Glazer Const. Co., Inc. v. U.S., Civ.A. 98-11445-PBS.
| Decision Date | 25 May 1999 |
| Docket Number | No. Civ.A. 98-11445-PBS.,Civ.A. 98-11445-PBS. |
| Citation | 50 F.Supp.2d 85 |
| Parties | GLAZER CONSTRUCTION CO., INC., and Murray Glazer, Plaintiffs, v. UNITED STATES of America, Defendant. |
| Court | U.S. District Court — District of Massachusetts |
John P. Davey, Davey & Davey, Canton, MA, for Glazer Construction Co., Inc., Murray Glazer, plaintiffs.
Susan M. Poswistillo, United States Attorney's Office, J. Mitch MacDonald, Special Assistant U.S. Attorney, United States Courthouse, Boston, MA, for USA, by and through the Air Force, defendant.
After reviewing the objections, I adopt the well-reasoned Report and Recommendation Regarding Defendant's Motion for Summary Judgment (Docket No. 10) dated April 16, 1999, and assume familiarity with that opinion.
I add a concern regarding the finding of a willful violation of the Buy America Act, 41 U.S.C. § 10b (West Supp.1998). In his memorandum setting forth the reasons justifying debarment, the debarring official found:
A preponderance of the evidence establishes that [Glazer Construction Co., Inc.'s] violation of the Buy American Act constituted a willful violation of its contract with the Air Force. As such, the violation provides a basis for its debarment pursuant to FAR 9.406-2(b)(1).
( 2, Docket 13, Tab 29, at 5). Earlier in the memorandum, he had stated that "an intentional violation of the Buy America Act was not conclusively established." (Id. at 4.)
Plaintiffs contend that fundamental fairness required an adjudicative hearing on the willfulness finding, not just an informal meeting, because there was a disputed fact question as to intent. Plaintiffs submitted materials to the agency for the administrative record to support the claim that they did not intend any violation of the Act and that any use of foreign wall base and light bulbs was "totally inadvertent." Plaintiffs also asserted that they misapprehended the "fifty percent rule" with respect to the structural steel used in the project.
Because willfulness is an "element" of this debarment ground, there was a genuine dispute over a material fact that afforded the contractor a more formal proceeding to be consistent with fundamental fairness pursuant to the Federal Acquisition Regulation (FAR), 48 C.F.R. § 9.406-3(b)(2) (1995).1 See Sterlingwear of Boston, Inc. v. United States, 11 Cl.Ct. 879, 889 (1987) (). See generally Imco, Inc. v. United States, 97 F.3d 1422, 1427 (Fed.Cir.1996) (); cf. Reeve Aleutian Airways, Inc. v. United States, 982 F.2d 594, 598 (D.C.Cir.1993) ().
The government argues that plaintiffs only requested an informal meeting and that therefore they are not entitled to a more formal adjudicative proceeding. Generally speaking, the failure to request an adjudicative hearing could be deemed a waiver. However, here the magistrate judge correctly pointed out that there was inadequate notice of the willfulness charge, which carries a serious stigma because of the intent element. (Report and Recommendation at 19). Even apart from the procedural concerns about the lack of fair notice and an adequate hearing, the ultimate finding of willfulness appears to be at odds with the prior statement that an intentional violation of the Buy America Act had not been established.
Even though the willfulness finding was made in violation of the FAR, I agree with the magistrate judge on the alternative ground of debarment. The undisputed facts (including Glazer's false and inconsistent statements about the wall base) reasonably supported debarment on the ground that there was a violation of the Buy America Act. Regardless of whether the debarment is mandatory,2 as the magistrate judge had concluded, the agency was not arbitrary or capricious in concluding that plaintiffs' conduct was of "so serious and compelling a nature" that it affected their "present responsibility" as a government contractor. See FAR § 9.406-2(c).
The Court orders entry of judgment in favor of defendant.
REPORT AND RECOMMENDATION REGARDING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT (DOCKET NO. 10)
This case has been referred to me pursuant to 28 U.S.C. § 636(b) for my Report and Recommendation on Defendant's Motion for Summary Judgment (Docket No. 10). Plaintiffs, Murray Glazer and Glazer Construction Company, seek review under the Administrative Procedure Act, 5 U.S.C. § 702 et seq. (West 1996) ("APA"), of Defendant United States' decision to debar them for three years from receiving federal contracts for violations of the Buy American Act, 41 U.S.C. § 10b (West Supp.1998) ("BAA"). Plaintiffs allege that the procedures under which they were debarred denied them due process of law, Verified Complaint, ¶¶ 73, 75, and further claim that Defendant's decision to debar them was "arbitrary and capricious, unsupported by the evidence, constituted an abuse of discretion and was based upon a substantive mistake of law." Id. at ¶¶ 76-77.
The crux of Plaintiffs' complaint is that Defendant unfairly denied them an evidentiary hearing under applicable agency rules when its debarring official determined that there was no genuine issue of fact material to the alleged violations of the Act. Plaintiffs further claim that, even if the court finds that it was proper to forego the evidentiary hearing, debarment was arbitrary and capricious where their BAA violations were both relatively minor and unintentional.
For reasons discussed below, I conclude that the BAA affords the government no discretion once it has found a violation of the Act. Because there was clearly a BAA violation in this case, debarment was the only appropriate result. Even if, despite the seemingly mandatory and self-executing language of the statute, debarment is a discretionary remedy, the arbitrary and capricious standard of review that the APA dictates is highly deferential to agency decisions. At least one of Defendant's two offered grounds for debarment plainly satisfies that standard. I therefore recommend that summary judgment enter in favor of Defendant.
The BAA requires that every federal construction contract contain a provision that the contractor will use "only such unmanufactured articles, materials, and supplies as have been mined or produced in the United States, and only such manufactured articles, materials, and supplies as have been manufactured in the United States substantially all from articles, materials, or supplies mined, produced, or manufactured ... in the United States." 41 U.S.C. § 10b(a). If the head of a contracting federal agency finds that a contractor has violated this provision, the BAA requires that he:
make public his findings, including the name of the contractor obligated under such contract, and no other contract for construction, alteration or repair of any ... public work ... shall be awarded to such contractor ... within a period of three years after such finding is made public.
The Federal Acquisition Regulations ("FAR"), promulgated jointly by the Department of Defense, the General Services Administration, and the National Aeronautics and Space Administration, implement the requirements of the BAA. 48 C.F.R. subparts 1 & 25.2. These regulations define certain statutory terms as well as procedures and remedies in the event of noncompliance. Id.
FAR 25.202 states, subject to exceptions not applicable here: "The Buy American Act requires that only domestic construction materials be used in construction in the United States." An unmanufactured construction material is a "domestic construction material" within the meaning of the rule if it has been mined or produced in the United States. FAR 25.201. A manufactured construction material is a "domestic construction material" only if it has been manufactured in the United States and if "the cost of its components mined, produced, or manufactured in the United States exceeds 50 percent of the cost of all its components." Id.1 The provision goes on to state that "in determining whether a construction material is domestic, only the construction material and its components shall be considered." "Components" are those "articles, materials, and supplies incorporated directly into the construction materials." Id.
When an investigation reveals that a contractor has used foreign construction materials without authorization, the contracting officer is required, in "sufficiently serious" instances of noncompliance, to "consider exercising appropriate contractual remedies, such as terminating the contract for default"; and also to "consider preparing and forwarding a report for suspension and/or debarment, including findings and supporting evidence in accordance with [48 C.F.R.] subpart 9.4, Debarment, Suspension, and Ineligibility." FAR 25.206(c)(4).
The FAR's debarment provisions provide the causes for debarment and the procedures to be followed in debarment proceedings by covered contracting agencies. FAR 9.406. The relevant causes for which a debarring official may debar under FAR 9.406-2(b) include the "violation of the terms of a Government contract ... so serious as to justify debarment, such as willful failure to perform in accordance with the terms of one or more contracts ..." and "[a]ny other cause of so serious or compelling a nature that it affects the present responsibility of a Government contractor...." FAR 9.406-2(b)(1)(i)(A) & (c).
The FAR further requires agencies to establish procedures governing the debarment process that are as "informal as...
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