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Case number 16-5080, National Mall Tours of Washington, Inc.

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Appellant versus United States Department of the Interior at L. Mr. Garden for the Appellant, Mr. Field for Appellee U.S.

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Department of the Interior, Mr. Swain for Appellee City Sightseeing, Washington, D.C.

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Good morning, Your Honors.

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Morning.

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I'm Kevin Garten, counsel for Appellant National Maltaurs of Washington, Inc., and I have reserved three minutes of my time for rebuttal.

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Your Honors, the District Court below aired in two key regards.

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First, the District Court improperly found that the term controlling interest did not apply beyond the parent level of a company that was bidding on a federal concession contract.

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And this finding was contrary to the plain language of the applicable regulatory definition.

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Yes, Your Honor.

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Actually, we do not believe so.

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The dict in that court, first of all, was addressing 51.85, which dealt with when it's appropriate to obtain approval of that.

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And when you read that decision... You mean in terms of an existing concessionaire?

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Yes.

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And when there's a need to approve a change.

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But when you look at this case, Your Honor, this case specifically involved the term controlling interest.

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What does it mean?

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What does it include?

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And the AmFAC resource case never dealt with that.

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But we think when you look at the plain language of that definition... What are you suggesting in this case there isn't a requirement of approval?

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You just distinguished it on the grounds that the first in the AmFAT case is a requirement of approval.

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But you're saying in this case there is no requirement of approval.

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No, that would not apply here.

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I didn't think you were going to say that.

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Correct.

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No, that would not apply here.

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What we have here is a situation where a prospectus calls for certain specific information.

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And there's a definition that applies to some of that information.

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The information was known to be no longer valid at the time the court decision was made.

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The regulation at AmFact really does not apply here because we're not in that situation.

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The term certainly does controlling interest, and that's defined in 51.84.

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The problem with your argument, I see, is that 51.84 is part of, I think it's subpart J.

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and it says that these definitions apply to this part, meaning to subpart J. There's a definition of concessioner that's in 51.3, and that definition replies to this part, meaning the entirety of part 51.

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So it seems to me that you are trying to use a definition that applies to subpart J, which only talks about transfers of contracts, which we don't have here.

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in saying that that definition should override the general definition of concessioner that applies to the entirety of Part 51, and that would apply specifically to the procurement of a contract.

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And actually, Your Honor, that's not what we're doing because we're the, as I understand it, the term concessioner is not really applicable here.

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The term that's at issue here is the term

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controlling interest that's specifically used in the regulation.

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But that's using a regulation that isn't applicable to these circumstances.

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Correct, but it's also using the prospectus.

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The prospectus clearly calls for all potential park service concessioners that are bidding on this contract to provide certain information about their controlling interest.

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Now the only definition that's in play here that's been offered by any party

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is the definition at 51.84.

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Yes, it is in a different subsection, but I think to look at the prospectus, where it specifically says to potential concessioners, provide us information about your controlling interest, and then not conclude that definition applies, doesn't make sense in that there's no other definition.

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And even the district court recognized that.

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If nothing else, there's an analogy there.

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But it's only an argument, though, that you're right that the only definition of controlling interest

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is the one in the different section and therefore it must be used in your view by analogy.

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Why is the change that came about and which was disclosed to the agency

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Why is that of particular significance?

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It's of significance, Your Honor, because it changed the fundamental basis for the award decision, which had not been made yet before that change came to light.

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So therefore, you have the problem where you know that... So the whole question is whether it was a material change, right?

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Correct.

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And we believe it was very true.

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And the regulation says information required by the prospectus refers to information

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that is material as determined by the service.

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So it's up to the service to determine whether it's material or not, right?

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It would be in that regard, except that you've got specifically calling for controlling interest.

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Yes, you're on.

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You've got the situation where you have that judgment being made by the agency.

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But they can abuse their discretion in that regard, because if you look at their own regulations, it's such a... So your whole argument in this case depends on the proposition

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that the decision made by the agency that this was not material, the change was not material, is arbitrary and capricious.

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That's your whole case.

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And abuse of discretion.

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Yes, Your Honor.

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Well, you don't need to abuse of discretion.

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If it's arbitrary and capricious, you don't need to abuse of discretion.

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But remember, it says as determined by the service.

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You know, that's a lot of discretion on that.

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Understood that, Your Honor, but we also know that the service determined in the regulations that controlling interest, knowing all about it, was very important to them.

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In fact, they stated that a change in a controlling interest, if not approved, is a material breach.

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And they gave specific reasons for why it's important.

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No, that's only on the concessionary question, right?

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Yes, but it's the same term, Your Honor, so it doesn't mean there's a material breach here.

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Well, it would mean that it was material, Your Honor, and that it doesn't make sense if this information about this term is necessary.

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Now, if you don't have enough information, there's a change in it that way.

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it would constitute a material breach automatically, a material breach in this contract.

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It doesn't make any logical sense to then say that, but when we're reviewing you to decide whether or not you should have this contract, we don't care if this changes.

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You can't have it both ways.

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Well, of course, in the AmFAT case, we focused primarily on dictates, to be sure.

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We focused primarily on the management of the direct corporation that's running the concession rather than the parent.

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I admit that this grandparent argument is a little thin since there's only a paper company between the

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corporation and their grandparents.

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But so what?

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We have said the real focus is on the management of the operation.

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So why are they arbitrary and capricious in thinking that, even in the case of a concessionaire?

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Because it shows that the regulation, the definition shows that the focus of the agency is on the bottom line.

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Who has the ability to control these operations?

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They want to know about that person.

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And we think it's very clear that when Exponent acquired 60% of limit in it, which then wholly owns the concessionaire, clearly, Exponent now has that ability.

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But see, your problem is to go back to Amfax.

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In this particular case, even if you're right,

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about the regulation.

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Your problem is that the agency was just following what we said in Amfax, namely that it just wasn't workable to go beyond the level of the parent because of the possibility that a grandparent could just be purchased on the stock market, right?

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Right.

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So how could it conceivably be unreasonable for an agency to adopt an interpretation that's based on dicta from this court?

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Well, two things, Your Honor.

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First of all, with all respect, of course, we don't think that those dictated comments were valid, because we don't think... That's not my point.

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You're missing my point.

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Given that they're there... They're there, and the agency... I mean, I get your point.

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In fact, my question was based on the assumption that you're right about the better interpretation of the regulation, but...

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just put yourself in the position of the agency, okay?

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The D.C.

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Circuit issues an opinion with some pretty clear dict in here, including a hypothetical, and it explains exactly why going beyond the parent doesn't make any sense.

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And so that's what the agency does, right?

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So how can we, you know, years later come along and say, because our question really is, have they reasonably interpreted their regulation?

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And they've done it

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directly a result of what we've said.

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So how can that be unreasonable?

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Well, Your Honor, we think that's unreasonable, because first of all, notably, the agency never even referred to AmFAC in their filings below.

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So they weren't going on AmFAC, because they never even referred to it.

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So they weren't even looking at that case decision to guide their decision.

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Sorry?

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But they cite it here.

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They do here, because the court below cited it.

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But when the agency was explaining their position, they never cited AmFAC as the basis for their position.

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So what?

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I don't understand why that happened.

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They were defending their regulation in the district court.

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They're defending it here.

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They can make new arguments here.

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Those aren't waived.

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Yes, Your Honor, but the AmFAC decision was focused on a different election.

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I got you.

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I got you about that.

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But the core of the AmFAC decision is it doesn't make any sense to go beyond the parent.

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And so that's what the agency's done.

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And for us to say, now the agency was unreasonable in taking that position, we're saying the AmFAC decision was unreasonable.

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Yes, Your Honor.

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I think you would have to be saying that.

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What do I do about that?

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I've never seen anything like that.

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But Your Honor, I don't believe that the agency should have got their decision, the reasonableness of their decision, should be judged on the validity of Dick, the statements, and a court's opinion, to be honest with you.

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Let me ask you a different question.

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You were talking to Judge Silverman about Big Bus's submission after you notified the agency of the purchase of the controlling interest in the grandparent.

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So what do you think?

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And again, your view is that the agency's request to big bus was not proper, right?

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Yes.

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There was no ambiguity in the original proposal, right?

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Yes.

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OK.

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So what's an agency to do in a situation like this?

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Follow the rules.

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OK.

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The rules say that a clarification has to be limited to a situation where there's an ambiguity, right?

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Yes.

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Okay.

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Or they have to ask for an amendment and give everybody else an opportunity, right?

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When certain circumstances exist, yes.

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So what's an agency to do when a situation like this happens, where

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It learns, again, through you, that circumstances have changed since the original bid, but the circumstances only related to the bidder, nobody else.

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The only question is whether one bidder had a change in ownership.

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You say it can't ask for supplementary information, right?

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Correct.

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And it can't

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What can it do?

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You wrote the letter.

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What did you expect the agency to do?

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We expected the agency to recognize that that offer from Big Bus Tours, who was well aware of these rules when they participated in this competition, that they recognized their bid was no longer valid because it wasn't accurate.

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Well, the bid was accurate.

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And you agree with that.

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At the time of the war, Your Honor, after things changed and they knew before they made the order, which is the final decision?

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So it's your position that once circumstances change in a material way for better, they're done.

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They're cooked.

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Stick a fork in them.

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Only with regard to the Park Service's very specifically designed regulations.

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Yes, Your Honor.

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They wrote the regulations, and if you apply the rules, which you all have to live by, that's the outcome.

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I didn't write the rules.

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And that's a reasonable interpretation and a reasonable procurement scheme.

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There's no other way out, given their own regulations.

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Why is there no other way out?

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They could actually do rebidding.

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Well, they could.

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I'm sorry, Your Honor.

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On the remand, of course, they could always cancel.

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So, you know, I wondered why you're litigating, because their alternative, final alternative argument is even if you were right, all you would get is a remand and exactly the same results.

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We don't know that you're on it.

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We don't know that you're on it because the original bid didn't say anything about exponent.

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Exponent is only known to anybody by name.

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We know nothing about this company.

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Can you tell me, Count, can you tell us what

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should have caused the Park Service to change their decision after learning of exponent.

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Recognizing that there was a material change in the accuracy of Big Bus Tours bid with regard to their controlling interest, which is a material element that the Park Service system... You're saying that if there's a material change, that automatically means that there's prejudice.

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You know, I read your brief in your reply brief, and then each of them, you only use the term prejudice or prejudicial once.

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There's no explanation in either of those briefs as to how this material change was prejudicial to you.

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It was prejudicial to us, Your Honor, because the process assumes a fair and legal

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adheres to the competition process.

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So when you have a situation where your fellow bidder puts in a bid and then you hold tight, you don't change your corporate structure, you may pass up on opportunities, you don't.

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But your fellow bidder takes advantage of a new acquisition and changes their controlling interest, they've not got an advantage because they have a flexibility that you didn't have.

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Had you known that,

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maybe you would have treated your bid differently.

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But you can't allow bidders to simply change their position after their bids go in, because that doesn't make it fair.

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The rules, as written and recognized, you can't... Only if it's a material change.

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Everything depends on the proposition that's a material change.

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It does, Your Honor.

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In Section 51.8... And if you follow the logic of Judge Randolph in AmFAT, there really is no significance

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when there is a change, allegedly a change in control of a parent of a company that is operating, unless there's some focus on the change in the management of the direct concessionaire or prospective concessionaire.

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Now, is that unreasonable?

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That's not, and we think that the record in this case, given what we know about Exponent and what they stated about the acquisition, shows they did intend, even though it only, the regulation only requires the ability to control, which they have, they went above and beyond that and demonstrated that their whole purpose of acquiring Big Bus Limited was to get in there and change up the management.

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No, their purpose in acquiring all kinds of companies is to enhance efficiency, but you, there is a, here's the key, it seems to me, there is now, under the

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agency's interpretation.

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If their exponent were to use its controlling interest, controlling in your theory, to change the management of big bucks, then the balloon goes off as a concessionaire, right?

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The agency has a right to say, oh, no dice.

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You can't do that.

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It certainly applies in that situation, but it also applies given the debt.

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That's the only thing that's relevant.

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No, it also applies if you look at the regulation.

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And when they have the ability to do that, the Park Service has made it clear.

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They want to know not just who's going to, but who can make that change.

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And touching 51.87... Not if they follow impact.

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Correct, your honor.

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Now they follow the dip.

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The VAMP FACTS logic is unless there is a change in the management

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There's no, there's no significance.

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In AmFact, as we mentioned, is dictating was also a big deal.

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I know it's dictated, but why is it unreasonable?

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And that goes back to Judge Taylor's point.

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How can you say it's unreasonable?

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I don't know why it's unreasonable even if they didn't follow it, but they did follow it.

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So why is it unreasonable to take the position, hey, we're not going to worry unless there is a change in the management structure, change in the behavior, change in the operations.

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Because we believe that the agencies, the reasonableness of the agency's decision should not be based on dicta in a vacated decision that we think is... Well, no question.

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You're still asking.

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You're not answering why that is unreasonable.

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You don't get anywhere with the vacated.

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The vacated has nothing to do with this issue.

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That doesn't help you.

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Go ahead.

[00:17:42] Speaker 05:
Sorry.

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I didn't mean to interrupt, but just trying to help you.

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You still have an answer to why that's unreasonable.

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So the question to me is if we accept the dicta as valid or binding on the agency.

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If the agency takes the position, whether we're talking about a bidder or even a concessionaire, that we're not worried unless a change in the corporate structure above it results in a change in the management or operations of the direct concessionaire.

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Why is that unreasonable?

[00:18:16] Speaker 06:
because that's contrary to their own regulations.

[00:18:20] Speaker 03:
It's not unreasonable, then.

[00:18:23] Speaker 06:
No, it isn't reasonable because they're there.

[00:18:24] Speaker 03:
No, no.

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I mean, put aside if they come up with that interpretation.

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You can't say that that's an unreasonable interpretation.

[00:18:33] Speaker 06:
No, if that had been the interpretation all along in the regulations, and that was the rules of the game for everybody to follow, of course that would be reasonable if they put it out there right before us.

[00:18:41] Speaker 03:
No, that gets back when you say the rules of the game for everybody to follow.

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That gets back to my colleague's question.

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Why, in the Lord's name, are you prejudiced?

[00:18:49] Speaker 03:
We've been prejudiced because... You could have sold your company to somebody to tail ink.

[00:18:57] Speaker 03:
And we've gotten $50 million or something like that?

[00:19:01] Speaker 06:
No, Your Honor, I don't believe we could because the regulations specifically say controlling the interest applies to... No, I'm asking why were you prejudiced?

[00:19:07] Speaker 03:
Because you didn't have an opportunity to sell your company?

[00:19:09] Speaker 06:
Right, we were playing by a different set of rules.

[00:19:11] Speaker 03:
Is that why you're prejudiced?

[00:19:12] Speaker 03:
Yes, Your Honor.

[00:19:13] Speaker 06:
Because you didn't want to sell your company?

[00:19:14] Speaker 06:
Well, yes, Your Honor, because we didn't have the same flexibility as Big Bus did.

[00:19:17] Speaker 06:
Yes.

[00:19:18] Speaker 02:
Okay.

[00:19:21] Speaker 02:
On the congressional review issue, why do you have standing to raise that?

[00:19:28] Speaker 02:
The most that that statute gets you is that the Park Service was supposed to send a copy of the contract to two congressional committees, one in the House and one in the Senate.

[00:19:43] Speaker 02:
It doesn't say that those committees can veto the contract and the committee can't do that.

[00:19:50] Speaker 02:
It doesn't even say that the committees get the proposals so that they can see whether the Park Service awarded this to the best bidder because they can compare proposals.

[00:20:01] Speaker 02:
They just get the contract of the proposed contract of the winner.

[00:20:06] Speaker 02:
So how is there any injury or redressability?

[00:20:13] Speaker 06:
Um, for you, if that process had been fulfilled because your honor, that process is a part of pre award part of the process, and we are entitled to that congressional review to the extent that Congress decides within their powers.

[00:20:31] Speaker 06:
They want to do something about that award.

[00:20:32] Speaker 06:
Clearly, Congress intended to have that ability because they wouldn't have required that

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notification and review before a war.

[00:20:40] Speaker 02:
Is there anything in the record showing that there's ever been an instance where Congress has been given a contract

[00:20:48] Speaker 02:
um, subs pursuant to that provision, and they've not something to to prevent that contract from going forward.

[00:20:58] Speaker 06:
Nothing aware of your honor.

[00:20:58] Speaker 06:
But I think the whole that we have no standing is tantamount to holding that that entire process is meaningless.

[00:21:03] Speaker 03:
It would never result in information that comes to Congress is just the amount of the money that's involved in this in the bitter.

[00:21:13] Speaker 03:
There's nothing comparing as

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Judge, welcome point.

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Nothing comparing any alternatives.

[00:21:19] Speaker 03:
Doesn't that suggest strongly that Congress's only concern is we want to see how much money is going out to a bid?

[00:21:26] Speaker 03:
That's all.

[00:21:27] Speaker 06:
No, Your Honor, because I think at that, Richard, they would just want a notification of the award and the amount.

[00:21:31] Speaker 06:
They want the contract.

[00:21:32] Speaker 03:
They want to see what that... But they're asking to look at other bidders?

[00:21:36] Speaker 06:
Not yet, but they should only have that right as Congress.

[00:21:38] Speaker 03:
Wait a minute, wait a minute.

[00:21:40] Speaker 03:
But the structure doesn't ask to look... That's Judge Wilpin's point.

[00:21:43] Speaker 03:
It doesn't look... Congress is not interested in the competition.

[00:21:47] Speaker 03:
I know you say it comes out of a general legislation, which includes concerns for competition.

[00:21:54] Speaker 03:
But I don't see how this provision has anything to do with competition.

[00:21:57] Speaker 06:
Well, Your Honor, because it's pre-war, we think that shows it is part of the competition.

[00:22:00] Speaker 03:
The Congressional... Why?

[00:22:02] Speaker 03:
Congress didn't ask for the other bidders.

[00:22:04] Speaker 06:
Because they have the right to do that once they see the contract.

[00:22:06] Speaker 03:
Oh, they always have the right to do that.

[00:22:08] Speaker 03:
Now, let me ask you a question.

[00:22:09] Speaker 03:
Suppose the Congress, suppose the legislation had provided that the bids must be

[00:22:16] Speaker 03:
disclosed in the Federal Register.

[00:22:21] Speaker 03:
I mean, the final bid should be disclosed in the Federal Register.

[00:22:26] Speaker 03:
And the agency hadn't done that.

[00:22:28] Speaker 03:
Would that give you standing?

[00:22:30] Speaker 03:
Would you have an injury then?

[00:22:32] Speaker 06:
If it was required to be disclosed.

[00:22:34] Speaker 06:
It very well may, yes, Your Honor.

[00:22:35] Speaker 03:
Well, yes or no?

[00:22:37] Speaker 06:
Yes.

[00:22:38] Speaker 03:
What about legislation that required to be sent to the newspapers?

[00:22:43] Speaker 03:
The final award goes to the newspapers.

[00:22:48] Speaker 06:
That very well could, Your Honor.

[00:22:54] Speaker 05:
Why isn't your government says your notification already was waived?

[00:23:01] Speaker 06:
With regard to the $5 million?

[00:23:02] Speaker 06:
Yeah.

[00:23:02] Speaker 06:
Yes, because your honor, it wasn't waived because their point is that my client estimated that the revenue.

[00:23:09] Speaker 05:
No, no, no.

[00:23:10] Speaker 05:
They say it's waived because you knew about this.

[00:23:12] Speaker 05:
It's in your complaint.

[00:23:13] Speaker 05:
In other words.

[00:23:14] Speaker 05:
Yes, that's what I'm getting at here.

[00:23:15] Speaker 05:
It wasn't dependent.

[00:23:16] Speaker 05:
When you filed your complaint, you knew about it.

[00:23:17] Speaker 05:
So therefore, you had an earlier opportunity to raise this question.

[00:23:22] Speaker 05:
And you have to raise it at the earliest possible date, and you didn't.

[00:23:25] Speaker 06:
Yes, well, what we became aware of in the basis for our position now when we got the record was that the agency had two inconsistent estimates.

[00:23:36] Speaker 05:
No, that's not my point.

[00:23:37] Speaker 05:
I understand that.

[00:23:37] Speaker 05:
But when you filed your complaint, you must have thought that the bid exceeded $5 million, right?

[00:23:45] Speaker 06:
Yes, Your Honor.

[00:23:45] Speaker 06:
Okay.

[00:23:46] Speaker 05:
That's their point.

[00:23:47] Speaker 05:
Their point is you had all the information

[00:23:50] Speaker 05:
The only information you needed to challenge this at an earlier date was that it exceeded $5 million.

[00:23:57] Speaker 05:
And you must have known that because you put it in your complaint.

[00:24:01] Speaker 06:
Yeah, Your Honor, I don't believe that's the only information we need.

[00:24:03] Speaker 06:
Why?

[00:24:04] Speaker 05:
What else would you need?

[00:24:04] Speaker 05:
That's what the statute says.

[00:24:06] Speaker 05:
Anything in excess of $5 million.

[00:24:08] Speaker 05:
If it was under $5 million, you couldn't have raised this question.

[00:24:11] Speaker 05:
If it's over $5 million, you could have.

[00:24:13] Speaker 05:
You didn't.

[00:24:14] Speaker 06:
It's not exactly.

[00:24:15] Speaker 06:
The statute says more.

[00:24:16] Speaker 06:
It says what the agency estimates it to be.

[00:24:19] Speaker 06:
So the problem you've got is that you can disagree with an agency estimate.

[00:24:21] Speaker 05:
My only point is you put it in your complaint.

[00:24:24] Speaker 05:
So you must have known that there was a problem.

[00:24:27] Speaker 06:
We did suspect there was a problem, Your Honor, but we didn't have

[00:24:30] Speaker 06:
the concrete information we have now.

[00:24:31] Speaker 05:
I mean, you can't put stuff in your complaint that you don't have a reasonable basis for thinking is accurate anyway.

[00:24:36] Speaker 06:
We had a reasonable basis for everything.

[00:24:37] Speaker 05:
So on Rule 11, we must have had a basis for claiming that this should have been submitted.

[00:24:43] Speaker 06:
Yes, Your Honor.

[00:24:44] Speaker 05:
OK.

[00:24:45] Speaker 05:
And so the government says it's waived.

[00:24:46] Speaker 05:
And you haven't told me why it isn't, other than that, well, you didn't discover this discrepancy until later.

[00:24:52] Speaker 06:
Your Honor, even if that allegation based on what we knew at the time had been waived,

[00:24:58] Speaker 06:
A new allegation can be brought once we get the administrative record based on new information that comes into our hands.

[00:25:04] Speaker 06:
So the information we got, we could have amended the complaint later on once we obtained the administrative record.

[00:25:10] Speaker 06:
We already had it in there.

[00:25:11] Speaker 06:
I don't see how that could, we're disqualified from raising that on that basis based on new information that we were never told about before we got the administrative record.

[00:25:21] Speaker 05:
Anything else?

[00:25:22] Speaker 06:
No.

[00:25:23] Speaker 05:
Okay.

[00:25:24] Speaker 05:
Thank you.

[00:25:25] Speaker 05:
Thank you very much.

[00:25:25] Speaker 05:
From the government.

[00:25:38] Speaker 01:
Good morning, Your Honors.

[00:25:39] Speaker 01:
Brian Field on behalf of the federal appellees.

[00:25:43] Speaker 01:
In this case, this is an APA challenge to the agency award of a concession contract, and in such cases, this court employs a highly deferential application of its arbitrary capricious standard, where it will only set aside the agency action

[00:25:55] Speaker 01:
if the complaining party has carried its heavy burden of showing that the agency's action failed to accord with the applicable statutes and regulations and lacked a rational basis.

[00:26:04] Speaker 05:
Well, isn't – haven't they met that heavy burden by showing that the agency's interpretation of this regulation and interest-beneficial – this definition – interest-beneficial or otherwise sufficient outstanding voting securities or capital

[00:26:17] Speaker 05:
of the concessioner or related entities that permits, the agency's interpretation ignores the phrase or related entities.

[00:26:26] Speaker 01:
Doesn't it?

[00:26:28] Speaker 01:
Respectfully, Your Honor, I would disagree.

[00:26:30] Speaker 01:
It doesn't.

[00:26:30] Speaker 05:
I thought you might.

[00:26:31] Speaker 05:
Why?

[00:26:32] Speaker 05:
We would disagree with that because I don't think... By the way, would you agree that if it does, they've met their standard?

[00:26:38] Speaker 05:
As deferential as it is, that meets the standard if they're right about that, right?

[00:26:43] Speaker 05:
If they can show that... Yeah, I mean, if the agency, in fact, ignored these three words.

[00:26:50] Speaker 05:
If the agency entirely ignored these three words, then... Yeah, okay, so explain to me why it doesn't.

[00:26:54] Speaker 01:
Right, so I think that this ties into the AmFact conversation that the court was having with... Why don't you just start with those words?

[00:27:02] Speaker 01:
Of course, Your Honor.

[00:27:02] Speaker 05:
Let's put AmFacts aside for a minute.

[00:27:04] Speaker 05:
Sure.

[00:27:04] Speaker 05:
I understand your AmFacts argument, but let's start with the right.

[00:27:09] Speaker 03:
So the regulatory text... It says, or related entities.

[00:27:12] Speaker 01:
Yes, Your Honor.

[00:27:13] Speaker 03:
You're talking about the regulation dealing with the prospectus, right?

[00:27:16] Speaker 03:
Yeah, I'm talking about... Not the other regulation that deals with the concessionaire.

[00:27:22] Speaker 05:
No, I'm talking about... Right.

[00:27:27] Speaker 01:
Right.

[00:27:27] Speaker 01:
Your Honor, we... In a concessionaire.

[00:27:29] Speaker 05:
In a concessionaire.

[00:27:30] Speaker 01:
Correct.

[00:27:31] Speaker 01:
So the Park Service's position is that the related entity analysis does, in fact, include... I mean, not... Obviously, it certainly includes both the concessionaire and, in certain circumstances, related entities.

[00:27:43] Speaker 01:
The Park Service is not advancing a position here today where we're trying to read... where we would be attempting to read out the related entity language from any regulatory scheme.

[00:27:50] Speaker 01:
What we are saying is that the related entity analysis includes a...

[00:27:57] Speaker 03:
view of whether or not that related entity has an ability to exercise managerial authority over the... Now, here's where I am really puzzled by your position, because let's forget the paper corporation in the middle, the parent you call, and let's go right to the real ownership.

[00:28:19] Speaker 03:
Now, are you seriously suggesting that if this

[00:28:25] Speaker 03:
Exponent will take 60% of the stock.

[00:28:29] Speaker 03:
It has no capacity to control Big Bus.

[00:28:34] Speaker 01:
But the position we're taking is that it is not clear that exponent necessarily has the ability to affect it.

[00:28:41] Speaker 03:
Yeah, you said in the brief that it doesn't necessarily exercise control.

[00:28:46] Speaker 03:
But that's not really the relevant question.

[00:28:48] Speaker 03:
The question, I thought, was whether they have the capacity to control under your regulations.

[00:28:53] Speaker 01:
Yeah, that's correct, Your Honor, and it's the person.

[00:28:56] Speaker 01:
So you should permit the exercise.

[00:28:59] Speaker 05:
That's the line.

[00:29:01] Speaker 05:
Permit the exercise.

[00:29:02] Speaker 05:
Thank you.

[00:29:03] Speaker 05:
You're welcome.

[00:29:05] Speaker 01:
Yes, sir.

[00:29:06] Speaker 01:
And I guess, standing here today, it is conceivable that we could say that exponent by function of acquiring a 60% interest in Big Bus Tours Limited has the ability to exercise managerial authority.

[00:29:20] Speaker 01:
But it's equally true that it may not.

[00:29:23] Speaker 01:
And we don't know what the corporate structure is with it.

[00:29:25] Speaker 03:
What do you mean?

[00:29:26] Speaker 03:
The capacity is not a may not.

[00:29:29] Speaker 03:
If you've got 60%, it's clearly not capacity.

[00:29:32] Speaker 03:
I can't imagine the circumstances where you have 60% of a corporation and you don't have capacity.

[00:29:38] Speaker 03:
Well, I think that there are, I guess... Whether they're going to do it or not is another question.

[00:29:44] Speaker 03:
Incidentally, suppose in this case information came to you that Exponent was a mafia organization.

[00:29:55] Speaker 03:
Is it your position that you have no ability to look behind

[00:30:00] Speaker 03:
the big boss as a concessionaire to look at the mafia parent?

[00:30:08] Speaker 01:
No, Your Honor, I think that the I think that if information were presented to the Park Service that an offeror or an existing concessioner was

[00:30:24] Speaker 01:
in some type of corporate relationship with an entity that was owned by the mafia?

[00:30:29] Speaker 03:
In some type of corporate relationship owned by a mafia corporation?

[00:30:34] Speaker 01:
Well, I think for the purposes of your question, Your Honor, I guess I was expanding a little bit more to say that if it came even if it had five percent, you'd be worried.

[00:30:43] Speaker 01:
If the Park Service was informed that an entity that had a 5% ownership in a company was owned by the Mafia, I think it would be the Park Service's position that it would be entirely reasonable for the Park Service to inquire and review that information.

[00:30:56] Speaker 01:
I don't own the service.

[00:30:57] Speaker 01:
Not on the grounds that it's controlling?

[00:31:02] Speaker 01:
No, on the grounds that the Park Service has an obligation.

[00:31:05] Speaker 03:
What is the Park Service authority if it's not based on the notion that that's a controlling relationship?

[00:31:11] Speaker 01:
Well, I think they'll, at any point, if an entity is not performing under his contract... Oh, that's not a separate thing.

[00:31:17] Speaker 03:
The mafia's not used, it's not... Mafia's very careful now.

[00:31:20] Speaker 03:
We're not going to use our efforts or our control to influence big bucks.

[00:31:26] Speaker 03:
We're just, this is just a laundry operation.

[00:31:29] Speaker 03:
Laundering operation.

[00:31:31] Speaker 01:
Of course, Your Honor.

[00:31:32] Speaker 03:
Justice Department, on the other hand, which you represent, was always a little troubled.

[00:31:38] Speaker 01:
Your Honor, in the hypothetical of a 5% ownership of a company that's a concessioner, were that entity that... No, we're talking about proposal, not either concessioner or somebody who's a prospectus, is responding to a prospectus.

[00:31:54] Speaker 01:
Sure, Your Honor.

[00:31:56] Speaker 01:
I would say that not as a function, obviously, of the controlling interest, because if we're putting aside the 60 percent, 45 percent, even after the evaluation panel completes its review, the regional director is obligated to or is able to terminate a contract if it determines that it's not in the public interest.

[00:32:12] Speaker 01:
And I think that that is the type of information that the regional director could say.

[00:32:16] Speaker 03:
So then the question is,

[00:32:19] Speaker 03:
Did you do an adequate search or inquiry into exponent?

[00:32:28] Speaker 01:
There's nothing in the record to suggest that the Park Service necessarily looked into the specific... What's this word necessarily you keep throwing up?

[00:32:36] Speaker 03:
That doesn't... That's not helpful.

[00:32:39] Speaker 01:
There's nothing in the record that shows the Park Service inquired into the other business operations of Exponent.

[00:32:47] Speaker 01:
That is correct.

[00:32:48] Speaker 02:
Let's suppose Judge Silverman stole my thunder, which he always seems to do.

[00:32:55] Speaker 05:
Were you going to also ask about the Mafia?

[00:32:59] Speaker 02:
My hypothetical was that Exponent was actually controlled by John Smith, who's a tycoon who's on the terrorist watch list and the no-fly list, because he funds al-Qaeda and ISIS.

[00:33:13] Speaker 03:
You see, the distinction between the two of us is I'm much older, so I think about the Mafia.

[00:33:20] Speaker 02:
And so that's who Exponent is.

[00:33:25] Speaker 02:
And National Mall Tours brings to your attention that Exponent is purchasing Big Bus Tours limited, and this is who Exponent is.

[00:33:36] Speaker 02:
So that wouldn't be material?

[00:33:38] Speaker 01:
I think that if the letter that you're referencing that the Park Service received includes that information, that that would in fact be part of the

[00:33:49] Speaker 01:
That would, in fact, be something that the Park Service would consider in its evaluation.

[00:33:53] Speaker 01:
Would it be material?

[00:33:57] Speaker 01:
Under the circumstances that you suggest, Your Honor, yes, I think it would be material to note that the investor in Big Bus Tours Limited is on the terrorist watch list.

[00:34:10] Speaker 03:
So the key to your case is that you had no information that Exponent was a bad character, and therefore you had no

[00:34:19] Speaker 01:
responsibility to inquire into exponent I think that's part of I think it part of our case is that your honor but I think the other part of our case also is that we did that the Park Service did not believe that the investment by exponent was material with respect to the operations management or finances well also part of its analysis

[00:34:42] Speaker 02:
So if the letter said, if you were told that Exponent is really John Smith's terrorist funder, no-fly-list person, and you did the exact same thing, send us, you know, we want some updated information, and Exponent sends a letter back saying, nothing to see here,

[00:35:05] Speaker 02:
We're not going to change the management of anything, so there's no reason for you to have any concerns.

[00:35:12] Speaker 02:
And the organizational structure is essentially the same case.

[00:35:19] Speaker 01:
No, Your Honor, and that's because there are several assumptions in that hypothetical that I think are worth noting.

[00:35:25] Speaker 01:
And at the outset, the letter that the Park Service received expressly in your hypothetical noted the investment by this member of Al-Qaeda or ISIS, whichever entity it was, and then indicated that then the Park Service asked Big Bus Tours, does this change anything about your finances and operations?

[00:35:43] Speaker 01:
And I don't think that that's how it would

[00:35:45] Speaker 01:
played out.

[00:35:46] Speaker 01:
Instead, I think that had the letter from appellant mentioned ISIS or al-Qaeda, the Park Service probably would have asked about the finances and operations like they did, but probably would have also asked about is this in fact true, and may in fact have also coordinated with other departments like the Department of Justice about looking into whether or not this individual is in fact on a terrorist watch list.

[00:36:05] Speaker 01:
And that would have then gone certainly into the public interest analysis under which the director or regional director is able to not enter into a contract.

[00:36:14] Speaker 01:
So I think that there would be, at every step of the process, a different outcome.

[00:36:21] Speaker 01:
And I think that that information, the information that was then obtained, would absolutely be material to the agency's analysis of whether or not the government is going to enter into a contract with a company that is, whose corporate grandparent has an investor who is a member of Rodley's company.

[00:36:36] Speaker 02:
So how can it be that it's material if the grandparent is controlled by an entity sometimes, but other times it's not material?

[00:36:49] Speaker 01:
I think that

[00:36:51] Speaker 01:
Going back to what I was saying very early in our conversation, I don't think that the Park Service position is not to read out the related entity language altogether.

[00:37:00] Speaker 01:
It is certainly possible, and indeed the Park Service suggested in its briefing to the court below, that there are circumstances beyond just the concessioner or the entity submitting a proposal where an investment above that entity in the corporate chain will, in fact, trigger

[00:37:16] Speaker 01:
if it were in concession or the change of control analysis.

[00:37:20] Speaker 01:
But again, we put a focus on the change in managerial authority, which here we were, the record shows there was no change in managerial authority, so the agency decided that that is not a material change in the offer, such that if there is some per se rule that appellant would suggest, that automatically the park service is barred from entering into that contract.

[00:37:44] Speaker 05:
When I first asked you about the meaning of the phrase related entities, you started to talk about AmFAC, and I said I didn't want to, but you know I do.

[00:37:56] Speaker 05:
So what role does that decision play in your thinking, and how should it affect the way we think about this case?

[00:38:04] Speaker 01:
I'm in fact, your honor.

[00:38:05] Speaker 01:
Yeah.

[00:38:05] Speaker 01:
Yes, your honor.

[00:38:06] Speaker 01:
I think that as as the court was mentioning to to Helen, I think that it is it is I think all sides agree in the court with courts already acknowledge that the language at issue in fact is dictum.

[00:38:18] Speaker 05:
Right.

[00:38:20] Speaker 01:
But I don't think

[00:38:21] Speaker 01:
I think we would be in here with a very different argument if the agency had said, or any other agency had said, you know, the D.C.

[00:38:28] Speaker 01:
Circuit had this language in dicta about our regulations, but we think otherwise.

[00:38:33] Speaker 05:
No, no, but you don't.

[00:38:34] Speaker 05:
You're following it.

[00:38:35] Speaker 05:
So I'm asking you, when we look at this, what role does that play in our thinking about this case?

[00:38:43] Speaker 05:
Does that resolve the case?

[00:38:44] Speaker 05:
In other words,

[00:38:46] Speaker 05:
Does the fact that the agency's position is consistent with that dicta, does that end it?

[00:38:54] Speaker 05:
In other words, as we said to your opponent here, how could it possibly be unreasonable for an agency to adopt the position contained in our own court's dicta?

[00:39:06] Speaker 01:
Yes, Your Honor.

[00:39:07] Speaker 01:
I do not think that

[00:39:09] Speaker 01:
I don't think that the language is binding such that you're being presented with a question of whether or not you would have to overturn that.

[00:39:14] Speaker 03:
I think that it goes to exactly the reasonableness question.

[00:39:16] Speaker 03:
You're not recognizing you're getting a friendly question.

[00:39:19] Speaker 01:
And I do understand that, Your Honor.

[00:39:20] Speaker 01:
And I guess what I'm saying is that, yes, it informs the reasonability analysis.

[00:39:24] Speaker 05:
It informs the reasonability analysis.

[00:39:26] Speaker 05:
But how does it if one of the things that the court said, in fact, was that the agency had failed to parse the regulations language?

[00:39:37] Speaker 05:
In other words, it was sort of saying, you know, we're going this way just because the agency hasn't really explained itself.

[00:39:44] Speaker 05:
So why would that be, why would that affect how we think?

[00:39:49] Speaker 05:
I mean, you know, the agency, did you see my point?

[00:39:54] Speaker 05:
In other words, it's even less significant than dicta, because the agency simply saying, well, the agency didn't part, I mean, the court is simply saying the agency didn't really explain itself.

[00:40:08] Speaker 05:
It's a pretty weak basis for it.

[00:40:11] Speaker 05:
So I mean, it works like this.

[00:40:12] Speaker 05:
Agency service comes before this court, and in fact, it loses on the grounds that it didn't parse the language.

[00:40:19] Speaker 05:
And so it now adopts that interpretation without parsing the language.

[00:40:24] Speaker 05:
Why would we consider that at all even relevant to how we think about this?

[00:40:30] Speaker 01:
I think the court would still find it to be relevant because even though it is certainly correct that their 5185 could have received more attention during the MFAC briefing, and in MFAC obviously they're looking at all sorts of other provisions, and each provision received its own set of discussions with the court.

[00:40:53] Speaker 01:
In 5185, there was still the court's language that we've talked about today, where it is limiting the reach of 5185.

[00:41:01] Speaker 01:
And I think that that does inform the courts.

[00:41:05] Speaker 01:
review of whether or not the agency was reasonable.

[00:41:07] Speaker 05:
I mean, that wasn't even the issue in the case.

[00:41:09] Speaker 05:
They didn't even talk about the phrase related entity.

[00:41:13] Speaker 05:
The case was about the distinction between a concessionaire's contract and a concessionaire's corporate owner.

[00:41:21] Speaker 05:
It wasn't about this grandparent issue at all.

[00:41:25] Speaker 01:
That's right, Your Honor.

[00:41:26] Speaker 05:
I mean, the case just seems

[00:41:30] Speaker 05:
for me to get my mind around how a case which doesn't deal with the issue, doesn't relate to the language and the regulation that concerns us, is even in the context of that case, dicta, and rests on the proposition in part that the agency didn't explain itself, how that language could play any role in our thinking today.

[00:41:54] Speaker 01:
I would submit, Your Honor, that it can't be one of the pieces of information that this Court considers when judging whether or not the Court acted and interprets its regulations reasonably.

[00:42:04] Speaker 03:
But it's not that, it's not... Should we pay any attention to the fact that that was a review of the regulation and now we are faced with an informal adjudication?

[00:42:15] Speaker 01:
No, Your Honor, because we are... Well, we don't know.

[00:42:20] Speaker 03:
Again, this may be more friendly than not.

[00:42:24] Speaker 03:
An informal adjudication of an agency doesn't normally have the same explanation that either a formal adjudication or a rule-making does.

[00:42:34] Speaker 03:
And we are aware of that, of course.

[00:42:37] Speaker 03:
Of course, Your Honor.

[00:42:38] Speaker 03:
So one of your arguments, of course, has got to be that this was simply an informal adjudication

[00:42:44] Speaker 03:
in which you're not expecting an opinion by Oliver Williams or Holmes.

[00:42:48] Speaker 01:
That is correct, Your Honor.

[00:42:50] Speaker 01:
I think that, as I was saying, that the AmFact decision is one piece of information that this Court can take into consideration when judging whether or not the agency's decision to issue the contract to Big Bus Tours was reasonable.

[00:43:07] Speaker 01:
And part of that, based on the way that the appellant has framed this, is an analysis of whether these

[00:43:13] Speaker 01:
other regulations are in fact relevant and whether or not they come into play and whether or not the Park Service's interpretations of those regulations is reasonable.

[00:43:22] Speaker 02:
Here's a not so friendly question.

[00:43:24] Speaker 01:
Yes, Your Honor.

[00:43:26] Speaker 02:
Maybe one way of looking at AmFAC is that AmFAC was looking at a statute and a regulatory provision

[00:43:37] Speaker 02:
that was a prohibition on a transfer of an ownership interest of a company unless you get advance approval from the government.

[00:43:48] Speaker 02:
That's something that's very, very intrusive.

[00:43:52] Speaker 02:
And the court therefore said we're going to limit the reach

[00:43:57] Speaker 02:
of this regulation, especially since the statute only speaks to transfer of an interest in the actual concession contract.

[00:44:09] Speaker 02:
So a regulation that goes further and requires some sort of advanced approval of the transfer of ownership in the concessioner should be limited in scope.

[00:44:27] Speaker 02:
But that's not what the context of how this definition of controlling interest is being used here.

[00:44:35] Speaker 02:
It's being used in a completely different context, which is, hey, when you submit a proposal, we want to know who the hell we're dealing with.

[00:44:47] Speaker 02:
And so give us all the information about your parents, grandparents, and who controls them so that we know who we're dealing with.

[00:44:56] Speaker 02:
And there are two different contexts, apples and oranges.

[00:45:01] Speaker 02:
And perhaps the MFAC interpretation makes sense for the transfer, where there's gotta be pre-approval by the Department of Interior, but it doesn't make sense in the bidding context.

[00:45:15] Speaker 01:
I think there's two things, Your Honor.

[00:45:17] Speaker 01:
Well, I think, taking that last point, I think that you, I think that

[00:45:25] Speaker 01:
Although the approval aspect of 5185 is certainly more onerous or more, I can't recall the word that you used, but I think that what appellant is asking the court to do here is equally significant, which is to say that because of this interpretation of 5185 that appellant is suggesting that

[00:45:50] Speaker 01:
similar to the corporation who's going to have to seek Park Service approval for a transfer, here's an entity that had submitted a proposal that now is barred from receiving that contract.

[00:46:01] Speaker 01:
And so I don't know that there's actually, that there's really a particular disagreement.

[00:46:04] Speaker 02:
We don't have to buy the appellant's argument that, you know, nothing can be amended and once there's a change, they're out of it.

[00:46:14] Speaker 02:
We could say, you know, the Park Service is allowed to seek a clarification of ownership, but that, you know, it is material when there's a change in who is the controlling interest of the grandparent.

[00:46:33] Speaker 01:
And the Park Service, as the record shows, wholly adopts the proposition that it is, in fact, reasonable to seek that clarification.

[00:46:43] Speaker 01:
And it was ultimately concluded, based on the information that it received, that there was no material change.

[00:46:49] Speaker 01:
And I think that we don't have to place, I don't believe that the Park Service needs to place

[00:46:56] Speaker 01:
too much weight on AmFAC that we need to say, AmFAC answers this question.

[00:47:00] Speaker 01:
If you all, if the court were to agree with our interpretation of AmFAC, that that's the end of it.

[00:47:05] Speaker 01:
We can all go home.

[00:47:06] Speaker 01:
But instead, it is one aspect or one piece of information that I think informs the reasonableness of the agency's decision to look at the exponent investment at Big Bus Tours Limited and decide that that does not

[00:47:21] Speaker 01:
change in any material way the offer that was submitted by Big Buster.

[00:47:26] Speaker 03:
I think if I understand your position now, listening to your response to all the questions, the government's position is if information came to you which sent the balloon up, whether it's mafia, whether it's terrorists, whatever,

[00:47:44] Speaker 03:
unsavory people had purchased and controlling interest in the bidder.

[00:47:50] Speaker 03:
You have the option to look into it and decide, no, we don't want to touch it with a 10-foot pole.

[00:47:56] Speaker 03:
And we won't recognize the clarification in this case.

[00:48:04] Speaker 03:
It won't be sufficient to get by our screen.

[00:48:07] Speaker 03:
But you don't have an obligation to look beyond

[00:48:13] Speaker 03:
a notification that there is a change in relationship, whether you call it relationship as Judge Taylor did or whether you call it control, you don't have an obligation to look beyond the information that you got in this case or in any case where there's just an information that somebody has purchased 60% of a parent.

[00:48:36] Speaker 03:
Isn't that basically your position?

[00:48:38] Speaker 03:
You can if you want to, but you're not obliged.

[00:48:41] Speaker 03:
That sort of responds a bit to

[00:48:44] Speaker 03:
Judge Wilkins position, isn't it?

[00:48:47] Speaker 03:
Isn't that basically your position?

[00:48:48] Speaker 03:
You can, but you don't have to.

[00:48:51] Speaker 01:
Yes, Your Honor, with one caveat, which is if there is something, as you said at the outset, if something raises a balloon.

[00:48:59] Speaker 01:
Right.

[00:48:59] Speaker 01:
But yes, if not, then yes, Your Honor, I think that does.

[00:49:03] Speaker 05:
All right.

[00:49:04] Speaker 05:
OK.

[00:49:05] Speaker 05:
So let's hear from Mr. Swayne.

[00:49:08] Speaker 01:
Thank you, Your Honor.

[00:49:16] Speaker 04:
Thank you, Your Honor.

[00:49:17] Speaker 04:
Good morning.

[00:49:18] Speaker 04:
I'm Frank Swain, representing City Sightseeing Washington, D.C., doing business as Big Bus Tourist.

[00:49:25] Speaker 04:
It is the company that was awarded the concession and continues to operate it today.

[00:49:31] Speaker 04:
I'd like to actually follow up on the colloquy that you were having with the government attorney on the issue of what would happen if a bad actor from wherever was thought to be involved.

[00:49:44] Speaker 04:
I want to remind the court that Big Bus Tours, as did each of the other bidders,

[00:49:51] Speaker 04:
had to, under the rules of the solicitation, have a cover letter in which it certifies in the cover letter that there are no individuals or entities acting as an offeror or with an ownership interest in the offeror that's been indicted, debarred, so on, several certifications.

[00:50:11] Speaker 04:
And so it's a relatively wide-open certification.

[00:50:15] Speaker 04:
It's the offeror.

[00:50:15] Speaker 03:
Does it have to disclose that somebody is a mafioso who's never been indicted?

[00:50:23] Speaker 04:
No.

[00:50:24] Speaker 04:
No.

[00:50:25] Speaker 04:
Not if they haven't been indicted.

[00:50:27] Speaker 04:
But my point is that this is a continuing certification.

[00:50:31] Speaker 04:
So if there is a change after the bid is in, but before the award is made, if there is a change and somebody has gotten in a controlling position or a director or an owner of a controlling company, then it is an affirmative obligation of our client to report that.

[00:50:50] Speaker 04:
It is not an affirmative obligation of our client to report the fact of a change that's otherwise benign or doesn't involve debarred individuals or invited individuals.

[00:51:01] Speaker 04:
It is in the discretion of the agency if they become aware of that information from whatever, from reading it in the newspaper, to make inquiries.

[00:51:10] Speaker 04:
And I'm not aware of any limitation on the level of inquiry that the agency can make.

[00:51:16] Speaker 04:
The agency can also decide not to make any inquiries.

[00:51:19] Speaker 03:
Well, now, wait a minute.

[00:51:20] Speaker 03:
If they allow you to make an amendment, then you have a problem, right?

[00:51:24] Speaker 04:
If it's an amendment, but we don't believe that that if the agency is soliciting information that that falls in the nature of a clarification.

[00:51:35] Speaker 05:
Mr. Garden seems to think that if the agency simply come it comes into the agency's possession new information.

[00:51:44] Speaker 05:
It can't ask the bidder for any response to that.

[00:51:50] Speaker 05:
Its only choice is to disbar the bidder.

[00:51:57] Speaker 04:
We obviously disagree with that reading.

[00:51:59] Speaker 04:
It flies in the face of the ability of the agency, which is recognized in the rule, to ask for a clarification.

[00:52:07] Speaker 05:
But the clarification, according to the rule here, it's very clear that a clarification can only ask for something that stems from an ambiguity in the bid.

[00:52:21] Speaker 05:
There was no ambiguity.

[00:52:22] Speaker 05:
There was nothing ambiguous in your bid.

[00:52:25] Speaker 04:
As you can see, your bid was totally accurate.

[00:52:42] Speaker 04:
in our position not only allowed to, but it would be good judgment to ask the question.

[00:52:48] Speaker 04:
And in fact, in other cases about clarification under the FAR, and I know the FAR doesn't control here, but the agency has the discretion.

[00:52:57] Speaker 05:
I'm just looking at the language.

[00:52:59] Speaker 05:
It says, clarification refers to making clear any ambiguities

[00:53:09] Speaker 05:
any ambiguities that may have been contained in a proposal, have been contained.

[00:53:18] Speaker 04:
There isn't.

[00:53:19] Speaker 05:
There aren't any in your proposal.

[00:53:21] Speaker 05:
True, they became, there was a, they subsequently became, they raised a question, and your answer, your company's response was, hey, nothing's changed, right?

[00:53:34] Speaker 04:
That's right, Your Honor.

[00:53:37] Speaker 05:
I don't see how... It seems to be a real... Excuse me.

[00:53:45] Speaker 03:
Yeah, go ahead.

[00:53:46] Speaker 03:
Isn't it fair to say that if you look at the regulations, what the agency wanted in response, the response they wanted to the question really doesn't clearly fall in either an amendment or a clarification.

[00:54:02] Speaker 03:
I think that's right.

[00:54:03] Speaker 03:
Because the term amendment

[00:54:06] Speaker 03:
has competitive consequences, as I read the regulation, that you can't have an amendment that would prejudice the other bidders, which implies something to do with the substance of the bid.

[00:54:23] Speaker 03:
So this is really something that doesn't, on its face, seem to fall within either the amendment or a clarification.

[00:54:29] Speaker 04:
I would agree, Your Honor, and that's a key point.

[00:54:34] Speaker 04:
Typically, an amendment is deemed a change in the proposal.

[00:54:38] Speaker 04:
We're going to buy more buses, we're going to run different sets of routes, whatever.

[00:54:43] Speaker 03:
So the, what the, and if you look at the- Because then it reopens it to the other benefits.

[00:54:48] Speaker 03:
Yes.

[00:54:48] Speaker 04:
If you look at the proposal as a whole, it really, if you think of it as having, you're making a proposal, I know this is a government

[00:54:56] Speaker 04:
contract but any proposal has what are we going to do for you and by the way here's our resume.

[00:55:02] Speaker 04:
The what are we going to do for you isn't changing at all in this situation.

[00:55:08] Speaker 04:
Arguably something about the resume is changing.

[00:55:11] Speaker 04:
The government has discretion to ask about the resume because it doesn't change anything about the proposal.

[00:55:19] Speaker 03:
Suppose this is neither a clarification nor an amendment, then what?

[00:55:24] Speaker 03:
I think it, I think it should be... Then there's nothing that bars, in your view, that nothing bars the agency for asking for the information anyway.

[00:55:32] Speaker 04:
If the agency is asking for additional information on this specific, on this point that's specific... But it called it a clarification.

[00:55:39] Speaker 03:
Does that mean the whole thing fails because they hit the wrong button?

[00:55:44] Speaker 04:
I think if, I think if it's an amendment, it's arguably fails, not if it's a clarification.

[00:55:49] Speaker 03:
I suppose it's neither.

[00:55:52] Speaker 04:
Well, that's why we have courts, I suppose.

[00:55:58] Speaker 03:
All right, I get your point.

[00:56:02] Speaker 04:
All right.

[00:56:04] Speaker 04:
The only other point I'll make, Your Honor, is on the issue of the threshold.

[00:56:09] Speaker 04:
I do want to draw the attention of the court to the fact that I don't completely understand the appellant's argument that they were not aware that the

[00:56:21] Speaker 04:
that the threshold in their view should have been higher in triggering congressional notification because in the prospectus, the fact that the agency did not intend to report this to the Congress is noted on the very same page

[00:56:41] Speaker 04:
There is a sentence that says, if you disagree with any fact in this, then you should let us know at the time the bids are received.

[00:56:49] Speaker 04:
And about 10 pages later in the prospectus, there's a clear estimate of the receipt, and it is above the $5 million threshold.

[00:56:58] Speaker 04:
So the fact may be that the more exact estimate didn't come out until the record came in.

[00:57:04] Speaker 04:
I would suggest, Your Honor, that every bidder was aware that the totality of the revenue, both the required services and the authorized but not required services, might exceed $5 million.

[00:57:22] Speaker 03:
Would the money be any different with respect to the three bidders?

[00:57:28] Speaker 04:
Each of the bids had a slightly different estimate as to what proportion of the totality, how that is disaggregated, what proportion is required as opposed to authorized and optional.

[00:57:41] Speaker 03:
No, I'm trying to understand.

[00:57:42] Speaker 03:
The amount of revenue that would flow to the bidders

[00:57:52] Speaker 03:
Does it change?

[00:57:55] Speaker 04:
Yes, the amount of revenue is the ticket sales.

[00:57:58] Speaker 03:
In other words, I know that.

[00:57:59] Speaker 03:
Different bidders had different price for their ticket sales?

[00:58:04] Speaker 04:
No, the prices were set in the prospectus.

[00:58:06] Speaker 03:
I thought that was true.

[00:58:08] Speaker 03:
So everybody was going to, it didn't matter which company got the bid.

[00:58:12] Speaker 03:
They would all, the revenue would be the same.

[00:58:15] Speaker 04:
The total the total revenue under the contract for purposes of a threshold part of the bid was that each of the bidders put in a number that it was going to pay the Park Service as a concession and that number varied our Client put in the highest number and that was one of the factors that Merited the high rating that it got That's what I was trying to do Okay, thank you

[00:58:42] Speaker 05:
Mr. Garden, I think you are out of time, but you can take two minutes.

[00:58:56] Speaker 06:
Your Honor, I think we've thoroughly been through much of this, so I won't go over all ground.

[00:58:59] Speaker 06:
But I did have one comment with regard to AmFAC, with regard to repercussions in the situation that people like my client would face.

[00:59:07] Speaker 06:
The problem that I'm seeing is that if AmFAC, the DICTA statement, can be used as a basis to find the agency was reasonable, the problem that concession would face is that AmFAC effectively becomes the binding precedent in the sense that you can't overrule it because it was DICTA.

[00:59:21] Speaker 06:
but yet the agency can rely upon it as the basis for conducting itself reasonably, regardless of the language of the regulation.

[00:59:28] Speaker 05:
Yeah, I think that's exactly the issue.

[00:59:30] Speaker 06:
Okay, thank you.

[00:59:31] Speaker 05:
No, that's why we asked about it, but it doesn't really resolve it for us, it just makes it.

[00:59:36] Speaker 05:
But could you just, what's your reaction to what Mr. Swain just said about the fact that the prospectus itself

[00:59:44] Speaker 05:
warned that any objections to failure to notify was right, and that the total estimate was over $5 million, which made clear that some of these revenues were from non-required services.

[01:00:01] Speaker 06:
It did, Your Honor.

[01:00:01] Speaker 06:
But the problem, as I mentioned, I think that the situation we had, we weren't aware of the actual facts.

[01:00:06] Speaker 05:
No, but they're right there in the perspective.

[01:00:08] Speaker 05:
That's his point.

[01:00:09] Speaker 05:
His point is that the prospectus put everybody on notice, not only that you had to challenge this, but also that the amount of money was over $5 million.

[01:00:20] Speaker 06:
Well, what more did you need?

[01:00:22] Speaker 06:
And in fact, that's why you put it in your complaint, right?

[01:00:25] Speaker 06:
Well, your Honor, this is what happened is that they said the prior money was 8.1 million estimator revenues historically.

[01:00:30] Speaker 06:
But they said there's going to be change in this new contract.

[01:00:33] Speaker 06:
So we're estimating the new revenues are going to be far less, below 5 million.

[01:00:37] Speaker 06:
What we found out later was they actually estimated that the reduction would be 10%.

[01:00:40] Speaker 06:
That doesn't take you below 5.

[01:00:42] Speaker 06:
But the problem we were faced with is the prospectus says,

[01:00:46] Speaker 06:
Here is the, in the statute, here's the agency's estimate.

[01:00:51] Speaker 06:
Recognize, and they say specifically, go find your own number, but this is our estimate.

[01:00:54] Speaker 06:
You don't rely upon it.

[01:00:55] Speaker 06:
So we would only have a basis, we would only have all the facts we needed to potentially prevail is if we knew that the agency's estimate was clearly contrary to what they already knew.

[01:01:07] Speaker 02:
But was your estimate in your prospectus for required services in excess of $5 million?

[01:01:15] Speaker 06:
Yes, it was, Your Honor.

[01:01:16] Speaker 06:
Our estimate differed from theirs.

[01:01:18] Speaker 06:
That doesn't necessarily mean theirs is unreasonable.

[01:01:20] Speaker 06:
Reasonable people can disagree.

[01:01:22] Speaker 06:
When we found out that they actually, unknowing to anybody, secretly had two different estimates, one which was far less and one which was far more, then we did not... But even their estimate of required services was less than 5 million, wasn't it?

[01:01:36] Speaker 06:
No, one of them was.

[01:01:38] Speaker 06:
The 7.5 million estimate was for required services.

[01:01:41] Speaker 06:
So they had two different estimates for the exact same value, which we didn't know about.

[01:01:45] Speaker 06:
That clearly makes it arbitrary.

[01:01:47] Speaker 06:
That clearly makes it abuse of discretion.

[01:01:48] Speaker 06:
You can't do that.

[01:01:49] Speaker 06:
But we didn't have those facts.

[01:01:51] Speaker 06:
We just knew that their estimate differed from ours.

[01:01:53] Speaker 06:
But we realized we probably should make this point, but we've got a tough road to hoe because

[01:01:59] Speaker 06:
They've got discretion.

[01:02:00] Speaker 06:
This is an estimate.

[01:02:00] Speaker 06:
They said it.

[01:02:01] Speaker 06:
And they specifically said, go get your own.

[01:02:03] Speaker 06:
It wasn't until we saw the administrative record.

[01:02:05] Speaker 06:
And we could have.

[01:02:05] Speaker 06:
Had we not raised this in our complaint, we certainly could have amended our complaint to reflect this new information and this new allegation.

[01:02:11] Speaker 05:
That's not the question.

[01:02:12] Speaker 05:
The question is, should you have raised it earlier?

[01:02:15] Speaker 06:
Yes, Your Honor.

[01:02:16] Speaker 06:
We believe we would have.

[01:02:17] Speaker 06:
We had enough information to raise it earlier.

[01:02:18] Speaker 05:
You did?

[01:02:19] Speaker 06:
Yes.

[01:02:20] Speaker 05:
That's the government's waiver argument.

[01:02:22] Speaker 06:
Understood.

[01:02:23] Speaker 06:
On that particular point.

[01:02:24] Speaker 06:
But we had new facts came to light afterwards.