By Sarah Schauerte:
In the Appeal of Atlas Int’l. Trading Corp., on December 2 the Armed Services Board of Contract Appeals (ASBCA) held that a contractor’s bribery of an agency’s program manager made the contract at issue in its appeal void ab initio (“from the beginning”).
As set forth in the Statement of Facts the ASBCA relied upon, from 2008 through 2011 the contractor’s owner paid a government program manager more than $185,000 in exchange for favorable procurement treatment. Both the business owner and the government official ultimately pleaded guilty to statutory criminal charges arising from their actions. In other words, “but for” the bribery, the contractor appealing to the ASBCA would not have won the contract. In particular, the program manager had provided the contractor with intel to let it know to submit an unsolicited proposal, which resulted in the award.
Then, in July of 2013, the Government terminated the contract for cause. The Government requested that the ASBCA deny the contractor’s appeal from the termination of the contract because, the government contended, the contract was tainted by fraud from its inception, and so was void ab initio. Illegal conduct will make a contract void ab initio where a contractor would not have received a contract but for illegal conduct.
The ASBCA agreed with the Government, holding that if a contract is void ab initio, a contractor cannot establish that it had a contract with the Government and the Government is entitled to judgment as a matter of law. It denied the appeal, upholding the Government’s decision to terminate for cause.
The takeaway – if you weren’t allowed in the game in the first place, you can’t complain that the Government broke the rules.
Access the decision at: http://www.asbca.mil/Decisions/2014 /59091%20Atlas%20International%20Tr ading%20Corporation%2012.2.14.pdf.
Article written by Sarah Schauerte. Sarah is admitted to practice in Virginia, the District of Columbia. She is also admitted to the courts of the Eastern District of Virginia, as well as the United States Court of Federal Claims. She is a U.S. Department of Veterans Affairs accredited attorney and a CVE Certified VetBiz Verification Counselor.