Parsons Government Services, Inc.
ASBCA No. 60663
| A.S.B.C.A. | May 3, 2017Background
- Parsons Government Services held a requirements contract (M67854-09-D-8000) to provide MOUT training systems to the USMC; contract performance involved construction-type work.
- Parsons submitted a certified claim (Oct 16, 2015) for $20,899,704 arguing the contract should have been funded with MILCON rather than O&M funds, rendering the contract void ab initio and entitling Parsons to quantum meruit.
- Parsons submitted a second certified claim (Oct 19, 2015) raising breach and constructive change allegations; that claim was docketed separately (consolidated but not at issue here).
- The Board reviewed only ASBCA No. 60663 (the MILCON funding / voidness claim) on the government’s motion to dismiss for failure to state a claim.
- Parsons’ theory: statutory fiscal law requiring MILCON funding for major construction was violated, depriving Congressional oversight and required contract terms, and thus the contract is illegal and void; alternatively, the government breached the implied duty of good faith and fair dealing.
- The Board found the claim rests on alleged fiscal law violations that do not create a private cause of action and held the appeal fails to state a claim; dismissal with prejudice was entered.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether statutory fiscal-law violations (use of O&M vs MILCON) render the contract void ab initio and permit quantum meruit recovery | Parsons: Use of O&M funds for construction-tainted contract violated MILCON statutes, so contract is illegal and void; quantum meruit recovery allowed for performed work | Govt: Contractor cannot state a claim because the cited statutes do not create a private cause of action; contract invalidation is disfavored | Held: Dismissed — statutes relied on do not provide private remedy; United Pacific and AT&T III control; claim fails to state a claim |
| Whether Parsons may amend to plead alternative theories (e.g., breach/good-faith) tied to fiscal violation | Parsons: Seeks leave to amend; alternatively alleges breach of implied duty of good faith and fair dealing due to loss of Congressional oversight and contract terms | Govt: Primary claim is statutory; relief based on alleged fiscal violation unavailable; amendment would not cure lack of private right of action | Held: Denied — amendment would not salvage claim grounded in fiscal-law violation |
| Whether a contractor may seek relief for fiscal-law violations when statutes primarily protect governmental interests | Parsons: Contractor contends statutes protect contractors’ expectations and terms (e.g., Davis-Bacon application) | Govt: Statutes protect Congressional oversight and government interests, not private remedies for contractors | Held: Held for government — where primary statutory beneficiary is the government, private cause of action is unavailable |
| Whether alleged illegal acts by government agents alone taint a contract and require invalidation | Parsons: Illegal funding and omissions taint contract | Govt: Illegal acts by agents do not automatically void contracts; remedy depends on statutory purpose | Held: Held for government — illegal agency acts do not automatically invoke void-ab initio; Board follows precedent |
Key Cases Cited
- United Pacific Ins. Co. v. United States, 464 F.3d 1325 (Fed. Cir.) (statutory fiscal-law violations do not necessarily provide private cause of action; contract invalidation not required)
- American Telephone & Telegraph Co. v. United States, 177 F.3d 1368 (Fed. Cir.) (invalidating a government contract for statutory violation requires analysis of the statute’s remedial purpose; pro-contract remedial bias)
- Cessna Aircraft Co. v. Dalton, 126 F.3d 1442 (Fed. Cir.) (a private cause of action exists only if statute’s primary beneficiary is the private party)
- Godley v. United States, 5 F.3d 1473 (Fed. Cir.) (illegal acts by government contracting agents do not automatically void the contract)
- Kellogg Brown & Root Servs., Inc. v. United States, 728 F.3d 1348 (Fed. Cir.) (pleading standards: accept well-pleaded facts and draw reasonable inferences for claimant on motion to dismiss)