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No. 06-436C (Judge Williams)

IN THE UNITED STATES COURT OF FEDERAL CLAIMS

ULYSSES, INC., Plaintiff, v. THE UNITED STATES, Defendant.

DEFENDANT'S POST-TRIAL BRIEF

STUART F. DELERY Acting Assistant Attorney General JEANNE E. DAVIDSON Director .DEBORAH A. BYNUM Assistant Director A. BONDURANT ELEY DAVID D'ALESSANDRIS Trial Attorneys Commercial Litigation Branch Civil Division U.S. Department of Justice P.O. Box480 Ben Franklin Station Washington, D.C. 20044 Tel: (202) 616-8254 Fax: (202) 514-7965 May 14,2012

Attorneys for Defendant

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TABLE OF CONTENTS PAGE(S)

STATEMENT OF ISSUES ADDRESSED ................................................................................... 1 INTRODUCTION ......................................................................................................................... 2 DEFENDANT'S PROPOSED FINDINGS OF FACT .................................................................. 3 I.

Ulysses's Use Of Deception To Obtain The Purchase Orders At Issue In This Litigation ................................................................................................... 3

II.

The Stop Work Order And Cancellation Ofthe Purchase Orders ......................... 7

III.

Ulysses's Fraudulent Certified Claim ....................... .'.......................................... 16

ARGUMENT ................................................................................................ :.............................. 17 I.

II.

The First And Second Purchase Orders Never Ripened Into Contracts And Were Properly Cancelled .......................................... ................................... 17 A.

Ulysses Had No Intention And No Ability To Supply The Specific Items Described In The First And Second Purchase Orders ...... 17

B.

Mr. Tsoutsas's Newly Minted Attempt To Explain Away The Plain Language Of The Purchase Orders Has No Merit .......................... 20

Ulysses Violated The False Claims Act In Presenting A Claim For Payment Under A Fraudulently Procured Purchase Order And In Submitting A CDA Claim For Payment That Contained False Assertions Of Fact ............................ 22 A.

FCA Violations Associated With The First Purchase Order ................... 23

B.

FCA Violations Associated With Ulysses's CDA Claim ........................ 26

C.

Ulysses Violated The CDA's Fraud Provision ........................................ 30

D.

Ulysses Should Forfeit Its CDA Claim Pursuant To The FFCA ............. 31

CONCLUSION ............................................................................................................................ 31

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TABLE OF AUTHORITIES CASES PAGE(S) Allen v. United States, 78 F.3d 605 (Fed. Cir. 1996) (unpublished) ................... ;................................................ 19 Commercial Contractors, Inc. v. United States, 154 F.3d 1357 (Fed. Cir. 1998) .................................................................................. 22,31 Davies Precision Machining, Inc. v. United States, 35 Fed. Cl. 651 (1996) ......................................................... :.......... :................................ 17 Franklin E. Penny Co. v. United States, 524 F.2d 668 (Ct. Cl. 1975) ............................................................................................. 18 Greenhill v. United States, 92 Fed. Cl. 385 (2010) ..................................................................................................... 17 Harrison v. Westinghouse Savannah River Co., 176 F.3d 776 (4th Cir. 1999) ........................................................................................... 23 Hometown Fin., Inc. v. United States, 409 F.3d 1360 (Fed. Cir. 2005) ........................................................................................ 17 Kaeper Machine, Inc. v. United States, 74 Fed. Cl. 1 (2006) ......................................................................................................... 18 Kinetic Builder's, Inc. v. Peters, 226 F.3d 1307 (Fed. Cir. 2000) .................................................................................. 18, 19 Laboratory Supply Corp. ofAmerica v. United States, 3 Cl. Ct. 722 (1983) ......................................................................................................... 19 McCarthy v. United States, 670 F.2d 996 (Ct. Cl. 1982) ............................................................................................. 31 San Carlos Irrigation & Drainage Dist. v. United States, 877 F.2d 957 (Fed.Cir.1989) ............................................................................................ 17 Smart Business Machines v. United States, 72 Fed. Cl. 706 (2006) ......................................................................................... 17, 18, 19

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UMC Elec;tronics Co. v. United States, 43 Fed. Cl. 776 (1999), affd, 249 F.3d 1337 (Fed. Cir. 2001) ........................................ 30 United States ex rel. Franklin v. Parke-Davis, 147 F. Supp. 2d 39 (D. Mass. 2001) ................................................................................ 22 United States ex rel. Longhi v. United States, 575 F.3d 458 (5th Cir. 2009) ........................................................................................... 23 United States ex rel. Marcus v. Hess, 317U.S. 537 (1943) ......................................................................................................... 23 United States ex rel. Tyson v. Amerigroup Illinois, Inc., 488 F. Supp. 2d 719 (N.D. Ill. 2007) ............................................................................... 23 Vantage Assocs. v. Gates, 342 Fed. Appx. 619 (Fed. Cir. 2009) ............................................................................... 17 Young-Montenay, Inc. v. United States, 15 F.3d 1040 (Fed. Cir. 1994) .......................................................................................... 31

STATUTES 18 U.S.C. § 1001 ............................................................................. :.............................................. 6 28

u.s.c. § 2514" .................................................................................................................. 1, 3, 31

31 U.S.C. § 3729, et seq ............................................................................................................. 1, 3 31 U.S.C. § 3729(a)(1) ...........................................................·...................................................... 22 '

31 U.S.C. § 3729(b) ..................................................................................................................... 22 41

u.s.c. § 7101

.......................................................................................................................... 30

41 U.S.C. § 7103(c) (formerly 41 U.S.C. § 604(c)

-111-

.~ ...........................................................

1, 3, 30

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

)

ULYSSES, INC.,

) ) ) ) ) ) ) )

Plaintiff, v. THE UNITED STATES, Defendant.

No. 06-436C (Judge Williams)

DEFENDANT'S POST-TRIAL BRIEF Pursuant to this Court's order dated March 14, 2012, defendant, the United States, respectfully submits this post-trial brief concerning the trial held March 12-13, 2012 in Washington, DC. STATEMENT OF ISSUES ADDRESSED 1.

Whether plaintiff, Ulysses, Inc. ("Ulysses") failed to meet its burden of proving

the existence of a contract, where the Government cancelled two purchase orders, thus withdrawing its offers to contract after learning that Ulysses could not, and did not intend to, supply the specific parts manufactured by required sources and described in those purchase orders. 2.

Whether Ulysses violated the False Claims Act (FCA), 31 U.S.C. § 3729, et seq.,

the Forfeiture of False Claims Act (FFCA), 28 U.S.C. § 2514, and the fraud provision of the Contract Disputes Act (CDA), 41 U.S.C. § 7103(c) (formerly 41 U.S.C. § 604(c)), when Ulysses knowingly: (a) falsely promised to provide another manufacturer's parts to the Government when Ulysses actually intended to supply its own parts; and (b) falsely asserted that Ulysses was an approved source in a certified claim.

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INTRODUCTION In this lawsuit, Ulysses has consistently maintained that the Government should be held liable for breach of contract in connection with a purported wrongful cancellation by the Defense Supply Center Columbus (DSCC) of two purchase orders for a critical application item used in naval weapons systems known as the 178AS 112, or the" '112 part." As we promised in our opening statement, the evidence admitted at trial was directly contrary to Ulysses' contentions and established that the Government's cancellation of the purchase orders at issue was entirely appropriate. Specifically, the unambiguous text of the two purchase orders reflected that the Government was not just offering to purchase a generic '112 part, but a '112 part made by or at the direction of a specific manufacturer, namely Raytheon Technical Services, Inc. (Raytheon), in the case of the first purchase order, and Frequency Selective Networks, Inc. (FSN) in the case of the second. The evidence admitted at trial established that Ulysses had no ability - and no intention- to supply '112 parts manufactured by Raytheon or FSN. Rather, Ulysses always intended to supply '112 parts of its own manufacture, i.e., products that the Government had never offered to buy in the first place. The evidence at trial proved, therefore, there was no offer and acceptance, and by extension, no contract formed between Ulysses and the Government. As such, the Government is entitled to judgment in its favor, and as a matter of law on Ulysses's breach claim. However, that is not the end of the story. As set forth in detail below, the evidence admitted at trial revealed that Ulysses obtained the first purchase order by fraud, intentionally misrepresenting in its electronic quotation both that it was providing a bid without exception and that it intended to supply Raytheon-manufactured '112 parts. In addition, the evidence 2

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introduced at trial demonstrated that, when confronted with the fact that its intention to supply its own self-manufactured parts was unacceptable, Ulysses engaged in a protracted campaign to explain away its attempt to supply non-conforming parts that culminated in the filing of a false CDA claim. Ulysses's CDA claim not only falsely contended that it was entitled to payment under the cancelled purchase orders, but falsely stated no fewer than three times that Ulysses itself was an "approved source" for the part at issue. The evidence admitted at trial established that, in fact, Ulysses had known at least since 1998 that it was not an approved source for the part, and that its decision to hold itself out as another manufacturer constituted a calculated attempt to avoid source approval requirements. In light of the foregoing considerations, the evidence adduced at trial proved, not only that the Government appropriately cancelled the purchase orders at issue, but that Ulysses's intentional actions in falsely holding itself out to be supplying a Raytheon-manufactured part or manufacturing the required part under the direction of Raytheon, and in submitting a CDA claim in which it falsely claimed three times that it was an approved source l;llld demanded payment under purchase orders to which it knew it was not entitled, violated the FCA, 31 U.S.C. § 3729,

et seq., the FFCA, 28 U.S.C. § 2514, and the CDA's fraud provision, 41 U.S.C. § 7103(c) (formerly 41 U.S.C. § 604(c)). As such, the Government is entitled to judgment in its favor. DEFENDANT'S PROPOSED FINDINGS OF FACT

I.

Ulysses's Use Of Deception To Obtain The Purchase Orders At Issue In This Litigation

1.1

On March 11,2002, DSCC issued Request for Quotation (RFQ) No. SP090002TCB06

(the First RFQ). DX 1. The First RFQ described the item being acquired both by: (1) specific part number (PIN), i.e., PIN 178AS112, connoting the' 112 part; and by (2) the five-digit

3

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Contractor and Government Entity (CAGE) Code of the specific manufacturers that were approved sources for the part. DX1; Tr. 215:8-216:8 (Kennedy). 1.2

As indicated within the First RFQ, the only three manufacturers that were approved

sources for the '112 part were Abrams Instrument Corp (CAGE 0048), Raytheon (CAGE 072E5), and Technical Services Laboratory, Inc. (CAGE 51283). DX 1; Tr. 214:16-215:4 (Kennedy). There were no other approved sources for the '112 part at that time. DX 1; Tr. 215:5-7 (Kennedy). 1.3

The '112 part was a critical application item, meaning that its individual failure within a

weapons system would cause the entire weapons system to fail. DX 1; Tr. 274:24-275:8 (Searfoss). 1.4

The First RFQ was posted on the Defense L'ogistic Agency's Internet Bid Board System

(DIBBS), DLA's internet-based procurement system. DX1; Tr. 274:3-15 (Searfoss). The DIBBS system posts all of the Defense Logistics Agency's solicitations on the web for the public to see, and allows vendors to log in and submit quotes electronically in a secured section. Tr. 269:8-18 (Searfoss). 1.5

A contractor participates in the DIBBS system by registering in the Central Contract

Registration System, and within the DIBBS system itself. Once contractors are registered in DIBBS, they can look at and submit quotations on RFQ's electronically, logging in with a user ID and password. Tr. 270:19-271:17 (Searfoss). 1.6

On March 20, 2002, Ulysses accessed the DIBBS system and submitted a quotation

electronically in response to the First RFQ, identifying the quoter as Demetrios Tsoutsas, Ulysses's principal. DX22; DX 23; Tr. 276:16-277:14 (Searfoss); Tr. 285:10-286:12 (Searfoss); 4

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Tr. 318:8-319:23 (Mort). 1. 7

Ulysses indicated in its quotation that it was submitting a bid without exception, and,

using a drop down menu within the system, identified the product that Ulysses intended to supply as CAGE 072E5 PIN 178AS112, i.e., a '112 part made by or under the direction of Raytheon, one of the approved sources. DX22 at 2; Tr. 275:9-276:8; Tr. 286:22-287:1 (Searfoss). 1.8

Ulysses's actions in this regard were not accidental.· Specifically, Ulysses submitted its

quotation as a "bid without exception" for a Raytheon-made '112 part, after being confronted with an electronic notice that stated as follows: You have stated that the product offered for NSN is an 'exact product'. Exact product means CAGE 072E5 part number 178AS 112, manufactured by or under the direction of CAGE 072E5. If you intend to manufacture this item, but are not CAGE 072E5, you must have evidence of a current contractual relationship with CAGE 072E5 to manufacture and sell this item as CAGE 072E5 PIN 178AS112 in order to quote exact product. Any product not meeting these criteria is considered an alternate product even though it may be manufactured in accordance with the drawings and/or specifications of CAGE 072E5. Any indication that you have misrepresented the product offered shall result in the government considering rescission of any resultant contract and all other sanctions, contract penalties, and remedies established under any other law or regulation. DX22; Tr. 287:2-288:22 (Searfoss). This notice was presented to individuals who were submitting bids without exception prior to the time when they would click the submit button. Tr. 288:19-22 (Searfoss). 1.9

At trial, Ulysses's president and owner, Demetrios Tsoutsas, attempted to cover up or

explain away Ulysses's electronic quotation, asserting that in March 2002, the company submitted quotations via facsimile, and not electronically. See, e.g., Tr. 34:11-35:6 (Tsoutsas);

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Tr. 79:24-80:9 (Tsoutsas). The evidence adduced at trial proved that Mr. Tsoutsas's representations to the Court in this regard were false. See DX 49 (Interrogatory Response No. 11); Tr. 81:5-22 (Tsoutsas); Tr. 84:17-85:9 (Tsoutsas); Tr. 285:10-286:12 (Defense Logistics Agency procurement analyst who has worked with DIBBS since 1999 testifying that Ulysses submitted quote electronically on DIBBS) (Searfoss); DX 23 (confirmation to Demetrios Tsoutsas of successful electronic bid submission); Tr. 315:3-12 (Mort) (Ulysses employee answering "Absolutely, yes" when asked whether Ulysses ever submitted bids by facsimile and by the Internet system and indicated that that was "our standard procedure"); Tr. 318:2-11 (Ulysses employee testifying that he submitted bids electronically, and that Mr. Tsoutsas was aware that Ulysses's secretary submitted bids electronically as well) (Mort); Tr. 318:12-319:23 (confirming that DX 23 is a print out of the confirmation page for Ulysses's March 20, 2002 electronic quotation on the First RFQ) (Mort). 1.10

Indeed, Mr. Tsoutsas has been convicted of a violation of 18 U.S.C. § 1001. Tr. 138:18-

20 (Tsoutsas). 1.11

On April 29, 2002, as a result of Ulysses's quotation in response to the first RFQ, DSCC

issued to Ulysses a purchase order (First Purchase Order) for part number 178AS112, manufactured by or under the direction of Raytheon Technical Services, Co., for a unit price of $525.00.and a total price of$44,625.00. PX 7; Tr. 288:23-289:8 (Searfoss). 1.12

Ulysses presented no evidence at trial that it ever had the intention or the ability to supply

DSCC with a' 112 part made by or under the direction of Raytheon; indeed, it had none. As Mr. Tsoutsas testified, Ulysses unilaterally decided that the Government's specification of Raytheon as the approved source of the '112 part that it ordered was "irrelevant to the case

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because ...we [Ulysses] were a qualified source, a more qualified source than Raytheon .... " Tr. 39:16-19 (Tsoutsas); Tr. 31:22-32:4 ("I don't believe the [G]overnment will issue a contract to a contractor and ask him to go to Raytheon to buy the item which would cost the [G]overnment a lot more money. Why should they do that when a manufacturer is an approved source for the overall equipment, has the knowledge to do it? Why the [G]overnment will ask the company to go to Raytheon to buy the part?"). 1.13

On June 27, 2002, DSCC issued a purchase order (the Second Purchase Order) to Ulysses

for a quantity of99 units ofthe '112 part at a total price of$50,490. PX 9. Section B ofthe Second Purchase Order identified the item that was being ordered as Frequency Selective Networks, Inc. (CAGE 56662) part number 178AS112. PX 9. Ulysses also

deeme~

the

specification of Frequency Selective Networks, Inc., to be "irrelevant." Tr. 92:23-94:7 (Tsoutsas). 1.14

The Government did not receive any deliverables under either the First or the Second

Purchase Order. Tr. 223:11-15 (Kennedy). II.

The Stop Work Order And Cancellation Of The Purchase Orders

2.1

Eventually, Brian Kennedy, the post-award contract administrator for the First and

Second Purch~se Orders, Tr. 203:25-4 (Kennedy), learned that Ulysses was not, in fact, going to deliver the products described in the purchase orders and expected by the Government, i.e., a ' 112 part made by or under the direction of Raytheon or a ' 112 part made by or under the direction ofFrequency Selective Networks, Inc. Tr. 219:24-220:4 (Kennedy); Tr. 222:7-12 (Kennedy); Tr. 225:7-10 (Kennedy). 2.2

Upon finding out that Ulysses was not going to be delivering the parts specified in the 7

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purchase orders, Mr. Kennedy contacted Ulysses, and had a conversation with Mr. Tsoutsas which led him to believe "[t]hat there was maybe some misunderstanding in terms of whether Ulysses was an approved source [for the '112 part] or not. Mr. Tsoutsas made a claim that they had provided the part ... they were able to provide the part, and maybe they were an approved source." Tr. 225:13-226:11 (Kennedy). 2.3

Based upon Mr. Tsoutsas's representations, Mr. Kennedy decided that he "need[ed] some

information to ... look into this[,]" Tr. 226:11-13 (Kennedy), and, as a matter of standard operating procedure, issued a stop work order on August 19,2002. PX 10; Tr. 227:3-21 (Kennedy). 2.4

In stark contrast with Mr. Tsoutsas's.representations both to Mr. Kennedy and at trial

regarding Ulysses's alleged status as an approved source for the' 112 part, Mr. Tsoutsas knew before the time that he even submitted a bid in response to the First RFQ that the Government had not, in fact, approved Ulysses as a source for the '112 part. In 1998, Ulysses's sister company Melstrom, of which Mr. Tsoutsas was also president and owner, Tr. 24:12-20, had submitted a bid on another '112 part procurement and been unequivocally informed by the Government in a letter addressed to Mr. Tsoutsas that its offer "was not eligible as an alternate

item ...." JX 1; Tr. 71:12-25 (Tsoutsas) (emphasis supplied). Melstrom had the same ownership as Ulysses, the same physical address, and the same employees. Tr. 111 :6-13 (Tsoutsas); see also Tr. 311:2-5 (Ulysses employee testifying that he worked for Melstrom "which is Ulysses"). 2.5

Mr. Tsoutas's representations to Mr. Kennedy were further contradicted at trial by the

testimony of James Mort, the business development estimator for Ulysses, Melstrom and other 8

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Tsoutsas-owned sister companies. Tr. 310:25-311:10 (describing role at companies) (Mort), Tr. 312: 11-15 (same) (Mort). Mr. Mort confirmed that Ulysses was not an approved source for the ' 112 part in the 2002 timeframe, and· had not manufactured the ' 112 part for the Federal Government before. Tr. 322:18-323:15 (Mort). 2.6

The Government had also informed Mr. Tsoutsas in 1998 of the necessary steps to take

"[i]fyou wish to pursue approval prior to the issuance of the next requirement." JX 1; Tr. 72-119 (Tsoutsas). Mr. Tsoutsas, however, had never pursued such approval. See DX 48 (Response to Interrogatory No. 1 answering "no" to the question "Did the plaintiff ever seek United States Government approval by submitting a technical data package pursuant to source approval request procedures to manufacture a part corresponding to NSN5998-00-007-1450"); Tr. 76:10-21 (Tsoutsas admitting truth of response to Interrogatory No. 1); Tr. 321:22-322:10 (Mort explaining that Ulysses "absolutely" knew what a source approval request was, and had never submitted one to become an approved source for the '112 part). Rather, Mr. Tsoutsas took the position that he "never needed to submit a source approval request for the '112 part ever." Tr. 104:16-19 (Tsoutsas). 2.7

On August 26, 2002, Mr. Tsoutsas sent Mr. Kennedy a letter in which he stated, among

other things, that "Melstrom Mfg. Corp. and Ulysses have been manufacturers of the end item, or Circuit Firing Equipment PIN 178AS 100; the subject contract is an internal component of the above equipment." PX 11. Mr. Tsoutsas purported to enclose- but did not actually enclose"DD250's for orders which we received and completed" for Sikorsky Aircraft, Aero, International, Inc., the Australian Government, and "Associated Aircraft Mfg. and Sales." PX 11; Tr. 96:20-97:3 (Tsoutsas). He also stated that he was "attach[ing] hereto DD250's for

9

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another Circuit Card Assembly PIN 178AS114, which is also part of the same equipment PIN 178AS100." PX 11. Mr. Tsoutsas stated that "we are certain we had government contracts in the past for both items PIN 178AS100 and 178AS112, due to the time elapsed we cannot locate the files. I am certain that each of the orders we received from Sikorsky Aircraft had a government contract behind it." PX 11. Mr. Tsoutsas concluded: "The information provided should give you enough confid~nce that if we are able to produce the equipment, which is by far a more complicated assembly than the subject item and which is part ofthe equipment, we should be able to perform the subject contracts. We therefore request that you indicate in your records that we are the manufacturer of the equipment PIN 178AS 100 as well as all the subassemblies within the equipment itself." PX 11. 2.8

As Mr. Kennedy explained, none ofthe assertions contained in Ulysses's August 26,

2002 letter were sufficient to establish that the company was, in fact, an approved source for the '112 part as Mr. Tsoutsas had claimed. First and foremost, the 178AS100 was not the '112 part. Tr. 228:10-23 (Kennedy). Second, as for Ulysses's claims regarding DD250s's -which are invoices generated by Ulysses itself, Tr. 96:9-19 (Tsoutsas)- those documents "were for the 100 part and none ofthe examples given were with the federal government." Tr. 228:3-15 (Kennedy). Third, Mr. Tsoutsas's reference to the 178AS114 part "were not relevant to the 112 part, it was the 114." Tr. 229:16-230:5 (Kennedy); see also Tr. 109:19-110:21 (Mr. Tsoutsas conceding that the' 112 part and the '114 part "are not interchangeable"). Finally, Mr. Tsoutsas's bare assertion regarding his past contracts with the Government were not sufficient to establish that Ulysses was an approved source for the '112 part because DSCC "could not find in [its] records anything that supported that, and, two, a company theoretically that was approved for 10

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contracts yesterday may not be approved today ... based on whatever the [Engineering Support Activity] would determine. So whether or not they were approved ... five-1 0 years ago does not mean they were approved for an acquisition today." Tr. 230:6-231:3 (Kennedy). 2.9

Mr. Tsoutsas knew even before the RFQ's at issue in this litigation were issued that

manufacturing the next higher assembly did not make Ulysses an approved source for the '112 part. The Government had unequivocally rejected the exact same argument in connection with Melstrom's unsuccessful bid to supply the' 112 part in 1998: "Your recent offer submitted in response to the solicitation is not eligible as an alternate item. The next higher assembly is not an acceptable alternate ...." JX 1; Tr. 71:12-25 (Tsoutsas conceding that he was informed of the

Government's position in 1998) (emphasis supplied). 2.10

Mr. Tsoutsas considered the Government's 1998 conclusion that Ulysses was not

automatically an approved source for the '112 part by virtue of having made the next higher assembly to be "an inappropriate response and without support of evidence." Tr. 107:1-2 (Tsoutsas). He also rejected the suggestion that he pursue source approval for the '112 part because "I don't know what steps to take because I already considered myself as an approved source because I built the overall equipment." Tr. 72:1-16 (emphasis supplied) (Tsoutsas). 2.11

On October 21, 2002, Mr. Kennedy wrote to Mr. Tsoutsas seeking technical data for

review in support of Mr. Tsoutsas's claims that Ulysses was an approved source for the' 112 part because "[t]he Defense Supply Center, Columbus, has not procured this item from Ulysses in the past, which requires your company to be approved by our technical group. This item has very specific manufacturing requirements and your submission of the needed technical data will allow our technical department to determine if Ulysses Incorporated is an approved source." JX 8; Tr. 11

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233:21-234:5 (Kennedy). 2.12

In his November 13, 2002 response, Mr. Tsoutsas did not include any data, compare JX 8

(requesting data) with Tr. 118:25-119:14 ("If I had supplied it the day before, of course, I wouldn't put it in the letter."), instead insisting that "we submitted to you documentation indicating that we are the manufacturer of the subject contracts item as well as the next higher assembly." PX 14. 2.13

In addition, despite the fact that a stop work order had been in place since August 19,

2002, PX 10, Mr. Tsoutsas also advised Mr. Kennedy that "we intend to go back into production and complete the remaining work that is to be done." PX 14. At trial, Mr. Tsoutsas testified that he received the stop work order, understood that he had been instructed to stop production, but elected not to honor the order, Tr. 94:8-95:14 (Tsoutsas), because "it didn't make any sense to us." Tr. 46:22-47:4 (Tsoutsas). 2.14

On November 20, 2002, Mr. Kennedy wrote back to Mr. Tsoutsas, stating: You were issued a stop work order ... in August 2002. At that time we spoke on the phone and I informed you that the government required Ulysses to submit all test data for this item. The data is to be reviewed and it will then be determined if Ulysses . Inc. is an approved source to supply these items. During the conversation you mentioned that Ulysses Inc. had sold the item in the past to the Navy and that you could submit proof of this. As of today, this office has received neither the data requested nor any documented proof of a previous military sale. The government is not responsible for the costs of manufacturing an item that does not meet stated military specifications and standards. Neither one of the quotes Ulysses Inc. submitted for these awards stated you were making alternate part bids. Since Ulysses Inc. will be manufacturing the part in-house, proper documentation must be submitted for government review. It has been 90 days since the request for information was made, and this office is still awaiting the documentation. Please submit as soon as possible. 12

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JX 10; Tr. 238:3-240:4 (KelUledy). 2.15

Mr. Tsoutsas responded to Mr. KelUledy's letter on November 20,2002. JX 11. That

response contains no technical or other data. JX 11; Tr. 240:23-241:3 (Kelli1edy). 2.16

Indeed, as ofNovember 20, 2002, Ulysses had not submitted any information whatsoever

that would allow the Government to make the determination that its product conformed with military drawings and specifications and standards, no information that would have allowed the Government to make a determination that Ulysses had even successfully produced the 178AS 100 part, and no information that suggested to Mr. KelUledy that Ulysses had ever been an approved source for the' 112 free and independent of the 178AS100 asssembly. Tr. 241:4-21 (KelUledy). 2.17

Mr. KelUledy testified that "it became increasingly difficult. When I would ask for

information, I would get different answers than I was looking for .... [T]he more difficult it became -the longer this dragged on the more concerned I got about ... whether Ulysses was truly approved to provide this part." Tr. 241:24-242:8 (KelUledy). 2.18

Indeed, at trial, Mr. Tsoutsas was asked no fewer than nine times to prove that he

submitted documentation to Mr. KelUledy to support the notion that Ulysses was an approved source for the '112 part free and clear of the 178AS 100 assembly and to identify the documents , wherein he had allegedly communicated that information to Mr. KelUledy. Tr. 98:9-13; 98:2399:3; 99:14-18; 100:6-7; 102:10-12; 102:25-103:5; 103:7-11; 103:15-104:2; Tr. 105:10-11. Each time, Mr. Tsoutsas went to great lengths to avoid answering the question, offering nonresponsive answer after nonresponsive answer, ultimately pointing to no documents that supported his contentions. See generally Tr. 98-109 (Tsoutsas). 2.19

Mr. Tsoutsas attempted to explain away his failure to supply Mr. KelUledy with any

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testing or technical data as requested by insisting that, in his mind, "technical" or "testing data" meant "the drawings the government provided us" showing how to build either the 178AS 100 or the '112 part. See, e.g., Tr. 116:4-13 (Tsoutsas); Tr. 116:20-117:9 (Tsoutsas); Tr. 122:30-123:20 (Tsoutsas). 2.20

However, even putting the obvious absurdity of Mr. Tsoutsas's contentions to one side,

the evidence at trial proved that, four months after the issuance of the stop work order, Mr. Tsoutsas had not supplied those purported drawings either. Tr. 242:12-25 (Kennedy). On December 2, 2002, Mr. Kennedy wrote to Mr. Tsoutsas stating: According to our records Ulysses Inc. has no prior history as a supplier of this item. In a previous phone conversation you stated, not indicated, that Ulysses Inc. had sold this item to the government in the past. To this date I have not received the documentation you said you would send to support your statement .... No fax with a copy of assembly drawing, PIN 178AS 112 was received. All requests for drawings should be sent to Cathy Green ... at fax number 614-692-2998. To this date no documentation has been submitted concerning this item .... Since Ulysses Inc. will be manufacturing the part in-house, proper documentation must be submitted for government review. It has now been more than 90 days since the request for information was made, and this office is still awaiting documentation. Please submit as soon as possible. JX 12; Tr. 242:12-15 (Kennedy). 2.21

On December 6, 2002, Mr. Tsoutsas responded to Mr. Kennedy's December 2, 2002,

letter. PX 18. This response contained various arguments, see PX 18, but did not contain any test or technical data, or any information that would assist the Government in determining whether Ulysses was in fact an approved source for the '112 part. PX 18; Tr. 243:22-244:8 (Kennedy).

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2.22

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At some subsequent point, Mr. Tsoutsas "probably" provided either Ms. Green or

Mr. Kennedy with a copy of either a drawing or some draV{ings. Tr. 226:7-127:6 (Tsoutsas). 2.23

On February 14, 2003, Mr. Kennedy wrote to Mr. Tsoutsas stating as follows: Ulysses Inc. is not a Navy approved manufacturer for this item. In regards to [the First Purchase Order], Ulysses Inc. quoted "Bid Without Exception" to supply Cage 072E5 part number 178AS 112. This is the exact item that must be supplied for this award. If Ulysses Inc. cannot supply the exact item the award will be cancelled without cost to the government. For Ulysses Inc. to be approved by the Navy as a source of supply, you will have to submit a Source Approval Request (SAR) to meet all of the requirements of the Navy website ... with no exception. The suspense for Navy evaluation is 180 days.

JX 14. Mr. Kennedy's conclusion that Ulysses was not an approved source for the' 112 part resulted from his own research into previous contract history, and input from DSCC's technical team indicating that Ulysses was not an approved source. Tr. 245:5-19 (Kennedy). 2.24

According to Mr. Tsoutsas, Mr. Kennedy's suggestion that Ulysses complete the SAR

process "d[id]n't make any sense because we were an approved source already because we built the overall equipment. He should never send a letter like that." Tr. 130:25-131:18 (Tsoutsas). 2.25

Mr. Tsoutsas did not, in fact, submit a SAR for the' 112 part in the wake of this

correspondence. Tr. 131:22-132:1 (Tsoutsas). Instead, Mr. Tsoutsas asked that Mr. Kennedy refer their dispute to DSCC's legal department. JX 15; Tr. 132:12-133:5 (Tsoutsas). 2.26

On June 17, 2003, DSCC cancelled the First and Second Purchase Orders "[b]ecause we

were not going to be supplied parts from an approved source." PX 24, PX 25; Tr. 249:1-23 (Kennedy).

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III.

Ulysses's Fraudulent Certified Claim

3.1

On February 16, 2006, Ulysses submitted a certified CDA claim to the contracting

officer. PX 28. Mr. Tsoutsas certified the claim, JX 28 at 4; Tr. 136:16-137:4 (Tsoutsas), seeking a total of$95,115 in connection with the cancellation of the First and Second Purchase Orders. PX 28 at 3; Tr. 137:7-138:17 (Tsoutsas).

3.2

In its claim, Ulysses once again asserted that "Ulysses has always been considered as an

approved source for PIN 178AS 112 .... " PX 28 at 2. Ulysses knew this statement to be false for the reasons set forth in detail above in Paragraphs 2.4, 2.5, 2.6, and 2.9, i.e., that the Government had explicitly informed Mr. Tsoutsas in 1998 he was not an approved manufacturer ofthe '112 part by virtue of putative experience with the next higher assembly. 3.3

In its claim, Ulysses requested that the ,Government:

1. Issue a determination that the Agency should accept Part 178AS 112 as Ulysses is an approved source and pay Ulysses the total contract amount for Contract 4209 for a value of$44,625.00; 2. Issue a determination that the Agency should accept Part 178AS112 as Ulysses is an approved source and pay Ulysses the total contract amount for Contract 5456 for the production of ninety-nine units of this identical item for a total value of $50,490.00; 3. Issue a determination that if Ulysses is not on the agency's approved source list then by allowing Ulysses to provide these parts in the past, the government has waived the requirement for Ulysses to be on the approved source list and should pay Ulysses the total contract amount for Contract 4209 and 5456 totaling $95,115.00. PX 28 at 3 (emphasis supplied). Ulysses knew that its assertion that "Ulysses is an approved source" and that "Ulysses had been allowed to provide these parts in the past" were false for the

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reasons set forth in detail above in Paragraphs 2.4, 2.5, 2.6, and 2.9, i.e., that the Government had explicitly informed Mr. Tsoutsas in 1998 he was not an approved manufacturer ofthe '112 part by virtue of putative experience with the next higher assembly, and had rejected his bid on that basis. ARGUMENT

I.

The First And Second Purchase Orders Never Ripened Into Contracts And Were Properly Cancelled A.

Ulysses Had No Intention And No Ability To Supply The Specific Items Described In The First And Second Purchase Orders

It is well settled that "[t]o establish a breach of contract, the plaintiff must show the existence of a contract, an obligation or duty arising out of that contract, a breach of the duty, and damages caused by the breach." Greenhill v. United States, 92 Fed. Cl. 385, 392 (2010) (citing San Carlos Irrigation & Drainage Dist. v. United States, 877 F.2d 957, 959 (Fed.Cir.1989)). In turn, "[t]o prove the existence of a contract with the [G]overnment, a plaintiff must prove four basic elements: (1) mutuality of intent to contract; (2) offer and acceptance; (3) consideration; and (4) a [G]overnment representative having actual authority to bind the United States." Hometown Fin., Inc. v. United States, 409 F.3d 1360, 1364 (Fed. Cir. 2005). "The Court of Federal Claims in Davies Precision Machining, Inc. v. United States, 35 Fed. Cl. 651 (1996) and several decisions of the Armed Services Board of Contract Appeals (' ASBCA ') ... have consistently held that issuance by the government of a purchase order does not constitute a contract, but is an offer by the government to the supplier to buy certain goods or services upon specified terms and conditions." Smart Business Machines v. United States, 72 Fed. Cl. 706, 708 (2006); see also Vantage Assocs. v. Gates, 342 Fed. Appx. 619, 620 (Fed. Cir. 17

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2009) (describing a purchase order from DSCC as an offer). Additionally, this Court has held that "when a supplier fails to tender performance in accordance with the terms and conditions of a purchase order, the order lapses and the contractor bears the costs of its non-performance."

Smart Business Machines, 72 Fed. Cl. at 709. Thus, a contractor that claims substantial performance in an attempt to demonstrate the existence of a contract must "allege that the government received what it has bargained for under the purchase order." Id at 710. Furthermore, "[a] finding of substantial completion is only proper where a promisee has obtained, for all intents and purposes, all the benefits it reasonably anticipated receiving under the contract." Kinetic Builder's, Inc. v. Peters, 226 F.3d 1307, 1315-16 (Fed. Cir. 2000); see also Franklin E. Penny Co. v. United States, 524 F.2d 668, 677 (Ct. Cl. 1975); Kaeper Machine, Inc. v. United States, 74 Fed. Cl. 1, 7 (2006) ("[W]hen a supplier fails to tender performance in accordance with the terms and conditions of a purchase order, the purchase order lapses and the contractor bears the cost of non-performance."). The evidence submitted at trial proved that the purchase orders at issue here did not constitute contracts. Rather, the purchase orders were offers by the Government to buy certain approved' 112 parts, specifically: (1) parts specifically described in the First Purchase Order as "Circuit Card Assembly, Critical Application Item, Raytheon Technical Services Co. (072E5)

PIN 178AS112," PX 7 (emphasis supplied); and (2) parts specifically described in the Second Purchase Order as "Circuit Card Assembly, Critical Application Item, Frequency Selective

Networks Inc. [CAGE] (56662) P/M 178AS112." PX 9 (emphasis supplied). At trial, Ulysses did not offer even a shred of evidence that it had either the intention or the ability to accept the Government's offer by supplying either of these items. Rather, as demonstrated by its repeated

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assertions in its correspondence with the Government, to include its certified claim, Ulysses intended to persuade the Government to accept ' 112 parts of its own manufacture, rather than the '112 parts that the Government had actually offered to buy. See, e.g., PX 11, PX 14, JX 11, PX 18, JX 28. Because Ulysses failed to "tender performance in accordance with the terms and conditions" of the two purchase orders - and, indeed, had no intention of supplying required parts manufactured by the specified companies - the purchase orders did not ripen into contracts and Ulysses must bear the entirety of the costs of its non-performance. Smart Business Machines, 72 Fed. Cl. at 708. 1 Indeed, to the extent that Ulysses has attempted to claim substantial performance to demonstrate the existence of a contract, the evidence established that the Government did not receive "all the benefits it reasonably anticipated ... under the contract." Kinetic Builder's, Inc., 226 F .3d at 1315-16. Again, DSCC' s purchase orders were for '112 parts manufactured by or under the direction of Raytheon and Frequency Selective Networks, Inc., not for parts manufactured by Ulysses. Accordingly, the evidence proved that Ulysses never had a contract with the Government, that the Government's cancellation of the First and Second Purchase Orders was appropriate, and that Ulysses has no cognizable damages in this case.

1

Put another way, because Ulysses never intended to supply the specified parts, at a minimum, there could be no "meeting of the minds" between Ulysses and the Government, and, therefore, no contract. "Under well established principles of contract law, no meeting of the minds can be found when there is a mutual misunderstanding with respect to a material term of the alleged agreement." Allen v. United States, 78 F.3d 605 (Fed. Cir. 1996) (unpublished) (collecting cases); Laboratory Supply Corp. ofAmerica v. United States, 3 Cl. Ct. 722, 726 (1983) (noting that "there was no meeting of the minds as to what was to be delivered and no acceptance"). 19

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Mr. Tsoutsas's Newly Minted Attempt To Explain Away The Plain Language Of The Purchase Orders Has No Merit

At trial, Mr. Tsoutsas attempted to explain away the plain language of the item description that appeared in each purchase order. According to Mr. Tsoutsas, within the specific item descriptions in the First and Second Purchase Order, the reference to "Raytheon Technical Services Co." within the line "Raytheon Technical Services Co (072E5) PIN 178AS112," PX 7, and the reference to "Frequency Selective Networks Inc. (56662) PIN 178AS112," PX 9, were "irrelevant." Tr. 39:11-23 (Tsoutsas); Tr. 93:16-20 (Tsoutsas). Attempting to defend his assertion with respect to the First" Purchase Order, Mr. Tsoutsas purported to explain that "Raytheon was not the source which would obligate it to go to buy the item because we were a qualified source, more qualified source than Raytheon because we had the overall knowledge of the equipment which we built, and that appears practically in every bid or contract, the [CAGE] quote of another manufacturer, but that doesn't mean that this item was a product of Raytheon. No way." Tr. 39: 11-23 (Tsoutsas); Tr. 92:10-15 (Tsoutsas) ("[T]his is only reference. It's not a requirement to go to Raytheon because the government will never do that, to ask you to go to another company, buy the item and sell it to the government because that multiplies the amount of money you have to put on it."). In the alternative, Mr. Tsoutsas explained that the reference to Raytheon as the manufacturer within the specific item description in the First Purchase order was "irrelevant because first of all, Raytheon is not the source of the item, probably they never build it, and second, it's referenced because every contract -- every bid has previous history showing all [CAGE] codes of companies who supplied the item." Tr. 90:11-16 (Tsoutsas). Mr. Tsoutsas maintained that, although located within that same line of the item

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description that contained the purportedly "irrelevant" reference to Raytheon, "the part number is not irrelevant. The part number is what we bid on." Tr. 90:17-20 (Tsoutsas). Mr. Tsoutsas then asserted that "it's a federal regulation which dictates the part number which was part of the overall equipment and it had nothing to do with Raytheon. Raytheon may [have] had the contract and indicate so in the bid or contract, but that's -- why the government would ask me to go to Raytheon to buy the item and sell to the government." Tr. 90:24-91:5 (Tsoutsas).

Mr. Tsoutsas did not identify any purported Federal regulation supporting his view. See Tr. 91:12-22 (Tsoutsas). Mr. Tsoutsas's selective reading of the purchase orders at issue- which was asserted for the first time in this litigation, rather than in any of the contemporaneous correspondence in this case -is absurd on its face. However, placed in the context of the other evidence at trial, it is clear that Mr. Tsoutsas's assertions do not result from an innocent mistake, but are part of a larger and more troubling course of conduct that has culminated in the Government's filing of fraud counterclaims in this case - and ultimately proving them at triaL As noted above, despite Mr. Tsoutsas's attempts to deny it, in order to obtain the First Purchase Order for the item described as "Raytheon Technical Services Co (072E5) PIN 178AS112," Ulysses entered an electronic quotation into the DIBBS system in which it: stated that the product offered for NSN is an 'exact product'. Exact product means CAGE 072E5 part number 178AS 112, manufactured by or under the direction of CAGE 072E5. If you intend to manufacture this item, but are not CAGE 072E5, you must have evidence of a current contractual relationship with CAGE 072E5 to manufacture and sell this item as CAGE 072E5 PIN 178AS112 in order to quote exact product. DX 22. Thus, the very quotation that Ulysses entered belies the notion that the reference to 21

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"Raytheon Technical Services Co (072E5)" within the item description "Raytheon Technical Services Co (072E5) PIN 178AS112" is at all ambiguous, let alone an "irrelevancy" as Mr. Tsoutsas has now asserted in an attempt to salvage his case. Rather, it was a direct reflection of the quotation that Ulysses itself had entered, and the product that Ulysses had promised to provide. The bottom line is that the self-manufactured parts that Ulysses intended to supply the Government were not the products that the Government had offered to buy. PX 7, PX 9. Ulysses has rio contracts, and no case. As such, judgment is warranted in the Government's favor. II.

Ulysses Violated The False Claims Act In Presenting A Claim For Payment Under A Fraudulently Procured Purchase Order And In Submitting A CDA Claim For Payment That Contained False Assertions Of Fact The FCA prohibits the presentment of a "false or fraudulent claim for payment or

approval" to the Government. 31 U.S.C. § 3729(a)(l). Under that statute, "a contractor is deemed to have known that a claim it submitted was false if it had actual knowledge of the falsity of the claim or it acted in deliberate ignorance or reckless disregard of the truth or falsity of the claim." Commercial Contractors, Inc. v. United States, 154 F.3d 1357, 1362 (Fed. Cir. 1998) (emphasis added); see also United States ex rel. Franklin v. Parke-Davis, 147 F. Supp. 2d 39, 51 (D. Mass. 2001) (FCA violations where "material misrepresentations [are] made to obtain a government benefit"). The burden of proof is preponderance of the evidence and "no proof of specific intent to defraud is required." 31 U.S.C. § 3729(b). In this case, the evidence established that Ulysses violated the FCA in two separate respects: (1) by knowingly submitting a false quote, via DIBBS, in order to obtain the award of a 22

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purchase order for which Ulysses knew it was not eligible; and (2) by filing a CDA claim that intentionally sought payment upon this fraudulently obtained purchase order and also asserted with knowing falsity no fewer than three times that Ulysses was an approved manufacturer of the '112 part, such that Ulysses should be paid for the Second Purchase Order as well. DX 28 at 1 ("Ulysses has always been considered as an approved source for PIN 178AS 112 .... "); id. at 3 (twice stating "Ulysses is an approved source"). These are quintessential FCA violations. A.

FCA Violations Associated With The First Purchase Order

A claim for payment on a contract obtained through fraud or a false statement constitutes a false claim under the FCA. Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 787 (4th Cir. 1999) (contractor violated FCA by obtaining government approval to award subcontract using false statements regarding the cost and duration of proposed project). Similarly, for example, in United States ex rel. Marcus v. Hess, 317 U.S. 537, 543-44 (1943), the United States Supreme Court held that collusive bidding for a contract tainted all claims for payment: This fraud did not spend itself with the execution of the contract. Its taint entered into every swollen estimate which was the basic cause for payment of every dollar paid by the [government]. ... The initial fraudulent action and every step thereafter taken, pressed ever to the ultimate goal-payment of government money to persons who had caused it to be defrauded. This means that any material false statement in, or fraudulent course of conduct related to, a bid for a Government contract taints future claims for payment made pursuant to that contract. See, e.g., United States ex rel. Longhi v. United States, 575 F.3d 458, 467 (5th Cir. 2009) (where

Government was fraudulently induced to award grant by material false statements in grant application, every invoice submitted for grant funds constituted a false claim); United States ex

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rel. Tyson v. Amerigroup Illinois, Inc., 488 F. Supp. 2d 719 (N.D. Ill. 2007) (HMO violated FCA by submitting claims under Medicaid contracts fraudulently procured by falsely representing intention to comply with federal nondiscrimination provisions). · The evidence and testimony showed that Ulysses submitted a quotation electronically in response to the First RFQ. DX22; DX 23; Tr. 276:16-277:14 (Searfoss); Tr. 285:10-286:12 (Searfoss); Tr. 318:8-319:23 (Mort). In that quotation, Ulysses indicated that it was submitting a bid without exception, and identified the product that Ulysses intended to supply as CAGE 072E5 PIN 178AS 112, i.e., a '112 part made by or under the direction of Raytheon. DX22 at 2; Tr. 275:9-276:8; Tr. 286:22-287:1 (Searfoss). In fact, this representation was false. Ulysses had no intention to supply a' 112 part made by or at the direction of Raytheon; rather, it intended to supply products of its own manufacture. See Tr. 219:24-220:4 (Kennedy); Tr. 222:7-12 (Kennedy); Tr. 225:7-10 (Kennedy); see also, e.g., PX 11, PX 14, JX 11, PX 18, PX 28. The evidence at trial demonstr-ated that Ulysses's misrepresentation was made knowingly within the meaning of the FCA, and was not the product of an innocent mistake in using the Government's DIBBS system. First, in order to convey to the Government that it intended to supply a part made by or under the direction of Raytheon, Ulysses affirmatively indicated that it was submitting a bid without exception, and then availed itself of a drop down menu of approved sources from which it specifically identified the product that it purportedly intended to supply. DX22 at 2; Tr. 275:9-276:8; Tr. 286:22-287:1 (Searfoss). That part was CAGE 072E5 PIN 178AS112, i.e., a '112 part made by or at the direction ofRaytheon. DX22; Tr. 286:22-287:1 (Searfoss). As a direct result of having indicated that it was providing a bid without exception, and in

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order to submit a quotation, Ulysses had to click past a warning screen prior to the time that it submitted its bid. Tr. 287:2-288:22 (Searfoss). That warning screen unequivocally stated: You have stated that the product offered for NSN is an 'exact product'. Exact product means CAGE 072E5 part number 178AS112, manufactured by or under the direction of CAGE 072E5. If you intend to manufacture this item, but are not CAGE 072E5, you must have evidence of a current contractual relationship with CAGE 072E5 to manufacture and sell this item as CAGE 072E5 PIN 178AS112 in order to quote exact product. Any product not meeting these criteria is considered an alternate product even though it may be manufactured in accordance with the drawings and/or specifications of CAGE 072E5. Any indication that you have misrepresented the product offered shall result in the government considering rescission of any resultant contract and all other sanctions, contract penalties, and remedies established under any other law or regulation. DX22; Tr. 287:2-288:22 (Searfoss). Ulysses proceeded to submit its bid anyway. See Tr. 276:16-277:2 (Searfoss); Tr. 288:19-22 (Searfoss). Then, when it actually obtained the First Purchase Order as a direct result of misrepresenting itself, see Tr. 288:23-289:8 (Searfoss), Ulysses felt justified in its attempt to foist its own self-manufactured parts on the Governmentnotwithstanding the fact that it had led the Government to believe that it was going to obtain parts made by or under the direction of Raytheon -because "we [Ulysses] were a qualified source, a more qualified source than Raytheon .... " Tr. 39:16-19 (Tsoutsas). In light of the foregoing considerations, the evidence admitted at trial proved that, in knowingly and intentionally misrepresenting to the Government in its electronic quotation that it had the intention, and the wherewithal, to supply the Government with parts made by or under the direction of Raytheon, Ulysses obtained the First Purchase Order by committing fraud. As such, Ulysses is liable for a violation of the FCA, and judgment is warranted in the

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Government's favor.

B.

FCA Violations Associated With Ulysses's CDA Claim

When DSCC learned that Ulysses did not intend to supply the parts that were requirred under the First and Second Purchase Orders, and confronted Ulysses with that information, Ulysses had an opportunity to come clean and effectively to walk away from the two purchase orders at issue. However, that is not the path that Ulysses took. Rather, over a period of months, Ulysses pushed DSCC to accept its non-conforming products, bombarding DSCC with correspondence in which it asserted in various iterations that Ulysses was itself already an "approved source" of the '112 part, and at the same time evaded repeated requ~sts by DSCC for documentary evidence that would allow DSCC to verify the truth of its claims. These efforts culminated in Ulysses's submission of a CDA claim, signed and certified by Mr. Tsoutsas, that was knowingly false - and ultimately fraudulent- in multiple respects. As the foregoing discussions demonstrate, Ulysses sought payment in its certified claim pursuant to purchase orders to which it knew that it was not entitled. Specifically, Ulysses knew that it had obtained at least the First Purchase Order by fraud, by intentionally misrepresenting in its quotation that Ulysses both intended and could supply a '112 part made by or under the direction of Raytheon. In addition, as demonstrated by Mr. Tsoutsas's tortured and implausible attempts to explain away after the fact the plain language of the purchase orders at issue, Ulysses also knew that the purchase orders called for products that Ulysses did not, and could not, supply. As such, Ulysses's certified claim was fraudulent within the meaning of the FCA from its inception. The evidence at trial also established that Ulysses compounded the falsity of its CDA

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claim by centering that claim around the assertion that Ulysses "has always been considered as an approved source for PIN 178AS112 .... " PX 38 at 2; see also id. at 3 (stating twice that "Ulysses is an approved source"). This statement was absolutely false. As James Mort, the business development estimator for Ulysses, Melstrom and other Tsoutsas-owned sister companies, Tr. 310:25-311:10 (describing role at companies) (Mort), Tr. 312:11-15 (same) (Mort), testified, Ulysses was not in fact an approved source for the '112 part in the 2002 timeframe, and had not manufactured the '112 part for the Federal Government before. Tr. 322:18-323:15 (Mort). In addition, the evidence at trial established that Ulysses had known since the year 1998 that the Government also did not consider it to be an approved source for the '112 part. Specifically, in 1998, Ulysses's sister company Melstrom, of which Mr. Tsoutsas was also president and owner, Tr. 24:12-20, had submitted a bid on another.' 112 part procurement, and been unequivocally informed by the Government in a letter addressed to Mr. Tsoutsas that its offer "was not eligible as an alternate item .... " JX 1; Tr. 71:12-25 (Tsoutsas) (emphasis supplied). Melstrom had the same ownership as Ulysses, the same physical address, and the same employees. Tr. 111:6-13 (Tsoutsas); see also Tr. 311:2-5 (Ulysses employee testifying that he worked for Melstrom "which is Ulysses"). At the same time, Mr. Tsoutsas was informed that the Government had unequivocally rejected the precise argument that he advanced in Ulysses's CDA claim, i.e.,that Ulysses should be deemed an "approved source" by virtue ofhaving made the next higher assembly: "Your recent offer submitted in response to the solicitation is not eligible as an alternate item. The next higher assembly is not an acceptable alternate .... " JX 1; Tr. 71:12-25 (Tsoutsas conceding that he was informed of the Government's position in 1998) 27

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(emphasis supplied). The Government had also informed Mr. Tsoutsas in 1998 as to how to become an approved source for the '112 part. JX 1. Mr. Tsoutsas rejected that approach, see Tr. 72:1-16 (Tsoutsas), and never pursued such approval. See DX 48 (Response to Interrogatory No. 1 answering "no" to the question "Did the plaintiff ever seek United States Government approval by submitting a technical data package pursuant to source approval request procedures to manufacture a part corresponding to NSN5998-00-007-1450"); Tr. 76:10-21 (Tsoutsas admitting truth of response to Interrogatory No. 1); Tr. 321:22-322:10 (Mort explaining that Ulysses "absolutely" knew what a source approval request was, and had never submitted one to become an approved source for the' 112 part). Rather, Mr. Tsoutsas took the unsupported position that he "never needed to submit a source approval request for the' 112 part ever." Tr. 104:16-19 (Tsoutsas). In addition, the fact that Ulysses had actual knowledge that Ulysses was not an approved source for the' 112 part is apparent from the record of Mr. Tsoutsas's conduct in this case. From the time that Mr. Tsoutsas first asserted to DSCC that Ulysses was an approved source for the '112 part, and continuing up until the cancellation of the First and Second Purchase Orders, DSCC consistently requested documentary proof of the truth of Mr. Tsoutsas's assertion. See,

e.g., JX 8; JX 10; Tr. 233:21-234:5 (Kennedy); Tr. 238:3-240:4 (Kennedy); Tr. 241:4-242:8 (Kennedy). Mr. Tsoutsas responded each time- and over a period of months- with a barrage of unsupported and irrelevant arguments, rather than any concrete information in support of its claim to be an approved source for the '112 part. See PX 11; Tr. 96:20-97:3 (Tsoutsas not enclosing information); Tr. 228:10-228:10-231 :3 (Kennedy explaining why Mr. Tsoutsas' bald 28

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assertions were insufficient); PX 14; Tr. 118:25-119:14 (Tsoutsas); JX 11; Tr. 240:23-241:21 (Kennedy). Indeed, as Mr. Kennedy explained: "it became increasingly difficult. When I would ask for information, I would get different answers than I was looking for .... [T]he more difficult it became -the longer this dragged on the more concerned I got about ... whether Ulysses was truly approved to provide this part." Tr. 241:24-242:8 (Kennedy). The same pattern and practice was on full display during trial proceedings in this matter. Indeed, Mr. Tsoutsas was asked no fewer than nine times on the stand to prove that he submitted documentation to Mr. Kennedy to support the notion that Ulysses was an approved source for the '112 part free and clear of the 178AS 100 assembly, and to identify the documents wherein he had allegedly communicated that information to.Mr. Kennedy. Tr. 98:9-13; 98:23-99:3; 99:14-18; 100:6-7; 102:10-12; 102:25-103:5; 103:7-11; 103:15-104:2; Tr. 105:10-11. Each time, Mr. Tsoutsas went to great lengths to avoid answering the question, offering nonresponsive answer after nonresponsive answer, ultimately pointing to no documents that supported his contentions. See generally Tr. 98-109 (Tsoutsas). Such behavior would be absolutely inexplicable in an individual who truly believed that his company was an approved source and who was in possession of actual evidence to vindicate his position; it is entirely consistent with the behavior of a witness who knows he has something to hide. In light of the foregoing considerations, the evidence admitted at trial established that Ulysses submitted a CDA claim that both sought payment under a fraudulently induced purchase order and contained multiple false assertions that Ulysses had been approved to manufacture the '112 part. The evidence admitted at trial also established that Ulysses actually knew that it was not entitled to the monies that it was attempting to obtain through the claim, and actually knew29

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because it had been so informed by the Government in 1998 -that it was not an approved source for the '112 part in the first place. This is quintessential fraud under the FCA. As such, judgment is warranted in the Government's favor. C.

Ulysses Violated The CDA's Fraud Provision

The CDA's fraud provision provides that "[i]f a contractor is unable to support any part of his claim and it is determined that such inability is attributable to misrepresentation of fact or fraud on the part of the contractor, he shall be liable to the Government for an amount equal to such unsupported part of the claim in addition to all costs to the Government attributable to the cost of reviewing said part of his claim." 41 U.S.C. § 7103 (formerly 41 U.S.C. § 604). The CDA, in tum, defines a "misrepresentation of fact" as "a false statement of substantive fact, or any conduct which leads to a belief of a substantive fact material to proper understanding of the matter in hand, made with intent to deceive or mislead." 41 U.S.C. § 7101. The burden of proof to demonstrate a violation of the CDA's fraud provision is preponderance of the evidence. UMC Electronics Co. v. United States, 43 Fed. Cl. 776, 795-96 (1999), aff'd, 249 F.3d 1337 (Fed. Cir. 2001) (citation omitted). In this case, the same evidence discussed above that supports finding violations of the FCA also supports relief under 41 U.S. C. § 71 03. As explained in detail above, Ulysses - in submitting its CDA claim to the contracting officer- repeatedly and falsely asserted that it was an approved source for the ' 112 part, and sought payment under purchase orders to which it knew that it was not entitled, with the intent to deceive or mislead the Government. Accordingly, this Court should enter judgment in favor of the United States.

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D.

Filed 05/14/12 Page 35 of 36

Ulysses Should Forfeit Its CDA Claim Pursuant To The FFCA

The FFCA provides that "[a] claim against the United States shall be forfeited ... by any person who corruptly practices or attempts to practice any fraud against the United States in the proof, statement, establishment, or allowance thereof." 28 U.S.C. § 2514. "To prevail under the FFCA, the government is required to establish by clear and convincing evidence that the contractor knew that its submitted claims were false, and that it intended to defraud the government by submitting those claims." Commercial Contractors, Inc. v. United States, 154 F.3d 1357, 1362 (Fed. Cir. 1998) (citing Young-Montenay, Inc. v. United States, 15 F.3d 1040, 1042 (Fed. Cir. 1994)); McCarthy v. United States, 670 F.2d 996, 1003-04 (Ct. Cl. 1982). The same intentionally fraudulent actions that serve as the bases of Ulysses's FCA and CDA liability should result in the forfeiture of Ulysses's CDA claim pursuant to the Special Plea in Fraud. Accordingly, judgment is appropriate in the Government's favor. CONCLUSION At trial, Ulysses failed to prove that the Government wrongfully cancelled the First and Second Purchase Orders. On the other hand, the Government established that Ulysses knowingly obtained the First Purchase Order by fraud and submitted a false certified claim to the contracting officer in order to obtain payments to which it knew it was not entitled. Accordingly, judgment in the Government's favor is warranted. Respectfully submitted, STUART F. DELERY Acting Assistant Attorney General JEANNE E. DAVIDSON Director 31

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Filed 05/14/12 Page 36 of 36

s/ Deborah A. Bynum DEBORAH A. BYNUM Assistant Director

s/ A,Bondurant Eley A. BONDURANT ELEY DAVID D'ALESSANDRIS Trial Attorneys U.S. Department of Justice P.O. Box 480 Ben Franklin Station Washington, D.C. 20044 Tel: (202) 616-8254 Fax: (202) 514-7965 May 14,2012

Counsel for Defendant

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