Eyak Technology, LLC
Docket: ASBCA 58552, ASBCA 58553
Decision date: 2012-12-20

ARMED SERVICES BOARD OF CONTRACT APPEALS 
Appeals of-- ) 
) 
Eyak Technology, LLC ) 
) 
) 
Under Contract Nos. W912HZ-05-D-0015 ) 
W912HZ-09-C-O 114 ) 
W912HZ-09-C-O 115 ) 
W912HZ-09-C-0116 ) 
APPEARANCES FOR THE APPELLANT: 
APPEARANCES FOR THE GOVERNMENT: 
ASBCA Nos. 58552, 58553 
58554,58555 
Paul F. Khoury, Esq. 
Roderick L. Thomas, Esq. 
John R. Prairie, Esq. 
Samantha S. Lee, Esq. 
Wiley Rein LLP 
Washington, DC 
Thomas H. Gourlay, Jr., Esq. 
Engineer Chief Trial Attorney 
Katherine D. Denzel, Esq. 
Engineer Trial Attorney 
OPINION BY ADMINISTRATIVE JUDGE MELNICK 
ON APPELLANT'S MOTION FOR SUMMARY JUDGMENT OR, IN THE 
ALTERNATIVE, TO DISMISS GOVERNMENT CLAIM, AND ON THE 
GOVERNMENT'S CROSS-MOTION FOR SUMMARY JUDGMENT 
These are appeals from contracting officer final decisions claiming a total of 
$29,414,881.94 from Eyak Technology, LLC (EyakTek). The amount reflects alleged 
contract overpayments made to EyakTek by the United States Army Corps of Engineers 
(Corps) as a result of a fraudulent scheme masterminded by a Corps employee, and that 
also involved an EyakTek employee and various subcontractors. EyakTek seeks 
dismissal on the ground that the government's claims improperly assert fraud. The 
government cross-moves for summary judgment, claiming the undisputed facts show that 
it overpaid EyakTek and that it is entitled to recover the overpayments. Both motions are 
denied. 

STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTIONS 
The following facts are not in dispute: 
1. Between 20 11 and 2012, eleven individuals, including two former government 
employees and 
one former employee ofEyakTek, pled guilty to certain crimes after being 
charged with participating in a bribery and kickback scheme involving contracts with the 
Corps (SUMF ,-r,-r 1-9; ex. A-8 at 2-3). 1 In summary, two Corps contracting officials 
facilitated the award of subcontracts to corrupt companies in return for payments. The 
subcontractors then included false or inflated amounts in their invoices to the Corps' 
prime contractors, which were then forwarded to the two Corps officials for payment 
approval. (SUMF ,-r,-r 4-12) The final judgments against many ofthe defendants included 
orders to pay restitution for disbursal to the Corps as the victim of their crimes 
(SUMF ,-r,-r 10-12; exs. A-15, -16,-18,-20,-22,-31, -37).2 Among those orders was one 
issued to the purported leader of the conspiracy, former Corps employee Kerry Khan, 
which requires him to pay restitution in the amount of$32,553,252.93 (ex. A-37 (Minute 
Order entry 7/1112013)). EyakTek has also been informed by the Department of Justice 
that it is under investigation respecting the scheme. It has met with the Department to 
discuss resolution of potential claims under the False Claims Act and the Anti-Kickback 
Act. (Ex. A-35) 
2. On 20 December 2012, a Corps contracting officer issued final decisions to 
EyakTek, asserting government claims for the return of payments made on Contract 
Nos. W912HZ-05-D-0015, W912HZ-09-C-0114, W912HZ-09-C-0115, and 
W912HZ-09-C-0116. The 
decisions refer to the criminal conspiracy and generally 
describe a series of events in which subcontractors invoiced EyakTek for work that was 
not performed, included fictitious line items and costs in purchase orders, or issued false 
invoices. These acts were typically at the direction of Mr. Khan, or with his knowledge 
or that ofEyakTek's convicted employee. They describe markups EyakTek added to the 
invoices that it then forwarded to the Corps for payment, accompanied by certifications 
that the identified work was performed. They calculate that the Corps ultimately 
overpaid EyakTek a total of$29,414,881.94. Together, the decisions seek payment of 
that amount from EyakTek. (Exs. A-8 to -11) EyakTek filed a notice of appeal to this 
Board from all ofthe decisions on 15 February 2013. 
1 "SUMF" refers to the Statement of Undisputed Material Facts in Support of Motion 
for Summary Judgment or to Dismiss Government Claim filed by EyakTek with 
its motion. Exhibits A-1 to A-35 were filed by EyakTek with its motion. 
2 Ex. A-37 was filed with EyakTek's Second Supplemental Memorandum in Support of 
Motion for Summary Judgment or to Dismiss Government Claim, which includes 
this appeal in its heading along with Eyak Services, LLC, ASBCA Nos. 58556, 
58557. 
2 

3. EyakTek now moves for summary judgment, or dismissal of its appeals for 
lack of jurisdiction, on the ground that the contracting officer's decisions are based upon 
the fraudulent conduct of particular individuals. It relies upon a statutory prohibition 
upon agencies settling or compromising fraud claims on their own to contend that the 
decisions are nullities. Alternatively, EyakTek suggests that the government's claims 
should be dismissed to avoid the possibility of inconsistent decisions between this forum 
and those adjudicating the fraud. 
4. The government cross-moves for summary judgment, claiming that the 
undisputed facts show that the amounts it seeks represent overpayments made on the 
contracts for goods that were not delivered. It contends it is entitled to recover the 
overpayments as a matter of law. 
DECISION 
I. EyakTek's Motion 
These appeals are from government claims contained in the four final decisions 
issued against EyakTek. Under the Contract Disputes Act (CDA), 41 U.S.C. 
§§ 7101-7109, we may only entertain an appeal from a final decision on a proper CDA 
claim. See Northrop Grumman Computing Sys., Inc. v. United States, 709 F.3d 1107, 
1111-12 (Fed. Cir. 2013). In this context, the adequacy of the claim does not pertain to 
whether it is meritorious; it relates to whether the claim complies with the requirements 
of the CDA. "If a purported claim is found to be insufficient for any reason, the 
insufficiency is fatal to jurisdiction under the CDA." !d. at 1112. Because EyakTek's 
arguments implicate our jurisdiction, we consider them through the lens of a motion to 
dismiss for lack of jurisdiction. See Raytheon Missile Sys., ASBCA No. 58011, 13 BCA 
~ 35,241 at 173,015 (treating a request for a declaration that a government claim is time 
barred under the CDA as a motion to dismiss for lack of jurisdiction). 
The CDA forbids agencies from relying upon it "to settle, compromise, pay, or 
otherwise adjust any claim involving fraud." 41 U.S.C. § 7103(c)(1). Thus, contracting 
officers may not pursue claims for penalties or forfeitures arising from fraud in their final 
decisions, and this Board lacks jurisdiction over appeals involving such claims. See 
Martin J. Simko Constr., Inc. v. United States, 852 F.2d 540 (Fed. Cir. 1988); Public 
Warehousing Co. K.S.C., ASBCA No. 58078, 13 BCA ~ 35,460 at 173,896-97. EyakTek 
contends that the government's claims against it involve fraud because they arise from its 
criminal prosecution of the conspirators and involve their false subcontractor charges 
(app. mot. at 8-11). EyakTek suggests that the government does not have a contractual 
basis for its claims because the government does not allege that it paid EyakTek more 
than the fixed prices of its delivery orders. Instead, it says the decisions allege that the 
amounts paid were inflated by fraud. 
3 

The government's claims against EyakTek do not arise from any alleged fraud by 
EyakTek. The government simply seeks the return of alleged overpayments that it claims 
EyakTek was not entitled to receive. The claims allege that an established, fraudulent 
conspiracy by others, which included government, contractor, and subcontractor 
personnel, caused the government to make overpayments to EyakTek for work that was 
never performed, or in amounts that were unjustifiably inflated (SOF ~ 2). The 
government does not base its claims upon any alleged responsibility EyakTek bears for 
that scheme. The fact that EyakTek is the subject of a fraud investigation by the 
Department of Justice is irrelevant. Whatever that investigation may lead to, the 
government's claims here are not premised upon fraud. 
Contrary to EyakTek's suggestion, the government's claims assert a cognizable, 
non-fraud basis for recovery based upon the established doctrine that the government is 
required to recover amounts paid to a contractor that the contractor was not entitled to 
receive. FAR 32.601-605; Acme Process Equip. Co. v. United States, 347 F.2d 538, 
551-52 (Ct. Cl. 1965) (acknowledging that the government can recover "funds which its 
agents have wrongfully, erroneously, or illegally paid"); Fansteel Metallurgical Corp. v. 
United States, 172 F. Supp. 268,270 (Ct. Cl. 1959) (holding that it is the duty ofthe 
government to sue for recovery of erroneous payments), accord Altos Fed. Grp., ASBCA 
No. 53523, 07-2 BCA ~ 33,657 at 166,678. EyakTek attempts to distinguish this 
precedent, arguing that it never invoiced for more than the contract price. Thus, the 
government is not really seeking the return of erroneous payments, but instead claiming 
the contracts' prices were fraudulently inflated. (App. opp'n and reply at 7-8) As 
already noted, the government is not contending that it was defrauded by EyakTek. It is 
alleging that it paid EyakTek more than it was entitled to receive due to the fraudulent 
acts of others. EyakTek has not established that the government must prove EyakTek 
itself committed fraud in order to recover overpayments made to it. As was the situation 
in Medica, S.A., ENG BCA No. PCC-142, 00-2 BCA ~ 30,966 at 152,812, a case relied 
upon by EyakTek, "[w]hether fraud or other illicit acts were committed in the course of 
the events underlying the Government's claims are separate matters," and "[t]he Board is 
not deciding whether fraud ... occurred." The government's claims implicate the parties' 
contract rights, not whether EyakTek committed fraud. 
We have jurisdiction to decide 
these issues. See M&M Servs., Inc., ASBCA No. 28712, 84-2 BCA ~ 17,405 at 86,688. 
EyakTek also contends that 
"[t]he Government's claims should ... be dismissed to 
avoid the possibility of inconsistent decisions between the Board and the appropriate 
tribunals for pursuing civil and criminal remedies for the fraudulent activity at issue in 
the Final Decisions" (app. mot. at 1-2, 11-12). Relying on the fact that it is the subject of 
a civil fraud investigation by the Department of Justice, EyakTek suggests that there 
might be an inconsistency between the decision of this Board and the actions of the 
Department of Justice or other tribunals. Therefore, the government's claims must be 
dismissed for lack of jurisdiction. EyakTek cites no authority for the proposition that a 
government claim against a contractor is subject to dismissal if the Department of Justice 
4 

is also investigating the contractor for civil fraud. Nor does EyakTek support its 
contention that a government claim must be dismissed because there could be 
inconsistencies between the proceedings here and those of other agencies or fora. Under 
certain circumstances, it could be appropriate to stay an appeal here to avoid 
inconsistencies. See Public Warehousing, 13 BCA ~ 35,460 at 173,897. But, given that 
currently there is only an investigation ofEyakTek taking place, EyakTek has not 
provided any basis for finding that a suspension is necessary, nor has a motion for a stay 
been filed by either party. 
In supplements to its motion to dismiss, EyakTek expands upon its inconsistency 
argument, suggesting that a conflict could also arise between the government's claims 
here and the restitution awards the government has already obtained against the 
individual conspirators. It contends that the restitution awards already compensate the 
government for the overcharges the government seeks and therefore these proceedings 
could lead to a double recovery by the government. It emphasizes in its reply that this 
potential for a double recovery is another reason to dismiss the government's claim for 
lack of jurisdiction (app. opp'n and reply at 10-13). We are unaware of authority 
depriving us of jurisdiction over the claims because they pose the risk of a double 
recovery by the government. 
Rather than restricting our jurisdiction, EyakTek's double recovery concern 
potentially relates to the merits of the government's claims. Though precedent permits 
the government to seek the return of overpayments made to contractors, its ultimate 
entitlement to recover is governed by equitable principles applied in "a case-by-case 
determination designed to avoid injustice." USA Petroleum Corp. v. United States, 
821 F .2d 622, 625 (Fed. Cir. 1987). Such a review requires the development of a 
thorough record which, among other things, should address the events leading to the 
alleged overpayments, the roles played by both government and EyakTek personnel in 
those activities, the parties' knowledge of the scheme, what they did or should have done 
to avoid it, and their reliance upon each other's conduct. See id. at 625-27. It also should 
provide specifics about the nature and calculation of the restitution awards, the degree to 
which they overlap with the claims here, their potential to be satisfied, and whether 
EyakTek continues to possess the allegedly overpaid funds. 
Because the government's claims are proper under the CDA, we possess 
jurisdiction to entertain an appeal from them, and since a complete record is necessary to 
rule upon their merits, we deny EyakTek's motion. 
II. The Government's Motion 
For similar reasons, we also deny the government's cross-motion for summary 
judgment. The government cites its final decisions as evidence of its overpayments to 
EyakTek. It suggests that EyakTek's complaint implicitly admits to the overpayments 
5 

and that the overpayments reflect undelivered goods. It therefore contends that there is 
no dispute that it paid for goods and services that were not delivered, and that it is 
therefore entitled to recover $29,414,881.94 as a matter oflaw. (Gov't opp'n and 
cross-mot. at 13-18) 
Summary judgment should be granted if it has been shown that there are no 
genuine issues of material fact and the moving party is entitled to judgment as a matter of 
law. Celotex Corp. v. Catrett, 477 U.S. 317,322 (1986). Significantly, it should only be 
granted after there has been adequate time for discovery. !d. 
Because these appeals are from government claims, the government bears the 
burden of proof. See Eaton Corp., ASBCA No. 34355, 93-2 BCA '1!25,743 at 128,096, 
aff'd, 26 F.3d 140 (Fed. Cir. 1994) (table). Contrary to the government's arguments, 
EyakTek's complaint does not admit to the accuracy of the claims' overpayment 
calculations or that they reflect undelivered goods. Indeed, the complaint affirmatively 
challenges some of the government's calculations (compl. '1!'1!52-53). EyakTek seeks 
discovery regarding the government's calculations, which it has not been able to perform 
yet (app. reply and opp'n at 15). We will permit that discovery. More fundamentally, as 
noted previously, any government entitlement to recover here is governed by equitable 
principles we cannot assess without a thorough development of the record. Accordingly, 
the government's cross-motion for summary judgment is denied. 
Both motions are denied. 
Dated: 1 April2014 
I concur 
~/44 
Administrative Judge 
Acting Chairman 
Armed Services Board 
of Contract Appeals 
CONCLUSION 
~~~ 
6 
MARK A. MELNICK 
Administrative Judge 
Armed Services Board 
of Contract Appeals 
I concur 
~FORD 
Administrative Judge 
Vice Chairman 
Armed Services Board 
of Contract Appeals 

I certify that the foregoing is a true copy of the Opinion and Decision of the 
Armed Services Board of Contract Appeals in ASBCA Nos. 58552, 58553, 58554, 
58555, Appeals ofEyak Technology, LLC, rendered in conformance with the Board's 
Charter. 
Dated: 
7 
JEFFREY D. GARDIN 
Recorder, Armed Services 
Board of Contract Appeals