Can the federal government declare a contract “void ab initio” or void from the beginning? Yes, if the government can “prove that the contractor (a) obtained the contract by (b) knowingly (c) making a false statement.” MLB Transportation v. U.S., 2025 WL 2962897, *8 (Fed.Cl. 2025) (citation omitted).
Where a contractor “obtained [a] contract by knowingly falsely stating that it was a small business … [the] government contract [is] tainted from its inception by fraud [and] is void ab initio.” The general rule that “a Government contract tainted by fraud or wrong-doing is void ab initio … protects the integrity of the federal contracting process and safeguards the public from undetectable threats to the public fisc.” A contract found to be void ab initio has “no legal effect,” and is “[n]ull from the beginning, as from the first moment when a contract is entered into.”
MLB Transportation, supra (citations omitted).
In MLB Transportation, the court found that the contractor obtained a government contract by knowingly making a false statement that it was a Service Disabled Veteran Owned Small Business (SDVOSB). Id., at *9. The solicitation provided that it was a SDVOSB set aside requirement. The contractor submitted a proposal stating it was a minority owned service disabled veteran company, which was a false statement, and in which the government relied on in issuing the contract.
The moral is obvious. Don’t make false statements to land a contract. Stated differently, don’t fraudulently induce another to enter into a contract as the outcome will be the same as the outcome here.
Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.