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ALI v. UNITED STATES

June 27, 1996

MIRZA ALI, Plaintiff,
v.
THE UNITED STATES, et al, Defendants.



The opinion of the court was delivered by: SMITH

 Introduction

 This action challenges the debarment of plaintiff Mirza Ali by the Department of Health and Human Services ("DHHS") in February, 1994. Plaintiff's motion for a temporary restraining order asked the Court to find his debarment invalid and to allow plaintiff to bid on government contracts. Plaintiff's motion was heard in an expedited manner on June 11, 1996.

 Regulatory Framework

 I. Debarment procedures

 The Federal Acquisition Regulations ("FAR"), 48 C.F.R., Chapter 1, allow federal agencies to "debar" a contractor from being awarded government contracts. "[A] debarment is designed to insure the integrity of government contracts . . . ." Shane Meat Co. v. United States Dept. of Defense, 800 F.2d 334, 338 (3d Cir. 1986); 48 C.F.R. § 9.402(a). Under the FAR, an agency may impose debarment for any "cause of so serious or compelling a nature that it affects the present responsibility" of the contractor. 48 C.F.R. § 9.406-2(c). The fraudulent conduct of a contractor may be imputed to any officer, director, shareholder, partner, employee, or other individual associated with the contractor who participated in, knew of, or had reason to know of the contractor's conduct. 48 C.F.R. § 9.406-5(b).

 A contractor that is debarred or proposed for debarment is generally "excluded from receiving contracts, and agencies shall not solicit offers from, award contracts to, or consent to subcontracts with these contractors, unless the acquiring agency's head or designee determines that there is a compelling reason for such action." 48 C.F.R. §§ 9.405(a), 9.405(d). The General Services Administration ("GSA") compiles and maintains a current list of all contractors debarred, suspended, proposed for debarment, or declared ineligible by agencies. 48 C.F.R. § 9.404(a)(1).

 II. Notice and opportunity to be heard

 The first procedural step in debarment is a notice to the contractor of a proposed debarment. An agency proposing debarment must "afford the contractor (and any specifically named affiliates) 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)(1).

 If the debarring official determines that the contractor's submissions in opposition to the proposed debarment do not raise a genuine issue of material fact, the agency may make its decision on the basis of the information contained in the written record, including the information submitted by the contractor. 48 C.F.R. § 9.406-3(d)(2)(i). The debarring official must make the final decision on debarment within 30 working days after receipt of any information and argument submitted by the contractor, unless the debarring official extends this period for good cause. 48 C.F.R. § 9.406-3(d)(1).

 If the debarring official determines that the contractor's submissions in opposition to the proposed debarment do raise a genuine issue of material fact, the agency must also "afford the contractor an opportunity to appear with counsel, submit documentary evidence, present appear witnesses, and confront any person the agency presents . . . ." 48 C.F.R. § 9.406-3(b)(2)(i). A designated fact finder will conduct the fact-finding proceeding. The proceeding before the fact-finder will be limited to a finding of the facts in dispute as determined by the debarring official. 48 C.F.R. § H-104(a). The designated fact-finder will set a date for the fact-finding proceeding within 45 working days of the contractor's final presentation of matters in opposition to the proposed debarment. 48 C.F.R. § H-104(a).

 Facts

 Mirza Ali was debarred because DHHS found that Mirza Ali's company, University Systems, Inc. ("USI"), *fn1" submitted a forged certification letter to the Social Security Administration ("SSA") *fn2" contracting officials and that Mirza Ali knew or should have known of the fraud.

 The debarment arose out of a solicitation by SSA for proposals to supply computer workstations. USI submitted a proposal. After examining USI's proposal, SSA became concerned that the "mouse" device proposed to be supplied by USI had been manufactured in Taiwan, in violation of the Trade Agreement Act of 1979. In response to SSA's inquiries, USI submitted a letter purporting to be from a sales representative of the mouse manufacturer that verified that the mouse was manufactured in the United States; this letter was revealed to be a forgery. The GSA Board of Contract Appeals ...


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