ARMED SERVICES BOARD OF CONTRACT APPEALS 

Appeals of -- ) 

) 

ABS Development Corporation ) 

) 

Under Contract No. W912GB-10-C-0047 ) 

APPEARANCES FOR THE APPELLANT: 

APPEARANCES FOR THE GOVERNMENT: 

ASBCA Nos. 60022, 60023 

Thomas R. Krider, Esq. 

Howard W. Roth III, Esq. 

Ashley J. Sherwood, Esq. 

Oles Morrison Rinker & Baker, LLP 

Seattle, WA 

Thomas H. Gourlay, Jr., Esq. 

Engineer Chief Trial Attorney 

Brett R. Howard, Esq. 

Paul Cheverie, Esq. 

Nancy van Noortwijk-Sommer, Esq. 

Engineer Trial Attorneys 

U.S. Army Engineer District, Europe 

OPINION BY ADMINISTRATIVE JUDGE MCILMAIL ON THE 

GOVERNMENT'S MOTION TO AMEND ITS ANSWERS 

Introduction 

The government seeks to amend its answers in ASBCA Nos. 60022 and 60023 

to assert the defense that the contract referenced above is void ab initio, and, in 

ASBCA No. 60023, to assert the contention that it is not responsible for the sovereign 

acts of the Government of Israel. We allow the amendments. 

Void ab initio 

In ASBCA Nos. 60022 and 60023, the government wants to amend its answers 

to assert allegations that the contract referenced above "was obtained by and is tainted 

by fraud, and hence is void ab initio and [appellant] cannot recover on its claims" 

(ASBCA No. 60022 (60022), amended answer at 1-3, iiiI 55-61, ASBCA No. 60023 

(60023), amended answer at 1-3, irir 5-11 (italics in originals)). Appellant, citing 

41 U.S.C. § 7103(a)(5), Contract Disputes Act, and Supply & Service Team GmbH, 

ASBCA No. 59630, 17-1 BCA iI 36,678, says that we do not possess jurisdiction to 

entertain such a defense here because no third party has made factual determinations 

regarding any alleged fraud (60022, app. opp'n at 4-7; 60023, app. opp'n at 4). We 
disagree that we need any third-party determination here; we possess jurisdiction to 

determine for ourselves whether a contract is void ab initio because of fraud. See 

International Oil Trading Company, ASBCA No. 57491 et al., 13 BCA ~ 35,393 at 

173,658 (bribery and fraud; discussing 41 U.S.C. § 7103); Servicios y Obras Isetan 

S.L., ASBCA No. 57584, 13 BCA ~ 35,279 at 173,162 (fraud in the inducement). 

Supply & Service Team does not require a contrary result, that appeal did not involve 

whether a contract was void ab initio. 

Appellant also cites Laguna Construction Company v. Carter, 828 F.3d 1364 

(Fed. Cir. 2016), but that opinion also, does not require a contrary result here. In 

Laguna the court recited the rule that "[ c ]ertain fraud-related claims are outside of the 

Board'sjurisdiction ... [t]hese include claims relating to 41 U.S.C. § 7103 (formerly 

41 U.S.C. § 604), 28 U.S.C. § 2514 (Special Plea in Fraud), and 31 U.S.C. §§ 3729-31 

(False Claims Act)." Id. at 1368 (emphasis added, internal citations omitted). Whether 

a contract is void ab initio is none of those. 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, 15-1BCA~35,830 at 175,198 (contract obtained 

through bribery void ab initio)), and whether (as in Laguna) the government is asserting 

the type of fraud claim that we do not possess jurisdiction to entertain. 

For these reasons, we possess jurisdiction to entertain the government's proposed 

void ab initio amendments; therefore, our jurisdiction is no bar to amendment. Appellant 

also says that, assuming we have jurisdiction, the amendments should not be allowed 

because, it says, there is no fraud (60022, app. opp'n at 8; 60023, app. opp'n at 4). 

However, that is a merits issue for a hearing. 

Appellant also says that, at this point amendment would unduly prejudice it 

(60022, app. opp'n at 11-13; 60023, app. opp'n at 4-5). We permit amendment upon 

conditions fair to both parties, Board Rule 6( d), and see no unfairness in allowing 

amendment here. We are not on the eve of trial (scheduled for April 10, 2018), and the 

proposed amendment concerns matters such as what appellant's president said at a 

deposition held only a few months ago regarding whether appellant "intentionally 

induced the US Government to award the contract to [appellant] even though they had no 

intention of performing the contract" (60022, amended answer at 2, ~ 58; 60023 amended 

answer at 2, ~ 8). Presumably, appellant is already aware of the facts that bear upon that 

issue. We allow the proposed amendments. 

Sovereign Acts of a Foreign Government 

In ASBCA No. 60023, the government wants to amend its answer to include 

the following contention: 

2 
The U.S. government is not responsible for the sovereign 

acts of a foreign nation. Control over base access on this 

project was the sole responsibility of the Government of 

Israel. A warranty covering the actions of a third party 

cannot be held to exist in a government contract unless the 

terms of the alleged warranty are unmistakable. The 

contract does not contain an express or implied warranty 

regarding the ability of [appellant] to receive approval by 

the Government of Israel for base access for Turkish 

workers. 

(60023, amended answer at 1, ~ 4) Appellant's opposition is based on its view that 

those contentions are not (using appellant's term) "viable" (60023, app. opp'n at 5, 9). 

That is, appellant contends that, "[g]iven that the contract does contain the implied 

warranty the Government's proffered affirmative defense seeks to avoid, the 

Government's motion to amend should be denied" (id. at 9). That, too, is a merits 

issue, either for a hearing, post-hearing briefing, or both. 

Appellant also says that allowing the government's "foreign sovereign acts" 

contention would cause it undue prejudice (see 60023, app. opp'n at 5). Again we are 

not on the eve of trial; moreover, the government's contentions appear to consist 

almost entirely of questions of law. In any event, appellant points to no specific 

prejudice. We see no unfairness in allowing the amendment, and allow it. 

Conclusion · 

The proposed amendments to the answers in these appeals are allowed. 

Dated: 30 August 2017 

(Signatures continued) 

3 

~~ Administrative Judge 

Armed Services Board 

of Contract Appeals 
I concur 

RICHARD SHACKLEFORD 

Administrative Judge 

Acting Chairman 

Armed Services Board 

of Contract Appeals 

I concur 

J. REiffPROUTY 

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. 60022, 60023, Appeals of 

ABS Development Corporation, rendered in conformance with the Board's Charter. 

Dated: 

4 

JEFFREY D. GARDIN 

Recorder, Armed Services 

Board of Contract Appeals