Column: Has Your Claim Been Flagged for Fraud?

      A recent decision[1] from the Civilian Board of Contract Appeals (CBCA) in the appeal of Widescope Consulting and Contracting Services sheds some light on the issue of whether the CBCA lacks jurisdiction over an appeal of a claim that a contracting officer has flagged for suspected fraud.

      Based on the Widescope decision, if a contracting officer merely suspects fraud and claims they have been divested of the authority to issue a decision on a claim, contractors will have the right to request a final decision from the contracting officer or move to the appeal phase before the CBCA.

      This eliminates a potential roadblock in the appeals process for government contractors.

      Prior to this decision, the CBCA had interpreted FAR 33.210(b) to eliminate the authority of a contracting officer to issue a decision on a claim involving fraud.[2] Notably, FAR 33.210 provides the contracting officer with authority “to decide or resolve all claims arising under or relating to a contract subject to the CDA.”

      But that “authority to decide or resolve claims does not extend to: (a) A claim or dispute for penalties or forfeitures prescribed by statute or regulation that another Federal agency is specifically authorized to administer, settle, or determine; or, (b) The settlement, compromise, payment or adjustment of any claim involving fraud.”[3]

      This limitation on a contracting officer’s authority to issue a final decision on a claim involving fraud seems like a blanket mandate under FAR 33.210(b).

      However, the CBCA’s decision in Widescope makes a crucial distinction between the instance where:

      (1) a claim is submitted to the contracting officer and the Department of Justice (DOJ) has already filed a related fraud action in district court; and

      (2) a claim is submitted to the contracting officer and the contracting officer has nothing more than a mere suspicion of fraud on the claim.[4]

      In Widescope, the Dept. of Health and Human Services (HHS) reviewed the contractor’s claim and concluded that there was a misrepresentation of fact or fraud on the claim.[5] Thus, the contracting officer determined that he was without authority to decide the claim and that a decision would not be forthcoming.[6] The contractor then appealed the decision to the CBCA, noting that the contracting officer had not issued a decision on its claim and that Widescope considered its claim to be deemed denied.[7] HHS then quickly moved to dismiss Widescope’s appeal for lack of jurisdiction.[8] HHS’s motion claimed that the CBCA lacked jurisdiction to hear the appeal because the contracting officer did not issue a final decision on the contractor’s claim.[9]

      The CBCA disagreed with HHS’s jurisdictional claim, specifically distinguishing Widescope from Savannah River. The CBCA explained that in Savannah River the DOJ had already filed a fraud action in district court against the contractor, which prevented the CBCA from hearing the appeal. Yet, in Widescope, the contracting officer expressed that he had a “suspicion of fraud,” and therefore chose not to issue a decision.[10] The CBCA held that a “mere suspicion [of fraud] [wa]s insufficient to defeat a finding of jurisdiction.”[11]

      This distinction set forth in Widescope is significant because, in many cases, if a contracting officer suspects a contractor’s claim is fraudulent, in accordance with FAR 33.210, the contracting officer will commonly allege that it lacks the authority to issue a decision, seemingly preventing the contractor from obtaining jurisdiction before the CBCA on appeal.[12] Yet, based on the Widescope decision, if the contracting officer merely suspects fraud is amidst, the contracting officer has not been divested of the authority to issue a decision on the claim under FAR 33.210. As a result, contractors have the right to request a final decision from the contracting officer or move to the appeal phase before the CBCA based on a deemed denial of its claim. [1] Widescope Consulting and Contracting Services, CBCA 6895, 2021 WL 1590347 (Apr. 16, 2021)
[2] See, e.g. Savannah River Nuclear Solutions, LLC v. Dept. of Energy, CBCA 5287, 17-1 BCA ¶36,749; 48 CFR 33.210(b)(2020)
[3] 48 CFR 33.210(b)(2020)
[4] Widescope Consulting and Contracting Services, 2021 WL 1590347 (Apr. 16, 2021).
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] Id.
[10] Id.
[11] Id.; see ESA South, Inc., ASBCA 62242, 20-1 BCA ¶ 37,647 (rejecting agency’s claim that contracting officer’s suspicion of fraud could divest the Board of jurisdiction (citing Todd Shipyards Corp., ASBCA 31092, 88-1 BCA ¶ 20,509, and PROTEC GmbH, ASBCA 61161, et al., 18-1 BCA ¶ 37,010))
[12] See 41. U.S.C. §7105.

This column has been reprinted with permission from PilieroMazza PLLC. For more information on this topic, please contact Lauren Brier, the author of this blog, or a member of PilieroMazza’s Government Contracts or Government Contract Claims & Appeals practice groups www.pilieromazza.com.

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Column: Has Your Claim Been Flagged for Fraud?

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