ASBCA 58324

ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of-- ) ) Laguna Construction Company, Inc. ) ASBCA No. 58324 ) Under Contract No. FA8903-04-D-8690 ) APPEARANCE FOR THE APPELLANT: Carolyn Callaway, Esq. Carolyn Callaway, P.C. Albuquerque, NM APPEARANCES FOR THE GOVERNMENT: E. Michael Chiaparas, Esq. DCMA Chief Trial Attorney Gregory T. Allen, Esq. Trial Attorney Defense Contract Management Agency Manassas, VA OPINION BY ADMINISTRATIVE JUDGE DELMAN ON GOVERNMENT'S MOTION TO AMEND ANSWER The government has filed a motion for leave to file an amended answer in this appeal to include the affirmative defense of fraud. Appellant opposes the motion. We have jurisdiction under the Contract Disputes Act (CDA), 41 U.S.C. §§ 7101-7109. STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION 1. In November 2003, the Air Force Center for Environmental Excellence (government) awarded Contract No. FA8903-04-D-8690, a contract for Worldwide Environmental Remediation and Construction Services (WERC), to Laguna Construction Company, Inc. (appellant or Laguna). Under this contract, Laguna received 16 cost-reimbursable task orders (TOs) to perform construction and/or environmental remediation work in Iraq. (Compl. ~~ 6, 12, 14) While Laguna was performing these TOs the United States was engaged in a contingency operation in Iraq as defined by FAR 2.101 (compl. ~ 15). 2. Insofar as pertinent, the WERC contract contained the following clauses: FAR 52.215-2, AUDIT AND RECORDS-NEGOTIATION (JUN 1999); FAR 52.216-7, ALLOWABLE COST ANDPAYMENT(DEC 2002)- ALTERNATE 1 (FEB 1997); FAR 52.233-1, DISPUTES (JUL 2002); FAR 52.244-2, SUBCONTRACTS (AUG 1988); and FAR 52.244-5, COMPETITION IN SUBCONTRACTING (DEC 1996) (R4, tab 1 at 25-29).  3. In February 2009, the Defense Contract Audit Agency (DCAA) began an audit of Laguna's incurred costs for its fiscal year (FY) 2006 (compl. ~ 32). Insofar as pertinent here, on 17 March 2011, DCAA issued four Notices of Contract Costs Suspended and/or Disapproved (hereafter "Forms 1"),designated by numbers 2011-002 through 2011-005, totaling $17,459,674 of disapproved costs (compl. ~ 41; R4, tabs 26-29). On 4 August 2011, DCAA revised the four Forms 1, changing the designations to 2011-002a through 2011-005a and increasing disapproved costs to $17,823,506 (compl. ~ 43; R4, tabs 32-35). 4. On or about 6 April2012, DCAA, seeking to recover some of the disapproved costs, rejected 14 Laguna vouchers under a number of TOs under the contract totaling $3,031,925 (compl. ~ 47). On or about 21 May 2012, Laguna submitted a certified claim to the contracting officer, requesting a decision, inter alia, "authorizing payment to Laguna ofthe improperly withheld sum certain of$2,874,081" (supp. R4, tab 40 at 283-84). 5. On 18 September 2012, Laguna submitted a notice of appeal to this Board based upon the deemed denial of this claim. The Board docketed the appeal as ASBCA No. 58324. 6. Appellant's complaint was filed on or about 26 October 2012. The government's answer was filed on or about 2 January 2013. The government did not assert an affirmative defense of fraud at this time. Indictment of Laguna Manager 7. On 10 October 2010, a Laguna manager pled guilty to a criminal information for conspiring to receive kickbacks from subcontractors on a number of Iraq projects, including certain TOs under this contract. As part of the plea agreement, he acknowledged as follows: From April 2005 until March 2008, I agreed with others to accept kickbacks from [Laguna] subcontractors, specifically: money payments for the purpose of improperly facilitating the award of [Laguna] subcontracts and favorably rating the performance of subcontractors....