Court Opinion

ID: 4260238
Source: CourtListenerOpinion
Date Created: 2018-04-02 18:00:07.209302+00
Date Added: 2024-06-11T14:28:51.527543
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeals of --                                 )
                                              )
PROTEC GmbH                                   )      ASBCA Nos. 61161, 61162, 61185 1
                                              )
Under Contract Nos. W912CM-14-D-0007 )
                    W912CM-14-P-0008 )

APPEARANCE FOR THE APPELLANT:                        Paul D. Reinsdorf, Esq.
                                                      Frankfurt, Germany

APPEARANCES FOR THE GOVERNMENT:                      Raymond M. Saunders, Esq.
                                                      Army Chief Trial Attorney
                                                     Dana J. Chase, Esq.
                                                      Trial Attorney

                  OPINION BY ADMINISTRATIVE JUDGE SWEET
                 ON THE GOVERNMENT'S MOTIONS TO DISMISS

       The Regional Contracting Office, Weisbaden (government) moves to dismiss these
appeals for lack of jurisdiction. The government argues that the contracting officer's (CO's)
final decisions (COFDs) were invalid-and thus we lack jurisdiction-due to the fact that
the COFDs' basis for denying the claims purportedly was a suspicion of fraud. Because a
suspicion of fraud was not the basis for the COFDs-let alone its only basis-we deny the
motions.

        STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTIONS

I. ASBCA No. 61161 and 61162

         1. On 28 September 2014, the government awarded Contract
No. W912CM-14-D-0007 to appellant PROTEC GmbH (PROTEC), for the maintenance,
inspection, and repair of fire alarm, fire suppression, and evacuation systems at U.S. Army
Garrison, Wiesbaden (R4, tabs 1, 4-8).

      2. On 26 October 2015, the CO posted an initial evaluation on the Contractor
Performance Assessment Reporting System (CPARS), which rated PROTEC as

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    ASBCA Nos. 61161 and 61162 are consolidated. However, ASBCA No. 61185 is a
       separate appeal. Nevertheless, because the issues raised in the motions to
       dismiss are substantially similar, we have decided to issue one decision for all
       three appeals.
unsatisfactory in the areas of quality, schedule, management, and regulatory compliance
(R4, tab 112).

         3. The government also refused to pay some PROTEC invoices (R4, tab 115).

        4. On 17 September 2016, PROTEC submitted a certified claim regarding the CPARS
evaluation (R4, tab 114 ). Shortly thereafter, on 23 September 2016, PROTEC submitted a
certified claim in the amount of€143,615.92 for the unpaid invoices (R4, tab 115).

        5. On 6 February 2017, the CO issued a COFD addressing the CPARS evaluation
and unpaid invoice claims together (R4, tab 122 at 7-8). The COFD corrected one error
in the CPARS evaluation, 2 but otherwise denied the claims (id. at 8). The COFD rejected
the claims for several reasons (id. at 8-18). First, PROTEC purportedly failed to maintain
required professional certifications (id. at 8, I 0). Second, PROTEC purportedly
submitted untimely maintenance schedules and condition reports, and failed to comply
with schedules (id. at 11-14 ). As a result, the government could not verify whether
PROTEC actually performed the invoiced work (id. at 12). Third, "[o]n the occasions the
COR could verify ProTec technicians arrived at a building to attempt to perform some of
the [testing] work, it was only partially attempted" (id. at 14). Fourth, PROTEC
allegedly failed to provide a proper quality control program, properly maintain and
replace limited life span equipment, and bring the child development center fire detection
system online (id. at 16). As a result, the COFD concluded that the CPARS evaluation
was accurate, and that "the Government cannot pay invoices when the contract called for
services that, even if attempted, did not comply with the [performance work statement]
and certification requirements, causing any work performed to be of no value to the
Government" (id. at 18). The COFD did not state that it was denying the claim based
upon a suspicion of fraud, or even mention fraud or false statements (id. at 1-18).

         6. PROTEC timely appealed the COFD to the Board.

II. ASBCA No. 61185

       7. On 20 December 2013, the government awarded Contract No. W912CM-14-P-0008
to appellant PROTEC, for the maintenance and repair of electronic doors, gates, scanners,
sauna compact system and electric/hydraulic barriers, and bollards also at U.S. Army
Garrison, Wiesbaden (R4, tab 3).

         8. The government refused to pay some PROTEC invoices (R4, tab 119).

2
    In particular, the original CPARS evaluation incorrectly indicated that the
          termination type was "default." The COFD corrected that evaluation to indicate
          that the termination type was "none." (R4, tab 122 at 7-8)

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     9. PROTEC then submitted a certified claim on 3 1 October 2016, in the
amount of€141,827.88 for the unpaid invoices (R4, tab 198).

        10. On 28 February 2017, the CO issued a COFD denying the claim. The COFD
denied the claim because PROTEC failed to: ( 1) provide timely schedules, condition
reports, and documentation for emergency; (2) follow such documents; and (3) provide
such documentation in an electronic format or in English. As a result, the government
purportedly was unable to inspect the work in order to verify the acceptability of
PROTEC's performance. Further, the COFD stated that PROTEC failed to secure
approvals for repair work in excess of €50. The COFD did not state that it was denying
the claim based upon a suspicion of fraud, or even mention fraud or false statements.
(R4, tab 199 at 7-9)

       11. PROTEC timely appealed the COFD to the Board.

III. Facts Common to all Appeals

        12. After performance began on the contracts, but before the COFDs, the CO's
representative (COR) sent the CO an email raising concerns that, in connection with the
contracts, PROTECH was fraudulently: ( 1) submitting invoices for work that it had not
performed; (2) utilizing unauthorized and unqualified personnel, and misrepresenting
qualified personnel performed the work; and (3) submitting documents supporting invoices,
which contained false information (R4, tab 25; gov't mot., ex. 1, 15).

        13. The COR also reported his suspicions to the United States Army Criminal
Investigation Command (CID) (gov't mot., ex. 1, 15). CID compiled a Target
Analysis File, which it subsequently forwarded to the CID Major Procurement Fraud
Unit (id., 11 5, 8). The criminal investigation regarding the alleged fraud is on-going
(id., 1 15).

                                      DECISION

       The government contends that the CO did not have authority to issue the final
decision because the CO knew that appellant was under investigation for fraud at the time
the COFD was issued. Therefore, the government argues that the COFD is a nullity and
the Board does not have jurisdiction over the appeal. (Gov't resp. at 2) Appellant
counters that the COFD was grounded exclusively in disputed contract issues and thus,
the Board may properly exercise jurisdiction (app. reply br. at 1, 5). We agree.

       We possess jurisdiction because the COFDs were not based upon-let alone
solely based upon-a suspicion of fraud, so they were valid COFDs. A CO's authority
"to decide or resolve claims does not extend to ... [t]he settlement, compromise, payment
or adjustment of any claim involving fraud." Federal Acquisition Regulation (FAR)

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33.2IO(b). Rather, "[i]fthe contractor is unable to support any part of the claim and
there is evidence that the inability is attributable to misrepresentation of fact or to fraud
on the part of the contractor, the contracting officer shall refer the matter to the agency
official responsible for investigating fraud." FAR 33 .209. As a result, the United States
Court of Federal Claims and the Civilian Board of Contract Appeals (CBCA) have held
that a COFD is not valid if it is based upon a suspicion of fraud. Medina Cons tr. Ltd. v.
United States, 43 Fed. Cl. 537, 555-56 (1999); Savannah River Nuclear Solutions, LLC
v. Department ofEnergy, CBCA No. 5287, 17-1 BCA ,i 36,749. Moreover, because a
valid COFD is a prerequisite for CDA jurisdiction, Medina Construction and Savannah
River hold that there is no CDA jurisdiction when a COFD is invalid due to it being
based upon a suspicion of fraud. Id. 3

       However, a COFD is only invalid if it is based solely upon a suspicion of fraud.
Daff v. United States, 78 F.3d 1566, 1572 (Fed. Cir. 1996). In Daff, a COFD offered
two reasons for sustaining a default termination: ( 1) the hardware was defective
because the personnel who worked on the contract were not certified; and (2) there
was intentional falsification of the certification records. Id. Daffheld that that was a
valid COFD for purposes of establishing Contract Disputes Act (CDA) jurisdiction
because, even though the second reason constituted a suspicion of fraud, the first
reason was a failure to perform according to the contract's terms, which was a
rationale the CO was authorized to assert. Id.

       Here, the COFDs were not even based upon a suspicion of fraud. Unlike in
Daff, nothing in the COFDs stated that there was intentional falsification, or any other
suspicion of fraud. (SOF ,i,i 5, 10) At most, the COFDs could be read as citing facts
similar to those in the report relied upon in the CID report (SOF ,i,i 5, 10, 12).
However, "[t]he mere fact that there is an ongoing criminal investigation which
encompasses events which were the basis for the contracting officer's decision being
appealed is not enough to divest us of jurisdiction." Fleischzentrale Sudwest GmbH,
ASBCA No. 37273, 89-3 BCA ,i 21,956, at 110,444. In any event, even ifthe COFDs
could be read as expressing a suspicion of fraud, the COFDs also relied upon other
rationales that the CO was authorized to assert, such as a failure to perform due to
improper certification in ASBCA Nos. 61161, and 61162 and PROTEC purportedly
preventing the government from inspecting PROTEC's work by failing to provide

3   The government relies upon Savannah River and Medina. In Savannah River, the
        CBCA upheld a CO's determination that he lacked authority to issue a COFD
        due to suspected fraud on behalf of the contractor. In Medina, the court held
        that the COFD, which denied a claim based upon fraud, was unauthorized and
        invalid. For purposes of this motion only, we assume- without deciding-that
        Medina Construction and Savannah River are persuasive because, based on the
        facts under these appeals, there was a valid COFD, even under Medina
        Construction and Savannah River.

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timely documentation in ASBCA No. 61185 (SOF 11 5, 10). Because we found that the
COFDs were based upon rationales the CO was authorized to assert (id.), the COFDs
were valid and each establishes CDAjurisdiction. Dajf, 78 F.3d at 1572.

                                    CONCLUSION

      We possess jurisdiction over these appeals. Therefore, the government's
motions to dismiss are denied.

       Dated: 20 March 2018

                                                  Administrative Judge
                                                  Armed Services Board
                                                  of Contract Appeals

 RICHARD SHACKLEFORD                              OWEN C. WILSON
 Administrative Judge                             Administrative Judge
 Acting Chairman                                  Vice Chairman
 Armed Services Board                             Armed Services Board
 of Contract Appeals                              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. 61161, 61162, 61185,
Appeals of PROTEC GmbH, rendered in conformance with the Board's Charter.

      Dated:

                                                  JEFFREY D. GARDIN
                                                  Recorder, Armed Services
                                                  Board of Contract Appeals

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