DISMISSED IN PART FOR LACK OF JURISDICTION; DENIED IN PART:

DISMISSED IN PART FOR LACK OF JURISDICTION; DENIED IN PART:

September 9, 2024

CBCA 8002

MLU SERVICES, INC.,

Appellant,

v.

DEPARTMENT OF HOMELAND SECURITY,

Respondent.

Allison G. Geewax of Smith Currie Oles LLP, Tysons, VA; and Lochlin B. Samples

of Smith Currie Oles LLP, Atlanta, GA, counsel for Appellant.

Andrew Michael Thabo Hickey, Office of Chief Counsel, Federal Emergency

Management Agency, Department of Homeland Security, Washington, DC, counsel for

Respondent.

Before Board Judges LESTER, RUSSELL, and SULLIVAN.

LESTER, Board Judge.

Appellant, MLU Services, Inc. (MLU), has appealed a decision of a contracting

officer for the Federal Emergency Management Agency (FEMA) that both denies a monetary

claim that MLU submitted and asserts a government claim. The FEMA contracting officer

denied MLU’s claim challenging FEMA’s non-payment of five invoices (only three of which

MLU is pursuing in this appeal) that MLU alleges, but FEMA denies, MLU had previously

submitted for payment. The FEMA contracting officer also asserted a government claim

under the anti-fraud provision of the Contract Disputes Act (CDA), 41 U.S.C. § 7103(c)(2)

(2018) (section 7103(c)(2)), seeking penalties on the unsupported part (allegedly the entirety)

CBCA 8002

2

of MLU’s monetary claim, plus reimbursement of FEMA’s costs incurred in reviewing

MLU’s claim.

Addressing MLU’s monetary claim, FEMA filed a motion seeking summary judgment

in its favor because, before MLU submitted its claim, MLU had not submitted its invoices

for payment in the manner that its task orders required, meaning that FEMA’s obligation to

process and pay those invoices had never accrued. Because MLU does not dispute that it did

not formally submit the invoices to FEMA for payment in conformance with the contract’s

required process and because MLU provides no evidentiary support for its allegation that

FEMA informally agreed to change the contractually required method for the formal

submission of invoices, FEMA is entitled to summary judgment on MLU’s claim challenging

FEMA’s non-payment. MLU’s more recent submission of the invoices to FEMA in

accordance with the contract requirements, which occurred after MLU submitted its certified

claim, is not properly before us, and our decision here does not preclude MLU, outside of the

context of this appeal, from pursuing payment on invoices that it properly submitted after

submitting its certified claim.

Addressing FEMA’s monetary claim, which seeks penalties under section 7103(c)(2)

arising out of MLU’s alleged fraud, MLU requests that we “strike” that claim because the

contracting officer did not possess authority to have issued a final decision asserting the

government claim. MLU is correct that contracting officers lack authority to issue CDA

decisions seeking recovery under section 7103(c)(2), meaning that the FEMA contracting

officer’s decision purporting to do so is void and unenforceable. We reject FEMA’s

argument that, because the Board lacks authority to consider fraud, the contracting officer’s

decision imposing penalties under section 7103(c)(2) is essentially unappealable and

untouchable. Instead, we find that, because the contracting officer’s decision asserting an

affirmative monetary claim under section 7103(c)(2) is void, there is no valid decision

asserting the purported government claim upon which to base jurisdiction of MLU’s appeal

of that claim.1

Background

I.

The Terms of Task Orders 18, 43, and 55

On April 3, 2018, FEMA awarded contract 70FB8018D00000013, known as the

“Logistics Housing Operations Unit Installation Maintenance and Deactivation”

1

We similarly lack jurisdiction to entertain additional monetary demands that

FEMA included in an addendum to its answer because the contracting officer never asserted

entitlement to those costs in the contracting officer’s final decision on appeal.

CBCA 8002

3

(LOGHOUSE) contract, to MLU. Appeal File, Exhibit 2 at 582, 643.2 The LOGHOUSE

contract was an indefinite-delivery/indefinite-quantity contract with a cost ceiling of $730

million that was intended to support FEMA’s manufactured housing unit mission. Id. at 583.

Under this contract, MLU subsequently competed for and was awarded several task orders,

three of which are relevant to this appeal:

First, on November 30, 2018, FEMA awarded task order 18 to MLU to transport and

install temporary housing units to assist in responding to California wildfires, with a ceiling

amount of $21,975,778. Exhibit 7 at 1342-43; see Complaint ¶ 11; Answer ¶ 11. The task

order provided that “[i]nvoices shall be submitted to the following: FEMA FINANCE:

[FEMA Finance Center Vendor Payment Address]@fema.dhs.gov.” Exhibit 7 at 1343.

Second, on May 7, 2019, FEMA awarded task order 43 to MLU for the same type of

services being provided under task order 18, with a ceiling amount of $53,299,894.40.

Exhibit 15 at 1471-72. Like task order 18, task order 43 provided that “[i]nvoices shall be

submitted to the following: FEMA FINANCE: [FEMA Finance Center Vendor Payment

Address]@fema.dhs.gov.” Id. at 1472.

Third, on July 8, 2019, FEMA awarded task order 55 to MLU for additional mobile

housing unit transport and installation services in response to the California wildfires, with

a task order ceiling amount of $17,302,435. Exhibit 26 at 1564-65. Like task orders 18 and

43, task order 55 provided that “[i]nvoices shall be submitted to the following: FEMA

FINANCE: [FEMA Finance Center Vendor Payment Address]@fema.dhs.gov.” Id. at 1565.

Task orders 18, 43, and 55 contained identical language describing where and how

MLU was to submit invoices:

B.3 BILLING INSTRUCTIONS (JUN 2014)

Contractors will use Standard Form 1034 (Public Voucher for Purchases and

Services

Other

Than

Personal)

located

at

http://www.gsa.gov/portal/forms/type/SF when submitting a payment request.

A payment request means any invoice or request for contract financing

payment requesting reimbursement for supplies or services rendered. The

Contractor can submit weekly invoice payments.

2

appeal file.

Unless otherwise noted, all exhibits referenced in this decision are found in the

CBCA 8002

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Contractors must submit vouchers electronically in pdf format to the FEMA

Finance Center at [FEMA Finance Center Vendor Payment

Address]@fema.dhs.gov. A copy of the voucher must be submitted

electronically to the contracting officer identified within this contract. The

submission of vouchers electronically will reduce correspondence and other

causes for delay to a minimum and will facilitate prompt payment to the

Contractor. Paper vouchers mailed to the finance center will not be processed

for payment. If the Contractor is unable to submit a payment request in

electronic form, the contractor shall submit the payment request using a

method mutually agreed to by the Contractor, the Contracting Officer, and the

payment office.

Exhibits 7 at 1346, 15 at 1474, 26 at 1577 (emphasis added).

The task orders also incorporated the clause at Federal Acquisition Regulation (FAR)

52.212-4 (Jan 2017) (48 CFR 52.212-4 (2018)), which provided that “[t]he Government will

make payment in accordance with the Prompt Payment Act (31 U.S.C. 3903) and prompt

payment regulations at 5 CFR Part 1315.” Exhibit 2 at 988.

II.

The Parties’ Process for Submitting Draft Invoices for Review

The parties agree that, during contract performance, they established a process

(outside the terms of the contract) whereby MLU would submit “draft invoice copies” to

Mohamad Elmahmoud, the contracting officer’s representative (COR) for at least two of the

task orders3 (to whom MLU refers as the contract’s “Quality Assurance Specialist”), for

review and comment before MLU would formally submit them for payment. Complaint

¶ 14; see Answer ¶ 14; Declaration of Charles Fradella (May 31, 2024) ¶ 5; Declaration of

Mohamad Elmahmoud (June 14, 2024). As Mr. Elmahmoud acknowledges, he “agreed to

perform courtesy reviews of [MLU’s] draft invoices.” Elmahmoud Declaration ¶ 4.

Following receipt, Mr. Elmahmoud “would review the invoices and backup prior to [MLU’s]

formal submission in an effort to address any issues upfront.” Complaint ¶ 14; see Answer

3

Although task orders 18, 43, and 55 originally identified individuals other than

Mr. Elmahmoud as the CORs, FEMA issued modifications to task orders 43 and 55 on

August 8, 2019, substituting Mr. Elmahmoud as the primary COR. Exhibits 35 at 1615, 36

at 1616. For task order 18, Mr. Elmahmoud was designated as the alternate COR (rather than

the primary COR) through a task order modification issued on December 18, 2018. Exhibit

8 at 1368. We see nothing in the record showing that Mr. Elmahmoud was ever reassigned

to become the primary COR for task order 18. Mr. Elmahmoud also never became the

contracting officer for any of the task orders.

CBCA 8002

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¶ 14. After Mr. Elmahmoud’s approval, MLU would submit the invoice to FEMA Finance,

using the submission procedures required by the contract. Fradella Declaration ¶ 6;

Complaint ¶ 15.

This process is reflected in the parties’ handling of one of the invoices that was

originally the subject of MLU’s certified claim but is no longer in dispute in this appeal. On

or before September 9, 2019, Mr. Fradella, who was MLU’s field finance accountant during

the performance of the task orders, Fradell Declaration ¶ 3, sent Mr. Elmahmoud a copy of

invoice GRID-CA-008, which identified a total invoice amount of $1,341,366. See Exhibits

38 at 1624, 1626, 39. On September 9, 2019, Mr. Elmahmoud informed Mr. Fradella of

necessary changes to the invoice; Mr. Fradella sent Mr. Elmahmoud additional information

later that day; Mr. Elmahmoud responded on September 9 and 12, 2019, with additional

concerns; and Mr. Fradella responded that he would “restructure, revise, and resubmit.”

Exhibit 43 at 1637; see Exhibits 39, 40, 41, 42. Mr. Fradella resubmitted the invoice on

September 13, providing Mr. Elmahmoud with written answers to each of his questions.

Exhibit 44 at 1638. On December 12, 2019, Mr. Elmahmoud sent Mr. Fradella more

suggestions for and questions about the invoice, Exhibit 47 at 1685, and Mr. Fradella

responded by email later that day with “responses . . . in red,” one of which indicated that

MLU was reducing the invoice amount to $1,010,200 to comport with a task order line item

ceiling. Exhibit 51. After additional exchanges between Mr. Elmahmoud and Mr. Fradella,

see Exhibit 48 at 1690, Mr. Elmahmoud informed Mr. Fradella on January 7, 2020, that,

“[p]er [the contracting officer], the below response is acceptable. You may submit for

payment.” Exhibit 51 at 1779. Mr. Fradella then formally submitted the invoice

(accompanied by a SF 1034) to the FEMA Finance Center email address required in the task

orders, with a copy to Mr. Elmahmoud, for payment of $1,010,200, Exhibit 50 at 1774-78,

which the FEMA Finance Center paid. Exhibit 81 at 2511.

III.

Submission to and Review by the COR of the Invoices in Dispute

MLU alleges that, in July 2019, Mr. Elmahmoud informed it that FEMA was

beginning an audit of MLU’s invoices and would not be processing any future invoice

submissions until the audit was complete. Fradella Declaration ¶ 7. In his declaration,

Mr. Fradella asserts that, as a result of this information, MLU “paused formal submission of

pending invoices to FEMA finance as we understand from Mohamad Elmahmoud that they

would not be processed.” Id. ¶ 8. The record contains no evidence, either documentary or

testimonial, that Mr. Elmahmoud or anyone else at FEMA told Mr. Fradella that MLU was

barred from submitting invoices. Although FEMA disputes MLU’s allegations, we need not

resolve that factual dispute to resolve the motions pending before us. After learning of the

audit, MLU continued to submit “draft invoice copies,” as MLU calls them in its complaint

CBCA 8002

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(Complaint ¶ 14), to Mr. Elmahmoud for review.4 That leads us to the three invoices for

which MLU is seeking payment in this appeal.

Invoice 4407-CA-010. MLU submitted invoice 4407-CA-010, which identified a

payment request amount of $703,230 under task order 18, to Mr. Elmahmoud sometime

between September 26 and December 6, 2019. See Respondent’s Addendum ¶ 8;

Appellant’s Answer to Addendum ¶ 8.5 Mr. Elmahmoud responded on December 10, 2019,

with requests for additional information and documentation. Exhibit 70 at 2196;

Respondent’s Addendum ¶ 10; Appellant’s Answer to Addendum ¶ 10. In response to a

September 29, 2020, email from Mr. Fradella concerning invoice 4407-CA-010,

Mr. Elmahmoud responded that “FEMA will need all back up documentation as [previously]

requested.” Exhibit 70 at 2196. Mr. Fradella, in turn, replied that MLU was “putting the

back up together now.” Id.

4

In its response to FEMA’s motion for summary judgment, MLU argues that

“the invoices that are the subject of this dispute were submitted in 2019 and 2020, before the

Government’s extensive audit of the Project,” Appellant’s Opposition to Motion for

Summary Judgment at 4 (emphasis added), and that it was not until “late 2019” that FEMA

“notified MLU that it would not process, pay, review, or otherwise negotiate invoices until

an audit was performed.” Id. at 1-2. Yet, Mr. Fradella states in his declaration that he

learned of the audit and its implications in July 2019. Fradella Declaration ¶ 7. Unsupported

statements of counsel in MLU’s brief, in conflict with the evidence that MLU has submitted,

do not provide a basis for creating factual issues that would preclude summary judgment.

See J.G. Watts Construction Co. v. United States, 161 Ct. Cl. 801, 808 (1963) (“Statements

made by counsel in briefs are not normally accepted by the [tribunal] as being part of the

factual record.”).

5

In its addendum to its answer, FEMA alleges that MLU emailed the invoice

to Mr. Elmahmoud for a courtesy review on September 26, 2019, Respondent’s Addendum

¶ 8, but, in response, MLU admits only “that it submitted the indicated invoice, which speaks

for itself,” without identifying a specific submission date. Appellant’s Answer to

Addendum ¶ 8. We cannot locate any documentary evidence in the record showing an

invoice submission on September 26, 2019. The documentary evidence suggests that,

although the invoice is dated September 26, Mr. Fradella actually hand-delivered it, along

with other invoices, to Mr. Elmahmoud’s office when he visited there in early December

2019, Exhibits 45 at 1648, 1652, 52 at 1783, followed by an email to Mr. Elmahmoud on

December 10, 2019, providing an SF 1034 to accompany the invoice. Exhibit 46 at 1655,

1666. For purposes of this decision, the specific date in late 2019 on which Mr. Fradella

provided the invoice to Mr. Elmahmoud is unimportant. The parties agree that MLU

delivered invoice 4407-CA-010 to Mr. Elmahmoud at some point between September and

December 2019.

CBCA 8002

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Invoice 4407-CA-012. MLU emailed invoice 4407-CA-012, which identified a

payment request amount of $709,976.16 under task order 18, to Mr. Elmahmoud “on or

about January 2020.” Respondent’s Addendum ¶ 12; see Appellant’s Answer to Addendum

¶ 12. Mr. Elmahmoud responded to Mr. Fradella through two emails sent on January 17,

2020, indicating that “[w]e have completed our review” of the invoice, asking some

questions about it and identifying missing documentation. Exhibit 53 at 1789; see Exhibit

54 at 1862. In response, Mr. Fradella submitted a corrected spreadsheet to Mr. Elmahmoud

on February 24, 2020. Exhibit 56 at 1872. On March 9, 2020, Mr. Elmahmoud notified

Mr. Fradella that “[a]fter performing our unofficial c[o]urtesy/preliminary review” of the

invoice, “the review team found what appears to be multiple discrepancies on [it]” after

comparing contract line items, an emergency call log, and the backup documentation that

MLU provided. Exhibit 57 at 1980-81. Then, on or about June 25, 2020, Mr. Elmahmoud

received a Federal Express package from MLU containing “preliminary invoice . . .

4407-CA-012 . . . along with backup documentation,” which, as Mr. Elmahmoud informed

Mr. Fradella by email, would be “the 3rd courtesy review that FEMA COR team has

undertaken.” Exhibit 67 at 2045. In an email dated June 25, 2020, Mr. Elmahmoud

identified a series of “[i]ssues to re-address.” Id. By email to Mr. Elmahmoud dated

September 29, 2020, Mr. Fradella provided a “corrected summary/spreadsheet” for the

invoice. Exhibit 68 at 2084. Mr. Elmahmoud responded later that day, indicating that the

issues identified in the prior email were “still applicable.” Exhibit 69 at 2124.

Invoice GRHI-CA-010. MLU delivered invoice GRHI-CA-010, which identified a

payment request amount of $81,837.98 under task order 55, to Mr. Elmahmoud in early

December 2019. See Exhibits 45 at 1648-54, 52 at 1783; Respondent’s Addendum ¶ 19;

Appellant’s Answer to Addendum ¶ 19. On December 18, 2019, Mr. Elmahmoud emailed

Mr. Fradella with a list of issues that he and his team had identified with the invoice. Exhibit

52 at 1783. He and Mr. Fradella engaged in an email dialogue from December 18, 2019,

through March 4, 2020, regarding documentation that would be required for invoice GRHICA-010 to be approved. Respondent’s Addendum ¶ 20; Exhibits 52 at 1781-84, 55 at 1864;

see Appellant’s Answer to Addendum ¶ 20.

During its communications with Mr. Elmahmoud in 2019 and 2020, MLU did not

send any of the three invoices for which MLU is seeking payment in this appeal to the

FEMA Finance Center email address identified in the task orders or to the contracting

officer.

IV.

The Conclusion of FEMA’s Audit, and MLU’s Response

By July 7, 2021, FEMA’s “audit” of MLU’s invoices was complete. See Complaint

¶¶ 19-20; Answer ¶¶ 19-20; Exhibit 73 at 2466. FEMA provided MLU a detailed list of

issues concerning prior invoices on July 7, 2021. Exhibit 92 at 2682-2772. Notably,

CBCA 8002

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FEMA’s email providing the audit findings only addressed “invoices submitted.” Id. at

2701, 2772. Although FEMA, in its email, addressed other invoices that MLU had submitted

under task orders 18, 43, and 55, it did not address or even mention the three invoices at issue

here: 4407-CA-010, 4407-CA-012, and GRHI-CA-010. See id. at 2685-2700, 2750-2772.

On August 20, 2021, MLU’s president emailed the FEMA contracting officer,

responding to “the concerns raised by FEMA in the documents forwarded in your 7 July

2021 email.” Exhibit 75 at 2477. She asserted that “MLU has prepared detailed responses

to the issues raised for each of the three task orders, nos. 18, 43 and 55,” including

“narratives addressing each concern FEMA raised and, where appropriate, documentation

supporting the narrative,” which were available through electronic hyperlinks included in the

email. Id. at 2477; see id. at 2480-82. She represented that “MLU Services has worked hard

to address these issues” and that “[o]ur investigation has been thorough and included a

detailed review of task order documentation, emails, changes, invoicing and accounting.”

Id. at 2480. She indicated her “hope that once your staff reviews the information we are

providing in our response that the parties can proceed to final closeout and MLU receive

amounts still unpaid.” Id. at 2481. Nevertheless, MLU did not take any action at that time

to submit invoices 4407-CA-010, 4407-CA-012, or GRHI-CA-010 to the FEMA Finance

Center for payment despite being notified that the audit had concluded.

The record does not reflect any further communications between the parties between

the remainder of 2021 and early 2023 regarding invoicing.

V.

MLU’s 2023 Certified Claim, and the Contracting Officer’s Decision

On April 19, 2023, MLU submitted a certified claim to FEMA “requesting a

contracting officer’s final decision . . . for unpaid amounts on [five invoices under task orders

18, 43, and 55] under the [LOGHOUSE] Contract.” Exhibit 79 at 2497. MLU asserted in

the claim that it had “properly billed for the outstanding $2,915,920.31 via five separate pay

requests from August 29, 2019, through December 5, 2019.” Id. While MLU is no longer

seeking payment in this appeal on two of the five invoices in its 2023 certified claim, all five

invoices form the $2,915,920.31 portion of the government claim here:

•

•

•

$703,230 for invoice 4407-CA-010, dated September 26, 2019, under

task order 18

$709,976.16 for invoice 4407-CA-012, dated December 2, 2019, under

task order 18

$1,341,366 for invoice GRID-CA-008, dated August 29, 2019, under

task order 43 (withdrawn from MLU’s appeal but still part of the

government claim)

CBCA 8002

•

•

9

$79,510.17 for invoice GRHI-CA-009, dated December 5, 2019, under

task order 55 (withdrawn from MLU’s appeal but still part of the

government claim)

$81,837.98 for invoice GRHI-CA-010, dated December 6, 2019, under

task order 55

Id. at 2499. MLU alleged that “FEMA refused payment, claiming that an ongoing audit into

Task Orders [18], 43, and 55 justified the withholding.” Id. at 2497. MLU called the

withholding of the $2,915,920.31 payment “wrongful.” Id. It also alleged that, based upon

the non-payment of its invoices, it was entitled to $54,750.62 in interest under the Prompt

Pay Act (PPA), 31 U.S.C. § 3903, and FEMA Directive 126-6, “calculated using the

application [sic] Contract Disputes Act interest rate and . . . limited to one year of interest

from the date submitted.” Exhibit 79 at 2499.

The FEMA contracting officer initially notified MLU that he would respond to the

certified claim by August 18, 2023, Exhibit 80 at 2508, but later revised that date to

October 31, 2023. Exhibit 81 at 2511-12. In the letter accompanying its second extension,

the contracting officer indicated that his “initial review has indicated that there are a number

of discrepancies between the Claim and FEMA’s internal records.” Id. at 2511. With regard

to invoice GRID-CA-008 under task order 43, for which MLU was seeking payment of

$1.341 million, the contracting officer stated that, according to FEMA records, MLU’s initial

submission contained two dollar entries, one for $1,010,200 million and one for $329,670,

but that, when MLU submitted the invoice to the FEMA Finance Center for payment, the

invoice only included the $1,010,200 request, which FEMA paid in January 2020. Id.; see

Exhibit 50 at 1774-78. With regard to the invoices under task orders 18 and 55, the

contracting officer represented that FEMA’s “records indicate that they were submitted for

courtesy review, but then withdrawn,” and that FEMA had “still not found any record of their

formal re-submission before they were submitted with the Claim.” Id. The contracting

officer contemplated discussions with MLU to address “potential paths forward.” Id. at

2512.

On October 25, 2023, before the contracting officer had issued a decision on MLU’s

claim, Mr. Fradella emailed four of the five invoices discussed in its claim (each

accompanied by an SF 1034) to the FEMA Finance Center, using the address required by the

contract, “for payment.” Exhibits 84, 85, 87, 88. With regard to the fifth invoice (GRIDCA-008), MLU renumbered it to read “GRID-CA-008-A,” revised it to request payment of

only $329,670 (presumably to account for the $1,010,200 that FEMA had previously paid

on invoice GRID-CA-008 in January 2020), and emailed it on October 25, 2023, to the

FEMA Finance Center “for payment.” Exhibit 86. These communications reflect the first

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time that MLU submitted the invoices for which MLU is seeking payment in this appeal to

the FEMA Finance Center for payment. 6

On October 30, 2023, the FEMA contracting officer issued a final decision denying

MLU’s certified claim. Exhibit 89 at 2659. The contracting officer indicated that each of

the five invoices for which MLU was now seeking payment had been submitted to

Mr. Elmahmoud for only a “courtesy review” and that FEMA could not have refused

payment for invoices that it did not formally receive. Id. at 2655-56. The contracting officer

also acknowledged that MLU had submitted invoices five days prior and asserted that FEMA

was forced to deny those invoices because MLU had submitted them immediately before

FEMA’s deadline for a final decision on MLU’s certified claim, foreclosing any opportunity

for corrections or additional substantiating documentation. Id. at 2656.

After denying MLU’s certified claim, the FEMA contracting officer then added a

government claim into the final decision, as follows:

After careful review, I have determined that MLU is currently indebted to the

Government in the amount of $2,978,670.93. This amount covers the amount

of the unsupported part of the claim ($2,915,920.31), the unsupportable

amount of interest in the claim ($54,750.62), and the Government’s costs

attributable to reviewing the unsupported part of the claim under the Contract

Disputes Act (at least $8,000.00).

Exhibit 89 at 2656-57. As the basis for this government claim, the contracting officer

asserted that, “[u]nder 41 U.S.C. § 7103(b), claims against the government for more than

$100,000.00 must be certified” and that “[t]he purpose of this certification requirement is to

trigger a contractor’s potential liability for a fraudulent claim under the CDA.” Id. at 2657.

He represented that the CDA’s anti-fraud provision, 41 U.S.C. § 7103(c)(2), entitled him to

assess damages “[i]f a contractor is unable to support any part of the contractor’s claim and

it is determined that the inability is attributable to a misrepresentation of fact or fraud by the

contractor.” Id. (quoting section 7103(c)(2)). He claimed that, even though FEMA had

identified numerous issues with MLU’s draft invoices during discussions with MLU, MLU

6

On November 27, 2023, Mr. Fradella submitted “MLU Invoice 4407-CA-010R1” to the FEMA Finance Center, using the address identified in the contract, “for payment,”

Exhibit 96, and, on January 22, 2024, he submitted “MLU Invoice GRHI-CA-009-R2 for

payment.” Exhibit 98. The reasons for these submissions are not explained in the record,

but the dollar amounts being sought did not change from what was requested when invoices

4407-CA-010 and GRHI-CA-009 were essentially submitted on October 25, 2023. See

Exhibits 96, 98.

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submitted a claim that it “falsely certified . . . ‘accurately reflects’ the amount owed to it ‘to

the best of [its] knowledge and belief.’” Id. at 2657-58. After recounting how MLU had not

supported its claim with documentation, he represented that “it is well established that a

baseless certified claim is a fraudulent claim.” Id. at 2658. Adding to the alleged fraud, he

discussed MLU’s inclusion in its certified claim of a demand for payment of more than $1.3

million under invoice GRID-CA-008, even though FEMA had previously paid approximately

$1,010,200 under the invoice that MLU had originally submitted to the FEMA Finance

Center. Id. at 2651, 2658. Accordingly, he found “that MLU is currently indebted to the

Government in the amount of $2,978,670.93.” Id. at 2659.

VI.

Proceedings Before the Board

MLU filed a notice of appeal of the contracting officer’s decision with the Board on

January 25, 2024. Because the appeal involved both an affirmative monetary claim by MLU

and a government claim, the Board directed MLU to file a complaint addressing the

allegations supporting its monetary claim, FEMA to file a responsive answer and an

addendum addressing the allegations supporting FEMA’s monetary claim, and MLU to file

an answer to FEMA’s addendum.

In its complaint, filed February 26, 2024, MLU represented that it was removing its

request for payment of invoices GRID-CA-008 and GRHI-CA-009 from the appeal,

Complaint ¶ 7, and that its appeal was now limited to FEMA’s non-payment of three of the

five invoices originally at issue in its certified claim—$703,230 for 4407-CA-010,

$709,976.16 for 4407-CA-012, and $81,837.98 for GRHI-CA-010—plus PPA interest. Id.

¶¶ 18, 23, 25-27, 29-31. MLU also alleged that FEMA’s use of its audit as an excuse to

withhold payment constituted a breach of the implied duty of good faith and fair dealing. Id.

¶¶ 33-40.

Pursuant to the Board’s direction, FEMA filed an addendum (in the form of a

complaint by the Government) along with its answer, identifying the allegations supporting

FEMA’s claim against MLU. In count I of that addendum, FEMA alleged that MLU’s

actions in submitting the invoices identified in its monetary claim constituted fraud, as

outlined in the contracting officer’s decision dated October 25, 2023, and that FEMA was

entitled to recovery under section 7103(c)(2). In addition, FEMA added five additional

counts. In count II of its addendum, FEMA sought payment of $386,890.23 in offsets that

MLU allegedly acknowledged in its April 19, 2023, certified claim that it owed because of

improper billing practices and other billing issues uncovered by FEMA’s audit.

Respondent’s Addendum ¶¶ 33-36. In counts III, IV, V, and VI, FEMA requested

reimbursement of $13,578 for costs that it “incurred . . . in reviewing [MLU’s] claims and

investigating matters,” id. ¶¶ 42, 49, 56, 66, on one of four alternative theories: (1) that

MLU’s decision to commence litigation rather than follow the invoice submission terms of

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its contract was a breach of contract (id. ¶¶ 38-42); (2) that MLU’s failure to make detailed

payroll records available for inspection, copying, or transcription under FAR 52.222-8(c),

despite repeated requests from FEMA, was a breach of contract (id. ¶¶ 44-49); (3) that

MLU’s failure to produce adequate supporting data that FEMA repeatedly requested under

FAR 52.232-5(b)(1)(v) was a breach of contract (id. ¶¶ 51-56); and (4) that MLU’s lack of

good faith in producing documents under FAR 52.222-8 and 52.232-5 was a breach of

contract (id. ¶¶ 58-66), as was its refusal “to allow FEMA more than four days to review the

invoices once it finally submitted them properly” on October 25, 2023, and “when it made

intentional misrepresentations both to FEMA in its certified claim and to this Board in its

Complaint.” Id. ¶¶ 60-61, 63, 64.

On May 1, 2024, FEMA filed a motion seeking summary judgment on MLU’s

affirmative monetary claim, arguing that, because MLU did not meet the clear contractual

requirement to submit its invoices to the FEMA Finance Center, FEMA’s obligation to pay

the invoices never arose, and FEMA did not breach any contract provisions through nonpayment. Respondent’s Motion for Summary Judgment at 2-3. In response, MLU raised

various arguments to excuse the absence of invoice submissions to the FEMA Finance

Center and, further, argued that, at the very least, its invoices were clearly before the

contracting officer when he issued his October 30, 2023, decision because MLU had properly

submitted them on October 25, 2023, while its claim was still pending before the contracting

officer.

MLU filed its own motion, asking the Board to “strike” (and dismiss for lack of

jurisdiction) count I of FEMA’s addendum, which involves FEMA’s section 7103(c)(2) fraud

claim against MLU, both because the contracting officer lacked authority to issue a decision

seeking recovery under section 7013(c)(2) and because the Board lacks jurisdiction to

entertain a fraud claim.

Discussion

I.

FEMA’s Motion for Summary Judgment on MLU’s Monetary Claim

A.

Standard of Review

Summary judgment is appropriate when there are no genuine disputes of material fact

and the movant demonstrates that it is entitled to judgment as a matter of law. Carmazzi

Global Solutions, Inc. v. Social Security Administration, CBCA 6264, et al., 19-1 BCA

¶ 37,439, at 181,950. Genuine disputes of material fact exist when a rational finder of fact

could resolve an issue in favor of either party and the resolution of that issue would impact

the outcome of the case under governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

CBCA 8002

13

247-48 (1986). We must view all inferences in a light most favorable to the nonmoving

party. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

Nevertheless, “[w]ith respect to whether there is a genuine issue, [a tribunal] may not

simply accept a party’s statement that a fact is challenged.” Barmag Barmer

Maschinenfabrik AG v. Murata Machinery, Ltd., 731 F.2d 831, 835-36 (Fed. Cir. 1984). To

the contrary, “[t]he party opposing the motion must point to an evidentiary conflict created

on the record at least by a counter statement of a fact or facts set forth in detail in an affidavit

by a knowledgeable affiant. Mere denials or conclusory statements are insufficient.” Id. at

836. “Argument and assertion of counsel cannot substitute for factual statements under oath

that establish a genuine material issue of fact.” Levi Strauss & Co. v. Genesco, Inc., 742 F.2d

1401, 1404 (Fed. Cir. 1984).

B.

MLU’s Non-Compliance with Contract Invoicing Requirements

“Contract language must be read in accordance with its express terms” and “given the

plain meaning that a reasonably intelligent person, acquainted with the circumstances, would

derive from that language.” Wu & Associates, Inc. v. General Services Administration,

CBCA 6760, 21-1 BCA ¶ 37,965, at 184,383. “The contract must be read as a whole and in

light of its purpose. Reasonable meaning must be given all parts of the [contract] so as not

to render any portion meaningless, or to interpret any provision so as to create a conflict with

other provisions of the contract.” Columbia Construction Co. v. General Services

Administration, CBCA 3258, 15-1 BCA ¶ 35,856, at 175,319.

Here, the plain language of each task order regarding invoice submission is clear:

“Contractors must submit vouchers electronically in pdf format to the FEMA Finance Center

at [FEMA Finance Center Vendor Payment Address]@fema.dhs.gov” and must also provide

a copy electronically to the contracting officer. Exhibits 7 at 1346, 15 at 1474, 26 at 1577.

Elsewhere, each task order similarly provides that “[i]nvoices shall be submitted to the

following:

FEMA FINANCE: [FEMA Finance Center Vendor Payment

Address]@fema.dhs.gov.” Exhibits 7 at 1343, 15 at 1472, 26 at 1565. When MLU

submitted its April 19, 2023, certified claim to the contracting officer seeking damages for

non-payment of the invoices at issue in the claim, MLU had not yet submitted the invoices

to the FEMA Finance Center as required by its contract.

“Under the contract’s payment clause, ‘[t]here [is] no breach until appellant request[s]

payment and the government reject[s] the request.’” OST, Inc. v. Department of Homeland

Security, CBCA 7077, et al., 23-1 BCA ¶ 38,414, at 186,666 (quoting Parsons-UXB Joint

Venture, ASBCA 56481, 09-2 BCA ¶ 34,305, at 169,459); see Todd Pacific Shipyards Corp.,

ASBCA 55126, et al., 11-1 BCA ¶ 34,759, at 171,087 (“[T]here can be no breach of that

[payment] clause . . . until the contractor requests payment and the government fails to

CBCA 8002

14

pay.”). Compliance with contractually-required invoicing procedures is a prerequisite to the

agency’s obligation to pay. L&A Jackson Enterprises v. United States, 38 Fed. 22, 45

(1997), aff’d, 135 F.3d 776 (Fed. Cir. 1998) (table). Because MLU had not submitted its

invoices in the manner that its contract required before it submitted its certified claim, it had

no basis for asserting that FEMA had breached its contract by not paying invoices that it had

failed properly to submit.

C.

MLU’s Excuses for Non-Compliance

MLU does not dispute that it did not follow the contract’s invoice submission process

before it submitted its certified claim. It argues, however, that it was excused from doing so.

As we discuss below, the problem with the reasons that MLU identifies to excuse itself from

complying with contract requirements is that they are largely based upon factual allegations

wholly unsupported in the record. A party opposing summary judgment cannot simply cite

to its own complaint to create a genuine material factual dispute but needs to identify actual

evidence in the record, whether documentary or testimonial, that shows a genuine dispute.

Barmag Barmer Maschinenfabrik, 731 F.2d at 836. Many of the alleged factual disputes that

MLU identifies in its briefing are wholly unsupported (and often contradicted) by the

evidence in the record, which is fatal to MLU’s alleged defenses.

MLU first asserts that it “submitted these invoices to the Contracting Officer directly

via email on December 10, 2019, February 24, 2020, and December 16, 2019,” which, it

claims, should be viewed as a formal submission for payment under the contract.

Appellant’s Opposition to Motion for Summary Judgment (Response Brief) at 1 (citing

Exhibits 46, 49, 56). As an initial matter, the appeal file exhibits to which MLU cites show

that the invoices in question were emailed not to the contracting officer but instead to Mr.

Elmahmoud, as primary or alternate COR, for the task orders. MLU cites no evidence (either

documentary or testimonial) that it ever submitted invoices directly to the contracting officer.

Even if it had, the contract’s invoicing provisions required MLU formally to submit invoices

for payment to both the FEMA Finance Center and the contracting officer. Under the plain

terms of the contract, submission of an invoice solely to the contracting officer was not a

formal submission for payment. Although MLU asserts that its failure to submit the invoices

to the payment center was simply “a clerical discrepancy which caused no prejudice to the

Government,” id. at 3, it is FEMA’s receipt of a properly submitted invoice that initiates

FEMA’s obligation to pay within a thirty-day period and to pay PPA interest if late. 5 CFR

1315.4(b), (f); see FAR 52.212-4(i)(2). Payment is not due until “30 days after the start of

the payment period,” which commences on “the date of [the agency’s] receipt of a proper

invoice.” 5 CFR 1315.4(f), (g)(1)(iv); see Safeguard Maintenance Corp., GSBCA 6054,

83-1 BCA ¶ 16,276, at 80,874 (“The [PPA] provides for payment of interest for delayed

payments of properly submitted invoices.”). MLU cannot validly assert that FEMA was in

CBCA 8002

15

breach of the contract’s payment provision when, under that provision, its duty to pay had

not yet accrued.

MLU then argues that, despite the contract language, the parties established a “course

of performance” whereby FEMA would accept and pay invoices submitted only to the

contracting officer (or, in reality, to the COR), without a need also to submit them to the

FEMA Finance Center. Appellant’s Response Brief at 2; see id. at 3 (identifying “whether

the parties had established a course of performance regarding invoice submission” as a

factual issue precluding summary judgment). We recognize that a course of performance

may, in appropriate circumstances, be “relevant to show a waiver or modification of any term

[in the contract] inconsistent with the course of performance.” Universal Development Corp.

v. General Services Administration, GSBCA 11468, 93-2 BCA ¶ 25,662, at 127,676 (1992)

(quoting Uniform Commercial Code § 2A-207(3) (1992)), motion for reconsideration

denied, 93-2 BCA ¶ 25,845. In fact, under the task orders at issue here, “the Contractor, the

Contracting Officer, and the payment office” could “mutually agree[]” to allow the

contractor, if it was “unable to submit a payment request in electronic form,” to submit using

another method. Exhibits 7 at 1346, 26 at 1577.7 Yet, MLU offers no evidence to

substantiate its factual assertion that there was a course of performance that conflicted with

the contract requirements or some type of mutual agreement to change the submission

method. To the extent that MLU argues that other invoices were paid after being submitted

only to the COR, it cites no evidence (either documentary or testimonial) that FEMA ever

paid an invoice submitted only to Mr. Elmahmoud. To the contrary, the only payment

evidence in the record shows an invoice that was paid only after MLU emailed it to the

FEMA Finance Center. Exhibits 50, 51 at 1779. Further, the declaration from Mr. Fradella,

upon which MLU mainly relies to support its summary judgment response, indicates his

understanding that, once Mr. Elmahmoud approved an invoice, Mr. Fradella was then

supposed to submit it to the FEMA Finance Center to obtain payment:

5.

During performance of the billing and invoicing, FEMA and MLU

established a practice of informal invoice submission to Mohamad

Elmahmoud, the Quality Assurance Specialist with FEMA.

6.

After approval by Mohamad Elmahmoud, I would submit the approved

invoice to FEMA finance.

7

Given that MLU eventually (in October 2023) submitted the invoices at issue

electronically to the FEMA Finance Center, after it had already submitted its certified claim,

it cannot reasonably argue that it was “unable to submit” its invoices electronically.

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16

Fradella Declaration ¶¶ 5-6. MLU cannot rely on a “course of performance” or waiver

defense without citing to any evidence that such a course of performance actually existed.

MLU then argues that, because “the Government made clear its intent to prevent and

hinder payment by telling MLU [in July 2019] that no further invoices would be processed

until the audit was completed,” MLU should be entitled to payment even without submitting

any invoices. Appellant’s Response Brief at 6. It asserts that, “[w]hen a party asserting a

condition precedent as a defense hindered or prevented fulfillment of that condition

precedent, . . . the hindering party cannot rely on the failure to avoid its own obligations to

act under the contract.” Id. at 5 (citing Haddon Housing Associates, Ltd. Partnership v.

United States, 711 F.3d 1330, 1338 (Fed. Cir. 2013)). The problem for MLU is that there

is no evidence, documentary or testimonial, that Mr. Elmahmoud ever told Mr. Fradella that

MLU was barred from submitting its invoices to the FEMA Finance Center or that the

Government took any other action to preclude submission. Mr. Elmahmoud merely said

(according to the evidence upon which MLU relies) that FEMA was going to pause

processing of invoicing pending the audit, without anything more, as MLU’s declarant

acknowledged:

7.

During performance of the project at Gridley, I had a phone

conversation [with] Mohamad Elmahmoud in July 2019 on invoicing.

During this conversation, I was informed that FEMA was starting an

audit of MLU and that future invoices would not be processed until the

audit was complete.

8.

Based on that conversation, we paused formal submission of pending

invoices to FEMA finance as we understand from Mohamad

Elmahmoud that they would not be processed.

Fradella Declaration ¶¶ 7-8.8 While Mr. Elmahmoud’s words “may have served to

discourage” MLU from submitting its invoices, they “nevertheless did not impede [MLU]

from doing so.” Haddon Housing, 711 F.3d at 1338. The only way for MLU to have created

an obligation for FEMA to pay its invoices was to submit them, which would have provided

MLU with a basis for alleging a breach through FEMA’s non-payment. See OST, Inc., 23-1

BCA at 186,666. “Absent a showing that [FEMA] took some action that prevented or

hindered [MLU’s] ability to submit its [invoices], the prevention doctrine does not apply to

8

We recognize that, in his declaration, Mr. Elmahmoud disputes making the

representations that Mr. Fradella attributes to him, Elmahmoud Declaration ¶¶ 6-7, but we

will assume for purposes of resolving MLU’s defense to FEMA’s summary judgment motion

that MLU’s allegations are true.

CBCA 8002

17

excuse [MLU’s] failure to submit” its invoices for payment to the FEMA Finance Center.

Haddon Housing, 711 F.3d at 1339. MLU has cited no evidence that FEMA barred, rather

than potentially discouraged, MLU from submitting invoices to FEMA Finance and thereby

setting up its claim for a right to payment.9

MLU’s defense of futility similarly must fail. MLU argues that it was “not required

to engage in futile acts, including the formal submission of invoices that the Government had

already told MLU would not be processed.” Appellant’s Response Brief at 6. The board in

Donohoe Construction Co., ASBCA 47310, et al., 98-2 BCA ¶ 30,076, aff’d on

reconsideration, 99-1 BCA ¶ 30,387, considered a situation similar to that here, where the

Government’s project manager had informed the contractor that he would not authorize

progress payments until certain pending issues were resolved. The contractor sought to

justify its subsequent delay in submitting pay applications on the basis of futility, arguing

that, even though the project manager had never refused to accept pay applications, there had

been no point in submitting them before the project manager was ready and willing to

process them and authorize payment. The board disagreed, finding that submission would

not have been futile because, in addition to creating the prerequisite for a breach claim,

submission would “start[] the clock on PPA interest.” Id. at 148,834. Had MLU submitted

its invoices and payment was not forthcoming, MLU potentially would have a basis for PPA

interest running thirty days from the date of submission. See 31 U.S.C. § 3903(a)(1)(B).

MLU cannot rely on a futility argument.

Further, even if FEMA’s announcement of an audit could be viewed as somehow

precluding MLU from submitting invoices to the FEMA Finance Center or rendering such

an act futile, MLU acknowledges that the audit concluded in July 2021—nearly two years

before MLU submitted its certified claim. Complaint ¶¶ 19-20; see Answer ¶¶ 19-20;

Exhibits 73, 92. MLU says that Mr. Elmahmoud originally told Mr. Fradella, in July 2019,

that invoices would not be processed until the audit concluded. Fradella Declaration ¶ 7.

MLU provides no explanation of why, once the audit concluded, it did not submit and could

not have submitted the invoices at issue for payment before it submitted its certified claim.

Again, until it actually submits the invoices, it has no basis for alleging a breach by

non-payment. OST, Inc., 23-1 BCA at 186,666.

9

MLU argues in its summary judgment response that “a fact issue remains as

to whether the Government informed MLU to not submit the invoices because they would

not be processed until the audit was complete.” Appellant’s Response Brief at 7. To the

extent that MLU is saying that FEMA barred it from submitting invoices, or even told it to

stop submitting invoices, it has cited absolutely no evidence in support. MLU cannot

preclude summary judgment by alleging facts in its brief that lack any documentary or

testimonial support.

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18

Finally, MLU argues that it is not precluded from claiming a breach through

non-payment because “the Government cannot hide behind alleged defects in an invoice

where it does not notify the contractor of such defects.” Appellant’s Response Brief at 5.

MLU cites no support for its position that FEMA is obligated, as some type of good faith

duty, to tell MLU to submit invoices. To the extent that MLU has cited authority suggesting

that the agency must notify a contractor of problems with an invoice (see Appellant’s

Response Brief at 5 n.16 (citing EMS, Inc., GSBCA 9588, et al., 90-2 BCA ¶ 22,876)), that

authority relies on the PPA, which requires that “any invoice determined not to be such a

proper invoice suitable for payment shall be returned as soon as practicable, but not later

than 7 days, after receipt.” 31 U.S.C. § 3903(a)(7)(B) (emphasis added). Under the plain

language of the regulation, that duty does not arise until MLU has submitted and FEMA has

received an invoice. Here, MLU did not formally submit its invoices before submitting its

certified claim, meaning that the PPA provision requiring FEMA action “after receipt” of a

defective invoice does not apply.

D.

MLU’s Post-Claim Submission of the Invoices

On October 25, 2023, six months after MLU had submitted its certified claim to the

contracting officer, MLU submitted the disputed invoices to the FEMA Finance Center for

payment. In his decision on the claim, issued just five days later, the contracting officer

acknowledged that MLU had just submitted the invoices using the correct contractual

procedure but rejected them because he did not have enough time to digest them before

having to issue a decision.

MLU argues that, because it submitted the invoices at issue before the contracting

officer issued his decision, that submission merged into its pending certified claim and

provides a basis for payment through this appeal. We disagree.

The CDA mandates that “[e]ach claim by a contractor against the Federal Government

relating to a contract shall be submitted to the contracting officer for a decision.” 41 U.S.C.

§ 7103(a)(1). An action brought under the CDA “must be ‘based on the same claim

previously presented to and denied by the contracting officer.’” Qwest Communications Co.

v. General Services Administration, CBCA 3423, 14-1 BCA ¶ 35,655, at 174,564 (quoting

Scott Timber Co. v. United States, 333 F.3d 1358, 1365 (Fed. Cir. 2003)). “It must arise

from the same operative facts and claim essentially the same relief.” Id.; see EHR Doctors,

Inc. v. Social Security Administration, CBCA 3522, 14-1 BCA ¶ 35,630, at 174,492. The

claim that MLU submitted to the contracting officer on April 19, 2023, alleged that MLU had

submitted invoices to FEMA between August and December 2019 (either physically or

through a legal theory excusing formal submission) and that FEMA’s failure to pay those

invoices was a breach of FEMA’s contract obligations, entitling MLU to payment of the

invoiced amounts plus PPA interest. MLU wants to include the validity of its formal

CBCA 8002

19

submission of those invoices to the FEMA Finance Center in October and November 2023

as part of the “same operative facts” identified in the original claim. To consider the validity

of MLU’s post-claim invoice submissions under the contract terms, we have to focus on a

completely different time period and scope of activities than when considering MLU’s

alleged August through December 2019 submissions. Because the facts and evidence

necessary to evaluate the two different sets of submissions are separate and distinct,

involving activities during different time periods, the “operative facts” underlying the

separate submissions are not the same. See Crane & Co. v. Department of the Treasury,

CBCA 4965, 16-1 BCA ¶ 36,539, at 178,005-06 (finding that legal theory dependent on

actions occurring before contract award was not based on the “same operative facts” as legal

theory dependent on actions occurring during contract performance). Accordingly, the

events giving rise to the October 25, 2023, invoice submissions do not constitute the “same

claim” that was presented to the contracting officer on April 19, 2023, and cannot, therefore,

properly be viewed as incorporated into that claim. See id. at 178,006. To the extent that

MLU is complaining about non-payment of invoices that it submitted on October 25, 2023,

it must submit a claim to the contracting officer challenging that non-payment.

E.

MLU’s Implied Duty Breach Argument

MLU asserts that its “payment requests were denied, at least in part, based on an

alleged audit that FEMA was performing, which FEMA used as an excuse to withhold

payments to MLU.” Complaint ¶ 35. It argues that FEMA’s failure to make payment during

the audit or afterwards breached FEMA’s implied duty of good faith and fair dealing. Id.

¶¶ 33-40. Given that FEMA has established that MLU failed to submit its invoices in

accordance with contract requirements before MLU submitted its certified claim and that

payment was therefore never due, MLU has no basis for pursuing this implied duty breach

claim. FEMA had no obligation under the contract prior to formal invoice submission.

F.

MLU’s Request for PPA Interest

MLU asks for PPA interest on the delays in payment of its 2019 invoices.

“Respondent’s obligation to pay interest on an invoice would arise only if payment was not

made within 30 days after receipt of a proper invoice.” Unarco Material Handling, PSBCA

4100, 00-1 BCA ¶ 30,682, at 151,526 (1999); see 31 U.S.C. § 3103(a)(1)(B). Having found

that MLU did not properly submit invoices for payment in 2019 or at any time before MLU

submitted its certified claim, there is no basis for awarding PPA interest to MLU.

CBCA 8002

II.

20

MLU’s Motion Regarding FEMA’s Fraud Claim (Addendum Count I)

A.

Standard of Review

The Board’s jurisdiction is derived from the CDA, 41 U.S.C. §§ 7101-7109. “[T]he

strict limits of the CDA” constitute “jurisdictional prerequisites to any appeal.” England v.

Swanson Group, Inc., 353 F.3d 1375, 1379 (Fed. Cir. 2004). If jurisdiction is found to be

lacking, the Board must dismiss the matter. Universal Canvas, Inc. v. Stone, 975 F.2d 847,

850 (Fed. Cir. 1992).

B.

Contracting Officer’s Lack of Authority to Seek Fraud Damages

The FEMA contracting officer purported to issue a final decision asserting a

government claim against MLU arising under section 7103(c)(2), the anti-fraud provision of

the CDA, and seeking penalties for which section 7103(c)(2) provides. That statutory

provision grants the Government the following relief if a contractor submits a fraudulent

claim:

Liability of contractor.—If a contractor is unable to support any part of the

contractor’s claim and it is determined that the inability is attributable to a

misrepresentation of fact or fraud by the contractor, then the contractor is

liable to the Federal Government for an amount equal to the unsupported part

of the claim plus all of the Federal Government’s costs attributable to

reviewing the unsupported part of the claim. Liability under this paragraph

shall be determined within 6 years of the commission of the misrepresentation

of fact or fraud.

41 U.S.C. § 7103(c)(2). To recover under this provision, “the government is required to

establish that the contractor made false or fraudulent statements in its submitted claim with

an intent to deceive or mislead the government.” Commercial Contractors, Inc. v. United

States, 154 F.3d 1357, 1362 (Fed. Cir. 1998); see 41 U.S.C. § 7101(9) (“The term

‘misrepresentation of fact’ means a false statement of substantive fact, or conduct that leads

to a belief of a substantive fact material to proper understanding of the matter in hand, made

with intent to deceive or mislead.”).

The contracting officer’s decision asserting a government claim under section

7103(c)(2) is void and unenforceable. The Court of Appeals for the Federal Circuit has held

that “Congress did not intend fraud claims by the government to be included in the dispute

process outlined by section [7103(a) of the CDA] and that Congress never intended to

include claims brought under section [7103(c)(2)] to be within the agency dispute resolution

process.” Martin J. Simko Construction, Inc. v. United States, 852 F.2d 540, 545 (Fed. Cir.

CBCA 8002

21

1988). It specifically held that contracting officers lack authority to issue decisions asserting

government claims under the CDA’s anti-fraud provision:

[A]s the legislative history [of the CDA] clearly shows, the changes made to

sections [7103(a) and 7103(c)(2)] were designed, among other things, to

clarify the exclusion of fraud claims from agency jurisdiction, while preserving

some aspects of the all disputes language.

. . . . Senate Report 1118 specifically states that the Department of Justice

would be “solely” responsible for “actions to enforce the Government’s rights

under section [7103(c)(2)].” S. Rep. 1118, at 20, U.S. Code Cong. & Admin.

News 1978, p. 5254. . . . Section [7103(c)(2)], which was added by the

Committee, was, therefore, never intended to be within the purview of the

[contracting officer]. In addition to the clearly expressed legislative intent to

exclude fraud claims generally from the “all disputes” provision, Congress

felt it necessary to emphasize that the Department of Justice would be the only

federal agency with responsibility and power to enforce section [7103(c)(2)].

Id. (emphasis added).

Similarly, in Warren Beaves, DOT CAB 1160, et al., 84-1 BCA ¶ 17,190, one of our

predecessor boards recognized that “in the legislative history of the Contract Disputes Act,

Congress has made abundantly clear that Contracting Officers . . . do not have jurisdiction

in fraud matters.” Id. at 85,595. It found that the legislative history of the CDA “could not

more clearly express the intent of Congress that all actions to enforce the rights given by

[section 7103(c)(2)] of the Act are to be the responsibility of the Justice Department, a term

which does not include the Contracting Officer, and are to be instituted by the United States

in a court of competent jurisdiction.” Id. It held that a contracting officer’s decision that

purports to assess fraud damages against a contractor under section 7103(c)(2) is not actually

a final decision and is not enforceable against the contractor:

The Contract Disputes Act, viewed in its entirety, is an effort to set up a

unified three-tier procedure for the litigation of contract disputes: final

decision, Contract Appeals Board or Claims Court, and Court of Appeals for

the Federal Circuit. By the above-quoted language, it appears to us that

Congress has manifested an intent to completely remove fraud litigation from

the three-tiered procedure established by the Act, and place it in the general

tribunal, the District Court, where a contractor would have all of the rights

available in that Article III court. . . . The conclusion must necessarily follow

that a “final decision” assessing a Section [7103(c)(2)] claim is not a final

decision as that term of art is used in the Contract Disputes Act, namely a

CBCA 8002

22

written determination by a Contracting Officer from which an appeal must be

taken to a board of contract appeals, and therefore is not to be accorded the

finality of such a true final decision, nor will it be subject to the normal

three-tier appeals procedure.

Id. Accordingly, it held, “Contracting Officer decisions under Section [7103(c)(2)] are not

final decisions as that term is used in the [CDA].” Id.

Pursuant to the CDA, the Board possesses jurisdiction to consider a dispute over a

government claim only if a contracting officer issues a valid final decision asserting the

government claim and the contractor timely appeals it. National Fruit Product Co. v.

Department of Agriculture, CBCA 2445, 12-1 BCA ¶ 34,979, at 171,932; see 41 U.S.C.

§ 7103(a)(3)-(4) (Under the CDA, “[e]ach claim by the Federal Government against a

contractor relating to a contract shall be the subject of a written decision by the contracting

officer” and “submitted within 6 years after the accrual of the claim.”). Because the

contracting officer’s decision purporting to assert a fraud claim against MLU under section

7103(c)(2) is void and unenforceable, there is no valid contracting officer’s decision upon

which to invoke the Board’s jurisdiction over the government claim addressed in count I of

FEMA’s addendum. Accordingly, count I of the addendum, as well as the portion of MLU’s

appeal challenging the contracting officer’s decision seeking recovery under section

7103(c)(2), are dismissed for lack of jurisdiction.10

III.

FEMA’s Non-Fraud Claims (Addendum Counts II through VI)

In the addendum to its answer, which essentially served as the complaint for FEMA’s

monetary claim, FEMA included five non-fraud counts (counts II through VI). Notably,

these counts seek costs that are not included in the October 25, 2023, final decision on

appeal. As previously discussed, the Board possesses jurisdiction under the CDA to consider

a dispute over a government claim only if a contracting officer has issued a valid final

decision asserting the government claim and the contractor has timely appealed. National

Fruit Product, 12-1 BCA at 171,932. Although MLU did not address these counts in its

motion to strike or ask to dismiss them, we plainly lack jurisdiction to entertain them.

Because dismissal of counts II through VI allows for full resolution of the issues in this

appeal, we dispose of them here in light of this obvious jurisdictional defect.

10

Because we are dismissing the government claim for lack of a valid contracting

officer’s final decision asserting it, we need not discuss the jurisdictional limitations on the

Board’s consideration of fraud claims. See TDC Management Corp., DOT BCA 1802, 90-1

BCA ¶ 22,627, at 113,492 (1989) (discussing jurisdictional issues surrounding fraud

allegations).

CBCA 8002

23

Decision

With regard to MLU’s April 19, 2023, monetary claim against FEMA, because MLU

did not submit invoices for payment before submitting its claim for invoice non-payment,

FEMA’s motion for summary judgment is granted. Accordingly, MLU’s appeal of the

contracting officer’s decision on its affirmative monetary claim is DENIED. This denial of

MLU’s claim does not preclude MLU from submitting and pursuing a new claim against

FEMA for non-payment of invoices that it formally submitted on October 25, 2023.

With regard to FEMA’s October 30, 2023, monetary claim asserting fraud penalties

against MLU, the contracting officer’s decision asserting that claim is void and

unenforceable. Because no valid contracting officer’s decision underlies any of the counts

in FEMA’s addendum, all of the government claims raised in this appeal are DISMISSED

FOR LACK OF JURISDICTION.

Harold D. Lester, Jr.

HAROLD D. LESTER, JR.

Board Judge

We concur:

Beverly M. Russell

BEVERLY M. RUSSELL

Board Judge

Marian E. Sullivan

MARIAN E. SULLIVAN

Board Judge