DE HERRAMIENTAS Y RESULTADOS

Prosecutors exercise a significant degree of charging discretion.244

1. Are Corrupt Government Contractors “Too Big to Debar”? A prosecutor’s decision to pursue claims of bribery under the FCPA (thereby triggering an agency’s discretionary debarment power) rather than charging the contractor under an alternative applicable statute, directly affects whether the company is subject to mandatory debarment, discretionary debarment, or is altogether immune from the risk of suspension or debarment. Prosecutors also indirectly influence debarment officials through frequent meetings and intra-agency cooperation.

Although prosecutors exercise a significant degree of influence over an agency’s discretionary debarment decision as discussed above, the ultimate decision rests with the agencies that do business with corrupt contractors. In 1987 alone, the Department of Defense’s “total suspensions and debarments of contractors totaled 898,” which was “over three times the 280 actions taken in fiscal year 1983.”245 _{Yet despite “[m]any of the U.S.}

government’s largest contractors hav[ing] been found to have repeatedly broken the law or engaged in misconduct” between 1990 and 2002, only one of the top forty-three government contractors was suspended or debarred during this period.246 _{These figures lend support to the Project on}

Government Oversight’s conclusion “that large contractors enjoy an unfair advantage over smaller contractors in navigating the federal government’s suspension and debarment system.”247

Admittedly, debarment differs from other FCPA sanctions in the collateral costs it imposes on the government, besides its particular burdens on the sanctioned violator. Other agencies, which have no input in the decision about sanctioning FCPA violators, may have long running

242. See Wray & Hur, supra note 231, at 1115.

243. See, e.g., id. (“[The Department of Defense (DoD)] adopted a voluntary disclosure

program that provides for the possibility of more lenient treatment for contractors that self- report. In order to encourage companies to self-report potential violations and agree to cooperate with the ensuing audits and investigations, DoD offers companies the increased likelihood of avoiding suspension and debarment—sanctions that are, for defense contractors, even more deathly than corporate criminal charges themselves.”).

244. See Wagoner, supra note 131, at 1108–12.

245. U.S. GOV’T ACCOUNTABILITY OFFICE,GAO-88-5BR,DODFRAUD INVESTIGATIONS: CHARACTERISTICS,SANCTIONS, AND PREVENTION (1988).

246. Federal Contractor Misconduct: Failures of the Suspension and Debarment System,

POGO (May 10, 2002), http://www.pogo.org/pogo-files/reports/contract-oversight/federal- contractor-misconduct/co-fcm-20020510.html. The lone suspension lasted a mere five days.

Id. 247. Id.

contractual relationships with the same company,248 _{especially for large} corporations like Lockheed Martin, Boeing, and Halliburton.249 _{When such} contracts come up for renewal (presumably debarment would not terminate all other existing contracts), the government has the inconvenience and bears the costs of finding a suitable replacement.250 _{In some cases, this is} virtually impossible due to the scale of some federal projects and the enormous set-up costs for providers.251

The DOJ echoed these concerns in its response to several questions about its stance on drafting legislation compelling mandatory debarment for FCPA violations: “If every criminal FCPA resolution were to carry with it mandatory debarment consequences, then prosecutors would lose the necessary flexibility to tailor an appropriate resolution given the facts and circumstances of each individual case.”252 _{The real reason for the DOJ’s} rejection of the mandatory debarment proposal appears to be evident in the preceding sentence of its response—that sanctioning those perceived as being too big to debar despite egregious FCPA violations “would likely lead to the cessation of revenues for a government contractor—a virtual death knell for the contractor–company.”253

2. Prosecutors’ Influence over Debarment Decisions

An agency’s decision to suspend or debar a contractor from future business with the United States is a direct result of whatever charges federal prosecutors brought against the firm. For example, BAE’s misrepresentation of $5 million in bribes and kickbacks paid to a Saudi official fell squarely within the language of the FCPA’s accounting provision.254 _{A more general statute criminalizes the submission of false} statements to the United States.255 _{Yet because BAE was prosecuted under} the latter statute (which does not trigger an agency’s discretionary debarment authority) rather than the former (which triggers an agency’s  

248. See generally John S. Pachter, The New Era of Corporate Governance and Ethics: The Extreme Sport of Government Contracting, 13 PUB.PROCUREMENT L.REV. 247 (2004) (arguing against the use of debarment as a sanction).

249. See generally Jennifer S. Zucker, The Boeing Suspension: Has Increased Consolidation Tied the United States Department of Defence’s Hands?, 13 PUB. PROCUREMENT L.REV. 260 (2004).

250. See CATHERINE DONNELLY, DELEGATION OF GOVERNMENTAL POWER TO PRIVATE PARTIES 79–81,94 (2007). For discussion of the “switching costs” problem in other areas of government contracting, see Dru Stevenson, Privatization of State Administrative Services, 68 LA.L.REV. 1285, 1291, 1303 (2008); Dru Stevenson, Privatization of Welfare Services:

Delegation by Commercial Contract, 45 ARIZ.L.REV.83, 115 (2003).

251. See Danielle Brian, Contractor Debarment and Suspension: A Broken System, 13

PUB.PROCUREMENT L.REV. 235, 236–38 (2004); Zucker, supra note 249, at 273–76.

252. Examining Enforcement of the Foreign Corrupt Practices Act: Hearing Before the Subcomm. on Crime & Drugs of the U.S. Senate Comm. on the Judiciary, 111th Cong.

(2010) [hereinafter Examining Enforcement] (questions for the record by Sen. Christopher Coons).

253. Id.

254. See Koehler, supra note 97, at 994–95. 255. See 18 U.S.C. § 1001 (2006).

discretionary debarment authority), BAE was insulated from suspension or debarment from its contracts with the United States.

The DOJ denies ever using specific language in settlements that would prevent debarments and suspensions. Breuer insisted at the Senate hearings, “I don’t think we ever do, Senator.”256 _{As one commentator}

pointed out, however, this position is inconsistent given that the DOJ sentencing memoranda in its Siemens prosecution explicitly stated that it selected sanctions that would avoid “collateral consequences” that would result from criminal FCPA anti-bribery charges.257 _{This included the “risk}

of debarment and exclusion from government contracts.”258 _{BAE is}

another major United States government contractor; DOJ pleadings against it aver that in “2008, BAE was the largest defense contractor in Europe and the fifth largest in [America] as measured by sales.”259

The DOJ faced a series of follow-up questions after a November 2010 hearing on FCPA enforcement held by the Senate Judiciary Committee. When asked whether “a mandatory, conduct-based, debarment remedy for companies that engage in egregious bribery [would] further the deterrent effect of the FCPA,” the DOJ conceded the possibility, but stated that the deterrent effect of mandatory debarment “would likely be outweighed by the accompanying decrease in incentives for companies to make voluntary disclosures, remediate problems, and improve their compliance systems.”260