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Harry Cassin
Publisher and Editor

Andy Spalding
Senior Editor

Jessica Tillipman
Senior Editor

Bill Steinman
Senior Editor

Richard L. Cassin
Editor at Large

Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
Contributing Editor

Julie DiMauro
Contributing Editor

Thomas Fox
Contributing Editor

Marc Alain Bohn
Contributing Editor

Bill Waite
Contributing Editor

Shruti J. Shah
Contributing Editor

Russell A. Stamets
Contributing Editor

Richard Bistrong
Contributing Editor

Eric Carlson
Contributing Editor

Response To ‘A House of Cards’

Ouch. While Jessica Tillipman’s recent post describes my article FCPA Sanctions: Too Big to Debar (co-authored with Nicholas Wagoner) as “all slogan and little substance,” it is her response – both here and in the Fordham online-only editorial blog, that engages primarily in name-calling and insults.

I will concede that we have an underlying disagreement about the merits of government outsourcing. Jessica believes it is necessary and healthy, and I believe outsourcing is inherently problematic, undemocratic, inefficient, sometimes unconstitutional, and completely out of control. I understand that advocates of privatization and outsourcing believe its opponents are foolish and naive, and on this point we simply disagree about who is uniformed and idealistic. There is a very large body of serious academic literature on privatization and outsourcing, and the debate shows no signs of quieting anytime soon. I will say, however, that in terms of sheer quantity, it is much easier to find university press books and print-based academic journals expressing concern about the scope and parameters or outsourcing than to find serious scholarship defending it.

Points of agreement: I agree that some firms would not survive if they had to go for three years. We understand that debarment can mean bankruptcy. Nevertheless, many of these firms have very large private-sector branches as well, so it is an overstatement to assert that most of them would not survive three years exclusively in the private sector. In addition, I believe it is unhealthy – dangerous, in fact – for the government to be in such a dependent relationship with one or two firms in certain sectors. One of the recurring problems with rampant government outsourcing is that it fosters monopolies – companies grow so large on the government contracts that the government can no longer switch to another contractor if the monopolist increases the price or alters other terms when the contract is up for renewal. Jessica’s point simply supports our argument (which she ignores) that an unwillingness to debar is both a symptom of, and a contributing factor to, the government’s abject dependence on a few companies. The problem is not the size of the contractor; the problem is the size of the contracts and the lack of a truly competitive market in the bidding for such contracts.

A very confusing point is where Jessica says we are trying to “insert punishment theories into an administrative regime,” as if administrative agencies did not regularly engage in enforcement, prosecution, and punishment for noncompliance. Our article was about the FCPA, in which Congress itself imposed CRIMINAL SANCTIONS for bribing foreign officials, and included the potential sanction of debarment. We are not trying to insert anything here – Congress inserted it into the statute from the beginning. FCPA prosecutions are commonplace and every one involves theories of punishment. It is completely appropriate, therefore, to discuss which sanctions should be used – and which ones are being neglected – in the prosecutions that the government already brings on a regular basis.

In response to the assertion that we incorrectly characterized FAR-9.4 as punitive, I believe she overlooked some points in our argument. We are not arguing for debarment merely on retributivist grounds; the fact is, we think it IS detrimental to the government to award multi-billion-dollar contracts to firms who have recently been caught bribing government officials elsewhere. A firm convicted of violating the FCPA has, by definition, been found GUILTY of bribing a foreign government in order to obtain contracts. Such a corrupt firm poses a much higher risk of engaging in corruption with our own government as well – either by bribing American officials to obtain the initial contract, or bribing the other officials who monitor the contracts, or bribing still other officials who decide the terms for renewing a contract. In the alternative, a corrupt firm (we are talking only about firms convicted of bribing government officials overseas) is more likely to engage in other forms of cheating – shortchanging the government in quality or quantity for the goods or services purchased, falsifying inspection reports or billing documents, and so forth. Would Jessica take her car to a mechanic who had just been fined for cheating her friend over a car repair?

In addition, there is a compelling government interest in reducing corruption among foreign governments as part of our foreign policy – this was a significant part of the reason Congress passed the FCPA in the first place. Foreign government corruption fosters terrorism, failed states, and civil wars. When our own government continues to award extremely lucrative contracts to firms convicted of bribing foreign officials, it seriously undermines our credibility in advocating that other governments clean up their act.


Dru Stevenson (pictured above) is a Professor of Law at the South Texas College of Law. He graduated from the University of Connecticut School of Law and holds a Master of Laws (LL.M.) from the Yale Law School. He served as an Assistant Attorney General for the State of Connecticut. “FCPA Sanctions: Too Big to Debar” appeared in the Fordham Law Review and is available here. Professor Stevenson can be contacted here.

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1 Comment

  1. Professor Stevenson,

    "Ouch" is right. Your response to Professor Tillipman's article has literally left my colleagues and I dumbfounded (much like your original article did). As a threshold matter, let me say that as a practitioner in this area of law at a government agency, I think the issues raised by you, Mr. Wagoner, and Professor Tillipman are important ideas that should be debated and discussed. Your article, however, lost all credibility with my colleagues and I with the staggering amount of legal and factual errors it contains…errors which you fail to address in your post here.

    First, you again display a fundamental lack of knowledge regarding government contract law, and in particular, the FAR. You have repeated in this post the same error you placed in your paper…The FAR is not part of the FCPA. They are completely separate regimes. No one disputes that the FCPA imposes criminal sanctions. The FAR, however, does not. You continually combine these two separate and very different statutory schemes into one. While an FCPA violation may trigger the FAR, they are not the same thing. As the language of the FAR explicitly states it is not for purposes of punishment.

    Second, your post has changed the entire premise of your article by claiming “Too Big To Debar” was about debating the merits of outsourcing when instead, your article was clearly advocating the use of debarment as a form of punishment…something, again, that is expressly prohibited by the FAR. If your article had simply been a debate about the merits of outsourcing, it would have enjoyed more support with practicing members of the government contract community. Instead, your article was a lethargic exercise in extreme contractor bashing that we have seen far too often from academics that do not have to be troubled with the realities of suspension and debarment.

    Next, and most telling in my mind, your post fails to address the myriad factual and legal errors contained in your article. Nowhere to be found in your post is a correction of some of the more egregious factual errors in your original article, e.g., your claim that the Air Force never considered BAE for debarment (trust me when I say that left many of us in my office scratching our heads); your reliance on part of the FAR that hasn’t existed for years; and your astonishing and somewhat insulting assertion that the federal government bankrolls foreign bribery.

    In short Professor, your article and this post have done nothing to help you gain traction with the government contracts community. You published an article that was filled with errors and rather than correct them, you’ve ignored them with this post and tried to claim your article was saying something else entirely.

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