Product Tankers is a fifth level subsidiary of the parent OSG, and a separate legal entity. The Court agreed that “debarment affects a contractors affiliate only if the debarring official names the affiliate in the action. Affiliates must have been involved in or affected by the contractors wrongdoing to be named in the debarment.” Product Tankers was not named in the debarment action. The Court pointed out that without OSG’s corporate history and financial backing and support, Product Tankers could not have submitted a responsive and responsible bid.
The COFC concluded that “procurement officials are obligated by law to make their own responsibility determinations. This contracting officer was not bound by rulings made by other agencies unrelated to plaintiff’s responsibility as a bidder.” The COFC also stated that the CO “conducted a thorough investigation, received input from multiple sources, and based her decision on the facts before her.” Finally the Court approvingly saw “no problems with her factual conclusion; they were fully substantiated by the record.”
The moral of the story is never be suspended or disbarred. Be sure to comply with all laws and regulations. Separation by affiliation is not sufficient to overcome a debarment whether proposed or actual. From this case, you can see that a proposed or actual debarment of a parent can have an impact on a subsidiary at any level, and vice
versa. In turn, this action can result in a finding of non-responsibility, and prevent award of a contract.
Tom Petruska
Contract Unlimited Incorporated
The foregoing is not legal advice or a legal opinion. See your attorney for legal advice.
Footnotes:
1. 48 C.F.R. 3.0
2. 48 C.F.R. 9.4
3. 48 C.F.R. 9.104
4. 48 C.F.R. 9.104-2
5. 48 C.F.R. 9.103 (b)
6. 48 C.F.R. 9.104-1
7. 48 C.F.R. 9.103 (b)
8. 48 C.F.R. 9.105-1 (a)
