Publicly Available FAPIIS – Consequences For Grant Recipients?

As OMBWatch explains here, FAPIIS becoming publicly available is a wonderful thing.

“When President Obama signed this year's supplemental appropriations bill, he delivered a big win for the good government community, as a little known transparency amendment attached to the bill became law. The amendment, introduced by Sen. Bernie Sanders (I-VT), will require the General Services Administration (GSA) to make most of the Federal Awardee Performance and Integrity Information System (FAPIIS) publically available.

Now, the public will have access to information on a contractor's past performance, specifically if the government has slapped them with any penalties, including non-responsibility determinations, terminations for default, administrative agreements over suspension or debarment, and criminal and civil proceedings.”

However, it remains to be seen whether the positive consequences of the FAPIIS database becoming publicly available will outweigh the negative consequences. Will the god of Unintended Consequences rule over the consequences of the FAPIIS database becoming publicly available? “To a degree” may be the correct answer, but only time will disclose how much. We know that FAR 52.209-7 imposes 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.”

Much of this information is already publicly available—in the public domain. For example, with some qualifications and exceptions, criminal law convictions are available from court records, and most civil law court files will be available from the clerk of the court. Online databases make many reported cases available. However, as public-domain information publishers are aware, the power of collected, searchable, and online-assessable public-domain information is often greater than discrete components thereof. Obviously, without a comprehensive database some individual items of information may be difficult and time consuming to find, others may go unnoticed, and individual items do not illustrate or subtly suggest patterns of behavior that might be detected in a comprehensive collection of searchable and online-accessible data.

Nevertheless, such a database of public-domain information may have unintended and undesirable consequences as well. Other commentators have ably speculated about possible unintended and harmful consequences of making the FAPIIS database publicly available. It would be interesting to focus on some less recognized potential consequences. Let us consider federal grant recipients for a moment, and let us focus in particular on large grant recipients. How will they be affected by the FAPIIS database becoming publicly available?

Large charitable organizations and universities are two types of large federal grant recipients. Their purposes vary. Some large charitable organizations focus on community improvement activities, some focus on K-12 education initiatives, some focus on medical research, and so on. Within large universities it is commonplace to see an engineering college receiving grants. There are many other examples of federal grant recipients.

As we see above in FAR 52.209-7, FAPIIS-related regulations appear to require large Federal grant recipients to self report various types of negative data. These particular reporting requirements spring from The Duncan Hunter National Defense Authorization Act of 2009 (Public Law 110-417).

Now let us suppose for the sake of discussion that a large charitable organization or university annually receives grants with a value in excess of $10,000,000. How will such an institution be affected by the FAPIIS database becoming publicly available?

Assuming some negative data is reported to FAPIIS by such an institution, we can easily imagine that this negative data may be publicized by the press or in privately run blogs. FAPIIS will become a favorite news-item source for the press and news-oriented blogs. It will be a free buffet of bad news items, each admitted by the reporting institution. Patterns of negative events may become the most sensational news. Imagine the press claiming that a few instances of one type of negative event recorded in FAPIIS show a pattern—a pattern of insensitivity, a pattern of mismanagement or incompetence, a pattern of corruption, a pattern of oppression, a pattern of dangerous activity, etc. Perhaps the patterns of behavior detected in FAPIIS data, or concocted by the press from FAPIIS data, will become more troublesome for institutions than individual news items.

Will any large charitable organization or university be happy about negative data found in FAPIIS being publicized? Not likely. Why not? Well, for one thing publicized FAPIIS database content will draw public attention to the institution’s significant items of dirty laundry. That will be embarrassing. Historically, public embarrassment of a large charitable organization or university has fairly often negatively affected donations. Donations are one of the major sources of funding for such institutions—part of their lifeblood. Can you imagine the public relations groups of such institutions growing in size and importance as they tackle the difficult task of trying to minimize the donation blood letting that such publicity may trigger? It seems possible that institutional public image management may become more difficult than ever before.

Let us be more specific. What kinds of negative information might be reported to FAPIIS by large universities? Obviously, there may be quite a variety of types of negative data stemming from various types of proceedings, including civil law suits brought by parents of students who commit suicide on the university’s campus each year. Must they be reported? If damages in excess of $5,000 are paid, it appears that they should be reported.

In response to a FAPIIS listing of a few suicide cases in which damages are paid there is likely to be some increase in interest in the overall suicide rate at a university. After all, prospective student applicants and their parents are not stupid, and the safety of their child on campus is a common parental concern. Will such a broader interest in all suicides on campus each year cause university ranking organizations to create a new rating category addressing the number of suicides on campus each year? How many student suicides per year will it take to lower the ranking of a university? Will three or more suicides per academic year be enough to drop one of the top 10 or 15 into the ranks of second-tier universities? Will any significant loss in ranking have a bearing on what annual tuition increases can be justified?

What about on-campus violent crime, such as assault and sexual assault, and resulting litigation against the university for inadequate security measures? If there is a damage award in excess of $5,000, these civil cases against a university seem to fall into the “must report to FAPIIS” category.

What about on-campus personal injuries and the personal injury cases that follow? For example, what about student partying on campus during which students get hurt by doing stupid, often alcohol-fueled things like jumping or falling out a window or being thrown out a window that was not locked or blocked from opening enough to prevent the exit? Again, if there is a damage award in excess of $5,000, these civil cases against a university seem to fall into the “must report to FAPIIS” category.

Will a FAPIIS collection of information about legal claim damages over on-campus suicides, assaults, and personal injuries cause a reduction in applicants, or in the number of the smartest students, applying each year? Conversely, will low numbers of such events help to persuade more applicants, including more very smart applicants, to apply to the universities with the low numbers?

Will large universities launch on-campus security improvement initiatives such as hiring more guards or on-campus police and improving external lighting, in part, to reduce the volume of litigation and FAPISS disclosures of negative events? What other types of internal initiatives will be launched by large universities in an attempt to reduce negative events and thereby minimize the volume of negative data reported to FAPIIS? Some prestigious universities currently offer little or no training to their resident assistants or resident advisors (“RAs”), thereby arguably leaving themselves open to avoidable liability and avoidable reporting to FAPIIS. Universities offering new RAs a month of training in the summer before classes begin are much better situated to minimize liability and minimize reporting to FAPIIS.

Plaintiffs’ trial counsel will likely smile at least slightly over self-reported negative information available in FAPIIS, for example, data regarding on-campus suicides, violent crimes, and personal injuries, because it can be used as a basis to assert that there is a virtually self-admitted pattern of negligence by the university . . . and that pattern can be used to help support greater than average damage awards. Will tuitions go up as a result of greater damage awards?

Or now that FAPIIS has become publicly available will universities fall prey to threats of litigation, for example, from some unions threatening lawsuits? Will FAPIIS become an indirect lever used by unions to pressure university administrations?

It will take some time for the consequences of the public availability of FAPIIS negative data to fully unfold, but it seems reasonably clear now that large charitable organizations and universities may suffer significant unintended consequences from such public availability. It is certainly easy to speculate about the unintended consequences they may suffer, and this article does not pretend to include all possibilities.

What do you think?

AF