Cross-Debarment: A Stakeholder Analysis

Article excerpt

I. Introduction

As anti-corruption initiatives around the world gain momentum, one device for fighting corruption-debarment, or "blacklisting,"1 of corrupt or unqualified contractors and individuals2-has emerged as an especially noteworthy tool.3 Governments and international institutions have developed their own debarment systems, to exclude contractors that have committed certain types of wrongs (bribery or fraud, for example) (the World Bank's approach),4 or, more broadly, to exclude contractors that pose unacceptable performance or reputational risks because of bad acts or broken internal controls (the U.S. federal government approach5).6

As debarment systems have matured in parallel, a policy question has emerged: should a contractor debarred in one system be automatically cross-debarred in another?7 For example, under the multilateral development banks' current cross-debarment scheme, when the World Bank debars a contractor, the other institutions automatically debar that contractor.8 But when the World Bank debars a contractor,9 should U.S. agencies-many of which sit only a few blocks away from the World Bank's headquarters in Washington-also debar that contractor?

Although proponents argue that this legal device, commonly known as "cross-debarment," would improve anti-corruption efforts by multiplying the impact of debarment actions10-contractors could potentially face exclusion from many systems, not just one, when confronted with a possible debarment-it would also mark a significant change in current practice. While cross-debarment is legally required among U.S. federal agencies (when one agency debars a contractor, that contractor is barred from doing business with all federal agencies),11 and cross-debarment is now the norm among the World Bank and the other multilateral development banks,12 cross-debarment between governments and other institu- tions is not yet common. Although one government may take note, and make informal inquiries, when another government or institution takes action against a contractor,13 generally govern- ments are not bound by other governments' or institutions' debar- ment decisions.14 Assessing cross-debarment therefore requires careful consideration of potential costs and benefits.

One way to explore the costs and benefits of cross-debarment is to assess it through the perspectives of various stakeholders15 in the procurement and anti-corruption communities, from policymakers to contractors. While focusing on stakeholders' likely views will not resolve some of the thornier legal issues buried inside cross-debar- ment-for example, how evidence should be shared between dif- ferent governmental proceedings-a stakeholder analysis will allow us to assess some of the more obvious practical and political issues that cross-debarment may present. To put the stakeholder analysis into context, Part II of this Essay will offer a very brief overview of the U.S. and World Bank debarment systems. Drawing, in part, on potential cross-debarment between those two systems as an exam- ple, Part III of the Essay will assess how each stakeholder group might view this type of aggressive cross-debarment, between the U.S. and World Bank systems. Part IV, the conclusion, will suggest a balance between the most radical solutions (such as automatic cross-debarment) and tamer approaches, such as vigorous publica- tion of the names of blacklisted contractors.

II. Overview of U.S. and World Bank Debarment Systems

Two systems that stand as potential candidates for cross-debar- ment are the U.S.16 and World Bank debarment systems. Although, as is discussed below, the two systems are fundamentally different in many ways, they also share, in loose terms, a common structure, in part because the World Bank system was shaped by the U.S. model.17

The U.S. federal debarment system18 is grounded in an assess- ment of contractor qualification-of "responsibility," to use the U.S. term.19 By law, debarment is not to be used as a form of pun- ishment,20 but instead is to be used to exclude contractors that have been convicted of certain crimes (such as bribery) or have been shown to be in serious breach of other requirements (such as contractual obligations), or for "any other cause of so serious or compelling a nature that it affects the present responsibility of the contractor. …