www.federaitimes.comMarch 29, 2004

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Company

A ida Perez is trying to prove to theAir Force that her company is ~t-worthy enough to do business with

the government.The 6-year-old company, San Antonio-

based JADCAP Machine Works, makesaircraft parts and sells about 70 percent ofthem to the Defense Department.

In early 2003, the Air Force's debam\entofficial, Steven Shaw, placed Perez, herhusband, Joseph, and their jointly ownedcompany on the government's list of pe0-ple and companies excluded from doingbusiness with federal agencies. Shaw sus-pended them on suspicions that Perez'company is closely affiliatR:d with anoiliercompany, owned by her fatlter, that waspreviously debarred for selling defectiveaircraft parts.

Of the 3,400 companies on the list now,more than 2,700 - 00 percent - got thereilie way tile Perezes did: through a discre-tionary process called suspension and de-barment.

Annual revenues $1.5 million $31.8 billionFIvIty arts ~~~~;:a~;.;%""" ~:~~ :_-~s& cO

p i~... ~":$n'd' ~fCt-r/A-fS Hornet a;~ft

Date of settlement March 2003 September 2002Ane or sentence $1.000 fine and $113.000 $6.2 minion fine and an

in restItIItion aweement to replace tile ~rts

Debarment or SUspensiM Debarred by the Air Force Not recommended foruntil January 2006; company is debarment by the Navynow going out of business

. loddIeed -'. 0!Jef8t;cwI1n »llrISO41 Cky. Nt, -.. p~ tile pattS III q.-.n, was ~t by 8M 5Y'1~" 2~. The 2002

~_.~andWS~~ F-.I T1mea _1I:h GRAPHIC BY MARCIA STNM£R

See DEBAR, Page 6

get hamIll e redBy KAREN ROBS

How two companies that sold faultyparts to the military fared under the

governmenfs debarment process:

Debar~.trr- I'Dqe 1

But the proce8 Is wkIeIy I8Inedby contractors and federal pro-~0ftida8~Deda1x8are ~ beIIR.t 0.cI ckxxs by ahandful oC debamIeIIt omd81s.Practices vary from acency toa&enCY, and, ~ Mr, die ~IUIfairIy targets small companiesand rareJy aims at l8r&e c0mpa-nies.

~~~laobvi-

~'=~ It.~~~~8L ~tiv. ~ of die ROW'-em ,IId". - die Pro-~~~rnment~

This spring, debamlent offi-cials, procurement experI8 fromacademia, contIactm' 8dvocatesand better pemment groupswID DIeet tD coosIder ..,. tD lm-prove the proc-.

"Wbatwearebyinglnoolndle~18iIxI,,'~lu,..~- 8 s.t a iii-IkIIue ~ we C8\ re8I:i\ a ~_ondlebestwa,to8ppro8chdebannent, " said DavId Dr8bkln,

deputY .->cj8te amnInI8IntOI' foracquisition JM>licy .. die GeneralSerYx-AdminBI8kx\.

GSA, along with creorwe Wash-ington University in washington,Is sponsoring open ConU118 on thetq>ic and is Inviting crMics oC diedebannent p~ In take part.

"We are thrilled d\81 GSA iseooosorina these di8cusalons.Hooefullv thev will lead tntJ1lOriiht soIudooo" POGO's Bri8n said.

~CI"I,:-jll~~~In ~ cases, laws aJ¥j ~

dons spell out clearly when com-panies ~ tD be deb8ned. About800 companies are on the debac-mentl8.~fiW!Y~theair or waterways, Imderpaid em-pkJYees, exported weapons to for-bkkien COIInaiI!S, or vk>Jated other.WS~~.~

But In the ~ of ~ thedecision oC wheUler a companylets debarred relies entirely onthe aggI'e88Iveness oC a cIIM.omer1gency°s debamlmt procIWn andf8I:h company's abi1ItJ to defendil8elf if targeted Cor ~ble de-bannent.

Critics say a company's free-dom to win new contnds afterbad conduct depends too oftenon whettIer It Is a tarwe, JM>~corporation that provides thegovernment products U\d eervlc-es tlIat are not easily availablefromotherCOnlP8Ries.

The ProIe<."t on ~entOversi* maintains a ~ ofaJleeed misconduct by the 10V-~rnment's tOD 10 contractDrs. Itmws that ~ rontrmon hawpaid $2.{r7 bWicHt dollars In ftnes.llenaldes. ~ seldementsand cleanUT) c(Jftts to ~ 280 in-.t.anr- nr All""...! mj~nndl~ inthe last 10 Years. But none nf

~~~~~~In the Pen-zes' (osse, d1e dcbar-

met\t PnK:e(otJinl was initialed bythe Air Force, which hM 811 ag-~ ~ program. TheIEIVice - a~ <.- ~more companies than any otheragency: more than 200 (IC the ap-proximately 2. 700 compan~ now'WI the !IO-Cailed ex~ panies

--~ ---, ,... -- ..-..., Ie ,.-- III -- ~

list through Ute discretionary de-J.nneIIt and SUS(Ier&(X1 p~The only Iarae company the AirForce has placed on the listthrough discretionary debarnlentIs the 8pKe launch division ofBoe81g Co. 0( aucago, whldt -~ ... Mmuner for usinglnftHm8tlon improperly obtainedfrom its competitor to win con-tracts.

Shaw, the Air Forcp's deputy~ ~I roc ~ T1'-sponsibility, would not discussthe Perez CMe because It i~ ~tlnpendinR. But h~ said that the AirForce's tt.harment procea doesnot dilTer('ntiate between ~aIIand large o:ompanies.

'We are just 88 likely to consid-f'r n large cnmpany Cor d~bnr-men!, but it i~ easier ror large("ompanit'S 10 provp Ihat theyhaw solved their probl~ms: beBald. ~ey have more ~I~,are more sophl~tlcated, And it iseasier for them to do things likenre the people who w~re in-YfJIved in the misronducl than itIs Cor small companll'S. WIthsmall rom pan ips it is nnpn th~own~r who committcd thp .nis-,'Onrluct in th~ fiI'8l p~."

~!I8kJ dIM to SI\'e 1- l'Oln-lIS/irS fe<\@raJ IlllSin.-, w mustprove to the Air Force that h~rhusill- ~ lint rom~tM to Her-ro AinTllft MlK"hinp )11('., whk-h mowned by tier father. IIerc(l ,~~ III.- yt'ar after ocoing ('(Xt-\ictal in re(lcorai c(lun llf df'liber-..t..ly "coiling thl' govpmmcollt tt.-rl'ctiv.. Ain-ran pans.

'W.. IlAw I~ to ,~ with Royrath.,r'~ b\,~ineM, bllt It Is vcryhllnt to pnl\'f' 'hat YO\I Rre 11\)( do-illg s<mwtJIlItR: r~re~ "!lid "IrtlleprOl'pss wa.~ rAir, lh~ Air F'offewo..ld IlAvI' 10 ,'n'v~ nlY CatherWM im.~t.lfthal- dw-~., would he confid~nt thRt w~,,'ould ,vin. ~inrp he i~ "ot in-VOI,M in 'I\lr h,...in~ "

Prnoz had wnrkf'd rnr hf'r ra-

.. ~ lor ... &;.~...~~ PIvteciI b8.m- ~ tWUfa., conbBCbIn

~s.-.~ ItIer'" cnmpnny "inCt' Ih.. .."rly

I~ '" 100ft hf'f" husbRild ~al1-I'd ./AD('AP, ROO in 200\ RII" I"R~ Calh('r'~ 1'f)t11plll1Y on,III('("IU1,.,\1~ p~ilWllt uC-IAJ'('AP SlI'-sa.YS ll134 IIf'r rathl-r II~1'r illv,~-ed in h"r C-oRlp"ny or h"4""1mRlIlt~,. it 'WI' Via/11M II' ItO II ro,nur OWt.: '111(' ""itl

JAI)('M'II~"',("I~,..-rnl:,1wiNlinJ: ",'"1",(1" 10 "'!lId IrM""and part" r"r ,"tlil"lY "Irrr:ln :lfltlhnd Rlor" thaI! $\ ,1Ii1l"", ill rl'v-"""" II.., y,.nr h,.rol1' Ih., "'L"\)("'-.'Iiotl- JII..'rI 'I ,,"11"nY1't"'-

~I~ ~t'lJlt..1"iIMllilld .k-tlaT-ment (~nOI affrt"t ('1lm'1ll ,-',11-

lract",./AIIC'API"lSbt'('""I)I.'I,,8tayil!h"~ln(, ,I,'ril,gth..l.Jmon.h~ il I'R~ hf-f'n "n~IM'I"lrtI,

hut wiD IK" 1 nnk-l, ""~"r"I fig',", WI' hn,1' ('fW)\IJ;!1 hl~-

I!~ I" stny "I"'" :llIotl..,. rOtOr1I",nlll" An..r 11m( "" "illl,,'\"'f',,:Iose ir \v(' ;lrf'l'-' ,,11,,\\('(1 1o \\i"- """r:1t1~-- """ ",,;'1

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PPrfO% ":(I"'oct~ a ,1P<-Mi()1I fromIhp Air F,1f'('p ">' May.

!'f) rat. Iltr rrrpzp~. ~'h'1fII' an.mllli "lllIlhll1('(1 Miano l~ nb,,"t$r,o.IJ()(), Itavp "11<'"1 ;II"n' Ihan$;J(1.CKJI) on Rliumrys RIIII tr"vplPXJIP- 'It Wn.~i"gt"" 1" 1I1"..r,,'llII Air rnr"I' ,I,,"ornl""!. orfi-,.jalo; "W" "a'." l'tIt all nllr nl"""Yill (Kif bt~I'-.!;I1 "I'<'fI,tin~ litis'"U!:1t fi~Iill. "',"..ml,.nl " "'ryhftld rOJr l!!t," I'..n.-z !;Rill

Sha~' "nilll""!. '.UIIIl'AIII~ ;,re""1 rPqllirrllln hirp :\1I,.rllry!; 10,)..r"'1I1 II\('m~lvffi ill !.IM' IIf'har-Inl'lIf I'roM.""S. ""'I' w"rk \'(,I~Il8fl1 to ;1n."rnnl<xL"r ""ullI ("'"1-I ","i .uK! ,,'illl.,kr ", il"""'" ""(7

Illl'ph"ll('r.'II"..rrlllllllllakrlll('III1",'1'110 \\'Mhill~""." hi' "..io!.

~..~ If.'r"" j. 1,,'1 1111' ,,"1\ ,It,r,..."t'

"'I,lr;,""', ;Ic',","r(1 "r"'II'I,'.,i"R1"",,'i'il:l~"IIII,k-rl'f1""I"'r1~.',,'rl'.."" el""1 1..,.kh 1 ~1"o1in

Corp. of BedIeSCIa, Md., BIreed topay 86.2 miDloo In ~ for sellingthe Navy defective parts. But~~oothavetoprovetothe NaY7'a debannent official,WIllard BI8kICk, dB It had solvedits problems that led to the faultyparts. Blalock said he never pur-sued~l«kheedbecal8edie Naval AIr s,.e- ~which had boushtthedefectiveparta, neve.. ref~ the cae tohim.

Amy Gilliland, Navy spokes-woman, said die command didnot believe debannelt - war-r8IIted because the company c0-operated with the Navy In cor-~ the problem.

"It Is import8nt to note dB DOadvene Impect (X\ aircraft flightcontrol perfonnance -- docu-mellted during ~ 0yInsover mJIUons of flJ8ht hours as aresult of the [defective parts),"Gil\I1and 8id.

Je«ery Adams, 8POkesman forLockheed, said the companyacted jUst the way a responsibleC(H1tr8Ctnr 8hou1d. "We ~ed fully and the Navy ~ ~dolled ~ ~~..Adams said. He polnlB out thatLockheed - never accused ofcrirnIna1 misconduct.

Paul Martins, a partner withHebner, MartiI8 and Morgan lawfirm In Cincinnati, represefltedRaymond Anderson, a formerL.:K!klleedemployeewhobroughtthe la~ apiIB the company.He said tha In 11M 12 ~ of S!-Ing companies for che8tlng thegovernment, he has found theNavy Is slow tD debar contractorsthat eJI888e In m~uct.

"In my experience, the Navy Ismc8 reluctant to debar contr8C-tDrs, beca~ if they debar th~irconttactors die)' have tD ftnd newODes, and that can Cau8e projectato fall behIIMJ schedule,' Martinssaid. ~ is not very mxIer-standing around appropriationstime about projecta that fall b~-hmd schedule. .

AccoIdIng tD the excluded par-ties Ust, whidt Ia maintained bythe General Services AdmhIm.tion, the Navy has d~barred orsuspended approximately 70 ofthe ~ 00 the Ust, aboutone-dIinIthenumbel'putonthelist by the Air Fon:e.

The Air Foree's Shaw said hisservice does not rely on lIB com-nw6 tD refer C(X11panIes for de-bamIent. -ntere Is An ~axdIc:t of ~ when it 81eft tDthe commarkI 00Ing ~ wit!!the company to decide whether acm1\I81Y 8In*I be a.18idered fm-debannent, " Shaw 8Id. -n..t is

why the AIr Fon:e 11M . 8eI88Ie.independent debummt otficial. Ican inIdate PItK=eed!I9 wheneVeI"it is appropriate. I don't wait forCOrI1P8Die8 to be ~ "

TheEnviromnentaJProtecticxIAgency also has an Independentdebannent office that sares8ive-Iy pursues allegations of mlscon-duct by jIB vendors, said RobertMeunier, debarring and ~ing oftIcial for EPA.

.We have people who gotlIrough the newspapers lookingfor companies that haw been Eocusrd of wrongdoln& . he said.

,~DEBAR, ~ 7

Deb.Conlinumfrum Pnge ~

His agency has debalM or --pended about 120 ~ 00the excluded parUes II8t.

One reason EPA Is so aggres-sive Is to protect the orpniza-tions that receive pants fromEPA, which are forbidden fromdoing business with companieson die II8t.

. A lot of our ~tee8 are small

and unsophisticated,' Meuniersaid. -ntey don't have the reosourees to do thorouBh investi-gations of potentIa1 contractors,and we don't want them to dobusIn- with untnIstworthy~.

M~, da8Im1an or tile inter-agency Suspension and Debar-ment Coordinatinl Committee,said his agency's 88II-'ve~ 8 ln8I8l. ""'--don't ~ die ~ I-.sazy to P8Y for a ~ deb8r-ment program, . he Mid.

Another .-In the debanneI1tand suspension Is ..,plied Oft-evenly Is that different 8IeIIciee\I8e different standards whenconsidering whether to debar orSJSPeIKl Same, for .-.nce. c0n-sider deb8rmer-. <X\Iy If a con.--ny '- tIeen coov6cIed ~ a aUIIe.1i\awsaid.

. AgmICies frequend1 fonow tJIe

easy road of either refII8IrIg to actex~mdleciearSorc-.orof deferring to act for severaJyears until such time - the evi-dence has been ruUy developedby other agencies in litigation,'Shaw said.

18 ~ ~ ~--:Another factor that 8OIne BIen-

cies consider is the economic: im-pact of cutting off a contractorfrom fub1re bIIsi-. . A&eIv:Je8haw to fIJIftJ1 their m.-c-. . Me--

unier said. "DebarrinI a axcac-tor that is the only lOurce ofsomething an agency needs canbe~to~~in the foot. .

But there is no co- onwhether agenci~ should C<XISid-er the Impact 00 their CCXItIadingProsram8 before takID8 a debar-mentacdOlL

GSA's Drabkin Aid the CO8t tothe agency of b8IU1ing a contrac-tor should never be a factor. HIsagency suspended Ashburn, VL-~ leIecommwlic8.ions &i8ntWorldCom 1ast. July while it c0n-sidered whether to debar thecompany for poor internal con-trols and ethics problems be-~ It was embroiled in 811 w:-countinS scanda1 In which itover8tated iI3 ~ by $11 bll-lion.

GSA ended World Com's sus-pension In January, j.. in timefor It to receive a OIIe-year con-tract extension to providetelecommunications services tofederal asencies. Agenci~ domore than $300 million of busi-ness a y~ar with the company.Ending WorkK:om's rederBllx8I-neM wooId have forced CU9IOmeI'asencles to spend an eetimated$100 million coUectively tod1aIIIe!'iKMteCOlnP8l\ie8.

"Even thouBh the debannentmay have been a haId8Iip (or the

..-:18. we didn't care 8rKI nel-ther did the agencies," Drabklnsaid. "Ir we round that the com-panJ w. not ~ble, wewould not want to do bosin-wid! diem no matter what Itcc8."

AIr Force MaJ, Gen. CraigCocx*I& recendy named the AIrFm1:e's director or ~ ~ticxI, .- that the lnconven-Ience and eIpen8e or debarriJIIm important contr8Ctor is irrele-vant "OIl m. and roremost pri-~ . to ~ die Inf2gI1tJ ordie SJItem," Cooning said. "Wewant die American people toknow we are spending their taxdoUar8 with companies that aretnS-..",-O:-v,"

He laid die Air Force's recent-wIeIWIon or Boeint's 8p8CelaImdI division hu not endan-gered his organization's effec-~ at ail "We have a W8iver~ we can OR Ir It Is a na-tional security l.ue, but dlere1wve~~reW~"hesaid, "'n\e issue that we may

"spend more because Boeing is,~ '- never even ccxne~~~-~~.. "

The Air Force Is unJikeq tohave to 88k for national ~tywaiven to continue to do buai-~ wMb tk1J JADCAP, ~ ma-dIiIR ~ like It are c0mmon-place, "We have alW8J8 done aIOOd job 8IMI never had lIlY com-piB8a, " Perez said. "But It Is very

I8nI ... SIM:h a mnaD ~ to~~.bII.fheAlrFIXt:e. Row do we ~ tJIemdleJC8\lI1ISt..r

=-~~~~ die ~ pidure

fUldIer . a recent ~ towarddeb8rrIng companies for generalmm.1duct ratber than mIsdeed8conuniIred within d\e 8COpe 01 apernment contract. For bt-~ in MardI ~ GSA ..-pended Chicago-b88ed BCCOIDIt-ing ftrm Arthur Andersen andHOImton-IJ88ed energy company~ Ccxp. from receiving newgovemJIIent contr8Ct8 for one1e8"'*-eol~bydleSecurities and Exchange Com-m!8k.l that die two companiesdefr8XIed Btockhoklels.

"In die past there .. a brilht- ~ conduct that aIrect-ed government contracts andconduct that didn't," GSA'sDr8bkiD said. ~ line Is noiOOII!r dee. CcxnP8I1ie8 guilty orunethk:aJ conduct In any arenanow will be conaldered for de-banneJIt."But - observers say that

the -.peftSion of compeniasuch - Enroll and WoridComweft made for political reasonaand are exceptlona rather thanthe rftIIlt of a clear policy that8I!SK:iIB feel ootiled to folJow.

-n. JM8Iic 00aInI of ArthurAndeIHft and Enron generaled~ SOImd bites but didvery IIWe to protect the govern-ment, since neither Wfte signift-cant government contractors, "

saki ~ SctMXmer, profe8>rat the ~rge Waal\lngton Unl-ver8ty Law ScltOoL "The govern-ilia Is a68id to debw l8Iwe coo-tractOI8. There are very few~ names 00 the exclud-ed partJ I8t. "