ASBCA Asserts Jurisdiction Despite Contracting Officer's Assertions of Fraud

Generally, an agency only has jurisdiction to review a contracting officer's final decision if that outcome was made on a basis other than fraud. In Mountain Movers/Ainsworth-Benning, LLC,¹ the Armed Services Board of Contract Appeals (ASBCA) addressed whether it maintains jurisdiction when the appeal concerns a contracting officer's final decision made on a basis other than fraud but that decision is later rescinded by the contracting officer on suspicion of contractor fraud. The Board found that the rescission did not affect its jurisdiction.

Background

In Mountain Movers, the contractor was a joint venture that had difficulty obtaining a bond for the task order due to the financial difficulties of one of the members. After failing to secure the bond, the contracting officer terminated the contractor for default but later rescinded that termination upon assurances from the contractor that they could ultimately secure the bond.

These assurances included representations about the identity and financial status of one of the contractor's joint venture members. After the contractor had performed the contract, it filed a claim, and the contracting officer issued a final decision finding partial merit. This final decision was the basis for the contractor's appeal before the Board.

Two months after the appeal was docketed, the contracting officer rescinded the final decision (that was the basis of the appeal) after discovering the contractor had made misrepresentations when it had given the government assurances that it could still secure the bond. The government argued that this 'reasonable suspicion of fraud deprives the Board of jurisdiction.'

Relying on the general rule that an agency only has jurisdiction to review a contracting officer's final decision if that decision is made on a basis other than fraud, the government claimed that the contracting officer's previous final decision had been rescinded, and that the current final decision was based on contractor fraud.

Decision

The Board determined that 'the government's statement is plainly incorrect as a matter of law' and stated that the government 'essentially seeks to create a government right of removal that would allow the government to unilaterally compel contractors to litigate their appeals before the United States Court of Federal Claims.'

The Board refused to allow the contracting officer's later rescission of the final decision to affect its subject matter jurisdiction. Instead, the Board determined that '[o]nce the Board is vested with jurisdiction over a matter, the contracting officer cannot divest it of jurisdiction by his or her unilateral action.'

The Board further reasoned that the final decision regarding the partial merits determination (the decision that the contractor appealed) could not have been based on fraud because the contracting officer admitted he was unaware of any potential fraud at the time of that decision.

Because the decision that the contractor appeal was not made on the basis of fraud and the later rescission of that final decision had no impact on the Board's jurisdiction, the Board denied the government's motion to dismiss the contractor's appeal.

Key Takeaways

While generally true that an appeal of a contracting officer's final decision based on allegations of contractor fraud cannot be brought before an agency like the ASBCA (a contractor in that situation would need to seek relief from the Court of Federal Claims), the Government's allegations of fraud made after submission of the appeal will not divest the ASBCA of jurisdiction.

FOOTNOTE

1  ASBCA 62164 (Aug. 7, 2020).