Unsupported fraud allegations don't support a determination of nonresponsibility
Does an unproven allegation of fraud or an improper termination for default limit a contractor’s ability to seek and obtain new contracts? Not automatically. According to the decision in Afghan American Army Services Corp. v. United States, No. 11-520C (Fed. Cl. Oct. 15, 2012) [pdf], contracting officials are required to conduct their own investigation and get the facts right before determining that a contractor is not responsible. Relying on unsupported conclusions of other government officials to justify a determination of non-responsibility is arbitrary and capricious.
The Army disqualified AAA from receiving a contract for trucking services in Afghanistan because AAA was deemed non-responsible. The determinative factor in the decision was a proposed debarment containing allegations that AAA had forged documents relating to an earlier trucking services contract. AAA had not previously been notified of the allegations and was not given an opportunity to rebut them. Rather than investigating the facts herself, the contracting officer simply assumed that AAA had violated criminal forgery statutes and had failed to take any corrective action.
AAA challenged the non-responsibility determination in a bid protest at the Court of Federal Claims. AAA argued that the Army's determination was arbitrary and capricious, arguing that it had not been informed of the alleged forgery during performance of the earlier contract, that it had been given no opportunity to rebut the allegations, and that that there had in fact been no forgery. The Court agreed with AAA and sustained the protest.
The critical factor in the case was the government’s own determination that there was no basis for the forgery allegations. The Army’s Suspension and Debarment Official concluded that there had been no forgery and terminated the debarment proceeding. In the SDO’s words, “there was neither direct nor circumstantial evidence” of any forgery. The contracting officer had “assumed the veracity of the allegations . . . but the Government itself later concluded that such assumptions were unwarranted.”
Although investigative reports can be considered in making a responsibility determination, a contracting officer cannot simply assume they are accurate. Here, the contracting officer should have obtained additional information, including a rebuttal from the contractor, which had never had an opportunity to address the allegations. Ultimately, it was the contracting officer’s “rush to judgment” that was arbitrary and capricious. The court sent the case back to the contracting officer for a new responsibility determination without considering the alleged forgery.