Contractors Live or Die by Uncle Sam’s Black Book

Unlike the Yellow Pages, businesses lose customers if they are published in this book.

Every month, the federal government distributes a thick listing of contractors temporarily barred from future business with Uncle Sam. To make the blacklist--and numerous Ventura County companies or their top officials have--contractors must have violated one of a series of government statutes, including fraud, antitrust violations, embezzlement, theft, forgery or bribery.

Once blacklisted, contractors can no longer tap into the roughly $400 billion the federal government spends on goods and services every year, a huge and potentially fatal blow for those who rely on federal business.

The punishment can span up to a decade for the most egregious infractions, but yearlong debarments are more common, and contractors sometimes can remove themselves from the list by correcting their violations.

“It can be a tremendously big deal to be on that list,” said Charles Eckerman, an Environmental Protection Agency attorney who has cited companies for serious environmental violations. “For those heavily involved in federal contracting it can be worse than a criminal action. It could mean the end of the company.”

That’s what happened to Melody Knitting Mills Inc., which ended up in the infamous government manual for repeated violations of the Clean Water Act.

The Simi Valley fabric-dying factory, also known as Travelin’ West Textiles, was the largest discharger of industrial waste water to a local treatment facility, EPA officials said. In 1994, owner Richard V. Bates and plant engineer Kenneth A. Baber were found to have improperly polluted the water with chlorine residuals, toluene, xylene ethyl benzene and other chemicals, officials said.

The company, which paid $45,000 in restitution, has shut its doors. EPA officials keep it on the list of banned contractors nonetheless to prevent it from starting up operations again.

A good chunk of the nation’s businesses count on the federal government as a customer. As of 1993, about 26 million workers--22% of the work force--were employed by federal contractors or subcontractors. The government’s $400 billion in annual purchases account for 6.5% of the nation’s economy.

Also on the list is Dixon Aircraft Components, a now-closed Oxnard company that repaired worn engines for the U.S. Air Force’s largest cargo plane, the C-5B. The company and its owner, Rudolf Augustus Dixon, were found to have falsified maintenance records and overcharged the government.

Oxnard psychologist Kenneth Bowers made the list after he was found to have improperly billed Medicaid for psychological evaluations that were never performed. In addition to 180 days in jail and a $75,000 fine, Bowers has been barred from contracting with any federal agency indefinitely, officials said.

The government’s black book was created in the early 1980s to coordinate what had been a haphazard way of tracking rogue contractors, said Ida M. Ustad, associate administrator for the General Services Administration. Previously, each government agency had its own list of violators and there was no governmentwide way of cutting off business with them.

The current book contains tens of thousands of individuals and corporations and is updated monthly. It is made available--in published form and by computer--to officials throughout the bureaucracy. Before any contract is signed, officials are required to check the book--which is officially called the “List of Parties Excluded from Federal Procurement and Nonprocurement Programs.”

In his State of the Union speech last month, President Clinton indicated that he intends to add even more names to the book by using the purchasing power of the government as leverage more often.

To fight illegal immigration among government contractors, Clinton called for an executive order that would prevent the government from doing business with employers found to have knowingly hired illegal immigrants. Those companies fined for such an offense would be added to the blacklist.

The prospect of losing federal business might prevent employers from hiring illegal immigrants, Clinton aides said. But they acknowledged it is difficult for the Immigration and Naturalization Service to prove that a company has knowingly hired an illegal immigrant because of the wide availability of fraudulent work documents.

Last year, Clinton issued a similar executive order banning federal contracting with any companies that hire permanent replacements for striking workers. The order applied to companies with federal contracts exceeding $100,000--about 28,000 firms.

But the U.S. Chamber of Commerce fought that measure in court, and last week a federal appeals court threw it out, saying the White House had overstepped the law. Clinton, meanwhile, has ordered the Justice Department to challenge the ruling.

Some of the contractors who make the government’s list are unable to conduct business for another even more pressing reason--they are behind bars.

For instance, Billie Wayne Puckett was sent prison for falsifying federal documents and selling uncertified airplane parts to McDonnell Douglas Corp. Like many other violators, his Simi Valley firm, Tri Air Supply, no longer does business with the federal government--or anyone else.