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Calls from Cloned Phone Not Chargeable to Government

A claim seeking to recover the value of stolen satellite cell phone services was denied by the Armed Services Board of Contract Appeals because the services were stolen from the contractor, not the government. The dispute arose from a contract to provide service for five government-owned satellite cell phones. After an investigation revealed the phone number for one of the phones was cloned and used by "fraudsters," the contracting officer denied payment for the majority of charges for that phone. On appeal, the contract's risk of loss clause (FAR 52.212-4(j)) did not resolve the dispute because the clause applies to physical supplies, not services. Instead, the appeal was resolved in favor of the government because the services were stolen from the contractor and its suppliers. The contractor argued the government should have taken certain actions to prevent the theft and limit cell phone usage to the contract's estimated price. However, there was no contractual duty for the government to take these actions, and the contractor did not seek to recover in tort. The contractor had privity of contract and the necessary information to direct its supplier to cancel the cell phone and stop the fraudulent charges. (Qatar Int'l Trading Co., ASBCA, 92,915)


































 






 

 

(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )

     
  
 

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