DENIED: September 12, 2013
CBCA 3084
SELRICO SERVICES, INC.,
Appellant,
v.
DEPARTMENT OF JUSTICE,
Respondent.
Theodore M. Bailey and Kristin Zachman of Bailey & Bailey, P.C., San Antonio, TX,
counsel for Appellant.
Joshua A. Mandlebaum, Commercial Litigation Branch, Civil Division, Department
of Justice, Washington, DC, counsel for Respondent.
Before Board Judges DANIELS (Chairman), SOMERS, and KULLBERG.
DANIELS, Board Judge.
Although the United States Marshals Service (USMS) was satisfied with the
performance of Selrico Services, Inc. (Services) under a contract between the parties, it did
not remit to the contractor all funds promised in the contract in exchange for the services
provided.  Instead, some of the money was offset to pay a debt which the Government
believes was owed by Services in conjunction with a Department of the Army contract. 
Services asserts that the offset was impermissible because the debt was owed by a separate
company, Selrico International, Inc. (International), which held the contract with the Army.


CBCA 3084 2
We grant a motion for summary relief brought by the Department of Justice (USMS’
parent agency), denying the appeal.
Background
Earlier this year, we denied a motion by the Department which asked us to dismiss the
case for lack of jurisdiction.  Selrico Services, Inc. v. Department of Justice, CBCA 3084,
13 BCA ¶ 35,268.  Many of the facts relevant to that decision are relevant to this one as well. 
To the extent that further details might be useful here, we refer the reader to the prior
opinion.  None of the facts stated there (or recited below) is contested.
Army contract
In 2004, the Army sought to have a contractor install a structure at an air base in Iraq. 
The Army engaged in discussions with Albert “Buddy” Aleman, who said that his company
could supply and install the product.  During these discussions, the names “Selrico Services,
Inc.” and “Selrico International, Inc.” were used interchangeably by Mr. Aleman and Army
officials.  The two companies are actually separate, though affiliated corporations.  At the
time, they had different but overlapping ownership.  (The appellant informs us that since
2009, they have had common ownership.)  Each has its own contractor and government
entity (CAGE) code and taxpayer identification number, and each files its own tax return.
Following the discussions with Mr. Aleman, the Army entered into a contract with an
entity identified as “Selrico International.”  The contract was initially in the amount of
$348,986.34; the amount was later increased to $365,386.34.
As required by the contract, the Army paid a mobilization fee of 30% of the original
contract price.  The Government issued a check in the amount of $104,695.91 to International
on May 25, 2004.
After the Army had accepted the structure, on October 9, 2004, Services sent the
agency an invoice in the amount of $365,386.34.  The invoice featured the Services logo. 
It included the CAGE code and taxpayer identification number of Services and specifically
stated, “Remit Payment to: Selrico Services, Inc.”
The Army paid this amount by electronic funds transfer.  Although the agency’s
records state that the payee was “Selrico International,” they also show the CAGE code and
taxpayer identification number of the payee as those of Services.  The money was deposited
in a bank account of Services.

CBCA 3084 3
Services has served as the “banking entity” for International and other affiliates of
Services.  At times, Services has advanced funds to International.  According to a statement
submitted under penalty of perjury by the chief financial officer of Services, during 2004,
when payments on outstanding accounts receivable were received by Services affiliates,
including International, the funds were normally deposited in a Services bank account.  The
affiliated companies’ accounting department would then record the payment as having been
made to the affiliate, such as International.  In keeping with this practice, the chief financial
officer says, the second payment on the Army contract was posted to International, and that
firm reported the revenue as gross sales for federal income tax purposes.
Government’s collection efforts
On April 29, 2010, a representative of the Army’s Joint Contracting Command’s
Iraq/Afghanistan contract closeout task force contacted Buddy Aleman and Michael
Robinson about contract payments.  Each of these individuals used an electronic mail address
which included the phrase “@selricoservices.com.”  The Army representative was concerned
that his agency should have subtracted the first payment from the total amount before making
the second payment.  He received no response.
On August 17, 2010, the Defense Finance and Accounting Service (DFAS) sent to
International a demand for repayment of the first payment, $104,655.91.  The letter was
followed by a telephone call to John R. “Rick” Aleman, the president of both International
and Services.  (The appellant tells us that Rick Aleman was the sole shareholder of Services
at all times relevant to this case; he was also the majority shareholder of International until
2009 and the sole shareholder of that company since then.)  Although Rick Aleman promised
DFAS that he would have Mr. Robinson research the matter, neither he nor Mr. Robinson
ever responded to DFAS inquiries.
In November 2010, DFAS referred the $104,655.91 debt to the Department of the
Treasury for collection.  A DFAS accounts receivable technician decided to collect the debt
from Services, rather than International.  She believed that because the Army’s second
payment had gone to an entity with the CAGE code and taxpayer identification number of
Services, that company had received the August 17, 2010, demand letter.  Treasury later
referred the debt to private collection agencies, which attempted to collect the money from
Services.
In response to the debt collection efforts by the private collection agencies, Services
disputed the assertion that it owed the money to the Government.  Services said that “[n]o
payments on the contract were made to Selrico Services, Inc.” and that the debt was owed
by International.  Notwithstanding this assertion, DFAS asked Treasury to continue to

CBCA 3084 4
attempt to collect the debt from Services because DFAS believed that Services had received,
on the Army contract, payment of money in excess of the amount specified in that contract.
According to information provided by the appellant, International suffered a
significant financial loss in 2005, when it paid a vendor of goods fifty percent of the amount
due at the time of the order, but the vendor never shipped  the goods.  International secured
a judgment against the vendor in Dubai in 2009, but despite the efforts of International’s
attorneys, the company has not been able to collect on the judgment.  Beginning in 2006,
Services made loans to International.  International ceased operations in 2010.  It filed its last
tax return in 2011.  International now owes more than $700,000 to Services.  International
has not formally closed its business, however, the appellant says, because International has
a remaining asset of the judgment against its former vendor in Dubai.
USMS contract
In February 2012, USMS contracted with Services to provide food services at the
USMS facility in Pineville, Louisiana, at specified times during that year.  The USMS
acknowledges that this contract was performed without incident.  During 2012, Services sent
to the USMS invoices in the total amount of $106,539.20.  Payments of $84,025.52 for this
contract were offset by Treasury against the debt on the Army contract.  This amount (less
$51 in charges retained by Treasury) was transferred to DFAS.
On August 9, 2012, Services submitted to the USMS contracting officer a claim for
the amount of money which had been offset, rather than paid to Services.  The contracting
officer denied the claim, and Services appealed her decision.
Discussion
Resolving a dispute on a motion for summary relief is appropriate when the moving
party is entitled to judgment as a matter of law, based on undisputed material facts.  The
moving party bears the burden of demonstrating the absence of genuine issues of material
fact.  All justifiable inferences must be drawn in favor of the nonmovant.  Celotex Corp. v.
Catrett, 477 U.S. 317 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986). 
Nevertheless, to defeat a motion for summary relief, the nonmoving party must come
forward with specific facts showing the existence of a genuine issue for trial.  “Where the
record taken as a whole could not lead a rational trier of fact to find for the non-moving
party, there is no ‘genuine issue for trial.’”  Matsushita Electric Industrial Co. v. Zenith
Radio Corp., 475 U.S. 574, 587 (1986).
As we explained in our earlier decision in this case:

CBCA 3084 5
The common law right of the Government to set off against moneys due
a contractor as a means of recovering previous erroneous payments has long
been recognized.  United States v. Munsey Trust Co., 332 U.S. 234, 239
(1947); East Coast Security Services, Inc. v. Department of Homeland
Security, DOT BCA 4469R, et al., 06-1 BCA ¶ 33,290, at 165,062-63 (citing
cases).  “This right extends to offsets between separate contracts which the
debtor may have with the Government.”  Cecile Industries, Inc. v. Cheney, 995
F.2d 1052, 1054 (Fed. Cir. 1993). . . .
When an offset occurs, the debtor has received payment in full
for the underlying obligation represented by the payment. . . . 
[I]f an agency certifies a payment to a Federal contractor for
work completed or services provided, and that payment is offset
to collect a delinquent debt that the contractor owes to another
Federal agency, the contractor has been paid in full for its
services.
31 CFR 285.5(e)(9) (2010).
Selrico Services, 13 BCA at 173,131.
The parties agree that the Army paid more than it should have under the 2004 contract
– $470,082.25, rather than $365,386.34.  The parties further agree that the Government is due
the difference between these two figures, $104,695.91.  The parties disagree, however, as to
which entity owes that sum.  The Department of Justice maintains that Services, which
received the Army’s second payment, must repay the amount in question, and that the
Government properly accomplished some of that repayment by setting off the debt against
money otherwise due Services under a USMS contract.  Services insists that International,
which held the Army contract and ultimately ended up with the excess payment, is the debtor. 
The difference is critical to the outcome of the case, since International currently has no
assets with which to pay the Government.
We advised the parties, in the earlier decision, that to resolve the dispute, “[i]t is the
identity of the payee on the Army contract, not the identity of the contractor, that matters.” 
Selrico Services, 13 BCA at 173,132.  We afforded the parties ample time to find evidence
which would show who that payee was.  The evidence now shows without doubt that
Services received the second payment from the Army.  Indeed, the payment was made in
response to an invoice from Services which requested the money and, by virtue of provision
of Services’ CAGE code and taxpayer identification number, effectively asked that the
money be transferred to Services’ bank account.  The Army complied with the request. 

CBCA 3084 6
Because the Army’s contract was with International, not Services, Services had no right to
seek or receive any of the second payment.  The Government had the right to recoup the
amount of that payment.  Doing so by setting off  $84,025.52 against the total amount due
under the USMS contract was entirely permissible.
The parties have exerted enormous effort in advancing arguments which we find
unnecessary to the result.  The Department of Justice maintains that we could pierce the
corporate veil, applying tests described in McCall Stock Farms, Inc. v. United States, 14 F.3d
1562, 1567-68 (Fed. Cir. 1993), to conclude that even if payment on the Army contract went
exclusively to International, the debt is owed by that company’s alter ego, Services.  Services
urges that because Services transferred to International, on the books of the affiliated
companies, the payment Services received from the Army, International should be deemed
to have obtained the Army’s money.  Services also contends that because the Government
did not follow the requirements of the Debt Collection Act, at 31 U.S.C. § 3716(a) (2006),
it may not collect any money from Services by way of offset.
Although these arguments consume many pages of briefing, they do not matter in this
case.  We have concluded that Services owes the money in question to the Government;
whether Services and International are one company or two, the debt is attributable to
Services.  Although Services did transfer the second Army payment to International, as far
as the Government is concerned, the money went to only one entity (Services), and any action
that entity took with regard to the money does not affect the identity of the payee.  Whether
the Government needed to follow Debt Collection Act requirements or not, it clearly gave
Services all that 31 U.S.C. § 3716(a) mandates: notice of the claim and an opportunity to
inspect records and have the agency’s collection decision reviewed internally.  The
Government told Services’ president and his personnel, as early as 2010, that it believed
Services owed the debt, and it formalized the demand through the 2012 USMS contracting
officer’s decision.  Through this litigation, if not before, Services has had ample opportunity
to inspect records and contest the Government’s position.  We have found that position valid.

CBCA 3084 7
Decision
The motion for summary relief is granted.  The appeal is DENIED.
_________________________
STEPHEN M. DANIELS
Board Judge
We concur:
_________________________ _________________________
JERI KAYLENE SOMERS H.CHUCK KULLBERG
Board Judge Board Judge