Kellogg Brown & Root Services, Inc.
Docket: ASBCA 62681, ASBCA 62843, ASBCA 62844
Decision date: 2023-12-13

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The decision issued on the date below is subject to an ASBCA Protective Order.   
This version has been approved for public release. 
 
ARMED SERVICES BOARD OF CONTRACT APPEALS 
OPINION BY ADMINISTRATIVE JUDGE HERZFELD  
ON THE GOVERNMENT’S MOTION TO AMEND ITS ANSWER 
 
The United States Army Corps of Engineers (Corps of Engineers) moves to 
amend its answer to add an affirmative defense that Kellogg Brown & Root Services, 
Inc. (KBR) made material misrepresentations in its proposal, rendering the 
fully-performed contract void ab initio.  For the reasons discussed below, we grant the 
Corps of Engineers’ motion to amend its answer to add the material misrepresentation 
affirmative defense.  The Board will consider this legal defense on the merits. 
 
BACKGROUND 
 
On July 9, 2013, the Corps of Engineers and KBR executed Contract 
No. W912GB-13-C-0011 for a firm, fixed-price amount of $134,211,592 to construct 
an Aegis Ashore Missile Defense System site on Deveselu Air Base in Deveselu, 
Romania (R4, tab 3 at 1-2); Kellogg Brown & Root Servs., Inc., ASBCA No. 62681 
et al., 22-1 BCA ¶ 37,974 at 184,424.  Later in July, two unsuccessful offerors 
protested the award to the U.S. Government Accountability Office (GAO), asserting 
that the Corps of Engineers conducted an improper price realism analysis, which 
should have found KBR’s price unrealistically low, and that the agency should have  
Appeals of - )  
 )  
Kellogg Brown & Root Services, Inc. ) ASBCA Nos. 62681, 62843, 62844 
 )  
Under Contract No. W912GB-13-C-0011 )  
   
APPEARANCES FOR THE APPELLANT: Daniel J. Kraftson, Esq.  
Sean M. Howley, Esq.  
Jonathan J. Straw, Esq. 
    Kraftson Caudle PLC 
    McLean, VA 
 
APPEARANCES FOR THE GOVERNMENT: Michael P. Goodman, Esq. 
    Engineer Chief Trial Attorney 
 Paul L. Huhtanen, Esq. 
Herbert J. Aldridge, Esq. 
Paul Cheverie, Esq. 
LuzDanielle O. Bolong, Esq. 
    Engineer Trial Attorneys 
    U.S. Army Engineer District, Europe  

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2 
 
given the protesters higher technical ratings and KBR lower technical ratings.  AMEC 
Programs, Inc., B-408708 et seq., Dec. 4, 2013, 2014 CPD ¶ 50 at 7-9.  On December 
4, 2013, GAO denied the protests, concluding that (1) the Corps of Engineers’ price 
realism analysis was reasonable and (2) because neither protester argued that “their 
own proposal should have been found technically superior to KBR’s” and the price 
disparity in the proposals, neither protester could show a “reasonable possibility of 
prejudice” even if GAO accepted the “protesters’ technical evaluation challenges.”  Id. 
at 9-10. 
 
KBR substantially completed the project on December 19, 2015, on an 
expedited schedule to meet a presidential mandate to have the system operational “in 
the 2015 timeframe” (R4, tab 38; consolidated & amended compl. ¶ 73; gov’t answer 
to appellant’s consolidated & amended compl. ¶ 73); Kellogg Brown, 22-1 BCA 
¶ 37,974 at 184,424.   
 
Thereafter, KBR submitted a certified claim, which the Corps of Engineers 
denied, and KBR filed its first timely notice of appeal to this Board on September 24, 
2020.  Kellogg Brown, 21-1 BCA ¶ 37,974 at 184,425-27.  Subsequently, the Corps of 
Engineers issued two demand letters seeking liquidated damages, which KBR timely 
appealed to this Board on March 8, 2021.  Id. at 184,427-29.  The Corps of Engineers 
moved to dismiss the appeals as untimely, which we denied on November 22, 2021.  
Id.  A month later, the Corps of Engineers filed another motion to dismiss, asserting 
that the appeals should be dismissed because KBR’s certified claim did not include a 
sum certain in its claim.  We have not ruled on that motion yet.
1  
 
On July 14, 2023, the Corps of Engineers moved to amend its answer to allege 
an affirmative defense that KBR’s material misrepresentations in its proposal induced 
the Corps of Engineers to enter the contract with KBR, which should result in voiding 
the contract.  Fact discovery had ended on June 23, 2023.  Notwithstanding the Corps 
of Engineers’ delay in formally amending its answer, KBR was aware of the potential 
affirmative defense before the conclusion of fact discovery (as reflected in its 
deposition of the contracting officer on these issues). 
 
The Corps of Engineers’ proposed affirmative defense alleges KBR made eight 
material misrepresentations in its proposal, which the agency relied on in awarding the 
contract and defending the GAO protest.  The Corps of Engineers asserts that those 
material misrepresentations render the contract void ab initio (gov’t mot. at 1-3). 
 
 
1 We intend to seek supplemental briefing from the parties in light of the U.S. Court of 
Appeals for the Federal Circuit’s decision in ECC Int’l Constructors, LLC v. 
Sec’y of Army, 79 F.4th 1364 (Fed. Cir. 2023). 

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First, the Corps of Engineers alleges KBR misrepresented that it had “obtained 
‘firm subcontract and vendor quotes for over 97 percent of the tasks and materials’ in 
the project and only $3,637,386 or 2.93 percent of KBR’s proposal was estimated” 
(gov’t mot. at 1).  In February 2014, after performance began, the Corps of Engineers 
realized that KBR did not have all their subcontractors “bought out” and that the 
“97 percent firm quotes and 2.93 percent” figure in KBR’s proposal had not been 
accurate (app. resp., ex. 1 – Deposition Transcript of Contracting Officer Rachael 
Raposa (CO tr.) at 15)).  The Corps of Engineers did not attempt to void the contract at 
that point, “[b]ecause we wanted KBR to just get back on track” with an interest in 
“KBR performing the work” (CO tr. at 17-18). 
 
Second, the Corps of Engineers alleges KBR misrepresented that “it had ‘firm 
fixed prices’ and ‘acceptance of subcontract terms and conditions from all major 
subcontractors’” (gov’t mot. at 1).  Like the first alleged misrepresentation, the 
contracting officer stated she knew in February 2014 that “KBR had not bought out all 
its subs” (CO tr. at 21). 
 
Third, the Corps of Engineers alleges KBR misrepresented the “scope and value 
of the work subcontracted to its ‘key subcontractor’ US International Development 
Consortium, Inc” (USIDC) (gov’t mot. at 1).  The contracting officer acknowledged 
she knew in late 2013 that KBR intended to use a different subcontractor, Schneider 
Electric Buildings Critical Systems, Inc., instead of USIDC to do this security systems 
work (CO tr. at 109).  For example, in the second partnering conference between the 
Corps of Engineers and KBR in 2014, the contracting officer noted that KBR’s 
performance seemed like a “bait and switch” (CO tr. at 115-16).  Nevertheless, at that 
time, the Corps of Engineers wanted KBR to perform and did not consider defaulting 
KBR or seek to void the contract (CO tr. at 109, 117). 
 
Fourth, the Corps of Engineers alleges KBR misrepresented that it “would self-
perform 25 percent of the total amount of work by value under the Contract, as 
required by the Solicitation clause 52.236-1 ‘Performance of Work by the Contractor’” 
(gov’t mot. at 1-2).  “[S]hortly after award when we couldn’t get anybody to the site” 
(and no later than September 2014), the contracting officer suspected that KBR might 
not comply with the requirement to perform 25% of the work (CO tr. at 137-38, 153, 
159).  However, the contracting officer hoped that KBR “would come forward” with 
more staff during the project because the Corps of Engineers was “driving towards 
performance” and “looking at the finish line” of the project (CO tr. at 155-56). 
 
Fifth, the Corps of Engineers alleges KBR misrepresented that it “already 
submitted its Technical Assistance Agreement [TAA] to the Directorate of Defense 
Trade Controls (DDTC) before its May 28, 2013 revised proposal” (gov’t mot. at 2).  
In November 2013, the contracting officer doubted that representation, questioning 

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why KBR had not completed this task given that KBR’s “revised technical proposal 
stated you had already started this process” (R4, tab 221 at 2510390).2 
 
Sixth, the Corps of Engineers alleges KBR misrepresented that the “‘relevant’ 
rate for calculating average Romanian labor costs was $5.25/hour for construction” 
(gov’t mot. at 2).  In 2017, when KBR was negotiating for an equitable adjustment, the 
Corps of Engineers learned that the “hourly wage rate of $5.25 was not a proposed 
rate” and that KBR had used rates varying from $18 to $23 for paying Romanian 
workers (app. supp. R4, tab 1-312 at 16946-47).   
 
Seventh, the Corps of Engineers alleges KBR misrepresented that its “Quality 
Control Manager specifically identified by name and qualifications in its proposal 
would be available to perform this role on the Project” (gov’t mot. at 2).  The Corps of 
Engineers approved a replacement soon after the request in 2013 (weeks after award) 
and did not seek to void or default the contract (CO tr. at 229-30, 233). 
 
Eighth, the Corps of Engineers alleges KBR misrepresented that “its revised 
Subcontracting Plan was based on actual ‘bids received’ from the various 
socioeconomic types of U.S. small businesses as stated in KBR’s discussion letter 
response” (gov’t mot. at 2).  During performance in February 2014, KBR informed the 
Corps of Engineers that KBR’s proposed small business subcontractors had “since 
refused to submit pricing or sign contracts to perform work” on the contract, and it 
would not meet the goals in its subcontractor plan (R4, tab 250).  For the 
September 2014 Contractor Performance Assessment Report, the Corps of Engineers 
gave KBR an “Unsatisfactory” past performance rating for utilization of small 
businesses based on KBR’s “complete disregard to comply” with the small business 
subcontracting plan (R4, tab 83 at 3, 6).  The contract also included a provision 
permitting the Corps of Engineers to impose liquidated damages for failure to make a 
good faith effort to meet the requirements of a small business plan (R4, tab 4 at 30, 35, 
56 (incorporating by reference FAR 52.219-16(b) – LIQUIDATED DAMAGES-
SUBCONTRACTING PLAN (JAN 1999)).  At that time, the contracting officer knew 
that KBR had failed to meet the targets in its subcontracting plan but did not impose 
 
2 Out of an abundance of caution we have marked this decision as protected based on 
citation to R4, tab 221, which is the only document cited in this decision that 
bears a protective legend.  However, both parties directly or indirectly cited this 
protected document but neither marked the information as protected.  Like the 
parties, we do not believe the discussion of this document includes anything 
meeting the criteria of protected information in the Protective Order.  However, 
on or before December 22, 2023, the parties shall (1) indicate whether the 
Board may re-issue this decision without the protective legend or (2) provide a 
legal basis supporting any redactions. 

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5 
 
liquidated damages or threaten to default KBR for failing to meet this requirement 
(CO tr. at 312-13).   
 
Ultimately, the Corps of Engineers knew of seven of the eight alleged material 
misrepresentations in 2013 and 2014 while performance was ongoing and knew of the 
other alleged material misrepresentation by 2017.   
 
After filing its motion to amend, the Corps of Engineers (1) moved for 
summary judgment on the newly alleged affirmative defense, and (2) moved to stay 
this appeal (including the hearing then scheduled to begin November 1, 2023) until the 
parties briefed and the Board ruled on the motion for summary judgment.  On 
August 2, 2023, KBR requested that we deny the motion to stay and defer briefing on 
the summary judgment motion, given that the hearing was so close.  After a status 
conference call, we denied the Corps of Engineers’ motion to stay the hearing, 
deferred ruling on the summary judgment motion, and awaited completion of the 
parties’ briefing of the motion to amend.  See Alistiqama Co., ASBCA Nos. 62501, 
62502, 20-1 BCA ¶ 37,720 at 183,100 at n.1 (deferring “consideration of the motion 
for summary judgment to the merits briefing” and issuing order before responding 
party files brief).  The parties completed briefing of the motion to amend on 
September 20, 2023.  On October 11, 2023, KBR requested that we postpone the 
hearing until after the Board ruled on the Corps of Engineers’ motion to amend.  On 
October 16, 2023, we granted that request by cancelling the scheduled hearing.  We 
now turn to ruling on the motion to amend. 
 
DECISION 
 
KBR opposes the Corps of Engineers’ motion to amend its answer, asserting 
that the Corps of Engineers delayed and otherwise acted prejudicially in raising its 
material misrepresentation affirmative defense (app. resp. at 9-38).  KBR also asserts 
that any amendment is futile because (1) the Board lacks jurisdiction due to the 
agency’s failure to raise the affirmative defense in a contracting officer’s decision, (2) 
the Board has no authority to make findings of fact regarding material 
misrepresentations, and (3) the Corps of Engineers waived this defense by permitting 
KBR to complete its performance rather than voiding the contract when it knew of 
these alleged misrepresentations during performance (app. resp. at 9-54).  
 
I.  Standard of Review 
 
“The Board may permit either party to amend its pleading upon conditions fair 
to both parties” and “[w]hen issues within the proper scope of the appeal, but not 
raised by the pleadings, are tried . . . by permission of the Board, they shall be treated 
in all respects as if they had been raised” in the pleadings.  ASBCA Rule 6(d).  The 
Board “looks to Fed. R. Civ. P. 15(a)(2), with its liberal standard for amendment, for 

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guidance.”  Chugach Fed. Sols., Inc., ASBCA No. 61320, 18-1 BCA ¶ 37,111 
at 180,620.  This liberal standard affords a litigant the ability to test a claim or defense 
“on the merits.”  Foman v. Davis, 371 U.S. 178, 182 (1962); ABB Enter. Software, 
Inc., ASBCA No. 60314, 17-1 BCA ¶ 36,586 at 178,202.  Absent “undue delay, bad 
faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies 
by amendments previously allowed, undue prejudice to the opposing party by virtue of 
allowance of the amendment, [or] futility of amendment,” we “freely” permit 
amendment of pleadings.  Foman, 371 U.S. at 182; Shell Oil Co. v. United States, 896 
F.3d 1299, 1315 (Fed. Cir. 2018); Pub. Warehousing Co. K.S.C., ASBCA No. 57510, 
17-1 BCA ¶ 36,700 at 178,720.  
 
II.  Neither Undue Delay Nor Prejudice Justify Denying the Motion to Amend 
 
KBR contends that the Corps of Engineers unduly delayed raising this 
affirmative defense, pointing out that the contracting officer admitted knowledge of 
almost all the alleged material misrepresentations nine or ten years before seeking 
leave to amend its answer (app. resp. at 16-17).  Pointing to one of our decisions, the 
Corps of Engineers asserts that “regardless of the length of delay that factor alone is 
insufficient reason to prohibit amendment” of an answer.  Space Age Eng’g, Inc., 
ASBCA No. 25761 et al., 83-2 BCA ¶ 16,789 at 83,441 (relying on precedent from 
circuits other than the Federal Circuit or Court of Claims); (gov’t mot. at 5-6).  But, as 
KBR points out, the Federal Circuit subsequently stated that “[d]elay alone, even 
without a demonstration of prejudice, has . . . been sufficient grounds to deny 
amendment of pleadings.”  Te-Moak Bands of W. Shoshone Indians of Nev. v. United 
States, 948 F.2d 1258, 1260-61 (Fed. Cir. 1991) (Te-Moak Indians); (app. resp. at 31).  
We have clarified that “delay alone is enough to deny the motion to amend” where it 
involves “extreme delays that were entirely the responsibility of the party seeking 
leave to amend . . . .”  Pub. Warehousing, 17-1 BCA ¶ 36,700 at 178,722.   
 
Extreme delays (standing alone) usually must encompass both (1) significant 
delay in raising a defense after a party knows the underlying facts of a defense and 
(2) significant delay in raising the defense during the litigation (for example, raising it 
after the trial has begun, the case has already been appealed, or after court-imposed 
deadlines to amend pleadings).  Shell Oil, 896 F.3d at 1316 (finding undue delay in 
raising affirmative defense on a 50-year old World War II-era contract, where the 
government was aware of its defense for 20-25 years and raised the defense 10 years 
into the litigation only after two trips to the Federal Circuit); Cencast Servs., L.P. v. 
United States, 729 F.3d 1352, 1356-57, 1363-64 (Fed. Cir. 2013) (finding undue delay 
in amending pleading, where party knew of the claim 15 years prior to raising the new 
theory, seven years after filing suit, and three years after the Court-imposed deadline 
for amending pleadings); Te-Moak Indians, 948 F.2d at 1262-63 (finding undue delay 
in a 40-year case and eight-year delay in amending pleadings).   
 

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As to the first component, KBR has demonstrated that the Corps of Engineers 
significantly delayed raising this defense since obtaining the underlying knowledge of 
the facts nearly ten years ago.  However, as to the second component, the Corps of 
Engineers did not unduly delay raising this defense in this litigation, having formally 
moved to amend before the hearing and apprising KBR of the likely defense during 
fact discovery.  Thus, the Corps of Engineers’ delay does not rise to the “extreme 
delay” necessary to deny its motion to amend the pleadings. 
 
KBR also asserts that the Corps of Engineers’ delay in raising this defense 
during this appeal has prejudiced KBR and was done in bad faith (app. resp. at 36-38).  
Government officials are presumed to act in good faith and KBR has not established 
by clear and convincing evidence that the Corps of Engineers acted in bad faith.  Am-
Pro Protective Agency, Inc. v. United States, 281 F.3d 1234, 1239-40, 1243 (Fed. Cir. 
2002).  Indeed, KBR acknowledges that it has deposed the contracting officer and 
obtained some discovery regarding the material misrepresentations asserted as the 
basis for the Corps of Engineers’ affirmative defense (and its brief opposing 
amendment attaches and cites that deposition frequently to respond to some of the 
alleged material misrepresentations).  Moreover, the Corps of Engineers has laid out 
the evidence it intends to rely upon in its now-deferred motion for summary judgment.  
However, given the timing of the Corps of Engineers’ motion to amend and to avoid 
any prejudice, we will include additional time for KBR to conduct fact discovery to 
prepare for the hearing (particularly given KBR’s request to delay the hearing).  
Raytheon Co., ASBCA Nos. 60448, 60785, 18-1 BCA ¶ 37,029 at 180,301. 
III.  The Proposed Amendment to the Answer is Not Futile 
 
The Corps of Engineers asserts that KBR’s futility argument is “irrelevant” and 
we need not consider it (gov’t reply at 8-9).  We disagree – the argument is relevant 
and must be assessed.  “Our cases have found futility of amendment and denied leave 
to amend where the litigant cannot prove any set of facts in support of a claim or 
defense that would entitle it to relief.”  Engility, LLC, ASBCA No. 61281, 19-1 BCA 
¶ 37,430 at 181,922.  To deny the motion, “we would need to assume that the [agency] 
is essentially asserting a defense with no basis in law.”  Chugach, 18-1 BCA ¶ 37,111 
at 180,620.  Like a motion to dismiss for failure to state a claim upon which relief may 
be granted, we do not consider facts outside the proposed pleading to judge any futility 
objection to a motion to amend.  Id. (citing FED. R. CIV. P. 12(D)).  Here, the Corps of 
Engineers’ proposed amendment meets these notice pleading requirements.3 
 
3 The Federal Circuit has not addressed in a precedential decision whether an 
affirmative defense needs to meet the plausibility standards applicable to a 
complaint.  Chugach, 18-1 BCA ¶ 37,111 at 180,620 (discussing whether the 
plausibility standard in Bell Atl. Corp. v. Twombly, 550 U.S. 544, 547 (2007) 
and Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) applies to affirmative 

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First, KBR asserts that we lack jurisdiction over this appeal because there was 
no contracting officer’s decision on the affirmative defense (app. resp. 39-48).  
Material misrepresentation (or fraud in the inducement) is a common-law affirmative 
defense.  Hollymatic Corp., ASBCA Nos. 61920, 61956, 21-1 BCA ¶ 37,823 
at 183,665 (“The common law defense of fraud in the inducement may be established 
either by proof of fraud or material misrepresentation.  It is well established that when 
one party to a contract induces the other party to enter into an agreement through fraud 
or misrepresentation, the cont[r]act is void ab initio.” (internal citations omitted)), 
aff’d, No. 2021-2158, 2022 WL 1041187 (Fed. Cir. 2022).  A common-law affirmative 
defense, such as material misrepresentation, “is not subject to a contracting officer’s 
final decision because the defense neither seeks the payment of money nor the 
adjustment of contract terms.”  Frazier Invs. d/b/a Optimum Constr., ASBCA 
No. 63001, 23-1 BCA ¶ 38,313 at 186,044; see also Securiforce Int’l Am., LLC v. 
United States, 879 F.3d 1354, 1362-63 (Fed. Cir. 2018) (“[I]f a party raises an 
affirmative defense under the contract as written—for example, common-law defenses 
of fraud or prior material breach—it need not first be presented to the CO for a final 
decision, since a defense is not a claim for money, and the CO has no necessary role in 
assessing the defense.”); Laguna Constr. Co. v. Carter, 828 F.3d 1364, 1368 (Fed. Cir. 
2016) (concluding that affirmative defense of fraud was not a CDA “claim” because 
“the government’s defense plainly does not seek the payment of money or the 
adjustment or interpretation of contract terms”).   
 
KBR asserts that the Corps of Engineers’ defense to void the contract 
constitutes a remedy that requires the adjustment of contract terms and, thus, a 
contracting officer’s decision (app. resp. at 39-48).  KBR points to CanPro 
Investments, where the U.S. Court of Federal Claims found no Contract Disputes Act 
jurisdiction over a contractor’s claim for rescission because that remedy was not 
presented to the contracting officer for a final decision (app. resp. at 43).  CanPro Invs. 
Ltd. v. United States, 130 Fed. Cl. 320, 340 (2017).  Notably, however, the court found 
that it had jurisdiction over a claim for a “[m]isrepresentation in the inducement of a 
contract” that typically permits a party to void a contract or make it voidable.  Id. 
at 338.  The court’s apparent disconnect between claim and remedy may explain what 
the court meant by “rescission.”  The court appears to have rejected a claim for an 
“agreement of rescission,” citing that provision of the Restatement.  Id. at 340 (citing 
R
ESTATEMENT (SECOND) OF CONTRACTS § 283).  Indeed, that section of the 
Restatement notes the difference between an “agreement of rescission” (what the 
CanPro court was apparently discussing) and the use of “rescission” to signify 
avoidance of a contract (as we have here).  RESTATEMENT (SECOND) OF CONTRACTS 
§ 283, cmt. a (1981) (“The term ‘agreement of rescission’ is used in this Restatement 
 
defenses).  Even assuming that standard applied and looking only at the 
pleadings, the Corps of Engineers has plausibly pleaded its proposed 
affirmative defense of material misrepresentation. 

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to avoid confusion with the word ‘rescission,’ which courts sometimes use to refer to 
the exercise by one party of a power of avoidance (§ 7).”).  And, when a tribunal voids 
a contract it need not adjust any contract terms (such as reforming a contract), because 
there is “not a contract at all” and “it is the ‘promise’ or ‘agreement’ that is void of 
legal effect.”  RESTATEMENT (SECOND) OF CONTRACTS § 7, cmt. a. (1981).  A voided 
contract wipes away any contractor or government claims (including liquidated 
damages).  ABS Dev. Corp., ASBCA No. 60022 et al., 19-1 BCA ¶ 37,234 at 181,233. 
 
Moreover, we have adjudicated an agency’s material misrepresentation 
affirmative defense without a contracting officer’s final decision relating to that 
affirmative defense.  Dongbuk R&U Eng’g Co., ASBCA No. 58300, 13 BCA ¶ 35,389 
at 173,636 (appellant appealed “based on lack of receipt of a final CO decision”); see 
also ABS Dev. Corp., ASBCA Nos. 60022, 60023, 17-1 BCA ¶ 36,842 at 179,522 
(permitting agency to amend the answer to raise a void ab initio defense where there 
was no contracting officer’s decision), and ABS Dev. Corp., ASBCA No. 60022 et al., 
17-1 BCA ¶ 36,784 at 179,301 (refusing to dismiss appeal despite agency’s failure to 
issue contracting officer’s final decisions).  Thus, we have jurisdiction to hear the 
Corps of Engineers’ material misrepresentation defense without a contracting officer’s 
final decision. 
 
Second, KBR asserts that we lack the authority to make findings of fact 
regarding a defense of material misrepresentation because it would require the Board 
to make determinations of fraud, which is outside our jurisdiction (app. resp. at 48-52).  
We disagree.  The Contract Disputes Act “does not authorize an agency head to settle, 
compromise, pay, or otherwise adjust any claim involving fraud.”  41 U.S.C. 
§ 7103(c)(1).  The Federal Circuit has explained, “[c]ertain fraud-related claims are 
outside of the Board’s jurisdiction,” including “claims relating to 41 U.S.C. § 7103 
(formerly 41 U.S.C. § 604), 28 U.S.C. § 2514 (Special Plea in Fraud), and 31 U.S.C. 
§§ 3729–31 (False Claims Act).”  Laguna, 828 F.3d at 1368.  While we lack 
jurisdiction to hear the types of fraud claims noted by the Federal Circuit, we possess 
jurisdiction over a void ab initio defense where the agency challenges “whether the 
contractor can establish . . . a contract with the government in the first place . . . .”  
ABS Dev. Corp., 17-1 BCA ¶ 36,842 at 179,522.  Indeed, a material misrepresentation 
without fraud may still result in contractual avoidance.  R
ESTATEMENT (SECOND) OF 
CONTRACTS § 162, cmt. c (1981) (“[A] non-fraudulent misrepresentation will not 
entitle him to relief unless it is material.”).  While the Board may not make factual 
findings relating to the types of fraud claims for which we lack jurisdiction, “we may 
make findings as to the material facts relating to material misrepresentation and the 
contract and how the acquisition regulations, statutes[,] and contract clauses operate 
given those findings.”  Hollymatic, 21-1 BCA ¶ 37,823 at 183,665.  Here, the Corps of 
Engineers asserts material misrepresentations during contract formation, not fraud 
derived from claims for which we lack jurisdiction.  Thus, the Board possesses 

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jurisdiction to make factual findings regarding the Corps of Engineers’ common law 
material misrepresentation defense.   
 
Finally, KBR asserts that the Corps of Engineers’ delay in raising the material 
misrepresentation defense should result in waiver, demonstrating the futility of raising 
the affirmative defense (app. resp. at 52-53).  Relying on evidence outside of the 
pleadings, KBR has asserted that the Corps of Engineers accepted the benefits of 
performance and never cancelled the contract until after performance concluded.  See 
Aydin Corp., ASBCA No. 34054, 89-1 BCA ¶ 21,206 at 106,998 (“When a material 
misrepresentation of fact is discovered, the non[-]misrepresenting party has the option 
of allowing the contract to proceed and seek damages, or rescind the contract.  The 
election to rescind, however, must be made with reasonable promptness, under the 
circumstances, after the misrepresentation is made known.  If a party does not rescind 
in a timely manner, it will lose its right to rescind.  One party will not be allowed to 
permit an unwary party to continue performance and incur large expenses.”); see also 
Godley v. United States, 5 F.3d 1473, 1476 (Fed. Cir. 1993) (“In the event it 
determines that Mr. Godley’s contract was voidable, the trial court must also 
determine whether the Government cancelled the contract within a reasonable time 
after discovery of the illegality.”); Pac. Architects & Engrs., Inc. v. United States, 491 
F.2d 734, 742-43 (Ct. Cl. 1974) (“The option to avoid a contract for fraud or 
misrepresentation is lost if after acquiring knowledge thereof the injured party 
continues with performance.  He is deemed to have affirmed or ratified the voidable 
contract.”).  “[A] misrepresentation may prevent the formation of a contract or may 
make a contract voidable.”  Long Island Savs. Bank, FSB v. United States, 503 F.3d 
1234, 1245 (Fed. Cir. 2007).  “[A] Government contract tainted by fraud or 
wrongdoing is void ab initio. . . .  A contract without the taint of fraud or wrongdoing, 
however, does not fall within this rule.”  Godley, 5 F.3d at 1476 (citing J.E.T.S., Inc. v. 
United States, 838 F.2d 1196, 1200 (Fed. Cir. 1988); United States v. Miss. Valley 
Generating Co., 364 U.S. 520, 564 (1961)).  A party can waive a material 
misrepresentation defense if the contract is voidable but not if it is void ab initio.  
Godley, 5 F.3d at 1475-76; Supreme FoodService GMBH, ASBCA No. 57884 et al., 
16-1 BCA ¶ 36,387 at 177,396. 
 
The Corps of Engineers alleges that KBR’s material misrepresentations render 
the contract void ab initio.  At this stage, we must treat the Corps of Engineers’ 
pleadings as true in considering its motion to amend.  Chugach, 18-1 BCA ¶ 37,111 
at 180,620.  Because of that deference at this stage, KBR cannot demonstrate futility 
and the Corps of Engineers’ pleadings pass muster.  However, it remains to be seen 
whether the agency can prove the alleged material misrepresentations and, if so, 
whether that renders the contract void ab initio (no waiver) or voidable (which would 
allow KBR to assert the agency waived this argument by accepting performance).   
 

DOCUMENT FOR PUBLIC RELEASE                                                                                           
The decision issued on the date below is subject to an ASBCA Protective Order.          
This version has been approved for public release. 
 
11 
 
CONCLUSION 
 
For the foregoing reasons, we grant the Corps of Engineers’ motion to amend 
its answer to add its material misrepresentation affirmative defense.   
 
 Dated:  December 13, 2023 
 
 
 
 
 
 
 
 
 
 
 
DANIEL S. HERZFELD 
Administrative Judge 
Armed Services Board 
of Contract Appeals 
I concur 
 
 
 
RICHARD SHACKLEFORD 
Administrative Judge 
Acting Chairman 
Armed Services Board 
of Contract Appeals 
 I concur 
 
 
 
 OWEN C. WILSON 
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. 62681, 62843, 62844,
 
Appeals of Kellogg Brown & Root Services, Inc., rendered in conformance with the 
Board’s Charter. 
 
 Dated:  December 13, 2023 
 
 
 
 
 
 
 
 
PAULLA K. GATES-LEWIS 
Recorder, Armed Services 
Board of Contract Appeals