ABS Development Corporation
ASBCA No. 60022, 60023
| A.S.B.C.A. | Aug 30, 2017Background
- ABS Development Corp. sued under Contract No. W912GB-10-C-0047; government moved to amend answers in ASBCA Nos. 60022 and 60023.
- Government sought to add a defense that the contract was void ab initio because it was obtained by fraud, and in No. 60023 to add a defense that the U.S. is not responsible for sovereign acts of Israel (base access for Turkish workers).
- ABS opposed amendments on jurisdictional grounds (relying on 41 U.S.C. § 7103(a)(5) and ASBCA precedent) and on prejudice and merits (arguing no fraud and that the contract contains an implied warranty as to base access).
- The Board considered whether it must defer to third‑party findings before entertaining a void‑ab‑initio fraud defense, and whether allowing the foreign sovereign‑acts defense would unfairly prejudice ABS.
- The Board was not at trial eve (trial scheduled for April 2018) and noted the government’s allegations rely largely on recent deposition testimony and legal questions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Jurisdiction to decide whether contract is void ab initio due to fraud | Board lacks jurisdiction absent third‑party factual determination (citing 41 U.S.C. § 7103 and ASBCA precedent) | Board may determine for itself whether a contract is void ab initio from fraud | Board has jurisdiction to entertain the void‑ab‑initio defense and allowed amendment |
| Merits of fraud allegation | No fraud; amendment should be denied on merits | Fraud is alleged; merits are for hearing | Merits are not decided now; issue reserved for hearing or briefing |
| Prejudice from allowing amendment | Allowing late amendment would unduly prejudice ABS | No unfair prejudice; parties can address issues; not on trial eve | No undue prejudice shown; amendment allowed under Board Rule 6(d) with fairness to both parties |
| Foreign sovereign acts / warranty for third‑party acts | Contract contains implied warranty; government cannot avoid liability by asserting third‑party sovereign acts defense | U.S. not responsible for sovereign acts of Israel; no express or implied warranty as to Israel’s approval for base access | Whether an implied warranty exists is a merits/legal question; amendment to assert foreign sovereign acts defense allowed |
Key Cases Cited
- Laguna Construction Co. v. Carter, 828 F.3d 1364 (Fed. Cir. 2016) (recites that certain fraud‑related claims lie outside Board jurisdiction, but does not control the void‑ab‑initio question the Board can decide)