CBCA Can’t Void an Assignment of Contract Payments; Heroes Hire, LLC v. Department of Veterans Affairs, CBCA 7195,7211

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Contractor’s emergency motion for relief is denied. The contractor assigned its payments under the contract to a lender. Thereafter, the agency terminated the contract for cause. The contractor appealed to the CBCA and filed a motion asking the board to void the assignment and direct any amounts still due to the contractor. The board found that this was essentially a request for injunctive relief. Unfortunately for the contractor, the board lacks jurisdiction under the CDA to grant injunctive relief.

Heroes Hires, LLC had a contract with the Department of Veterans Affairs to provide community care nurses. While performing the contract, Heroes assigned the payments from the VA contract to one of its lenders. The VA approved the assignment under the Assignment of Contracts Act and thus began making contract payments directly to Heroes lender.

Later, however, Heroes sought to annul the assignment. Heroes provided the VA with what purported be a release of the assignment. The release was only signed by Heroes, not by its creditor. Heroes insisted that it had satisfied the debt owed to the lender, but the lender said otherwise. The VA refused to release the assignment and kept making payments to the lender.

In response, Heroes stopped providing nurses to the VA. The VA terminated the contract for cause. Heroes appealed the termination to the CBCA.

Although it had terminated the contract, the VA still owed Heroes money for services previously provided. Under the assignment, however, the VA was required to pay these funds to Heroes’ lender. Heroes thus filed an emergency motion asking the board to void the assignment and to direct the VA to pay the remaining funds directly to Heroes.

The board found that it could not void the assignment and direct payment to Heroes. The board’s authority is prescribed by the Contract Disputes Act. That statue allows the board to consider contract claims for money damages and, in certain instances, to declare parties’ rights and obligation under a contract. The CDA does not give the board power to grant injunctive relief.

What’s more, the board continued, even if it had authority to grant injunctive relief, it only has authority over an appeal of a monetary claims that has been submitted to the contracting officer. Here, Heroes had not submitted a monetary claim to the VA, so the board lacked jurisdiction to entertain Heroes’ request.

The board considered whether the invalidity of the assignment could serve as a defense to the termination. After all, Heroes had stopped performing because, due to the assignment, it was not being paid.

But the board found that Heroes had not established that the assignment was invalid. Heroes argued that the assignment presented to the VA named the wrong agency. Additionally, it was not clear whether Heroes’ lender was the type of financing institution that could be assigned proceeds from a government contract under the Assignments of Contract Act. The board found these mistakes irrelevant. The Assignment of Contracts Act is for the benefit of the government. Thus, the government is permitted to waive any objections to an assignment that would be in violation of the Act. In this case, the VA clearly waived and defects in the assignment by making payments to Heroes’ lender.

Heroes is represented by it CEO, Jessica House. The government is represented by Kathleen Ellis-Ramos of the Department of Veterans Affairs.

CBCA - Heroes Hire LLC