Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

United States v. Savannah River Nuclear Solutions, LLC

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

April 11, 2017

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

          ORDER

         This matter comes before the court pursuant to the court's earlier determination that, pursuant to 41 U.S.C. § 7107(f), it will request an advisory opinion from the Civilian Board of Contract Appeals (“CBCA”) on certain matters of contract interpretation that are under the court's consideration. (See ECF No. 42.) Having received briefing from the parties regarding the questions to be asked the CBCA in requesting an advisory opinion (see ECF Nos. 47, 48, 52, 53), the court concludes that it will ask the questions as set forth in the letter to the CBCA attached to this order for the reasons that follow.

         I. RELEVANT FACTUAL AND PROCEDURAL BACKGROUND

         The Government filed a complaint against Defendants Savannah River Nuclear Solutions, LLC (“SRNS”), and Fluor Federal Services, Inc. (“FFS”) (together, “Defendants”) alleging, among other things, that Defendants made false claims for payment, in violation of the False Claims Act (“FCA), 31 U.S.C. § 3729, et seq., by submitting for reimbursement certain home office expenses that the Government asserts were unallowable under the management and operations (“M&O”) contract underlying this action and applicable regulations governing the allowability of expenses in cost-reimbursement contracts with the federal government. (See ECF No. 1.) Defendants filed a motion to dismiss the Government's complaint pursuant to Fed.R.Civ.P. 12(b)(6), arguing with respect to claims involving home offices expenses, that the complaint, as relevant here, failed to sufficiently plead the falsity and scienter elements required for FCA claims. (See ECF No. 21.)

         On December 6, 2016, the court entered an order granting in part and denying in part Defendants' motion to dismiss the Government's complaint. (ECF No. 42.)[1] Regarding the falsity requirement, the court explained that “it would be appropriate to determine whether the applicable provisions of the M&O contract and regulations makes the challenged costs unallowable” because “when the objective falsity of a claim for a government contractor's reimbursement of costs turns on a purely legal determination of whether those costs are allowable under the applicable provisions of the underlying contract and regulations, it is appropriate to make this determination at the motion-to-dismiss stage.” (Id. at 31-32.) If the court determined that contract and regulations do not make the costs challenged in the complaint unallowable, then “there is no legal basis for concluding that the claim was false, a fundamental requirement of an FCA claim, and the complaint would state only a claim for which the court could not grant relief.” (Id. at 33.)

         Instead of making that determination, the court decided to grant Defendants' request (see id. at 33-38) to seek an advisory opinion on the matter from the CBCA, pursuant to § 7107(f), which, in relevant part, provides:

(1) In general.-Whenever an action involving an issue described in paragraph (2) is pending in a district court of the United States, the district court may request an agency board to provide the court with an advisory opinion on the matters of contract interpretation under consideration.
(2) Applicable issue.-An issue referred to in paragraph (1) is any issue that could be the proper subject of a final decision of a contracting officer appealable under this chapter.

41 U.S.C. § 7107(f)(1)-(2).

         Regarding the scienter requirement, the court explained that “a contractor is not liable under the FCA, if the claims at issue were submitted with nothing more regarding scienter than that the contractor believed the claims were valid under its interpretation of the underlying contract or regulation.” (ECF No. 42 at 44-45.) The court further explained that in assessing the contractor's belief, courts must be cognizant that the interpretation advanced by the contractor might be “the product of mere afterthought in an attempt to escape the scienter requirement” and that “a determination whether the contractor's interpretation was reasonable” would be relevant. (Id. at 45.) The court declined to determine whether Defendants' interpretation of the M&O contract and regulations precluded FCA liability at the motion to dismiss stage but determined that, because it was already requesting an advisory opinion from the CBCA as to the allowability of the challenged costs under the M&O contract and regulations, it would also be appropriate to request an advisory opinion as to the reasonableness of Defendants' interpretation of the M&O contract's and regulations' provisions regarding the allowability of the challenged costs. (See id.)

         Having determined that it would request an advisory opinion from the CBCA on the aspects of the falsity and scienter elements described above, the court denied without prejudice Defendants' motion to dismiss the FCA claims regarding home office expenses and stated that it would enter a stay in the proceedings in this case pending receipt of the advisory opinion. (See Id. at 61.) The court explained that, following receipt of the advisory opinion, Defendants would be free to renew or refile their motion to dismiss these claims. (See id.)

         Following the court's order, the court granted the Government's motion for leave to file briefs on the questions to be presented to the CBCA. (See ECF Nos. 44, 46.) Having received the briefs (see ECF Nos. 47, 48), the court also permitted the parties to file responses to each other's positions (see ECF No. 51), which the parties filed on January 10, 2017 (see ECF Nos. 52, 53).

         The Government proposes two questions for which the court should seek an advisory opinion from the CBCA:

(1) Whether, as pled in the United States' Complaint, the home office expenses for the loaned employees at the Department of Energy's Savannah River Nuclear Site were allowable costs under the Management and Operating Contract. See Attachment 1 (Complaint); Attachment 2 (M&O Contract).
(2) Whether, as pled in the United States' Complaint, the home office expenses for the loaned employees at the Department of Energy's Savannah River Nuclear Site were allowable costs under applicable regulations. See Attachment 1 (Complaint); see, e.g., DEAR 970.3102-3-70.

(ECF No. 47 at 2, 6.) The Government explains that these proposed questions are tailored to the matter of contract interpretation at issue in the motion to dismiss (whether the challenged costs are allowable under the M&O contract and applicable regulations) and minimize the potential for what the Government perceives as unnecessary fact-finding by the CBCA. (See Id. at 3.) The Government contends that the court should not request an advisory opinion from the CBCA as to the reasonableness of Defendants' interpretation because such a request is not permitted by § 7107(f), because opining on the reasonableness of Defendants' interpretation would require impermissible fact-finding in the context of a motion to dismiss, and because the issue of reasonableness itself would only be relevant to the factual determination of Defendants' scienter in submitting the claim which should not be decided at the motion to dismiss stage. (See Id. at 3-5.)

         In response, Defendants first contend that the Government's proposed questions refer to the challenged costs in a vague and inaccurate way and thus would prompt the CBCA to offer only a tautological opinion in response to the question. (See ECF No. 52 at 2-3.) In Defendants' view, the question should specify more clearly which costs are alleged to be unallowable. (See id.) Second, Defendants argue that the Government's proposed questions' reference to the costs “as pled in the Complaint” would unnecessarily limit the CBCA's consideration of allowability to the four corners of the complaint. (See Id. at 3-5.) This limitation would hinder the CBCA's ability to interpret the contractual provisions regarding the allowability of the challenged costs because, in Defendants' view, interpretation of the M&O contract may require resort to evidence beyond what may be alleged in the complaint. (See Id. at 3-4.) Moreover, Defendants assert that the questions posed to the CBCA should not limit the ability of the CBCA to conduct fact-finding because the court “should allow the CBCA to opine on the issue that Defendants and the government will eventually have to litigate anyway: whether the costs that were actually submitted are allowable under the contract and applicable regulations.” (Id. at 5.) Third, Defendants contend that the Government's questions unnecessarily segregate the questions of whether the costs are unallowable under the M&O contract and whether they are unallowable under the regulations. (See Id. at 5-6.) Fourth, Defendants argue that the court should pose to the CBCA a question regarding the reasonableness of Defendants' interpretation of the M&O contract and regulations with respect to the challenged costs. (See Id. at 6-8.) Defendants assert that such a question would be allowed by § 7107(f) and that answering such a question would otherwise be within the CBCA's jurisdiction. (See id.)

         Defendants also propose two questions for which the court should seek an advisory opinion from the CBCA:

1. Whether the challenged costs, i.e., the fully burdened labor costs of the corporate reachback employees, are allowable under the provisions of the M&O Contract and applicable regulations.
2. Whether it is objectively reasonable to interpret the M&O Contract and applicable regulations as ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.