Between 2008 and 2016, the United States entered into construction contracts with various contractors through the U.S. Army Corps of Engineers to build projects in Afghanistan. Arwand Road and Construction Company was awarded a subcontract under one contract, and provided services and timely invoices for payment under the subcontract’s terms. Arwand, however, claimed that it was never paid for its work, and in response, the trustee for the primary contractor, the JV, contended that it could not pay Arwand because the United States had not paid it. In 2012, the U.S. Army Corps of Engineers Contracting Office cancelled the JV’s contracts and the JV appealed the decision to Armed Services Board of Contract Appeals. On February 12, 2016, the United States entered a settlement agreement with the JV regarding the cancelled contracts and, on April 19, 2016, the Board approved the settlement agreement and dismissed the JV’s appeals with prejudice.
On May 23, 2016 Arwand sued the JV and Advance Constructors International LLC in district court in Delaware to recover the amount owed under its subcontract, and petitioned the Board for relief in an attempt to recover the money it was allegedly owed. On November 27, 2017 Arwand also filed a complaint in the Court of Federal Claims seeking the same relief.
The JV moved to intervene in the CFC, which the Court granted. After the Court granted its motion to intervene, the JV moved to dismiss. Before the Government filed its response, the Court ruled on the JV’s motion, stating that “the Court does not deem any further filings necessary in order to reach its decision. . . .”
The Court dismissed Arwand’s case with prejudice, concluding that the case was moot because the Board had earlier dismissed the case with prejudice. The Court further stated that since Arwand was a subcontractor to the JV, Arwand had no standing to sue the United States.
The Court finally explained that Arwand had lost its ability to sue in the Court of Federal Claims when it petitioned the Board prior to suing in the Court of Federal Claims. The Court pointed out that contractors can appeal the U.S. Army Corps of Engineers Contracting Office’s decisions to the Board or sue in the Court of Federal Claims–but not both. Since Arwand appealed to the Board, it could not now sue in the Court of Federal Claims. Finally, the Court held that any rights Arwand claims to have under Delaware law must be brought in state court.
Read Judge Wheeler’s full decision here.
