### ARMED SERVICES BOARD OF CONTRACTAPPEALS
Appeal of-- ) ) 

### Public Warehousing Company K.S.C. ) ) 

### Under ContractNo. SPM300-05-D-3128 )

APPEARANCES FORTHE APPELLANT:

APPEARANCES FORTHE GOVERNMENT: ASBCANo. 58078

Michael R. Charness, Esq. BryanT. Bunting, Esq. Jamie F. Tabb, Esq.

Vinson & 

### Elkins LLP Washington, DC

Daniel K. Poling, Esq.

DLA ChiefTrial Attorney John F. Basiak, Jr., Esq. Kristin K. Bray, Esq.

Trial Attorneys Elizabeth Amato-Radley, Esq.

Assistant Counsel DLATroop Support Philadelphia, PA

OPINION BYADMINISTRATIVE JUDGE TING ON THE GOVERNMENT'S MOTION TO DISMISS PURSUANT TO BOARD RULE 30

In the Board's 12 November 2013 decision onjurisdiction, we rejected Defense Supply CenterPhiladelphia's (DSCP) alternate argumentto dismiss this appeal pending the outcome ofthe criminal and civil fraud cases inthe District Court. We did so because DSCP failed to make out a clear case ofhardship and inequities in beingrequired to go forward. Public Warehousing Company K.S.C., 

### ASBCANo. 58078, 13 BCA**~** 

### 35,460 (PWC). 

### Through DSCP's new motion to dismiss, the U.S. Attorney for the Northern District ofGeorgia has explained that proceeding with ASBCA No. 58078 would compromise and interfere with ongoing criminal proceedings in the District Court. DSCP's motion this time is based on Board Rule 30. As an alternative, DSCP has moved to stay discovery in ASBCANo. 58078 pendingthe resolution ofthe criminal case. By Discovery OrderNo. 1, we stayed discovery pending our decision on DSCP's motion to dismiss. Forreasons stated below, we grant DSCP's motion and dismiss this appeal without prejudice under Rule 30.STATEMENT OF FACTS (SOF) FORPURPOSES OF THE MOTION
Background

1. In 2003, DSCP, now known as Defense Logistics Agency Troop Support (DLA Troop Support), awarded a "Prime Vendor" contract (PV1 Contract) to Public Warehousing Company K.S.C. (PWC) to deliver subsistence items to U.S. and Allied forces in Kuwait and Qatar (SOF**~** 2). 1 The contract was amended in June 2003 adding the "Iraq Deployment Zone"requiring PWC to make deliveries'to additional Authorized Customers in active combatzones. Underthe contract, PWCwas to be reimbursed for the cost offood plus a distribution price, includingprofit. (SOF**~** 3)

2. DSCP continued the PV1 Contract with PWC through a bridging contract (PV Bridge Contract) from February 2005 to mid-December 2005 (SOF**~** 4). In July 2005, DSCP awarded ContractNo. SPM300-05-D-3128 (PV2 Contract) to PWC. The PV2 Contract included an 18-monthbase year and 3 options. PWC beganperformance ofthe PV2 Contract in December, 2005. DSCP exercised all three options extendingthe PV2 Contractto 4 December2010. In all, PWC performed the PV1, PVBridge, and PV2 Contracts continuously for approximately seven and a halfyears. (SOF**~** 5)

3. Unlike the PV1 and the PVBridge Contracts, the PV2 Contract contained a "PERFORMANCE BASEDDISTRIBUTIONFEES" clause (PBDF clause) whose purpose was to incentivize PWC to perform "at an optimal level" to achieve "customer satisfaction" (SOF**~** 6). The PBDF clause established a six-month fee review cycle (SOF**~** 7). Depending upon whetherPWC's performance was rated as "Excellent," "Good," "Fair," or "Poor" in accordance withthe standards prescribed in the PBDF clause, PWC could receive an increase in distribution fee, a decrease in distribution fee, orthe standard distribution fee (SOF**~~** 6, 8).

4. A rating of"Excellent," "Good," "Fair," or "Poor" depends on two factors: PWC's (1) fill rate and (2) current Contractor Performance AssessmentReport (CPAR) rating. An "Excellent" or "Good" rating requires the CO to determine that she "'would definitely,' award to this vendortoday given that I had the choice." A "Fair"rating requires the CO to determine that she '"probably would not,' awardtothis vendortoday given that I had the choice." A "Poor" rating requires the CO to determine that she "'probablywould not' or 'would not,' award to this vendortoday giventhat I had the choice." (SOF**~** 8)

1 Citations to SOFs in the sections before the "DECISION"portion ofthis opinion are to the SOFs in the Board's 12 November 2013 decision published at 13 BCA**~** 35,460. References to SOFs inthe "DECISION"portion ofthis opinion are to the SOFs in this opinion.

25. In November 2005, a few weeks before the end ofthe PVBridge Contract, Kamal MustafaAl-Sultan, a former PWC employee, filed under seal a complaint in the

name ofthe United States, a False Claims Act (FCA) suit, 31 U.S.C. § 3732(a), in the United District Court for the NorthernDistrict ofGeorgia. The FCA complaint contained, interalia, allegations relating to PWC'spricingpractices with one ofits local marketready items (LMRI) suppliers

- The Sultan Center (TSC). The complaint remained under seal until November 2009. (SOF**~** 18) Also in November 2005, the government opened an investigation ofPWC concerning allegations ofovercharging, kickbacks, and security issues (SOF**~** 23).

6. On 27 April2009, while PWC was performing Option 2 ofthePV2 Contract, contracting officerLinda L. Ford (CO Ford) received a $119 million certified claim from PWC. The claim alleged that DSCPbreachedthe PV2 Contract in failing to assess PWC'sperformance every six months for awarding PBDF. (SOF**~** 37) Since no CPAR

was issued under the PV2 Contract, PWC contended that "DSCP shouldhave awarded the PBDF to PWC based on the fill rate metric alone." Public Warehousing Company, K.S.C., ASBCA No. 56888, compl.**~** 61. Thus, the $119 million claim assumed PWC

was entitled to an increase in distribution fees from December2005 through December 2008 (compl., tab 28 at 10). CO Ford acknowledgedthat no CPARs had beenperformed becausethere was an on-going fraud investigation and, because the Department ofJustice (DOJ) had not made available the information developed, she had insufficient information to evaluate PWC'sperformance. COFord's letter saidthat she expected to issue a decision on the claim on or before 3 December2009. (SOF**~** 38) In July 2009, PWC appealed tothe Board onthe basis that its claim shouldbe deemed denied and an appeal authorized pursuantto 41 U.S.C. § 7103(f)(5). The Board granted DSCP's motion to dismiss for lack of jurisdiction holding that, given the complexity ofthe PV2 Contract CPAR/PBDF assessments, the CO's commitment to issuing a decision by a specific date -3 December 2009- was reasonable. Public Warehousing Company, 09-2 BCA**~** 34,265.

The Superseding Indictmentbefore the District Court

7. Less thantwo months after the Board dismissed ASBCANo. 56888, a grand juryin the Northern District ofGeorgiareturned a six-count indictment on 9 November 2009 charging that PWC conspired to defraud the United States in the biddingprocess for the PV2 Contract and in overchargingthe United States during the execution ofthe PV1, PVBridge and the PV2 Contracts. Three months later, a grandjury inthe Northern District ofGeorgiareturned a Superseding Indictment (indictment) on 9 February 2009 charging PWCwith the same six counts and adding Agility DGS Logistics Services Company and Agility Holdings, Inc., as defendants. (Mot. to dismiss, tab 1at 2,**~** 1)

38. Count I ofthe indictment alleges that PWC violated 18 U.S.C. § 1031 and 18 U.S.C. 

### § 1001 in connection with its efforts to procure the award ofthePV2 Contract (mot. to dismiss, tab 1 at 2,**~** 2).

9. Count II ofthe indictment alleges thatPWC violated 18 U.S.C. 

### § 1031, 18 U.S.C. § 1001, 18 U.S.C. 

### § 287, and 18 U.S.C. § 1343 in overchargingthe government in PWC'sperformance ofthe PV1, PVBridge and PV2 Contracts by (1) failing to purchase less expensiveproducts because the vendor did not offerprompt payment discounts; (2) generating fraudulent billings by improperly chargingthe government for certain warehousing and distribution costs; (3) manipulating and inflating prices from distributors orvendors; (4) failing to return, and fraudulently concealing rebates, allowances, and discounts attributable to orders by the governmentunderthe contracts; and (5) reducing the pack size oftheproducts to increase distribution fees claimed from the government (mot. to dismiss, tab 1 at 2,**~** 3).

10. Count III ofthe indictment alleges thatPWC violated 18 U.S.C. § 1031 by overchargingthe government for distribution fees by asking vendors to reduce the pack size ofproducts during the performance ofthe PV1 Contract (mot. to dismiss, tab 1at 2,**~** 4).

11. Count IV ofthe indictment alleges thatPWCviolated 18 U.S.C. § 1031 by generating fraudulent billings by improperly chargingthe government for certain warehousing and distribution costs during the performance ofthe PV2 Contract (mot. to dismiss, tab 1at 2,**~** 5).

12. Counts V and VI allege that PWC violated 18 U.S.C. §§ 1343 and 2, by using wire communications with vendors as part ofits scheme to generate fraudulent billings by improperly charging the government for certain warehousing and distribution costs during the performance ofthe PV2 Contract (mot. to dismiss, tab 1 at 3,**~** 6).

The Qui Tam Action before the District Court

13. On 13 November 2009, the United States intervened in part and declinedto intervene on part in the qui tam action filed by Kamal MustafaAl-Sultan. UnitedStates

ex. ref. KamalAt-Sultan v. The Public Warehousing Company, K.S.C., a/k/aAgility, and The Sultan Center FoodProducts Company, K.S.C., No. 1:05-CV-2968. On 5 January 2011, the United States filed an amended complaint against PWC alleging six counts of violations ofthe False Claims Act, fraud, paymentby mistake, unjust enrichment, and breach ofcontract. On 1 7 January 2013, the civil action in the District Courtwas administratively closed, subjectto reopening by motion ofanyparty, pending the resolution ofan appeal inthe Kuwait Court ofAppeals. (Mot. to dismiss, tab 1 at 3,**~** 7)

414. CO Ford did not issue her decision on PWC's $119 million claim on 3 December 2009 as promised. She notified PWC that in light ofthe pending civil and criminal cases, she would issue her decision on orbefore 21 May 2010. Using the same justifications and projecting a date on orbefore which she expected to issue a decision, CO Fordput offissuing her decision for over four years. Her 14 December2011 letter

- the seventh and last letter

- stated that she expected to issue her decision on orbefore 8June 2012. By notice dated 13 Apri12012, nearly 11 months after it filed its amended ($158 million) and recertified claim, PWC appealed again pursuantto 41 U.S.C. § 7103(f)(5) onthe basis thatthe CO had failed to issue a decision within the time period required. Itfiled its complaint at the same time. The Board docketed the appeal as ASBCA No. 58078.

PWC'sProsecutorial Misconduct Case in the District Court

15. As a part ofits defense against the Superseding Indictment, PWC's defense attorneys2 filed in the United States District Court for the Northern District ofGeorgia on 21 February 2012 a motionto dismiss the indictmentbased on prosecutorial misconduct. The motion was accompanied by a supporting memorandum and requested an evidentiary hearing. (Gov't 11 May 2012 (first) mot. to dismiss, tab 11) The misconducts, PWC alleges the government attorneys and agents committed, include:

(!d. at 2) • improperly pressured DSCP's lead contracting officerto change herpositive evaluation ofPWC

- statingthat she would "definitely award the contractto PWC again" if given the chance

- into a qualified "might or might not award" evaluation, because her favorable endorsement would have negatively affected the Government's investigation;

• instructed DSCP not to perform contractually mandated performance assessmentreports and evaluations, which wouldhave entitled PWCto a $160 million bonus, and thus, may have undermined the Government's investigation;

• interfered with the routine administration ofthe PV Contracts in ordertopreventPWC and DSCP from resolving contractual disputes and interpretation issues[.]

2 Skadden, Arps, Slate, Meagher & Flom LLP represents PWC in the District Court criminal case.



### 5

### 16. Onthe second point above, PWC'sprosecutorial misconduct memorandum explains: "Whilethe prosecution could not keep PWC from reaching the minimum 97.5% fill rate

...it couldprevent PWC from achieving the requisite 'would definitely award' CPARevaluation." The memorandum alleges "[r]atherthan riskhaving the Philadelphia Supply Centerprovide PWC with a 'would definitely award' recommendation, the prosecution simply directed DSCP to stop completing CPAR evaluations altogether." (First mot. to dismiss, tab 11 at 28) The memorandum continued stating: "To date

...Ms. Ford has yet to issue a final decision on PWC's claim

- which now stands at nearly $160 million excluding interest

- and has extended the time in which she expects to issue a final decision on at least six occasions" (id. 

### at 29).

17. The DSCP employees alleged to have been involved in the issue ofwhether the prosecutionpressuredDSCP to alterthe positive evaluations ofPWC'sperformance include COs Ford and Dlugokecki; DSCP's internal fraud counsel, AdityaMcDuffy; DSCP's section chiefand CO Ford's immediate supervisor, Gary Shifton; DSCP's Chief ofOverseas Prime Vendor Program, Gordon Ferguson; and DLA Assistant General Counsel, NormandLussier (first mot. to dismiss, tab 11 at 16-18, 20). Among those alleged to have been involved in the issue ofwhether the prosecutionprevented DSCP from completing additional PBDF performance evaluations include COs Ford and Dlugokecki (id. 

### at 28, 29).

PWC's Complaintbefore the Board

18. PWC's complaint in ASBCANo. 58078 summarized its case before the Board as follows:
Beginning in 2005, and continuing through the date of this Complaint, with the acquiescence or approval ofthe Contracting Officers ("COs"), government officials employed by the Department ofDefense ("DoD"), including DSCP, and the Department ofJustice ("DoJ") conspired and acted in concert to intentionally deprive PWC ofits rights under ContractNo. SPM300-05-D-3128 (the "Contract" orthe "PV2 Contract"), breachingthe Contract's express and implied terms, and violating regulatory duties. Inparticular, DSCP was obligated to periodically fairly and objectively evaluate PWC's performance ofthe Contract. Based on those objective evaluations, PWC could receive additional payments in the form ofhigher distributionprices or fees. Ratherthan fairly and objectively evaluating PWC's performance, the COs, at the direction ofDoJ officials and others, never issued any objectively honest evaluations, nor

6

### authorized any additional payments. Had DoJ officials and others not interfered with PWC's contractual rights, and had the COs fulfilled their independent contractual and regulatory duties, DSCP would have issued evaluations entitling PWC to nearly $160 million in additional distribution fee payments. In this Appeal, PWC seeks the $158,979,385.06 it is owed in additional distribution fee payments, plus interest.
(Compl. at 1-2)

19. PWC's complaint repeatedly alleges elsewhere that DOJ interfered with DSCP's administration ofthe PV2 Contract: PWC alleges that DSCP's failure to properly evaluate PWC for a PBDF under the PV2 Contract was the direct result ofthe interference ofDOJ officials with routine government contract administration (compl.**~** 

### 43); that a senior DOJ official increasingly intruded into DSCP's day-to-day operations ofthe PV2 Contract (compl.**~53);** 

### and that DSCP officials were aware that they were not fulfilling their contractual obligation and the reason DSCP did not evaluate PWC for PBDFs was due to the DOJ official's direction (compl.**~** 

### 94).

20. PWC's complaint in ASBCANo. 58078 sets outtwo counts: Count I seeks reliefbased on "BREACH OF CONTRACT." PWC contends that "(t]he Contract required DSCP to evaluate PWC every six months for the purpose ofdetermining whether PWC was entitled to the PBDF" (compl.**~** 

### 136), and "DSCPhas failed to comply with its contractual obligations because ofthe existence ofa DoJ investigation, and the active interference ofDoJ officials" (compl.**~** 

### 138). Count II seeks reliefbased

on DSCP's alleged "BREACH OF THE IMPLIED DUTIES OF COOPERATION, NON-INTERFERENCE WITH WORK, AND GOOD FAITH AND FAIRDEALING." PWC contends that DSCP breachedthe contract by "(1) 

### failing to fulfill its contractual duties; (2) interfering with PWC'sperformance; and (3) conspiring to deprive PWC ofits ability to reap the full benefits ofthe Contract" (compl.**~** 

### 148).

Board Proceedings in ASBCA No. 58078

21. The Board docketed PWC's 13 April2013 appeal as ASBCANo. 58078 on the basis thatthe CO had failed to issue a decision on PWC's $158 million claim. On 11 May 2012, DSCP moved to dismiss the appeal (first mot. to dismiss). It

### made two arguments: First, DSCP argued thatthe CO's 14 December 2011 letter stating that she "expect[s] to issue a final decision on the claim on orbefore Friday, June 8, 2012," was in compliance with 41 U.S.C. § 7103(f)(2)(B) because she "pinpointed a particular date within which a decision would be issued" (first mot. to dismiss at 16-17). Second, DSCP argues that PWC's appeal was premature and the CO's failure to issue a final decision

was reasonable so long as the civil qui tam 

### and the criminal cases were pending in the District Court (id. 

### at 6, 17-18).

722. In our decision issued on 12 November 2013, werejected both arguments. We held the CO's qualified commitmentto issue her decision on 8June 2012 conditioned upon the District Courtrendering a decision onwhether PWC committed fraud did not comply withthe requirement of41 U.S.C. § 7103(t)(2)(B) and established case law. We held also that despite the criminal and civil fraud cases pending before the District Court,

we havejurisdictionto interpret the PBDF clause and to determine what adjustments, if any, PWC was entitled to under that clause. We said that, contrary to the established case law for suspension or dismissal ofa case pending the resolution ofcivil and criminal

cases in court, "the DOJhas not asked that Board adjudication

...be suspended or dismissed

...pending resolution ofthe fraud cases in the District Court. Norhas the DOJ

orDSCP shown that Board adjudication ofthe contract rights ofthe parties will interfere

orprejudice the criminal and civil actions in the District Court." 

### PWC, 13 BCA**~** 35,460 at 173,897.

PWC'sDiscovery in the Board Case

23. Shortly after the Board issued its decision onjurisdiction in ASBCA No. 58078, PWC's counsel3 before the Board served DSCP with discovery requests (mot. to dismiss, tabs 4, 5). In reviewing PWC's discovery requests, we find numerous requests seeking information relating to PWC'sprosecutorial misconduct defense in the District Court. For example, a number ofPWC's discoveryrequests seek information relating to (1) communications between DoD agencies (DLA, DSCP, DCIS, OIG, CENTCOM) and DOJ (USAO, FBI) concerning the evaluations ofPWC, the CPAR process, orPBDFs (mot. to dismiss, tab 4 at 9, interrogatory no. 21); (2) DSCP's employees' expressions ofconcern over alleged involvement orinterference by DoD and DOJ in the interpretation, administration, and performance ofthe PV Contracts (id. at 10, interrogatory no. 25); (3) the identification ofall individuals involved in the CO's decision not to issue any CPARs for the PV2 Contract (id. at 14, interrogatory no. 53); and (4) communications and meetings between DoD and DOJ leading up to DSCP's decision not to complete any CPARs for the PV2 Contract (id. at 14-17, interrogatory

nos. 54, 60, 62, 68).

24. Other interrogatories broadly included subject matters (distribution fees, discounts and rebates) in the Superseding Indictment. Forexample, PWC's discovery requests seek (1) communications between DoD and DOJ regarding the "pricing, delivered cost, distribution fees, discounts, rebates, sheltered income, case breaking, or suppliers" (mot. to dismiss, tab 4 at 17, interrogatory no. 69); and (2) identification ofany investigation ofother PV Contractors by DoD and DOJ "regardingpricing, delivered cost, distribution fees, discounts, rebates, sheltered income, case breaking, or suppliers of

3 Atthe Board, PWC is represented by Vinson & Elkins LLP in Washington, DC.

8

### local market ready items, fresh fruits and vegetables, bakery items, or dairy products" (id. 

### at 21, interrogatory no. 91).

Recent Filings with the District Court and the Board

25. Believingthat the Board's decision supports theirposition, PWC's defense attorneys in the District Court filed a supplemental briefon 4 December2013 in support ofits 2012 motion to dismiss the indictment for prosecutorial misconduct (mot. to dismiss, tab 6). As reflected in its supplemental brief, PWC read the Board's 12 November 2013 decision onjurisdiction as strong support ofits argument that the prosecutors committed misconduct in pressuring DSCP COs to downgrade its PV Bridge Contract CPAR and to issue no CPARs 

### under the PV2 Contract (id. 

### at 2). PWC viewed the Board's decision onjurisdiction in the context of"dueprocess" violations in the criminal case (id. 

### at 5-7).

26. On 7 January 2014, DOJ moved the District Court seeking an expedited consideration ofits earlier motion to enjoin PWC from using civil discovery at the Board to gather evidence for the criminal case and to suppress any evidence so derived (mot. to dismiss, tab 7). Byway ofbackground, DOJ's initial motion to enjoin PWC from using civil discovery to gather evidence for the criminal case was filed in the District Court in June 2012. That motion stemmed from the deposition ofCO Ford in ASBCA No. 56022

- a case unrelated to the criminal or civil fraud cases pending before the District Court

- in March 2012. Contrary to the parties' prior agreement to stay clear ofthe civil and criminal fraud cases beforethe District Court, it was discovered that PWC's counsel at the Board was live-streaming CO Ford's deposition to PWC's criminal defense counsel. 

### It remains unclearwhetherPWC's defense counsel participated in the deposition electronically. See The Public Warehousing Company, ASBCA No. 56022, 13 BCA**~** 

### 35,201. In the Board's subsequentruling on certain questions posed but left unanswered by CO Ford at the deposition, the Boardprovidedthe following general ruling, among others, in its Discovery Order No. 1on 7 June 2012:

4. Given the criminal and civil fraud cases pending before the District Court in Atlanta, and given the prosecutorial misconduct case before that Court, any inquiry which encroaches or appear[s] to encroach on the issues raised in those cases, are unnecessary and counterproductive for purposes ofproceeding with ASBCA No. 56022.

27. In a letter dated 15 January 2014 to DSCP counsel ofrecord in the Board case, the United States Attorney for the Northern District ofGeorgia wrote that in reviewing PWC's discovery requests in the Board case she was concerned that PWC "will use the proceedings before the Armed Service[s] Board ofContractAppeals

...to further its aims in the criminal matter, and that further civil discovery in ASBCA

9

### No. 58078 will compromise the ongoing criminal prosecution." The U.S. Attorney asked DLA to seek a Rule 30 dismissal without prejudice in ASBCANo. 58078 "inlight ofthe ongoing criminal matter or, in the alternative, a stay pendingthe resolution ofthe criminal matter." (Mot. to dismiss, tab 1 at 1)

28. The U.S. Attorney's letterpoints out that PWC's complaint in the Board case
as well as the discovery recently filed showthat PWC seeks to litigate before the Board the same issues currentlypending in the District Court: PWC's motion to dismiss the indictment alleges that DOJ committed misconductbypressuringDSCP to change its evaluation ofPWC, and to refrain from performing CPARevaluations to preclude PWC from receiving distribution fees it might otherwise be entitled to under the contract PBDF clause; and PWC's complaint in ASBCA No. 58078 alleges the same facts in support of its breach claims. The U.S. Attorney points outthat PWC evenreferred to documents the government produced in the criminal case in its complaint filed at the Board. (Mot. to dismiss, tab 1at 4, 

### ,-r 13)

29. The U.S. Attorney's letterpoints out also that PWC's discovery in ASBCA No. 58078 further supports overlapping issues in the criminal case: PWC had filed a Motion to Compel Production ofCommunications Betweenthe Prosecution and DSCP/DLA in the criminal case arguing that the information is necessary to understand the internal and external influences experienced by DSCP contractingpersonnel in the administration ofthe PV Contracts; and PWC seeks the same discovery in ASBCA No. 58078. Since PWC's motion to compel is still pendingbefore the District Court, the U.S. Attorney asserts that "PWC's discovery requests effectively would circumventthe District Court's consideration ofsubstantially similar discovery requests." (Mot. to dismiss, tab 1at 4-5, 

### ,-r,-r 19, 21)

30. In addition to the pending motion to dismiss for prosecutorial misconduct case PWC filed in defense ofthe criminal case, the U.S. Attorneypoints out thatPWC also seeks to discover at the Board "the solicitation ofthe PV-11 contract, the costs ofthe PV Contracts, and the interpretation ofcontract terms related topricing, delivered costs, delivered fees, and discounts, [which] go to the heart ofthe fraud claims at issue in the criminal case." (Mot. to dismiss, tab 1at 6, 

### ,-r 26) The U.S. Attorney's letter states that in filing a supplemental briefin the District Court arguing that the Board decision on "contract andjurisdictional issues" supports its case onprosecutorial misconduct is further proofthat PWC is using civil proceedings to bolster its defenses in the pending criminal case (id., 

### ,-r 28).

31. The U.S. Attorney's letterrequests that the Board dismiss ASBCA No. 58078 pendingresolution ofthe criminal case based on (1) the "indefinite resolution" ofthe motions before the District Court (i.e., PWC's motion for prosecutorial misconduct and its motion to compel discovery, and DOJ's motion to enjoin PWC from using civil discovery at the Board to gather evidence for the criminal case and to suppress evidence

10

### so derived) and (2) "the inordinate length oftime that may be required to resolve the criminal matter as a whole" (mot. to dismiss, tab 1at 9,**~** 

### 45). In the alternative, the U.S. Attorney requests a stay ofdiscovery in ASBCANo. 58078 "pendingthe resolution of the criminal matter" (id. 

### at 10,**~** 

### 46).

32. Forwarding the U.S. Attorney's letter, DSCP on 17 January 2014 movedto dismiss ASBCA No. 58078 without prejudice pursuantto Rule 30, or in the alternative, to stay proceedings in ASBCA No. 58078 pending resolution ofthe criminal matter. Upon receipt ofDSCP's motion, the Boardby letter dated 23 January 2014 directed PWC's Board counsel to respond by 21 February 2014. Separately, the Board issued Discovery OrderNo. 1staying discovery in ASBCANo. 58078, "effective immediately," pending aruling on DSCP'spresent motion to dismiss.

DECISION

We address first PWC's opposition to DSCP's current motion to dismiss based on Rule 30 which PWCrefers to as DSCP's second motion to dismiss. PWC contends this second motion was strategicallyplanned "as part ofa schemeto delay the administration of justice"with successive motions (opp'n at 4, 5). PWC also contends that DSCP's current Rule 30 motion "is inextricably intertwined with the comity issue decided in the First Motion" (opp'n at 8).

We do not believe DSCP deliberately reserved its Rule 30 dismissal as apart ofits litigation strategy to take a second shot at delayingproceedings. Although DSCP could have moved for a Rule 30 dismissal initially, we believe it simply focused on other issues and arguments. In our first decision, we did not extensively discuss the comity issue for two reasons: First, as PWC observes, "DLA offered a less than compelling rendition of the comity argument" (opp'n at 8), stating simply that "the contracting officer should seekto avoid meddling in a matter before a United States District Court and avoid making a separate decision onwhether PWC committed fraud" (first mot. to dismiss, gov't 20 July 2012 reply to app. opp'n at 9; 

### PWC, 13 BCA**~** 

### 35,460 at 173,898). Second, contrary to the position itnow takes, in its oppositionto DSCP's first motion to dismiss, PWC took the position that DSCP's "entire comity argument on the so-called 'first-to-file' rule

...simply does not apply to these proceedings," because "comity becomes relevant only whenthe courts are presented with the same lawsuit, not merely

some overlapping issues" (first mot. to dismiss, app. opp'n at 15). PWC never argued what it now argues- that "Rule 30

...essentially enshrines the doctrine ofcomity" (opp'n at 8). It

### is more likely that DSCP's current motion to dismiss is in response to the reason the Board gave for denying DSCP's first motion to dismiss: "Wehave received no indication from the DOJ that for the CO to fulfill her contractual obligations under the terms ofthe PV2 Contract would interfere orprejudice the ongoing civil and criminal

cases before the District Court." 

### PWC, 13 BCA**~** 

### 35,460 at 173,898.

11We address next DSCP's motion to dismiss pursuantto Rule 30. The Constitution does notrequire a stay ofcivil proceedings pendingthe outcome ofcriminal proceedings. Afro-Lecon, Inc. v. UnitedStates, 820 F.2d 1198, 1202 (Fed. Cir. 1987); Securities and Exchange Commission v. DresserIndustries, Inc., 628 F.2d 1368, 1375 (D.C. Cir. 1980), cert. denied, 449 U.S. 993 (1980). Courts have long recognized, however, thatthere is "a clear-cut distinction betweenprivate interests in civil litigation and the public interest in a criminal prosecution, between a civil trial and a criminal trial, and betweenthe Federal Rules ofCivil Procedure and the Federal Rules ofCriminal Procedure." Campbellv. Eastland, 307 F.2d 478, 487 (5th Cir. 1962), cert. denied, 371 U.S. 955 (1963); United States v. Kordel, 397 U.S. 1, 12 n.27 (1970). In civil cases, for example, depositions may be taken as a matter ofright by notice withoutpermission ofthe court. FED. R. CIV. P. 30. In criminal cases, depositions can only be taken by order ofthe court, and on notice to all parties and under "exceptional situations." FED. R. CRIM. P. 15. Moreover, except
as permitted, the FED. R. CRIM. P. 16(a)(2) does not authorize the discovery ofreports, memoranda, or other internal government documents madeby an attorney for the government or other government agent in connection with investigating orprosecuting the case. Recognizing the rules governing criminal discovery are far more restrictive than thoseprovided in the Federal Rules ofCivil Procedure, "[a] litigant should not be allowed to make use ofthe liberal discovery procedures applicable to a civil suit as a dodge to avoid the restrictions on criminal discovery" in obtaining evidence that litigant would not otherwise be entitled to for use in a criminal suit. Campbell, 307 F.2d at 487. Courts are given discretion to stay civil proceedings, postpone civil discovery, or impose protective orders and conditions whenthe interests of justice sorequire. Dresser Industries, 628 F.2d at 1375. The exercise ofdiscretion mustbe made in the light ofthe particular circumstances ofthe case. /d.

As the situation now stands, there are parallel proceedings at the Board and at the District Court: At the Board, the central issue for resolution in ASBCANo. 58078 is whetherDSCP breached the PV2 Contract in refusing to issue CPARevaluations without which PWC's distribution fees could notbe adjusted as providedunderthe PBDF clause. Atthe District Court, in moving to dismiss the indictment on the basis ofprosecutorial misconduct, PWC has put in issue whether government attorneys and agents committed misconductbypressuring the CO and otherDSCP personnel to refrain from performing the contractually mandatedperformance evaluations (CPARs) to deprive additional distribution fees PWC arguably wouldreceive. Thus, eventhough PWC seeks different reliefatthe Board (breach damages) and at the District Court (dismissal ofthe indictment for prosecutorial misconduct), establishing the underlying cause or causes ofthe alleged

12breach and the alleged prosecutorial misconductwill necessarily involve the use ofthe

same witnesses and documents. 4

Recent discovery requests filed by PWC in ASBCANo. 58078 confirmthat its breach claim at the Board and its prosecutorial misconduct defense at the District Court

are inseparable: In ASBCANo. 58078, PWC requests information and documents relating to (1) communications between DoD agencies (DLA, DSCP, DCIS, OIG, CENTCOM) and DOJ (USAO, FBI) concerning the evaluations ofPWC, the CPAR process, orPBDFs; (2) DSCP's employees' expressions ofconcern over alleged involvement or interference byDoD and DOJ in the interpretation, administration and performance ofthe PV Contracts; (3) the identification ofall individuals involved in the CO's decision not to issue any CPARs for the PV2 Contract; and (4) communications and meetings between DoD and DOJ leading up to DSCP's decision notto complete any CPARs for the PV2 Contract (SOF -,r 23). Additionally, we are told that PWC has filed a Motionto Compel Production ofCommunications Betweenthe Prosecution and DSCP/DLA. With that motion still pending in the District Court, we agree with the U.S. Attorney that PWC's discovery requests at the Board, ifallowed, "effectivelywould circumvent the District Court's consideration ofsubstantially similar discovery requests." (SOF -,r 29)

That PWC's criminal defense attorneys would read the Board's decision on jurisdiction as support for "dueprocess" violations and file a supplemental briefto its motion to dismiss for prosecutorial misconduct in the District Court, further highlights the overlapping nature ofthe cases at the Board and at the District Court.
Leaving aside its prosecutorial misconduct defense in the District Court, PWC's recent discovery requests at the Boardbroadly inquired into areas relating topricing, delivered costs, distribution fees, discounts, rebates and local marketready item (LMRI) suppliers underthe PV Contracts (SOF -,r 24). These matters coincide with the matters that are the bases ofthe six-count indictment (SOF -,r-,r 8-12).
Concedingthey are interrelated, PWC argues that the District Court cases can proceed in that court focusing onthe legal impact ofthe conduct ofDOJprosecutors, and the Board case canproceed focusing on the legal impact ofthe conduct ofDLA contracting officials (opp'n at 14). We have consideredthe imposition ofprotective orders as a way forward in ASBCANo. 58078. Since DSCP attorneys are nottotally familiar with the prosecutors' case, we are persuadedthat itwould impose an impossible burden on DSCP attorneys to protect DOJ's interests in Boardproceedings. Furthermore, with PWC pushing the envelope ofpermissible discovery, and with DOJ and DSCP

4 With the criminal case taking center stage, we need not considerthe consequences of proceeding at the Board in relation to the District Court 

### qui tam case which was administratively closed (SOF -,r 13).

13trying to contain discovery at every tum, navigating the fine line between what goes on at the Board and what goes on in the District Court will be extraordinarily onerous, ifnot outright impossible. We believe the risks ofgoing forward under a protective order far outweigh any benefits that can be reaped.

In addition to potentially compromisingthe criminal case in the District Court based on overlapping issues, the U.S. Attorney requests that in light ofthe indefinite resolution ofvarious motions still pending in the District Court- PWC's motion for prosecutorial misconduct and its motion to compel discovery, and DOJ's motion to enjoin PWC from using civil discovery before the Board to gather evidence for the criminal case

- and the inordinate length oftime that may be required to resolve the criminal matter as a whole, that ASBCA No. 58078 be dismissed withoutprejudice pursuantto Board Rule 30, and in the alternative, discovery in ASBCANo. 58078 be stayed pending the resolution ofthe criminal matter (mot. to dismiss, tab 1at 9-10, ,-[,-[ 45, 46).

Board Rule 30 allows us to suspendproceedings for good cause. The Rule also states that the Board may, at its discretion dismiss appeals withoutprejudice where the suspension has continued ormay continue for an inordinate length oftime. Dismissal without prejudice under Rule 30 would be deemed to be withprejudice unless either party orthe Board acts within three years to reinstate the appeal.

The authority ofthe ASBCA Judge "is no different from that offederal trial courts which, by virtue oftheir case management authority, are given broad discretion to manage the litigation on their dockets." 

### Metadure Corp. v. 

### UnitedStates, 6 Cl. Ct. 61, 67 (1984); 

### Turbomach, ASBCANo. 30799, 87-2 BCA ,-[ 19,756 at 99,953 ("this Boardhas the inherentpower to control the discovery process in appeals before it").

The Fifth Circuit Court ofAppeals has said: "Administrativepolicy gives priority to the public interest in law enforcement. This seems so necessary and wise that a trial judge should give substantial weight to it in balancing the policy against the right ofa civil litigant to a reasonably prompt determination ofhis civil claims or liabilities." 

### Campbell, 307 F.2d at 487; 

### Palm Springs General Trading and Contracting Establishment, ASBCANo. 56290 

### etal., 10-1 BCA,-[ 34,406 at 169,867 (we dismissed the three appeals withoutprejudice because toproceedwith overlapping issues would interfere with the District Court case and would be counterproductive in terms oftime and effort). The criminal case in the District Court does not end with obtaining the indictment more than four years ago orthe exchange ofover27 million pages of documents (opp'n at 2). We know there are pending motions before the court covering substantially similar issues before the Board. And, from where we sit, we can only

assume that the criminal case is proceeding to trial. Moreover, the speed ofresolution of the criminal case is entirely beyond our control. This factor also weighs in favor of dismissing ASBCANo. 58078 withoutprejudice. 

### WEDJ/Three C's, Inc., ASBCA

14

### Nos. 53747, 53756, 05-2 BCA**~** 

### 33,070 at 163,898 (Rule 30 dismissal warranted when

course ofevents not within the Board's control and may continue for an indefinite length oftime.).

Given the publicpolicy granting priority to the public interest in law enforcement, the overlapping nature ofthe issues in ASBCANo. 58078 and those in the criminal case in the District Court and the potential for compromising DOJ's criminal prosecution and possibly interfering with the District Court's rulings and decisions in being required to go forward, we conclude that DOJ and DSCP have made out a clear case for dismissal without prejudice under Rule 30.

CONCLUSION

Forthe reasons stated, ASBCA No. 58078 is dismissed without prejudicepursuant to Rule 30. Eitherparty has three years from the date ofthis decision to move to reinstate this appeal or this dismissal will be deemed to be with prejudice.

Dated: 10 April2014

.,



### Administrative Judge Armed Services Board ofContractAppeals

I concur I concur

# ~~~**~KLEFORD-** Administrative Judge Acting Chairman Armed Services Board ofContractAppeals

15 Administrative Judge Vice Chairman Armed Services Board ofContractAppeals 

# •I certify that the foregoing is a true copy ofthe Order ofDismissal ofthe Armed Services Board ofContractAppeals in ASBCANo. 58078, Appeal ofPublic Warehousing CompanyK.S.C., rendered in conformance with the Board's Charter.

Dated:

16 JEFFREYD. GARDIN Recorder, Armed Services Board ofContract Appeals