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ADMINISTRATIVE AGREEMENT
between
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY (EPA)
and
CET ENVIRONMENTAL SERVICES, INCORPORATED (CET)
EPA Case No. ▇▇-▇▇▇▇-▇▇
PURPOSE
This agreement is being made between the EPA and CET in order to provide
EPA with certain assurances during the course of a Federal investigation
concerning CET's claims for costs associated with the performance of services
on various EPA contracts.
This agreement describes the conditions under which EPA will terminate its
suspension of CET, and what assurances CET will provide to protect the
Government's interests on an interim basis, pending development and definition
of the investigation(s) and/or audits that form the bases for EPA's August 10,
1999 suspension of CET.
It is understood by EPA and CET that this agreement is not a final
resolution of any issue involved in this matter. Nor does this constitute a
resolution of matters that may be pending before any other government agency. At
any time if the information available to the Debarring Official, or the
circumstances, change, the Debarring Official may reinstate CET's suspension.
Nothing in this agreement is to be construed as a finding by the Debarring
Official or an admission by CET that any amounts in question under CET's
contracts with EPA are due the Agency, or that CET has engaged in misconduct for
which criminal prosecution, civil recovery, or administrative debarment action
is warranted. This agreement recognizes that the allegations that constitute the
bases for EPA's suspension are subject to further definition and factual
development during the ongoing investigation, or are yet to be resolved by audit
resolution. By signing and abiding by this agreement, CET wishes to
affirmatively demonstrate its willingness to cooperate with the audits and
investigation, and to secure important Government business interests pending
resolution of the matters so as to obviate EPA's need to impose suspension to
protect those interests.
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RECITALS
On July 30, 1999, the EPA Suspension and Debarment Division (SDD) filed a
request for suspension of CET alleging that CET had engaged in intentional
misconduct with respect to billing EPA for services provided under various EPA
contracts. The SDD made other allegations with respect to CET's billing and
accounting system, and CET's lack of cooperation with Federal authorities
during the course of the audits and investigation.
On August 10, 1999, the EPA Debarring Official suspended CET, having made
an initial finding that the information presented by the SDD constituted
adequate evidence that a cause for debarment may exist and that immediate action
was necessary to protect procurement and assistance interests of the Federal
Government.
The United States Attorney's Office for the Western District of Washington
requested that the Debarring Official not engage in fact-finding as to disputed
material facts pursuant to 40 CFR Section 32.412(b)(l)(ii).
On September 13, 1999, CET's President and Controller personally appeared
with counsel and presented matters in opposition to the suspension before the
EPA Debarring Official at proceedings conducted by EPA Hearing Officer, ▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇.
As part of its presentation in opposition to the suspension, CET provided
relevant information concerning the SDD's allegations, and made certain
assurances(1) and other offers to protect the Government's interests. After
considering all information in the suspension record available at this time, the
Debarring Official has determined that it is appropriate to terminate CET's
suspension upon CET's willingness to adhere to its offers and cooperate fully
with all Federal and other authorities investigating the matter(2), and to take
other actions described in this agreement.
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(1) As part of its presentation, CET stated that it would not use the
services of its former Vice President, Mr. ▇▇▇▇ ▇▇▇▇▇▇▇, as either a CET
employee or contract consultant on any Government contract until allegations
concerning his conduct in the matter have been resolved and addressed.
(2) During final submissions, SDD counsel raised questions concerning
certain filings made by CET to the Internal Revenue Service (IRS) and the
Securities and Exchange Commission (SEC). Although the Debarring Official finds
no evidence in the record to conclude impropriety on the part of CET, CET has
agreed to cooperate fully with the IRS and SEC in any inquiry those agencies may
conduct concerning those issues.
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TERMS
1. COOPERATION. CET agrees to cooperate fully with any Federal, State or other
government officials investigating, auditing, or otherwise reconciling
claims involved in this matter. Cooperation includes providing immediate
access to CET facilities, documents or other information (regardless of how
such information was recorded, stored, reported or translated), at
reasonable times and in reasonable business settings so as to assist
government officials in ascertaining CET's costs, accounting, billing or
other business policies and practices related to the issues forming the
bases of CET's August 10th suspension. This provision includes records
related to appeals under the disputes clause, or settlement of any claims
under the contract(s) concerned, whether or not those claims have been
finally resolved.
2. ACCESS TO RECORDS. CET agrees to provide immediate access to, records and
information it has, controls, or is responsible for, without the
government having to issue subpoenas or other compulsory process to obtain
information and data. CET will ensure that any documents or other forms of
information requested by a government office or official are delivered and
received in accordance with the request. CET understands that this includes
giving the government access to its software for government officials to
obtain, inspect and interpret data within CET's computer files, if legally
permissible.
3. EMPLOYEE INTERVIEWS. CET agrees to provide the government with unrestricted
access to its current employees for interviews, and will not impede access
to former employees. Nothing in this obligation shall be deemed to require
CET to take any action beyond that of providing reasonable access to
employees, and CET will not advise, direct or otherwise influence any
current or former employee with respect to any statement made, or to be
made, to the government, except as may be legally appropriate in order to
provide legal representation to CET.
4. SUBCONTRACTS. While under the obligations of this agreement, CET agrees to
include the obligations in paragraphs 1-3 above, in any of its future
subcontracts that are cost-reimbursement, incentive, time and materials, or
labor-hour type contracts (or any combination of these) that require data
for submission into the financial and technical progress reports.
5. FINANCIAL RESERVE. CET agrees that OAM may establish a reserve amount of
SEVEN HUNDRED THOUSAND DOLLARS ($700,000.00), pending completion of the
investigation and/or resolution of the audits concerning this matter. Such
amount shall consist of FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) from
current and future EPA invoices that are otherwise due and payable but have
not yet been paid and a FIFTEEN PERCENT (15%) withholding of the estimated
base fee and determined award fee. Should the AM Director determine the
current invoices plus the 15 percent withholding
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to be insufficient to cover the total reserve amount under this paragraph,
the OAM Director must notify CET of any deficiency, and CET agrees to
retain in its own books of account a set-aside of such sums from its
earnings and profits, sale of assets, other income realized, restructure of
its debts, or deferred payment of dividends or compensation, in order to
fund the reserve balance as security against potential claims arising from
the investigation and/or audits that formed the bases for CET's suspension.
If at any time during the investigation and/or pending resolution of the
audits in this matter, the OAM Director determines that a greater or lesser
reserve is necessary, the OAM Director, after consulting with the Debarring
Official, shall notify CET and the reserve amount under this paragraph
shall be adjusted accordingly. If CET is required to retain a set-aside to
meet an adjusted total reserve under this paragraph, and if that total
reserve is subsequently decreased, in determining any balance due CET, such
balance shall be satisfied first from the CET set-aside. Any remaining
balance due CET may be paid to CET with interest due according to
applicable rates as determined by the U.S. Department of the Treasury. In
no event shall any amount retained by OAM as part of the reserve under this
paragraph, or held by CET as a set-aside to meet the adjusted total
reserve, be regarded as a failure by the Government to comply with the
requirements of the Prompt Payment Act, and interest penalties will not
accrue on any part of the total reserve retained by OAM or set-aside by
CET.
6. DAILY REPORTS. CET agrees to comply with any directive or other guidance
issued by EPA after the effective date of this agreement to clarify CET's
obligations to submit estimated or actual daily usage and cost information
on any Emergency Response contract.
7. SUBMISSION OF INVOICES. CET shall generate invoices only from its job cost
accounting system. CET shall submit all EPA contract invoices for audit
review and approval by the cognizant Defense Contract Audit Agency office
prior to submission for payment by EPA. The terms of such reviews are
subject to specifications as defined by the EPA Financial Administrative
Contracting Officer responsible for negotiation of CET's indirect cost
rates.
8. ASSURANCE AGAINST DIVERSION OF INCOME/ASSETS. From the date of this
agreement until relieved of this obligation by the Debarring Official, CET
shall not transfer income or assets of the corporation, delay the
recognition or realization of any income, incur unnecessary debt to any
officer or director, or make other payment of dividends or pay excessive
compensation to any officer, director, manager or their relatives with the
intent to place corporate assets or income beyond the reach of the Federal
Government to satisfy potential claims that may arise from the
investigation or audits that are the subject of EPA's suspension. Any
such action that results in the inability of the EPA to satisfy its
contract claims for reimbursement of losses against CET's assets and
income may be regarded by the EPA and CET as an ultra ▇▇▇▇▇ act for which
EPA or the United States may seek contribution from CET's corporate
officers and directors. CET shall notify the EPA Debarring Official in
the event it plans to reorganize itself, transfer or sell any of its
assets, or increase compensation or fringe benefit payments to its
officers or directors, declare unusual dividends, or take other action that
will significantly change the value of assets available to satisfy
potential claims under this
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paragraph. CET shall inform any potential purchaser of its assets, or any
portion of its assets, of the existence of this agreement, and that any
such sale/purchase is subject to the terms of this agreement.
9. TERMINATION OF FUTURE CONTRACTS, SUBCONTRACTS OR OTHER AWARDS. If EPA
determines that any serious misconduct occurs within CET in its accounting
and/or submission of invoices, or services provided to any Federal agency
or other person during performance of duties under a Government-funded
contract or assistance award during the existence of this agreement, CET's
contract, subcontract or award may be immediately terminated for cause, and
without cost to the Government, its contractor, or any assistance
participant.
10. FAILURE TO ADHERE TO THIS AGREEMENT. If CET fails to comply with its
obligations under this agreement in any material respect, the EPA Debarring
Official may unilaterally terminate the agreement and reinstate CET's
suspension upon the original cause(s) for action, and for material breach
of the provisions of this agreement. In such event, the EPA Debarring
Official will provide CET with appropriate notice and an opportunity to
contest the action in accordance with 40 CFR Part 32.
11. TERMINATION OF CET'S SUSPENSION. Upon execution of this agreement by the
EPA Debarring Official and CET's representative(s), EPA shall immediately
terminate CET's suspension and notify the General Services Administration
(GSA) to remove CET's name, address and entry from the GSA List of Parties
Excluded from Federal Procurement and Non-procurement Programs. Upon
execution of this agreement by the parties, CET shall be eligible to bid
for, receive, and perform any Federal contract or subcontract, or
participate in any assistance, loan or benefit without restriction, except
as may be required by law or regulation, this agreement, or the terms of a
particular contract, subcontract or nonprocurement award or transaction.
12. RELEASE. CET agrees to release and hold harmless any agency of the United
States, or officials acting on its behalf in their official or personal
capacity, from any damages and claims CET may otherwise believe it is
entitled to pursue as a result of its suspension by EPA.
13. MODIFICATION OR TERMINATION OF THIS AGREEMENT. The terms of this agreement
may be modified by CET and the EPA Debarring Official at any time in
accordance with information developed during the Government's
investigation and/or audits. If at any time, CET desires to conclude the
administrative suspension/debarment matters as part of a comprehensive
settlement, CET may apply to the Debarring Official for termination,
modification or other adjustment of this agreement as a final settlement in
accordance with a comprehensive resolution under 40 CFR Section 32.315.
14. COMPLIANCE REVIEW. At any time during this agreement, EPA may review CET's
compliance with its obligations under this agreement. Such review may
include an
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examination of CET's books and records, employee interviews, or submission
of documentation as may be appropriate. In the event a compliance review
under this paragraph is to be conducted which will necessitate a site visit
by EPA employees, the EPA Debarring Official shall notify CET of EPA's
intent to conduct a review at least five (5) working days prior to such
review.
15. INCORPORATION BY REFERENCE. CET agrees that OAM may unilaterally modify EPA
Contract No. 68-W7-0016 to incorporate by reference any or all of the
requirements contained in this agreement as it deems appropriate to the
administration of that contract.
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Date
Debarring Official
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▇▇▇▇▇▇ ▇▇▇▇▇, President Date
CET Environmental Services, Inc.
We, the undersigned officers and directors of CET, hereby sign this
agreement as our acknowledgment of our obligations contained in paragraph 8 of
this agreement. (Add others as appropriate)
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Name and Title Date
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Name and Title Date
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Name and Title Date
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Name and Title Date
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examination of CET's books and records, employee interviews, or submission
of documentation as may be appropriate. In the event a compliance review
under this paragraph is to be conducted which will necessitate a site visit
by EPA employees, the EPA Debarring Official shall notify CET of EPA's
intent to conduct a review at least five (5) working days prior to such
review.
15. INCORPORATION BY REFERENCE. CET agrees that OAM may unilaterally modify EPA
Contract No. 68-W7-0016 to incorporate by reference any or all of the
requirements contained in this agreement as it deems appropriate to the
administration of that contract.
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Date
Debarring Official
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ November 4, 1999
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President Date
CET Environmental Services, Inc.
We, the undersigned officers and directors of CET, hereby sign this
agreement as our acknowledgment of our obligations contained in paragraph 8 of
this agreement.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ November 4, 1999
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▇▇▇▇▇ ▇. ▇▇▇▇▇, Director Date
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇ November 4, 1999
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▇▇▇▇ ▇. ▇▇▇▇▇, Interim Chief Financial Date
Officer, Assistant Secretary
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ November 4, 1999
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Vice Date
President, Director
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ November 4, 1999
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President, Chief Date
Executive Officer, Secretary,
Director
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/s/ ▇▇▇▇▇▇ ▇▇▇▇▇ November 4, 1999
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▇▇▇▇▇▇ ▇▇▇▇▇, Director Date
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ November 4, 1999
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Director Date