Appeal of P.S. Docket No. 37/33 -- SOL FISHER

 In the Matter of the Proposed Debarment of:

 SOL FISHER,
 5 Wareham Court,
 Scotch Plains, NJ  07076-3131

 P.S. Docket No. 37/33

 03/19/91

 Cohen, James A., Judicial Officer

 APPEARANCE FOR POSTAL SERVICE: Karren M. Dickson, Esq.,
 Evelyn M. Loeb, Esq., Procurement Division,
 Law Department, United States Postal Service,
 Washington, DC  20260-1122 

 APPEARANCE FOR RESPONDENT: Sol Fisher, 5 Wareham Court,
 Scotch Plains, NJ  07076-3131

POSTAL SERVICE DECISION

Sol Fisher (hereafter Respondent) has filed an appeal from a Notice of Proposed Debarment in which the Assistant Postmaster General, Procurement & Supply Department (Department Head), advised Respondent that he was proposing to debar him from contracting with the United States Postal Service for a period of 18 months based on his conviction of one count of mail fraud in violation of 18 U.S.C. $S1341. Respondent contends that the proposed debarment would take away his livelihood and, because he was an exemplary citizen with an unblemished record prior to his conviction, he should not be debarred.

FINDINGS OF FACT

1. Respondent is an independent salesman who sells products including floor mats and other maintenance supplies to approximately 300 post offices throughout New Jersey, eastern Pennsylvania and southern New York (Stipulation (Stip.) PP 1 & 2).

2. During a nine month period beginning on June 2, 1988, David L. Carter (Carter), a Postal Service employee at the Newark Main Post Office in Newark, New Jersey, placed orders with Respondent for floor mats to be used at the Newark facility (Stip. PP 4 & 6).

3. During a meeting held prior to November 23, 1988, Respondent offered Carter a gift of an entrance mat valued at $10.00 for use in Carter's home (Tr. 5-9). Carter's response that he had kids in school left Respondent with the impression that he had to give Carter money in order to continue doing business with the Newark Main Post Office (Id.).

4. On November 23, 1988, Respondent gave Carter $100.00 in cash (Stip. P 7). During four subsequent meetings, Respondent gave Carter additional cash payments totalling $310.00 in return for floor mat orders placed by Carter (Id.).

5. At an interview with FBI agents and a Postal Inspector on April 12, 1989, the date of the last payment, Respondent admitted that he gave cash to Carter (Stip. P 9).

6. By Plea Agreement dated June 27, 1989, Respondent agreed to plead guilty to one count of mail fraud in violation of 18 U.S.C. § 1341, in exchange for an agreement that the United States Attorney for the District of New Jersey (U.S. Attorney) would not prosecute him for any other criminal activity involving his dealings with Carter and the Newark Main Post Office (Plea Agreement with Sol Fisher (Plea) P 2).

7. In his Plea Agreement, Respondent stipulated that he 1) knowingly and willfully executed a scheme and artifice to defraud the Postal Service by making illegal payments totalling approximately $400.00 to a postal employee and 2) recognized and affirmatively accepted personal responsibility for the offense for which he was charged (Stip. P 11(a) & (b); Plea, Schedule A).

8. On May 4, 1990, in a letter to the U.S. District Court, District of New Jersey, the U.S. Attorney advised the court of Respondent's truthfulness and cooperation during his investigation, recommending that Respondent's sentence be "at the lower end of the [sentencing] guidelines" (Request for Hearing (Request), Enclosure).

9. On May 11, 1990, Respondent pled guilty to one count of mail fraud in violation of 18 U.S.C. § 1341, receiving a sentence of two years probation, a special assessment of $50.00, and a fine of $1,000.00 to be paid over the course of his probation (Judgment Including Sentence, pp. 1 & 2; Stip. P 13).

10. On September 27, 1990, the Department Head notified Respondent that he was proposing to debar Respondent from contracting with the Postal Service for a period of 18 months. In determining that a term of 18 months was appropriate, the Postal Service "credited" Respondent with what it considers to be three mitigating factors: 1) Respondent's cooperation with Postal Inspectors and the U.S. Attorney during their investigation; 2) the small monetary amount of cash offered Carter by Respondent; and 3) the fact that Respondent's sales to the Postal Service comprise the bulk of his livelihood (Tr. 20-21; Stip. #14).

11. Since April 12, 1989, when he was caught making the last payment to Carter, various post offices located in New York and New Jersey have continued to purchase products from Respondent (Tr. 10 & 20; Stip. P 14). In connection with these procurements, no incident has occurred which would reflect negatively on Respondent's present responsibility (Tr. 24).

12. Aside from the conduct on which the conviction is based, Respondent has a 20-year unblemished record of contracting with the Postal Service (Tr. 13).

13. Respondent admits that his actions in giving cash to the postal employee were wrong stating that he is "extremely disturbed and sorry" that "this unfortunate incident" has occurred and explaining that the shame is something he will "be scarred with forever" (Tr. 10 & 27).

14. Respondent has made assurances that he will never again act improperly while contracting with the Postal Service and if asked for a contribution will refuse and report the incident to a postal inspector (Tr. 12 & 13).

DECISION

The proposed debarment is based on Respondent's guilty plea and conviction of one count of mail fraud in violation of 18 U.S.C. § 1341. Specifically, Respondent's conviction stems from his illegal payments of cash to obtain Postal Service contracts. Under Postal Service Procurement Manual (PM) $S3.3.2(e)(1), a conviction for commission of a criminal offense incidental to obtaining or attempting to obtain contracts with the Postal Service is cause for debarment. See John R. Gnau, Jr., P.S. Docket No. 28/186 at 7 (P.S.D. June 16, 1988); Paul E. Jaquish, Jr., P.S. Docket No. 19/124 at 16-19 (P.S.D. April 12, 1985), aff'd on recon. (P.S.D. June 12, 1985 & July 22, 1985). Since Respondent was convicted of such an offense, cause exists to debar him from contracting with the Postal Service.

Despite the fact that cause for debarment exists, the decision to debar is discretionary and must be based on a determination of the best interest of the Postal Service. PM $S3.3.2(f)(1). Respondent seems to contend that the Department Head should not have exercised his discretion to debar Respondent because of 1) his previously unblemished record in dealing with the Postal Service, 2) his many years as an exemplary citizen, 3) his cooperation during the investigation of the criminal charges, 4) the punishment to which he already has been subjected, 5) his remorse for his illegal payments, 6) the fact that he has continued to contract with the Postal Service without incident and 7) the Postal Service's failure to discharge the employee who solicited the cash gratuities from Respondent. The Postal Service on the other hand argues that Respondent's conduct in illegally giving cash payments to a Postal Service employee shows 1) a serious irregularity in his business dealings with the Postal Service and 2) a lack of business honesty and integrity which reflect negatively on his present responsibility as a contractor.

It is in the best interest of the Postal Service to contract only with presently responsible contractors. In making a present responsibility determination, the Postal Service is required to assess the present and future business risk of a contractor based on moral integrity, honesty and ability to perform. Recognition Equip. Inc., P.S. Docket No. 32/62 at 29 (P.S.D. Feb. 17, 1989). Past wrongdoing can be the basis for a determination that a contractor is not presently responsible, so long as mitigating factors are given due consideration. Id. Consequently, a guilty plea and the legitimate inferences to be drawn therefrom may constitute evidence of a serious breach of trust reflecting a lack of present responsibility. See Agan v. Pierce, 576 F. Supp. 257, 261 (N.D. Ga. 1983).

In this case, the record supports the Department Head's exercise of discretion to debar Respondent based on his finding that Respondent is not presently responsible and that debarment is in the best interest of the Postal Service. Respondent's improper conduct reflects a serious breach of trust, and his guilty plea and the inferences therefrom are sufficient to establish that he continues to be a risk to the Postal Service. Although several mitigating factors exist which we hereafter consider in connection with the period of Respondent's debarment, those same factors are not sufficient to outweigh the Postal Service's discretionary determination that Respondent's improper conduct and guilty plea establish that he is a present business risk and therefore, not presently responsible.

Having determined that the Postal Service properly exercised its discretion to debar Respondent, the prescribed period of Respondent's exclusion from contracting with the Postal Service must be considered to determine whether under PM $S3.3.2(g)(1) it is commensurate with the seriousness of his offense. The debarment should not be punitive in nature and should not remain in effect beyond the period necessary to protect the interests of the Postal Service. See Vijay Patel and Loading Dock, Inc., P.S. Docket No. 35/28 at 9 (P.S.D. Dec. 29, 1989); Paul E. Jaquish, Jr., at 28 (P.S.D. April 12, 1985).

In prescribing the length of Respondent's debarment, the Postal Service credited Respondent with his cooperation during the criminal investigation, and took into consideration the small monetary amount of his illegal payments and the fact that he depends on Postal Service contracts for the bulk of his livelihood (FOF 10). However, the record does not reflect that the Postal Service considered Respondent's 1) 20 years of unblemished service (See Nathan Dal Santos, P.S. Docket No. 15/130 & 16/33 at 6 (P.S.D. June 10, 1983)); 2) sincere assurances that his improper conduct will not be repeated (see Photo & Sound Co., P.S. Docket No. 6/8 at 19 (P.S.D. Oct. 17, 1977)); 3) genuine remorse and appreciation of the seriousness of his wrongdoing (see Paul E. Jaquish, Jr., at 16 & 26 (P.S.D. April 12, 1985); Nathan Dal Santos, at 6 & 7); and 4) almost two year period of performance since the last illegal payment, during which time the Postal Service has continued to contract with Respondent without incident (see In the Matter of Elia Chahla, HUDBCA No. 88-4489-D33 (Nov. 1, 1989) (1989 HUD BCA Lexis 18); In the Matter of John Fitzpatrick, HUDBCA No. 89-4503-D43 (Feb. 7, 1990) (1990 HUD BCA Lexis 2); In the Matter of Charles Kirkland, HUDBCA No. 90-5285-D57 (Jan 14, 1990) (1991 WL 4684)).

Even considering these factors, an 18-month period of debarment is commensurate with the seriousness of Respondent's offense and not punitive in nature. However, the effective date of the debarment period should be computed from, at the latest, the date of Respondent's guilty plea, which was May 11, 1990. A debarment period beginning at any later date would extend the debarment beyond the period Respondent continues to be a risk to the Postal Service and thus would not be commensurate with the seriousness of the offense despite the fact that Respondent was not suspended.

CONCLUSION

Accordingly, the proposed debarment of Respondent is sustained. The period of the debarment is modified to terminate on November 11, 1991, 18 months after Respondent pled guilty to the criminal charges.