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United States v. Savannah River Nuclear Solutions LLC

United States District Court, D. South Carolina, Aiken Division

December 6, 2016

United States of America, Plaintiff,
Savannah River Nuclear Solutions, LLC and Fluor Federal Services, Inc., Defendants.


         The Government filed a complaint against two government contractors, Defendants Savannah River Nuclear Solutions, LLC (“SRNS”) and Fluor Federal Services, Inc. (“FFS”), raising six claims for relief, including three counts pursuant to the False Claims Act (“FCA”), 31 U.S.C. § 3729, et seq., and three counts asserting common-law liability. (ECF No. 1.) Before the court is Defendants' motion to dismiss the Government's complaint pursuant to Fed.R.Civ.P. 12(b)(1) and (6). (ECF No. 21.) For the reasons that follow, the court GRANTS Defendants' motion to dismiss IN PART and DENIES it IN PART.


         A. Factual Background

         In March 2007, the U.S. Department of Energy (“DOE”) issued a request for proposals (“RFP”) to prospective offerors for award of a management and operations contract (“M&O contract”) at the Savannah River Site, a DOE facility that processes and stores nuclear materials and is dedicated to environmental management and cleanup of the facility. (ECF No. 21-3 at 2-3.) Under clause H-20, titled “Home Office Expenses, ” the RFP provided that “[h]ome office [(‘HO')] expenses, whether direct or indirect, relating to the activities of the Contractor are unallowable, except as otherwise specifically provided in the Contract or specifically agreed to in writing by the [contracting officer (‘CO')] consistent with [Department of Energy Acquisition Regulation (the ‘DEAR')] 970.3102-3-70, ‘Home Office Expenses.'” (ECF No. 21-3 at 63; see Id. at 4 (executive summary of the RFP).) Under clause I.51(j), titled “Determining allowable costs, ” the RFP also provided that the CO “shall determine allowable costs in accordance with the Federal Acquisition Regulation [(the ‘FAR')] subpart 31.2 and the [DEAR] subpart 48 CFR 970.31.” (ECF No. 21-4 at 26.) The subpart cited by the RFP states that “Independent Research and Development Bid and Proposal [(‘B&P')] costs are unallowable.” 48 C.F.R. § 970.3102-05-18; (see ECF No. 1 at 8 (citing subpart and analogous clause in M&O contract).)

         The M&O contract was awarded to SRNS, which signed the contract on June 16, 2008, and commenced performance on August 1, 2008. (ECF No. 1 at 3, 6; ECF No. 21-2 at 7; ECF No. 21-5 at 2, 4-5.) The M&O contract is a cost-reimbursement contract, which means that SRNS would be reimbursed for actual costs it incurred in furtherance of performing work under the contract-so long as those costs are allowable-and would earn a fee that represents its profits. (ECF No. 1 at 6.) To receive its reimbursement for allowable costs, SRNS would “collect[] and consolidate[] invoices associated with its contract work scope” and draw daily upon a letter of credit to pay for those invoices. (Id. at 6-7.) From August 1, 2008, to December 31, 2015, using this method of reimbursement, “SRNS claimed and received more than $8 billion from [the] DOE under the M&O contract in reimbursement for its incurred costs.” (Id. at 7.)

         The M&O contract contained both clauses H-20, the clause regarding HO expenses, and I.51(j), the clause incorporating regulations regarding B&P costs, which were included in the RFP. (ECF No. 21-5 at 62; ECF No. 21-6 at 73.) Although not specifically mentioned in the RFP or in the M&O contract, the Government alleges, and Defendants agree, that “SRNS was authorized to enter into loaned employee agreements with its owners and their affiliates, ” such as FFS, under a practice known as “corporate reachback.”[2] (ECF No. 1 at 9.) As the complaint states,

[t]he purpose of the loaned employee agreements is to allow for “reachback” to the SRNS member companies' employee pool for critical skills needed in the performance of the M&O contract at the Savannah River Site. The practice of using loaned employees has come to be known as “corporate reachback.”
Corporate reachback consists of an intra-company human resources cost transfer and is not a subcontract with an outside source. As an acceptable and approved human resources technique, personnel are loaned pursuant to a cost transfer agreement and not a procurement (sub) contract.


         SRNS and FFS entered a cost transfer agreement (“CTA”) on December 22, 2008, which governed the corporate reachback program as between SRNS and FFS and specifically established procedures “for invoicing of costs incurred for [FFS] to provide personnel support” and for FFS “home office personnel who perform SRNS work” and “for processing and paying FFS invoices.” (ECF No. 21-7 at 2.) In a clause titled “Reimbursement for Labor Costs, ” the CTA provided that “SRNS shall reimburse FFS for actual direct labor costs and associated indirect burdens, ” including “[o]verhead charges.” (Id. at 3-4.) The CTA further provided, in a clause titled “Reimbursement for Expenses of Home Officer Personnel, ” that “allocations of home office expenses to FFS Loaned Employee costs are unallowable in accordance with the provisions of the [M&O c]ontract.” (Id. at 5.) The same clause provided that, “[n]otwithstanding the above, SRNS will reimburse FFS for the costs of FFS personnel who are not Loaned Employees . . . who perform work in support of SRNS.” (Id.)

         In May 2010, SRNS's president, who was also a reachback employee of FFS, wrote a letter to the DOE, notifying it that SRNS and FFS were processing corporate reachback employee costs in accordance with the CTA. (ECF No. 1 at 10.) The Government alleges that Defendants “knew this statement was false” and “were knowingly charging both [HO] expenses and [B&P] costs to the DOE in direct violation of the [CTA] and . . . the M&O contract.” (Id.)

         On April 20, 2011, SRNS managers, some of whom were FFS reachback employees, received an internal audit report regarding the reachback program and the reimbursement for FFS employees performing work for SRNS under the CTA. (Id. at 11; ECF No. 21-8 at 7.) The report concluded that the portion of the CTA providing that SRNS would reimburse FFS for FFS personnel who are not loaned employees and who perform work in support of SRNS was inconsistent with clause H-20 of the M&O contract. (ECF No. 21-8 at 28.)[3] In a response, which is incorporated into the report, SRNS management did not concur with the report's conclusion, asserting instead that the allocability and allowability of HO expenses are governed by the Cost Accounting Standards (the “CAS”) found in the FAR, 48 C.F.R. ch. 99, subch. B, pt. 9904. (Id. at 29.) Under the CAS, SRNS management continued, “these questioned costs for Corporate Support are not an allocation of [HO] Expense, but are directly allocable and allowable costs that support work processes required by [the M&O c]ontracts but are performed in a location other than the Savannah River Site. Therefore, these costs questioned are allowable.” (Id. at 29.) In short, SRNS management stated that they “fundamentally disagree[d] that these costs should be categorized as [HO] Expense. (Id. at 30.)

         On May 20, 2011, an SRNS officer, Greg Ahlstrom, contacted the DOE, informing it that no FFS HO expenses were being billed to the DOE, but “insist[ing] that [FFS] did not believe that [FFS] loaned employee expenses met the definition of [HO] expenses prohibited by the M&O contract.” (ECF No. 1 at 12.) The Government alleges that Ahlstrom's communication was “false[]” and that he “did not inform [the] DOE that this interpretation was in direct contradiction to the [CTA] . . . and was in direct contradiction to the findings of, and management response to, the . . . internal audit [report].” (Id.) Following Ahlstrom's communication, the DOE initiated its own audit to determine whether any costs charged pursuant to the reachback program were unallowable. (Id.)

         On January 31, 2012, SRNS and FFS modified the CTA by replacing the language stating that “allocations of [HO] expenses to FFS Loaned Employee costs are unallowable” to language stating that “allocations of [HO] expenses to the SRNS segment costs are unallowable.” (Id. at 13 (internal quotation marks omitted).) The Government alleges that this modification was done “secretly” and that Defendants “knew that this change was directly at odds with the original meaning and intent of the [CTA] and . . . with the explicit contractual and regulatory provisions pertaining to [HO] expenses billed to [the] DOE.” (Id.)

         On May 21, 2012, SRNS forwarded to the DOE an internal audit that “review[ed] . . . expenses and burdens applied to the corporate reachback employee[s] working at SRNS.” (Id. (internal quotation marks omitted).) The Government alleges that this communication was “the first time [the DOE] had actual evidence that [HO] expenses were being included in incurred costs submissions and billings to [the] DOE.” (Id. at 14.)

         Between July and October 2012, an auditing firm brought in by the DOE's Office of Inspector General (“OIG”) conducted an “audit of [HO] expenses submitted by FFS.” (ECF No. 21-2 at 7.) The OIG report, issued October 10, 2012, concluded that “[SRNS]'s costs incurred for [the M&O contract], for the period August 1, 2008 through August 21, 2012, included [HO] expenses of $1, 256, 481 . . . resulting from its use of [FFS] loaned employees.” (Id. at 8, 22.) In January 2013, following the issuance of the OIG report, the DOE CO “issued a finding that all home expenses . . . billed to [the] DOE through the corporate reachback program . . . were unallowable.” (ECF No. 1 at 14.) In April 2015, the DOE sent SRNS a cease-and-desist letter, demanding that SRNS discontinue its billing of HO expenses to the DOE under the M&O contract. (Id.)

         On March 14, 2016, the Government filed a complaint against Defendants in this court, alleging the factual background outlined in the above paragraphs, as supplemented by the documents the court properly considers at this stage of litigation. (See ECF No. 1 at 3, 5-14; Part II, infra.) The complaint includes three counts of FCA violations against both Defendants, one count of breach of contract against SRNS, one count of unjust enrichment against FFS, and one count of payment by mistake against both Defendants. (Id. at 21-24.)

         B. Alleged false and fraudulent claims

         In its complaint, the Government alleges that Defendants made three types of false and/or fraudulent claims. First, the Government alleges that “[b]etween October 2008 and December 31, 2015, [FFS] submitted invoices to SRNS and caused those invoices to be claimed to the DOE under the M&O contract for explicitly unallowable [B&P] costs.” (Id. at 14.) For each invoice, the Government alleges that FFS “knowingly and falsely certified that the costs included in the invoice were in accordance with the requirements of the M&O contract and therefore did not contain explicitly unallowable [HO] and [B&P] costs.” (Id.; see Id. (reiterating that “[FFS] knew that these certifications were false and also knowingly caused the submission of false and fraudulent claims by SRNS to [the] DOE”).) Although this type of fraudulent claim focuses on FFS's culpability for submitting invoices to SRNS, the Government's complaint alleges that “[FFS] and SRNS have knowingly and fraudulently claimed more than $5, 203, 000 in contractually unallowable [HO] and [B&P] costs.” (Id.)

         Second, the Government alleges that SRNS knowingly submitted false annual certifications. Under the terms of the M&O contract, “SRNS was required to review its claimed costs annually, including its reachback costs, and certify that all costs were allowable, allocable, reasonable, and had properly been incurred in furtherance of SRNS's contract scope of work.” (Id. at 15.) In each October of 2008, 2009, 2010, 2011, and 2012, an SRNS officer submitted to the DOE a signed statement, certifying that “the [c]osts [i]ncurred and [c]laimed are allowable and reasonable in accordance with the terms of the [M&O] contract and applicable laws and regulations.” (Id. at 15-17.) The Government alleges that, for each certification, both SRNS and FFS “knew th[e] certification was false and knew that [they] submitted and caused to be submitted false and fraudulent claims that contained unallowable [HO] and [B&P] costs.” (Id.) In October 2013 and again in March 2015, an SRNS officer submitted to the DOE a signed statement, making the same certification as in previous years. (Id. at 18.) However, these last two certifications contained footnotes, in which the officer explained that SRNS had been notified of a “potential civil action with regard to the application of overheads on contract charges for [FFS] employees . . ., involv[ing] accounting mischarges and false certification of claimed costs regarding [HO] expenses, [B&P] expenses.” (Id.) The Government lodges the same allegation regarding these last two certifications as it lodged regarding previous certifications: SRNS and FFS “knew th[e] certification was false and knew that [they] submitted and caused to be submitted false and fraudulent claims that contained unallowable [HO] and [B&P] costs.” (Id. at 18-19.)

         Third, the Government alleges that “[b]etween October 8, 2008, and December 31, 2015, [FFS] submitted 573 claims to SRNS in connection with its reachback employees that it knew contained unallowable [HO] and [B&P] costs in direct violation of DOE [r]egulations and the M&O contract” and that FFS and SRNS “knowingly colluded and submitted or caused to be submitted claims to the DOE under the M&O contract that included the fraudulent [HO] and [B&P] costs.” (Id. at 19.) The Government further alleges that “SRNS and [FFS] knowingly and fraudulently certified that [they] had not included any unallowable costs in [SRNS]'s [letter-of-credit] drawdowns.” (Id.)

         C. Motion to Dismiss

         Defendants filed the instant motion to dismiss on May 20, 2016, arguing, pursuant to Rule 12(b)(6), that the three FCA counts, the unjust enrichment count, and the payment by mistake count fail to state a claim upon which relief could be granted and that, pursuant to Rule 12(b)(1), the court lacks subject-matter jurisdiction over the breach of contract count. (See ECF No. 21; ECF No. 21-1.) The issues raised by the motion have been fully briefed, and the court held a hearing on the motion on November 7, 2016.


         Before turning to the parties' arguments, the court preliminarily must determine what documents appropriately may be considered in its Rule 12(b)(6) assessment. Defendants have attached 11 exhibits to their motion to dismiss: (1) the OIG audit report (ECF No. 21-2), (2) the RFP for which SRNS was formed and for which it was awarded the M&O contract (ECF Nos. 21-3, 21-4), (3) the M&O contract (ECF Nos. 21-5, 21-6), (4) the December 22, 2008 CTA between SRNS and FFS (ECF No. 21-7), (5) the April 20, 2011 internal audit report completed by SRNS (ECF Nos. 21-8, 21-9), (6) email correspondence between the DOE CO and SRNS management discussing whether HO expenses would be disallowed (ECF No. 21-10), (7) a May 24, 2010 letter from SRNS's president to DOE officials summarizing SRNS's activities pursuant to the M&O contract's reachback provisions (ECF No. 21-11), (8) a complaint filed by SRNS against the DOE on May 19, 2016, in the Civilian Board of Contract Appeals (“CBCA”) (ECF No. 41), (9) SRNS's response in opposition to the DOE's motion to dismiss the CBCA complaint[4] (ECF No. 41-1), (10) the DOE's reply to SRNS's response (ECF No. 41-2), and (11) SRNS's sur-reply to the DOE's reply (ECF No. 41-3). In addition to these documentary exhibits, Defendants' motion to dismiss also frequently references portions of the FAR, specifically the CAS, which is found therein, and portions of the DEAR, 48 C.F.R. ch. 9. (See ECF No. 21-1 at 15-19, 22.)

         Defendants contend that because many of their exhibits “are explicitly referenced throughout the Complaint and are integral to the Government's claims” or because they are either “in [the Government]'s possession” or within the Government's knowledge and the Government “clearly relied on [them] in forming the Complaint, ” “the [c]ourt may consider [them] for purposes of the instant motion without converting it into a motion for summary judgment.” (ECF No. 21-1 at 10-14 nn.1-5, 27 n.10.) Defendants also note that the CAS are binding on the parties both by the terms of the M&O contract and by statute, that the M&O contract's HO expense provision referred to the DEAR, and that the Government relies on the DEAR regulations in its complaint. (Id. at 15 & n.6, 26 n.9, 27, 30.) In response, the Government states that it “has no objection to th[e] principle [that the court may refer to documents referenced in the complaint without converting the motion into one for summary judgment]-except where . . . Defendants use these exhibits to support bald and factually incorrect assertions, unconnected to any specific allegations in the Complaint.” (ECF No. 26 at 18 n.5). The Government offers only one example of a document that fits into this vaguely-worded exception. Noting that its complaint references the OIG audit report, the Government argues that this does not mean that it would be proper for the court to consider Defendants' response to the OIG audit, which is contained in the report. (Id.; see ECF No. 21-2 at 14-20.)

         Although courts “generally do not consider extrinsic evidence when evaluating the sufficiency of a complaint, ” in a motion under Rule 12(b)(6), there are exceptions: for example, courts “may properly consider documents attached to a . . . motion to dismiss ‘so long as they are integral to the complaint and authentic.'” Anand v. Ocwen Loan Servicing, LLC, 754 F.3d 195, 198 (4th Cir. 2014) (quoting Philips v. Pitt Cty. Mem. Hosp., 572 F.3d 176, 180 (4th Cir. 2009)). Thus the court may consider documents that are “integral to and explicitly relied on in the complaint” when the Government “do[es] not challenge [their] authenticity.” Phillips v. LCI Int'l, Inc., 190 F.3d 609, 618 (4th Cir. 1999); accord Zak v. Chelsea Therapeutics Int'l, Inc., 780 F.3d 597, 606-07 (4th Cir. 2015); The Fourth Circuit has explained that

“[t]he rationale underlying this exception is that the primary problem raised by looking to documents outside the complaint-lack of notice to the plaintiff- is dissipated where plaintiff has actual notice and has relied upon these documents in framing the complaint. What the rule seeks to prevent is the situation in which a plaintiff is able to maintain a claim of fraud by extracting an isolated statement from a document and placing it in the complaint, even though if the statement were examined in the full context of the document, it would be clear that the statement was not fraudulent.”

Am. Chiropractic Ass'n v. Trigon Healthcare, Inc., 367 F.3d 212, 234 (4th Cir. 2004) (internal quotation marks, brackets, and ellipsis omitted) (quoting In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)); see also Pension Benefits Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3rd Cir. 1993) (“[A] court may properly consider a concededly authentic document upon which the complaint is based when the defendant attaches such a document to its motion to dismiss . . . . Otherwise, a plaintiff with a legally deficient claim could survive a motion to dismiss simply by failing to attach a dispositive document.”).

         The Fourth Circuit has not definitively set forth a standard for deciding when a document attached to a motion to dismiss should be considered “integral” to a complaint. See Goines v. Valley Comty. Servs. Bd., 822 F.3d 159, 166 (4th Cir. 2016). However, reviewing Second Circuit case law in the recent Goines opinion, the Fourth Circuit suggested that a relevant inquiry may include whether the complaint's “claims . . . turn on, []or are . . . otherwise based on, statements contained in the [document].” Id. (citing Smith v. Hogan, 794 F.3d 249, 255 (2d Cir. 2015) (document with “no independent legal significance to [plaintiff's] claim” was not integral to complaint); Sira v. Morton, 380 F.3d 57, 67 (2d Cir. 2004) (“Limited quotation from or reference to documents that may constitute relevant evidence in a case is not enough to incorporate those documents, wholesale, into the complaint.”); Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002) (explaining that a document is “integral to the complaint” “where the complaint relies heavily upon its terms and effect” (internal quotation marks omitted))). The Goines Court also indicated that it is relevant whether the plaintiff disputes that the document proffered by the moving defendant is integral to the complaint. Cf. Id. (“[B]ecause [plaintiff] does not argue otherwise, we will assume without deciding that the [document] was integral to the complaint.”).

         In numerous cases, the U.S. District Court for the District of Maryland has adopted what appears to be a higher standard than that suggested in Goines: “To be ‘integral, ' a document must be one ‘that by its very existence, and not the mere information it contains, gives rise to the legal rights asserted.'” Royster v. Gahler, 154 F.Supp.3d 206, 227 (D. Md. 2015) (quoting Chesapeake Bay Found., Inc. v. Severstal Sparrows Point, LLC, 794 F.Supp.2d 602, 611 (D. Md. 2011)). Other courts within the Fourth Circuit, including this court, have employed this standard prior to the Fourth Circuit's recent opinion in Goines. See Tinsley v. OneWest Bank, FSB, 4 F.Supp.3d 805, 819 (S.D. W.Va. 2014); Tisdale v. Enter. Leasing Co.-Se., LLC, No. 3:13cv221-MU, 2013 WL 3227927, at *2 n.2 (W.D. N.C. June 25, 2013); Mozingo v. Orkin, Inc., No. 4:10-cv-71, 2011 WL 845896, at *4 (E.D. N.C. March 8, 2011); Alexander v. City of Greensboro, 762 F.Supp.2d 764, 822 (M.D. N.C. 2011); Hendrix Ins. Agency, Inc. v. Continental Cas. Co., No. 7:10-2141-HMH, 2010 WL 4608769, at *4 (D.S.C. Nov. 3, 2010); Walker v. S.W.I.F.T. SCRL, 517 F.Supp.2d 801, 806 (E.D. Va. 2007).

         In the instant motion, Defendants argue that the M&O contract (ECF Nos. 21-5, 21-6), the CTA (ECF No. 21-7), the internal audit report (ECF Nos. 21-8, 21-9), the email correspondence regarding HO expense disallowance (ECF No. 21-10), and the letter regarding the reachback program (ECF No. 21-11) fall under this exception and thus may be considered in resolving the Rule 12(b)(6) motion. (ECF No. 21-1 at 11-14 nn.2-5, 27 n.10.) Because the Government references these documents in its complaint and does not dispute the authenticity of any of them, the only issue is whether the documents are integral within the meaning of the exception. The court has no trouble concluding that the M&O contract is integral under the higher standard employed in the District of Maryland, as the M&O contract gives rise to the legal rights asserted by the Government against SRNS. Without the M&O contract, which allegedly binds SRNS, preventing it from charging HO expenses and B&P costs, the Government could not assert any of the six counts contained in the complaint against SRNS. The court likewise concludes that the CTA is integral, as it gives rise, in part, to the legal rights asserted by the Government against FFS. The complaint expressly relies on the fact that FFS was bound by the CTA so that FFS could not charge HO expenses and B&P costs to the DOE (see ECF No. 1 at 9-11), and the invalidity of the charges underlies all six counts in the Government's complaint.

         The M&O contract directly references each of the DEAR provisions cited in Defendants' motion to dismiss (compare ECF No. 21-5 at 62, 77, 80, with ECF No. 21-1 at 11, 26 n.9, 27), and it incorporates by reference “with the same force and effect as if they were given in full text” (ECF No. 21-5 at 88, 90) the requirement that the contractor “[c]omply with all CAS” as set forth “in 48 CFR part 9904, ” 48 C.F.R. § 52.230-2. Because the M&O contract incorporates or refers to the CAS and DEAR provisions that Defendants cite in their motion to dismiss, the court will consider these provisions under the exception.

         Whether the internal audit report (ECF Nos. 21-8, 21-9) is integral is a little more difficult to decide. The Government's complaint refers to the internal audit report to support its allegation that Defendants were aware that the CTA governed the invoicing of FFS's costs relating to reachback employees, because the internal audit report stated as much (see ECF No. 1 at 11-12), and its allegation that Defendants did not inform the DOE that their interpretation of the M&O contract's HO provision was at odds with the internal audit report (see Id. at 12), which inferentially supports the allegation that Defendants knew their claims were false or fraudulent.[5]Arguably, the report would be integral under the District of Maryland standard, as the existence of the report and Defendants' alleged nondisclosure of it and their disagreement with its conclusions give rise to the requisite scienter element of the complaint's FCA counts. It is more likely to be integral under the standard suggested by Goines because the Government's FCA claims turn, or are based, in part on Defendants' failure to disclose statements contained in the report. The court notes that considering the report at this stage accords with the reason for the exception. The Government had ample notice of the report's existence prior to filing the complaint and has framed portions of it complaint in reliance on the report's existence as well as its contents. See Trigon, 367 F.3d at 234. Further, consideration of the report would prevent the Government from advancing fraud claims by relying on only selected portions of a document it chose not to attach to its complaint. Id. Accordingly, the court concludes that it is proper to consider the internal audit report in resolving the 12(b)(6) motion.

         The court concludes, however, that the email correspondence (ECF No. 21-10) and the May 24, 2010 letter (ECF No. 21-11) will not be considered under the exception. As Defendants note (ECF No. 21-1 at 8 n.5), the complaint does not reference the entire email chain they attach as an exhibit, but instead references a single January 29, 2013 email in which the DOE CO notified Defendants of his decision that the HO expenses were disallowed. (Compare ECF No. 1 at 14, with ECF No. 21-10.) Defendants would like the rest of the email chain considered as it shows that, after January 29, 2013, they continued claiming the disputed costs under a claim of right because the contracting officer refused to render a final decision. (See ECF No. 1 at 13-15 (citing 41 C.F.R. § 7103(a)(3); 48 C.F.R. § 32.605(a)(1)).) However, because, as discussed more thoroughly below, the complaint's allegations make clear that all of Defendants claims for the disputed costs on and after May 20, 2011, were made under a claim of right, it is unnecessary to consider the remainder of the email chain. Similarly, Defendants request that the May 24, 2010 letter be considered only in their efforts to show that the disputed costs were allowable under the M&O contract (see ECF No. 21-1 at 25-28), but, because the court declines to determine at this stage whether or not the costs were allowable, the letter will not be considered. Accordingly, the court does not need to consider these documents beyond the factual allegations regarding them in the complaint, which the court must assume to be true. See Anand, 754 F.3d 195 (noting that court's “may properly consider documents attached to a . . . motion to dismiss” (emphasis added)).

         The court concludes that the RFP (ECF Nos. 21-3, 21-4) does not fall under the exception. Contrary to Defendants' assertion (see ECF No. 21-1 at 11 n.2), the Government's complaint never references, even obliquely, the RFP. Moreover the claims in the complaint do not turn, and are not based on, statements contained within the RFP. However, the court may take judicial notice of the RFP, pursuant to Fed.R.Evid. 201, because it is a matter of public record. See Papasan v. Allain, 478 U.S. 265, 268 n.1 (1986) (“Although this case comes to us on a motion to dismiss under [Rule 12(b)(6)], we are not precluded in our review of the complaint from taking notice of items in the public record . . . .”); id. (suggesting consideration of items in the public record is more appropriate when it is “not disputed by the parties”); United States v. Zayyad, 741 F.3d 452, 463-64 (4th Cir. 2014) (explaining that courts may take judicial notice of “indisputable facts, ” such as “when they are ‘generally known within the trial court's territorial jurisdiction” or they “can be accurately and readily determined from sources whose accuracy cannot be reasonably questioned'” (quoting Fed.R.Evid. 201(b))); Haw. Coal. for Health v. Hawaii, 576 F.Supp.2d 1114, 1119 n.3 (D. Haw. 2008) (taking judicial notice of an RFP because it is “a matter of public record” (internal quotation marks omitted)). Likewise, the court may take judicial notice of the OIG report (ECF No. 21-2) pursuant to Rule 201 because it is a matter of public record, available at the DOE's website.[6] The court may also take judicial notice of the filings in the CBCA (ECF Nos. 26-1, 41, 41-1, 41-2, 41-3), although not the content therein, under the same rule. See Nolte v. Capital One Fin. Corp., 390 F.3d 311, 317 n.* (4th Cir. 2004); Colonial Penn Inc. Co. v. Coil, 887 F.2d 1236, 1239-40 (4th Cir. 1989). Accordingly, the court will consider the RFP, the OIG report, and the CBCA filings.[7]

         In sum, the court's decision takes into consideration the OIG audit report, the RFP, the M&O contract, the CTA, the internal audit report, and the CBCA filings. The court does not consider the email correspondence or the letter Defendants attached as exhibits to their motion to dismiss beyond the factual allegations regarding them in the complaint.


         A. Rule 12(b)(6) standard

         Defendants move to dismiss five counts of the complaint pursuant to Rule 12(b)(6). A motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted “challenges the legal sufficiency of a complaint.” Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009) (citations omitted); see also Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (“A motion to dismiss under Rule 12(b)(6) . . . does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.”). To be legally sufficient a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2).

         “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). This means that a complainant's factual allegations “must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Twombly, 550 U.S. at 555-56 (citations omitted). When considering a motion to dismiss, the court should accept as true all well-pleaded allegations and should view the complaint in a light most favorable to the complainant. Ostrzenski v. Seigel, 177 F.3d 245, 251 (4th Cir. 1999); Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993).

         “In addition, claims under the FCA ‘must also meet the more stringent particularity requirement of Federal Rule of Civil Procedure 9(b).'” United States v. Triple Canopy, Inc., 775 F.3d 628, 634 (4th Cir. 2015) (quoting United States ex rel. Ahumada v. NISH, 756 F.3d 268, 280 (4th Cir. 2014)), vacated on other grounds, 136 S.Ct. 2504 (2016); see also United States ex rel. v. Takeda Pharm. N. Am., Inc., 707 F.3d 451, 456 (4th Cir. 2013) (“We have adhered firmly to the strictures of Rule 9(b) in applying its terms to cases brought under the [FCA].”). “Rule 9(b) requires that ‘an FCA plaintiff must, at a minimum, describe the time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby.'” Triple Canopy, 775 F.3d at 634 (quoting United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 379 (4th Cir. 2008). “More precisely, the complaint must allege ‘the who, what, when, where and how of the alleged fraud.'” Ahumada, 756 F.3d at 280 (quoting Wilson, 525 F.3d at 379). “Requiring such particularized pleading . . . ‘prevents frivolous suits, eliminates fraud actions in which all the facts are learned after discovery, and protects defendants from harm to their goodwill and reputation.'” Id. at 280-81 (brackets and ellipses omitted) (quoting Takeda, 707 F.3d at 456).

         B. Rule 12(b)(1) Standard

         Defendants move to dismiss one count of the complaint pursuant to Rule 12(b)(1). A motion to dismiss for lack of subject matter jurisdiction raises the fundamental question of whether a court has jurisdiction to adjudicate the matter before it. Fed.R.Civ.P. 12(b)(1). “Federal courts are courts of limited subject matter jurisdiction, and as such there is no presumption that the court has jurisdiction.” Pinkley, Inc. v. City of Frederick, 191 F.3d 394, 399 (4th Cir. 1999). “In determining whether jurisdiction exists, the district court is to regard the pleadings' allegations as mere evidence on the issue, and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment.” Richmond, Fredericksburg & Potomac R.R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991) (citing Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982)). “The moving party should prevail only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law.” Id. In a motion to dismiss pursuant to Rule 12(b)(1), “[t]he burden of establishing subject matter jurisdiction rests with the plaintiff.” Demetres v. E.W. Constr., Inc., 776 F.3d 271, 272 (4th Cir. 2015).

         IV. ...

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