ASBCA 57930

ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of-- ) ) WorleyParsons International, Inc. ) ASBCA No. 57930 ) Under Contract Nos. W9126G-04-D-0002 ) W914NS-04-C-0002 ) APPEARANCES FOR THE APPELLANT: Kathleen Olden Barnes, Esq. Sheila U. Sears, Esq. Watt, Tieder, Hoffar & Fitzgerald, L.L.P. McLean, VA APPEARANCES FOR THE GOVERNMENT: E. Michael Chiaparas, Esq. DCMA Chief Trial Attorney Arthur M. Taylor, Esq. Deputy Chief Trial Attorney Defense Contract Management Agency Manassas, VA OPINION BY ADMINISTRATIVE JUDGE MELNICK ON APPELLANT'S MOTION TO DISMISS FOR LACK OF JURISDICTION This is an appeal from a purported claim against WorleyParsons International, 1 Inc. The government seeks $6,999,550 allegedly due for Cost Accounting Standards (CAS) violations. Because the government's claim is a nullity under the Contract Disputes Act, the appeal is dismissed for lack of jurisdiction. STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION 1. On 9 July 2003, the United States Army Corps of Engineers (Corps) issued a solicitation for contract proposals to provide repair and continuity of operation services for oil infrastructure in Iraq (R4, tab 1). 2. In early December 2003, Parsons Delaware, Inc. and Parsons Energy and Chemicals (E&C) International, Inc., executed an agreement establishing the Parsons Iraq Joint Venture (PIJV). They created PIJV to respond to the Corps' request for the infrastructure project proposal and to enter into and perform a contract for that purpose. (Bd. corr.ltr. dtd. 17 June 2013, ex. G-1 ("ex. G-1") at 1) Parsons E&C possessed an 1 The appeal was originally erroneously docketed as Worley Parsons International, Inc., Joint Venture. The correct caption has been substituted. 85% interest in PIJV's assets, profits, and losses, and was the managing partner (ex. G-1 at 10, ex. G-2 at 7). Under the joint venture agreement, PIJV would not hire employees of its own. It would rely upon its partners to provide necessary personnel to perform the contract work. (Ex. G-1 at 10) The agreement contemplated that PIJV would execute subcontracts with its partners for their services (id. at 9, 14, 15). The partners would invoice PIJV for their costs in accordance with their accounting systems, government regulations, and their subcontracts. PIJV would then separately invoice the government, deposit resulting payments in its bank account, and issue checks to its partners. (!d. at 15) In the event a subsequent audit showed that government payments to PIJV required revision, the adjustments would be passed on to the partners (id. at 15-16). The agreement stated that PIJV would "be registered in the State of Delaware, but [PIJV], as a profit and loss sharing agreement for the Project, will not be a separate entity" (id. at 6). Finally, the agreement was to be "governed and interpreted in accordance with" Delaware law (id. at 21 ). The partners subsequently changed their names, with Parsons E&C becoming WorleyParsons International, Inc. (WPII), and Parsons Delaware, Inc. becoming Parsons Global Services, Inc. (ex. G-2 at 8, 38). 3. On 16 January 2004, the Corps awarded Contract No. W9126G-04-D-0002 to PIJV (the PIJV contract). It was a cost plus award fee, indefinite delivery, indefinite quantity contract for services. (R4, tab 1) The contract included the FAR 52.230-2, COST ACCOUNTING STANDARDS (APR 1998) clause (id. at 14). Under that clause, PIJV was required to comply with the CAS, and agreed "to an adjustment of the contract price or cost allowance, as appropriate, if the Contractor or a subcontractor fails to comply with an applicable Cost Accounting Standard" (id. at 15). On 19 January 2004, PIJV executed subcontracts with its partners for the personnel, facilities, equipment, material, supplies, and services necessary to perform the prime contract (ex. G-2 at 8, 11 ). 4. On 23 March 2007, the Defense Contract Audit Agency (DCAA) issued an audit report concluding that WPII was not in compliance with the CAS respecting its allocation of overhead (R4, tab 4). The report identified WPII as a partner in PIJV, and PIJV as the party performing the PIJV contract (id. at 61 ).