John F. Robinson, Trustee for the Francis E. Heydt Company v. Richard Cheney, Secretary, U.S. Department of Defense

876 F.2d 152, 35 Cont. Cas. Fed. 75,666, 277 U.S. App. D.C. 393, 1989 U.S. App. LEXIS 7295, 1989 WL 54879
CourtCourt of Appeals for the D.C. Circuit
DecidedMay 23, 1989
Docket88-5126
StatusPublished
Cited by24 cases

This text of 876 F.2d 152 (John F. Robinson, Trustee for the Francis E. Heydt Company v. Richard Cheney, Secretary, U.S. Department of Defense) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
John F. Robinson, Trustee for the Francis E. Heydt Company v. Richard Cheney, Secretary, U.S. Department of Defense, 876 F.2d 152, 35 Cont. Cas. Fed. 75,666, 277 U.S. App. D.C. 393, 1989 U.S. App. LEXIS 7295, 1989 WL 54879 (D.C. Cir. 1989).

Opinion

Opinion for the Court filed by Circuit Judge D.H. GINSBURG.

*154 D.H. GINSBURG, Circuit Judge:

On December 24, 1987, the Defense Logistics Agency (DLA) debarred the Francis E. Heydt Company (FHC), a manufacturer of military apparel, from bidding on any contract or subcontract with any agency in the Executive Branch until September 29, 1990. John H. Robinson, trustee for FHC, brought this action in the district court challenging the DLA’s order as arbitrary, capricious, and an abuse of discretion and the regulation pursuant to which it was issued as unconstitutional. The district court, Revercomb, J., granted the Government’s motion for summary judgment and dismissed the action with prejudice. We affirm in all respects.

I. Legal Framework

Under the Armed Forces Procurement Act of 1948, military agencies are generally required, in preparing for the procurement of property or services, to solicit bids or proposals and develop specifications in a manner designed to achieve “full and open competition,” 10 U.S.C. § 2305(a)(l)(A)(i) & (iii), and to award bids only to “responsible” bidders, 10 U.S.C. § 2305(b)(1), (3). A bidder is responsible if, among other things, it “has a satisfactory record of integrity and business ethics.” 10 U.S.C. § 2302(3); 41 U.S.C. § 403(8)(D).

The Federal Acquisition Regulations (FAR), which implement these statutory standards, permit an agency, for cause, to prohibit a contractor from bidding on government contracts or subcontracts for a period generally not to exceed three years. This sanction of “debarment” is to be imposed “only in the public interest for the Government’s protection and not for purposes of punishment.” 48 C.F.R. § 9.402(b).

Under the FAR, an agency may debar a contractor that has been convicted of, or is the subject of a civil judgment for, (1) fraud in connection with obtaining, attempting to obtain, or performing a government contract; (2) a violation of federal or state antitrust law; (3) embezzlement, theft, bribery, falsification of records, making false statements, or receiving stolen property; or (4) any other offense that indicates a lack of business integrity that directly and seriously affects its present responsibility as a government contractor. 48 C.F.R. § 9.406-2(a). A government agency may also debar a contractor if it finds “[a]ny other cause of so serious or compelling a nature that it affects the present responsibility” of the company. 48 C.F.R. § 9.406-2(c). In order to act under the latter standard, the agency must prove the “other cause” for debarment by a preponderance of the evidence, 48 C.F.R. § 9.406-3(d)(3), which the FAR define as “proof by information that, compared with that opposing it, leads to the conclusion that the fact at issue is more probably true than not.” 48 C.F.R. § 9.403.

The FAR permit an agency to impute to a contractor the “seriously improper conduct of any officer, director, shareholder, partner, employee, or other individual associated with [the] contractor ... when the conduct occurred in connection with the individual’s performance of duties for or on behalf of the contractor, or with the contractor’s knowledge, approval, or acquiescence.” 48 C.F.R. § 9.406~5(a). An agency may also extend a debarment order to any affiliate of a debarred contractor. 48 C.F.R. § 9.406-l(b). “Business concerns or individuals are affiliates if, directly or indirectly ... one controls or can control the other_” 48 C.F.R. § 9.043.

An agency proposing debarment must “afford the contractor ... an opportunity to submit, in person, in writing, or through a representative, information and argument in opposition to the proposed debarment.” 48 C.F.R. § 9.406-3(b). If the agency finds that the contractor’s submissions raise a genuine issue of fact material to the proposed debarment, it must also “[ajfford the contractor an opportunity to appear with counsel, submit documentary evidence, present witnesses, and confront any person the agency presents.... ” 48 C.F.R. § 9.406-3(b)(2)(i). Otherwise, the agency may make a decision on the basis of all information in the record, including any *155 information submitted by the contractor. 48 C.F.R. § 9.406-3(d)(2)(i).

The parties are in accord that the agency’s decision is subject to judicial review under the standards set forth in § 706(2)(A) of the Administrative Procedure Act, see 5 U.S.C. § 706(2)(A) (“reviewing court shall ... hold unlawful and set aside agency action ... found to be ... arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law”); Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 413-16, 91 S.Ct. 814, 822-24, 28 L.Ed.2d 136 (1971), and we proceed accordingly.

II. Background

In February 1987, a grand jury indicted a number of military clothing suppliers doing business with the Defense Personnel Support Center in Philadelphia (DPSC), along with several DPSC employees and former employees. Neither FHC nor Francis E. Heydt, who owns all of the stock in FHC, was indicted, but one of the indicted government employees, Donald F. Sherry, made statements to the government investigator that implicated Heydt. According to Sherry, Heydt (1) orchestrated the bids of five suppliers, three of which he controlled, on a contract for camouflage pants; and (2) paid Sherry $10,000, in two $5,000 installments, for his help in directing the contract to FHC.

During the summer of 1987, Heydt learned that the DLA was considering debarring both him and FHC. On the advice of counsel, Heydt executed an irrevocable trust agreement whereby he transferred to Robinson, as trustee, all of his right, title, and interest in the assets of FHC.

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Bluebook (online)
876 F.2d 152, 35 Cont. Cas. Fed. 75,666, 277 U.S. App. D.C. 393, 1989 U.S. App. LEXIS 7295, 1989 WL 54879, Counsel Stack Legal Research, https://law.counselstack.com/opinion/john-f-robinson-trustee-for-the-francis-e-heydt-company-v-richard-cadc-1989.