ASBCA Exercises Jurisdiction Over Contractor Claim Despite Government's Allegations of Fraud

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In Nauset Construction Corporation,1 the Armed Service Board of Contract Appeals once again addressed how Government allegations of fraud impact the Board's ability to hear a claim.

In Nauset, the contractor submitted a claim for additional time and money arising out of a construction project. The Contracting Officer subsequently extended the date for issuing her final decision, noting that due to ongoing investigations by multiple government agencies, she could not issue a decision. Ultimately, the Contracting Officer informed the contractor that the Government suspected the contractor's claimed costs were fraudulent or false and that she had no authority to take action on the contractor's claims, citing Federal Acquisition Regulation (FAR) 33.210.

The contractor filed an appeal with the Board, and the Government moved to dismiss on the grounds that the Board lacked jurisdiction because the claims involved fraud. In ruling on the motion, the Board looked to the language of the Contract Disputes Act and the FAR, which the Board characterized as unambiguous.

The Board noted that while the Contracting Officer had properly referred the suspected fraud to the investigative agencies, she erred by concluding that because she, herself, suspected fraud, the claims did in fact involve fraud and that she had no authority to resolve them. As the Board explained, a Contracting Officer's articulation of a suspicion of fraud is insufficient to deprive the Board of jurisdiction.

Furthermore, the Board held that the fact that there is an ongoing investigation does not divest the Board of jurisdiction in a matter otherwise properly before it. The Board further noted that the record did not support that a finding of fraud in the contractor's claims had been made by an authority competent to make such a finding, and the Board declined to make such a finding.

The Board further noted that because the Contracting Officer had declined to issue a decision on the claims, the Board had jurisdiction on the basis of a deemed denial. Therefore, the Board had jurisdiction over the matter and the Contracting Officer could not divest the Board of jurisdiction by his or her unilateral action.

FOOTNOTE

1  ASBCA Nos. 61673 and 61675 (May 5, 2021)

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