Miracle Contractors, Inc. v. United States

32 Cont. Cas. Fed. 72,682, 5 Cl. Ct. 466, 1984 U.S. Claims LEXIS 1372
United States Court of Claims·Decided July 5, 1984·No. No. 49-82C·Published·Cited by 1 cases

Opinion

TIDWELL, Judge:

This is a government contract case which involves 13 janitorial contracts and two parking contracts awarded by the General Services Administration (GSA) to Miracle Contractors, Inc. Plaintiff seeks $375,000 in damages alleging breach of contract in that defendant wrongfully withheld payment due plaintiff under the contract and suspended plaintiff from further government contracting until after January 1, 1984. Defendant counterclaimed seeking $374,644 in damages under the False Claim Act, 31 U.S.C. 231 et seq., alleging that plaintiff misrepresented the number of man-hours actually worked by plaintiffs employees under the janitorial contracts and that plaintiff submitted false vouchers to the government under the contracts. Defendant also counterclaimed for $13,237 which plaintiff allegedly owes defendant pursuant to the parking contracts.

Defendant, seeking dismissal of plaintiff’s Complaint, moved for summary judgment on the grounds that there is no genuine issue of material fact and that plaintiff failed to state a claim upon which relief can be granted and that defendant is entitled to judgment as a matter of law.

FACTS

GSA awarded to plaintiff 18 fixed-price janitorial contracts running from March 1976 through January 1981 for the upkeep of buildings in the Washington Metropolitan area. Thirteen of the contracts contained a minimum man-hour clause which constitute the basis of this lawsuit. The clause provided that if a specified number of man-hours were not performed daily by plaintiff’s employees, then defendant could make deductions from the payment due plaintiff under the contract. The contracts further required plaintiff to keep a daily record of each employee who worked at each site, including the employee’s classification and the number of hours worked. Each employee was required to sign in and sign out of the buildings on GSA Form 139 (record of time of arrival and departure from building). At the end of each two-week period, plaintiff was to furnish a certified copy of the record to the contracting officer.

In November of 1978 the GSA Contract Assurance Task Force examined plaintiff’s performance on Contract No. 03CB091601 (the NASSIF Building), one of the minimum man-hour janitorial contracts. The task force found that plaintiff’s employees were not working the minimum number of hours required under the contract despite plaintiff’s reports to the contrary.1 Subsequently, on January 31, 1979, the Regional Administrator requested that the Director of the Office of Investigations investigate plaintiff regarding the problems uncovered by the task force. Part of the investigation consisted of taking a deposition of James Mastropoalo, President of plaintiff. In the deposition, taken on March 21, 1979, Mr. Mastropoalo admitted falsifying man-hours on GSA Form 139. He stated:

It always seemed to come to the point at the end of the month that I was shy [468] man-hours____ I have seven-hour people and they sign in for eight____ I feel what I’m doing is I’m fraudulently filling out a Federal document____

Plaintiff, however, alleges that GSA administration officials assured Mr. Mastropoalo all along that the government’s interest in plaintiff's performance was only that the buildings be properly cleaned. Plaintiff claims that it was repeatedly lead to believe by responsible GSA officials, contracting officers, contract administrators, and inspectors that payment deductions for not meeting the minimum man-hour requirement would occur only in the event that the cleaning performed proved unsatisfactory or untimely.

In February of 1980, the GSA Washington Field Audit Office audited plaintiff’s business records. It determined that plaintiff had operated, prior to May of 1978, without a system which would record employee hours on payroll registers. Therefore, any calculations of number of hours worked based on payroll registers was not possible prior to May of 1978. After May of 1978, plaintiff’s payroll records recorded employee hours by individual building. Since each building could be tied to one of the 13 minimum man-hour contracts, the auditors were able to compare the number of hours worked for payroll purposes with the minimum hour requirements specified in the corresponding contracts. Using this approach, the auditors determined that plaintiff had failed to meet the minimum man-hour requirements levels by 13,397 hours resulting in an overpayment to plaintiff of $106,651.

On November 21, 1980, in response to the auditor’s report, the Director of the GSA Regional Contracts Division stopped payment of all subsequent invoices submitted by plaintiff on the janitorial contracts. Plaintiff alleges that defendant withheld $47,776. However, defendant asserts that the amount withheld was only $35,132.

On June 29,1981, GSA Washington Field Audit Office issued the results of a second audit it had conducted on plaintiff’s records which covered the period of time from May 4, 1979 to January 21, 1981. This audit showed that plaintiff had underrated the minimum man-hour contracts by 9,168.30 hours resulting in an overcharge to defendant of $780,681. Plaintiff was subsequently suspended from doing business with GSA by the Commissioner of Public Buildings Service on January 19, 1981. Plaintiff appealed the suspension on February 5, 1981 to the GSA Board of Contract Appeals (BCA). The GSABCA upheld the suspension on June 18, 1981 after concluding that the audits and Mr. Mastropoalo’s deposition constituted a reasonable basis for the Commissioner’s determination.

Plaintiff also had entered into several parking service contracts with GSA. Two of the contracts, GSA No. GS-11C-00104 (Forrestal Building) and 11C-00102 (Half Street Building), required plaintiff to collect parking permit fees and remit the fees to GSA. Specifically, plaintiff was to deposit in a bank at the close of business each day all currency and coin collected under the contracts which were then to be converted into a cashier’s check payable to GSA. All checks collected were to be hand carried to GSA by 3:00 p.m. on the day following receipt.

On December 1, 1980, Ms. Peggy Brown, then President of Miracle Contractors,2 failed to deposit the parking receipts for the day in a bank as required by the two contracts. Instead, she carried them home with her after the close of business. When Ms. Brown parked her car in a parking lot near her residence early in the evening, she was allegedly robbed.3 Plaintiff contends that, as a result of the alleged robbery, it [469] failed to remit $13,237.50 in parking receipts to GSA.

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Miracle Contractors, Inc. v. United States, 32 Cont. Cas. Fed. 72,682, 5 Cl. Ct. 466, 1984 U.S. Claims LEXIS 1372 (cc 1984).

32 Cont. Cas. Fed. 72,682 (Miracle Contractors, Inc. v. United States) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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