Court Opinion

ID: 4213562
Source: CourtListenerOpinion
Date Created: 2017-10-20 20:03:53.501517+00
Date Added: 2024-06-11T14:41:43.795014
License: Public Domain

In the United States Court of Federal Claims
                                Nos. 16-446C, 16-447C, 16-448C
                                  (Filed: October 20, 2017)1

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                            *                                   Summary Judgment; Contract
OMRAN HOLDING GROUP, INC.,  *                                   Disputes Act, 41 U.S.C. § 7101
                            *                                   (2012); 22 U.S.C. § 2363; 31
          Plaintiff,        *                                   C.F.R. § 281.8; Exchange Rates;
                            *                                   Currency Conversion.
          v.                *
                            *
THE UNITED STATES,          *
                            *
          Defendant.        *
                            *
                            *
*****************************

      Dirk Haire and Alexa Santora, Fox Rothschild LLP, 1030 15th Street, NW, Suite 380 East,
Washington, D.C. 20005, for Plaintiff.

        Chad A. Readler, Robert E. Kirschman, Jr., Douglas K. Mickle, and P. Davis Oliver, U.S.
Department of Justice, Civil Division, Commercial Litigation Branch, P.O. Box 480, Ben Franklin
Station, Washington, D.C. 20044, for Defendant. James Stephens, United States Army Corps of
Engineers, P.O. Box 2250, Winchester, VA 22604, Of Counsel.
           _________________________________________________________

                                   OPINION AND ORDER
           _________________________________________________________

WILLIAMS, Judge.

       In this unusual case, Plaintiff claims that the Government used a depreciated exchange rate
in paying it under three contracts Plaintiff performed in Afghanistan. However, in actuality, the
Government used an exchange rate that resulted in higher payments to Plaintiff than the regulations
permitted.

1
       The Court issued this Opinion under seal on September 28, 2017. The parties did not
provide any redactions. Accordingly, the Court publishes this Opinion.
        These three Contract Disputes Act (“CDA”) cases come before the Court on the parties’
cross-motions for summary judgment. 41 U.S.C. § 7101 et seq. (2012).2 Omran seeks damages
totaling $1,418,925.22. Because there are no genuine issues of material fact and Plaintiff has failed
to establish underpayment, Plaintiff’s motion for summary judgment is denied, and Defendant’s
cross-motion for summary judgment is granted.

                                           Background
The Parties and the Contracts
        Plaintiff, Omran Holding Group, Inc. (“Omran”), is an Afghan construction and
engineering firm with its headquarters and principal place of business in Kabul, Afghanistan. The
firm has provided, among other things, services in Afghanistan to the United States Government
and its agents and agencies.
       During 2012-13, the United States Army Corps of Engineers (“USACE”) awarded three
contracts to Plaintiff (“the Contracts”)- - the first on December 12, 2012, for the design and
construction of the 203rd Corps Garrison in Gardez District, Paktiya Province, Afghanistan, the
second on December 17, 2012, for the design and construction of the Afghan Air Force Forward
Area Arming and Refueling Points in Gardez District, Afghanistan, and the third on March 12,
2013, for the adaptation and construction of a training center and support facilities for the Afghan
National Army near Camp Hero in Kandahar Province, Afghanistan. Upon performance, USACE
was obligated to pay Omran in Afghani (“AFN”), the local currency of Afghanistan.
       Each of these Contracts included Contract Clause 952.232-0002 – Notification of Payment
in Local Currency (Afghanistan) (Dec 2011), (“the Local Currency Clause”), which provides:
       (a) Pursuant to the authority of USCENTCOM FRAGO’s 09-1567 and 10-143 this
       contract will be awarded in Afghani (local currency) if awarded to a host nation
       vendor. The contractor will receive payment in local currency via Electronic Funds
       Transfer to local (Afghan) banking institution. Contracts/purchase orders shall not
       be awarded to host nation vendors (Afghan) who do not bank locally. If awarded
       to other than a host nation vendor, the contract will be awarded in U.S. Dollars.
       The currency exchange rate will be determined at the official exchange rate posted
       by the local DoD Finance office on the date of the payment in accordance with the
       Department of Defense Financial Management Regulation.
Am. Compl. 446 Ex. 5, at 2.

Omran’s Appeal to the Contracting Officer
        On March 26, 2015, Omran submitted a certified claim to the USACE Contracting Officer,
alleging underpayment on the three Contracts due to USACE’s use of an incorrect exchange rate
in converting U.S. dollars to AFN. Omran argued that the Contract language was ambiguous
regarding the exchange rate and the determination of which facility constituted the “local DoD
Finance office” within the meaning of the Local Currency Clause. Omran argued that USACE

2
        On November 16, 2016, the Court consolidated Cases 16-446C, 16-447C, and 16-448C for
all purposes. See ECF Docket No. 21.

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should have paid it using the Afghanistan National Bank rate instead of the less favorable rate set
by the Treasury Department’s International Treasury Service’s (“ITS”) online payments portal,
ITS.gov.
      In his May 16, 2015 final decision, the Contracting Officer denied Omran’s claim for
underpayment, stating:
       The contractor asserts that the Government did not set the exchange rate at the
       “local DoD Finance office” but rather relied on an exchange rate established by the
       U.S. Treasury’s International Treasury Services (“ITS”) website. There is no “local
       DoD Finance office” in GIRoA. For the purposes of this contract, the “local DoD
       Finance office” is located at the U.S. Army Corps’ of Engineers’ Finance Center
       (“UFC”), located in Millington, Tennessee. The UFC notifies the Treasury ITS of
       the dollar amount of the Pay Estimate and the ITS then makes payment in Afghani
       currency to the designated account. The rates are set by Treasury, not USACE.
       The exchange rate of the National Bank of Afghanistan is not a factor in this
       process.
Am. Compl. 446 Ex. 5, at 3; Am. Compl. 447 Ex. 5, at 3; Am. Compl. 448 Ex. 5, at 3.

                                            Discussion
Jurisdiction and Legal Standards
       This Court has jurisdiction over this action pursuant to the Tucker Act, 28 U.S.C. §
1491(a)(2) and the Contract Disputes Act (“CDA”), 41 U.S.C. § 7104(b). The Tucker Act grants
the Court jurisdiction over:
       [A]ny claim against the United States founded either upon the Constitution, or any
       Act of Congress or any regulation of an executive department, or upon any express
       or implied contract with the United States, or for liquidated or unliquidated
       damages in cases not sounding in tort.
28 U.S.C. § 1491(a)(1). However, the Tucker Act is not money-mandating, but rather is a
jurisdictional statute. United States v. Testan, 424 U.S. 392, 398 (1976). To establish jurisdiction,
a plaintiff must seek money damages under a source of substantive law. “[T]he claimant must
demonstrate that the source of substantive law he relies upon ‘can fairly be interpreted as
mandating compensation by the Federal Government for the damages sustained.’” United States
v. Mitchell, 463 U.S. 206, 216-17 (1983) (quoting Testan, 424 U.S. at 400); see Jan’s Helicopter
Serv., Inc. v. Fed. Aviation Admin., 525 F.3d 1299, 1306 (Fed. Cir. 2008) (“[A] plaintiff must
identify a separate source of substantive law that creates the right to money damages.”) (internal
citation and quotation marks omitted).
        Because the CDA is a money-mandating statute that applies to contracts made by executive
agencies, this Court possesses jurisdiction to consider claims arising under the CDA. See G.E.
Boggs & Assocs., Inc. v. Roskens, 969 F.2d 1023, 1026 (Fed. Cir. 1992); Cal. Dept’t of Water
Res. v. United States, 128 Fed. Cl. 603, 610 (2016) (citing Palafox St. Assocs., L.P. v. United
States, 114 Fed. Cl. 773, 780 (2014)). Under the CDA, this Court reviews the contracting officer’s
decision de novo. 41 U.S.C. §7104(b)(4) (2016); Timber Prods. Co. v. United States, 103 Fed. Cl.
3
225, 241 (2011). “[B]ecause the court’s review is de novo, the contracting officer’s decision is
afforded no deference.” Baldi Bros., Inc. v. United States, No. 15-1300C, 2017 WL 4052368, at
*2 (Fed. Cl. Sept. 13, 2017). The findings of fact in the contracting officer’s decision “are not
binding in any subsequent court proceeding,” and “are not entitled to any deference.” Wilner v.
United States, 24 F.3d 1397, 1401 (Fed. Cir. 1994).
        When interpreting a contract provision in which the United States is a party, the court
“appl[ies] general rules of contract interpretation.” Precision Pine & Timber, Inc. v. United States,
596 F.3d 817, 824 (Fed. Cir. 2010) (citing Lockheed Martin IR Imaging Sys., Inc. v. West, 108
F.3d 319, 322 (Fed. Cir. 1997)). The terms of the contract “are given their plain and ordinary
meaning unless the provisions are ambiguous.” Id. (citing Alaska Lumber & Pulp v. Madigan, 2
F.3d 389, 392 (Fed. Cir. 1993)). A contract term is ambiguous when “it is susceptible of two
different yet reasonable interpretations, each of which is consistent with the contract language and
with the other provisions of the contract.” Lockheed Martin, 108 F.3d at 322. “[A]n interpretation
that gives a reasonable meaning to all parts of the contract will be preferred to one that leaves
portions of the contract meaningless.” Fortec Constructors v. United States, 760 F.2d 1288, 1292
(Fed.Cir. 1985). “Issues involving contract interpretation often are resolved through summary
judgment, because contract interpretation generally is a matter of law.” Northrop Grumman
Computing Sys., Inc. v. United States, 93 Fed. Cl. 144, 148 (2010) (citing NVT Techs., Inc. v.
United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004)).

The Proper Exchange Rate
The Government Paid Omran Using a Higher Exchange Rate Than Required
        At issue in this consolidated case is what exchange rate Plaintiff should have received
under the Local Currency Clause. Clause 952.232-0002(a) provides: “The currency exchange
rate will be determined at the official exchange rate posted by the local DoD Finance office on the
date of the payment in accordance with the Department of Defense Financial Management
Regulation.” This clause does not elaborate on what either the “official exchange rate” or the
“local DoD Finance office” is.3
       The Government paid Omran using the ITS.gov system - - the online payments portal
referenced in the DoD Financial Management Regulation and the Department of Treasury’s
Financial Manual. Department of Defense Financial Management Regulation 7000.14-R (DoD
FMR), Vol. 5, Ch. 12, ¶ 120104, “Use of Foreign Currency,” provides:
       When a foreign currency payment needs to be made, the preferred method of
       payment is via the International Treasury Services, ITS.gov, the Department of the
       Treasury’s . . . comprehensive international payment and collection system.
Dep’t. of Defense, Office of the Undersecretary of Def. (Comptroller), Financial Management
Regulation 7000.14-R, Vol. 5, Ch. 12, ¶ 120104 (2011). Chapter 3000 of the Department of the
Treasury’s Financial Manual describes the system as follows:

3
        The Contracting Officer determined that the USACE Finance Center in Millington,
Tennessee was the “local DoD Finance Office,” under the Clause, but neither party has espoused
this position.

                                                 4
       ITS.gov enables federal agencies to issue U.S. dollar and foreign currency
       payments electronically using the [Automated Clearing House] network, Fedwire,
       and the Society for Worldwide Interbank Telecommunication (SWIFT) to nearly
       200 foreign countries.       Additionally, ITS.gov enables agencies to issue
       international U.S. dollar wire transfer payments without a corresponding U.S.
       financial institution. Agencies should use ITS.gov to make foreign benefit, payroll,
       vendor, and miscellaneous payments electronically.
Treas. Fin. Man., Ch. 3000, § 30115.10e (emphasis added).
        Walker Woods, the Department of Treasury, Bureau of the Fiscal Service’s ITS.gov
Operations Supervisor and Project Manager, testified that ITS.gov provides multiple exchange rate
options to the federal agencies it serves, that those agencies are free to choose whichever rates best
suit their needs, and that the Bureau of Fiscal Service and ITS.gov do not “approve, deny, or
otherwise mandate a participating federal agency’s use of an ITS.gov established rate structure.”
Woods Decl. ¶¶ 1-6 (June 28, 2017). As relevant here, ITS.gov provides a 3-day or 5-day rate to
be used at the agency’s option.
        Kevin Heath, a Disbursing Officer at the USACE Finance Center, testified that USACE
elected to use the ITS.gov 3-day rate to pay Omran after several meetings with the Bureau of Fiscal
Service as that rate best suited USACE’s needs. Heath Decl. ¶ 6 (June 28, 2017). Russell T.
Hacecky, the U.S. Army’s ITS.gov Program Manager, testified that between June 2013 and
October 2015, (the period covering the submission of the first and last invoices under the three
Contracts) Army personnel “were only authorized to use the Department of the Treasury’s ITS.gov
5-day exchange rate for payment and collection of Afghan currency,” and that “the ONLY rate
available for viewing [and use] is the 5 day rate for any Army personnel in the Middle East,
including any Army finance office in Afghanistan, Iraq and Kuwait.” Hacecky Decl. ¶¶ 2, 6-7
(emphasis in original). In addition, the 5-day rate was the rate that was posted by the local DoD
Finance office, the 159th Financial Management Support Division at Bagram Airfield.
        Nonetheless, in an odd, unexplained turn of events, the Army Corps of Engineers did not
pay Omran using the 5-day rate and instead paid Omran at a higher 3-day rate. Plaintiff argues
that Defendant has not explained how it was able to use the 3-day rate if the 5-day rate was the
“only” one it was supposed to be using. This is true, but it does not help Plaintiff.4 Although, as
the Government acknowledges, the 3-day rate available on ITS.gov was not the “official” rate for
the purposes of Clause 952.232-0002, this rate was nevertheless more favorable to Omran than the
5-day rate. Plaintiff does not deny that the 3-day rate was higher than the 5-day rate, but instead
injects yet another rate into this controversy, arguing that a quarterly rate published by the Bureau
of Fiscal Service should be interpreted as the “official rate” for purposes of Clause 952.232-0002.
        However, the quarterly Bureau of Fiscal Service rates are to be used for intra-governmental
reporting, not conversion and payment through ITS.gov. As stated on the Bureau of Fiscal
Service’s website, “[t]his quarterly report reflects exchange rates at which the U.S. government

4
        The only explanation is Mr. Heath’s testimony in his second declaration that USACE had
several meetings with the Bureau of Fiscal Service, and as a result of those meetings, USCAE was
given the option to use the 3-day rate, which it chose to do because it was in the agency’s best
interest without elaboration. Heath Decl. ¶ 6 (June 28, 2017).

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can acquire foreign currencies for official expenditures as reported by disbursing officers for each
post on the last business day of the month prior to the date of the published report.” Pl.’s Mot.
Summ. J. 10. Plaintiff confuses currency “conversion” or “disbursement” operations performed
by the Government with the “acquisition” or “purchase” of foreign currency. The DoD FMR, the
Treasury Financial Manual, and the testimony of a USACE Disbursing Officer and an ITS.gov
Operations Supervisor and Project Manager establish that the “acquisition rate” cited by Plaintiff
is not appropriate under the Contracts. Section G, Paragraph 120402 of Volume 5, Chapter 12 of
the DoD FMR provides “[w]here there is [a Military Banking Facility] in-country, [Disbursing
Officers] purchase foreign currency for official use at the official rate.” As Mr. Heath, a USACE
Disbursing Officer, testified, this “official rate” refers to USACE’s purchase of only three
currencies for its Limited Depository Accounts: Won, Yen, and Euro. “For all other currencies,
including Afghani, USACE uses ITS.gov to convert U.S. dollar payments . . . [and] does not
purchase currency.” Heath Decl. ¶ 7 (June 28, 2017).
        Plaintiff further argues that the Contracts required the Government to make payments
according to an official “posted” exchange rate and that USACE violated that requirement by
utilizing an exchange rate not available to the public. In support of this argument, Omran asserts
that, as a division of the Treasury, ITS.gov does not fall within the administrative ambit of the
Department of Defense, and therefore, “logically cannot be deemed a ‘local DoD Finance office.’”
Additionally, Plaintiff contends that the ITS.gov rates lack the requisite degree of publicity to be
“posted,” because the ITS.gov website can be accessed only by select Government employees with
the requisite login credentials, and that the rates it posts “are not publicized, advertised, announced
or otherwise made available to the public . . . .” Pl.’s Mot. Summ. J. 15.
       However, the record establishes that the 159th Financial Management Support Detachment
(FMSD) was the “local DoD Finance office” in Afghanistan within the meaning of the DoD FMR
and Contract Clause 952.232-0002. The Government presented uncontroverted testimony that “on
a weekly basis, the 159th FMSD – one of two Army finance offices located in Afghanistan – posts
Treasury’s ITS.gov 5-day exchange rate in an area accessible to anyone with authorized access to
Bagram Airfield,” and that the rates the FMSD “posted” constitute the proper currency exchange
rates mandated by the Local Currency Clause. Def’s. Mot. Summ. J. 8 (emphasis added); Halonen
Decl. ¶¶ 5-8; Tuiaana Decl. ¶¶ 2-5.
        Lieutenant Joseph McManus, who has served as the Disbursing Agent for the 159th FMSD
at Bagram Airfield in Afghanistan since November 17, 2016, testified that his office receives the
5-day exchange rate for Afghanistan from an Army finance office in Kuwait on a weekly basis,
which his office then “posts” in an area accessible to anyone with authorized access to Bagram
Airfield. McManus Decl. ¶¶ 1-9. Captain Joshua Halonen, who has served as a Deputy Disbursing
Officer for the 376th Financial Management Support Unit (376th FMSU) at Camp Arifjan, Kuwait,
since October 2016, testified that his office transmits the current ITS.gov 5-day rate to its
subordinate unit, the 159th FMSD at Bagram Airfield on a weekly basis for that unit to “post” and
use for payment and collection of AFN. He further testified that he learned of this “standard
operating procedure to post the ITS.gov 5-day exchange rate from [his] predecessor sometime in
February 2014,” and it was his understanding that his predecessor “also engaged in this practice”
prior to February 2014 - - before the time the Contracts were signed. Halonen Decl. ¶¶ 1-9.
Captain Halonen’s predecessor, Ms. Evelyn Tuianna, testified that each Army finance office in
Afghanistan was required to use the 5-day rate, and employed the practice of posting those rates

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each week throughout the period during which the Contracts were executed and fulfilled. Tuianna,
Decl. ¶¶ 1-8.
         In sum, the record demonstrates that the 159th FMSD posts the ITS.gov 5-day rate weekly,
that every DoD Finance office in Afghanistan uses this weekly rate, and that Bagram Airfield acted
as the “local DoD Finance office” under the Contracts’ Local Currency Clause. The fact that the
Army Corps of Engineers paid Omran using the 3-day rate appears to have been wrong, but that
error is of no moment here.
        The Government is not seeking to recoup amounts it overpaid Omran due to its cryptic
choice to pay the 3-day rate instead of the 5-day rate. Whatever the Government’s rationale for
paying the higher 3-day rate may have been, it benefited Omran and caused it no prejudice.
Because Omran was not harmed by receiving the more generous 3-day rate, it cannot recover
damages. See Northrup Grumman Computing Sys., Inc. v. United States, 823 F.3d 1364, 1368
(Fed. Cir. 2016) (“It is fundamental in contract law that in order to recover on a breach of contract
claim, a plaintiff must prove damages – that it has been harmed.”). In Northrup, the Court of
Appeals for the Federal Circuit found that the plaintiff was not entitled to recover damages because
it was “in at least as good, if not better, a position as it expected . . ., and it has not shown any
particular harm to itself flowing from the alleged breach.” Id. The same can be said of Omran
here.

                                            Conclusion
     Plaintiff’s motion for summary judgment is DENIED, and Defendant’s cross-motion for
summary judgment is GRANTED. The Clerk is directed to enter judgment.

                                              s/Mary Ellen Coster Williams
                                              MARY ELLEN COSTER WILLIAMS
                                              Judge

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