______________________________________________________ DISMISSED FOR LACK OF JURISDICTION: February 28, 1994 ______________________________________________________ GSBCA 10567 P.H. MECHANICAL CORPORATION, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Joseph E. Phelan of Fleming & Langlois, P.C., Quincy, MA, counsel for Appellant. Sharon A. Roach and Richard R. Butterworth Jr., Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges DANIELS (Chairman), DEVINE, and HENDLEY. HENDLEY, Board Judge. In 1986, appellant, P.H. Mechanical Corporation, appealed a contracting officer's denial of two equitable adjustment claims. As is customary in such cases, we bifurcated the appeal with the intention of first deciding entitlement. On February 7, 1989, we held that appellant was entitled to an equitable adjustment. P.H. Mechanical Corp., GSBCA 8191, et al., 89-2 BCA 21,670. On April 24, 1989, we docketed this claim for quantum. Appellant subsequently submitted to the contracting officer documentation regarding the amount of the adjustment. Soon thereafter, the Government began a criminal investigation of possible False Claims Act violations involving this submittal. This investigation ended in September 1991, when appellant and its president each pled guilty to one count of violating the Act. In October 1991, respondent moved to dismiss the quantum claim as res judicata. Appellant responded that the fraud for which it was convicted did not affect this Board's determination that it was entitled to a quantum recovery. It is appellant's position that although it did try to deceive the Government as to what appellant was due, it is still entitled to receive compensation for the work it admittedly performed. We DISMISS appellant's claim because we lack jurisdiction over a claim involving fraud. 41 U.S.C. 605(a)(1988). Background On November 16, 1983, respondent accepted appellant's bid of $187,700 on contract number GS-01B-00207, to remodel the air conditioning system at the Federal Records Center in Waltham, Massachusetts. Appeal File, GSBCA 8191, Exhibit 6 at 1. The dispute between the parties developed after respondent ordered appellant to install insulation in certain areas. Appellant characterized the installation of the insulation as extra work, while respondent argued that it had always been required by the specifications. After the contracting officer denied appellant's certified claim, and the appellant appealed, we held a hearing in October 1986. There, respondent conceded appellant's entitlement to labor costs incurred in correcting deficiencies in the building's humidity control system (chillers, compressors, and wall sealant), the subject of GSBCA 8684. P.H. Mechanical Corp. GSBCA 8191, et al., 89-2 BCA 21,670. Still, we heard evidence concerning the installation of insulation, the subject of GSBCA 8191, and eventually granted both of appellant's claims as to entitlement. Id. On April 24, 1989, appellant filed its quantum claim with the contracting officer, seeking $48,395 as the extra cost of supplying and installing the insulation, the subject of GSBCA 8191. Appeal File, GSBCA 10567, Exhibit 2 at 1. Appellant also sought $66,734.78 in labor costs incurred to correct design deficiencies, the subject of GSBCA 8684; $16,740 in retainage; and $57,487.98 in interest incurred between September 11, 1985, and April 30, 1989, with $4,335.44 per diem after that.[foot #] 1 Id. at 1-2. Finally, appellant sought $7,785.57 in attorney fees and costs incurred through October 30, 1986.[foot #] 2 Id. at Exhibit C. After the contracting officer failed to issue a decision, appellant appealed a deemed denial of the claim, which the Board docketed on March 29, 1990. Respondent answered by averring that the detailed documentation appellant presented at the entitlement hearing: ----------- FOOTNOTE BEGINS --------- [foot #] 1 Obviously, something is totally amiss in the appellant's calculations. There is no conceivable way that a claim totalling $131,869.78 [$48,395 + $66,734.78 + $16,740 = $131,869.78] could possibly incur interest at the rate of $4,335.44 per diem. ____ [foot #] 2 Legal fees totalled $7,395, which is the total of 73.95 hours at a rate of $100 per hour, plus $390.57 in costs. Appeal File, Exhibit 2 at Exhibit C. ----------- FOOTNOTE ENDS ----------- was found to be insufficient, inaccurate, and improperly documented. The claims are currently subject to detailed scrutiny by the GSA Inspector General's Office, which investigation must take place before any payment may be authorized or additional legal action taken by the respondent. Respondent's Answer at 6 (June 11, 1990). The parties completed discovery in November 1990, but by then the U.S. Attorney's Office in Boston had begun investigating whether appellant had violated the False Claims Act, 18 U.S.C. 287 (1988). On December 18, 1990, respondent moved to stay the Board proceedings "until such time as the U.S. Attorney's Office concludes its action on this case." Respondent's Motion to Suspend Proceedings (Dec. 18, 1990) at 1. In reply by letter dated December 21, 1990, appellant asked the Board to schedule a hearing on quantum regardless of the investigation and admitted that: [t]he appellant submitted claims for amounts due under these contracts as early as April 24, 1985. The exhibits presented to the Board and the respondent in support of the within appeal as to quantum, were the same exhibits presented to the Board and to the respondent at the time of the decision on entitlement and again following the receipt of the Board's decision on entitlement on February 7, 1989. Appellant further challenged the respondent, if it disputed the authenticity of the quantum documentation, to "let any such evidence be brought before the Board." However, the U.S. Attorney's Office continued the investiga- tion, and before the Board ruled on respondent's suspension motion, had appellant and its president each indicted on one count of violation of the False Claims Act, 18 U.S.C. 287. The indictment charged that appellant and its president had, by filing the quantum claim with the contracting officer on or about April 24, 1989: made and presented to Robert Kline, Esq. of the General Services Administration, an agency of the United States government, a claim upon the General Services Administration in the amount of $199,913.83, knowing said claim to be false, fictitious and fraudulent, in that receipts, invoices and records submitted in support of said claim totalling approximately $172,617.76 were falsified, fictitious and fraudulent. United States v. Paul A. Hayes and P.H. Mechanical Corp., Cr. No. 91-10050Z (D. Mass., Feb. 14, 1991). Appellant and its president each pled guilty to one count of making a false claim, in violation of 18 U.S.C. 287, on September 9, 1991. United States v. Paul A. Hayes and P.H. Mechanical Corp., Cr. No. 91-10050Z (D. Mass., Sept. 9, 1991). The sentencing judge ordered Mr. Hayes to spend two months in home confinement, undergo two years of probation, and pay a $10,000 fine. The court also fined appellant corporation $50,000. Id. On October 9, 1991, respondent moved to dismiss the case before the Board "on the basis of res judicata," since the subject matter of the claim considered in the criminal proceeding was the same as that before the Board in GSBCA 10567. Appellant countered the motion by letter dated October 18, 1991, in which it argued that respondent: had ample time to investigate the documentation submitted by the appellant in this regard, and has been able to discredit a certain amount of the costs submitted. This does not change the fact that a certain amount remains due. To resolve the quantum issue, appellant suggested that the Board convene a conference call and added that "appellant is willing to accept the government's determination as to the amount due the appellant." We conclude that we lack jurisdiction to decide this appeal, although for a reason somewhat different from the legal theory articulated by the respondent. Accordingly, we grant respondent's motion to dismiss. Discussion Respondent has moved to dismiss this case "on the basis of res judicata," since the subject matter of the claim considered in the criminal proceeding is the same as that before us now. We agree with respondent that appellant is barred from relitigating the fraud issue before this Board. Moreover, as fraud has been conclusively established, this Board must dismiss this case for lack of jurisdiction. This is a case of first impression for this Board. Never before has an appellant convicted of fraud returned to this Board to request further compensation on the very claim underlying its conviction. Under the doctrine of collateral estoppel[foot #] 3 appellant is estopped from denying ----------- FOOTNOTE BEGINS --------- [foot #] 3 Under the doctrine of res judicata, a final ____________ judgment on the merits bars further claims by the parties based on the same cause of action, including all matters actually (continued...) ----------- FOOTNOTE ENDS ----------- its fraudulent activities involving its claim before this Board. A federal district court has found fraud to permeate appellant's quantum claim. United States v. Paul A. Hayes and P.H. Mechanical Corp., Cr. No. 91-10050Z (D. Mass., Sept. 9, 1991). Collateral estoppel precludes appellant from relitigating the fraud issue. Brown v. United States, 524 F.2d 693 (Ct.Cl. 1975); see also United States v. Uzzell, 648 F. Supp. 1362 (D.D.C. 1986) (stating that a prior criminal conviction is conclusive proof of facts supporting the conviction in subsequent civil actions and thus operates as an estoppel on the affected party); Danac, Inc., ASBCA 30227, et al., 90-3 BCA 23,246, at 116,638 (noting that a guilty plea collaterally estops a party from relitigating, in subsequent litigation, issues that were essential to the plea). Hence, the only question before this Board is what effect the existence of this fraud has upon appellant's quantum claim. This Board's jurisdiction under the Contract Disputes Act of 1978 is defined as follows: Each agency board shall have jurisdiction to decide any appeal from a decision of a contracting officer (1) relative to a contract made by its agency, and (2) relative to a contract made by any other agency when such agency or the Administrator [of Federal Procurement Policy] has designated the agency board to decide the appeal. In exercising this jurisdiction, the agency board is authorized to grant any relief that would be available to a litigant asserting a contract claim in the United States Court of Federal Claims. 41 U.S.C. 607(d) (Supp. IV 1992). We conclude that this Board is limited by the plain language of section 607(d) to appeals from decisions of contracting officers. However, a contracting officer's authority to decide contractor's claims against the government does not extend to any claim or dispute for penalties or forfeitures ----------- FOOTNOTE BEGINS --------- [foot #] 3 (...continued) presented or that might have been presented to sustain or defeat the right asserted in the earlier proceeding. Where the parties are the same but the claims in the later case could not have been asserted in the earlier one, the doctrine of collateral estoppel ____________________ bars relitigation of issues of law or fact which were actually and necessarily determined in the prior case. If the issues actually decided in the previous litigation cover the facts needed to determine a new claim, and any possibility of success on the new claim is precluded, the new claim itself is barred. Res judicata operates as a principle of claim preclusion; the ____________ collateral estoppel doctrine is one of issue preclusion. Roubin ___________________ ______ & Janeiro, Inc., GSBCA 6042, 82-2 BCA 15,802 (citations _________________ omitted). ----------- FOOTNOTE ENDS ----------- prescribed by statute or regulation which another Federal agency is specifically authorized to administer, settle, or determine. This section shall not authorize any agency head to settle, compromise, pay, or otherwise adjust any claim involving fraud. 41 U.S.C. 605(a) (1988). Accordingly, this Board's jurisdiction does not extend to any "claim or dispute for penalties or forfeitures prescribed by statute or regulation which another federal agency is specifically authorized to administer, settle, or determine." Id. Nor can this Board "settle, compromise, pay or otherwise adjust any claim involving fraud." Id. Our conclusion is in consonance with the legislative history of the Contract Disputes Act. See S. Rep. No. 1118, 95th Cong., 2nd Sess. 20 (1978), reprinted in 1978 U.S.C.C.A.N. 5235, 5253 (the section "empowers contracting agencies to settle and pay, and administrative forums to decide, all claims or disputes arising under or growing out of or in connection with administration of contracts entered into by the United States excluding cases of fraud"). These jurisdictional limitations have been interpreted by our sister boards of contract appeals so as to place fraud issues outside the jurisdiction of the various boards. See, e.g., Comada Corp., ASBCA 26599, et al., 83-2 BCA 16,681, at 83,012 (interpreting the Contract Disputes Act to exclude from the board's jurisdiction the ability to entertain a Government counterclaim asserting a misrepresentation of fact); M & M Services, Inc., ASBCA 28712, 84-2 BCA 17,405, at 86,688 (stating that "the issue of whether appellant committed any fraud . . . will not be addressed by the Board"); Fidelity Construction Co., DOT CAB 1113, et al., 80-2 BCA 14,819, at 73,140 (holding that the Contract Disputes Act did not grant the board jurisdiction to render a determination as to whether or not fraud exists). It is therefore apparent that the Contract Disputes Act forbids this Board from granting appellant its requested relief. We simply lack the authority to "settle, compromise, pay or otherwise adjust" appellant's fraudulent claim. See 41 U.S.C. 605(a) (1988). Appellant is estopped from denying its fraudulent claim. The presence of this fraudulent claim means that there are no circumstances under which we could grant appellant its requested relief simply because the CDA prevents this Board from settling, compromising, paying or otherwise adjusting its fraudulent claim. Accordingly, appellant's complaint must be dismissed. Fidelity Construction Co., 80-2 BCA at 73,142 (noting that a dismissal of an action before the board is only appropriate if there has been a "determination by a court of competent jurisdiction that fraud exists and forfeiture or other statutory penalty is in order"). Our decision is also in accord with the decisions of the United States District Courts in United States v. JT Construction Co., 668 F. Supp. 592 (W.D. Tex. 1987), and United States v. Rockwell International Corp., 795 F. Supp. 1131 (N.D. Ga. 1992) holding that the Contract Disputes Act exempts fraud cases from the jurisdiction of the boards of contract appeals. Decision Appellant's appeal is dismissed for LACK OF JURISDICTION. _____________________________ JAMES W. HENDLEY Board Judge We concur: _____________________________ _____________________________ STEPHEN M. DANIELS DONALD W. DEVINE Board Judge Board Judge