The World Bank Debarment System – Part I
By Oles Morrison on April 1, 2015 | Posted in Suspension and Debarment
On February 25, 2015, the World Bank lifted its debarment of Alstom SA. The company had been debarred after it was discovered it had made improper payments for consultant services to an entity controlled by a former senior government official on a World Bank-finance project in Zambia in 2002. The terms of the debarment required Alstom subsidiaries, Alstom Hydro France and Alstom Network Schweiz AG, to pay $9.5 million in restitution and prohibited these entities from bidding on World Bank contracts for up to three years. If these subsidiaries complied with the terms of the agreement with the World Bank, they would be eligible to compete for contracts again in 21 months. 24 months later, following Alstom’s fulfillment of the terms of the agreement, the World Bank lifted its debarment.
While the World Bank does not have the long history of a developed suspension and debarment regime similar to that of the United States, the World Bank has been progressively more aggressive in this area. Part I of this blog post discusses the World Bank’s system for suspensions and debarments. Part II discusses the collateral consequences of a World Bank debarment.
What is the World Bank’s debarment process?
In many ways, the World Bank’s debarment process is similar to the United States’ system. There are three structural levels to the World Bank’s system: the Integrity Vice President (“INT”), the Evaluation Officer, and the Sanctions Board. The Integrity Vice President refers matters to the Evaluation Officer. The Evaluation Officer makes a determination regarding the adequacy of the matter for a sanction under the World Bank’s rules. The Sanctions Board reviews the case if a contractor decides to appeal the Evaluation Officer’s determination.
One tool available to the World Bank is the Notice of Temporary Suspension. This correlates to the suspension element of the United States system. The World Bank can issue a Notice of Temporary Suspension if there is sufficient evidence generated during an investigation to support allegations of a “Sanctionable Practice” and it is highly likely that a Statement of Accusations and Evidence will be presented to an Evaluation Officer within one year. Sanctionable Practices are similar to the grounds for exclusion in FAR 9.4 but are more focused on corrupt practices. The contractor then has 30 days from the issuance of the notice to respond and explain why it the temporary suspension should be lifted. A temporary suspension has an initial duration of 6 months followed by renewals of the suspension every 6 months thereafter based upon an additional evaluation of the progress of the investigation. Once a Statement of Accusations and Evidence is presented to the Evaluation Officer, the temporary suspension is automatically extended through the final outcome of the debarment proceeding.
The second tool available to the World Bank is a Notice of Sanctions Proceedings. This correlates to the proposed debarment element of the United States system. The INT presents a Statement of Accusations and Evidence to the Evaluation Officer. If the Evaluation Officer determines there is sufficient evidence, a Notice of Sanctions Proceedings is issued. The Evaluation Officer includes in the Notice a recommendation for sanctions. From this point, the processes between the United States and the World Bank differ.
Rather than contest to the Evaluation Officer, the contractor has 90 days to submit a written response to the accusations and recommended sanction to the Sanctions Board. The INT then replies to the Sanctions Board within 30 days of receiving the contractor’s appeal. The contractor may also request a hearing before the Sanctions Board. Based on the evidence in the record, the Sanctions Board will make a final decision regarding the contractor’s case. This decision is not appealable to any other authority.
In the United States, the Suspension and Debarment Official (“SDO”) determines whether causes exist for a suspension or debarment and makes the final decision. There is no Sanctions Board that would review the case if the contractor decided to appeal. Additionally, the SDO’s decision is subject to an appeal under the Administrative Procedures Act. A contractor can appeal to the courts to review only if the SDO’s decision was “arbitrary or capricious.” The Court will not review and make a second decision based on the evidence but determine if the SDO’s decision was based on appropriate procedures and evidence.
One particularity of the World Bank system that is not in the United States system is a statute of limitations. The World Bank system is limited to a contract, which was completed no more than 10 years prior to the date the Statement of Accusations and Evidence was submitted to the Evaluation Officer. The FAR has no such limitation; however, it does require SDOs to consider the “present responsibility” of the company. This standard would likely have a similar limiting outcome as actions from a decade previous are unlikely to represent the company’s current state.
Image by Victorgrigas (licensed)