Eyak Services, LLC
Docket: ASBCA 58552, ASBCA 58553, ASBCA 58554, ASBCA 58555
Decision date: 2012-12-20

ARMED SERVICES BOARD OF CONTRACT APPEALS 
Appeals of-- ) 
) 
Eyak Services, LLC ) 
) 
Under Contract Nos. W912HZ-10-C-0112 ) 
W912HZ-10-C-0116 ) 
APPEARANCES FOR THE APPELLANT: 
APPEARANCES FOR THE GOVERNMENT: 
ASBCA Nos. 58556, 58557 
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 
$3,049,163.42 from Eyak Services, LLC (ESL). The amount reflects alleged contract 
overpayments made to ESL by the United States Army Corps of Engineers (Corps) as a 
result of a fraudulent scheme masterminded by a Corps employee, which also involved an 
employee ofESL's sister company, Eyak Technology, LLC (EyakTek), and various 
subcontractors. ESL 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 ESL 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 2011 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-9 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 of the defendants included 
orders to pay restitution for disbursal to the Corps as the victim of their crimes 
(SUMF -,r-,r 10-12; exs. A-14, -16, -23, -24, -26, -27, -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)). ESL 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-32) 
2. On 20 December 2012, a Corps contracting officer issued final decisions to 
ESL, asserting government claims for the return of payments made on Contract 
Nos. W912HZ-10-C-0112 and W912HZ-10-C-0116. The decisions refer to the criminal 
conspiracy and allege that an ESL subcontractor and Mr. Khan acted to artificially inflate 
subcontractor purchase orders. They describe markups ESL added to the subcontractor's 
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 ESL. Together, the decisions seek payment of$3,049,163.42 from ESL. 
(Exs. A-9, -10) ESL filed a notice of appeal to this Board from the decisions on 
15 February 2013. 
3. ESL 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, ESL 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 
1 "SUMF" refers to the Statement of Undisputed Material Facts in Support ofMotion 
for Summary Judgment or to Dismiss Government Claim" filed by ESL with its 
motion. Exhibits A-I to A-32 were filed by ESL with its motion. 
2 Ex. A-37 was filed with ESL'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 Technology, LLC, ASBCA Nos. 58552, 
58553,58554,58555. 
2 

contracts for goods that were not delivered. It contends it is entitled to recover the 
overpayments as a matter of law. 
DECISION 
I. ESL' s Motion 
These appeals are from government claims contained in the two decisions issued 
against ESL. 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 ESL'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)(l). 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. ESL 
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 7-9). ESL suggests that the government does not have a contractual basis 
for its claims because the government does not allege that it paid ESL more than the fixed 
prices of its delivery orders. Instead, it says the decisions allege that the amounts paid 
were inflated by fraud. 
The government's claims against ESL do not arise from any alleged fraud by ESL. 
The government simply seeks the return of alleged overpayments that it claims ESL was 
not entitled to receive. The claims allege that an established, fraudulent conspiracy by 
others caused the government to make overpayments to ESL in amounts that were 
unjustifiably inflated (SOF ~ 2). The government does not base its claims upon any 
alleged responsibility ESL bears for that scheme. The fact that ESL 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. 
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Contrary to ESL'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 of the 
government to sue for recovery of erroneous payments), accord Altos Fed. Grp., ASBCA 
No. 53523, 07-2 BCA ~ 33,657 at 166,678. ESL 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 ESL. It is alleging that it paid 
ESL more than it was entitled to receive due to the fraudulent acts of others. ESL has not 
established that the government must prove ESL 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 ESL, "[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 ESL 
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. 
ESL 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, 10-11 ). Relying on the fact that it is the subject of a civil 
fraud investigation by the Department of Justice, ESL 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. ESL cites no authority for the proposition that a government claim 
against a contractor is subject to dismissal if the Department of Justice is also 
investigating the contractor for civil fraud. Nor does ESL 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 of ESL taking place, ESL 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, ESL 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 
4 

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 claims 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, ESL'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 government, ESL, 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 ESL 
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 ESL' 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 
ESL. It suggests that ESL's complaint implicitly admits to the overpayments 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 $3,049,163.42 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. I d. 
Because these appeals are from government claims, the government bears the 
burden of proof. See Eaton Corp., ASBCA No. 34355, 93-2 BCA ~ 25,743 at 128,096, 
aff'd, 26 F.3d 140 (Fed. Cir. 1994) (table). Contrary to the government's arguments, 
5 

ESL'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. ,-r 44). ESL 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. 
CONCLUSION 
Both motions are denied. 
Dated: 1 April2014 
~~ 
MARK N. STEMPLER$ 
Administrative Judge 
Acting Chairman 
Armed Services Board 
of Contract Appeals 
~&.JL 
MARK A. MELNICK 
Administrative Judge 
Armed Services Board 
of Contract Appeals 
RICHARD SHACKLEFORD 
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. 58556, 58557, Appeals of 
Eyak Services, LLC, rendered in conformance with the Board's Charter. 
Dated: 
6 
JEFFREY D. GARDIN 
Recorder, Armed Services 
Board of Contract Appeals