MOTION TO AMEND COMPLAINT GRANTED IN PART:
April 6, 2022
CBCA 7090
ZACH FUENTES, LLC,
Appellant,
v.
DEPARTMENT OF HEALTH AND HUMAN SERVICES,
Respondent.
William Selinsky and Andrew D. Gillman of Whitcomb, Selinsky, P.C., Denver, CO,
counsel for Appellant.
Tami S. Hagberg and Terrius D. Greene, Office of the General Counsel, Department
of Health and Human Services, Washington, DC, counsel for Respondent.
Before Board Judges LESTER, SHERIDAN, and KULLBERG.
SHERIDAN, Board Judge.
Pending before the Board is a motion from appellant, Zach Fuentes, LLC (ZFL),
seeking leave to file an amended complaint. Respondent, the Department of Health and
Human Services (HHS), objects to that motion, arguing that ZFL seeks a “do-over” now that
it has retained new counsel, that HHS would be prejudiced by the amendment, that ZFL
unduly delayed raising its new count of breach of the implied duty of good faith and fair
dealing, and that amendment would be futile. For the reasons explained below, except to the
extent that ZFL attempts to add an allegation of affirmative bad faith, we grant ZFL’s motion
for leave to amend.


CBCA 7090 2
Background
On April 14, 2020, the Indian Health Services (IHS), an agency of HHS, awarded a
contract to ZFL for the purchase of one million KN95 respiratory masks. After delivery, IHS
informed ZFL that it was rejecting the entire order because the masks delivered were not
from the same manufacturer as the samples provided to IHS prior to contract award.
Exhibit 28.1
ZFL submitted a certified claim to the IHS contracting officer on June 22, 2020, for
breach of contract in the amount of $3,428,892. Exhibit 30. In its claim, ZFL represented
that the contract did not reference a specific manufacturer from which the masks were to be
supplied and asserted that IHS had accepted delivery of all one million masks. Id. ZFL
alleges in the certified claim that IHS improperly rejected the masks because they were not
from Mezorrison Health Science & Technology Co., Ltd. (Mezorrison), a Chinese KN95
mask manufacturer with whom Gabriele Business Corporation (GBC) had a relationship and
whose masks Mr. Zachary Fuentes originally used to market the KN95 masks to IHS.2 ZFL
alleges in its certified claim that “ZFL offered multiple times to replace any defective masks.
To date, IHS has not identified a single defect despite having inspected the masks and held
them for over a month. Instead, IHS claims it is rejecting the masks because they were [sic]
produced by an unknown Chinese manufacturer.”Id. (footnote omitted.) ZFL offered
several other reasons why IHS’s proffered bases for rejecting the masks were legally
inadequate and “pretextual in nature,” concluding that “the real reason for IHS’s rejection
of the masks is likely the unexpected media and political attention surrounding the contract.”
Mr. Fuentes, the chief executive officer of ZFL, had previously worked in the White House,
and ZFL speculated that Mr. Fuentes’ political connections and a mounting investigation into
the award of this contract had caused IHS to withhold payment for the one million masks.
Id.
After asserting that IHS’s failure to pay for the masks was “unacceptable, unfair, and
a breach of the parties’ contract,” ZFL demanded payment or a contracting officer’s final
decision on its claim, insisting that it had fulfilled all of its obligations under the contract.
1 All exhibits are found in the appeal file, unless otherwise noted.
2 ZFL alleges that GBC was the company IHS originally approached to provide
KN95 masks and that, at the time of the award and related discussions, Mr. Fuentes was
working as an independent contractor for GBC. ZFL further alleges that, because GBC was
unable to register as a small business through the purchasing system that IHS was using (the
System for Award Management website (SAM.gov)), Mr. Fuentes offered to provide the
masks through his own company, ZFL, at the same price and quantity as GBC (using GBC
as the supplier).

CBCA 7090 3
ZFL appealed the contracting officer’s “deemed denial” to the Board, asking for a final
decision regarding its claim for full payment. On June 17, 2021, the contracting officer
issued a final decision denying the claim.
ZFL subsequently filed a notice of appeal with the Board. It then filed a complaint
alleging a single count of breach of contract, arguing that it entered into a valid and binding
contract with IHS, that it performed all of its obligations under the contract, and that IHS
breached the contract by failing to pay for the delivered masks. Complaint ¶¶ 83–87.
On February 4, 2022, several months after IHS answered the complaint, ZFL filed a
motion for leave to amend its complaint. Through its proposed amended complaint, ZFL
would add an additional count of breach of the implied duty of good faith and fair dealing,
as follows:
HHS refused to cooperate with ZFL’s multiple offers to cure; and
unreasonably impeded performance and dealt in bad faith by making repeated
negative and false public statements or insinuations about ZFL’s performance
behind his back while reassuring him through [the contracting officer] that his
performance was acceptable, and seeking to impose additional, non-existent
requirements as a pretext in order to deny conformity of goods to attempt to
coerce a no-cost termination for convenience, and to cancel ZFL’s order when
the primary reason was in fact the government’s mistake in improperly failing
to define the specification to require EUA [Umbrella Emergency Use
Authorization3] approved KN95 masks necessary for use by health care
personnel in health care settings.
Proposed First Amended Complaint ¶ 67. ZFL asserts that justice requires the Board to grant
the motion because ZFL recently retained new, more specialized, counsel and contends that
amending the complaint will not unduly delay or prejudice the Government or be futile.
3 An EUA is issued by the United States Food and Drug Administration (FDA)
authorizing emergency use of certain foreign-manufactured non-NIOSH [National Institute
of Occupational Safety and Health] approved respiratory masks by health care personnel in
health care situations. Normally, NIOSH “must formally approve such medical devices
proposed for uses in [health care] settings.” Proposed First Amended Complaint ¶ 15.

CBCA 7090 4
Discussion
Standard for Reviewing a Motion to Amend
In opposing ZFL’s motion for leave to amend its complaint, HHS argues that simply
retaining new counsel is insufficient grounds to amend a complaint. HHS asserts that ZFL’s
breach of the duty of good faith and fair dealing claim is based on information that was
available to it since it submitted its certified claim and that ZFL should be precluded from
raising it now. HHS further contends that the complaint as amended contains facts that are
inconsistent with the certified claim, original complaint, ZFL’s Board filings, and discovery
to date.
Board Rule 6(c) provides a party is entitled to amend its complaint once without leave
of the Board at any time “before a responsive pleading is filed.” 48 CFR 6101.6(c) (2020).
ZFL correctly recognizes that pursuant to Board Rule 6(c), it may now amend its complaint
only by seeking the Board’s permission.
The Board has previously discussed the standards upon which we review a motion to
amend a complaint:
Our rules do not expressly address the standards that we should apply in
evaluating motions for leave to amend a complaint. “In the absence of
applicable Board Rules” creating such standards, “the Board generally
employs the Federal Rules of Civil Procedure,” and particularly Federal Rule
of Civil Procedure (FRCP) 15, as “guidelines.” Although we are “not
inexorably bound to apply those rules to administrative hearings which are
generally of a somewhat less formal nature” than federal court proceedings, we
still look to the principles underlying FRCP 15 when a request for leave to
amend a complaint has been opposed to ensure fairness to the parties.
Crane & Co. v. Department of the Treasury , CBCA 4965, 16-1 BCA ¶ 36,539 (citations
omitted).
FRCP 15 seeks “to provide maximum opportunity for each claim to be decided on its
merits rather than on procedural technicalities” and “to limit the role of the complaint and
answer to that of providing ‘notice of the nature of the pleader’s claim or defense and the
transaction, event, or occurrence that has been called into question.’”Crane & Co. (citing
6 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane,Federal Practice & Procedure
§ 1471 (3d ed. 2010)). Accordingly, “absent a specific justifying reason such as prejudice
to the opposing party or futility of amendment, leave to amend a complaint or an answer is
to be freely given.”Id. (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). Tribunals are

CBCA 7090 5
“required to take into account any prejudice” to the non-moving party,Zenith Radio Corp.
v. Hazeltine Research, Inc. , 401 U.S. 321, 330-31 (1971), and may consider a number of
factors, including bad faith or dilatory motive, undue delay, harm to the movant if leave is
not granted, and futility of amendment. Foman, 371 U.S. at 182.
Prejudice
Prejudice sufficient to deny leave to amend a complaint must be “substantial or
undue.”Cureton v. National Collegiate Athletic Ass’n, 252 F.3d 267, 273 (3d Cir. 2001).
“[P]rejudice can result where a proposed amendment raises a new legal theory that would
require the gathering and analysis of facts not already considered by the opposing party, but
that basis for a finding of prejudice essentially applies where the amendment is offered
shortly before or during trial.”Crane & Co. (quoting Johnson v. Oroweat Foods Co., 785
F.2d 503, 510 (4th Cir. 1986)). “An amendment is not prejudicial, by contrast, if it merely
adds an additional theory of recovery to the facts already pled and is offered before any
discovery has occurred.”Id. (quoting Laber v. Harvey, 438 F.3d 404, 427 (4th Cir. 2006)).
We do not find that granting ZFL leave to amend its complaint will substantially prejudice
the Government. Although discovery has already occurred, ZLF’s motion to amend its
complaint is not being offered shortly before trial. Pursuant to the Board’s January 19, 2022,
scheduling order, a hearing is presently scheduled for the end of August, nearly five months
from the issuance of this order. Further, information about the Government’s good faith
reasons for rejecting ZFL’s masks should be in the Government’s possession, rendering
concerns about discovery unnecessary. The Government has provided no further argument
for denying ZFL’s motion as prejudicial.See DCD Programs, Ltd. v. Leighton , 833 F.2d
183, 187 (9th Cir. 1987) (“The party opposing amendment bears the burden of showing
prejudice”).
Undue Delay
Where substantial prejudice is lacking, leave to amend may still be denied based on
“truly undue or unexplained delay.”In re Fleming Cos., 323 B.R. 144, 149 (Bankr. D. Del.
2005) (quotingLorenz v. CSX Corp., 1 F.3d 1406, 1414 (3d Cir. 1993)). Delay without more
does not justify denial of leave to amend a complaint, but at some point a delay becomes
“undue,” placing a burden on the court or the opposing party.See In re Laitram Machinery,
Inc., No. 421, 1995 WL 138959, at *4 (Fed. Cir. Mar. 21, 1995). ZFL waited five months
to submit its amended complaint, but we do not find that this delay is undue.

CBCA 7090 6
Futility
In deciding whether to permit an amendment, futility of the amendment is a relevant
factor. Foman, 371 U.S. at 182. ZFL’s proposed complaint adds an additional count
alleging bad faith and a breach of the implied duty of good faith and fair dealing. The
Government alleges that the proposed amended complaint is a “material departure[] from the
facts supporting [ZFL’s] original certified claim and the original Complaint.” HHS
Response at 16. Although not framed as a jurisdictional futility argument, the Government’s
assertion calls into question whether ZFL’s amended complaint should be denied on the basis
of futility. “When a party faces the possibility of being denied leave to amend on the ground
of futility, that party must demonstrate that its pleading states a claim on which relief could
be granted, and it must proffer sufficient facts supporting the amended pleading that the
claim could survive a dispositive pretrial motion.”Crane & Co.(quoting Kemin Foods, L.C.
v. Pigmentos Vegetales del Centro S.A. de C.V., 464 F.3d 1339, 1354-55 (Fed. Cir. 2006)).
The Contract Disputes Act (CDA), 41 U.S.C. §§ 7101-7109 (2018), governs the
resolution of contract disputes that arise between the Government and contractors.Applied
Cos. v. United States, 144 F.3d 1470, 1477 (Fed. Cir. 1998). The CDA expressly requires
that “[e]ach claim by a contractor against the Federal Government relating to a contract shall
be in writing” and “shall be submitted to the contracting officer for a decision.” 41 U.S.C.
§ 7103(a)(1), (2). If the amount of a claim exceeds $100,000, the claim must be certified by
the contractor. Id. § 7103(b)(1). The CDA further requires that “[t]he contracting officer
shall issue a decision in writing and shall . . . furnish a copy of the decision to the
contractor.”Id. § 7103(d). These requirements are “jurisdictional prerequisites to any
appeal.”England v. Swanson Group, Inc., 353 F.3d 1375, 1379 (Fed. Cir. 2004) (quoting
Sharman Co. v. United States, 2 F.3d 1564, 1569 n.6 (Fed. Cir. 1993), overruled on other
grounds by Reflectone, Inc. v. Dalton , 60 F.3d 1572 (Fed. Cir. 1995) (en banc)).
Accordingly, “jurisdiction over an appeal of a contracting officer’s decision is lacking unless
the contractor’s claim is first presented to the contracting officer and that officer renders a
final decision on the claim.”Id.
Before the Board can entertain a legal or factual issue under its CDA jurisdiction, the
claim upon which the appeal is based must have provided adequate notice of the factual basis
of that issue. Crane & Co. (citing Santa Fe Engineers, Inc. v. United States, 818 F.2d 856,
858 (Fed. Cir. 1987)). To perform the appropriate analysis, we compare the operative facts
in the proposed amended complaint with those set forth in the certified claim, rather than
with the original complaint. Id. (citing Foley Co. v. United States , 26 Cl. Ct. 936, 940
(1992), aff’d, 11 F.3d 1032 (Fed. Cir. 1993)). While an amended complaint “does not
require ridged adherence to the exact language or structure of the original administrative
CDA claim,”Scott Timber Co. v. United States , 333 F.3d 1358, 1365 (Fed. Cir. 2003),
“presenting a materially different factual or legal theory (e.g., breach of contract for not

CBCA 7090 7
constructing a building on time versus breach of contract for constructing with the wrong
materials) does create a different claim.”K-Con Building Systems, Inc. v. United States, 778
F.3d 1000, 1006 (Fed. Cir. 2015). “In determining whether a contractor’s attempt to alter the
legal theories underlying its claim constitutes a ‘new’ claim, [we] ‘look at whether the new
issue is based on the same set of operative facts’ as the claim submitted to the contracting
officer.”Crane & Co. (quoting Foley Co., 26 Cl. Ct. at 940).
In comparing the operative facts in the proposed amended complaint with those set
forth in the certified claim alleging bad faith and a breach of the implied duty of good faith
and fair dealing, we look to see whether the factual elements in the proposed amendment
exist within ZFL’s certified claim. In rejecting the masks that ZFL delivered, the agency
objected that the delivered masks were not the brand that ZFL had delivered to the agency
for sample testing. ZFL disputes that it was required to provide the same mask that it
originally discussed with the agency when it entered the contract, and, in this appeal, it seeks
damages for the rejection of the masks. In its certified claim challenging the rejection of the
delivered masks, ZFL alleged that the agency had “provided the thinnest of pretextual
excuses” for rejecting the masks when the real reason for rejection was “likely the
unexpected media and political attention surrounding the contract.” Exhibit 30. ZFL also
alleged in its certified claim that it “offered multiple times to replace any defective Masks”
but was rebuffed. Id.
In its proposed amended complaint, in which it attempts to set up an implied duty of
good faith and fair dealing breach claim, ZFL alleges that contract performance was impeded
by the agency’s “repeated negative and false public statements or insinuations about ZFL’s
performance behind his back while reassuring him through [the contracting officer] that his
performance was acceptable”; that the agency sought “to impose additional, non-existent
requirements as a pretext in order to deny conformity of goods or to attempt to coerce a no-
cost termination for convenience”; and that the agency “cancel[led] ZFL’s order when the
primary reason was in fact the governments’s mistake in improperly failing to define the
specification to require EUA-approved KN95 masks necessary for use by health care
personnel in health care settings.” Proposed First Amended Complaint ¶ 67. ZFL also
alleges that the agency “refused to cooperate with ZFL’s multiple offers to cure.” Are these
factual allegations the same as the operative facts on which ZFL’s certified claim is based?
Certainly, the factual allegations in the proposed amended complaint are more detailed than
in the certified claim. In its certified claim, ZFL does not elucidate on the “pretextual”
actions that the agency allegedly took when rejecting ZFL’s masks. Nevertheless, the
allegations that ZFL now makes appear to be intended to provide a more fulsome explanation
of how the original rejection was pretextual. Thus, we find that the operative facts
underlying ZFL’s certified claim are sufficiently similar to those upon which ZFL’s implied
duty breach claim is based to allow the Board to exercise jurisdiction over the new implied
duty breach legal theory.

CBCA 7090 8
Although the Board’s jurisdiction extends to the implied duty of good faith and fair
dealing breach claim, to the extent that ZFL is raising an affirmative bad faith claim against
the agency in paragraph 67 of its proposed amended complaint, the Board lacks jurisdiction
to entertain it. “To prove bad faith by the Government, a contractor must establish, by clear
and convincing evidence, that a government official acted with ‘some specific intent to injure
the [contractor].’”CAE USA, Inc. v. Department of Homeland Security, CBCA 4776, 16-1
BCA ¶ 36,377 (quoting Am-Pro Protective Agency, Inc. v. United States , 281 F.3d 1234,
1240 (Fed. Cir. 2002) (quotingKalvar Corp. v. United States, 543 F.2d 1298, 1302 (Ct. Cl.
1976))). Bad faith is not a required element of every implied duty breach claim,CAE USA,
but, to the extent that any arguments that ZFL is raising depend on a finding of actual bad
faith, ZFL would have to prove an intent by the agency to harm ZFL to prevail. ZFL’s
certified claim is devoid of any allegations regarding the agency’s specific intent to harm him
or of any examples of such intentional harm, rendering such an argument beyond the
confines of the certified claim itself. Accordingly, we lack jurisdiction to consider any bad
faith claim in this appeal.
Decision
Because ZFL’s amended complaint, including its new breach of the duty of good faith
and fair dealing claim, is neither prejudicial, unduly delayed, nor futile, ZFL’s motion for
leave to amend isGRANTED IN PART, except to the extent that it alleges affirmative bad
faith.
Patricia J. Sheridan
PATRICIA J. SHERIDAN
Board Judge
We concur:
Harold D. Lester, Jr. H. Chuck Kullberg
HAROLD D. LESTER, JR. H. CHUCK KULLBERG
Board Judge Board Judge