Is FAPIIS the Business Equivalent of “Pick-Your-Poison?” (Part 2)

Difficulties

We begin to see some difficulties when the above-referenced rules and regulations are applied to a contractor with current active Federal contracts and grants totaling more than $10,000,000. Intentionally, for discussion purposes, we are not considering a small business concern here, but instead consider a medium-sized or large company or grant-receiving organization. When we consider the multi-million dollar contracts commonly pursued in this larger contractor realm, one obvious difficulty is that a fine or penalty of $5,000 or any sum close to it is trivial and not hard to incur. By itself, this low threshold of "$5,000 or more" makes the ACT anti-business in nature. This low threshold aspect of the ACT and its related federal acquisition regulations should be revised and made more practical.

To add insult to injury, in subsection (f) of section 872 of the ACT we are advised that contractors must self-report the above-required content for the FAPIIS database. Subsection (f) states:

"f) DISCLOSURE IN APPLICATIONS.—Not later than one year after the date of the enactment of this Act, the Federal Acquisition Regulation shall be amended to require that persons with Federal agency contracts and grants valued in total greater than $10,000,000 shall—
(1) submit to the Administrator, in a manner determined appropriate by the Administrator, the information subject to inclusion in the database as listed in subsection (c) current as of the date of submittal of such information under this subsection; and
(2) update such information on a semiannual basis."

FAR 52.209-7 helps to implement the statute by imposing the following contractual requirements upon the offeror:

"(b) The offeror [ ] has [ ] does not have current active Federal contracts and grants with total value greater than $10,000,000.
(c) If the offeror checked "has" in paragraph (b) of this provision, the offeror represents, by submission of this offer, that the information it has entered in the Federal Awardee Performance and Integrity Information System (FAPIIS) is current, accurate, and complete as of the date of submission of this offer with regard to the following information:
(1) Whether the offeror, and/or any of its principals, has or has not, within the last five years, in connection with the award to or performance by the offeror of a Federal contract or grant, been the subject of a proceeding, at the Federal or State level that resulted in any of the following dispositions:
(i) In a criminal proceeding, a conviction.
(ii) In a civil proceeding, a finding of fault and liability that results in the payment of a monetary fine, penalty, reimbursement, restitution, or damages of $5,000 or more.
(iii) In an administrative proceeding, a finding of fault and liability that results in—
(A) The payment of a monetary fine or penalty of $5,000 or more; or
(B) The payment of a reimbursement, restitution, or damages in excess of $100,000.
(iv) In a criminal, civil, or administrative proceeding, a disposition of the matter by consent or compromise with an acknowledgment of fault by the Contractor if the proceeding could have led to any of the outcomes specified in paragraphs (c)(1)(i), (c)(1)(ii), or (c)(1)(iii) of this provision.
(2) If the offeror has been involved in the last five years in any of the occurrences listed in (c)(1) of this provision, whether the offeror has provided the requested information with regard to each occurrence."

As we see above, given "current active Federal contracts and grants with total value greater than $10,000,000", the contractor represents that the information he submitted to the FAPIIS database "is current, accurate, and complete".

Now we need to remember FAR 52.214-4 regarding false statements in bids which states in part:

"The penalty for making false statements in bids is prescribed in 18 U.S.C. 1001."

Title 18 of the United States Code tells us in section 1001 that anyone within the jurisdiction of "the executive, legislative, or judicial branch of the Government of the United States" who "knowingly and willfully" . . . "makes any materially false, fictitious, or fraudulent statement or representation" shall "be fined under this title, imprisoned not more than 5 years . . . or both."

Given the representation mentioned above, it appears that at least in some situations contractors may face fines or imprisonment for submitting incomplete or false information to the FAPIIS database.

How will government procurement personnel react to a contractor’s self-reported negative data found in the FAPIIS database? Will any of them ever overreact notwithstanding any contractor comments in FAPIIS? I believe instances of de facto debarment are inevitable and will be easily covered up by procurement personnel. A large or mid-sized contractor may be subject to de facto debarment from a major contract award by overreacting contracting personnel who review the contractor’s self-reported negative data in the FAPIIS database and decide subjectively, excessively, and without bothering to go through proper debarment procedures, that there are sufficient responsibility concerns to warrant bid rejection.

On the other hand, this hypothetical contractor may also be subject to fines and imprisonment if negative data reported is not complete and accurate and if the omissions or inaccuracies are caught.

This hypothetical scenario of (1) "possible de facto debarment due to reporting negative data" versus (2) "possible fines and imprisonment due to not reporting negative data" sounds like a theoretical Catch 22 situation, but the potential loss of huge contracts versus potential fines and imprisonment are too serious for the normal, every-day category of Catch 22 situations. Instead, this scenario places two vials of Hemlock in front of a business and asks it to drink one. It is the business equivalent of asking you to pick your poison. This poison may or may not kill you, but it definitely is not good for your health.

Is this picture too extreme? Tell that to a company that loses out on a multi-million dollar contract due to de facto debarment, even a one-time de facto debarment, especially if layoffs and facility closings follow the loss. Tell that to the laid off workers as they apply for unemployment compensation and food stamps, and then lose their homes because they cannot find other work in the current economy with its high unemployment rate. Ask these workers how they feel. Ask their family members how they feel. Then see if you say this suggestion of FAPIIS business equivalence with being forced to choose a poison is too extreme to have merit.

Do you retort that no federal government contracting personnel will excessively subject a bidder to de facto debarment? Then I ask, what is the source of your faith in their perfection? Then I ask, why does section 869 of the ACT say:

"(c) CRITERIA.—The Acquisition Workforce Development Strategic Plan shall include, at a minimum, an examination of the following matters:

(1) The variety and complexity of acquisitions conducted by each Federal agency covered by the plan, and the workforce needed to effectively carry out such acquisitions."

Federal agencies have undertaken diverse and complex acquisitions for decades, and many of them already have in place extensive training programs for procurement personnel. One possibility is that this call for The Acquisition Workforce Development Strategic Plan is more than an employment initiative and is intended, in part, to address the obvious potential for de facto debarment abuses and an increased volume of unofficial complaining and official protests alleging unjustified and unreasonable agency decisions regarding responsibility determinations. The FAPIIS database and its use are certainly not likely to make contractors less prone to complain and protest.

What do you think?

-AF