Is a Public Contractor Entitled to an Administrative Review Before Being Debarred? Not Necessarily

A vendor to the City of New York was terminated from its existing contracts and disqualified from future contracts following internal City correspondence and a front page article in the New York Times indicating alleged irregularities in the vendor’s procurement of certain City contracts. The vendor filed an action in federal court claiming, among other things, deprivation of its liberty interest without due process under the 14th Amendment and seeking injunctive relief. The ground for the liberty interest claim was that the City in effect debarred the vendor on the spot, without initiating the administrative reviews that are called for by the City’s own procedures. The procedures in question were designed specifically to provide “due process” to vendors whose eligibility for City contracts is in question.[i]

The district court granted the vendor’s request for injunctive relief, but the Second Circuit reversed. The Second Circuit held that even though no administrative review had been undertaken prior to the debarment, the vendor nevertheless was afforded due process since it could have filed an Article 78 proceeding in state court challenging the debarment after the debarment was effectuated; that this is an adequate “post-deprivation” remedy. Where the deprivation of constitutionally protected rights is random or unauthorized, and a pre-deprivation remedy is not available, a post-deprivation remedy, if “meaningful,” may suffice.[ii]

[i] See Hellenic Amer. Action Neighborhood Action Committee v. City of New York, 933 F. Supp. 286 (S.D.N.Y.), rev’d 101 F.3d 877 (2d Cir. 1996), cert. dismissed, 521 U.S. 1140 (1997).

[ii] Where the deprivation or debarment is not “random” or “unauthorized,” but is pursuant to established procedure, a “post-deprivation” remedy may not be sufficient. See A.F.C. Enterprises, Inc. v. NYC School Constr. Auth., 2001 WL 1335010, * 14-16 (E.D.N.Y., Sept. 6, 2001). In view of the holding in Hellenic that “due process” had been provided, the Second Circuit did not reach the issue whether the plaintiff’s liberty interests had been violated.