By Government Contracts Editorial Staff
A motion to dismiss an appeal for lack of subject matter jurisdiction was denied by the Armed Services Board of Contract Appeals because the contracting officer’s final decision was not based on a finding of fraud and the CO’s rescission of that final decision did not divest the board of jurisdiction. The dispute arose from a task order for dam repairs. After the contractor, a joint venture, performed the contract, it submitted a claim to the CO that the CO granted in part. The CO subsequently rescinded the final decision after determining the contractor knowingly misrepresented the identity of one of the members of the joint venture.
Binding Precedent. The government’s motion was premised on a theory it should be entitled to unilaterally remove litigation from the boards of contract appeals whenever it suspects fraud and compel contractors to litigate their appeals before the Court of Federal Claims. However, the government failed to explain how its interpretation of the Contract Disputes Act as divesting the board of jurisdiction would not similarly divest the CFC of its CDA jurisdiction. The government’s motion was directly contrary to binding precedent of the Court of Appeals for the Federal Circuit and the board’s own precedent. Even if the CO issues a final decision on a contractor claim involving fraud, the board possesses jurisdiction to review that decision if the decision asserts a basis that the CO is permitted to assert other than fraud (see Daff v. U.S., CA-FC, 40 CCF ¶76,899, PROTEC GmbH, 18-1 BCA ¶37,010, and Sand Point Services, 19-1 BCA ¶37,412). If a CO issues a decision based solely on a suspicion of fraud it is not a valid CO’s final decision and does not provide the board with jurisdiction to entertain an appeal (Medina Construction, Ltd. v. U.S., CA-FC, 43 CCF ¶77,458). Here, the board possessed jurisdiction to entertain the CO’s initial final decision because it was not based on a finding of fraud. In particular, the CO did not know of the contractor’s alleged fraud when he issued his final decision, and he did not assert fraud as a basis for the decision. The board was vested with jurisdiction when the contractor filed its notice of appeal. (Mountain Movers/Ainsworth-Benning, LLC, ASBCA, ¶96,097)
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