Court Opinion

ID: 2760818
Source: CourtListenerOpinion
Date Created: 2014-12-15 21:00:33.316363+00
Date Added: 2024-06-11T12:16:46.072658
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of--                                      )
                                                 )
Atlas International Trading Corporation          )      ASBCA No. 59091
                                                 )
Under Contract No. FA8240-10-M-U025              )

APPEARANCES FOR THE APPELLANT:                          Terry L. Elling, Esq.
                                                        Megan M. Mocho Jeschke, Esq.
                                                        Elizabeth N. Jochum. Esq.
                                                         Holland & Knight LLP
                                                         McLean, VA

APPEARANCES FOR THE GOVERNMENT:                         Lt Col James H. Kennedy III, USAF
                                                         Air Force Chief Trial Attorney
                                                        Erika L. Whelan Retta, Esq.
                                                        Capt Amy K. Siak, USAF
                                                        Capt Eric J. Singley, USAF
                                                         Trial Attorneys

             OPINION BY ADMINISTRATIVE JUDGE MCILMAIL
        ON THE GOVERNMENT'S MOTION FOR SUMMARY JUDGMENT

       The government moves for summary judgment, contending that appellant's
bribery of the government's program manager makes the contract at issue in this
appeal void ab initio. The Board grants the motion and denies the appeal. 1

            STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION

        1. On 20 January 2010, the Department of the Air Force (government) and Atlas
International Trading Corporation (appellant) entered into Contract No. FA8240-10-M-U025,
for the provision of a "l 9Zh6 Zip Kit" ( compl., ex. A at 1, 3 of 12).

        2. From 2008 through about August 2011, Sylvester Zugrav, appellant's owner and
director, paid Jose L. Mendez, a government program manager, more than $185,000, in
exchange for favorable procurement treatment (gov't mot., attach. 1 at 3-4, if 11, attach. 2
at 4-5, if 11). As part of that arrangement, in 2009, Mr. Zugrav offered to pay Mr. Mendez

1
    This appeal has been consolidated with ASBCA Nos. 59090 and 59092 through
         59111, which address other contracts, but only this appeal, ASBCA No. 59091,
         is the subject of the government's motion. Although the government styles the
         motion as one for partial summary judgment, the motion seeks denial of
         ASBCA No. 59091 in its entirety.
$80,000 if appellant received a contract for a Zip Kit, and Mr. Mendez provided appellant
the information (not provided to other potential vendors) that (1) the government needed a
 19Zh6 Zip Kit, and (2) the government's budget for that item was $500,000 (gov't mot.,
attach. 1 at 5, ~ (b), at 9, ~ (f), attach. 2 at 6, ~ (b), at 10, ~ (e); app. reply at 12, ~ 1).
Appellant subsequently submitted to the government an "unsolicited proposal" that a
contracting officer (CO) (who was not Mr. Mendez) accepted, awarding the contract to
appellant for $553,000, the amount that appellant had proposed (compl., ~ 20, ex. A; app.
reply at 12, ~ 2). Subsequently, Mr. Mendez (on 24 October 2011) and Mr. Zugrav (on
26 February 2013) pleaded guilty to violating 18 U.S.C. § 371, Conspiracy to Commit
Bribery, including for activities relating to the 19Zh6 Zip Kit procurement (gov't mot.,
attach. 1at1, 9-10, attach. 2 at 1, 10-11). Mr. Mendez also pleaded guilty to violating
18 U.S.C. § 20l(b)(2), Bribery; and 18 U.S.C. § 423, Procurement Fraud, including for
activities relating to the 19Zh6 Zip Kit procurement (gov't mot., attach. 2 at 1-2, 10-11).
Thus, appellant obtained the contract by bribing a government program manager; but for
that bribery, appellant would not have obtained the contract.

         3. On 27 June 2013, the government terminated the contract for cause (compl.,
ex:B).

         4. Appellant received the CO's final decision on 28 September 2013 (compl., ex. B).

       5. On 24 December 2013, appellant timely filed this appeal from the CO's final
decision.

                                          DECISION

       The government requests summary judgment in its favor, and that the appeal be
denied. Summary judgment shall be granted if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a
matter oflaw. FED. R. CIV. P. 56(a); Mingus Constructors, Inc. v. United States,
812 F.2d 1387, 1390 (Fed. Cir. 1987).

        The government requests that the Board deny the appeal from the termination
of the contract because, the government contends, the contract was tainted by fraud
(that is, bribery of the government's program manager) from its inception, and so is
void ab initio. Illegal conduct makes a contract void ab initio where the contractor
would not have received the contract but for the illegal conduct. See Kellogg Brown
Root Services, Inc. v. United States, 728F.3d1348, 1371-72 (Fed. Cir. 2013). For
example, a contract obtained through bribery is void ab initio. Schuepferling GmbH &
Co., KG, ASBCA No. 45564, 98-1BCA~29,659 at 146,953.

       The acts of Mr. Zugrav, appellant's owner and director, are imputed to
appellant. Cf Laguna Construction Co., ASBCA No. 58324, 14-1BCA~35,748
at 174,950 (imputing actions of company's project manager and vice president of

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operations to company). Appellant obtained the contract by bribing the government's
program manager (SOF ii 2), making the contract void ab initio.

        Appellant explains that "an offeror of an unsolicited proposal is not competing
with other offerors" (app. reply at 18). While appellant focuses on the end-stage of
that procurement process -the government's decision (not made by Mr. Mendez, but
by a CO) to accept the unsolicited proposal, and what appellant contends was the
inability of other vendors to supply the 19Zh6 Zip Kit - the more apt inquiry concerns
an earlier stage; that is, how it was that appellant's unsolicited proposal came before
the government in the first place. Appellant knew to submit its proposal because
Mr. Mendez told Mr. Zugrav of the government's need; without that information,
appellant's proposal would not have existed for the government to accept (SOF ii 2).
And appellant obtained that information by bribing Mr. Mendez for it (id.). But for the
payment to Mr. Mendez for the information he provided, appellant would not have
submitted its unsolicited proposal, because it would not have known to do so (not even
appellant contends otherwise). Of course, but for appellant's unsolicited proposal, the
government would not have awarded the 20 January 2010 contract to appellant (id.);
there is no evidence of a government plan to issue a solicitation for a 19Zh6 Zip Kit if
it had not received appellant's unsolicited proposal. In any event, the question is
whether, but for having bribed Mr. Mendez, appellant would have obtained the
contract it was awarded pursuant to its unsolicited proposal, not whether appellant
would have been awarded a contract pursuant to a proposal that it might have
submitted in response to a solicitation that was never issued.

        There is no genuine issue of material fact that appellant's bribery of
Mr. Mendez is illegal conduct that was the but-for cause of the award of the contract to
appellant. That makes the contract void ab initio; therefore, appellant cannot establish
that it had a contract with the government. Dongbuk R&U Engineering Co., ASBCA
No. 58300, 13 BCA iJ 35,389 at 173,639. Consequently, the government is entitled to
judgment as a matter of law. Accordingly, the motion for summary judgment is
granted, and the appeal is denied.

       Dated: 2 December 2014

                                                 Administrat· e Judge
                                                 Armed Services Board
                                                 of Contract Appeals

(Signatures continued)

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I concur                                        I concur

~~#
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 No. 59091, Appeal of Atlas
International Trading Corporation, rendered in conformance with the Board's Charter.

      Dated:

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

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