General Services Administration
FAR Secretariat (MVR)
1800 F Street, N.W., Room 4035
ATTN: Laurie Duarte
Washington, D.C. 20405

      Re: FAR Case 1999-010

Dear Ms. Duarte:

     The Food Marketing Institute (FMI) appreciates the opportunity to submit the following comments in response to the most recently proposed amendments to the contractor responsibility provisions of the Federal Acquisition Regulation. 65 Fed. Reg. 40830 (June 30, 2000). The current document revises the proposed rule issued in 1999. See 64 Fed. Reg. 37360 (July 9, 1999). FMI submitted comments in opposition to the 1999 proposal because it would have allowed the federal government to prohibit companies from contracting with the federal government on unsubstantiated grounds. “Blacklisting” of this sort reduces the number of companies eligible to compete for government contracts, which is, ultimately, a disservice to American taxpayers. As the revised proposal is substantially similar to the earlier proposal, FMI remains strongly opposed to the most recently proposed regulation.

      FMI is a non-profit association that conducts programs in research, education, industry relations and public affairs on behalf of its 1,500 members and their subsidiaries. Our membership includes food retailers and wholesalers, as well as their customers, in the United States and around the world. FMI’s domestic member companies operate approximately 21,000 retail food stores with a combined annual sales volume of $300 billion, which accounts for more than half of all grocery store sales in the United States. FMI’s retail membership is composed of large multi-store chains, small regional firms, and independent supermarkets. Our international membership includes 200 members from 60 countries.

     As with the initial proposal, under the most recent version of the FAR, contracting officers would have substantial discretion to “blacklist” companies that the contracting officer decides do not “have a satisfactory record of integrity and business ethics” including those that the officer decides have not achieved a “satisfactory compliance with federal laws including tax laws, labor and employment laws, environmental laws, antitrust laws, and consumer protection laws.” Proposed 46 CFR § 9.104-1(d). Companies that are “blacklisted” would be ineligible to enter into procurement contracts with the federal government. The proposed regulation would prevent such companies from contracting with the government without consideration of such factors as the severity or number of the violations, the employers’ intent, or whether an appeal is pending.

     The sweeping nature of the proposed regulation would mean that practically any company could find itself ineligible to contract with the federal government at any time. Every company in the food distribution industry must comply with a vast array of complicated, confusing and lengthy federal laws and regulations every day. Our businesses must comply with major regulations in the area of job safety, wage and hour, food safety, antitrust, tax and many other laws that are covered by the proposed regulation. Nearly every aspect of every job in the food distribution system is in some way regulated by the far-reaching federal regulatory system. Our industry employs legions of legal and technical experts to help our companies maintain compliance with these federal laws and regulations. However, under the proposed regulation any lapse in compliance—no matter how unintentional, technical or perhaps inconsequential to health or safety—could result in a company being blacklisted and prevented from participating in federal contracting.

     The proposed regulation would allow government contracting agents to make judgments and determinations about the eligibility of an individual company to engage in the contracting process. This eligibility determination would in most or all cases be made by untrained contracting agents who do not the have technical or working knowledge of the vast requirements of environmental, employment, tax, antitrust or consumer protection statutes and regulations. Since the regulation provides no guidance with respect to the gravity of the violation or the status of appeal, a government contracting officer is given the license to deny eligibility based on any violation or complaint without distinction. Furthermore, the revised regulation still is not clear how “satisfactory compliance” with the law is defined, therefore leaving these untrained contract agents to make subjective or possibly unfair interpretations.

     The proposed regulation allows contract denial based on a wide range of actions against a company, including court decisions, decisions by Administrative Law Judges, civil cases brought by federal agencies, or any decision, order or complaint issued by any federal agency, board or commission. This allows companies to be barred from contracting even though an order or decision may yet be the subject of a pending appeal. Thus companies could be prohibited from contracting with the government simply on the basis of a complaint having been made against the company, and before the company has had the opportunity to defend itself. This “guilty until proven innocent” approach is highly unfair.
     
     The original proposal authorized contracting officers to consider unsubstantiated allegations in determining whether a prospective contractor had a “satisfactory record of integrity and business ethics.” In comments submitted to the agencies, FMI and others observed that the proposal would allow contracting officers to blacklist prospective contractors unfairly. The preamble to the revised regulation acknowledges the validity of the concern and attempts to address it, however, government contracting officers are still permitted to consider “all relevant credible information” from any source in determining the eligibility of a company to contract with the government. Proposed 46 C.F.R. § 9.104-3(c). The revision only shifts the inquiry to an undefined determination of whether the unproven allegation is “credible.” The revised proposal will still permit a determination of ineligibility based on questionable information received from outside sources with a grudge against a particular company. Union organizers will be able to use this regulation as a weapon against open-shop food distribution companies in their efforts to organize those companies. Trial lawyers, disgruntled employees, or business competitors seeking to damage a company will also be able to use the proposed rule to unscrupulous advantage. Again, mere accusations may still form the basis for blacklisting a company, even if the accusations have never been proven or substantiated.

     FMI and the food distribution industry remain strongly opposed to the revised regulation and we encourage the agency to withdraw this proposal.


Sincerely,


Tim Hammonds
President and CEO