formance of contract or program provisions.

(4) Persons are debarred under the provisions of the Walsh-Healey Public Contracts Act (41 U.S.C. 37) and DavisBacon Act (40 U.S.C. 276a-2(a)).

(b) All suspension and debarments under the provisions of this part shall extend to and include any proprietorship, corporation, partnership, association, or other business entity, the policies or business practices of which are decided or materially influenced by the suspended or debarred person if such proprietorship, corporation, partnership, association, or other business entity is specifically named in the notice of suspension or debarment.

(c) The provisions of this part shall not be construed to require the suspension and debarment of any person but shall be deemed a statement of the terms and conditions under which suspension and debarment action may be taken by an authorized official when such action is deemed to be in the best interests of CCC.

(a) Suspension is a drastic action and, as such, shall not be based upon an unsupported accusation. In assessing whether adequate evidence exists for invoking suspension, a consideration should be given to the amount of credible evidence which is available, to the existence or absence of corroboration as to important allegations, as well as to the inferences which may properly be drawn from the existence or absence of affirmative facts. This assessment should inIclude an examination of basic documents, such as contracts, investigation reports, if available, and correspondence. Suspension is for the purpose of protecting the interest of CCC and not for punishment. A suspension may be modified whenever it is determined to be in the interest of CCC to do so.

(b) An authorized official may, upon probable cause for belief that one or more of the causes for debarment specified in § 1407.5 exist, suspend any person on written notice and without hearing for periods not longer than those specified in this section. Such notice shall be sent to the suspended person and to all other individuals or business entities who are to be suspended because their policies or business practices are decided or materially influenced by the suspended person. The notice shall state the grounds for

50-021-71- -4

the suspension, without disclosing the evidence, and shall specify the suspension period.

(c) All suspensions shall be for a temporary period of not more than 1 year except as otherwise specified in this part. If civil or criminal action has not been initiated by the Department of Justice within 12 months from the date of the notice of suspension, the suspension shall be terminated unless the Attorney General, or his designee, requests continuance of the suspension. If such a request is received, the suspension may be continued for an additional 6 months. A suspension shall not continue beyond 18 months unless civil or criminal action involving the fact situation upon which the suspension action was taken has been initiated within that period. Whenever such legal action has been initiated, the suspension may continue until the legal proceedings are completed.

(d) The termination or extension of a suspension shall not prejudice any debarment action which may be or may have been taken.

or

(b) The person has been debarred or otherwise forbidden from contracting with or participating in contracts or programs administered financed by another agency of the U.S. Government. (c) The person has failed to perform obligations or carry out representations or warranties to CCC, or has made misrepresentations to CCC, under circumstances considered to be of such a serious and compelling nature as to justify debarment.

(d) The person has committed other acts of misconduct, including but not limited to fraudulent activities, showing such a serious lack of business integrity business honesty warrant as to debarment.

or

§ 1407.6 Suspension pending debarment, notice of proposed debarment, decision of authorized official and right to hearing.

(a) Debarment proceedings may be instituted by any authorized official without prior suspension action having been taken or while a period of suspension is in effect. In either event, the notice of proposed debarment may provide for a period of suspension or a continuation of any period of suspension which may be in effect. Any such suspension shall continue until completion of the debarment proceedings including such time as may be required for an appeal to the Board of Contract Appeals: Provided, however, That any such suspension shall not exceed a period of 120 days from the date of the notice of proposed debarment or 120 days after the expiration of any period of suspension imposed under the provisions of § 1407.4, whichever period expires last: And provided further, That any such period of suspension shall be increased by the period of any extension granted the appellant, on his request, for prosecution of his appeal.

(b) Debarment proceedings shall be instituted by any authorized official by sending a notice of proposed debarment to the person concerned and to all other individuals or business entities who are to be debarred because their policies or business practices are decided or materially influenced by him, at the last known address of each such person, by certified mail, return receipt requested. Such notice shall set forth:

(1) The name of the person debarred together with the names of all other individuals or business entities who are to be debarred because their policies are decided or materially influenced by him; (2) One or more of the causes for debarment specified in this part;

(3) A brief statement of facts showing the basis for the belief that one or more of the causes for debarment specified in this part exist; and

(4) A statement that all persons included in the debarment may, within the period stated in the notice, present information for consideration in their behalf.

(c) If no response is received from any such persons within the time limit specified in the notice or any written extension thereof, the issue of debarment shall be determined by the authorized official upon the basis of such informa

tion as may be available to him bearing upon the causes for debarment specified in the notice. If such persons, in response to the notice of proposed debarment, submit information for consideration on their behalf, such information, together with such other data as may be available to the authorized official, shall be considered by him in making his determination on the issue of debarment.

(d) Each such person shall be notified of the decision of the authorized official, of the findings of fact on which it is based, and of any period of debarment, by certified mail, return receipt requested, addressed to his last known address. If such person is debarred, such notice shall also advise him that he may appeal the debarment action to the Board of Contract Appeals within 30 days after the date he receives the notice. Any such appeal shall be subject to the rules of the Board of Contract Appeals (Part 2400 of this title). If appealed the debarment shall be deferred pending decision of the Board of Contract Appeals, but such person may be suspended or continued in a suspended status until final decision, as provided in this § 1407.6. On determination of the appeal by the Board of Contract Appeals, the appellant shall be notified by certified mail, return receipt requested, addressed to his last known address, of the Board's decision and of any period of debarment determined by the Board. The decision of the Board on the issue and period of debarment shall be final and conclusive, unless determined by a court of competent jurisdiction to be fraudulent, arbitrary, capricious, or so grossly erroneous as to imply bad faith or not supported by substantial evidence. If no appeal is filed with the Board of Contract Appeals, the decision of the authorized official on the issue and period of debarment shall have a like degree of finality.

§ 1407.7 Period of debarment.

All debarments shall be for a period commensurate with the gravity of the cause therof. As a general rule, periods of debarment in excess of 3 years will not be imposed but such policy shall not preclude the impositions of longer periods of debarment in flagrant cases. If debarment is preceded by suspension, consideration may be given to such period of suspension in determining the period of debarment. At any time during the period of debarment, the debarment may be removed or otherwise modified if it is

determined by the Executive Vice President, Vice President, or Deputy Vice President that such action is warranted. Nothing in this § 1407.7 shall preclude the institution of new debarment proceedings during the pendency of an existing debarment or following its termination: Provided, That such new debarment proceedings shall be based upon facts and circumstances other than those underlying the original debarment.

§ 1407.8 Restrictions on suspended and debarred persons.

Persons who are suspended or debarred under this part shall be subject to all of the following restrictions except to the extent that the notice of suspension or debarment otherwise specifically provides:

(a) No suspended or debarred person may contract with CCC or participate in any manner in any programs administered or financed by CCC: Provided, That current contracts with or other firm commitments of CCC to such persons shall be continued in effect notwithstanding the suspension or debarment unless such suspension or debarment specifies in writing that such contracts or commitments shall also be subject to such suspension and debarment action. However, any warehouse facilities operated by any suspended or debarred person may be removed from the lists maintained by CCC of warehouses approved for price support program purposes.

(b) No offers or proposals shall be solicited from suspended or debarred persons and if submitted by such persons shall not be considered in making awards.

(c) If a suspended or debarred person is proposed as a subcontractor, supplier, or agent the contracting officer shall decline to consent to the use of such person as a subcontractor, supplier, or agent. If CCC gives written notice to a person participating in a program administered or financed by CCC of the identity of a suspended or debarred person, such participant shall not use such suspended or debarred person as a subcontractor, supplier, agent, or employee in connection with such participant's performance under such program.

(d) Funds due or to become due any suspended or debarred person may be withheld in whole or in part in accordance with the Setoff, Withholding, and Stop Payment Policies of CCC (Part 1408 of this subchapter).

(e) Any or all of the restrictions for which provision is made under this § 1407.8 may be waived in whole or in part on written determination by the Executive Vice President, Vice President, or Deputy Vice President that such waiver of the restriction or restrictions involved is essential to carrying out the functions and responsibilities of CCC and is otherwise in the public interest. Any such waiver shall be effective only with respect to the transactions or categories of transactions specified therein. § 1407.9 Miscellaneous.

(a) The Executive Vice President, Vice President, or Deputy Vice President may delegate to such other employees of the Department, as he deems appropriate, authority to carry out the provisions of this part and all such persons to whom such authority has been delegated shall be deemed authorized officials within the meaning of this part.

(b) The issuance of this revised part shall not affect any suspensions and debarments imposed under the CCC suspension and debarment regulations heretofore in effect (29 F.R. 10495; 31 F.R. 4950).

Sec.

1408.15 Interest.

1408.16 Debtors operating under more than

one name.

1408.17 Responsibility of agents of or contractors with CCC.

1408.18 Administration.

AUTHORITY: The provisions of this Part 1408 issued under sec. 4(d), 62 Stat. 1071; 15 U.S.C. 714b.

SOURCE: The provisions of this Part 1408 appear at 30 F.R. 8094, June 24, 1965, unless otherwise noted.

GENERAL

§ 1408.1 Purpose.

This part states the policies of CCC and the conditions under which (a) debts owing to CCC will be set off against amounts payable to debtors by CCC, (b) requests will be made by CCC to other agencies of the United States for setoff against amounts payable by them to such debtors, and (c) debts owing to other agencies of the United States may be set off against amounts payable to debtors by CCC. This part also states the policies and the conditions under which actions will be taken to withhold or stop payment of amounts due debtors by CCC. The provisions of this part shall not apply to the collection of amounts due CCC under a contract by deduction from amounts otherwise payable under the same contract, since the collection of amounts due CCC in such cases is necessary to determine the amount properly payable under the contract.

(a) The term "setoff" means the application of a specified amount from amounts payable to a debtor as liquidation, in whole or in part, of an amount owed by the debtor.

(b) The term "withholding" means the taking of action temporarily to prevent the payment of a specified amount from amounts payable to a debtor.

(c) The term "stop payment" means the taking of action temporarily to prevent the payment of all amounts payable to a debtor under one or more contracts. (d) The term "CCC" means the Commodity Credit Corporation.

(e) The term "ASCS" means the Agricultural Stabilization and Conservation Service of the Department of Agriculture.

(f) The term "C&MS" means the Consumer and Marketing Service of the Department of Agriculture.

(g) The term "other agencies" includes any department, establishment, commission, administration, authority, board, bureau, or service of the United States, or any corporation other than CCC all of the capital stock of which is owned by the United States.

(h) The term "Executive Vice President" means the Executive Vice President of CCC.

(i) The term "in kind" means a payment-in-kind certificate.

§ 1408.3 Applicability of regulations of the Secretary of Agriculture, Part 13, Title 7, Code of Federal Regulations. The provisions of this part are not applicable to withholding or setoff action taken against amounts approved by Agricultural Stabilization and Conservation county committees for disbursement to persons under programs administered by the Department of Agriculture, or any agency thereof. The regulations governing such administrative action are contained in Part 13 of this Title 7, Code of Federal Regulations.

(a) If in the case of any procurement contract with CCC which provides for invoicing upon shipment from point(s) of shipment with delivery to be made at designated destination point(s) (1) payment is made to the Contractor prior to receipt of evidence of delivery, and (2) CCC thereafter determines that the Contractor is indebted to CCC because of losses sustained due to damage or deterioration of the commodity while in transit and prior to delivery, CCC may set off such indebtedness against amounts due and payable to the Contractor under any other contract with. CCC if the proceeds thereunder have not been assigned by the Contractor.

(b) In all other cases, debts due CCC shall be set off, in whole or in part, against amounts payable to debtors by CCC, either in cash or in kind, where the following conditions apply:

(1) The debtor has been given a reasonable opportunity to pay.

(2) The debtor has been notified that the debt will be collected by setoff.

(3) There is no legal bar to enforcement of the debt.

(4) The debtor has not disputed the validity or the amount of the debt or, if disputed, there is no reasonable basis to support the debtor's position or both of the following conditions apply:

(i) Compromise settlement cannot be effected and referral of the debt for legal action is not considered feasible because the amount of the debt is too small to warrant litigation, or there is good reason to believe the debtor may be unable financially to satisfy a judgment by the time the courts would render a decision, and there are no issues involved requiring court adjudication in the interest of program operations.

(ii) The setoff has been approved by an authorized claims official of CCC.

(c) A judgment in favor of CCC, or in favor of the United States on a claim of CCC, shall be set off against amounts payable to a debtor by CCC but, prior to taking such action, the approval of the Department of Justice (U.S. Attorney) shall be obtained.

(d) A debt due under the Civil Frauds Statute, section 231 of Title 31, United States Code, shall be set off against amounts payable to the debtor by CCC if the Department of Justice has authorized setoff.

(e) Debts due CCC from rail carriers for overcharges or for loss or damage shall be set off against amounts due such carriers under freight bills involving shipments on commercial bills of lading, in the following cases:

(1) Any overcharge debt if:

(i) The carrier, without reasonable justification, has declined payment of the debt or has failed to pay the debt after being given a reasonable opportunity, and

(ii) The period of limitation prescribed in section 16(3) (i), Title 49, United States Code, has not expired.

(2) Any loss or damage debt of less than $250 if:

(i) Demand for payment was made on the carrier within the period of time specified in the bill of lading.

(ii) The carrier has declined payment of the debt without reasonable justification,

(iii) The period of limitation prescribed in the bill of lading has not expired, and

(iv) The debt cannot be grouped within 20 months from the date it was first declined by the carrier with other similar debts against the same carrier making a total of $250 or more.

(3) Any loss or damage debt if the debt can be set off against the bill for transportation charges on the shipment on which the loss or damage occurred.

(4) Any overcharge or loss or damage debt due CCC on which the applicable period of limitation has run may be set off against any amounts owing by CCC to the carrier which are subject to a defense of limitation.

(f) If a CCC debt which is subject to collection by setoff under this part cannot be so collected because of insufficient amounts payable to debtor by CCC, CCC shall request another agency of the United States to set off the debt against amounts payable to the debtor in any case where CCC has information that amounts are payable to the debtor by that agency.

[30 F.R. 8094, June 24, 1965, as amended at 31 F.R. 10733, Aug. 12, 1966; 34 F.R. 9539, June 18, 1969]

§ 1408.5 Withholding.

Withholding shall be made from amounts payable to a debtor by CCC, either in cash or in kind, to insure that the interests of CCC and the United States will be protected, in the following

cases:

(a) Where there has been a serious breach of contract or violation of program requirements and the withholding action is considered necessary to protect the financial interests of CCC.

(b) Where there is substantial evidence of violations of criminal or civil frauds statutes and criminal prosecution or civil frauds action is of primary importance to program operations of CCC.

(c) Where prior experience with the debtor indicates that collection will be difficult if amounts payable to the debtor are not withheld.

(d) Where there is doubt that the debtor will be financially able to pay a judgment on the claim of CCC.

(e) When a judgment on a claim of CCC has been obtained.

(f) Where requested by the Department of Justice.