In the Matter of the Proposed Suspension of

LaBAR TRANSPORTATION CORP. et al
RR#1, Box 331
Berwick, PA 18603

P.S. Docket No. 10/58

APPEARANCE FOR RESPONDENT                         Robert A. Scherr, Esq.
                                                                               Law Department
                                                                               U. S. Postal Service
                                                                               475 L'Enfant Plaza West, SW
                                                                               Washington, D.C. 20260

APPEARANCE FOR APPELLANT:                          David E. Koff, Esq.
                                                                               Rosenn, Jenkins & Greenwald
                                                                               15 South Franklin Street
                                                                               Wilkes-Barre, PA 18711
                                                                               Cohen, James A.

POSTAL SERVICE DECISION

Respondents have appealed from a Notice of Suspension from Postal Service contracting issued on December 11, 1980, by the Assistant Postmaster General, Mail Processing Department. The Notice suspends Mr. James C. LaBar, LaBar Transportation Corporation, LaBar Enterprises, Inc., and Petroleum Suppliers, Inc., and any company in which Mr. LaBar has a substantial interest or control, from being awarded United States Postal Service contracts for a period not in excess of 120 days from the date of the Notice. According to the Notice, the suspension is "based upon information that you have committed irregularities of a serious nature in business dealings with the Government, and which seriously reflect on the propriety of your further dealings with the Government." Specifically, the Notice refers to a Grand Jury Indictment alleging 25 counts of violations of Title 18, United States Code, ?? 2. 371, 1001 and 1341 in connection with obtaining economic pay adjustments under United States Postal Service highway transportation contracts.

Respondents have denied that they committed any irregularities of a serious or other nature in their business dealings with the United States Postal Service and allege that the business practices which are the basis for the suspension are acceptable business practices, that the suspension is a form of retaliation against Respondents because of their allegations of violations of contractual agreements, and that the performance of Respondents under contracts with the United States Postal Service has been exemplary. Respondents, therefore, request that the decision of the Assistant Postmaster General, Mail Processing Department, be reversed and the suspension revoked.

Although the Rules of Practice in Proceedings Relative to Debarment and Suspension From Contracting, 39 CFR Part 957, provide in § 957.27(c) that oral argument or a hearing may be held upon application of a Respondent filed with its Notice of Appeal, no such application was filed. Therefore, by order dated January 8, 1981, the parties were informed the appeal would be considered on the record which either party could supplement by submission of additional evidence or brief no later than January 23, 1981. The Postal Service filed a brief within the time allowed. Respondent did not submit additional evidence or brief. The record as supplemented consists of Respondents' appeal, a copy of the Grand Jury Indictment, the Notice of Suspension, Postal Service counsel's transmittal memorandum and the Postal Service brief.

FINDINGS OF FACT AND DECISION

On or about November 20, 1980, a Grand Jury of the United States District Court, Middle District of Pennsylvania, issued an indictment charging Respondents with 25 counts of violations of 18 United States Code, ?? 2, "Principals;" 371, "Conspiracy to commit offense or to defraud United States;" 1001, "Statements or entries generally;" and 1341, ""Frauds and swindles." These violations are alleged to have taken place in connection with as many as 27 contracts between LaBar Transportation Corporation and the United States Postal Service, under which LaBar transported mail by truck between designated postal facilities during the period July 1, 1977, through December 31, 1978. According to the indictment Respondents sought cost adjustments permitted by statute through the systematic, fraudulent and arbitrary inflation of the cost of diesel fuel used by LaBar in connection with the performance of its contracts. As a result Respondents received fuel adjustments in excess of those which would have been allowable.

The grounds upon which a contractor may be suspended are enumerated in 1-605.1(a) of the Postal Contracting Manual which provides, in part, as follows:

A department head may, where the interest of the Government require sic , with the concurrence of the General Counsel, suspend any firm or individual:

(1) Suspected, upon adequate evidence of -

(i) Commission of fraud or a criminal offense as an incident to obtaining, or attempting to obtain, or in the performance of a public contract;

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(iii) Commission of embezzlement, theft, forgery, bribery, falsification, or destruction of records, receiving stolen property, or any other offense indicating a lack of business integrity or business honesty, which seriously and directly affects the question of present responsibility as a Government contractor; or

(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.

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The Grand Jury Indictment constitutes adequate evidence to support a finding that Respondents are suspected of the commission of fraud or a criminal offense in the performance of a public contract. Accordingly, under § 1-605.1(a) of the Postal Contracting Manual, sufficient grounds exist to suspend Respondents from being awarded contracts with the United States Postal Service. See Contract Master Services, Inc., P.S. Docket No. 5/18, (May 20, 1977). Respondents' appeal from the Notice of Suspension is, therefore, denied.