Administrator, Wage and Hour Div., USDOL v. Seven Hills, Inc.

U.S. Department of Labor 	Administrative Review Board
200 Constitution Ave. NW
Washington, DC 20210-0001
IN THE MATTER OF:
ADMINISTRATOR, WAGE AND
HOUR DIVISION, UNITED STATES
DEPARTMENT OF LABOR,
PROSECUTING PARTY,
v.
SEVEN HILLS, INC.,
RESPONDENT.
ARB CASE NO. 2024-0005
ALJ CASE NO. 2018-SCA-00002
ASSOCIATE CHIEF
ALJ CARRIE BLAND
DATE: January 30, 2026
Appearances:
For the Administrator, Wage and Hour Division:
Seema Nanda, Esq., Jennifer S. Brand, Esq., Maria Van Buren, Esq.,
Jonathan T. Rees, Esq., and Priom Ahmed, Esq.; United States
Department of Labor, Office of the Solicitor; Washington, District of
Columbia
For the Respondent:
Natalie Nehls, Esq. and Jonathan W. Greenbaum, Esq.; Coburn
Greenbaum & Eisenstein PLLC; Washington, District of Columbia
Before JOHNSON, Chief Administrative Appeals Judge, and KAPLAN,
BURRELL, and KIKO, Administrative Appeals Judges; KAPLAN,
Dissenting
DECISION AND ORDER
This case arises under the McNamara-O’Hara Service Contract Act of 1965,
as amended (SCA or the Act), and its implementing regulations.0F
1 On September 29,
2023, a United States Department of Labor Administrative Law Judge (ALJ) held
that Respondent Seven Hills, Inc., failed to establish the “unusual circumstances”
1 	41 U.S.C. §§ 6701-6707 (2011), and its implementing regulations at 29 C.F.R. Parts
4, 6, and 8 (2025).

2
the regulations require to warrant relief from an otherwise automatic three-year
debarment for their undisputed SCA violations. Respondent filed a Petition for
Review challenging its debarment.
Because a preponderance of evidence supports the ALJ’s culpable conduct
findings, we affirm the ALJ’s decision.
B ACKGROUND
1. Statutory and Regulatory Framework
The SCA requires government contractors to meet minimum standards in
paying prevailing wages and fringe benefits.1F
2 Every contract must include clauses
setting forth the contract’s SCA obligations including a wage determination issued
by the Secretary of Labor through the Wage and Hour Division (WHD) establishing
the minimum prevailing wage rates and fringe benefits that contractors must pay
service employees.2F
3
The SCA implementing regulations, among other things, require contractors
to pay covered workers at least the “minimum compensation specified” for “each
hour worked,”3F
4 and provide “fringe benefits” to all covered workers for “all hours
spent working.”4F
5 Employers must “promptly” pay the prevailing wage rate no “later
than one pay period following the end of the pay period in which they are earned.”5F
6
In addition to creating liability for underpaid compensation, violations of these
requirements result in an automatic three-year debarment unless the contractor
can demonstrate that “unusual circumstances” warrant relief from debarment.6F
7
Under the SCA regulations, offending contractors must satisfy each stage of a
three-step process to establish unusual circumstances.7F
8 Step One prohibits relief
when any of the following circumstances exist: (1) the conduct causing SCA
2 	41 U.S.C. §§ 6702-6703.
3 	41 U.S.C. § 6703; 29 C.F.R. §§ 4.3(a), 4.6.
4 	29 C.F.R. § 4.178.
5 	Id. § 4.172.
6 	Id. § 4.165.
7 	41 U.S.C. § 6706; 29 C.F.R. § 4.188(a).
8 	29 C.F.R. § 4.188(b)(3); Adm’r, Wage & Hour Div., U.S. Dep’t of Lab. v. Hearn’s
Enters., LLC, ARB No. 2020-0050, ALJ No. 2017-SCA-00006, slip op. at 14 (ARB Mar. 10,
2022). The convoluted test is a regulatory creation not found in the statute. “The term
unusual circumstances is not defined in the Act.” 29 C.F.R. § 4.188(b)(1). However, we are
bound by the regulations.

3
violations was willful, deliberate, or of an aggravated nature; (2) the violations were
the result of culpable conduct, including culpable neglect, culpable disregard, or
culpable failure to comply with recordkeeping requirements; (3) the contractor has a
history of similar violations or repeatedly violated the SCA; or (4) any previous
violations were serious in nature.8F
9 Therefore, the contractor must demonstrate that
these circumstances were not present.
Next, Step Two requires a contractor to show “prerequisites to relief” from
debarment, including: “[a] good compliance history, cooperation in the
investigation, repayment of moneys due, and sufficient assurances of future
compliance.”9F
10
Finally, at Step Three, “a variety of factors must still be considered,”
including: (1) “whether the contractor has previously been investigated for
violations of the Act;” (2) “whether the contractor has committed recordkeeping
violations which impeded the investigation;” (3) “whether liability was dependent
upon resolution of a bona fide legal issue of doubtful certainty;” (4) “the contractor’s
efforts to ensure compliance;” and (5) “the nature, extent, and seriousness of any
past or present violations, including the impact of violations on unpaid employees,
and whether the sums due were promptly paid.”10F
11
2. Seven Hills, SCA Covered Contract, Modifications, and Violations
A. Seven Hills, SCA Contract, and Violations
Seven Hills entered into Contract N00250-04-C-0052 (Contract) with
NEXCOM to provide food services at the Pentagon from October 15, 2004, through
September 24, 2019.11F
12 On November 21, 2014, NEXCOM issued contract
modification 40 (MOD-40), which included an updated wage determination with
9 	29 C.F.R. § 4.188(b)(3)(i). The numbering has been added for clarity to identify our
understanding of the different factors at each step—the numbers are not present in the
regulation.
10 	Id. § 4.188(b)(3)(ii).
11 	Id.
12 	Decision and Order (D. & O.) at 6, ¶¶2-3, 9. NEXCOM stands for the “Navy
Exchange Service Command.” Administrator Response Brief (Adm’r Response Br.) at 3.

4
new applicable prevailing wages and fringe benefits as required by the SCA.12F
13
On November 26, 2014, Tadavarthy (Seven Hills’ President) signed MOD-40.13F
14
In the Summer of 2016, WHD investigated Seven Hills’ performance of the
Contract under the SCA.14F
15 At the conclusion of the investigation, WHD concluded
that Respondent failed to pay the proper prevailing wages and fringe benefits after
the rates increased under MOD-40.15F
16 After receiving the investigation findings,
Respondent paid $193,181.45 in back wages to employees for improperly paid
prevailing wages and fringe benefits.16F
17
B. Other Relevant Violations
In 2014, the WHD investigated Respondent for prior Davis Bacon Act (DBA)
violations. The investigation revealed that Respondent failed to incorporate DBA
and CWHSSA clauses into a subcontract with a first-tier contractor, and then the
first-tier contractor did not incorporate the clauses into a subcontract with a
second-tier contractor.17F
18 As a result, the Administrator found $2,251.62 in back
wages due to seven employees, and $8,127.78 in unpaid fringe benefits due to eight
employees.18F
19
3. ALJ’s Decisions
A. ALJ D. & O.
The ALJ held a hearing on February 27, 2019.19F
20 It was undisputed that
Respondent violated the SCA by failing to pay the prevailing wage and required
13 	D. & O. at 7, ¶16. The parties also reference a MOD-41 (dated June 1, 2015), but it is
not detailed in the ALJ decision. Petition for Review (PFR) at 6; Adm’r Response Br. at 6.
14 	D. & O. at 6-7, ¶¶10, 17. The D. & O. noted that Tadavarthy claimed he did not
“understand the contents of MOD-40” and he “was unfamiliar with the SCA.” Id. at 12.
However, in the Joint Prehearing Statement, the parties also stipulated that “Tadavarthy
was aware that the Contract was governed by the SCA and the regulations at 29 C.F.R.
Part 4.” Id. at 6, ¶12.
15 	Id. at 2.
16 	Id.; see also Administrator’s Exhibit (AX) 1 at 5 (SCA Investigation Narrative).
Respondent similarly admitted a failure to pay proper prevailing wages and fringe benefits.
D. & O. at 7, ¶¶22-23.
17 	D. & O. at 7, ¶28; Id. at 10.
18 	D. & O. at 8, ¶¶ 34-35.
19 	Id. at 8, ¶¶ 36-37.
20 	Id. at 3.

5
benefits.20F
21 Therefore, the issue before the ALJ was whether “unusual
circumstances” warranted debarment relief, and the ALJ considered the three steps
of the test: Step One (whether certain factors were present that preclude relief);
Step Two (whether prerequisites to relief were present); and Step Three (whether
other factors demonstrated entitlement to relief).21F
22
The ALJ examined the factors under Step One. The ALJ concluded that
Respondent did not engage in a deliberate SCA violation. However, the ALJ found
the presence of other factors that precluded relief at Step One, including that Seven
Hills’ violations were the result of culpable conduct (both culpable disregard and
culpable neglect), Seven Hills had a history of similar violations, and Seven Hills’
violations were serious, as discussed below.
The ALJ first found that “there [was] no evidence of [a] deliberate violation of
the SCA, intentional falsification of records, or other willful behavior.”22F
23 The ALJ
further explained that “there [was] no indication that Respondent deliberately
disregarded the requirements of the Contract.”23F
24
However, even though Respondent’s conduct was not deliberate or willful, the
ALJ found that Seven Hills’ violations were the result of culpable conduct, including
both culpable neglect and culpable disregard. The ALJ found that Respondent
engaged in “culpable disregard” by failing to properly pay prevailing wages and
fringe benefits after reading and signing MOD-40 in November 2014.24F
25 The ALJ
rejected Respondent’s claim that relief was appropriate because Tadavarthy was
unfamiliar with the SCA. The ALJ explained that “the requirements to comply”
with the SCA in MOD-40 were “clear.”25F
26 MOD-40 referenced the SCA and noted
how the new wage determination established the applicable minimum monetary
wages and fringe benefits for “[c]ontractor service employees working” at certain
concessions.26F
27 The ALJ also cited the SCA regulations to emphasize that unusual
circumstances do not include “a contractor’s plea of ignorance of the [SCA’s]
requirements where the obligation to comply with the [SCA] is plain from the
contract.”27F
28
21 	Id. at 10.
22 	Id. at 10, 14-15.
23 	Id. at 12.
24 	Id.
25 	Id. at 12-13.
26 	Id. at 13.
27 	Id.
28 	Id. at 13 (citing 29 C.F.R. 4.188(b)(1)).

6
The ALJ found “culpable neglect” because Respondent failed to take steps to
ensure SCA compliance.28F
29 The ALJ rejected Respondent’s argument that debarment
relief should apply because NEXCOM had not properly explained MOD-40 or the
SCA to Respondent.29F
30 The ALJ stressed that under the SCA regulations, “[a]
contractor has an affirmative obligation to ensure that its pay practices are in
compliance with the [SCA], and cannot [itself] resolve questions which arise, but
rather must seek advice from the Department of Labor.”30F
31 Thus, the ALJ explained
that it was “not the responsibility of NEXCOM, as a party to the contract, to ensure
that the other parties to the contract understand it.”31F
32
Next, the ALJ found at Step One that there was a history of similar
violations because the DBA violations from a previous investigation were
“substantially similar to the [SCA] violations” in this case.32F
33 The ALJ explained the
violations were “more similar than diverse” because “both sets of violations resulted
in failures to properly pay employees required prevailing wages and fringe
benefits.”33F
34
Finally, the ALJ also found at Step One that the violations in the current
case were “serious” because “Respondent owed a total of 178 employees an average
of more than $1,000.00 each.”34F
35
The ALJ had other findings related to Steps Two and Three of the “unusual
circumstances” test, but we do not reach those issues because the Board affirms the
ALJ solely on the findings related to culpable conduct at Step One.
29 	Id. at 13.
30 	Id. at 12-13.
31 	Id. at 13 (citing 29 C.F.R. § 4.188(b)(4)).
32 	Id. at 13.
33 	Id. at 14.
34 	Id.
35 	Id. As discussed in Discussion Section 3, the ALJ’s findings here were harmless
error because Step One only considers “where previous violations were serious in nature,”
29 C.F.R. § 4.188(b)(3)(i), and the ALJ’s Step One analysis pertained to present SCA
violations. The ALJ should have considered the seriousness of present violations at Step
Three: “the nature, extent, and seriousness of any past or present violations.” 29 C.F.R.
§ 4.188(b)(3)(ii) (emphasis added).

7
B. ALJ FLSA Order
We also note that, on July 15, 2021, prior to issuing the D. & O., the ALJ
issued an Order Denying the Admission of Prior FLSA Violations (FLSA Order).35F
36
The ALJ considered arguments from the parties regarding whether Respondent’s
prior FLSA violations were relevant to SCA proceedings, including whether they
could be considered in evaluating “a history of similar violations.”36F
37 The
Administrator claimed that “the regulatory language under the SCA clearly
contemplates similar violations under different statutes, otherwise the language
contained in the regulation would be repetitive and unnecessarily cumulative”37F
38
and that “DOL clearly intended to address similar violations under other laws.”38F
39
Furthermore, the Administrator argued that “Respondent’s failure to comply with
applicable labor laws is a pattern,” and to “ignore Respondent’s history of non-
compliance of labor laws would be a violation of the purpose of the labor
regulations.”39F
40
The ALJ issued an Order that thoroughly evaluated and rejected the
Administrator’s rationale for its broad interpretation of the subject regulation,
including the Administrator’s claim that FLSA violations could be considered as
part of “history of similar violations.”40F
41 Specifically, the ALJ explained:
I find that the language of the SCA does not support the
inclusion 	of 	Respondent’s 	past 	FLSA 	violations. 	The
Administrator argues that the relevant language from the
regulation reads, “[R]elief from debarment cannot be in
order where a contractor has a history of similar violations,
where a contractor has repeatedly violated the provisions
of the Act, or where previous violations were serious in
nature.” The Administrator then argues that since these
items are in a list, they should be viewed independently,
and must be read to mean that the first clause includes
similar violations outside of the SCA. I do not find this
argument determinative since the regulation could be read
such that the relevant inquiry is whether a contractor had
36 	We highlight the FLSA Order because it is relevant to our consideration of a “history
of similar violations” in Discussion Section 2, infra.
37 	FLSA Order at 1; Administrator’s Brief Regarding the Admissibility of Evidence of
Similar FLSA Violations (Adm’r FLSA Br.) at 1-4.
38 	Adm’r FLSA Br. at 3 (emphasis added).
39 	Id. at 4 (emphasis added).
40 	Id. at 6 (emphasis added) (citation and inner quotations omitted).
41 	FLSA Order at 5-6.

8
a history of similar violations of the SCA, whether the
contractor repeatedly violated the SCA, and whether the
prior violations, either similar or numerous, were serious
in nature. [41F
42]
Accordingly, the ALJ issued an Order Denying the Admission of Prior
FLSA Violations.42F
43 We agree with the ALJ’s reasoning and find it instructive as we
consider the Administrator’s comparable argument on appeal that “history of
similar violations” can include “violations of the SCA or another law” related to
Respondent’s DBA violations, as considered below in Discussion Section 2.43F
44
J URISDICTION AND S TANDARD OF R EVIEW
The ARB has jurisdiction to hear and decide appeals from ALJ decisions and
orders under the SCA.44F
45 The Board’s review of an ALJ’s decision under the SCA is
an appellate proceeding.45F
46 As such, the Board reviews conclusions of law de novo.46F
47
The Board shall modify or set aside an ALJ’s factual findings, however, only when a
preponderance of evidence does not support them.47F
48
DISCUSSION
The SCA’s debarment provision is a “particularly unforgiving provision of a
demanding statute” forcing violating contractors “to run a narrow gauntlet” to
establish relief.48F
49 Indeed, debarment “should be the norm, not the exception” with
42 	Id. at 5 (emphasis in original and emphasis added). We also note that the
Administrator’s selective, implausible argument relied on the now defunct dictates of
Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984) in claiming
deference should apply to its interpretation. Adm’r FLSA Br. at 3. Of course, Chevron was
reversed by the Supreme Court in Loper Bright Enters. v. Raimondo, 603 U.S. 369 (2024).
43 	D. & O. at 3; FLSA Order at 5-6.
44 	Adm’r Response Br. at 21 (emphasis added).
45 	Secretary’s Order No. 01-2020 (Delegation of Authority and Assignment of
Responsibility to the Administrative Review Board (Secretary’s discretionary review of ARB
decisions)), 85 Fed. Reg. 13,186 (Mar. 6, 2020); 29 C.F.R. §§ 6.20, 8.1(b).
46 	29 C.F.R. § 8.1(d).
47 	Hearn’s Enters., LLC, ARB No. 2020-0050, slip op. at 4-5 (citation omitted).
48 	29 C.F.R. § 8.9(b).
49 	Hearn’s Enters., LLC, ARB No. 2020-0050, slip op. at 14 (citation omitted). As
explained by the SCA regulations, “[t]he authority [to relieve from blacklisting] was
intended to be used in situations where the violation was a minor one, or an inadvertent
one, or one in which disbarment . . . would have been wholly disproportionate to the
offense.” 29 C.F.R. § 4.188(b)(2).

9
“only the most compelling of justifications” relieving a “violating contractor from
[the] sanction.”49F
50
We affirm the ALJ’s D. & O. because of the presence of certain circumstances
at Step One of the “unusual circumstances” test. Namely, Respondent engaged in
culpable conduct, including culpable disregard when Respondent failed to timely
pay the prevailing wage and fringe benefits, despite plain obligations in the
Contract to comply with SCA requirements; and culpable neglect when Respondent
failed to take proper steps to ensure compliance with the SCA. Under Step One, the
presence of any of the circumstances is an independent ground for debarment. Thus,
the findings of culpable disregard and culpable neglect each prohibit debarment
relief.
We conclude however, that the ALJ erred as a matter of law at Step One in
finding a history of similar violations and in finding that the “present” violations
were serious. Nonetheless, these were harmless errors because the ALJ correctly
ruled regarding culpable disregard and culpable neglect, and we affirm those
rulings.
Furthermore, because the culpable disregard and culpable neglect findings
prohibit relief from debarment, and we affirm the D. & O. on those findings at Step
One, we conclude that “unusual circumstances” do not exist to relieve Respondent
from debarment. Thus, it is unnecessary to consider Step Two and Three of the
“unusual circumstances” test.50F
51
50 	Adm’r, Wage & Hour Div., U.S. Dep’t of Lab. v. Mesa Mail Serv., LLC, ARB No.
2017-0071, ALJ No. 2009-SCA-00011, slip op. at 8 (ARB Sept. 30, 2020) (quotations and
citations omitted). In 1972, Congress amended the SCA, and the “effect of the 1972
Amendments” was “to limit the Secretary’s discretion to relieve violators from the debarred
list.” 29 C.F.R. § 4.188(b)(1). In 1971, “just prior to the 1972 [SCA] amendments,” the House
issued a Subcommittee report making “it plain that the limitation of the Secretary’s
discretion through the unusual circumstances language was designed in part to prevent the
Secretary from relieving a contractor from the ineligible list provisions merely because the
contractor paid what he was required by his contract to pay in the first place and promised
to comply with the Act in the future.” 29 C.F.R. § 4.188(b)(2) (emphasis added).
51 	Adm’r, Wage & Hour Div., U.S. Dep’t of Lab. v. Igwe, ARB No. 2007-0120, ALJ No.
2006-SCA-00020, slip op. at 11 (ARB Nov. 25, 2009) (citation omitted) (analyzing how Step
Two and Step Three are unnecessary to consider where an employer cannot satisfy Step
One).

10
1. Step One – Culpable Conduct
While the unusual circumstances determination “must be made on a case-by-
case basis in accordance with the particular facts present,”51F
52 a contractor cannot
receive debarment relief where its violations result from “culpable conduct,” such as
“culpable disregard of whether they were in violation or not” or “culpable neglect to
ascertain whether practices are in violation.”52F
53 Culpable conduct goes “beyond
negligence,” but falls “short of specific intent.”53F
54
On appeal, Respondent disputes the ALJ’s findings that there was culpable
conduct and argues that unusual circumstances apply.54F
55 First, Respondent contests
the ALJ’s finding of culpable disregard by primarily arguing that Seven Hills was
ignorant of the SCA and this was Seven Hills’ first SCA violation.55F
56 Next,
Respondent contests the ALJ’s finding of culpable neglect, pointing out that it
sought guidance from NEXCOM “with MOD 40 or the later modification,” and
NEXCOM had “mentioned to [Tadavarthy] that the wage rates applied only when
the employee works directly for the federal government, not with Seven Hills.”56F
57
We disagree with Respondent. The preponderance of the evidence supports
the ALJ’s findings regarding culpable conduct.57F
58 We therefore affirm the ALJ that
(1) Respondent engaged in culpable disregard when it failed to timely pay the
prevailing wage and fringe benefits, despite plain obligations in the Contract to
comply with SCA requirements; and (2) Respondent engaged in culpable neglect
when it failed to take proper steps to ensure compliance with the SCA.
A. Step One – Culpable Disregard of Whether They Were in Violation or Not
There cannot be debarment relief when a contractor’s SCA violations result
from “culpable disregard of whether they were in violation or not.”58F
59 The ALJ found
that Respondent engaged in “culpable disregard” by failing to properly pay
prevailing wages and fringe benefits after reading and signing MOD-40 in
52 	29 C.F.R. § 4.188(b)(1).
53 	Id. § 4.188(b)(3)(i).
54 	Igwe, ARB No. 2007-0120, slip op. at 9 (quotations and citation omitted).
55 	Respondent Opening Brief (Resp. Br.) at 6.
56 	Id. at 7-9.
57 	Id. at 7; see also Respondent Reply Brief (Resp. Reply Br.) at 5.
58 	29 C.F.R. § 8.9(b) (“The Board shall modify or set aside findings of fact only when it
determines that those findings are not supported by a preponderance of the evidence.”).
59 	29 C.F.R. § 4.188(b)(3)(i).

11
November 2014.59F
60 On appeal, Respondent “contests the ALJ’s finding that Seven
Hills’ conduct constituted culpable disregard in its practices,” highlighting that
Respondent was “unfamiliar with SCA” and that it was their first SCA violation.60F
61
We disagree with Respondent. The preponderance of the evidence confirms
Respondent acted with culpable conduct by failing to pay SCA-required prevailing
wages and fringe benefits, despite plain obligations in the Contract to comply with
SCA requirements.
First, as highlighted by the ALJ, the debarment regulation explicitly provides
that when the contractor’s “obligation to comply with the Act is plain from the
contract,” the contractor’s “plea of ignorance of the Act’s requirements” does not
constitute “unusual circumstances.”61F
62 Furthermore, the Board has held that when
the SCA’s requirements are plain from the face of a contract, a violating contractor
is “at least culpably negligent in failing to read and perform them.”62F
63 Here, the
evidence in the record shows that the obligation to comply with the SCA was plain
from the Contract. In November 2014, Tadavarthy signed contract modification
MOD-40, which directly referred to the SCA and the applicable wage determination
for service workers at two of Respondent’s restaurants. Specifically, MOD-40 stated:
In accordance with Section H.8, “Service Contract Act”,
Wage Determination #2014-0140, Revision 1, establishes
the 	applicable 	minimum 	monetary 	wages 	and 	fringe
benefits to be provided to Contractor service employees at
the following concessions:
• 	Burger King, Concourse Food Court
• 	Starbucks, Concourse Food Court.63F
64
Accordingly, because the plain terms of MOD-40 established a clear SCA
obligation under the Contract, Respondent cannot rely on a plea of ignorance.64F
65 The
failure to properly pay prevailing wages and fringe benefits, in accordance with the
plain terms of the Act and the contract, establishes culpable disregard.65F
66
60 	D. & O. at 12-13.
61 	Resp. Br. at 6-9.
62 	29 C.F.R. § 4.188(b)(1).
63 	Adm’r, Wage & Hour Div., U.S. Dep’t of Lab. v. Integrated Res. Mgmt., Inc., ARB No.
1999-0119, ALJ No. 1997-SCA-00014, slip op. at 6 (ARB June 27, 2002) (emphasis added).
64 	AX 8 at 1 (MOD-40).
65 	See 29 C.F.R. § 4.188(b)(1).
66 	See Integrated Res. Mgmt., Inc., ARB No. 1999-0119, slip op. at 6.

12
Furthermore, even if we assumed that MOD-40’s terms were not plain in
establishing Respondent’s SCA obligations, Respondent cannot rely on a plea of
ignorance because Respondent knew (or clearly should have known) about the SCA
obligations under the Contract prior to MOD-40.66F
67 The parties stipulated that “[a]t
all times relevant to the performance of the subject blanket purchase agreement,
Raghu Tadavarthy was aware that the Contract was governed by the SCA and the
regulations at 29 C.F.R. Part 4.”67F
68 Furthermore, Respondent had been on notice of
its SCA’s obligations since the start of the Contract in 2004, not just since MOD-40.
The parties stipulated that the “Contract contained the representations and
stipulations required by the SCA.”68F
69 It strains credulity that Seven Hills was
unaware of the SCA’s obligations related to the Contract. Thus, because Respondent
knew (or clearly should have known) about the SCA and the accompanying
obligations, Respondent cannot rely on a plea of ignorance.
Finally, Seven Hills cites to A to Z Maintenance Corp. v. Dole,69F
70 claiming that
it permits relief from debarment when a contractor is unfamiliar with the SCA and
it is the contractor’s first violation.70F
71 Thus, Respondent argues its “plea of ignorance
should warrant against debarment here, as this was the first time it had violated
the SCA, and there was no pattern of culpable disregard for the SCA.”71F
72
We disagree. Here, as already discussed, the plain terms of MOD-40 established a
clear SCA obligation and Respondent knew (or clearly should have known) about
the SCA—therefore, Respondent cannot rely on a of plea ignorance. Furthermore,
regarding relief from debarment for a first violation, A to Z Maintenance Corp.
clearly notes that debarment is still permissible for a single violation, stating: the
SCA “does not require a series of violations as a prerequisite to debarment,”
it “provides without qualification that ‘a violation’—i.e., a single, perhaps wholly
inadvertent violation—may provide grounds for debarment.”72F
73 Here, even though
Seven Hills had no former SCA violations, we affirm the ALJ that Respondent’s
failure to properly pay prevailing wages and fringe benefits, as required by the
67 	Cf. Adm’r, Wage & Hour Div., U.S. Dep’t of Lab. v. Coleman Constr. Co., ARB No.
2015-0002, ALJ No. 2013-DBA-00004, slip op. at 8 (ARB June 8, 2016) (“Coleman’s only
argument that Davis-Bacon shouldn’t apply to it is premised on . . . feigned ignorance about
the applicability of Davis-Bacon . . . . ,” but “[t]he evidence establishes that Coleman
Construction knew or clearly should have known that the subcontract was subject to Davis-
Bacon Act requirements.”) (emphasis added).
68 	D. & O. at 6, ¶12 (emphasis added).
69 	Id. at 6, ¶4.
70 	710 F. Supp. 853 (D.D.C. 1989); Resp. Br. at 6.
71 	Resp. Br. at 6-9.
72 	Id. at 9.
73 	A to Z Maint. Corp., 710 F. Supp. at 855.

13
plain terms of the Act and the contract, establishes culpable disregard.73F
74 Thus,
culpable conduct is present at Step One, a finding that prohibits debarment relief.
B. Step One – Culpable Neglect to Ascertain Whether the Practices Are in
Violation
Debarment relief is prohibited when a contractor’s SCA violations result from
“culpable neglect to ascertain whether practices are in violation.”74F
75 The ALJ found
Respondent engaged in “culpable neglect” because Respondent failed to take steps
to ensure SCA compliance.75F
76 On appeal, Seven Hills claims that it did not engage in
culpable neglect, pointing out that it sought guidance from NEXCOM “with MOD 40
or the later modification,” and NEXCOM had “mentioned to [Tadavarthy] that the
wage rates applied only when the employee works directly for the federal
government, not with Seven Hills.”76F
77 We disagree. The preponderance of the
evidence confirms Respondent acted with culpable conduct by failing to take proper
steps to ensure SCA compliance.
The SCA regulations explain that: “A contractor has an affirmative obligation
to ensure that its pay practices are in compliance with the Act, and cannot itself
resolve questions which arise, but rather must seek advice from the Department of
Labor.”77F
78 Thus, under the regulations, Seven Hills had an obligation to seek
74 	See 29 C.F.R. § 4.188(b)(1); Integrated Res. Mgmt., Inc., ARB No. 1999-0119, slip op.
at 6. Respondent also attempts to contrast the circumstances here with Vigilantes, Inc. v.
Adm’r, Wage & Hour Div., U.S. Dep’t of Lab. a case where the company’s violations
demonstrated a pattern of culpable neglect. 968 F.2d 1412 (1st Cir. 1992). Seven Hills
claims that the circumstances here are distinct and warrant debarment relief because,
unlike the company in Vigilantes, Seven Hills has no prior SCA violations. Resp. Br. at 8-9.
We disagree that relief is warranted. As already discussed, we affirm the ALJ that
Respondent’s SCA violations constitute culpable disregard that preclude debarment relief.
Respondent also highlights how “unlike the company in Vigilantes, Seven Hills promptly
paid the monies due.” Id. at 8. This argument does not persuade us regarding our
considerations of culpable conduct at Step One. Furthermore, it is more properly examined
at Step Three, which requires consideration of “whether sums due were promptly paid.”
29 C.F.R. § 4.188(b)(3)(ii). However, as discussed elsewhere, we affirm the D. & O. on those
findings at Step One, and we conclude that “unusual circumstances” do not exist to relieve
Respondent from debarment. Thus, it is unnecessary to consider Step Three of the test.
See Igwe, ARB No. 2007-0120, slip op. at 11 (analyzing how Step Two and Step Three are
unnecessary to consider where an employer cannot satisfy Step One).
75 	29 C.F.R. § 4.188(b)(3)(i).
76 	D. & O. at 13.
77 	Resp. Br. at 7; see also Resp. Reply Br. at 5.
78 	29 C.F.R. § 4.188(b)(4).

14
guidance from the Department of Labor, not NEXCOM.78F
79 By failing to take proper
steps to ensure compliance, Respondent engaged in culpable neglect. Thus, culpable
conduct is again present at Step One, another finding that prohibits debarment
relief.
Furthermore, while guidance from a contracting agency alone is insufficient
to establish relief for debarment, the record here does not even support
Respondent’s claim that Seven Hills contacted NEXCOM regarding MOD-40 (or
MOD-41) or that NEXCOM explained that the modifications did not apply to
Respondent. In addition, Respondent’s claim is implausible that NEXCOM
explained to Respondent that the modified wage rates only applied to federal
workers.
Respondent relies on Tadavarthy’s deposition testimony as evidence that
Respondent contacted NEXCOM and that NEXCOM provided guidance regarding
the modification.79F
80 However, in Tadavarthy’s deposition, he does not remember
crucial details, such as the MOD he discussed with NEXCOM. In his deposition,
Tadavarthy explained “I called [the] NEXCOM office. That is what I remember.
Was it [MOD] 40, 41, or some other MOD? I don’t remember.”80F
81
In addition to not recalling the MOD discussed, Tadavarthy also could not
remember whom he spoke with at NEXCOM.81F
82 Tadavarthy testified that he
contacted NEXCOM when “one [of] the MODs” came in with “some wage
determination papers.”82F
83 He explained that “I don’t remember who I talked to,”
but “[t]hey said this does not apply to Seven Hills,” the modification only applies to
“Federal Government employees that work directly [for] the government.”83F
84
79 	Cf. 29 C.F.R. § 4.187(e)(5) (“Reliance on advice from contracting agency officials (or
Department of Labor officials without the authority to issue rulings under the Act) is not a
defense against a contractor’s liability for back wages under the Act.”).
80 	Resp. Br. at 7.
81 	Respondent’s Exhibit (RX) 13 (Tadavarthy Dep.) at 58. There are several other
examples of Tadavarthy not recalling which MOD he discussed with NEXCOM. In his
deposition, DOL asked Tadavarthy “[d]o you recall if for MOD 40 you had a conversation
with somebody at NEXCOM?” Tadavarthy responded “I don’t remember whether that is in
MOD 40 or in some other MOD.” Id. at 44. The questioning continued: “But it’s possible
that conversation was on a different MOD and not [MOD-40]?” Tadavarthy responded,
“[y]es.” Id. at 44-45.
82 	Id. at 16.
83 	Id.
84 	Id. Similarly, Respondent’s Accountant testified that he had heard of the SCA
because “it was listed on a MOD,” but he claimed he “wasn’t aware it pertained to our
employees.” RX 12 (Joseph Palo Dep.) at 13.

15
Based on Tadavarthy’s testimony, it is unclear whether Respondent sought
guidance from NEXCOM related to MOD-40 or MOD-41.84F
85 However, Respondent’s
claim regarding NEXCOM’s guidance fails on another ground. Namely, it is highly
improbable that “NEXCOM mentioned to [Tadavarthy] that the wage rates applied
only when the employee works directly for the federal government, not with Seven
Hills.”85F
86 MOD-40 states that the wage determination establishes the “minimum
monetary wages and fringe benefits” for “service employees working at” Burger
King and Starbucks.86F
87 Given the clear requirements of MOD-40 and the fact the
SCA does not apply to the “U.S. Government, its agencies, and instrumentalities,”87F
88
it is borderline ludicrous that NEXCOM would explain that MOD-40 only applies to
federal government workers at Burger King and Starbucks or that the Respondent
would not have followed up on such a purported, critical clarification and requested
such a clarification in writing.
Further, as discussed above, even if the evidence was clear that NEXCOM
advised Respondent that MOD-40 only applied to federal government workers,
guidance from a contracting agency alone is insufficient as evidence for debarment
relief. The SCA regulations note that a contractor “cannot itself resolve questions
which arise,” but must “seek advice from the Department of Labor.”88F
89 We are
unaware of evidence that Respondent sought advice from the Department of Labor.
Accordingly, based on the foregoing, we affirm the ALJ’s finding that Seven Hills
engaged in culpable neglect when it failed to properly take steps to ensure
compliance with the SCA.
2. Step One – History of Similar Violations
While we affirm the ALJ’s analysis and findings on “culpable conduct,”
including “culpable neglect” and “culpable disregard,” we conclude that the ALJ
erred as a matter of law in counting DBA violations as part of her finding that the
employer had a “history of similar violations.”89F
90 The error is harmless because we
affirm the ALJ’s culpable conduct findings, but we nonetheless here explain our
reasoning to foreclose similar future efforts by the Administrator to argue that
“history of similar violations” could involve violations of statutes beyond the SCA.
85 	We are also unaware of any other evidence in support, such as evidence from a
NEXCOM representative. We also do not see evidence that Seven Hills followed up with
NEXCOM on this obviously important issue.
86 	Resp. Br. at 7 (emphasis added).
87 	AX 8 at 1.
88 	29 C.F.R. § 4.1a(f).
89 	Id. § 4.188(b)(4).
90 	D. & O. at 14.

16
The relevant regulatory language can be found at 29 C.F.R. § 4.188 (b)(3)(i),
which states that relief from debarment is not appropriate (under the “unusual
circumstances” proviso discussed above) where a “contractor has a history of similar
violations, where a contractor has repeatedly violated the provisions of the Act [the
SCA], or where previous violations were serious in nature.”
The Administrator has argued for a broad interpretation of “history of
similar violations,” noting how the regulatory text expressly limits “repeated
violations” to violations of the SCA, “but the ‘history of similar violations’ criterion
contains no such limitation in the regulatory text and hence encompasses ‘similar
violations’ whether they are violations of the SCA or another law.”90F
91 As noted in the
Background Section 3(B), the Administrator provided a similar rationale to the
ALJ, arguing that Respondent’s FLSA violations should be considered as part of a
“history of similar violations.”91F
92 However, in her FLSA Order, the ALJ rejected the
Administrator’s broad interpretation of the of “history of similar violations.”92F
93
The ALJ explained that the SCA “regulation could be read such that the relevant
inquiry is whether a contractor had a history of similar violations of the SCA . . . .”93F
94
The ALJ’s reading of the regulation in the FLSA Order is also instructive here.
We disagree with the Administrator’s argument that “history of similar violations”
can include “violations of the SCA or another law,” such as the DBA.94F
95
Perhaps if the Administrator had admitted to some limiting principle in
defining “similar violations” (such as other “prevailing wage laws”) this might be
seen as a small technical issue in the practical world of enforcement, but no limiting
principle as to what “other laws” can be considered can be found in its arguments
before the Board or in the briefs before the ALJ relating to the FLSA violations,
discussed in Background Section 3(B). Indeed, the narrowest reading of the briefed
arguments would be that, at the very least, the full panoply of employment laws
could be considered by the decision maker in determining whether the employer has
“a history of similar violations.” However, even this reading is charitable, as the
Administrator generally puts no limitations on what violations of other laws may be
included. Thus, if accepted, the Administrator’s interpretation of the words in
question would not lend itself to any limitation.
91 	Adm’r Response Br. at 21 (emphasis added) (citation omitted).
92 	The Administrator argued “history of similar violations” includes violations of the
SCA or “different statutes” or “other laws.” Adm’r FLSA Br. at 3-4 (citations omitted).
93 	FLSA Order at 5-6.
94 	Id. at 5 (emphasis added). The ALJ did not explain why this reasoning did not apply
to DBA violations in its subsequent D. & O.
95 	Adm’r Response Br. at 21 (emphasis added).

17
Therefore, we take this opportunity to make clear, for the reasons explained
below, that it is not appropriate to engraft violations from other statutes onto the
SCA in order to compute penalties, including debarment.
Each statute has its own specific regime in defining what is prohibited and
required by that law, and therefore what is a violation thereof; this includes its own
particular enforcement mechanisms and its own appropriate penalties. Likewise,
each statute has its own administrative directives, implementing regulations, case
law, and nuances. To say that statutes vary widely under our nation’s employment
laws alone is an understatement. Some include debarment but most do not. Some
penalize violators with back pay and double loss pay. Others include penalties such
as punitive and compensatory damages. Some are enforced only through agency
action, others also with private causes of action, with jury trials.95F
96 All vary widely
with regard to the underlying substantive rights. And though there may be
similarities at the very general top line level, between (e.g. DBA and SCA) statutes,
there is no “cookie cutter” format. This is hardly surprising since the contours of
statutes are normally forged after much debate and drafting representing broad
compromises between competing goals, enforcement mechanisms, and other
factors.96F
97
These have been set by the Congress. It is not appropriate therefore for an
agency to mix and match penalties from one statute with those of another, absent
express Congressional authority to do so—clearly absent here where the regulations
spring solely out of the statutory wording “unusual circumstances.”97F
98 We therefore
decline to interpret the subject regulation in such a manner. Doing so would not
only raise constitutional issues,98F
99 but more importantly for our purposes, open doors
for boundless creative agency enforcement efforts which could pull from many other
enforcement proceedings (where claims of alleged “violations” may be pending or
finalized) under many other statutes in other forums, and inappropriately cross
pollinate their requirements and penalties. This is not an apocalyptic prediction and
96 	For example, SCA has no private cause of action, while FLSA has a private cause of
action (with jury trials). Furthermore, the statutes’ penalties are vastly different.
97 	See Adm’r, Off. of Foreign Lab. Certification, Employment and Training Admin.,
U.S. Dep’t of Lab. v. Cent. Fla. Lab. Servs., LLC, ARB No. 2025-0026, ALJ Nos. 2023-PED-
00011, -00012, -00014, -00015, slip op. at 19 n. 92 (ARB Mar. 28, 2025) (Johnson, C.J.,
concurring).
98 	Supra note 8, “The term unusual circumstances is not defined in the Act.” 29 C.F.R.
§ 4.188(b)(1).
99 	“It is well settled that when Congress has directly addressed the extent of authority
delegated to an administrative agency, neither the agency nor the courts are free to assume
that Congress intended the Secretary to act in situations left unspoken.” Associated
Builders & Contractors of Se. Tex. v. Rung, No. 1:16-CV-425, 2016 WL 8188655, at *7 (E.D.
Tex. Oct. 24, 2016) (citations and quotations omitted).

18
indeed this path has been traveled before under past administrations. These paths
were blocked either by subsequent rulemaking, the courts, or the Congressional
Review Act.99F
100
Finally, we would like to emphasize that we have diligently searched the
preambles to the relevant regulations and found no discussion which would lend
itself to the expansive interpretation of this section advanced by the Administrator
here.100F
101
100 	President Obama issued Executive Order 13673, “Fair Pay and Safe Workplaces,”
on July 31, 2014, which, with Guidance for Executive Order 13673, 81 Fed. Reg. 58654
(Aug. 25, 2016), required federal contracting officers to review prospective
contractor/employers’ history of compliance with 14 federal employment laws, and
“equivalent” state laws, to evaluate whether these applicants for federal contracts had a
suitable record to justify being awarded a contract. In sum, those judged not to have a
suitable record were barred from receiving federal contracts. Hence, the record of
compliance with many laws which did not even include a penalty or sanction of debarment
were carried over to use in evaluating whether contractors should be barred from receiving
federal contracts. This initiative was enjoined in Rung, 2016 WL 8188655, at *15, and
President Trump subsequently revoked Executive Order 13673. See Revocation of Federal
Contracting Executive Orders, Exec. Order No. 13782, 82 Fed. Reg. 15607 (Mar. 27, 2017).
Furthermore, a related FAR regulation, 81 Fed. Reg. 58562, was repealed by Congress
under the Congressional Review Act, H.J. Res. 37, 115th Cong. (as passed by House, Feb. 2,
2017, and Senate, Mar. 6, 2017), and signed by President Trump on March 27, 2017. Pub.
L. No. 115-11. The Obama initiative was preceded by a similar one under President Clinton
(which included an even more expansive list of laws—tax, labor and employment,
environmental, antitrust, consumer protection—to be considered for the purposes of
eligibility to contract with the government). See 65 Fed. Reg. 80255 (Dec. 20, 2000).
However, the Clinton final rule was ultimately repealed by President George W. Bush.
See Contractor Responsibility, Labor Relations Costs, and Costs Relating to Legal and
Other Proceedings-Revocation, 66 Fed. Reg. 66986 (Dec. 27, 2001). Both were very
controversial on legal as well as policy grounds, and the broad coverage of both indicate the
deceptive reach of the simple words “other laws” as argued by the Administrator. In all
these proceedings, a pervasive issue was what level or type of violations should be
considered and when can a covered “violation” be considered even if still pending and under
review at some stage—agency complaint, ALJ decision, administrative appeals level, or
pending before Article III courts? See Fair Pay and Safe Workplaces, Exec. Order No.
13673, 79 Fed. Reg. 45309 (July 31, 2014); Rung, 2016 WL 8188655, at *12 (“These
examples of enforcement agency conduct that has later been rejected by the courts
illustrate the fallacy and danger of the DOL Guidance’s definition of “‘violation.’”).
Of course, none of these important caveats would even be part of the Administrator’s
sweeping position here concerning adoption of (undefined) “violations” under other laws.
101 	See, e.g., Labor Standards for Federal Service Contracts, 33 Fed. Reg. 9880 (July 10,
1968); Labor Standards for Federal Service Contracts, 48 Fed. Reg. 49736 (Oct. 27, 1983);
Amendments to Federal Contract Labor Laws by The Federal Acquisition Streamlining Act
of 1994, 61 Fed. Reg. 40714 (Aug. 5, 1996); Labor Standards for Federal Service Contracts;
66 Fed. Reg. 5328 (Jan. 18, 2001); Updating Regulations Issued Under Service Contract Act

19
Furthermore, the cases cited in the regulation itself do not lend themselves to this
interpretation.101F
102 We also note that, after an exhaustive search, there is virtually
no case law which would support the Administrator’s interpretation102F
103—even after
and Other Acts, 82 Fed. Reg. 2221 (Jan. 9, 2017). We recognize that certain parts of the
SCA implementing regulations cross reference standards from other statutes and
incorporate those requirements as part of those regulations. See, e.g., 29 C.F.R. § 4.181
(“Overtime pay provisions of other Acts”). However, the few statutes identified are a far cry
from the position advanced by the Administrator here of “other laws,” which, troublingly,
admits to no limiting principle, nor does the Administrator look at these provisions to
“cabin in” its broad position. Further, these provisions in our view do not authorize
adopting into an SCA enforcement proceeding, to justify debarment, violations under these
other statutes arising in other proceedings. They are simply part, by reference, of the SCA
standards against which a contractor’s performance is to be measured in an enforcement
action under the SCA.
102 	29 C.F.R. § 4.188(b)(3)(i) cites decisions as examples of the criteria developed by the
Department “for determining when there are unusual circumstances within the meaning of
the [SCA].” Wash. Moving & Storage Co., SCA No. 168 (Aug. 16, 1973) (Decision of the
Assistant Secretary); Wash. Moving & Storage Co., SCA No. 168 (Mar. 12, 1974) (Decision
of the Secretary); Quality Maint. Co., Inc., SCA No. 119 (Jan. 11, 1974) (Decision of the
Assistant Secretary). Paper copies of these decisions and those cited in them were retrieved
from the Wirtz Labor Library. None of the cases expressly define “a history of similar
violations,” but they discuss recurrent violations and their impact on whether a finding of
unusual circumstances is warranted: “It is also clear that a history of recurrent violations of
identical nature, such as repeated violations of identical minimum wage or recordkeeping
provisions does not permit a finding of ‘unusual circumstances.’ On the other hand, where a
bona fide legal question of doubtful certainty exists, and an employer reasonably chooses to
litigate such question in order to resolve it, this should not prevent a finding of ‘unusual
circumstances.’” Quality Maint. Co., SCA No. 119, slip op. at 19 (citing Wash. Moving &
Storage Co., SCA No. 168, slip op. at 10 (Aug. 16, 1973)). Quality Maint. Co. also refers to
supplemental ALJ decisions in the following cases: Emerald Maint., Inc. SCA No. 153 (Apr.
5, 1973); Burns Sec. Sys., Inc., SCA No. 150 (Apr. 30, 1973); Kelly Cab Co., Inc., SCA No.
146 (Mar. 22, 1973); Foreman’s Sec. Serv., Inc., SCA No. 167 (Mar. 14, 1973); Bouchet, SCA
No. 165 (Jan. 23, 1973). Some of these decisions noted how there was no history of previous
violations of the SCA, but they did not find a history of similar violations of other statutes
as argued by the Administrator.
103 	Our research did not yield recent federal, ARB, or Secretarial decisions defining
“a history of similar violations” as used in 29 C.F.R. § 4.188(b)(3)(i). One ALJ decision was
found which supports the Administrator’s position, although it was not cited by the
Administrator. Adm’r, Wage & Hour Div., U.S. Dep’t of Lab. v. Davis-Paige Mgmt. Sys.,
LLC, ALJ No. 2019-SCA-00003 (ALJ Jan. 29, 2024). In Davis-Paige Mgmt. Sys., the ALJ
determined that an ERISA default judgment amounted to a “history of similar of
violations,” illustrating the Administrator’s unbridled interpretation. Id. at 27. ERISA is an
extremely complicated statute far removed from the SCA. Notably, the appeal of the ALJ’s
decision was administratively closed by the Board. Adm’r, Wage & Hour Div., U.S. Dep’t of
Lab. v. Davis-Paige Mgmt. Sys., LLC, ARB No. 2024-0053, ALJ No. 2019-SCA-00003 (ARB

20
decades of enforcement under the SCA.103F
104 We therefore conclude that the
regulatory language can only logically be interpreted to allow the inclusion of
“violations” under the Service Contract Act, and not that of other laws, in
evaluating a “history of similar violations.”
3. Step One – Previous Violations Serious in Nature
The ALJ erred in finding at Step One that Seven Hills’ SCA violations
“found under the instant investigation” were serious.104F
105 Step One prohibits
debarment relief “where previous violations were serious in nature.”105F
106 However,
the ALJ’s Step One analysis pertained to the SCA violations “found under the
instant investigation,” not “previous” violations. Step Three allows for consideration
of the seriousness of “present” violations: “the nature, extent, and seriousness of any
past or present violations.”106F
107 Thus, the ALJ should have considered the seriousness
of the “present” SCA violations (those “found under the instant investigation”) at
Step Three. The ALJ’s error is harmless though because the ALJ correctly ruled
regarding culpable conduct and we affirm that ruling—therefore, Respondent still
Sept. 4, 2024) (Order of Administrative Closure). We also note that the Administrator, in its
FLSA brief before the ALJ in this case, cited to the ARB’s decision in Hugo Reforestation,
Inc., ARB No. 1999-0003, ALJ No. 1997-SCA-00020 (ARB Apr. 30, 2001), but the
Administrator referred to how the ALJ ruled in Hugo, not how the ARB ruled, noting that
the ALJ found it appropriate to consider “different statutes” related to “history of
violations.” Adm’r FLSA Br. at 5. In the FLSA Order, the ALJ in this case disagreed with
the Administrator, noting that in Hugo, “it is clear that the ARB determined the inclusion
of respondent’s prior FLSA violations to be irrelevant to the analysis of whether or not
respondent ‘had a history of violating the SCA.’” FLSA Order at 6. We agree with the ALJ
in the FLSA Order. See also Hugo Reforestation, Inc., ARB No. 1999-0003, slip op. at 4 n.3.
The Davis-Paige Mgmt. Sys. and Hugo Reforestation ALJ decisions thus lack broad or
controlling authority.
104 	Similarly, under other statutes, expansive interpretations have been critiqued when
the interpretation is inconsistent with historical practice. Cent. Fla. Lab. Servs., LLC.,
ARB No. 2025-0026, slip op. at 18-19 (Johnson, C.J., concurring) (“Stated simply, given this
is the first time this issue has arisen in the many years the H-2A program has operated, it
begs credulity that debarment at the pre-certification stage is needed for effective
enforcement,” and it is “perplexing the Administrator has not pointed to any instances in
which it has utilized this purported power in the past.”); Hiran Mgmt., Inc. v. NLRB, 157
F.4th 719, 722 (5th Cir. 2025) (“Ninety years after Congress created the National Labor
Relations Board (“NLRB”), the NLRB claimed for the first time the ability to award full
compensatory damages in its enforcement proceedings. . . .We hold that the NLRB lacks
statutory authority to award full compensatory damages.”).
105 	D. & O. at 14.
106 	29 C.F.R. § 4.188(b)(3)(i) (emphasis added).
107 	Id. § 4.188(b)(3)(ii) (emphasis added). The Administrator also considers seriousness
of present violations under Step Three in their brief. Adm’r Response Br. at 24-28.

21
fails Step One of the “unusual circumstances” test, such that there can be no
debarment relief.107F
108 Because we affirm the ALJ’s culpable conduct
findings—findings that prohibit debarment relief—we do not need to proceed to
Step Three of the test.
4. Respondent’s Other Argument on Appeal
Seven Hills also argues that they have been prejudiced by undue delay,
noting that the WHD investigation began in 2016 and that the period of debarment
for SCA violations is three years.108F
109 Seven Hills cites to 29 C.F.R. § 6.19(b), which
states that the ALJ “shall make” a decision “[w]ithin a reasonable time.” Seven
Hills claims it has not bid on a contract in several years and ended its contract at
the Pentagon in 2021.109F
110 Seven Hills also notes that the ALJ erred in ordering
debarment from the effective date of the D. & O., and that subsequently, the
Administrator contacted the Comptroller General, stating that Seven Hills and its
owners “are ineligible from bidding on government contracts.”110F
111 As a result, Seven
Hills was improperly (and briefly) added to the ineligibility list.111F
112 However,
Respondent was notified that due to their appeal to the Board, they were removed
from the ineligibility list.112F
113
We are sympathetic to the delays and the errors that resulted in Seven Hills
temporarily being listed on the ineligibility list. However, these arguments are not
relevant to the examination of “unusual circumstances.” In addition, Seven Hills
decided to end its contracts and not pursue additional contracts—they were not
required to take those actions.
108 	Even though the ALJ analyzed the “present” violations at the wrong step, the ALJ’s
analysis would be relevant to Step Three. The ALJ found that that Respondent’s violations
“under the instant investigation” were serious because “Respondent owed a total of 178
employees an average of more than $1,000 each.” D. & O. at 14. We do not reach Step
Three, but we agree with the ALJ’s analysis.
109 	PFR at 11-12.
110 	Id. at 12.
111 	Resp. Reply Br. at 9.
112 	Id.
113 	Id., Attachment 1.

22
C ONCLUSION
We AFFIRM the ALJ’s findings that “unusual circumstances” do not exist to
relieve Respondent from debarment. As a result, we AFFIRM the ALJ’s order that
the Respondent shall not be awarded United States government contracts for three
years.
SO ORDERED.
RANDEL K. JOHNSON
Chief Administrative Appeals Judge
THOMAS H. BURRELL
Administrative Appeals Judge
PHILIP G. KIKO
Administrative Appeals Judge

23
Judge Kaplan, Dissenting:
With some reluctance, I respectfully dissent from the majority’s affirmance
of the ALJ’s D. & O. Because of insufficient findings of fact and conclusions of law,
the preponderance of the evidence does not support her findings, and the “unusual
circumstances” test could result in findings of fact and conclusions of law that show
that debarment relief is not appropriate.113F
114 Therefore, I cannot support the
majority’s analysis,114F
115 and I would reverse and remand the case to the ALJ for
further findings of fact and conclusions of law.115F
116
I take issue with my learned colleagues on the majority reaching their own
conclusions on the facts in reliance on the testimony. Had the ALJ relied on the
same evidence as the majority for her findings of fact and articulated the same
conclusions, I would not be writing this dissent. However, judges rely on intuition,
context, and demeanor to assess credibility. None of these non-verbal
communications exist on a transcript, therefore it is improper for an appellate court
to review testimony and reach its own conclusions because the reader lacks the
ability to read the witness; there are no voice inflections, facial expressions, or
evidence of the litigation drama that combined can be the best evidence of the truth.
114 	“The Board shall modify or set aside an ALJ’s factual findings . . . when a
preponderance of evidence does not support them.” 29 C.F.R. § 8.9(b).
115 	Except as noted later in the dissent.
116 	An ALJ must “adequately explain why he credited certain evidence and discredited
other evidence.” Sea “B” Mining Co. v. Addison, 831 F.3d 244, 253 (4th Cir. 2016) (citations
omitted). And although an ALJ “need not address every aspect of [a party’s claim] at length
and in detail,” the findings “must provide enough information to ensure the Court that he
properly considered the relevant evidence underlying [the party’s] request.” Mori v. Dep’t of
the Navy, 917 F. Supp. 2d 60, 65 (D.D.C. 2013) (citations omitted). The failure to address
evidence or resolve conflicts in the evidence thus requires remand; ultimately, a reviewing
court must be able to “discern what the ALJ did and why he did it.” Printz v. STS Aviation
Grp., ARB No. 2022-0045, ALJ No. 2021-AIR-00013, slip op. at 30 (ARB Dec. 15, 2023)
(citation omitted).
When an ALJ fails to ground a decision in findings of fact and conclusions of law,
the decision ceases to be an act of law and becomes an exercise of discretionary judgment,
untethered from constitutional limits. See G ARY L. M CD OWELL, EQUITY AND THE
CONSTITUTION (University of Chicago Press 1982). In Professor McDowell’s comprehensive
treatise on equity, he draws a sharp distinction between law as a rule and equity as
discretionary judgment. His core concern is that when decision-makers (including
administrative actors) fail to anchor decisions in findings of fact and conclusions of law,
they cease to be bound by constitutional legal constraints and instead exercise personal
judgment under the guise of fairness. For McDowell, this is dangerous not because
“fairness” is bad per se, but because equity untethered from law becomes arbitrary
power—the very thing the Constitution was designed to restrain.

24
Those signals and nuances do not exist on a page of transcript.116F
117 That is the
wisdom reflected in Dantran.117F
118
DISCUSSION
The stated purpose underlying debarment is not to punish but rather to
protect the government from the potential consequences of contracting with non-
responsible contractors.118F
119 The case for debarment must be established by a
preponderance of the evidence,119F
120 therefore to support debarment the evidence
must establish a level of culpability beyond negligence.120F
121 Disregard of obligations
must involve “some element of intent.”121F
122 Intentional failure to look at the law is
also sufficient.122F
123
In the words of Supreme Court Chief Justice Burger, then a Circuit Judge,
“[t]he governmental power must be exercised in accordance with accepted basic
legal norms. Considerations of basic fairness require administrative
regulations establishing standards for debarment and procedures which
will . . . culminate[] in administrative findings and conclusions, based upon
the record so made.”123F
124
Under the SCA, an employer must establish “unusual circumstances” to
warrant relief from debarment for SCA violations.124F
125 “Unusual circumstances” must
be determined “on a case-by-case basis in accordance with the particular facts
present.”125F
126 Furthermore, as the majority explains, the SCA regulations outline a
117 	See Puddifoot K., Re-Evaluating the Credibility of Eyewitness Testimony, Vol 17-2
EPISTEME 255 (2020).
118 	Dantran, Inc. v. U.S. Dep’t of Lab., 171 F.3d 58, 72 (1st Cir. 1999), in which the First
Circuit reversed the ARB’s decision (which had in turn reversed the ALJ’s decision) in part
because “the ALJ, not the ARB, had the opportunity to observe the witnesses’ demeanor at
first hand.”).
119 	48 FAR 9.402(b).
120 	48 FAR 9.406-2.
121 	Dantran, 171 F.3d at 68.
122 	NCC Elec. Servs., Inc., ARB No. 2013-0097, ALJ No. 2012-DBA-00006, slip op. at 8
(ARB Sept. 30, 2015). In addition, an employer’s bad faith and/or gross negligence
regarding compliance have also been found to constitute disregard of statutory obligations.
Id.
123 	Id. at 9.
124 	Gonzalez v. Freeman, 334 F.2d 570, 578 (D.C. Cir. 1964) (emphasis added).
125 	41 U.S.C. § 6706; 29 C.F.R. § 4.188(a).
126 	29 C.F.R. § 4.188(b)(1).

25
three-step process to establish “unusual circumstances.”126F
127 Here, the preponderance
of the evidence may not support the ALJ’s findings related to “unusual
circumstances,”127F
128 because the ALJ did not make sufficient findings of fact and
conclusions of law to support her muddled conclusion that Respondent failed to
show unusual circumstances. Although I support remand for further findings of fact
and conclusions of law, I set forth my analysis of the unusual circumstances test on
the facts as they exist below, which favor reversal.
1. Unusual Circumstances Test, Step One
Under 29 C.F.R. § 4.188(b)(3)(i), Step One of the “unusual circumstances”
Test prohibits relief when any of the following circumstances exist: (1) the conduct
causing SCA violations was willful, deliberate, or of an aggravated nature;
(2) the violations were the result of culpable conduct, including culpable neglect,
culpable disregard, or culpable failure to comply with recordkeeping requirements;
(3) the contractor has a history of similar violations or repeatedly violated the SCA;
127 	Id. § 4.188(b)(3). The full “unusual circumstances” test is detailed on page 2-3 of the
majority opinion. The Board is bound to the regulations. See Secretary’s Order No. 01-2020
(Delegation of Authority and Assignment of Responsibility to the Administrative Review
Board), 85 Fed. Reg. 13,186 (March 6, 2020) at (5)(a)(4)(b)(69): “The Board shall not have
jurisdiction to pass on the validity of any portion of the Code of Federal Regulations that
has been duly promulgated by the Department of Labor and shall observe the provisions
thereof, where pertinent, in its decisions.” However, I take this opportunity to note that the
SCA “unusual circumstances” test is unnecessarily complex and unduly burdensome on
employers. The statute only uses the term “unusual circumstances,” yet the regulatory test
interpreting those words is immensely complicated and provides hurdles that are nearly
insurmountable. See 29 C.F.R. § 4.188(b)(1) (“The term unusual circumstances is not
defined in the Act.”). Justice Joesph Story pointed out the difficulty in assuming that one
could properly codify a comprehensive legal code, noting that it requires one “to suppose
that [the legislator] is capable of all this, is to suppose that he is omniscient, all-wise, and
all-powerful; that he is perfect, or that he can attain perfection; that he can see all the
future in the past, and that the past is present to him in all it relations.” JOSEPH S TORY ,
“LAW , LEGISLATION, AND CODES,” ENCYCLOPEDIA AMERICANA, at 587. The deficiencies of
the SCA test highlight the limitations. Furthermore, as Alexander Hamilton noted:
“In Law as in Religion the Letter Kills What the Spirit Makes Alive.” Julius Goebel, Jr., ed.,
The Law Practice of Alexander Hamilton: Documents and Commentary, 2 vols. (New York:
Columbia University Press, 1964), p. 391. Furthermore, a judge is not a traffic cop and “is
more than a moderator or umpire,” “[h]e has the responsibility to preside in such a way as
to promote a fair and expeditious development of the facts unencumbered by irrelevancies.”
Smith v. United States, 305 F.2d 197, 205 (9th Cir. 1962).
128 	However, there were certain components of the ALJ’s D. & O. that I would affirm,
all noted below. For example, I would affirm the ALJ’s findings related to Step One, Factor
One. Namely, that Respondent did not engage in deliberate conduct. Nonetheless, I would
not affirm the ALJ’s ruling.

26
or (4) any previous violations were serious in nature.128F
129 Therefore, the contractor
must demonstrate that these circumstances were not present. I consider the Step
One factors below, and after review, I would find that the preponderance of the
evidence does not support the ALJ’s conclusions—the evidence shows Respondent
met its burden.
“There must be affirmative evidence of culpable conduct”129F
130 which the ALJ
has failed to articulate. “There are no facts in the record to refute the judicial belief
that no rational precautions could reduce violations to absolute zero . . . Certainly,
contractors could hire an army of bookkeepers, accountants and supervisors to
ensure no underpayments would occur, and perhaps most needful to all, lawyers at
each location. Such a practice, however, would elevate the cost of operation to a
level to endanger the future of appellants’ type of business as a source of
employment.”130F
131 Tadavarthy testified that when he received the contract
modification he called NEXCOM and was told it only applied to government
employees, not his. However, at no time does the ALJ explain that she does not
believe Tadavarthy’s testimony, but instead explains her reasoning stating, “[i]t is
not the responsibility of NEXCOM, as a party to the contract, to ensure that other
parties to the contract understand it.”131F
132 That is true, but a long way from imputing
his culpability. The ALJ is in the best position to evaluate the credibility of a
witness and must state the reasons for those conclusions. Tadavarthy may
have used poor judgment, but he testified he had always called NEXCOM whenever
he received a Wage and Hour modification over the 13 years he was a contractor to
129 	29 C.F.R. § 4.188(b)(3)(i). The SCA “unusual circumstances” test, as articulated in
the regulations, is convoluted and unnecessarily complex. For clarity, Step One of the test
has been presented here with numbering to identify the different factors—the numbers are
not present in the regulation.
130 	Dantran, 171 F.3d at 69.
131 	Fed. Food Serv., Inc. v. Donovan, 658 F.2d 830, 834 (D.C. Cir. 1981).
132 	D. & O. at 13.

27
the government if he had a question about the MOD.132F
133 There is no question
that he should have called the Department of Labor, but considering that
Tadavarthy had a clean heart but an empty head, he should not be found
to have been culpable. Unless the ALJ found him to be deceitful or
dishonest, he should not have been found to have failed the test at this
Step, because deceit and dishonesty is what the Act is trying to manage.
I do not believe you can declare the debarment death sentence without clear
and concise findings of fact to overcome Respondent’s 13-year practice of asking
NEXCOM if MODs related to him. Additionally, debarment should not be imposed
without a clear articulation of the facts that support the ALJ’s conclusions.
Finally, the additional criteria under § 4.188 must be considered. Moreover, why did
the ALJ continue with her analysis under Step Two, after she found that there were
no unusual circumstances at Step One? Was it a flip of a coin or is it that the ALJ
did not understand the criteria for ineligibility for further contracts when violations
occur because she went on to analyze issues that are irrelevant once culpable
conduct is found? Certainly, it is evidence of arbitrary or perhaps muddled
judgment.133F
134
A. Willful Conduct
Notably, in considering the first factor, the ALJ did not find “that
Respondent willfully or deliberately violated the SCA in relation to the
Contract.”134F
135 The ALJ further explained that “there [was] no indication that
Respondent deliberately disregarded the requirements of the Contract.”135F
136 I would
affirm these findings.
133 	The majority states “[b]ased on Tadavarthy’s testimony, it is unclear whether
Respondent sought guidance from NEXCOM related to MOD-40 or MOD-41. However,
Respondent’s claim regarding NEXCOM’s guidance fails on another ground. Namely, it is
highly improbable that ‘NEXCOM mentioned to [Tadavarthy] that the wage rates applied
only when the employee works directly for the federal government, not with Seven Hills.’”
Majority Op. at 15. Further “[w]e are also unaware of any other evidence in support, such
as evidence from a NEXCOM representative. We also do not see evidence that Seven Hills
followed up with NEXCOM on this obviously important issue.” Majority Op. at 15 n.85.
Tadavarthy testified that MODs came often and that he called NEXCOM but could not
remember who he had spoken to years before. Yet based on these statements, the majority
reaches the bold conclusion that this is evidence of culpable neglect in spite of there being
no evidence in the record to support such a conclusion and the ALJ did not find Tadavarthy
to be dishonest. This is an insurmountable problem with the findings of facts and
conclusions of law in this case.
134 	Supra, Dissent note 116.
135 	D. & O. at 11.
136 	Id. at 12.

28
B. Culpable Conduct
Regarding the second factor, the SCA regulations do not allow relief for
debarment “where the violations are the result of culpable conduct such as culpable
neglect to ascertain whether practices are in violation, culpable disregard of
whether they were in violation or not, or culpable failure to comply with
recordkeeping requirements (such as falsification of records).”136F
137
The ALJ made two findings related to culpable conduct: (1) Respondent
engaged in “culpable disregard” by failing to properly pay prevailing wages and
fringe benefits after reading and signing MOD-40 in November 2014;137F
138 and
(2) Respondent engaged in “culpable neglect” because Respondent failed to take
steps to ensure SCA compliance.138F
139 As explained below, I disagree with these
findings of culpability because the evidence shows Respondent did not understand
the modification as it was not obvious on its face, Respondent regularly sought
guidance from NEXCOM, and Respondent did not have a history of prior SCA
violations. Accordingly, Respondent should not be debarred under these
circumstances because its actions do not amount to culpable conduct.
The preponderance of the evidence does not support the ALJ’s findings—they
should be reversed, or we should remand for additional findings.
The second factor hinges on how to understand “culpable” in the SCA
regulations. The First Circuit decision in Dantran, Inc. v. U.S. Department of Labor
is instructive:
What the regulations mean by the term “culpable” is not
spelled 	out, 	except 	to 	stipulate 	that 	“falsification 	of
records” (an evil not present in this case) qualifies as
“culpable 	failure 	to 	comply 	with 	recordkeeping
requirements.” If this latter example is intended to serve
as a guide, culpability must require more than simple
negligence or a mere failure to ascertain whether one’s
practices coincide with the law’s demands. [139F
140]
Furthermore, the Dantran Court also noted: “There must be affirmative
evidence of culpable conduct.”140F
141 Here, the ALJ’s findings were insufficient and did
not amount to affirmative evidence of culpable conduct. Furthermore, consistent
137 	29 C.F.R. § 4.188(b)(3)(i) (emphasis added).
138 	D. & O. at 13.
139 	Id.
140 	171 F.3d 58, 68 (1st Cir. 1999) (citation omitted and emphasis added).
141 	Id. at 69.

29
with Dantran, the evidence shows Respondent’s actions do not rise to culpable
conduct because Respondent merely failed “to ascertain whether [its] practices
coincide[d] with the law’s demands.”141F
142
First, the ALJ found that the “the requirements to comply [were] clear even
in the brief contract modification . . . .”142F
143 I disagree. The debarment regulation
provides that when the contractor’s “obligation to comply with the Act is plain from
the contract,” the contractor’s “plea of ignorance of the Act’s requirements” does not
constitute “unusual circumstances.”143F
144 However, Dantran notes that “this language
contemplates an automatic finding of culpability only when the law’s requirements
are obvious on the face of the contract.”144F
145 In accordance with Dantran, I examine
MOD-40 to determine whether the requirements were “obvious on the face of the
contract.” MOD-40 stated:
In accordance with Section H.8, “Service Contract Act”,
Wage Determination #2014-0140, Revision 1, establishes
the applicable monetary wages and fringe benefits to be
provided to Contractor service employees at the following
concessions:
• 	Burger King, Concourse Food Court
• 	Starbucks, Concourse Food Court. [145F
146]
Upon review, it is not abundantly clear that the obligations were obvious on
the face of the contract.146F
147 In fact, when I first read MOD-40, the obligations were
not obvious on the face of the contract to me. Notably, the relevant provision
highlighted above is listed in between several other provisions in MOD-40.
Despite including such a significant obligation, MOD-40 does not clearly highlight
the new requirement.
Second, the majority makes findings of facts and conclusions of law that are
not in the record regarding Tadavarthy’s truthfulness when they state:
“Respondent cannot rely on a plea of ignorance because
Respondent knew (or clearly should have known) about the
SCA obligations under the contract prior to MOD-40 . . .
142 	Id. at 68.
143 	D. & O. at 13.
144 	29 C.F.R. § 4.188(b)(3)(i) (emphasis added)
145 	Dantran, 171 F.3d at 69 (emphasis in original and added).
146 	AX 8 at 1 (MOD-40).
147 	See Dantran, 171 F.3d at 69.

30
The parties stipulated that “[a]t times relevant to the
performance of the subject blanket purchase agreement,
Raghu 	Tadavarthy 	was 	aware 	that 	the 	Contract 	was
governed by the SCA and the regulations at 29 C.F.R. Part
4 . . . . It strains credulity that Seven Hills was unaware of
the 	SCA’s 	obligations 	related 	to 	the 	Contract. 	Thus,
because Respondent knew (or clearly should have known)
about 	the 	SCA 	and 	the 	accompanying 	obligations,
Respondent cannot rely on a plea of ignorance.” [147F
148]
However, the plain language of the regulation does not present a question of
whether Tadavarthy should have known, but rather the question of whether he
understood the MOD. Subjective evidence is information rooted in an individual’s
personal perception, opinion, belief, or internal experience rather than verifiable
external facts. It reflects what a person genuinely knew, thought, or intended at a
specific time and often involves a person’s state of mind or their interpretation of
events, which cannot be directly proven by external means. When the majority
concludes that “[i]t strains credulity,” they are making a finding of fact that is
beyond their capability because they are independently reviewing testimony and
reaching their own conclusions. This task is beyond the majority’s capability
because they lack the ability to read the witness; there are no voice inflections,
facial expressions, or evidence of the litigation drama that combined can be the best
evidence of the truth of the statement. As earlier stated, those signals and nuances
do not exist on a page of transcript.148F
149 Again, that is the wisdom stated in
Dantran.149F
150
Further, I take issue with the majority’s use of an objective analysis to reach
their conclusion that “Respondent knew (or clearly should have known) about the
SCA and the accompanying obligations.”150F
151 Rather, the analysis should focus on
Tadavarthy’s subjective or good faith belief as to whether the SCA obligations
applied. The majority’s conclusion does not disprove or modify Tadavarthy’s
testimony that he was unaware that the SCA governed the relevant contracts:
Q. So when you entered into these government contracts
you’ve mentioned, Pentagon, Norfolk, Little Creek, and
Jacksonville, were you aware that you – that they would be
subject to the Service Contract Act?
148 	Majority Op. at 12 (citations omitted).
149 	Supra, Dissent note 117.
150 	Dantran, 171 F.3d at 72.
151 	Majority Op. at 12.

31
A. No, ma’am. [151F
152]
The ALJ never stated in the D. & O. whether she believed Tadavarthy knew or
believed in good faith that he had SCA obligations to fulfill.
Next, the majority argues Tadavarthy knew (or should have known) about
the SCA obligations because “the parties stipulated that ‘[a]t all times relevant to
the performance agreement, Raghu Tadavarthy was aware that the Contract was
governed by the SCA and the regulations at 29 C.F.R. Part 4.’”152F
153 In my experience,
attorneys prepare stipulations and rarely would a client review them because the
client cannot typically appreciate their significance. Additionally, stipulations are
not evidence that disproves a client’s testimony. For this reason, this is another
objective conclusion of the majority—the ALJ did not find Tadavarthy to be
dishonest, mendacious, or deceptive in her findings of fact and conclusions
of law, and thus, the majority’s conclusion on what he should have known is wrong
in all respects.153F
154
Accordingly, I would find that Respondent’s actions were not culpable
conduct and only amount to “mere failure to ascertain whether one’s practices
[of thirteen years] coincide with laws demands,”154F
155 which is consistent with
§4.188(b)(2) “The authority [to relieve from blacklisting] was intended to be used in
situations where the violation was a minor one, or an inadvertent one, or one in
which disbarment . . . would have been wholly disproportionate to the offense.”155F
156
Next, the ALJ found that Respondent “has offered no evidence to suggest he
sought guidance from the Department of Labor regarding the requirements of the
contract modification or the SCA.”156F
157 The SCA regulations explain that:
“A contractor has an affirmative obligation to ensure that its pay practices are in
152 	Tadavarthy Dep. at 15
153 	Majority Op. at 12 (citing D. & O. at 6, ¶12).
154 	It is interesting to note that the majority quotes 29 C.F.R. § 8.9(b) (“The Board shall
modify or set aside findings of fact only when it determines that those findings are not
supported by a preponderance of the evidence.”). Preponderance means in a legal context it
is more likely than not (greater than 50% chance). The conclusions of the majority
interpreting the testimony and calling those conclusions evidence are arbitrary and not
evidence because they were not the conclusions of the trier of fact, and therefore they are
untethered from the law and not evidence at all.
155 	Dantran, 171 F.3d at 68.
156 	29 C.F.R. § 4.188(b)(2) (emphasis added) (citing Hearings on H.R. 6244 and H.R.
6245 Before the Special Subcomm. on Labor of the H. Comm. on Ed. and Lab., 92d Cong.
(1971)).
157 	D. & O. at 12.

32
compliance with the Act, and cannot itself resolve questions which arise, but rather
must seek advice from the Department of Labor.”157F
158 Therefore, in accordance with
the SCA regulation, Respondent should have sought DOL guidance to resolve
questions it had related to MOD-40. However, the regulation does not indicate that
a failure to reach out to the DOL constitutes culpable conduct, and Respondent’s
actions do not indicate culpability.
Respondent had maintained a practice of reaching out to NEXCOM for
guidance. Tadavarthy could not recall whether he sought guidance related to MOD-
40, or a different MOD, but he indicated in testimony that he regularly contacted
NEXCOM for guidance. For example, Tadavarthy testified that “I do talk to [the]
NEXCOM office quite often at Norfolk”158F
159 and “I did make so many calls to
NEXCOM,” but for “[w]hich modification, I don’t recall.”159F
160 Furthermore,
Tadavarthy testified that “there was a time when a modification came in,” and he
cannot remember the specific MOD, but he “called NEXCOM,” [and t]hey said that
[MOD] applies only to federal government, not for” Seven Hills.160F
161 The ALJ found
“it is not the responsibility of NEXCOM, as a party to a contract, to ensure that the
other parties to the contract understand it.”161F
162 I agree that it was Seven Hills’
responsibility, but I still find Respondent’s efforts to comply, including reaching
out to NEXCOM, were reflective of “mere failure to ascertain whether one’s practices
coincide with the law’s demands,”162F
163 not “culpable neglect to ascertain whether
practices are in violation.”163F
164 The difference being that Seven Hills’ actions do not
rise to the level of culpable conduct.
It is also noteworthy that Respondent does not have any prior SCA violations.
In Karawia v. U.S. Department of Labor,164F
165 the District Court found that the
company’s “numerous and repeated violations of the SCA, particularly after being
put on notice as to the statute’s requirement, constitute culpable neglect.”165F
166 The
circumstances are distinct here, and I consider the lack of prior SCA violations as
weighing against culpable conduct.
158 	29 C.F.R. § 4.188(b)(4).
159 	Tadavarthy Dep. at 16.
160 	Hearing Transcript at 180.
161 	Id. at 181.
162 	D. & O. at 13.
163 	See Dantran, 171 F.3d at 68 (citation omitted and emphasis added).
164 	29 C.F.R. § 4.188(b)(3)(i).
165 	627 F.Supp.2d 137 (S.D.N.Y 2009).
166 	Id. at 150.

33
Here, Tadavarthy did not understand the modification because to him it was
not obvious on its face, Tadavarthy regularly sought guidance from NEXCOM, and
Respondent did not have a history of prior SCA violations. Accordingly, Respondent
demonstrated that its actions did not amount to culpable conduct. Because the
preponderance of the evidence does not support the ALJ’s findings, I would reverse
or remand for further findings.
C. History of Similar Violations and Previous Serious Violations
Regarding factors three and four, the SCA regulations note how “relief from
debarment cannot be in order where a contractor has a history of similar violations,
where a contractor has repeatedly violated the provisions of the Act, or where
previous violations were serious in nature.”166F
167 Because Respondent does not have
any prior SCA violations,167F
168 the ALJ clearly erred in her findings related to these
factors.168F
169 I generally agree with the majority’s analysis related to “history of
similar violations” and “previous violations of a serious nature,”169F
170 except I disagree
with the majority’s ruling that these ALJ findings were harmless error.170F
171 I would
reverse the ALJ’s D. & O., or at least remand for further consideration because the
ALJ’s errors are not harmless.171F
172
2. Unusual Circumstances Test, Step Two
The ALJ found that Respondent met all of the Step Two, “unusual
circumstances” requirements for relief: “the prerequisites to relief (good compliance
history, cooperation in the investigation, repayment of moneys due, and sufficient
167 	29 C.F.R. § 4.188(b)(3)(i).
168 	The ALJ found that “there is no evidence in the record of prior SCA violations by
Employer.” D. & O. at 15.
169 	D. & O. at 14.
170 	Supra, Discussion Sections 2 and 3 of majority opinion.
171 	I also agree with the majority that the ALJ analyzed “present” violations at the
wrong step, and she should have considered “present” violations at Step Three. Majority
Op. at 21 n.108. However, I disagree with the majority’s agreement “with the ALJ’s
analysis” regarding serious violations. See Infra, Dissent, Section 3(E) (disagreeing with
ALJ’s analysis).
172 	It is noteworthy that the ALJ has made more legal errors in her D. & O. than Seven
Hills made in thirteen years of government service. However, the majority found this error
to be harmless error. Judging is difficult and the law (especially debarment) is complicated
and can result in unusual circumstances. Findings of Facts and Conclusions of Law are as
important to a decision as the law. It is also instructive to note that had the ALJ made
thorough findings of fact and conclusions of law she may have recognized her errors and
likely reached another conclusion more in line with this dissent.

34
assurances of future requirements) were met.”172F
173 I would affirm the ALJ’s findings
related to Step Two.
3. Unusual Circumstances Test, Step Three
At Step Three of the “unusual circumstances” test, “a variety of other factors
must still be considered,” including: (1) “whether the contractor has previously been
investigated for violations of the Act;” (2) “whether the contractor has committed
recordkeeping violations which impeded the investigation;” (3) “whether liability
was dependent upon resolution of a bona fide legal issue of doubtful certainty;” (4)
“the contractor’s efforts to ensure compliance;” and (5) “the nature, extent, and
seriousness of any past or present violations, including the impact of violations on
unpaid employees, and whether sums due were promptly paid.”173F
174
Step One of the test requires the absence of the factors to proceed (presence of
a factor bars debarment relief) and Step Two requires the presence of the factors to
proceed (absence of a factor bars debarment relief).174F
175 Unlike Step One and Step
Two of the test, “a variety of factors must still be considered” at Step Three, but the
regulation does not indicate that the presence (or absence) of any of the Step Three
factors precludes relief from debarment. Thus, I examine each factor below and
consider the totality of the Step Three factors. Based on a review of all the factors
and the current record, I would find that if Respondent has met its burden for Step
Three, it should be afforded relief from debarment. But because the preponderance
of the evidence does not support the ALJ’s findings, I would reverse or remand for
further findings.
A. Prior SCA Violations
The ALJ found “[t]here is no evidence in the record of prior SCA violations by
Employer.”175F
176 I agree and would affirm the finding—it weighs in favor of debarment
relief.
173 	D. & O. at 14-15.
174 	29 C.F.R. § 4.188(b)(3)(ii).
175 	See 29 C.F.R. § 4.188(b)(3)(i)-(ii) (“Where these prerequisites are present [Step Two
factors] and none of the aggravated circumstances [Step One factors] in the preceding
paragraph exist, a variety of factors [Step Three factors] must still be considered”).
29 C.F.R. § 4.188(b)(3)(ii).
176 	D. & O. at 15.

35
B. Recordkeeping Violations
The ALJ found that Respondent’s failure to “keep appropriate records as
required by 29 C.F.R. § 4.6(g) impeded the investigation, potentially preventing
investigators from identifying employees who were paid improperly.”176F
177 The ALJ
cited to the SCA narrative that noted: “due to the high turnover of employees
working on this contract and the firm’s lack of records to properly identify all of the
Fast-Food Shift Leaders who worked on this contract, the writer was only able to
compute back wages or the shift leaders identified[.]”177F
178 Seven Hills claims that the
“recordkeeping” violations cited by the ALJ in the D. & O. were not raised in the
SCA Complaint and the SCA investigation did not note any “recordkeeping”
violations.178F
179 I agree with Seven Hills—therefore, I do not find that this factor
weighs against Seven Hills. Alternatively, if the ALJ properly found that there were
recordkeeping violations, then this factor weighs against Seven Hills. Nonetheless, I
would still find that Respondent met its burden at Step Three, based on the totality
of the Step Three factors.
C. Bona Fide Legal Dispute
The ALJ found “[t]here is no evidence that there was a bona fide legal dispute
regarding Respondent’s commission of violations.”179F
180 The ALJ notes there was a
dispute between Respondent and the Administrator, but they resolved the issue.180F
181
I would affirm the ALJ’s findings, which do not weigh for or against debarment
relief.
D. Efforts to Comply
The ALJ found that Respondent paid the back wages, but after it paid the
back wages, “the Administrator filed evidence regarding Respondent’s continued
failure to timely pay fringe benefits to at least one employee, Maria Cruz.”181F
182
The paystubs “show that during three pay periods, Ms. Cruz was paid for hourly
wages and overtime, but not fringe benefits.”182F
183 Upon notice by Ms. Cruz,
Respondent “mailed a check for benefits at a later date.”183F
184 Seven Hills notes that
177 	Id.
178 	Id. (citation omitted).
179 	Reply Br. at 2, 7.
180 	D. & O. at 15.
181 	Id. at 15-16.
182 	Id. at 16.
183 	Id.
184 	Id.

36
this was a payroll glitch, and Seven Hills replaced the payroll system with a new
system that resolved the glitch.184F
185
I disagree with the ALJ—I would find that Seven Hills made efforts to
comply with the Act. Here, Respondent made a small mistake, quickly resolved it,
and took steps to ensure future compliance by replacing the payroll system.
Moreover, the SCA regulations note: “The authority to [relieve from blacklisting]
was intended to be used in situations where the violation was a minor one, or an
inadvertent one, or one in which disbarment . . . would have been wholly
disproportionate to the offense.”185F
186 Here, we have a “minor” violation that was
“inadvertent” from a company that had no prior SCA violations. Similar to the
regulations, I caution against debarment in such circumstances. It is nearly
impossible, or at least cost prohibitive, to prevent all “minor” and “inadvertent”
violations. The D.C. Circuit Court noted the difficulty of preventing all violations:
Certainly, contractors could hire an army of bookkeepers,
accountants, and supervisors to ensure no underpayments
would occur, and perhaps most needful to all, lawyers at
each location. Such a practice, however would elevate the
cost 	of 	operation 	to 	a 	level 	to 	endanger 	the 	future
appellants’ type of business as a source of employment. [186F
187]
I would find that Seven Hills made efforts to comply with the SCA, and
this factor weighs in favor of Seven Hills.
E. Seriousness of Violations
As noted elsewhere,187F
188 the ALJ improperly considered present serious
violations at Step One. Step One requires consideration “where previous violations
were serious in nature,”188F
189 while Step Three requires consideration of the “nature,
extent, and seriousness of any past or present violations, including the impact of
violations on unpaid employees, and whether sums due were promptly paid.”189F
190
Accordingly, I consider the ALJ’s examination of the “serious violations” here.
185 	PFR at 10-11.
186 	29 C.F.R. § 4.188(b)(2) (emphasis added).
187 	Fed. Food Serv., Inc., 658 F.2d at 834.
188 	Supra, Dissent note 171.
189 	29 C.F.R. § 4.188(b)(3)(i).
190 	Id. § 4.188(b)(3)(ii) (emphasis added).

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The ALJ found that Respondent’s “violations found under the instant
investigation to be serious ones.”190F
191 In support, the ALJ explained that “Respondent
owed a total of 178 employees an average of more than $1,000.00 each.”191F
192
I disagree.
According to the ALJ, the underpayments occurred from July 15, 2014,
through August 1, 2016—a period of about two years.192F
193 The D. & O. also noted that
for one year, from February 2015 to February 2016, “Seven Hills, Inc. had
approximately $5,000,000.00 in gross annual sales from the food services at the
Pentagon.”193F
194 By my calculations, the underpayment is 3.86% of the annual gross
sales for the year ending in February 2016194F
195 (part of the time frame being
investigated). Moreover, if you look at the combined gross revenues from 2013 to
2016 of over sixty-six million dollars195F
196 the percentage of gross sales is .0027%.
Neither 3.86 nor .0027 percent are sufficient to demonstrate any nefarious efforts
on the part of Respondent and can be viewed as supportive of Tadavarthy’s
assertion that he did not know that he was not paying the correct amount.196F
197
Given these numbers, it is clear that the underpayments were a very small
percentage of gross sales, which makes it unlikely that the underpayments resulted
from nefarious efforts by Respondent. It also supports the view that Respondent
thought it was paying the correct amount. While $1,000 over that timeframe is
significant for an employee, the factor also requires consideration of “whether the
sums due were promptly paid.”197F
198 Here, the Respondent promptly paid. The ALJ
noted that: “At the completion of the Department of Labor’s 2016 SCA investigation
of Respondent, Wage and Hour informed Respondent of the findings of the
191 	D. & O. at 14.
192 	Id.
193 	Id. at 7, ¶¶20-23.
194 	Id. at 6, ¶8.
195 	See id.
196 	See id. (I reached this figure by adding $23,455,000.00 in 2015, $22,430,000.00 in
2014, and $20,598,000.00 in 2013).
197 	See Fed. Food Serv., Inc., 658 F.2d at 834 (“In the instant case, after finding
appellants were responsible for a deficiency of $3,328.35 an amount less than one-fifth of 1
percent of the contract values and in a labor-intensive business, no doubt almost as low a
ratio compared to total payrolls the ALJ ostensibly applied the Washington Moving
guidelines. The ALJ found that there was no evidence the violations were willful or
deliberate and that appellants cooperated with the extensive and complex investigation of
the case except for one unexplained instance at the Norfolk location. Payments were made
fully and promptly even though substantial amounts had to be estimated through no fault
of appellants. Previous violations were not substantial and did not result in debarment
because of unusual circumstances.”).
198 	29 C.F.R. § 4.188(b)(3)(ii).

38
investigation, and Respondent agreed to pay the prevailing wages found to be
due.”198F
199 I disagree with the ALJ, and I would find that this factor weighs in favor of
Respondent.
C ONCLUSION
I respectfully dissent from the majority’s affirmance of the ALJ’s D. & O.
Seven Hills performed so well for the Defense Department that they chose Seven
Hills to fulfill other food service contracts at other facilities and the Pentagon for
over 13 years. Tadavarthy took responsibility when the Administrator informed him
of the error and fulfilled his obligations under the contract even though he had to
borrow the money personally.199F
200 Contractors make innocent mistakes with no
intent to hurt the government, employees, or creditors, and in this matter, there has
never been any suggestion by the ALJ or the Administrator that Seven Hills
attempted to enrich themselves at the expense of their employees or the
government. Debarment is a drastic result for a contractor akin to a “death
penalty.”200F
201 I would reverse the ALJ’s ruling because the preponderance of the
evidence does not support her findings, and the “unusual circumstances” test shows
that debarment relief is appropriate. Alternatively, I would remand this matter to
the ALJ for further findings of fact and conclusions of law citing to the record or
instruct her to make an entry of an appropriate judgment based on our
consideration of the debarment scheme and history.201F
202
ELLIOT M. KAPLAN
Administrative Appeals Judge
199 	D. & O. at 7, ¶26.
200 	It is notable that Tadavarthy’s efforts to comply promptly required him to borrow
money, creating personal liability for himself rather than borrowing through the company.
201 	Cf. Five Star Automatic Fire Prot., LLC, ARB No. 2023-0051, ALJ No. 2019-DBA-
00004, slip op. at 11 (ARB Aug. 25, 2025) (citation omitted) (“Debarment has long been
considered the ‘death penalty’ of procurement law as it can cut off the lifeblood of an
employer or contractor’s business. Given the severe impact of debarment, it is appropriate
that agency impositions of debarments as a penalty be carefully reviewed.”).
202 	The Board shall modify or set aside an ALJ’s factual findings, however, only . . .
when a preponderance of evidence does not support them. 29 C.F.R. § 8.9(b).