The Civilian Board of Contract Appeals held that it had jurisdiction to consider an appeal of the contracting officer’s denial of a claim seeking payment for services outside the scope of the contract. While the appellant’s submissions provided contradictory statements as to whether it sought payment under its contract or sought payment for uncompensated work performed outside the contract, the board held that the appeal relied on the same set of operative facts as the claim presented to the CO and that it could consider the appeal on the merits.
Michaelson, Connor & Boul sought payment for services provided to the Department of Housing and Urban Development supporting an agency program for reacquiring certain properties from mortgagees. After the complaint was filed, the board raised concerns about whether the claim presented to the contracting officer was the same claim that MCB presented on appeal. MCB was ordered to clarify whether it is seeking relief (1) under the contract identified in the notice of appeal, (2) under no contract, or (3) under a different contract. Based on its response, MCB was then ordered to show cause why the claim described in its complaint was based on the same operative facts as those in its claim presented to the CO.
In February 2010, HUD awarded MCB a contract to serve as HUD’s mortgagee compliance manager, whose primary responsibility was to assist HUD with ensuring lender compliance with property conveyance requirements of HUD’s real-estate portfolio. After the contract ended, MCB submitted a claim requesting payment in the amount of $661,312.81, which MCB stated was incurred relevant to work performed “in connection to” the mortgagee compliance manager contract. In its claim, MCB alleged that, following the award of the contract, HUD asked MCB to perform extra work and agreed to reimburse the appellant the cost of performance. MCB additionally both HUD and MCB personnel were consistent in their shared belief that the reacquisition services were not expressly required under the mortgagee compliance manager contract and that MCB would need to be paid for performing these services. The CO denied this claim and MCB appealed.
In its complaint, MCB stated that it appalled the CO’s denial of its claim for costs in connection with the mortgagee compliance manager contract. MCB alleged that HUD asked it to perform services not required by the contract and that HUD committed to paying for these services. In its complaint, MCB sought the exact same monetary relief that it did in its certified claim submitted to the CO.
After receiving the complaint, the board ordered MCB to clarify the basis of its appeal. The board explained that it awards money under the Contract Disputes Act only under valid procurement contracts. In this case, MCB’s complaint did not plainly allege that the claim arose under a contract. The board ordered MCB to clarify whether it sought relief under its mortgagee compliance manager contract, under a different contract, or under no contract.
In response, MCB asserted that its claim and appeal sought payment for services under the mortgagee compliance manager contract. However, the board noted the contradictions between the original claim and the appeal, pointing out out that MCB’s certified claim alleged that HUD and MCB personnel consistently demonstrated that they believed the work was outside the scope of the subject contract. The board noted that this assertion was repeated in MCB’s appeal.
The board then ordered MCB to demonstrate that the claim presented to the CO was the same as presented in the appeal. The board also questioned whether anyone at HUD with authority to modify the mortgagee compliance contract authorized MCB to perform the services, explaining that this would be the only way the claim and appeal could rely on the same operative facts. Under that circumstance, the certified claim and complaint could be construed as alleging a constructive change.
With its response to the show cause order, MCB filed a motion for leave to amend its complaint. MCB sought to delete language from its initial complaint regarding relief sought for services outside the scope of its contract, and to clarity that it sought payment for services performed in relation to the subject contract. MCB asserted that its appeal was based on the same operative facts as its claim.
In response, HUD argued that MCB failed to show that anyone with contracting authority ordered MCB to perform the reacquisition services, or that there was an adequate basis for a claim whether resting on a change order, a constructive change, or an implied contract. Further, HUD argued that the amended complaint was not the same claim as that presented to the CO.
The board held that the allegations MCB raised in this appeal are fundamentally the same as those asserted in its claim to the CO. In both documents, MCB sought payment for relevant work that it alleged was directed by HUD during performance of the mortgagee compliance manager contract, and asserted that HUD had agreed to pay for the services, but had not. Further, MCB requested the exact same amount in the claim and appeal. Thus, the board concluded MCB relied on the same operative facts in its complaint filed at the Board as those in its claim presented to the contracting officer.
Although MCB used various phrases to describe the relationship between its claim for reacquisition services and the mortgage compliance manager contract, the board held the differences were de minimis and did not defeat a finding of jurisdiction. While MCB used various terms to describe the work—such as extra-contractual or outside the scope of the contract—the board found these semantic differences immaterial.
The board also held that MCB’s failure to assert a contract or identify a cognizant HUD official who directed the work did not preclude its jurisdiction, finding those matters went to the merits of the claim, not the board’s ability to consider it.
Michaelson, Connor & Boul is represented by Margaret A. Dillenburg of Law Offices of Margaret Dillenburg, P.C. The government is represented by Jonathan English, Dean Roy, and Julie Cannati, Office of General Counsel, Department of Housing and Urban Development.
