Novicki v. Cook, No. 90-5206

CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)
Writing for the CourtBefore RUTH BADER GINSBURG, SILBERMAN and WILLIAMS; SILBERMAN
Citation946 F.2d 938
Parties, 60 USLW 2316, 37 Cont.Cas.Fed. (CCH) P 76,198 Carroll A. NOVICKI, Appellant, v. Janet C. COOK, Special Assistant for Contracting Integrity Defense Logistics Agency, in her official capacity.
Decision Date15 October 1991
Docket NumberNo. 90-5206

Page 938

946 F.2d 938
292 U.S.App.D.C. 64, 60 USLW 2316,
37 Cont.Cas.Fed. (CCH) P 76,198
Carroll A. NOVICKI, Appellant,
v.
Janet C. COOK, Special Assistant for Contracting Integrity
Defense Logistics Agency, in her official capacity.
No. 90-5206.
United States Court of Appeals,
District of Columbia Circuit.
Argued Sept. 11, 1991.
Decided Oct. 15, 1991.

Page 939

[292 U.S.App.D.C. 65] Appeal from the United States District Court for the District of Columbia (Civil Action No. 90-0285).

Clifton S. Elgarten, with whom W. Jay DeVecchio and Joan H. Moosally, Washington, D.C., were on the brief, for appellant.

Michael L. Martinez, Asst. U.S. Atty., with whom Jay B. Stephens, U.S. Atty., John D. Bates and R. Craig Lawrence, Asst. U.S. Attys., Washington, D.C., were on the brief, for appellee. Molly D. Current, Asst. U.S. Atty., Washington, D.C., also entered an appearance, for appellee.

Before RUTH BADER GINSBURG, SILBERMAN and WILLIAMS, Circuit Judges.

Opinion for the Court filed by Circuit Judge SILBERMAN.

SILBERMAN, Circuit Judge:

This case concerns a decision of the Defense Logistics Agency (DLA), a combat support agency within the Department of Defense, to debar Carroll A. Novicki, the former president and chief executive officer of Dale Electronics, Inc., from government contracting on the ground that he had "reason to know" of Dale's misconduct. Novicki contends that the agency failed to apply the "reason to know" standard, debarring him instead on the basis of his mere status at Dale. The district court rejected this argument, concluding that the agency properly applied the "reason to know" standard, and Novicki appeals. We think that the agency's decision is ambiguous. It would appear that the agency applied an incorrect legal standard, but assuming arguendo that it did use "reason to know," we do not think the record adequately supports the agency's decision. Novicki's debarment therefore must be vacated.

I.

Carroll A. Novicki was, from 1981 to 1989, the president and chief executive officer of Dale, a major manufacturer of electronic components. Dale manufactured fixed film resistors used in sophisticated military weapons and navigation systems, including the MX missile and the Global Positioning Satellite System. As president and chief executive officer, Novicki had ultimate authority over the company's financial affairs and strategic business plan. He also oversaw its five operating product divisions and six control and support divisions. Direct responsibility for manufacturing operations was placed in the executive

Page 940

[292 U.S.App.D.C. 66] vice president for resistors and various division directors and product managers.

From 1982 to 1986, Dale was listed on Qualified Products Lists (QPL) as a source for two particular military specifications of fixed resistors. QPLs are administered by the Defense Electronics Supply Center (DESC), a field activity of DLA responsible for acquiring electronic components for the military services. Listing on a QPL indicates that a product has been examined and tested and that it satisfies all governmental requirements. See 48 C.F.R. § 9.201. In order to be retained on the QPLs with the highest possible reliability rating of "S," which signified that the resistors failed no more than once in 53.2 million hours of life testing, Dale was required by the applicable military specifications continually to test its resistors and to report all test failures, as well as "field failures" reported by customers, to DESC.

In September 1986, DESC began receiving complaints from Dale customers about the reliability of the company's QPL resistors. DESC then conducted two audits of Dale in October and November 1986. The audits uncovered deficiencies to which Dale responded with thirty-one corrective actions approved by DESC. Because the audits revealed unreported customer complaints, DESC referred the matter to the Defense Criminal Investigative Service (DCIS) for further investigation. In April 1987, DCIS began an extensive two-year investigation with the execution of two search warrants at Dale facilities, during which records pertaining to the testing and production of QPL resistors were seized. At about the same time, DESC initiated proceedings to reduce Dale's "S" rating on the QPL resistors.

Relying on DCIS's findings, DESC recommended that DLA debar Dale, Novicki, and five of Novicki's subordinates from government contracting. According to DESC's report, between 1982 and 1986 Dale made numerous false statements to DESC regarding unreported test and field failures. Although the investigation revealed "no direct evidence linking [Novicki] to the fraudulent scheme," DESC recommended Novicki's debarment on the ground that he, "as President and the person to whom ultimately everyone reported, was in a position to know, or should know, that this type of activity was going on at Dale."

The Federal Acquisition Regulation, jointly issued by the Department of Defense, the General Services Administration, and the National Aeronautics and Space Administration, prescribes the policies and procedures governing agency debarment of contractors. See 48 C.F.R. § 9.400(a)(1). Under the regulation, a contractor may be debarred for a number of reasons, including fraud in the performance of a public contract or subcontract, see id. § 9.406-2(a)(1)(iii), and commission of any offense "indicating a lack of business integrity or business honesty that seriously and directly affects the present responsibility of a Government contractor or subcontractor," id. § 9.406-2(a)(4). A contracting company is held strictly accountable for the misconduct of its employee "when the conduct occurred in connection with the individual's performance of duties for or on behalf of the contractor," id. § 9.406-5(a), but an individual employee or officer can only be debarred if he or she "participated in, knew of, or had reason to know of the contractor's conduct." Id. § 9.406-5(b).

Although DLA did not...

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21 practice notes
  • Debarment and suspension (nonprocurement) and drug-free workplace (grants): Governmentwide requirements,
    • United States
    • Federal Register November 26, 2003
    • November 26, 2003
    ...standard for imputing misconduct to individuals under section 630(b). The Circuit Court of Appeals for the DC Circuit, in Novicki v. Cook, 946 F.2d 938 (D.C. Cir. 1991), noted that the reason to know standard was not defined in the FAR. Using an analysis of that standard at common law, the ......
  • Indian River Cnty. v. U.S. Dep't of Transp., No. 19-5012
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • December 20, 2019
    ...from a final judgment issued by the District Court, we do not defer to the District Court’s review of the agency action. Novicki v. Cook , 946 F.2d 938, 941 (D.C. Cir. 1991). Rather, "[w]e review the administrative action directly, according no particular deference to the judgment of the Di......
  • Fox v. Clinton, No. 11–5010.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • June 12, 2012
    ...of an agency adjudication any more than the Supreme Court defers to a court of appeals' review of such a decision.” Novicki v. Cook, 946 F.2d 938, 941 (D.C.Cir.1991) (citation omitted). Two distinct but potentially overlapping standards of APA review govern the instant dispute. First, the A......
  • Rodriguez v. Penrod, Civil Action No. 1:18-cv-00240 (CJN)
    • United States
    • United States District Courts. United States District Court (Columbia)
    • February 11, 2020
    ...of an agency [action] any more than the Supreme Court defers to a court of appeals' review of such a decision.'" (quoting Novicki v. Cook, 946 F.2d 938, 941 (D.C. Cir. 1991))). The standards of review between and among courts are different from the standard the APA generally requires courts......
  • Request a trial to view additional results
20 cases
  • Indian River Cnty. v. U.S. Dep't of Transp., No. 19-5012
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • December 20, 2019
    ...from a final judgment issued by the District Court, we do not defer to the District Court’s review of the agency action. Novicki v. Cook , 946 F.2d 938, 941 (D.C. Cir. 1991). Rather, "[w]e review the administrative action directly, according no particular deference to the judgment of the Di......
  • Fox v. Clinton, No. 11–5010.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • June 12, 2012
    ...of an agency adjudication any more than the Supreme Court defers to a court of appeals' review of such a decision.” Novicki v. Cook, 946 F.2d 938, 941 (D.C.Cir.1991) (citation omitted). Two distinct but potentially overlapping standards of APA review govern the instant dispute. First, the A......
  • Rodriguez v. Penrod, Civil Action No. 1:18-cv-00240 (CJN)
    • United States
    • United States District Courts. United States District Court (Columbia)
    • February 11, 2020
    ...of an agency [action] any more than the Supreme Court defers to a court of appeals' review of such a decision.'" (quoting Novicki v. Cook, 946 F.2d 938, 941 (D.C. Cir. 1991))). The standards of review between and among courts are different from the standard the APA generally requires courts......
  • Feinerman v. Bernardi, Civil Action No. 08-759 (RBW).
    • United States
    • United States District Courts. United States District Court (Columbia)
    • June 12, 2008
    ...HHA's contractual breaches within the meaning of 2 C.F.R. § 180.630(b). As the District of Columbia Circuit explained in Novicki v. Cook, 946 F.2d 938 (D.C.Cir.1991), the phrase "`reason to know' imposes no duty of inquiry; it merely requires that a person draw reasonable inferences from in......
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