In the Matter of the Proposed Suspension of April 19, 1983 JONES E. DAVIS and JED-SPG, INC. 972 Park Forest Lane at Jacksonville, FL 32211-6229 P.S. Docket No. 15/186 APPEARANCE FOR POSTAL SERVICE: Robert A. Scherr, Esq. Transportation Division Law Department United States Postal Service Washington, DC 20260-1117 APPEARANCE FOR RESPONDENT: Richard G. Hathaway, Esq. Mahoney, Hadlow & Adams 100 Laura Street P. O. Box 4099 Jacksonville, FL 32201-4099 Cohen, James A.
By notices dated January 25 and 28, 1983, the Assistant Postmaster General, Mail Processing Department notified Jones E. Davis and JED-SPG, Inc. (Respondents) that they, and any company in which Mr. Davis has a substantial interest or control, were suspended from contracting with the United States Postal Service. As stated in the notices, the suspensions were based on information that Respondents committed irregularities of a serious nature in business dealings with the Government in that they violated the Service Contract Act of 1965, as amended, and that debarment proceedings against Respondents were pending before the United States Department of Labor (DOL). In accordance with § 1-605.2(c) of the Postal Contracting Manual (PCM), the notices advised that the suspensions were effective for a temporary period not exceeding 120 days from the date of the notices but that the suspensions may be extended for additional 120 day periods if the debarment proceedings, or other action, are still pending.
By letter dated February 16, 1983, Respondents timely appealed the suspensions to this office. Since Respondents did not request a hearing and no dispute of fact appeared to exist which would warrant a hearing, it was determined, by Order dated February 23, 1983, that this matter would be decided on the record. The record consists of the notices of suspension; Respondents' letter of appeal; and the DOL complainst dated November 5, 1982 and January 24, 1983; Postal Service counsel's transmittal memorandum dated February 18, 1983; Respondents' letter dated March 15, 1983, and attachments, which include affidavits by Jones E. Davis, Tony E. Davis, and Reo Hood; and the Postal Service's brief dated March 16, 1983.
1. On November 5, 1982, DOL issued a complaint against Jones E. Davis and others, alleging violation of the Service Contract Act of 1965, 41 U.S.C. § 351 et seq., and regulations issued thereunder in connection with numerous Postal Service mail transportation contracts. The complaint alleges that during the performance of these contracts, Jones E. Davis failed to pay employees "amounts not less than the amounts required by the contracts and wage determinations. . . in that the respondents failed to pay employees their monetary wages and fringe benefits promptly following the end of the pay period in which they were earned, as required by 29 C.F.R. § 4.165." The complaint charges Mr. Davis with the violations as an officer and controlling stockholder of southeastern Mail
Transport, Inc., a.k.a. Southeastern Mail Haulers, which was awarded the contracts. It also charges Mr. Davis with failing and refusing to maintain the work records required by the contracts and by DOL regulations. The complaint states that because of these violations, Mr. Davis and the others identified "may be denied the award of any contracts with the United States until three years have elapsed from the date of publication by the Comptroller General of a list naming them as having been found to have violated the Act."
2. On January 24, 1983, DOL issued a complaint against Respondents which alleges that they "Failed and refused to pay" service employee wages and fringe benefits as determined by the Secretary of Labor under a Postal Service mail transportation contract (No. 010-314-81) in violation of the Service Contract Act and DOL regulations. It also alleges that "Respondents failed to make and maintain and to make available" to DOL representatives "adequate and accurate records for service employees showing, among other things, the daily and weekly hours worked" as required by the Act and DOL regulations. The complaint states that while Respondents have made restitution for underpayments to its employees, they nonetheless are subject to debarment for three years from the date of publication by the Comptroller General of a list naming them as having been found to have violated the Act.
3. Debarment proceedings arising from these complaints are currently pending before DOL (Respondents' letters to the Judicial Officer dated February 16 and March 15, 1983). It is presumed that these proceedings include an administrative hearing as authorized by 29
C.F.R. Part 6, since the proposed debarments are being actively contested (Respondents' letter to the Judicial Officer dated February 16, 1983).
4. The present suspensions are based on the allegations set forth in the DOL complaints and the pending debarment proceedings before that agency (Notices of Suspension dated January 25 and 28, 1983).
5. Respondents contend, as a defense to the DOL actions, that the contract which is the subject of the January 24, 1983, complaint was operated by independent contractors and that any violation of the Service Contract Act resulted from the failure of these contractors to pay their employees. It is further contended that when Mr. Davis first became aware of the problem, he consented to having $22,564 withheld from this contract and enacted company procedures to ensure that all of the persons employed under the contract would be paid in accordance with the Act. With respect to the contracts which are the subject of the November 5, 1982, complaint, Respondent, Jones E. Davis contends, contrary to the complaint's allegation, that he did not serve as an officer, director, shareholder or employee of Southeastern Mail and never received any salary or other remuneration from this company or owned any equity interest in the company (Respondents' letter to the Judicial Officer dated March 15, 1983 and attached affidavits by Jones E. Davis, Tony E. Davis, and Reo Hood).
Based on the affidavits and other documentation submitted, Respondents claim a good faith defense to the proposed debarments and a substantial likelihood that they will prevail in the DOL proceedings. Accordingly, they argue that "it would be unfair, inequitable and contrary to all concepts of American jurisprudence to take administrative suspension action against them prior to the final disposition of these two actions" (letter dated March 15, 1983). The Postal Service argues, in its brief, that the pendency of the debarment proceedings before DOL in itself authorizes these suspensions under the PCM.
Section 1-605.1(a) of the PCM authorizes suspension of any firm or individual
"(2) For other cause of such serious and compelling nature, affecting responsibility as a Government contractor, as may be determined by the department head to warrant suspension. A pending hearing for debarment may be a cause of such serious and compelling nature as to warrant suspension."
In accordance with this provision, it is concluded that the DOL proceedings constitute "serious and compelling" cause "affecting responsibility as a Government contractor." In reaching this conclusion, consideration has been given to the defenses to the proposed debarments which Respondents allege support their contention that there is a substantial likelihood that they will prevail in the DOL proceedings. However, the merit of these defenses ultimately must be evaluated by DOL. The allegations contained in the DOL complaints raise sufficient questions regarding Respondents' responsibility as a Government contractor to warrant suspension pending that agency's determination of this matter.
The present suspension is authorized under the PCM and is consistent with the standards recognized in Transco Security, Inc. of Ohio v. Freeman, 639 F.2d 318 (6th Cir. 1981) and Horne Brothers, Inc. v. Laird, 463 F.2d 1268 (D.C. Cir. 1972). In this regard, it is presumed that the DOL proceedings comport with due process requirements and will be expeditiously completed.
The suspension is sustained.