International Oil Trading Company
Docket: ASBCA 57491, ASBCA 57492, ASBCA 57493
Decision date: 2018-01-12

ARMED SERVICES BOARD OF CONTRACT APPEALS 
Appeals of -- ) 
) 
International Oil Trading Company ) 
) 
Under Contract Nos. SP0600-09-D-05 l 5 ) 
SP0600-07-D-0483 ) 
APPEARANCES FOR THE APPELLANT: 
APPEARANCES FOR THE GOVERNMENT: 
ASBCA Nos. 57491, 57492, 57493 
Christopher M. Kise, Esq. 
Melissa B. Coffey, Esq. 
Foley & Lardner, LLP 
Tallahassee, FL 
Ronald H. Uscher, Esq. 
Donald A. Tobin, Esq. 
Peckar & Abramson, P.C. 
Washington, DC 
Daniel K. Poling, Esq. 
DLA Chief Trial Attorney 
Howard M. Kaufer, Esq. 
David R. Nolte, Esq. 
Kathryn M. Kelley, Esq. 
Trial Attorneys 
DLA Energy 
Fort Belvoir, VA 
OPINION BY ADMINISTRATIVE JUDGE MELNICK ON APPELLANT'S MOTION 
FOR PARTIAL JUDGEMENT ON THE PLEADINGS OR, IN THE ALTERNATIVE 
RENEWED MOTION TO STRIKE THE GOVERNMENTS FIRST AFFIRMATIVE 
DEFENSE 
International Oil Trading Company (IOTC) seeks partial judgment on the 
pleadings or, in the alternative, renews its motion to strike the government's first 
affirmative defense. That defense alleges that IOTC obtained the contracts identified 
above through fraud or bribery. It contends they are therefore void ab initio. The Board 
has already denied a request from IOTC to strike the defense for lack of jurisdiction. In 
this new motion, IOTC contends that the subsequent decision of the United States Court 
of Appeals for the Federal Circuit in Laguna Construction Co. v. Carter, 828 F.3d 1364 
(Fed. Cir. 2016), abrogates that prior ruling. The new motion is denied. 

BACKGROUND 
IOTC has appealed from the denial of claims for fuel delivered to the government 
in Iraq under two contracts. Previously, the Board granted IOTC partial summary 
judgment. International Oil Trading Co., ASBCA No. 57491 et al., 12-2 BCA ,i 35,104, 
amended by 14-1 BCA ,i 35,593. The government then advanced its first affirmative 
defense, alleging that IOTC principals bribed the head of a Jordanian intelligence agency 
"to assure that IOTC would not have effective competition for the contracts." The 
government maintained that "[t]he contracts were obtained by and tainted by bribery and 
fraud, and hence are void ab initio and IOTC cannot recover on its claims." IOTC moved 
to strike the government's defense, suggesting that the Contract Disputes Act (CDA), 
41 U.S.C. §§ 7101- 7109, which excludes from the Board's jurisdiction consideration of 
fraud-related claims, barred the Board from entertaining the government's defense. In a 
decision issued 19 August, 2013, the Board disagreed, concluding that the Board's 
statutory bar to considering fraud claims did not extend to an affirmative defense that the 
contract is void ab initio under the common law for taint of fraud or bribery in its 
formation. International Oil Trading Co., ASBCA No. 57491 et al., 13 BCA ,i 35,393. 
IOTC now contends that Laguna abrogates the Board's prior ruling by forbidding the 
Board from deciding the facts relevant to the defense. 
DECISION 
As observed in the Board's opinion denying IOTC's motion to strike the defense, 
"[a] government contract is void ab initio under the common law for taint of fraud, 
bribery or other misconduct compromising the integrity of the Federal contracting 
process, without a criminal conviction." International Oil Trading Co., 13 BCA ,i 35~393 
at 173,658; see also Godfrey v. United States, 5 F.3d 14 73, 1475 (Fed. Cir. 1993) ("In 
general, a Government contract tainted by fraud or wrong-doing is void ab initio"). 
IOTC cannot prevail if the contracts at issue are void ab initio. See Dongbuk R&U Eng'g 
Co., ASBCA No. 58300, 13 BCA iJ 35,389 at 173,639. IOTC suggests that Laguna 
"recalibrated the legal landscape," requiring any determination that fraud or bribery 
induced the award of a contract be issued "by an outside tribunal" (app. mot. at 5-6). 
IOTC contends there are no pending judicial decisions where such findings have or could 
be made (id. at 3). 
Laguna sought payment before the Board of contract vouchers. Separately, senior 
Laguna officials pled guilty in district court to kickback schemes with its subcontractors, 
including conspiracy to defraud the United States. Accordingly, the government advanced 
before the Board an affirmative defense based upon fraud, which the Board found 
meritorious. Laguna, 828 F .3d at 1366-67. The court of appeals affirmed, confirming the 
Board's jurisdiction over the fraud defense. Id. at 1368- 73. The court observed that 
"[ c ]ertain fraud-related claims are outside of the Board's jurisdiction." They include "claims 
relating to 41 U.S.C. § 7103 (formerly 41 U.S.C. § 604), 28 U.S.C. § 2514 (Special Plea in 
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Fraud) and 31 U.S.C. §§ 3729-31 (False Claims Act)." However, the court held that the 
government's affirmative defense of prior material breach premised upon fraudulent conduct 
"does not fall into any of these categories." Laguna, 828 F.3d at 1368. Furthermore, though 
the Board lacked jurisdiction over the Anti-Kickback Act claim brought by the government 
against Laguna's officials, the court commented approvingly about the Board's prior practice 
of entertaining a defense arising from such a claim when it does not have to find facts about 
the fraud. Id. at 1368-69. 
Contrary to IOTC's suggestion, Laguna did not purport to recalibrate the legal 
landscape and abrogate the Board's prior ruling here permitting the government's 
affirmative defense to proceed. Laguna said nothing to restrict the Board's power to 
determine the validity of a contract when the government alleges that it is void ab initio due 
to fraud or bribery in its acquisition.* Laguna acknowledged "the Supreme Court's 
instruction that the government must be able to 'rid itself of contracts that are 'tainted' by 
fraud, including kickbacks and violations of conflict-of-interest statutes." Laguna, 828 F.3d 
at 1371 (citing United States v. Acme Process Equip. Co., 385 U.S. 138 (1966); United 
States v. Miss. Valley Generating Co., 364 U.S. 520, 563 (1961 )). The Board has already 
held in this appeal that its contract jurisdiction includes determining such issues. 
International Oil Trading Co., 13 BCA ,r 35,393 at 173,658-59. 
Indeed, the Board has previously rejected IOTC's current argument. In ABS 
Development Corp., ASBCA Nos. 60022, 60023, 17-1 BCA ,r 36,842, the government 
sought to amend its answers and assert the same affirmative defense it maintains here, that 
the contract "was obtained by and is tainted by fraud, and hence is void ab initio." As 
here, the appellant argued Laguna deprived the Board of jurisdiction to entertain such a 
defense because "no third party has made factual determinations regarding any alleged 
fraud." The Board observed that Laguna had found that "certain fraud-related claims are 
outside of the Board's jurisdiction." Ruling in favor of jurisdiction, the Board concluded 
that: 
There is a big difference between whether a contract is void 
ab initio (in which the question is whether the contractor can 
establish that he has a contract with the government in the 
first place, see Atlas International Trading Corp., ASBCA 
No. 59091, 15-1 BCA ,r 35,830 at 175,198 (contract obtained 
through bribery void ab initio)), and whether (as in Laguna) 
• Among Laguna's citations is Turner Construction Co. v. General Services 
Administration, GSBCA No. 15502 et al., 05-2 BCA ,r 33,118. Laguna 
characterized that decision as rejecting a prior material breach claim that would 
require a finding of fraudulent conduct. Laguna's reliance upon it does not extend 
its holding to forbid the Board from determining whether a contract is void ab 
initio due to fraud. 
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the government is asserting the type of fraud claim that we do 
not possess jurisdiction to entertain. 
ABS Dev. Corp., 17-1 BCA ,J 36,842 at 179,520. 
The Board decisions IOTC claims support its contention about Laguna do not do so. 
Kellogg Brown & Root Services, Inc., ASBCA No. 57530, 16-1 BCA ,i 36,554, held that 
Laguna does not require the suspension of a Board appeal pending resolution of a related 
fraud case in district court. It did not address the Board's power to declare contracts void 
ab initio. The Board's reconsideration decision in Supreme Foodservice GmbH, ASBCA 
No. 57884 et al., 17-1 BCA ,i 36,740 at 179,091, rejected the suggestion that the Board had 
ignored a previous criminal fraud claim against the contractor in district court, observing 
that the Board did not intend to relitigate that matter or make determinations of fraud. The 
Board did not depart from its initial conclusion that it may rule upon a defense that the 
contract is void ab initio due to fraud in the inducement. See Supreme Foodservice GmbH, 
ASBCA No. 57884 et al., 16-1 BCA ,i 36,387 at 177,385-86. Another ofIOTC's citations, 
Public Warehousing Co., KS. C., ASBCA No. 59020, 17-1 BCA ,i 36,630, granted a 
limited stay of the Board's proceedings for the pursuit of a criminal fraud case in district 
court. Still another, L.C. Gaskins Construction Co., ASBCA No. 58550 et al., 17-1 
BCA ,i 36,780 at 179,284, acknowledged the Board's power to determine whether a 
contract is void ab initio due to material misrepresentation. Neither of the last two 
decisions discussed Laguna. 
Finally, the appellant in Supply & Service Team GmbH, ASBCA No. 59630, 17-1 
BCA ,i 36,678, sought reimbursement of government offsets taken after the contractor 
had allegedly submitted invoices for services not provided, or that were inflated. The 
government advanced an affirmative defense that the Board characterized as material 
breach based upon fraud. Citing Laguna, the Board found the defense unsustainable 
without a third-party factual determination. The decision did not address the Board's 
power to declare contracts void ab initio. 
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CONCLUSION 
IOTC has failed to demonstrate that Laguna abrogates the Board's prior denial of 
its motion to strike the government's first affirmative defense, or holds that the Board 
may not decide it. Accordingly, the motion is denied. 
Dated: 12 January 2018 
I concur 
RICHARD SHACKLEFORD 
Administrative Judge 
Acting Chairman 
Armed Services Board 
of Contract Appeals 
::Lei~ 
MARK A. MELNICK 
Administrative Judge 
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 in ASBCA Nos. 57491, 57492, 57493, Appeals of 
International Oil Trading Company, rendered in conformance with the Board's Charter. 
Dated: 
5 
JEFFREY D. GARDIN 
Recorder, Armed Services 
Board of Contract Appeals