Contractor’s Misrepresentation Allows Government to Void Maintenance Contract

09/03/2013

Multiple representations are required from prospective bidders as part of the bidding process. Some bidders push the line on those in order to put them in a better position for award. But what happens when a bidder crosses the line from augmenting qualifications to misrepresenting them? In the recent decision of Dongbuk R&U Engl’g Co., Ltd., ASBCA No. 58300, 8/13/13, decision released 8/26/13, the ASBCA concluded such misrepresentation allowed the Government to void the contact – in that case a maintenance services contract. In its proposal, Dongbuk had represented that it had several technicians meeting required licensing requirements, but after award the Army found that none possessed the required certificate.

The matter was referred to the local prosecutor’s office and ultimately Dongbuk’s CEO convicted of fraud and the company debarred. In the interim, Dongbuk had been performing the contract and submitting invoices for its work that the Government did not pay. Donguk’s final decision request was denied, and it appealed for payment to the ASBCA. The ASBCA granted summary judgment to the Government on the grounds that Dongbuk’s fraud voided the underlying contract, and that the fact that the Government may have received some benefit did not relieve Dongbuk from the consequences of its fraud.

This decision offers many lessons for prospective bidders / offerors; all learned the hard-way by Dongbuk.

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