|
EBCA No. C-9509187, C-9509220, C-9509221
Department of Energy Board of Contract Appeals
ROCKWELL INTERNATIONAL CORPORATION
1997 EBCA LEXIS 5;
97-1 B.C.A. (CCH) P28,814
CONTRACT:
Contract Nos. AD(29-2)-3533 and DE-AC04-76DP03533
JUDGES:
Sherman P. Kimball, Administrative Judge. Beryl S. Gilmore, Administrative
Judge, E. Barclay Van Doren, Chief Administrative Judge, concur.
COUNSEL:
Representing Appellant: Richard J. Ney, Esq., William J.
Kelley,
III. Esq.,
Christina A. Bull, Esq., CHADBOURNE
& PARKE, Los Angeles, California.
Representing Respondent: Donna M. Christensen, Esq., Laura E. Kilpatrick, Esq.,
United States Department of Energy, Albuquerque Operations Office, Albuquerque,
New Mexico.
OPINION BY: KIMBALL
RULING DENYING RESPONDENT'S MOTION FOR
SUMMARY JUDGMENT
This appeal involves a certified claim by Appellant Rockwell International
Corporation for
reimbursement of certain alleged
allowable costs, in the amount of $ 10,039,511, incurred under and authorized by its
contract with the Respondent Department of Energy (DOE or Government) to
manage and operate a government-owned facility known as Rocky Flats Plant. The appeal
was filed from a deemed denial of Appellant's claim pursuant to
§ 6(c)(5) of the Contract Disputes Act,
41 U.S.C. § 605(c)(5), which provides that the failure of the Contracting Officer to issue a decision within the time prescribed is deemed to be a decision denying the
claim.
Respondent has moved to dismiss the appeal or, in the alternative, for
summary judgment, on the ground that the costs claimed by Appellant are not
allowable as a matter of law by virtue of the Major
Fraud Act of 1988, Pub. L. No. 100-700, as amended by Pub. L. No. 103-355,
41 U.S.C. § 256. The Board treats the motion as one purely for
summary judgment. For the reasons that follow, the motion is denied.
THE FACTS
Determination of the motion before us revolves around the confluence of four
undisputed elements: first, the Federal investigation into
environmental violations out of which Appellant's claim for
reimbursement of
allowable costs arose; second, the
contractual provisions authorizing
reimbursement for
allowable costs; third, the impact of the cost limitation provisions of the Major
Fraud Act on the claim; and, finally, the
Plea Agreement between Appellant and the Department of Justice entered into in connection
with the
environmental violations and accepted by the United States District Court.
I
The Basis of Appellant's Claim
Appellant's claim
is for the attorneys' fees of outside counsel and litigation support costs
that Appellant incurred in
defending against the investigation into alleged criminal violations of
environmental laws and
regulations that occurred during Rockwell's operation of the plant. The investigation,
which began in June 1989, led to grand jury proceedings and ultimately, after
lengthy and protracted
negotiations, to pleas of guilty by Rockwell to ten criminal counts of knowingly or
negligently violating certain
environmental laws or
regulations, in United States v. Rockwell, U.S. District Court (D. Col.), Case No.
92-CR-107, and
fines of $ 18.5 million, pursuant to a
Plea Agreement between Rockwell and the Department of Justice on behalf of the Government,
dated March 26, 1992. Seven of the ten criminal counts to which Rockwell
pleaded guilty, applied to conduct that occurred exclusively in 1987 and 1988,
prior to the
effective date of the Major
Fraud Act. Of the remaining three counts that included some conduct in 1989, 47 of the
total of 188 days of violations of
environmental laws for which
fines were imposed occurred in 1989. Accordingly, of the 410 days of
environmental violations which resulted in the $ 18.5 million
fine, less than 12% of the total related to 1989 conduct, after the Act took
effect. See
Plea Agreement and Statement of Factual Basis, dated March 26, 1992, Appeal File
(A.F.), Tab
4.
Rockwell, consequently, incurred certain costs which it claims are
allowable under the
Plea Agreement and contracts herein. It retained outside legal counsel to represent it during
the
environmental investigation, between June 6, 1989 and December 31, 1989, to whom it paid $
1,157,364 (docketed as EBCA No. C-9509187). It also provided independent legal
counsel for certain Rockwell employees and
former employees who became involved in the ensuing grand jury investigation of the alleged
environmental violations as key witnesses or subjects, which cost $ 3,725,461 (EBCA No.
C-9509220). Finally, Rockwell retained LSI Corporation to develop and maintain
a computerized litigation support system data base for use in connection with
the Federal investigation and grand jury proceedings relating to the
environmental violations and also for
defending against resulting civil actions, for which it paid $ 5,156,686 (EBCA No.
C-9509221).
II
The Contracts
Rockwell's contract to
manage and operate Rocky Flats was first entered into,
effective June 30, 1975, with a predecessor agency, and provided that Rockwell was
entitled to
reimbursement of
allowable costs incurred in that connection. Approximately every five to six years, that
contract was modified in toto and a new contract was entered into by Rockwell
and DOE. n1 Modification No. M087 (hereinafter Mod. 87) and Mod. 124, which
became
effective on January 1, 1986, and January 1, 1989, respectively, constitute the basis
for Appellant's claim that the specific costs claimed are contractually
allowable.
n1 For example, Mod. 87 provides that it constitutes
"the entire agreement of the parties with respect to performance by the
contractor on or after January 1, 1986, without in any way affecting the rights of the
parties under prior
contractual agreements for periods of time prior to January 1, 1986." Mod. 124 contains a similar provision except that
"January 1, 1989" was substituted for
"January 1, 1986." See MacDonald Construction Company, 69-1 BCA
§ 7568, at 35,060 (IBCA).
Items of
allowable cost are set forth in P 54(d) of Mod. 87, including P 54(d)(16) which
Appellant characterizes as an
environmental indemnity provision. Para. 54(d) provides that
"the following items of cost of work done under this contract shall be
allowable....
(16) all cost incurred by [Rockwell] with respect to any and all liabilities,
claims, demands, damage costs, or penalties (such as civil sanctions including
fines), arising out of, or relating to
environmental, safety and health activities...."
In Mod. 124, the same provision appears as P 62(d)(16). In addition, set forth
in P 62(d) are other relevant items of
allowable costs, viz., expenses of
defending employees involved in legal actions and proceedings resulting from performing
their duties under the contract (P 62(d)(8)) and legal expenses and other costs
of
defending against claims and litigation brought against Rockwell arising out of contract
performance (P 62(d)(3) and (4)).
Rockwell's responsibility for management and operation of Rocky Flats ended on
December 31, 1989, by virtue of a transfer agreement (Mod. A 140) entered into
among Rockwell, EG&G Rocky Flats, Inc. (EG&G), and DOE, dated December 29, 1989. Under it, DOE agreed to pay all
allowable costs of Rockwell's activities necessary for the close-out and orderly
transfer of responsibilities from Rockwell to EG&G, which included the protection of Rockwell's continuing rights and interest
and those of its employees and
former employees. A.F., Tab 3, P 19(b).
III
The Major
Fraud Act of 1988
The Major
Fraud Act, inter alia, amended the Federal Property and Administrative Services Act of
1949 to limit the
allowability of costs incurred by
contractors under a covered contract in connection with any criminal, civil, or
administrative proceeding commenced by the United States or a State.
41 U.S.C. § 256(k)(1). In general, it prohibits reimbursing a
contractor if the proceeding relates to a violation of a Federal or state law or
regulation and results in a disposition of any of the following:
(a) a criminal conviction (§ 256(k)(2)(A));
(b) in a civil or
administrative proceeding involving an allegation of fraud, a determination of
contractor liability for violation of a law or
regulation (§ 256(k)(2)(B));
(c) the imposition of a monetary penalty in a civil or
administrative proceeding by reason of a violation of a law or
regulation (§ 256(k)(2)(C));
(d) a final decision to debar or suspend the
contractor, or to rescind or void the contract, (or terminate the contract for default (§ 256(k)(2)(D)); or
(e) a disposition by consent or compromise in any proceeding which could have
resulted in a disposition described in
§ 256(k)(2)(A),(B),(C), or (D) (§ 256(k)(2)(E)).
However, where a proceeding
"is commenced by the United States and is resolved by consent or compromise
pursuant to an agreement entered into between [the]
contractor and the United States, the costs incurred by the
contractor in connection with such proceeding that are otherwise not
allowable as
reimbursable costs under [§ 256(k)(1)] may be allowed to the extent specifically provided in [the]
agreement."
§ 256(k)(3). n2 The parties are at odds over the
applicability of this provision to this case.
n2 A similar provision applies to proceedings commenced by a State. The State
agency that awarded the covered contract may allow costs incurred in the
proceedings as
reimbursable costs if the agency determines that the costs were incurred as the result of a
specific term or condition of the contract, or specific written instructions of
the agency (§ 256(k)(4)).
The Act was passed on November 19, 1988, and became
effective thirty days later. By its own terms, the Act
"is
effective with respect to contracts awarded after November 19, 1988."
41 U.S.C.A. § 256 (Historical and Statutory Notes); see Pub. L. 100-700,
§ 8(e). The DOE
regulations implementing the Act, Department of Energy Acquisition
Regulation (DEAR), 48 CFR
§§ 970.5294-13(e)(33) and 50.5204-61, apply to contracts entered into on or after
December 22, 1993.
58 Fed. Reg. 61,625 (1993). n3
n3
"Renewals or extensions of M&O contracts...., substantively and legally, ....constitute an award of a new
contract and, as a matter of agency practice, new legislation enacted during
the prior period of performance which affects newly awarded contracts is
implemented in the extended contract."
58 Fed. Reg. 61,625, 61,626 (1993).
IV
The
Plea Agreement
Beginning in 1991, Rockwell and the Department of Justice entered into plea
negotiations which
"because of the range of issues and the technicalities associated with the
statutes and Rockwell's contract with DOE" were protracted. Department of Justice (DOJ) Report, April 8, 1994, Exhibit C
to Appellant's Opposition to Motion, 13. n4 Eventually, a
plea agreement, dated March 26, 1992, was reached
"through
negotiations involving concessions by both parties." Id. at 58.
n4 The Report is an after-the-fact response to a congressional inquiry critical
of the
plea agreement. While hearsay, the Report is admissible under Fed. Rule Evid. 803(8)(C),
particularly in view of the divergent positions of the parties. In the context
of a
plea agreement, the traditional parol evidence rule is subordinated to the protection of the
defendant who waives constitutional rights in entering the
plea agreement. See
Bemis v. United States, 30 F.3d 220, 222-23 (1st Cir. 1994).
The following paraphrased provisions of the
Plea Agreement ("P.A.") are pertinent:
Para. 6 - Rockwell will not seek to recover, pursuant to
indemnification provisions in Rockwell's contracts with DOE, and will not recover from DOE,
the criminal
fines paid by Rockwell in connection with this disposition.
Para. 7 - Except as provided in P 8, Rockwell will not seek to recover,
pursuant to
indemnification provisions in Rockwell's contracts with DOE, and will not recover from DOE,
the attorneys'
fees and costs incurred by Rockwell in
defending or preparing to defend the Rocky Flats
criminal investigation and prosecution (including this disposition and sentencing), concerning the
following subjects: (a) the manufacture, storage, treatment, disposal or other
management of pondcrete and saltcrete; (b) the use of the 207 solar ponds to
receive, treat or store hazardous or mixed wastes; (c) the manufacture,
storage, treatment or other management of vacuum filter sludge; (d) the
operation and management of the sewage treatment plant (including its influent
and effluent); (e) spray irrigation; (f) Rocky Flats' violation of the
biological oxygen demand and fecal coliform limits in its NPDES permit; and/or
(g) the chromic acid spill in February-March 1989.
Para. 8 - As authorized by
41 U.S.C., § 256(k)(3) and [48 CFR
§§ 970.5204-13(e)(33) and 970.5204-61], Rockwell may seek to recover from DOE
(and subject to DOE's review and approval in accordance with the relevant
contract(s)) and
applicable law and
regulations: (a) attorneys' fees and costs incurred by Rockwell (on behalf of the
corporation) prior to January 1, 1990 (but not thereafter);
(b) attorneys' fees and costs incurred by Rockwell in providing legal
representation to past and present Rockwell employees; and (c) costs concerning
a computer system which is also used in Rocky Flats-related civil litigation.
Contained in the DOJ Report are several relevant observations relating to these
provisions of the
Plea Agreement by the
prosecutors who negotiated the agreement, at 47-48:
"2. Attorneys' fees for attorneys provided to Rockwell employees.
Rockwell also sought the right to seek
indemnification of attorneys' fees for the attorneys paid for by Rockwell and provided to past
and present employees. Although the
prosecutors considered resisting this request, or attempting to limit it to the
"mere witnesses" (and not the targets), the
prosecutors felt under the DOE-Rockwell contract, they did not have a strong basis for
asking Rockwell to forego seeking
indemnification of these fees. (Emphasis
supplied.) Accordingly, the government agreed to permit Rockwell to seek
reimbursement of attorneys' fees for the individuals, including the targets....
3. The
applicability of the Major
Fraud Act.
* * *
In September 1991, DOE informed DOJ that the Major
Fraud Act (MFA) would determine whether Rockwell's attorneys' fees and defense costs
would be
reimbursable....
[The
prosecutors] believed the DOE's position on the
applicability of the MFA was legally untenable.... (Emphasis
supplied.) The MFA, on its face, applied to contracts entered into after November 19,
1988. The Rockwell contract most relevant to the investigation was entered into
on January 1, 1986 and continued in effect until December 31, 1989. DOE
maintained the Act would apply because Rockwell's legal fees and costs were,
for the most part, accrued after December 31, 1989. In [the prosecutors'] view,
however, the terms of the January 1986 contract would control because the legal
fees and costs related to the investigation of conduct that primarily occurred
during the pendency of that contract....
As a result, [the
prosecutors] proposed language in the agreement that specifically allowed Rockwell under
an exception to the MFA for
settlement agreements, to submit claims for
reimbursement for attorneys' fees in the categories discussed above." (Emphasis
supplied.)
At 49-50 of the DOJ Report
As a result of the
negotiations, the
Plea Agreement embodied the following terms:
* * *
5. Rockwell would not seek
reimbursement of the criminal
fines from DOE under the
indemnification provisions of its contracts with DOE [P.A., P 6];
6. Rockwell agreed not to submit claims under its DOE contracts for
indemnification of attorneys' fees and defense costs incurred on behalf of the corporation
concerning the
criminal investigation .... An exception was made for fees and costs incurred prior to January 1,
1990. Rockwell's responsibility for management and operation of Rocky Flats
expired on December 31, 1989. (Mod. A140) The agreement also specifically
authorized submission of claims under its contracts for fees and costs incurred
by Rockwell in providing legal representation for past and present employees
and for costs concerning a computer Rockwell had used in both criminal and
civil matters [P.A., PP 7
& 8].
Rockwell and DOJ specifically agreed that the application of the
indemnification provisions of the DOE contracts would be a matter left to DOE, and that the
Plea Agreement was not intended to predetermine
contractual issues concerning the existence of
"willful misconduct or lack of good faith" by Rockwell
"managerial
personnel."
DISCUSSION
I
It is
undisputed that since their inception Rockwell's contracts to
manage and operate Rocky Flats provided that Rockwell's
allowable costs so incurred were
reimbursable. Starting with the 1986 contract (Mod 87), an express provision was added to
include as
allowable those costs incurred by the
contractor with respect to any liabilities, claims, etc. arising out of or related to
environmental activities at Rocky Flats, the precise subject matter of the investigation.
The 1989 contract (Mod. 124) contained the same
environmental indemnity provision. An exception to such
allowability for costs which result from the
"willful misconduct or lack of good faith" on the part of Rockwell's
managerial
personnel is not an issue before the Board in connection with Respondent's motion. n5
n5 The
Plea Agreement provides, at P 9, that
"nothing in this agreement shall be construed as an admission by Rockwell, or a
determination by the Department of Justice, of 'willful misconduct or lack of good faith' by Rockwell's 'managerial
personnel', as such terms are used or defined in [the contract]."
It is further
undisputed that as a result of the Government's investigation into the alleged violations of
environmental laws by Appellant at Rocky Flats, Appellant incurred certain costs for legal
expenses made expressly
allowable under the 1989 contract (Mod. 124). Finally, it is also
undisputed that in its agreement with Rockwell and EG&G (Mod. A 140), DOE agreed to pay all
allowable costs of Rockwell's continuing obligation thereunder including all actions
necessary to protect Rockwell's continuing rights and those of its employees
and
former employees with the determination of
allowability to be made at a subsequent time, if necessary. A.F., Tab 3.
The question presented to the Board is whether, as Respondent contends, the
Major
Fraud Act as a matter of law bars the recovery of costs that might otherwise be
allowable under the contracts and
Plea Agreement. Put simply, does the Act in and of itself override the terms of the contracts
and
Plea Agreement so that the Appellant may not seek recovery?
II
At the outset, although not raised, much less briefed, by the parties, we are
constrained to begin our inquiry by questioning whether, in the light of
United States v. Winstar Corp., 64 F.3d 1531 (Fed. Cir. 1995), aff'd,
116 S. Ct. 2432 (1996), the Major
Fraud Act can override the contract and preclude a
contractor from seeking its costs expressly made
allowable by its contracts. The Federal Circuit said, at 1547,
"The terms of a Government contract, like any other contract, do not change with
the enactment of subsequent legislation absent a specific
contractual provision providing for such a change." A
contractual provision of this nature is absent here.
However, such an inquiry could lead us even further afield into the
applicability of the sovereign acts doctrine (e. g.,
Atlas Corp. v. United States, 895 F.2d 745, 754 (Fed. Cir. 1990)), raised by both the Federal Circuit and Supreme Court. Our analysis need not
look to Winstar or the minefield of the sovereign acts doctrine in order to
resolve the issue before us. Rather, more appropriately for a board, we have
reached our decision on a narrow ground.
First, we look to the Act, over the interpretation of which the parties are in
deep conflict. Respondent relies on
§ 256(k)(1) which provides that costs, otherwise
allowable, incurred in connection with a criminal proceeding are not
reimbursable where the proceeding has resulted in either of two alternative dispositions -- disposition by conviction or
disposition by consent or compromise that could have resulted in a disposition
by convicticn. (Emphasis
supplied.) Respondent contends that since the disposition by consent or compromise in
the guise of the
Plea Agreement not only
"could have resulted" in a conviction, but actually did, the exception in
§ 256(k)(3) which provides that where a proceeding is resolved by consent or
compromise pursuant to an agreement between the
contractor and the United States, costs that are otherwise unallowable, may be allowed to
the extent specifically provided in the agreement, is inapposite. In
Respondent's view, in order to fall within
§ 256(k)(3), the
"consent or compromise pursuant to an agreement" must fall short of providing for a conviction. Accordingly, Respondent
asserts, the
plea agreement cannot serve as a consent or compromise because it provided for a conviction.
Rockwell, however, maintains that the
plea agreement memorialized a compromise between it and Respondent which came within the
exception to the general
unallowability provision. Rockwell points to the absence in the subsection of any limitations
on the form or terms of a
settlement agreement that can provide for the
allowability of specific costs.
Moreover, Rockwell contends that the Act does not apply to most of the conduct
underlying the costs at issue and therefore does not bar recovery of those
costs. The conduct underlying the costs at issue took place for the most part
under the 1986 contract (Mod. 87) which was entered into before the Major
Fraud Act and the DEAR
regulation took effect. The Act applies only to contracts entered into on or after
November 19, 1988, and the DEAR implementing the Act only to contracts on or
after December 22, 1993.
58 Fed. Reg. 61,625 (1993). For this reason, Rockwell argues, Mod. 87 is not and cannot be a
"covered contract" within the meaning of
§ 256(k)(1) and only the 1989 contract (Mod. 124) and conduct thereunder is
covered by the Act. Accordingly, in Rockwell's view, the
allowability of approximately 88% of the costs at issue here are controlled by the 1986
contract and not by the Act or DEAR.
In this regard, Rockwell also argues that even under DOE's construction of the
Act, the costs in question would be
allowable. Rockwell here distinguishes between charged conduct and uncharged conduct. It asserts that the subjects listed in P 7 of
the
plea agreement are the violations for which it was charged and pleaded guilty, and the
attorneys' fees relating to those subjects are not recoverable. But the three
categories of costs in P 8, which it seeks to recover in this appeal, relate to
subjects for which Rockwell was not charged and did not plead guilty.
Consequently, Rockwell asserts that DOE's reading of the Act does not prevent
the costs'
allowability since they concern types of conduct that did not lead to or result in the
guilty plea.
Respondent strongly disagrees with such distinction or segregation of costs.
Respondent charges Rockwell's violations were of a continuing nature which were
an integral part of the
criminal investigation or
"proceeding" under the Major
Fraud Act. The limitations on
allowability set forth in the Act refer to
"proceeding" costs. The Act does not provide for segregation of costs and fees according to
when the criminal conduct occurred.
Thus, the parties construe the Act in sharply conflicting ways. Were we to
attempt to resolve these positions, the Board would be required to engage in a
lengthy exercise in statutory construction and break new ground However, treading in Congress' domain is a
last resort which we need not do because the
Plea Agreement, by reason of its acceptance by the court, is determinative here, even if
DOE's construction of the Act is correct.
III
In order to reach our conclusion that the
Plea Agreement is determinative, notwithstanding the Act, we have had to consider three
related questions. One, was the Department of Justice empowered to enter into
the
plea agreement? Two, what is the status of a
plea agreement? And, three, may the Board overturn the agreement as Respondent contends we
can?
First, it is beyond question that the Department of Justice (DOJ) has broad
authority to settle litigation where the United States is a party. See e. g.,
Executive Business Media, Inc. v. Department of Defense, 3 F.3d 759, 761, (4th Cir. 1993). Its authority may be limited, but only by a clear and
unambiguous directive by Congress.
United States v. Hercules, Inc., 961 F.2d 796, 798-99 (8th Cir. 1992). From our review of the Act, following closely the analysis in Hercules, we
conclude that it does not clearly and unambiguously limit DOJ's authority to settle.
When DOJ settles a matter, the terms of the
settlement or, in this case,
plea agreement, bind the entire Government. See, e.g.,
Stern v. Shalala, 14 F.3d 148 (2nd Cir. 1994), cert. denied,
116 S. Ct. 82 (1995), where terms of a
plea agreement between DOJ and the defendant were held to be binding on another department in
a subsequent
administrative proceeding. Indeed, the Supreme Court has said that DOJ's power to enter into
settlements includes
"the power to make erroneous decisions as well as correct ones."
Swift & Co. v. United States, 276 U.S. 311, 332 (1928).
Second, a
plea agreement is
contractual in nature and generally construed according to ordinary contract principles.
See, e.g.,
United States v. Floyd, 1 F.3d 867, 871 (9th Cir. 1993). As such, it has been held that the Government must fulfill the agreement made
with the defendant,
United States v. Strawser, 739 F.2d 1226, 1230 (7th Cir. 1984). It has also been held that a defendant, who has entered into a
plea agreement, must receive the consideration due him under the agreement,
United States v. Clark, 55 F.3d 9 (1st Cir. 1995), cert. denied,
S. Ct.
. Indeed, Respondent has acknowledged in its Supplemental Memorandum (pp. 1-2)
that the
plea agreement is valid and its terms fulfilled.
Moreover, in Respondent's view, only P 8 of the
Plea Agreement which reserved to it the responsibility to review and approve Appellant's cost
allowability claims in accordance with
applicable law and
regulations, is outstanding. Respondent contends that the
applicable law to which it must adhere in reviewing the claims is the Major
Fraud Act. It alleges in its Supplemental Memorandum (p. 5) that the Act statutorily
bars the claimed costs. Hence, it has moved for
summary judgment.
Respondent, however, concedes that, by reading the DOJ Report, the intent of
the parties to the
Plea Agreement was that the Major
Fraud Act would not provide a legal bar to Appellant. Respondent would prefer that we
not look to the DOJ Report as irrelevant. Since we have found it relevant,
Respondent calls upon the Board to rule that the
plea agreement is contrary to law, i.e., the Major
Fraud Act, which precluded DOJ from agreeing to exclude the costs claimed from the general
unallowability provisions of the Act. Accordingly, it is said that the Board, by virtue of
its inherent authority, may refuse to be bound by the
Plea Agreement as a stipulation contrary to the law.
In the case of an ordinary stipulation, Respondent's contention that the Board
is not bound by a stipulation that is contrary to the evidence or the law has
merit. See, e. g.
General Atomics Corporation, 91-3 BCA P24047 (ASBCA), at 120, 360 (citing
Kaminer Construction Corp. v. United States, 488 F.2d 980 (Ct. Cl. 1973)). In this case, however, this stipulation or
plea agreement does not stand alone but was expressly accepted by the Court and made part of
its judgment of June 1, 1992, under Rule 11 of the Federal Rules of Criminal
Procedure. As the Court observed in
United States v. Swift & Co., 286 U.S. 106, 115 (1932),
"We reject the argument....that a decree entered upon consent is to be treated
as a contract and not as a judicial act."
The effect of the Court's acceptance of the
plea agreement is to preclude the Board and Respondent from altering its terms. See
Brock v. Scheuner Corp., 841 F.2d 151, 154 (6th Cir. 1988). As held in
Town of Deerfield, New York v. Federal Communications Commission, 992 F.2d 420, 428 (2d Cir. 1992),
"[a] judgment entered by an Article III court.... is not subject to review by a
different branch of government."
For purposes of preclusion or judicial estoppel, Respondent and DOJ are
considered the same party. See, e.g.,
Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 402-03 (1940);
United States v. Rogers, 960 F.2d 1501, 1509 (10th Cir. 1992), cert. denied,
506 U.S. 1035 (1992). The doctrine of judicial estoppel forbids a party from taking a position
inconsistent with one successfully and unequivocally asserted by the same party
in a prior proceeding.
United States v. Owens, 54 F.3d 271, 275 (6th Cir. 1995).
Accordingly, even if, as Respondent contends, DOJ was circumscribed by the
Major
Fraud Act and unauthorized to except proceeding costs from the Act's
unallowability provisions in a consent or compromise which includes a conviction, the Board and Respondent are
precluded from maintaining that Rockwell may not seek the costs at issue.
Respondent is estopped from collaterally attacking the District Court's
judgment in this forum. See
Federated Dept. Stores Inc. v. Moitre, 452 U.S. 394, 398 (1981). The Board's hands are tied.
CONCLUSION
The motion for
summary judgment is denied. In view of the judgment of the District Court, the Major
Fraud Act and DEAR do not bar Appellant from seeking recovery of costs
allowable under its contracts with Respondent and the
Plea Agreement, and incurred before January 1, 1990.
Sherman P. Kimball
Administrative Judge
I concur:
Beryl S. Gilmore
Administrative Judge
I concur:
E. Barclay Van Doren
Chief Administrative Judge
End of Opinion. |