ASBCA Rejects Agency’s Fraud Allegation Because CO Did Not Report Matter to Investigators

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The Armed Services Board of Contract Appeals denied NASA’s motion to dismiss a contractor’s appeal due to a fraudulent claim, finding the CO did not take action on the alleged fraud. The board also did not find the contractor’s claim inconsistent with statements it made in a related Miller Act suit, and therefore did need not come to any factual conclusion about fraud.

Sand Point Services LLP had a contract with NASA to repair an aircraft parking apron. After performing the contract, SPS submitted claims to NASA for (1) differing site conditions due to unsuitable soil, and (2) a constructive change, which resulted from NASA waiving minor deviations and then turning around and insisting on strict compliance.

NASA denied the differing site condition claim, contending that SPS had released that claim when it signed a contract modification. NASA also denied the constructive change claim, arguing that compliance with the allegedly waived specifications was mandatory. The agency also alleged that SPS’s claims were fraudulent based on statements by SPS’s manager in related Miller Act Litigation.

After SPS appealed, NASA moved to dismiss, claiming that SPS’s manager had made statements in a related Miller Act suit that were inconsistent with statements made in the claim. The claims were therefore fraudulent, and NASA argued ASBCA did not have jurisdiction to hear fraudulent claims.

The board rejected this argument, noting that NASA’s fraud assertion was undermined by the fact that the CO did not immediately refer the matter to the agency official responsible for investigating fraud. Moreover, the board did not agree that the statements SPS’s manager made in the other litigation were inconsistent with the claims. Thus, the board did not need to make factual determinations of fraud to resolve the appeal.

ASBCA – Sand Point Services LLC