No company, regardless of its size or industry, is immune from potential FCPA liability if it does business abroad. Why then, has FCPA Sanctions: Too Big to Debar by Drury Stevenson and Nicholas Wagoner, singled-out and declared war on large government contractors? Because it can—large government contractors are not sympathetic.
My new article A House of Cards Falls: Why ‘Too Big to Debar’ is All Slogan and Little Substance, demonstrates that despite its populist appeal, Too Big to Debar is simply an inflammatory exercise in contractor bashing. Instead of offering practical solutions to improve the government procurement process, the authors use a catchy slogan to promote policies that have little basis in fact or law.
One of the most glaring errors in Too Big to Debar is its incorrect characterization of debarment as a punitive regime. As FAR 9.4 makes clear, debarment is to be used only for the protection of the government, not to punish past misconduct. This nuclear sanction should only be used when absolutely necessary to protect the government from imminent harm—not because it is “far more crippling to a company’s bottom line.” When used properly, the debarment regime facilitates ethical transformations in a company (as the Air Force did when, despite the authors’ bewildering claims to the contrary, it considered BAE for debarment).
Too Big to Debar also misrepresents the true consequences of debarment—the corporate death penalty. It belies reality that a company will be debarred, somehow manage to survive up to three years without government revenue, and come back stronger and more compliant than ever. Moreover, characterizing the debarment of some of the government’s largest contractors as an “inconvenience” is laughable. In certain fields, only one or two contractors have the ability to perform contract requirements. In an era of outsourced government, these large, sophisticated firms not only permit the government to provide critical functions, but employ thousands of hard-working and innocent employees. Imposing debarment for the sake of retribution or deterrence is not only contrary to law, but would be harmful to the country’s diverse interests.
Too Big to Debar appears to assert that it is morally wrong to “reward” government contractors that have misbehaved. By injecting theories of punishment into an administrative regime, the article elevates the simple, almost visceral desire for large-scale retribution over the best interests of the government. A House of Cards Falls exposes Too Big to Debar for what it is: a populist sound bite used to vilify and bash contractors without regard for nuance or reality.
Jessica Tillipman, pictured above, is the Assistant Dean for Outside Placement and a Professorial Lecturer in Law at The George Washington University Law School where she teaches an Anticorruption and Government Procurement Law seminar. Her recent article, “A House of Cards Falls: Why ‘Too Big to Debar’ is All Slogan and Little Substance,” was published in January 2012 by Fordham Law Review Res Gestae. It’s available at SSRN here.