Document: 385 U.S. 138 87 S.Ct. 350 17 L.Ed.2d 249 UNITED STATES, Petitioner,v.ACME PROCESS EQUIPMENT COMPANY. No. 86. Argued Nov. 9, 1966. Decided Dec. 5, Rehearing Denied Jan. 16, 1967. See 1032, 738. Sol. Gen. Thurgood Marshall, for petitioner. Jack Rephan, Washington, D.C., respondent. Mr. Justice BLACK delivered the opinion of Court. 1 The respondent, Acme Process Equipment Company, brought this action against United States in Court Claims to recover damages breach a contract under which undertook through itself and subcontractors manufacture 2,751 75-mm. recoilless rifles about $337 per rifle. Among other defenses, alleged that it had rightfully canceled its with because three Acme's principal employees accepted compensation awarding subcontracts violation Anti-Kickback Act set out part below.1 found, as facts, kickbacks been paid was ground on prime Acme, but construed not authorizing cancellation. 347 F.2d 509, 171 Ct.Cl. 324. We hold does. I. 2 In October 1952, hired Harry Tucker, Jr., his associate, James Norris, purpose establishing managing new division company handle government contracts. Norris made general manager production authority submit bids, sign contracts, award subcontracts. Tucker placed charge sales, expediting subcontract operations. Prior time entered into All Metals Industries, Inc., he rceive commission all sales customers, including procured by him. Tucker's employment specifically stated represented would continue represent firms lines business, did consult any clients at hired. 3 Late October, advised superiors proposed Army rifles, suggestion, submitted bid Since lowest, began negotiations culminating January 1953. were handled Acme. contemplated project be largely subcontracted, leaving only final finishing assembly components, expressed keen interest subcontractors. Not review subcontracting plans require notify changes those during stages negotiation, eventually awarded required approval excess $25,000. Metals, amounted one-third amount contract, actually participated between Army. 4 During period negotiation two developments took place. obtained agreements from potential pay him commissions orders could procure contracting officers warned president, Joshua Epstein, suspected having engaged contingent-fee arrangements contractors. 5 Finally, contract. Although price fixed rifle, contained redetermination clause which, after 30% delivered, parties negotiate past future shipments upward or downward, an upper limit $385 Within few weeks awarded, companies prior kickback Acme.2 kickbacks, but, apparently unsatisfied payoff, got superintendent chief plant son president stockholder, join conspiracy. Together Epstein threatened cancel Metals' unless $25,000 dummy corporation owned fictitious consulting services. reluctantly acceded shakedown. charged increase price. 6 they knew representing notified Army's suspicions involvement contingentfee arrangements, officials aware activities until late At time, caused resignation officials. 7 1956 indicted then Act, 60 Stat. 37.3 After presentation Government's case, District granted defendants' motion acquittal Act—which embraced 'cost-plus-a-fixed-fee cost reimbursable' contracts—did apply fixed-price provision limited redetermination. court found actions 'despicable morally reprehensible, unfortunately within narrow letter law.' recommended Congress amend 'to include crime vicious immoral type conduct has exhibited case.' v. Crim. 18535 (D.C.E.D.Pa.), April 14, 1956. 8 Court's indeed spur Comptroller General recommend amendatory legislation 1960 amended 'negotiated contracts.'4 civil retroactive allow recovery 'whether heretofore hereafter incurred subcontractor.' II. 9 originally passed 1946 1960, provides express sanctions violation: (1) fine imprisonment one who makes receives kickback, (2) States. held, is argued here, wanted provide additional remedy annulment, have done so' language, F.2d, 521, 343, course have. But fact see fit such language does end matter. 'prohibited' payments, clearly policy decidedly hostile them. They recognized devices hurtful procurement practices. Extra expenditures get necessarily add costs cost-plus-a-fixed-fee reimbursable And also true where negotiated clause, here. here are Government stages. contractor rarely submits tentatively lined up Indeed, frequently participate subcontractor's tentative will, course, reflect contemplates paying inflated will reflected contractor's Government. renegotiation stage, actual experience basis redetermination, form upward.5 10 argues, however, enough protect increased attributable argument rests false assumptions. first can easily detected recovered. This hardly case. Kickbacks being criminal means must made—if all—in secrecy. Though inflate Government, inflation detectable. particularly regards defense contracts products involved usually commercial market there may effective competiton. Such generally without formal advertising competitive bidding, often no opportunity compare going prices Government.6 discovered, if all, let. second assumption underlying equal recoverable. Of subcontractor likely all. A anticipates obtaining virtue little incentive stint estimates. obtain regard economic merits proposal, tempted proposal more than kickback. even isolate still saddled who, job merit, perhaps entirely unreliable ways. unreliability turn undermines security performance result public cannot tolerate, especially where, important involved. III. 11 Mississippi Valley Co., 364 520, 563, 81 294, 316, 268, 'a statute implies enforced when arises circumstances lead enforcement offend essential enactment.' approved cancellation conflict-of-interest 'the sanction nonenforcement consistent effectuating embodied in' statute. Ibid. think same thing said 12 Claims, holding authorize violation, distinguished Co. Anit-Kickback unlike statute, well remedy. we do deem decisive. Where mere conflict interest, concrete monetary rewards received action. bribery something specific recover, hence quite natural There absolutely indication legislative history Congress, providing tangible evil, intended preclude necessary effectuate Act. 13 likewise merit Claims' distinction case violated whereas conspirators acquitted violating existed occurred, 1960. As seen, technical 'cost expressly applied. It unnecessary us decide whether correct.7 For contravened law, strictly construed, violative 1946. If reach types use then. recent extensive forms led cover these close loophole opened employees, congressional changed. merely reiterated recognition evil sought correct law long-standing policy. making retroactive, indicated basic change kickbacks. 14 requires able rid tainted take place either shortly thereafter, least kickbacking These circumstances, feature produced great likelihood reliability directly affected performed 15 relied heavily finding none previously agents know echelon managers. One guilty company's plants receivers operations, kind personnel whose held responsible. Cf. Gleason Seaboard Air Line R. 278 349, 49 161, 73 L.Ed. 415. selected carry business performing obvious reason why their field should considered conduct, touches all-important subject supra, 565, S.Ct., 317, appropriate say 'inherent difficulty detecting corruption * (the Act) unenforceable, though party seeking ostensibly appears innocent.' 16 judgment reversed directions sustain States' right so ordered. 18 Judgment directions. Section 37, amended, 74 740, 41 U.S.C. § 51, pertinent part: 'That payment fee, commission, granting gift gratuity kind, indirectly, behalf subcontractor, officer, partner, employee, agent department, agency, establishment furnishing supplies, materials, equipment services whatsoever inducement order hereby prohibited. expense gift, shall charged, *. cost, recoverable recipient thereof setoff *' 54, provides: 'Any person knowingly, make receive prohibited fined $10,000 imprisoned years, both.' Shortly father Norris' assistant total five original *.' H.R.Rep.No.1880, S.Rep.No.1585, 86th Cong., 2d Sess., U.S.Code Cong. & Admin.News p. 3292. note 1, supra. precisely what happened before 1953 data purposes included charges employees. amounts Had discovered canceled, renegotiate rifle $385. $132,000 entire n. 4, 3. Barnard, 255 583, cert. denied, 358 919, 79 287, 238, unlimited

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