely to succeed on the merits. To support his determination concerning present responsibility, the DO stated a review of the records for 6800 shipments "revealed that in approximately 2995 of those shipments, [the contractor] delivered the freight late" but billed the government as if it had delivered the freight on time. However, the DO did not properly consider the opinion of the plaintiff's expert, who concluded there was only enough information to analyze the timeliness of 45 of the 6800 shipments. According to the expert, 44 of those 45 shipments were delivered on time or early. Also, the manner in which the DO calculated certain delivery deadlines was flawed. Moreover, in imputing the contractor's conduct to the plaintiff under FAR 9.406-5(b), the DO did not point to information in the plaintiff's possession from which he should have inferred that misconduct was occurring, as required by the decision of the Court of Appeals for the District of Columbia in Novicki v. Cook (37 CCF 76,198).

Irreparable Harm

With respect to the other factor for injunctive relief considered by the district court, the plaintiff made a sufficient showing of irreparable harm. If he were to succeed on the merits of his complaint but could not obtain other government contracts, the plaintiff would be unable to recoup lost income due to the government's sovereign immunity. In addition, the plaintiff stated in a declaration that he was "rapidly losing the benefit of the business connections [he has] built ... because of the stigma attached with [his] debarment." (Alf v. Donley, et al., DC DofC, 53 CCF 79,197)




(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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