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United States Civilian Board of Contract Appeals
Decided October 1, 2020

Facts: Regiment Construction Corp. (Regiment) filed a certified claim on a contract with the Department of Veterans Affairs (VA).  The contracting officer did not issue a decision on the claim within the required time limit, and so the claim was “deemed denied.”  Regiment began settlement discussions with the Government.  During that period, Regiment also settled a DoJ investigation into Regiment’s status as a Service-Disabled Veteran-Owned Small Business (SDVOSB).   The DoJ settlement had Regiment paying the Government restitution. However, the settlement agreement with the DoJ also explicitly stated that the settlement was not an admission of guilt. When bidding the initial VA contract, Regiment had claimed to be an SDVOSB.  The VA claimed the contract was void due to fraud and that the issue of fraud was already settled by the DoJ settlement. They claimed that Regiment fraudulently claimed their status as a SDVOSB when they bid the contract.  The VA filed a motion for summary judgment to void the contract.

Issue: Did Regiment admit to committing fraud when it settled with the DoJ?

Holding: No – Regiment’s settlement with the DoJ was not an admission that it committed fraud asserting its SDVOSB.

Reasoning:  The settlement with the DoJ explicitly states, “[t]he United States releases Regiment and [an individual] from any civil or administrative monetary claim the United States has for the Covered Conduct under . . . the common law theories of breach of contract, payment by mistake, unjust enrichment and fraud.”   This statement within the settlement prevents the VA using the settlement as proof that Regiment had fraudulently asserted its SDVOSB status.  Furthermore, the board did not find that any other statements in the settlement amounted to an admission of fraud regarding their SDVOSB status.  Therefore, the board denied the VA’s motion for summary judgment.