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Streamlining Fraud Claims in Government Contracts Law

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27/03/19 Free Law Essays Reference this

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STREAMLINING FRAUD CLAIMS IN GOVERNMENT CONTRACTS LAW: AMENDING THE CONTRACT DISPUTES ACT TO EXPAND BOARD OF CONTRACT APPEALS’ JURISDICTION

Introduction

There is perhaps no other word used in the legal language that is more authoritative and powerful than “jurisdiction.” One of the most fundamental questions of law is whether a [court or administrative tribunal] has jurisdiction to preside over a case.[1] Jurisdiction is essentially a court’s power to render judgment or decree upon the rights of citizens. The Contract Disputes Act of 1978 (“CDA”) [2] provides the Boards of Contract Appeals (“Boards”)[3] with the statutory authority to establish procedures for handling claims between the federal government and federal contractors.[4] The scope of the CDA is limited to matters arising under, or related to, a contract between the federal government and a government contractor.[5]

The CDA has broad jurisdiction over contractual matters, with some limitations.[6] One of the limitations provides that the CDA “does not authorize any agency to settle, compromise, pay, or otherwise adjust any claim involving fraud.”[7] For over thirty-seven years, the Boards have held that these provisions of the CDA preclude the Boards from deciding whether a contractor committed fraud, because Congress gave the Department of Justice (“DOJ”) the sole responsibility to administer and enforce the fraud statutes.[8] The Court of Appeals for the Federal Circuit has also interpreted the CDA to broadly exclude claims involving fraud from the Boards’ jurisdiction.[9] Federal district courts have reached similar conclusions, determining that the CDA provisions exclude from the Boards’ jurisdiction not just fraud allegations, but, more generally, any claim concerning fraud, including government counterclaims of fraud and fraud affirmative defenses.[10]

Indeed, there are several cases from the Armed Services Board of Contract Appeals (“ASBCA”), the largest of the Boards, in which the ASBCA made determinations of fraud despite the CDA, without addressing the issue of jurisdiction, resulting in conflicting decisions with the other agency Boards.[11] Since 1990, there have been several cases where the government has asserted an affirmative defense of fraud in response to a contractor’s appeal of a contracting officer’s decision where the Board has engaged in its own finding of fraudulent conduct on the part of the contractor, thus resulting in a decision in the government’s favor to render the contract void ab initio.[12]

Despite the CDA’s jurisdictional bar on deciding fraud, some Board decisions create confusion. These decisions show the difficulty of separating certain fraud claims from contract claims, a situation that demonstrates a need to rethink the CDA fraud provisions. The CDA’s jurisdictional bar on fraud claims creates issues with parallel proceedings that can turn a contractor’s claim into a circular, time consuming, and expensive process, which frustrates the purpose of the CDA in assuring a streamlined system of adjudication.[13] Moreover, the CDA impinges on the Boards’ jurisdiction to hear all claims arising under, or related to, a contract between the federal government and a government contractor,[14] because it restricts the Boards from hearing the claims until a court of competent jurisdiction issues a decision regarding the fraud.[15]

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This Note suggests that Congress amend and narrow the CDA’s broad fraud provisions to authorize the Boards to make factual determinations of fraud when the government asserts an affirmative defense of fraud in order to decide whether a contract should be rendered void ab initio. This Note begins with a brief history and overview of the government contracting adjudication process and analyzes why Congress established the CDA. The Note then analyzes several Federal Circuit and Board decisions that interpret the CDA to forbid the Boards to hear fraud claims. It compares these decisions to recent conflicting Federal Circuit and ASBCA decisions that make determinations of fraud while neglecting to address the jurisdiction question entirely. After describing the necessary background information, this Note analyzes the problem of parallel proceedings due to the CDA fraud provisions. The Note also discusses the problem the Boards face when they cannot exercise full authority to proceed with a contract claim due to an affirmative defense of fraud. Finally, this Note suggests that Congress amend the CDA fraud provisions to authorize the Board to hear contract claims when there is an affirmative defense of fraud in order to: (1) clear up confusion of CDA jurisdiction; (2) decrease the need for parallel proceedings; and (3) allow the Boards to exercise full authority over claims arising under or related to government contracts as Congress intended.

I. BRIEF HISTORY OF THE FEDERAL GOVERNMENT CONTRACTING ADJUDICATION PROCESS AND THE CONTRACT DISPUTES ACT OF 1978

The Contract Disputes Act of 1978 is the final product of a long history of inevitable tensions and difficulties in holding a sovereign entity responsible for its contractual obligations.[16] Congress passed the CDA in part to resolve these controversies and to streamline the government contract adjudication process and forgo lengthy and costly litigation.[17]

A. Prior to the Passage of the Contract Disputes Act

Prior to the passage of the CDA in 1978, contractors were required to bring their contract-related claims against the United States under a variety of statutory and contractual provisions.[18] In 1887, Congress passed the Tucker Act, which granted the Court of Claims authority to consider monetary claims against the government based on: (1) the Constitution; (2) an act of Congress; (3) an executive regulation; or (4) an express or implied-in-fact contract.[19] Agencies responded to the Court of Claims’ increased oversight by adding disputes clauses to government contracts that appointed specific agency officials, such as the contracting officer or the service secretary, as the final decision-maker for questions of fact.[20] Tension arose between the agencies’ desire to decide contract disputes without outside interference, and the contractors’ desire to resolve disputes in the Court of Claims.[21]

Congress established the Boards during World War I, beginning with the War and Navy Departments to hear claims involving wartime contracts.[22] After World War II, in a series of cases culminating in Wunderlich v. United States[23], the Supreme Court of the United States (SCOTUS) upheld finality (absent fraud) of factual decisions issued under the disputes clause by a department head or his duly authorized representative.”[24] Congress passed the Wunderlich Act[25], which reaffirmed that the Court of Claims could review factual and legal decisions by agency Boards.[26] Later, SCOTUS limited the jurisdiction of the Boards to cases “arising under” remedy granting clauses in the contract to clarify the relationship between the Court of Claims and the agency Boards.[27]

The dispute system turned out to be inefficient because it was unclear as to what matters parties could litigate and what authority the heads of agencies and tribunals had in hearing disputes.[28] Thus, Congress replaced this system in 1978 with a comprehensive statutory scheme, known as the Contract Disputes Act.[29] Congress intended that the CDA: (1) help induce resolution of more disputes by negotiation prior to litigation; (2) equalize the bargaining power of the parties when a dispute exists; (3) provide alternative forums suitable to handle the different types of disputes; and (4) ensure fair and equitable treatment to contractors and government agencies.[30] The CDA attempts to resolve all controversies and issues by mutual agreement at the contracting officer’s level to forgo lengthy and costly litigation.[31]

B. The Contract Disputes Act of 1978 (41 U.S.C. §§ 7101-7109)

The CDA establishes the procedures for handling “claims” related to United States government contracts.[32] A claim is “a written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to the contract.”[33] The contractor submits a claim to the applicable agency’s contracting officer (“CO”).[34] Within a prescribed period of time, the CO then issues its final decision.[35] Contractors have the right to appeal from the CO’s decision to an agency Board,[36] or file a claim at the COFC.[37] Further, the contractor may appeal the decision to the Federal Circuit.[38] The extensive coverage and litigation options under the CDA afford contractors substantial protection in pursuing their claims against the federal government.[39]

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The CDA authorizes the Boards to hear and decide disputes “arising under” or “relating to a contract.”[40] Although the CDA provides broad coverage for disputes between contractors and the government, it does not encompass all types of disputes.[41] The CDA contains two primary provisions that appear to exempt the Boards from presiding over matters of fraud within the dispute process: (1) § 7103(a)(5) states that “[t]he authority of this subsection . . . does not extend to a claim or dispute for penalties or forfeitures prescribed by statute or regulation that another Federal agency is specifically authorized to administer, settle, or determine[;]”[42] and (2) § 7103(c)(1) provides that “[t]his section does not authorize an agency head to settle, compromise, pay, or otherwise adjust any claim involving fraud.”[43] Hence, a federal agency cannot adjudicate a claim involving fraud before its administrative board.[44] Congress authorized another federal agency to address these types of claims and disputes.[45] Despite this interpretation of the CDA, several Boards have found that contractors have committed fraud, voiding entire contracts as a result.[46]

II. BOARD OF CONTRACT APPEALS’ JURISDICTION TO HEAR FRAUD CLAIMS UNDER THE CONTRACT DISPUTES ACT

Federal Circuit and district court interpretations of the CDA have generally been uniform in establishing that the Boards do not have jurisdiction to hear fraud claims or make determinations of fraud.  However, in the past thirty-seven years, there have been several Board decisions that have departed from this historical interpretation and have made fraud determinations despite the CDA.  This has resulted in confusing precedent regarding Board jurisdiction and fraud claims.

A. Federal Circuit and District Court Interpretations of the CDA

According to CDA § 7103(c)(1), the CDA “does not authorize an agency head to settle, compromise, pay, or otherwise adjust any claim involving fraud.”[47] The Federal Circuit’s decision in Martin J. Simko Constr., Inc. v. United States (“Simko”),[48] suggests that Congress did not intend the CDA to reach fraud-based claims.[49]

Simko involved a dispute between the U.S. Air Force and Martin J. Simko Construction, Inc., concerning a contract for the construction of a jet fuel loading facility at Pease Air Force Base in New Hampshire.[50] Simko filed suit in the COFC after the Air Force terminated its contract for default.[51] The government asserted counterclaims alleging fraud, invoking the COFC’s counterclaim jurisdiction[52] and the anti-fraud provisions of the CDA.[53] The court reviewed the relevant language of §§ 7103(a)(5) and (c)(1) and analyzed the legislative history of the CDA.[54] The court held that a claim of fraud “was not a contract dispute” within the meaning of the CDA, but “rather a right enforceable by the [DOJ] and redressable in a court of competent jurisdiction.”[55] It further concluded that Congress did not intend to include fraud claims within the agency Boards’ jurisdiction as set forth in § 7103, because Congress gave the DOJ the responsibility to administer and enforce those statutes.[56] Moreover, the court explained that during the congressional hearings, several executive agencies, including the DOJ and the General Accounting Office (“GAO”),[57] were concerned that the bill did not clearly state that agencies did not have jurisdiction to address controversies arising from fraudulent submissions against the United States.[58] There were similar concerns from the Senate, but the bill ultimately passed.[59]

This decision and analysis is consistent with several decisions from federal courts and agency Boards, both before and after the Simko decision.[60] Federal district courts have reached similar conclusions, determining that the Boards do not have jurisdiction to hear fraud allegations, or even claims involving fraud.[61]

B. Board Decisions Establishing Their Lack of Jurisdiction to Make Fraud Determinations

In the past thirty-seven years since the CDA’s enactment, decisions by the Boards have uniformly held that a Board may rely upon findings of fraud made by courts of competent jurisdiction in determining if the contract is void or void ab initio.[62] But the language of the statute and the decisions interpreting the Board’s jurisdiction make it less obvious that a Board may not rely on its own determination of fraud in deciding if a contract is void or void ab initio.[63] Several Board decisions establish that Boards lack jurisdiction to make their own fraud determinations, while others fail to address jurisdiction and proceed to make their own fraud determinations, thus resulting in conflicting decisions.

Between 1990 and 1999, Board decisions continued to recognize that the Boards do not have jurisdiction to determine fraud, but, rather, must rely upon determinations made by courts of competent jurisdiction, such as the COFC or the district courts.[64] For example, the Engineering Board of Contract Appeals (“ENG BCA”) in Beech Gap, Inc.[65] held that the Board must rely upon fraud determinations made by forums with the appropriate jurisdictional authority.[66] Similarly, in Harddrives, Inc.,[67] the Department of Interior’s Board of Contract Appeals (“IBCA”) held that although it had jurisdiction to decide a contractor’s contract claims, the CDA did not give it authority to make a fraud determination.[68] The ASBCA followed suit and stated, “[i]f the Government is able to establish, in the court suits, that [a] contract is fraudulently obtained . . . , [the] contract could be declared null and void abinitio.”[69] The ASBCA further noted that a proper showing of fraud in another tribunal would strip it of its jurisdiction to hear the appeal.[70]

Beginning in 2000, the Boards addressed the issue of whether they have jurisdiction over fraud allegations that surface in the form of an affirmative defense to a contractor’s claim.[71] These decisions seem to vaguely support the conclusion that a Board does not have jurisdiction to consider fraud as an affirmative defense if it must first determine that fraud occurred.[72] For example, in Turner Construction Co.,[73]the General Services Board of Contract Appeals (“GSBCA”) concluded that the government’s False Claims Act (“FCA”) allegation was “outside the jurisdiction of the CDA’s dispute process,” and stated that other agencies within § 7103(a)(5)’s exception enforce the government’s Anti-Kickback Act and Sherman Act allegations.[74] The GSBCA emphasized that “an affirmative defense that would turn on a board’s finding of fraudulent conduct . . . is not within [the Board’s] jurisdiction.”[75]

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The ASBCA followed the GSBCA’s reasoning in Turner Construction Co. anddenied a contractor’s claim based upon an affirmative defense of fraud because a federal district court subsequently issued a judgment against the contractor for violating the FCA in connection with the contract.[76] The Board premised its jurisdiction upon the adjudication of fraud by a court of competent jurisdiction.[77] In turn, the Board denied the contractor’s claims relying upon the district court’s decision that the contractor violated the FCA.[78] The ASBCA continued to reiterate the GSBCA’s holding in Turner Construction Co. and its own holding in AAA Engineering & Drafting, Inc.[79] consistently holding that the ASBCA can only determine a contract void or void ab initio when there has been a previous adjudication of fraud by a court of competent jurisdiction.[80] In a drastic approach, the ASBCA began issuing decisions that made independent findings of fraud without any statutory support for its authority to do so.[81] By doing this, the ASBCA departed from prior Board and federal court decisions, which illustrates the difficulty of separating fraud matters from the underlying contract matters.

C. ASBCA Decisions Departing from Boards’ and Federal Court Historical Decisions Holding That It Lacks Jurisdiction to Make Its Own Fraud Determinations

In the following decisions, the ASBCA made its own independent fraud determination without statutory support for doing so. As such, the board departed from prior and contemporaneous Boards’ and federal court decisions.

Beginning as early as 1990, with C&D Construction, Inc.,[82] the ASBCA misapplied its previous decisions in National Roofing & Painting, Inc.[83] and J.E.T.S, Inc.[84] and made its own factual determination of fraud.[85] In C&D Construction, the contractor claimed expenses for extra work due to government delays on a small contract to replace an air conditioning unit at a military reservation in Hawaii.[86] In its defense, the government argued that the contract was void because the contractor allegedly misrepresented itself as a small business during the contract award process.[87] Consequently, the ASBCA agreed with the government and declared the contract void, denying recovery on the contractor’s claim.[88]

Relying on its previous decisions in National Roofing & Painting, Corp. and J.E.T.S., Inc., the ASBCA noted that when a contractor made misrepresentations during the government’s bidding process, the resulting contract is void or voidable.[89] In each of those decisions, however, the Board did not make its own determination of fraud and instead relied upon a criminal conviction made by a court with jurisdictional authority.[90] There was no such determination of fraud by a court of competent jurisdiction in C&D Construction.[91]

Six years later, in ORC, Inc.,[92] the ASBCA relied on its decision in C&D Construction in finding that a contractor made deliberately false representations to the government to obtain a contract by misrepresenting academic credentials of personnel and falsely certifying that the contractor had prepared its proposal in its entirety.[93] The ASBCA held that the contract was void due to the contractor’s deliberately false representations to the government.[94] The Board relied on its C&D Construction decision in support of its conclusion.[95]

Similarly, in Schuepferling GmbH & Co., KG,[96] decided in 1998, the ASBCA found that German contractors working at an Army base in Germany committed fraud by bribing government officials to obtain contracts.[97] Based on the its own fraud determination, the Board declared the contract void ab initio.[98] As in the previous decisions in C&D Construction and ORC, the Board never explained why or how it had jurisdiction to make its own determinations of fraud[99] and proceeded on the merits as if it had jurisdiction.[100]

The ASBCA made its own determination of fraud again in 2013 when it applied C&D Construction in Servicios y Obras Isetan S.L.[101] In this case, the government contended that the contract was void ab initio due to the contractor knowingly submitting false credentials to obtain the contract and knowingly submitting a false bank letter of guarantee to begin performance.  The government also believed that the appeal should be dismissed or denied.[102] Analogous to its decisions in C&D Construction, ORC, and Schuepferling, the Board assumed, without explanation, that it had jurisdiction to determine whether there was a misrepresentation that would render the contract void ab initio.[103] The Board proceeded on that basis and found that the contractor committed fraud and dismissed the contractor’s appeal.[104]

D. Recent Federal Circuit Decision Relies on ASBCA’S AAA Engineering & Drafting, Inc. Holding

In 2016, in Laguna Construction Co. v. Carter,[105] the Federal Circuit relied on the ASBCA holding in AAA Engineering & Drafting, Inc., finding that the Board can only determine a contract is void or void ab initio when there has been a previous adjudication of fraud by a court of competent jurisdiction.[106] The Federal Circuit never mentioned the ASBCA’s conflicting decision three years prior in Servicios y Obras Isetan S.L. In Laguna Construction,the contractor brought a case to the ASBCA for reimbursement of past costs that the government refused to pay.[107] The government’s answer in the Board appeal included the affirmative defense of fraud, in which it argued that the government was not liable for Laguna’s claim because the company had materially breached its contract by engaging in a kickback scheme with its subcontractors.[108] The Board granted the government’s motion for summary judgment and declined to hear the merits of Laguna’s motion.[109] It concluded that Laguna had breached the duty of good faith and fair dealing when its employees engaged in the kickback scheme and had breached the contractor’s Allowable Cost and Payment clause because its vouchers were improperly inflated to include the payment of kickbacks.[110] Laguna appealed to the Federal Circuit, arguing that the Board did not have jurisdiction over the government’s affirmative defense of fraud, and, in the alternative, that the Board erred in granting the government’s summary judgment motion.[111] The Federal Circuit agreed with the government and held that the Board had jurisdiction over the government’s affirmative defense of fraud.[112] It reasoned that though fraud-related claims are outside the Board’s jurisdiction, the Board did not have to make any factual findings of fraud because it relied on the criminal conviction of one of Laguna’s principle officers.[113]

It is impossible to reconcile the ASBCA decisions making determinations of fraud with other decisions of the ASBCA, the decisions of other Boards, and decisions of the Federal Circuit holding that the Board can render a contract void due to fraud only based upon a finding of fraud by a court of competent jurisdiction.[114] Despite the conflicting decisions within the Boards, no Board or court has ever affirmatively stated that a Board has CDA jurisdiction to make an independent fraud determination.[115] To date, this issue has never been appealed to the Federal Circuit.[116] Both the analysis of C&D Construction as reflected in the 2013 ASBCA decision in Servicios y Obras Isetan S.L. and the analysis of Simko as reflected in the 2016 ASBCA decision in Laguna Construction stand today, creating uncertainty for everyone involved in the government contract adjudication process.

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IV. IMPACT RESULTING FROM THE LACK OF BOARD OF CONTRACT APPEALS’ JURISDICTION TO MAKE FRAUD DETERMINATIONS WHEN CONTRACT BASED CLAIMS INVOLVE FRAUD

Due to the conflicting decisions within the Boards, it is unclear whether the Boards can actually make determinations of fraud when faced with a government affirmative defense. There are two primary issues that arise when the government asserts a fraud counterclaim or affirmative defense of fraud. These issues effectively frustrate the intended purpose of the CDA. First, parallel proceedings involving a government’s counterclaim/defense of fraud at the COFC and the contractor’s claim at the Boards may occur simultaneously, and a judgment from either forum could inadvertently affect a judgment in the other, resulting in potential unfairness and bias to either party.[117] Second, the Boards are unable to exercise their jurisdiction afforded by the CDA to answer contract questions when the government asserts a fraud counterclaim or affirmative defense of fraud, which causes significant time, expense, and circular procedures for all parties involved.[118]

These issues frustrate the purpose of the CDA, which was meant to create a more streamlined approach in resolving contract disputes and help avoid lengthy and costly litigation.[119] Congress should amend the broad sweeping CDA fraud provisions to allow the Boards to hear fraud claims, as far as they surface as affirmative defenses by the government to contractor claims.

A. Parallel Proceedings

The government has the opportunity to bring a separate and independent action in a U.S. district court for fraud claims against a contractor.[120] When litigation commences before a Board where the government argues for fraud, the government will frequently try to obtain a fraud judgment against a contractor in district court.[121] Typically, the government files a motion to stay the Board litigation while the fraud case is adjudicated in district court.[122] This creates parallel proceedings that delay both the contractor’s claim and the government’s claim, Additionally, one proceeding could inadvertently affect the other if both proceed concurrently as discussed in the example below.

There are instances where the Boards have denied the government’s motion to stay due to a parallel fraud case in district court. For example, in BAE Systems Tactical Vehicle Systems, LP,[123] the ASBCA denied the government’s motion to stay appeals due to a parallel FCA case in district court.[124] In this case, BAE allegedly provided defective cost or pricing data in connection with award of the contract.[125] The government filed suit in district court alleging violations of the Truth in Negotiations Act and the FCA.[126] The government argued that it would experience substantial prejudice if the ASBCA case proceeded because the ASBCA cannot make findings of fraud.[127] BAE argued its statutory right under the CDA to have its appeal decided by the ASBCA.[128] Because the dispute stemmed from events that happened up to eight years ago, witnesses already struggled to recall events and the government was having difficulty locating and producing documents.[129] Additionally, BAE emphasized that discovery had not started in the FCA case and no trial date had been set, while discovery was underway at the ASBCA with a hearing scheduled.[130]

The ASBCA agreed with BAE that it could be prejudiced by the further passage of time due to the potential loss of witnesses and evidence.[131] Because the government had not represented that the stay will be of any duration other than indefinite, the ASBCA found BAE could suffer harm from a further delay and noted that proceeding with the appeals would best serve judicial efficiency because the ASBCA litigation is likely to lead to an earlier resolution of the contract claims.[132]

This case demonstrates the issues that can arise from parallel proceedings that affect both the government and the contractor. As the ASBCA noted, a stay of the Board proceedings would have substantially harmed the contractor due to how long suits can last in district courts.[133] Had the Board allowed a stay, the contractor would have endured lengthy and costly litigation,[134] a consequence the CDA aimed to mitigate.[135] Additionally, the contractor would also suffer prejudice from the further passage of time,[136] another consequence Congress intended for the CDA to alleviate.[137] This decision seems to suggest that either the Board should make a factual determination of fraud in order to proceed with the contractor’s claim, or the government should drop its affirmative defense of fraud due to the CDA’s jurisdictional bar on fraud claims so that the Board can proceed with the underlying contract claims.

B. The CDA Fraud Provisions’ Effect on Board Jurisdiction to Answer Contract Questions

The CDA provides the Boards with the statutory authority to establish procedures for handling claims between the federal government and federal contracting agencies.[138] The scope of the CDA is limited to matters arising under, or related to, a contract between the federal government and a government contractor.[139] Although CDA jurisdiction is generally broad, there are limitations, such as the fraud provisions.[140]

In light of the rise in government fraud counterclaims and affirmative defenses of fraud,[141] the CDA fraud provisions are overly broad and act as an undue restriction on the Boards’ jurisdiction to hear contract claims. Because the CDA bars the Boards from hearing any claim concerning fraud, including government counterclaims of fraud and fraud affirmative defenses,[142] the Boards cannot answer a contractor’s underlying claim until a district court renders a decision regarding the fraud from a court of competent jurisdiction.[143] As discussed in Part IV.A, this leads to a stay on the claim at the respective agency Board while the COFC or the district courts make a fraud determination. This process can be circular, time consuming, and expensive for the contractor, which defeats the CDA’s purpose to resolve contractor’s contract-based claims without lengthy and costly litigation.[144]

With the influx of government fraud claims and affirmative defenses of fraud, the Federal Circuit has opened the door to Board jurisdiction to hear contractor claims concerning fraud. For example, in Laguna Construction, decided in 2016, the Federal Circuit concluded that the government’s affirmative defense of fraud is not a “claim” that requires a decision by the contracting officer; the court also noted that a prior material breach is a federal common law defense asserted when a party breaches a contract after another party has already breached the contract.[145] This conclusion—that the government’s affirmative defense does not meet the definition of a “claim” under the CDA—is problematic.[146] At some points, the Federal Circuit referred to the defense in Laguna Construction as an affirmative defense of fraud.[147] Yet, at other points, the Federal Circuit characterized it as a “prior material breach.”[148] However, a breach of contract is a classic “claim.”[149] The Federal Circuit neglected to fully address the Board’s CDA jurisdiction as it relates to hearing fraud claims.

The Federal Circuit further circumvents the CDA jurisdiction issue by labeling the defense as a breach of contract defense rather than the affirmative defense of fraud.[150] Moreover, it seems to suggest that the Boards can hear a contractor’s contract-based claim, regardless of the government affirmative defense of fraud, since an affirmative defense of fraud is not a claim in and of itself.[151] This reasoning, along with the inconsistent Board decisions regarding fraud, merit a closer look into the CDA’s fraud provisions in an attempt to resolve the current uncertainties.

V. CONGRESS SHOULD AMEND THE CDA FRAUD PROVISIONS TO ALLOW THE BOARD OF CONTRACT APPEALS TO MAKE DETERMINATIONS OF FRAUD WHEN FACED WITH A GOVERNMENT AFFIRMATIVE DEFENSE OF FRAUD

Throughout the past thirty-seven years, both the Boards and the courts have issued conflicting decisions regarding the jurisdiction of the Boards to hear fraud claims, demonstrating a need to rethink the CDA fraud provisions. The CDA jurisdictional bar on fraud claims has created several issues for all parties involved in federal contracting disputes in an already complex adjudication process. Parallel proceedings can frustrate the purposes of the CDA by prejudicing either the government or the contractors based on whether one claim must wait for the other to be adjudicated or each proceeding occur simultaneously. Parallel proceedings also have the potential to waste judicial resources and unnecessarily prolong litigation resulting in unnecessary excessive costs. Furthermore, the Boards cannot actually consider contractors’ claims when the government asserts a fraud counterclaim or affirmative defense of fraud without a court of competent jurisdiction’s determination of fraud.

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First, there should be a thorough review of the decisions where Boards did make determinations of fraud without addressing the jurisdictional issue to shed light on the inconsistencies and clear some of the confusion that results from these decisions.[152] Next, Congress should amend the CDA to allow the Boards to hear government affirmative defenses of fraud, as the case law discussed in Part III.C demonstrates already happens.[153] These decisions show how difficult it is to separate fraud claims from the underlying contract claims in order to come to a fair and just result for both parties.

Boards can successfully adjudicate contract disputes when faced with a government affirmative defense of fraud if the decision only involves whether to render a contract void ab initio. The Boards are qualified to hear contract claims because Board judges are experts in the field, whereas COFC judges do not focus solely on government contract claims.[154] Additionally, there are several judges on each Board to review a claim, whereas only one judge on the COFC reviews each claim. Moving these decisions to the Boards could result in a better and more thorough review of all claims.[155] Moreover, decisions by the Boards are collegial[156] and the majority of the judges on the panel must agree for the decision to be issued.[157] This process ensures that each Board is consistent with the prior precedent of that specific Board, so decisions are less likely to be reversed on appeal.[158] In contrast, the COFC does not employ procedures to ensure consistency in the court’s decisions.[159] Thus, only an appeal to the Federal Circuit can resolve any inconsistency.[160] Therefore, a contractor must be advised that its case will be decided based upon the more favorable court precedent of that court.[161] Fraud claims and counterclaims seeking monetary damages are complicated and the district courts and COFC are better equipped for such complicated claims. However, government affirmative defenses of fraud seeking to render a contract void or void ab initio do not require the Boards to decide complex fraud-based claims; it would only require the Boards to consider fraud in connection with the principle claim, which, as C&D Construction[162] seems to suggest, Boards are more than capable of doing.

Allowing Boards to identify fraud as part of an affirmative defense in order to decide the principle claim would eliminate many parallel proceedings. Additionally, the Boards would no longer be as restricted in exercising their broad jurisdiction to hear claims. Although this category of cases is a small portion of federal government contract cases involving fraud,[163] it is a step in the right direction to help realize the CDA’s purpose: to assure both contractors and the government can resolve contract disputes in a fair and effective manner without lengthy and costly litigation.

CONCLUSION

If Congress amends the CDA fraud provisions to authorize the Boards to make determinations of fraud when the government asserts fraud as an affirmative defense, it would eliminate some of the confusion associated with jurisdiction and parallel proceedings. Moreover, it would help reestablish the CDA’s purpose in assuring a more streamlined contract disputes process to avoid lengthy and costly litigation. As the Boards and COFC continually see an increase in fraud counterclaims by the government, it is necessary to resolve the inconsistencies and clean up the adjudication process associated with federal contracting to ensure a fair and efficient process for all parties involved.

[1] Jurisdiction, Legal Information Institute, https://www.law.cornell.edu/wex/jurisdiction (last visited Nov. 19, 2016). E.g., Simon v. Eastern Ky. Welfare Rights Org., 426 U.S. 26, 37 (1976) (“No principle is more fundamental to the judiciary’s proper rule in our system of government than the constitutional limitation of federal court jurisdiction to actual cases or controversies.”).

[2] See generally 41 U.S.C. §§ 7101-7109 (2012).

[3] The Boards of Contract Appeals is a statutory court of law that hears and decides appeals from decisions of contracting officers on claims related to federal government contracts. The Board, The U.S. Civilian Bd. Of Contract Appeals, http://www.cbca.gsa.gov/board/index.html (last visited Feb. 26, 2018). Prior to the establishment of the Civilian Board of Contract Appeals (“CBCA”) in 2007, there were several agency boards. Id. The CBCA consolidated eight different agency boards for contract appeals. Id. All decisions of former Boards are still binding. Id. CBCA decisions apply to all federal agencies “except the Department of Defense and its constituent agencies, the National Aeronautics and Space Administration, the United States Postal Service, the Postal Rate Commission, and the Tennessee Valley Authority.” Id. In addition to the CBCA, the Armed Services Board of Contract Appeals (“ASBCA”) has jurisdiction over contract disputes as to the Department of Defense, National Aeronautics and Space Administration, and Central Intelligence Agency. Welcome, Armed Services Bd. Of Contract Appeals, http://www.asbca.mil/ (last visited Feb. 26, 2018). For a full list of remaining Boards, see generally 41 U.S.C. §§ 7105(a)–(e) (Supp. V 2012).

[4] 41 U.S.C. §§ 7102(a), 7105(b)(4)(A)-(B).

[5] See generally FAR 33.203(c) 2017; John Cibinic, Jr., Administration Of Government Contracts 1236 (4th ed. 2006).

[6] See, e.g., § 41 U.S.C. 7103(a)(5) (limiting the Contracts Disputes Act of 1978 by stating that “the authority of this subsection . . . does not extend to a claim or dispute for penalties or forfeitures prescribed by statute or regulation that another federal agency is specifically authorized to administer, settle, or determine”).     

[7] 41 U.S.C. § 7103(a)(4), (c)(1).

[8] The Environmental Systems Board applied the Simko analysis, infra Part III-A, of 41 U.S.C. § 7103(a)(5) and government counterclaims in fraud to an affirmative defense of fraud in finding that the CDA precludes the ASBCA from exercising jurisdiction over these issues because the Department of Justice is the federal agency authorized to administer, settle, and determine FCPA violations. See In Re Appeal of Envtl. Sys., Inc., ASBCA No. 53283, 03-1 B.C.A. (CCH) ¶ 32167 (Jan. 23, 2003).

[9] See Martin J. Simko Constr. Inc. v. United States, 852 F.2d 540, 545 (Fed. Cir. 1988).

[10] See United States v. Kellogg Brown & Root Serv., Inc., 800 F. Supp. 2d 143, 160 (D.D.C. 2011) (quoting 41 U.S.C. § 605(a) [now Section 7103]) stating that the CDA prohibits jurisdiction over fraud-related claims and holding that “[T]here can be no doubt that a . . . False Claims Act claim “involves” fraud thus precluding it from Board jurisdiction.”); accord First Choice Armor & Equip., Inc. v. United States, 808 F. Supp. 2d. 68, 80 (D.D.C. 2011); United States v. Unified Indus., Inc., 929 F. Supp. 947, 950-51 (E.D. Va. 1996) (holding that the CDA exception applies to claims “involving fraud” and not merely to claims “of fraud” or “for fraud” and that the CDA’s language suggests an intention to restrict CDA jurisdiction to exclude not only fraud-based claims but also fraud-related claims); United States v. Rockwell Int’l Corp., 795 F. Supp. 1131, 1135 (N.D. Ga. 1992) (holding that the CDA restricts jurisdictional authority to prevent Boards from resolving fraud claims and fraud-related claims); United States v. JT Constr. Co., 668 F. Supp. 1131, 1135 (W.D. Tex. 1987) (stating that the CDA’s legislative history clearly shows an intent to exclude fraud claims from Board [of Contract Appeals’] jurisdiction).

[11] Benjamin Williams, a prior law student from Catholic University, gives a detailed timeline of cases ranging from 1980 to 2013 describing, in depth, several Board decisions regarding fraud claims or counterclaims to point out the disparity in the Boards’ decisions. Additionally, Williams analyzes the ASBCA decisions where the Board made fraud determinations despite the long history of case law determining that the Boards did not have jurisdiction to hear fraud claims. See, generally, Benjamin Williams, Note, Drawing the Line: Board of Contract Appeals’ Jurisdiction to Make Determinations of Fraud, 63 Cath. U.L. Rev. 815 (2014).

[12] A. Jeff Irah, Board Procedures Involving Fraud Counterclaims Against Contractors, Briefing Papers No. 07-10 (September 2007).

[13] See S. Rep. No. 95-1118, at 1, reprinted in 1978 U.S.C.C.A.N. 5235; id. S. Rep. No. 95-1118, at 25.

[14] See CIBINIC, supra note 3.

[15] See Nexus Constr. Co., 98-1 BCA ¶ 29,375, at 146,017 (stating that a finding of fraud from a court of competent jurisdiction is a precondition to the dismissal of an appeal from a contractor’s claim).

[16] See, e.g., Collin D. Swan, GOVERNMENT CONTRACTS AND THE FEDERAL CIRCUIT: A HISTORY OF JUDICIAL REMEDIES AGAINST THE SOVEREIGN, 8 J. Fed. Cir. Historical Soc’y 105, 105 (2014).

[17] See S. Rep. No. 95-1118, at 1, reprinted in 1978 U.S.C.C.A.N. 5235.

[18] See CIBINIC, supra note 3, at 1231.

[19] Id. at 1236.

[20] The Judge Advocate General’s School, Contract & Fiscal Law Department, Contract Attorneys Deskbook 22-1, 22-2 (Vol. II 2014) (explaining the United States Supreme Court upheld the finality of the contract officers’ decisions in Kihlberg v. United States, 97 U.S. 398 (1878).

[21] Id.

[22] Id.

[23] 342 U.S. 98 (1951).

[24] Id. at 100.

[25] 41 U.S.C. §§ 321-22.

[26] Id.

[27] See id. (citing Utah Mining and Constr. Co. v. United States, 384 U.S. 394 (1966)).

[28] Id; see also CIBINIC, supra note 3, at 1231 (noting that with the increase of government procurement during the twentieth century, it became difficult for contractors to take advantage of sovereign immunity waivers because many contracts with the government contained dispute provisions limiting these waivers).

[29] See The Judge Advocate General’s School, supra note 18, at 22-2.

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[30] See S. Rep. No. 95-1118, at 1, reprinted in 1978 U.S.C.C.A.N. 5235 (“The contractor should feel that he is able to obtain his ‘day in court’ at the agency boards and at the same time have saved time and money through the agency board process.”); id. (“Board proceedings . . . should be of sufficient positive value in time and monetary savings that contractors would elect to take their appeals to the agency boards.”).

[31] Id.

[32] See 41 U.S.C. §§ 7101-7190 (Supp. V 2012).

[33] See FAR 2.101 (2017); FAR 52.233-1 (2017).

[34] See 41 U.S.C. §§ 7103(a) The term “contracting officer” (CO) “means an individual who, by appointment in accordance with applicable regulations, has authority to make and administer contracts and to make determinations and findings with respect to contracts; and . . . includes an authorized representative of the contracting officer, acting within the limits of the representative’s authority.” Id. § 7101(6)(A)-(B).

[35] 41 U.S.C. § 7103(d). Also, the CO’s decision is final unless a party files a timely appeal to an agency board or the Court of Federal Claims. Id. §7103(g).

[36] 41 U.S.C. § 7104(a).

[37] 41 U.S.C. § 7104(b); United States v. Kasler Elec. Co., 123 F.3d 341, 346 (6th Cir. 1997) (explaining that the CDA is responsible for keeping government contract claims in the appropriate forum, which helps regulate the waiver of sovereign immunity and provide tribunals with adequate knowledge and experience); see also, Irah, supra note 10 (explaining the potential outcomes of adjudicating a contractor’s claim involving fraud before the different fora).

[38] 41 U.S.C. § 7107(a)(1); 28 U.S.C. § 1295(a)(3), (10) (Supp. V 2012).

[39] See CIBINIC, supra note 3, at 1244 (explaining that the CDA broadened coverage to include court and board jurisdiction over all disputes “relating to the contract” as opposed to only those disputes in which the contract contained a “remedy granting” clause that encompassed the contractor’s desired remedy).

[40]FAR 33.203(c) (2017).

[41] Benjamin Williams, Note, Drawing the Line: Board of Contract Appeals’ Jurisdiction to Make Determinations of Fraud, 63 Cath. U.L. Rev. 815, 818 (2014).

[42] 41 U.S.C. § 7103(a)(5).

[43] 41 U.S.C. § 7103(c)(1).

[44] See id.

[45] See 41 U.S.C. § 7103(a)(5).

[46] See, e.g., Servicios y Obras Isetan S.L., ASBCA No. 57584, 13-1 BCA ¶ 35,279, at 173, 160–61; ORC, Inc., ASBCA No. 49693, 96-2 BCA ¶ 28,371, at 141, 681; C & D Constr., Inc., ASBCA No. 38661, 90-3 BCA ¶ 23,256, at 116,683–84. A finding of fraud in connection with a government contract damages a contractor’s CDA claim because the Board does not have jurisdiction to decide the underlying issue of the contractor’s claim. See Andreas Boehm Malergrossbetrieb, ASBCA No. 44017, 01-1 BCA ¶ 31,354, 154,539–40 (signifying a situation in which the government moved for dismissal of the contractor’s claim based on lack of jurisdiction arguing that the subject contract was tainted by fraudulent conduct (bribery in the inducement) and thus void ab initio). When a contract is rendered void for fraud, no contract exists from which the contractor may assert a claim for review before the Board; therefore, the Board has no jurisdiction to decide the issue. See Joule Technical Corp., NASA BCA No. 978-27, 79-2 BCA ¶ 14,017, at 68,841–43 (citing City Window Cleaners, IBCA No. 1218–10–78, 79–2 BCA ¶ 13,901) (explaining that the Board “must always consider the issue of its jurisdiction, and where [the Board finds] that a contract is void ab initio [it] may go no further in resolving disputes arising thereunder”).

[47] 41 U.S.C. § 7103(c)(1).

[48] 852 F.2d 540 (Fed. Cir. 1988).

[49] See id. at 542–47.

[50] See id. at 541.

[51] Id.

[52] Id. (citing 28 U.S.C. §§ 1503, 2508 (1982)).

[53] Id.(citing 41 U.S.C. § 604 (1978)).

[54] Id. at542-43 (formerly part of 41 U.S.C. § 605(a) (2006)).

[55] Id. at545.

[56] Id. at 544; see also Sterling Millwrights, Inc. v. United States, 26 Cl. Ct. 49, 93 (1992) (stating that because “the False Claims Act is a statute which the Attorney General, through the qui tam provisions of 31 U.S.C. § 3730, is specifically authorized to administer,” it is not within the jurisdiction granted by the CDA).

[57] This agency is currently called the Government Accountability Office (GAO). Our Name, U.S. Gov’t Accountability Office, http://gao.gov/about/namechange.html (last visited Jan. 14, 2017) (citing GAO Human Capital Reform Act of 2004, Pub. L. 108-271, 118 Stat. 811 (2004)).

[58] See Simko,852 F.2d at 543 (citing Contract Disputes Act of 1978: Joint Hearings on S. 22292, S. 2787, and S. 2178 Before the Subcomm. on Federal Spending Practices and Open Government of the Committee on Governmental Affairs and the Subcomm. on Citizens and Shareholders Rights and Remedies of the Committee on the Judiciary, 95th Cong. 210-13 (1978)).

[59] Simko,853 F.2d at 544 (citing S. Rep. No. 95-1118, at 5 (1978), reprinted in 1978 U.S.C.C.A.N. 5235, 5239). Senator Chiles, a sponsor of the Act, declared that Congress did not intend for fraud claims to be determined by the Boards. Id.

[60] Williams, supra note 37, at 822 (citing Fidelity Constr. Co., DOT CAB 80-2 BCA ¶ 14,819, 73,141; S. REP. NO. 95-1118, at 19 (1978), reprinted in 1978 U.S.C.C.A.N. 5235, 5253) (stating that although the Board has authority to settle contractor’s disputes relating to government contracts, the Board does not have the authority to decide fraud claims).

[61] See United States v. Kellogg Brown & Root Serv., Inc., 800 F. Supp. 2d 143, 160 (D.D.C. 2011) (quoting 41 U.S.C. § 605(a) [now Section 7103]) stating that the CDA prohibits jurisdiction over fraud-related claims and holding that “[T]here can be no doubt that a . . . False Claims Act claim “involves” fraud thus precluding it from Board jurisdiction.”); accord First Choice Armor & Equip., Inc. v. United States, 808 F. Supp. 2d. 68, 80 (D.D.C. 2011); United States v. Unified Indus., Inc., 929 F. Supp. 947, 950-51 (E.D. Va. 1996) (holding that the CDA exception applies to claims “involving fraud” and not merely to claims “of fraud” or “for fraud” and that the CDA’s language suggests an intention to restrict CDA jurisdiction to exclude not only fraud-based claims but also fraud-related claims); United States v. Rockwell Int’l Corp., 795 F. Supp. 1131, 1135 (N.D. Ga. 1992) (holding that the CDA restricts jurisdictional authority to prevent Boards from resolving fraud claims and fraud-related claims); United States v. JT Constr. Co., 668 F. Supp. 1131, 1135 (W.D. Tex. 1987) (stating that the CDA’s legislative history clearly shows an intent to exclude fraud claims from Board [of Contract Appeals’] jurisdiction).

[62] See, generally, Williams, supra note 37.

[63] Id.

[64] Williams, supra note 37, at 823.

[65] ENG BCA Nos. 5585, 5600, 95-2 BCA ¶ 27,879, aff’d, 86 F.3d 1177 (Fed. Cir. 1996).

[66] Id. at 139,076. The Eng BCA is now consolidated under the CBCA. Prior to the establishment of the Civilian Board of Contract Appeals (CBCA) in 2007, there were several agency boards. The Board, THE U.S. CIVILIAN BD. OF CONTRACT APPEALS, http://www.cbca.gsa.gov/board/index.html (last visited Jan. 12, 2017). The CBCA consolidated eight different agency boards for contract appeals. Id. All decisions, however, of former Boards are still binding. Id. CBCA decisions apply to all federal agencies “except the Department of Defense and its constituent agencies, the National Aeronautics and Space Administration, the United States Postal Service, the Postal Rate Commission, and the Tennessee Valley Authority.” Id.

[67] IBCA Nos. 2319, et al., 91-2 BCA ¶ 23,769.

[68] Id. at 119,062. The IBCA is now consolidated under the CBCA. See supra note 67.

[69] See Donat Gerg Haustechnik, ASBCA Nos. 41197, et al., 96-1 BCA ¶ 27,977 at 139,734–35 (citing Godley v. United States, 5 F.3d 1473, 1475 (Fed. Cir. 1993)) (finding that a fraudulent contract is void ab initio); see also Nexus Constr. Co., 98-1 BCA ¶ 29,375, at 146,017 (noting that a finding of fraud from a court of competent jurisdiction is a precondition to the dismissal of an appeal from a contractor’s claim).

[70] Id. at 977 at 139,734; see also Schuepferling GmbH & Co., KG, ASBCA No. 45564, 98-1 BCA ¶ 29,659, at 146,953–54 (upholding the government’s motion to dismiss because the Board lacked jurisdiction to decide the merits of the contractor’s claim because the contract was void ab initio as result of the contractor’s fraud); Erwin Pfister General – Bauunternehmen, ASBCA Nos. 43980, et al., 01-2 BCA ¶ 31,431, at 155,226; Anreas Boehm Malergrossbetrieb, ASBCA No. 44017, 01-1 BCA ¶ 31,354, at 154,839–40; Schneider Haustechnik GmbH, ASBCA No. 43969, 45568, 01-1 BCA ¶ 31,264, at 154,440; Schuepferling GmbH & Co., KG, ASBCA No. 45567, 98-2 BCA ¶ 29,828, at 147,679; Schuepferling GmbH & Co., KG, ASBCA No. 45565, 98-2 BCA ¶ 29,739, at 147,405.

[71] See, e.g., Turner Constr. Co., GSBCA Nos. 15502, et al., 05-2 BCA ¶ 33,11, at 164,117, 164,123 (refusing an affirmative defense that would turn on a Board’s finding of fraudulent conduct); Range Tech. Corp., ASBCA No. 51943, 03-2 BCA ¶ 32,290, at 159,773 (holding that the ASBCA lacked jurisdiction to decide an affirmative defense based upon an FCA violation); Envtl. Sys., Inc., ASBCA No. 58283, 03-1 BCA ¶ 32,167, at 159,053, aff’d, ASBCA No. 53283, 03-1 BCA ¶ 32,242, at 159,428 (finding that, with respect to an affirmative defense alleging the elements of fraud, the Board does not have authority to determine FCA disputes).

[72] See Envtl. Sys., Inc., 03-01 BCA ¶ 159,053.

[73] GSBCA Nos. 15502, et al., 05-2 BCA ¶ 33,11.

[74] See id. at 164,117, 164,120.

[75] Id at164,123; c.f. P.H. Mech. Corp., GSBCA 10567, 94-2 BCA¶ 26785, at 133,209 (dismissing a contractor’s quantum claim where contractor’s submission of claim served as a basis for a conviction under the FCA in federal district court because a court of competent jurisdiction had determined that the claim was fraudulent).

[76] AAA Eng’g & Drafting, Inc., ASBCA Nos. 47940, et al., 01-1 BCA ¶ 31,256 at 154,367–68.

[77] Id. at 154,366 (citing Joseph Morton Co., Inc. v. United States, 757 F.2d 1273, 1281 (Fed. Cir. 1985)).

[78] Id. at 154,367.

[79] Id. See also ERKA Constr. Co., Ltd. ASBCA No. 57618, 12-2 BCA ¶ 35,129, at 172,475 (denying government’s motion for summary judgment on an affirmative defense of fraud because there was no court adjudication from a court of competent jurisdiction that ERKA perpetuated a fraud). The Board stated that the government cited cases that can be distinguished based on the fact that those cases, unlike the present case, contained previous court adjudications as to the issue of fraud. Id. (citing AAA Eng’g & Drafting, Inc., 01-1 BCA, at 154,367–68; Nat’l Roofing & Painting Corp., ASBCA No. 36551, et al., 90-2 BCA ¶ 22,936 at 115,131–34; J.E.T.S., Inc., ASBCA No. 28642, 87-1 BCA ¶ 19,569, at 98,916–17, aff’d, 838 F.2d 1196 (Fed. Cir. 1988); Techno Eng’g & Constr., Ltd., ASBCA No. 47471, 94-3 BCA ¶ 27,109 at 135,117).

[80] The ASBCA judge who wrote the decision in ERKA also wrote three other decisions since 1999 addressing government affirmative defenses of fraud: Nexus Construction, AAA Engineering, and Giuliani Associates, Inc.; see Nexus Constr. Co., ASBCA No. 51004, 98-1 BCA ¶ 29,375, at 146,017, AAA Eng’g & Drafting, Inc., ASBCA Nos. 47940, et al., 01-1 BCA ¶ 31,256 at 154,366, Giuliani Assocs., Inc., ASBCA Nos. 51672, 52538, 03-2 BCA ¶ 32,368, at 160,163.

[81] See, e.g., Servicios y Obras Isetan S.L., ASBCA No. 57584, 13-1 BCA ¶ 35,279; Erwin Pfister General–Bauunternehmen, ASBCA Nos. 43980, et al., 01-2 BCA ¶ 31,431; Andreas Boehm Malergrossbetrieb, ASBCA No. 44017, 01-1 BCA ¶ 31,354; Schneider Haustechnik GmbH, ASBCA Nos. 43969, 45568, 01-1 BCA ¶ 31,264; Schuepferling Gmbh & Co., KG, ASBCA No. 45564, 98-1 BCA ¶ 29,659; ORC, Inc., ASBCA No. 49693, 96-2 BCA ¶ 28,371; C & D Constr., Inc., ASBCA No. 38661, 90-3 BCA ¶ 23,256.

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[82] C&D Constr., Inc., ASBCA No. 38661, 90-3 BCA ¶ 23,256.

[83] ASBCA Nos. 36551, 37714, 90-2 BCA ¶ 22,936.

[84] ASBCA No. 28642, 87-1 BCA ¶ 19,659, aff’d, 838 F.2d 1196 (Fed. Cir. 1988).

[85] C&D Constr., Inc., at 116,683.

[86] Id. at 116,680, 116,678.

[87] Id.

[88] Id. at 116,680, 116,684.

[89] Id. at 116,680, 116,683 (citing Nat’l Roofing & Painting Corp., ASBCA Nos. 36551, 37714 90-2 BCA ¶ 22,936; J.E.T.S., Inc., ASBCA No. 28642, 87-1 BCA ¶ 19,659, aff’d, 838 F.2d 1196 (Fed. Cir. 1988)).

[90] Id. at 116,679, 116,684.

[91] See, e.g., id. at 116,680, 116,683.

[92] ASBCA No. 49693, 96-2 BCA ¶ 28,371

[93] Id. at 141,680, 143,487–88.

[94] Id. at 143,491.

[95] Id.

[96] ASBCA No. 45564, 98-1 BCA ¶ 29,659.

[97] Id. at 146,953, 146,949–50.

[98] Id. at 146,953–54.

[99] See Servicios y Obras Isetan, S.L., ASBCA No. 57584, 13-1 BCA ¶ 35,279, 173,160-61 (declaring contract void ab initio due to contractor knowingly submitting false credentials to obtain the contract and knowingly submitting a false bank letter of guarantee to begin performance). Despite reaching the same result in making its own determination of fraud, the ASBCA did not cite C&D Construction, National Roofing & Painting, ORC, or Schuepferling. The Boards seem to completely ignore the analysis in Simko despite it remaining good law.

[100] Schuepferling GmBH & Co., KG, ASBCA No. 45564, 98-1 BCA, at 146,953-54.

[101] Servicios y Obras Isetan, S.L., ASBCA No. 57584, 13-1 BCA, at 173,160-61.

[102] Id.

[103] Id.

[104] Id.

[105] ASBCA Nos. 47940, et al., 01-1 BCA ¶ 31,256.

[106] Id. at 154,366.

[107] Laguna Contr. Co. v. Carter, 828 F.3d 1364, 1366 (Fed. Cir. 2016).

[108] Id. at 1367.

[109] Id.

[110] Id.

[111] Id. at1367-68.

[112] Id. at1368.

[113]Id. at 1369.

[114] Compare AAA Eng’g & Drafting, Inc., ASBCA Nos. 47940, et al., 01-1 BCA ¶ 31,256, at 154,317 (holding that there was sufficient evidence of fraud), with Envtl. Sys., Inc., ASBCA No. 53283, 03-1 BCA ¶ 32,167, at 159,053 (finding that they did not have jurisdiction to determine whether the contractor violated the False Claims Act), aff’d, ASBCA No. 53283, 03-1 BCA ¶ 32,242; see also Turner Constr. Co., GSBCA No. 15502, 05-2 BCA ¶ 33,118, at 164,122 (holding that an affirmative defense which would turn on a board’s finding of fraudulent conduct by appellant is not within the board’s jurisdiction); see also Beech Gap, Inc., ENG BCA Nos. 5585, 5600, 95-2 BCA ¶ 27,879, at 139,076, aff’d, 86 F.3d 1177 (Fed. Cir. 1996) (finding that the Board does not have the proper jurisdictional authority to determine issues of fraud and must follow such determinations made by a court of competent jurisdiction). Compare C & D Constr., Inc., ASBCA No. 38661, 90-3 BCA ¶ 23,256, at 116,684 (finding the contract void and denying recovery on contractor’s claim), with ERKA Constr. Co., Ltd., ASBCA No. 57618, 12-2 BCA ¶ 35,129, at 172,471 (holding that the Board did not have jurisdiction to consider the affirmative defense of fraud), and Servicios y Obras Isetan S.L., ASBCA No. 57584, 13-1 BCA ¶ 35,279 at 173,160 (finding lack of jurisdiction for monetary claim, but proper jurisdictional authority for determining if a contract is void ab initio).

[115] Williams, supra note 37, at 836.

[116] Id.

[117] See infra Part IV-A.

[118] Id.

[119] See S. Rep. No. 95-1118, at 1, reprinted in 1978 U.S.C.C.A.N. 5235.

[120] Michael J. Schaengold & Robert S. Brams, Choice of Forum for Government Contract Claims: Court of Federal Claims vs. Board of Contract Appeals, 17 Fed. Cir. B.J. 279, 304 (2008).

[121] Id.

[122] E.g., Hardrives, Inc., IBCA No.2319, 91-2 BCA ¶ 23,769; San-Val Eng’g, Inc., GS- BCA No.10371, 92-1 BCA ¶ 24,558; ASBCA No.51865, 00-1 BCA ¶ 30,626 (“To justify a stay in ASBCA proceedings on account of a contractor’s fraud, movant has the burden to show that there are substantially similar issues, facts and witnesses in civil and criminal proceedings, and there is a need to protect the criminal litigation which overrides any injury to the parties by staying the civil litigation.”).

[123] ASBCA No. 59491, 16-1 BCA ¶ 36,450.

[124] Id. In making this determination, the ASBCA considered four factors generally considered in parallel proceedings: (1) whether the facts, issues, and witnesses in both proceedings were substantially similar; (2) whether the ongoing investigation or litigation would be compromised by going forward with the appeal; (3) the extent to which the proposed stay could harm the non-moving party; and (4) whether the duration of the requested stay is reasonable. Id.[124]

[125] Id.

[126] Id.

[127] Id.

[128] Id.

[129] Id.

[130] Id.

[131] Id.

[132] Id.

[133] Id.

[134] Id.

[135] See supra note 15.

[136] Id.

[137] See supra note 15.

[138] See 41 U.S.C. §§ 7101-7109 (Supp. V 2012).

[139] FAR 33.203(c) (2017); see also CIBINIC, supra note 3.

[140] Williams, supra note 37.

[141] James D’agostino & Sean M. Connolly, Contractors See Rise in Fraud Counterclaim, Nat’l Defense Bus. and Tech. Magazine (Sep. 2007), http://www.nationaldefensemagazine.org/articles/2007/9/1/2007september-contractors-see-rise-in-fraud-counterclaim.

[142] See United States v. Kellogg Brown & Root Serv., Inc., 800 F. Supp. 2d 143, 160 (D.D.C. 2011) (quoting 41 U.S.C. § 605(a) [now Section 7103]) stating that the CDA prohibits jurisdiction over fraud-related claims and holding that “[T]here can be no doubt that a . . . False Claims Act claim “involves” fraud thus precluding it from Board jurisdiction.”); accord First Choice Armor & Equip., Inc. v. United States, 808 F. Supp. 2d. 68, 80 (D.D.C. 2011); United States v. Unified Indus., Inc., 929 F. Supp. 947, 950-51 (E.D. Va. 1996) (holding that the CDA exception applies to claims “involving fraud” and not merely to claims “of fraud” or “for fraud” and that the CDA’s language suggests an intention to restrict CDA jurisdiction to exclude not only fraud-based claims but also fraud-related claims); United States v. Rockwell Int’l Corp., 795 F. Supp. 1131, 1135 (N.D. Ga. 1992) (holding that the CDA restricts jurisdictional authority to prevent Boards from resolving fraud claims and fraud-related claims); United States v. JT Constr. Co., 668 F. Supp. 1131, 1135 (W.D. Tex. 1987) (stating that the CDA’s legislative history clearly shows an intent to exclude fraud claims from Board [of Contract Appeals’] jurisdiction).

[143] See supra Part IV.A.

[144] See supra note 11.

[145]Laguna Contr. Co. v. Carter, 828 F.3d 1364, 1369 (Fed. Cir. 2016).

[146] Cameron S. Hamrick, Federal Circuit Finds ASBCA had Jurisdiction over a Government Affirmative Defense of Fraud – Which the Court Also Characterized as a Defense of Prior Material Breach – and Affirmed the Board’s Grant of Summary Judgment to the Government Based on that Defense, Meaningful Discussions (July 27, 2016), https://www.meaningfuldiscussions.com/federal-circuit-finds-asbca-had-jurisdiction-over-a-government-affirmative-defense-of-fraud-which-the-court-also-characterized-as-a-defense-of-prior-material-breach-and-affirmed-the-bo/).

[147] Id.

[148] Id.

[149] Id.

[150] Cameron S. Hamrick, Federal Circuit Finds ASBCA had Jurisdiction over a Government Affirmative Defense of Fraud – Which the Court Also Characterized as a Defense of Prior Material Breach – and Affirmed the Board’s Grant of Summary Judgment to the Government Based on that Defense, Meaningful Discussions (July 27, 2016), https://www.meaningfuldiscussions.com/federal-circuit-finds-asbca-had-jurisdiction-over-a-government-affirmative-defense-of-fraud-which-the-court-also-characterized-as-a-defense-of-prior-material-breach-and-affirmed-the-bo/.

[151] Id.

[152] See Williams, supra note 37, at 822 (“Given the current state of the law and the complex federal procurement process, the issue should be resolved. Jurisdiction is a fundamental component of our legal system that should be applied consistently. The CDA’s jurisdictional limitation over matters of fraud applies equally to appeals before all of the Boards and contractors should not be subject to different interpretations. When codified by statute, jurisdiction is subject to review at the highest level, and therefore must be taken seriously in providing effective dispute resolution.”).

[153] In C&D Construction, National Roofing & Painting, ORC, Schuepferling and Servicios y Obras Isetan S.L., the ASBCA made its own factual fraud determinations, rendering the contracts void ab initio.

[154] Schaengold & Brams, supra note 105.

[155] Id. at 335.

[156] Id.

[157] See e.g., CBCA R. 1, 48 C.F.R. § 6101.1(e) (2007); Preface to the Rules of the AS-BCA II(c).

[158] CBCA R. 28(a)(1), 48 C.F.R. § 6101.28(a)(1).

[159] Schaengold & Brams, supra note 122,at334.

[160] Id.

[161] Id.

[162] See supra Part III.C.

[163] See L. James Agostino & Sean M. Connolly, Contractors See Rise in Fraud Counterclaim, National Defense Industry Association’s Business and Technology Magazine, (Sep. 2007), http://www.nationaldefensemagazine.org/archive/2007/September/Pages/EthicsCorner2541.aspx; see also Irah, supra note 10.

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