Earlier this week, the Air Force issued a Notice of Proposed Debarment to Booz Allen Hamilton, Inc. The basis for the debarment is set forth in a memorandum attached to the notice (contact me if you would like a copy). According to the memorandum, the proposed debarment occurred because of the conduct of an employee in Booz Allen’s San Antonio branch, Mr. Joselito Meneses. Mr. Meneses formerly was a Lt. Colonel in the Air Force and previously served as the Deputy Chief, Information Technology Division, Office of the Surgeon General, Air Force Medical Support Agency, at Brooks Air Force Base, Texas.
Mr. Meneses joined BAH on April 4, but underwent several weeks of orientation at BAH before reporting to work at the San Antonio branch on April 11. That day he brought to the office an external hardrive that contained non-public information regarding an Air Force IT services contract. BAH intended to submit a proposal for the follow-on procurement for this requirement. On April 11, Mr. Meneses apparently emailed his superiors in the San Antonio office information regarding the prior contract award, including CLIN pricing data, labor mix and labor rates by labor category. That information subsequently was forwarded to others in the San Antonio office. At some point between April 12 and April 27, an employee in BAH’s pricing department received the information and realized that it was non-public information that should not have been disclosed to BAH. That employee contacted BAH’s legal department.
BAH let Mr. Meneses go on June 28, 2011 and the Air Force proposed to debar Mr. Meneses on September 30, 2011.
The Notice of Proposed Debarment served on BAH earlier this week also was served on other BAH employees in the San Antonio office. The notice stated that the employees violated the Procurement Integrity Act. The other employees were proposed for debarment because they failed to stop or report the disclosure of the non-public information in the branch office. The memorandum explains that BAH was proposed for debarment because Mr. Meneses and the other employees’ conduct was “imputed” to BAH. The memorandum further explains that BAH was proposed for debarment also because it was “affiliated” with the San Antonio office employees.
Some observations by this government contracts lawyer in Virginia:
- It is not clear whether BAH in its entirety has been proposed for debarment or just the San Antonio office of BAH. The Notice of Proposed Debarment was served on BAH and BAH is now listed in EPLS. However, the memorandum supporting the notice states that only the San Antonio branch of the office is proposed for debarment
- How did the Air Force learn of this improper conduct? Was this the topic of a “mandatory disclosure”? The memorandum notes that the BAH legal department was contacted and that the legal department issued a “document hold and retention order” to the employees involved on May 27, 2011. Was a disclosure in fact mandatory? Many people forget that the mandatory disclosure rule only applies to covered conduct “in connection with the award, performance, or closeout” of a Government contract. It’s not clear that the follow-on procurement had even started at this point. Does that make a difference?
- Assuming that BAH made some type of disclosure, why did the Air Force come down on BAH so hard? Assuming that the entire company has been proposed for debarment, the proposed debarment is catastrophic for a company like BAH. Now, if only the BAH San Antonio branch is involved, maybe that is the compromise reached between BAH and the Air Force.
- This is a bit ironic: the many weeks of orientation Mr. Meneses received before starting in the San Antonio branch included ethics training. Before you rush to criticize the training, remember that pricing employee. Presumably he or she received the same training – and practiced what was preached.
- The proposed debarment serves as a warning to government contractors hiring former government contract employees. As the GAO implies in the VSE case, it is not enough for a government contractor to ensure that a former government employee hired by the company complies with the “revolving door” regulations, the government contractor must also ensure that the former government employee does not bring or disclose non-public information to his or her new employment. Otherwise, the situation could create an OCI of the “appearance of impropriety” variety discussed in VSE. In this case, that was not an issue as BAH, smartly, decided not to submit a proposal in the follow-on procurement.
- How does the BAH experience fit in with the proposed changes to the FAR OCI regs? A number of significant changes were proposed last April and still are under review and comment. Among the proposed revisions is a proposal to separate OCI issues from issues where an government contractor has an unfair competitive advantage by having unequal access to non-public information. In the proposed rules, the concern was about non-public information received by a contractor during contract performance, but doesn’t this situation also fit the bill? See also GAO Report (GAO-10-693) “Contractor Integrity: Stronger Safeguards Needed For Contractor Access to Sensitive Information.”
- What about the new DoD certification rule included in 252.203-7000, Requirements Relating to Compensation of Former DoD Officials. It was effective November 18, 2011. Did BAH violate this rule? Did anyone read my blog on this topic? Did you?Finally, this case reminds us that it takes only one skunk to stink up a room (or a branch office, as the case may be).