[00:00:00] Speaker 06: Case number 23-5183, Crowley Government Services Inc. [00:00:06] Speaker 06: Appellants versus General Services Administration and Robin Cardahan in our official capacity as Administrator of the General Services Administration. [00:00:15] Speaker 06: Mr. Boland for the Appellants, Mr. Hazel for the Police. [00:00:21] Speaker 02: Good morning, Mr. Boland. [00:00:23] Speaker 01: Good morning, Your Honor. [00:00:24] Speaker 01: James Boland for the appellant, Crowley Government Services. [00:00:27] Speaker 01: May it please the court. [00:00:29] Speaker 01: This case is not about whether Crowley will be audited. [00:00:33] Speaker 01: Crowley welcomes an audit under this contract and always has. [00:00:36] Speaker 01: The question is about who will conduct the audit under what legal authority. [00:00:41] Speaker 01: So we've discussed that. [00:00:42] Speaker 00: That question's not presented either. [00:00:44] Speaker 01: I beg your pardon, Your Honor? [00:00:46] Speaker 00: I said that question's not presented either. [00:00:49] Speaker 01: I understand it was not framed that way. [00:00:52] Speaker 01: Because of the letter. [00:00:55] Speaker 00: I'm not sure which one. [00:00:57] Speaker 00: He said who is going to do the audits under this contract is the issue. [00:01:02] Speaker 00: But that issue is not presented in light of GSA's letter. [00:01:06] Speaker 00: It says we're not going to audit you anymore under this contract. [00:01:11] Speaker 00: So why isn't this case moved? [00:01:14] Speaker 01: Your Honor, the [00:01:15] Speaker 01: The case is not moot because there is a substantial risk that these audits would resume. [00:01:24] Speaker 00: So your point is GSA may go back on its promise not to audit? [00:01:31] Speaker 01: It's not a promise. [00:01:32] Speaker 01: It's a letter stating a position at one point during the litigation. [00:01:37] Speaker 00: There's an opinion by Judge Scalia when he was a judge on this court talking about whether [00:01:44] Speaker 00: when a representation is made by the federal government, whether they have to be enjoined. [00:01:50] Speaker 00: And he said, no, the federal government is such that we can trust it when it says something that it's going to abide by. [00:01:59] Speaker 00: And if there's a problem there, then why not have the district court just embody the letter as a consent decree, which would then give you all the relief that you could possibly ask for [00:02:14] Speaker 00: in this appeal. [00:02:17] Speaker 01: Your Honor, I don't know that GSA would accept that. [00:02:22] Speaker 01: I don't know. [00:02:22] Speaker 00: Let's see. [00:02:23] Speaker 00: We'll ask them. [00:02:24] Speaker 00: Why wouldn't they accept it if they've written letters making that representation to the district court? [00:02:31] Speaker 00: And again, I don't think they even need it in light of Judge Scalia's opinion in Espinosa, I think it was. [00:02:40] Speaker 01: So there's a few comments on the moodness. [00:02:44] Speaker 01: So in our view, given the lengthy litigation history, this is not a situation where GSA is changing its policy. [00:02:54] Speaker 00: Before you go any further, your complaint does not seek any retroactive relief, correct? [00:03:02] Speaker 00: You're not seeking money damages. [00:03:04] Speaker 00: Correct. [00:03:05] Speaker 00: That's correct, Your Honor. [00:03:06] Speaker 01: Right. [00:03:07] Speaker 01: It's perspective relief under the contract, and this audit authority, this is an important authority for GSA's Transportation Audit Division. [00:03:18] Speaker 01: They have taken this view that they have the authority to audit contracts. [00:03:22] Speaker 01: They intend to audit the next contract, and by way of reference, Crowley was recently awarded the DFT. [00:03:28] Speaker 02: Let's suppose we agree with all of that, but taking Judge Randolph's point, if [00:03:37] Speaker 02: We believe the case law says that GSA would be bound by the representation of their letter for the duration of this contract. [00:03:49] Speaker 02: And your friend on the other side represents to us that they consider themselves bound by that. [00:03:57] Speaker 02: And all you're seeking is prospective relief with respect to this contract, not other future contracts or other contracts. [00:04:08] Speaker 02: What is there for us to do? [00:04:11] Speaker 01: Well, your honor, I mean, one of the concerns is that this harm is not ending. [00:04:17] Speaker 01: Crowley was awarded the DFTS 2 contract. [00:04:19] Speaker 01: This is continuing on for many, many years. [00:04:22] Speaker 01: The lower court's decision [00:04:25] Speaker 01: as I understand it, is binding on Crowley. [00:04:27] Speaker 01: It has collateral estoppel effect. [00:04:30] Speaker 01: And the problem is, we're going to be right back at this in a matter of months when the next contract transitions and GSA resumes. [00:04:38] Speaker 00: GSA has made their. [00:04:39] Speaker 00: If the case is moot, we vacate, just record some decisions. [00:04:45] Speaker 01: If the court intends to vacate the district court's decision, we would not object to that. [00:04:52] Speaker 00: What has happened with the proposed legislation that GSA put before Congress in March? [00:05:00] Speaker 01: As far as I'm aware, the Congress has not taken that up. [00:05:04] Speaker 01: It has not been enacted or passed. [00:05:06] Speaker 01: And no committee hearings? [00:05:08] Speaker 01: Not to my knowledge. [00:05:09] Speaker 01: And they've tried twice on that. [00:05:11] Speaker 00: The legislation did not. [00:05:14] Speaker 00: to prevent this conflict? [00:05:17] Speaker 00: And whose side won in the legislative proposal? [00:05:22] Speaker 01: So the legislative proposal actually came from the Department of Defense. [00:05:26] Speaker 01: And it sort of took GSA's view on this. [00:05:31] Speaker 01: And the proposed legislation would essentially eliminate [00:05:36] Speaker 01: or carve out the Transportation Act from the CDA and basically allow GSA to audit a FAR-based contract. [00:05:43] Speaker 01: I mean, the very issue that is directly in response to this litigation. [00:05:47] Speaker 01: Now, it's an interesting fact pattern here because the Transportation Command, the Department of Defense has been on Crowley's side throughout this. [00:05:55] Speaker 01: That was one of the areas where we did obtain relief in the lower court. [00:05:59] Speaker 01: I think for the court's understanding, what really is motivating this is the source of money. [00:06:04] Speaker 01: When DOD audits contracts, audits are paid by appropriations for DOD. [00:06:12] Speaker 01: But if they can sneak in an audit through GSA, GSA pays for the audits by money it takes from the contractor. [00:06:19] Speaker 01: So that's why this fight is really here. [00:06:23] Speaker 01: And I think, I'm presuming, but my understanding is that TRANSCOM, the Department of Defense, is proposing this legislation because they can have GSA audit under a different legal authority, and they don't have to pay for it. [00:06:40] Speaker 01: So in light of this discussion, I'm pleased to turn to any of the substance, but I don't want to if the court would prefer that we [00:06:50] Speaker 02: I guess what I'm trying to understand is that if I look back at how the district court put it in its opinion, is that the district court said, well, the case boils down to two questions. [00:07:12] Speaker 02: And is GSA authorized to audit Crowley's contract with US transcript? [00:07:19] Speaker 02: U.S. [00:07:20] Speaker 02: transcript. [00:07:24] Speaker 02: And then if so, but audit determinations are disputed by Crowley. [00:07:31] Speaker 02: What statutory dispute resolution scheme applies? [00:07:36] Speaker 02: Well, if the district court is correct, let's start there. [00:07:39] Speaker 02: Is the district court correct that that's really the framing, that those are really the two issues? [00:07:46] Speaker 02: presented by your complaint for declaratory injunctive relief? [00:07:53] Speaker 01: I wouldn't necessarily agree with the framing as to which dispute process applies, although there's overlap. [00:08:00] Speaker 01: The thrust of our action is whether GSA has the legal authority to conduct the audits. [00:08:05] Speaker 01: And we've argued that because these two statutes are comprehensive in the areas that they're intended to cover, [00:08:13] Speaker 01: ICA regulated carriers and government contractors. [00:08:16] Speaker 01: Those are sort of the two buckets. [00:08:18] Speaker 01: When the audit authority under 313726B, that authority applies to that statute and the subject of that statute, which are ICA regulated carriers. [00:08:32] Speaker 01: What the court basically did was took out subsection B, the audit authority, and said, I'm not going to address the rest of the statute, but I think because B is broad, that allows us to audit government contractors. [00:08:44] Speaker 01: And what we've said is, because both statutes are comprehensive, and we've looked at the two Federal Circuit cases that talk about how the dispute processes are in conflict, but we're not really dealing with the dispute here. [00:08:55] Speaker 01: We're dealing with the, on this question, the audit authority. [00:09:00] Speaker 01: We're saying that because the audit authority is part of that comprehensive system, you can't pull out the audit authority. [00:09:06] Speaker 01: If the disputes processes are mutually exclusive, so is everything else. [00:09:10] Speaker 02: I understand that's your legal argument, but I guess just as an old district court judge here, former district court judge, getting down the brass tacks, you've asked for relief. [00:09:26] Speaker 02: And if you get the relief that GSA, respectively, cannot and will not audit this contract anymore, then there's no need to answer any further questions about how we resolve any dispute with respect to an audit you disagree with, because there won't be any such audits. [00:09:52] Speaker 02: Right? [00:09:53] Speaker 02: So really, ultimately, if you prevail on that issue, if I were a district court judge, I don't see where why I would have any reason to decide anything else. [00:10:06] Speaker 02: If. [00:10:06] Speaker 02: I mean, if the district court judge had said GSA had no authority to perform these audits, would the district court have any reason to rule on anything else in your case? [00:10:22] Speaker 02: No, Your Honor. [00:10:24] Speaker 02: So if there's a letter that is binding and there was even a Rule 68 offer of judgment that was tendered, right? [00:10:33] Speaker 02: That's right. [00:10:39] Speaker 02: Such that you have the equivalent really of a judgment, at least for the purposes of this case. [00:10:50] Speaker 02: was something that's enforceable with respect to this case, that they're not going to perform any more audits. [00:10:56] Speaker 02: What's left? [00:10:57] Speaker 02: Why are we here? [00:10:59] Speaker 02: What do you want us to do? [00:11:02] Speaker 01: Well, Your Honor, we would concede if the decision below is vacated and GSA would reach that agreement, [00:11:14] Speaker 01: then we would concede that it's moot. [00:11:16] Speaker 01: But our understanding is that GSA is not willing to give up this argument for the DFCS program. [00:11:25] Speaker 01: And I think that's one of our concerns that we're about to begin the next contract. [00:11:30] Speaker 01: And this is an issue that's not going to go away. [00:11:35] Speaker 01: We're concerned that we're going to be right back out here again and have to essentially relitigate the same issues again. [00:11:42] Speaker 03: So the letter that you have right now sort of specifically says they won't audit you under this current contract. [00:11:50] Speaker 03: It doesn't speak to the next contract. [00:11:51] Speaker 03: Correct. [00:11:52] Speaker 03: It's on the horizon. [00:11:53] Speaker 01: Correct. [00:11:53] Speaker 01: And GSA 100% is planning to audit the next contract. [00:11:56] Speaker 01: And we've had those discussions. [00:12:00] Speaker 01: And my understanding is they are not willing to. [00:12:02] Speaker 02: How do we know that they're going to audit the next contract? [00:12:05] Speaker 01: it's it's language to that effect has been included in the in the next contract and so which this one does not have in fact Transcom changed the contract to deem Crowley a carrier on the next contract in response to this argument here and I mean through discussions with GSA we that that's something that we've we've we've offered and proposed but they have not the government has not accepted that position meeting has the next contract been signed yes it has [00:12:36] Speaker 01: in July. [00:12:40] Speaker 02: All right. [00:12:41] Speaker 02: So moving to the merits and won't you move to the merits? [00:12:46] Speaker 02: Explain to me, I guess. [00:12:50] Speaker 02: The district court and the government's argument, I think on authority kind of boils down to the language of 3726 B is new was added [00:13:07] Speaker 02: in 1998, correct? [00:13:10] Speaker 02: That's right. [00:13:15] Speaker 02: By saying transportation bills there, but not saying bills from a carrier or freight forwarder, like it says in A1. [00:13:30] Speaker 02: And like it says in other parts of 3726, that omission is significant. [00:13:42] Speaker 02: And so transportation bill doesn't have to mean always that it's from a carrier or freight forward. [00:13:50] Speaker 02: Why isn't that a pretty straightforward textual proper reading statute? [00:13:57] Speaker 01: So Your Honor, I think I would begin by just referencing addendum page 72, which is the 1998 legislative history. [00:14:05] Speaker 01: In our view, it's crystal clear that when Congress added subsection B, inserted that, and broke up the existing paragraphs in Transportation Act, there was absolutely no intention or even understanding, not a whisper, that they were expanding the audit authority outside of ICA-regulated carriers. [00:14:24] Speaker 01: The description on page 72 shows [00:14:26] Speaker 01: in the list of history talks about transportation bills. [00:14:30] Speaker 01: Transportation post-payment audits are a historical legacy of a regulated transportation market. [00:14:34] Speaker 01: Crowley's not regulated by the ICA. [00:14:37] Speaker 01: Congress understood that when they were adding this post-payment audit, they were simply, what they were doing was, in fact, the Act, 1998 Act, [00:14:45] Speaker 01: was intended to mandate prepayment audits, because they talk about how post-payment audits are ineffective. [00:14:51] Speaker 01: They were essentially spending $1 to get $1, whereas prepayment audits were much more cost effective. [00:14:55] Speaker 01: So the whole purpose of the 1998 amendment was to stop and reduce GSA's post-payment audits, shift it to prepayment audits. [00:15:03] Speaker 01: There's not a hint anywhere in the legislative history that's what Congress intended. [00:15:07] Speaker 01: And as we've discussed, it's not just a plain text reading of B. [00:15:12] Speaker 01: The statute doesn't define transportation bill, but it does talk about bills throughout. [00:15:17] Speaker 01: And when you read it in context, you read that one audit line in context, it's very clear that they're talking about transportation. [00:15:27] Speaker 01: The transportation bills are those presented by carriers to the government for payment. [00:15:32] Speaker 01: No carrier under this contract submits a bill to the government. [00:15:36] Speaker 01: There's no presentation of a bill. [00:15:37] Speaker 01: The government doesn't pay any carriers. [00:15:39] Speaker 01: That's entirely Crowley negotiates rates with carriers. [00:15:43] Speaker 01: They pay them. [00:15:44] Speaker 01: Crowley has separate rates. [00:15:45] Speaker 01: The payment under the contract is a traditional government contract where the rates were set by competition. [00:15:52] Speaker 01: The ICA has nothing to do with this contract. [00:15:56] Speaker 03: You've said a few times that the ICA doesn't regulate. [00:15:59] Speaker 03: a Crowley if it's a broker, treated as a broker. [00:16:03] Speaker 03: I thought there were at least some requirements that the ICA imposes on brokers, including registration and notification requirements, things like that. [00:16:13] Speaker 01: Yes, Your Honor. [00:16:14] Speaker 01: Just to be clear, we've analogized Crowley is like a broker in its role, but we don't actually argue that they are a broker under the ICA. [00:16:23] Speaker 01: We're saying that under this FAR-based contract, they're essentially acting what would be equivalent to a broker [00:16:29] Speaker 01: under the ICA where they are not involved in the physical move. [00:16:32] Speaker 01: They're not taking physical possession of the freight. [00:16:35] Speaker 01: This is a contract where Crowley is the coordinator for DoD. [00:16:40] Speaker 01: Crowley selects carriers, hires them. [00:16:42] Speaker 01: They're running the entire DoD freight transportation process. [00:16:47] Speaker 01: So that involves a massive amount, millions of dollars of software development. [00:16:52] Speaker 01: There's labor teams involved. [00:16:55] Speaker 01: This looks like a government contract. [00:16:58] Speaker 01: Within that umbrella, you have them, Crowley, actually engaging subcontracted decarriers. [00:17:05] Speaker 03: But Crowley said earlier the dispute is about who's going to conduct the audit. [00:17:09] Speaker 03: And I was just curious. [00:17:11] Speaker 03: I couldn't find in the brief an explanation of what other government entity, if any, and under what authority, would audit a [00:17:19] Speaker 03: contract like this, in your view? [00:17:21] Speaker 01: So the Defense Contract Audit Agency, DCAA, is the Defense Department's primary audit agency. [00:17:27] Speaker 01: They exist solely to audit contracts like this. [00:17:29] Speaker 01: And they audited the predecessor contract to this contract before GSA decided to start taking over. [00:17:35] Speaker 01: And so the government, that was sort of my point, that there's no one here is trying to avoid the audit. [00:17:42] Speaker 01: But the issue is, when DCAA audits a government contract, the auditors give a recommendation to the contracting officer. [00:17:48] Speaker 01: They respect the CDA authority. [00:17:51] Speaker 01: And then the contracting officer can decide whether or not they agree with the audit determination and issue a claim. [00:17:56] Speaker 01: That's how every government contract operates. [00:17:58] Speaker 01: That's how this one should operate. [00:17:59] Speaker 01: But the problem is, when GSA, under this other statute, which doesn't apply here, when they audit, they make binding determinations. [00:18:07] Speaker 01: And then under their process, they then proceed to collections. [00:18:11] Speaker 01: And there's an inherent conflict. [00:18:13] Speaker 01: And I think one of our concerns, and one of the reasons why we're here, even though we prevailed on the issue of that the TransCom's contracting officers' final decisions are binding, the court's analysis of getting there was incomplete. [00:18:27] Speaker 01: And it doesn't work. [00:18:28] Speaker 01: You cannot have a system where GSA can audit a contract [00:18:32] Speaker 01: as they did here, declare millions of dollars in overcharges, 10,000 plus notices in a single electronic transmission. [00:18:41] Speaker 01: And then channel it and then divert to the CDA because we don't even know if there's a dispute yet with the procuring agency. [00:18:50] Speaker 01: We have to treat it like a dispute, submit a claim under the CDA. [00:18:52] Speaker 01: The contracting officer has 60 days at least to decide the claim. [00:18:56] Speaker 01: Meanwhile, during those 60 days, we could lose millions of dollars with no interest, which were guaranteed under the CDA. [00:19:03] Speaker 01: If we get a favorable contract officer's decision, the lower court agree with us that it would bind GSA. [00:19:08] Speaker 01: That's great, but it doesn't deal with the first 60 days. [00:19:11] Speaker 01: It doesn't deal with the lack of interest. [00:19:14] Speaker 01: The court also did not consider what happens if we submit a claim to the CO, and they agree with GSA. [00:19:21] Speaker 01: What happens there? [00:19:22] Speaker 01: The court suggested we go back to GSA under C1, the shall adjudicate language, but that's impossible because the courts, under the CDA, the CEO's decisions are binding. [00:19:32] Speaker 01: So that would be, that would be futile. [00:19:34] Speaker 01: We'd go to GSA, they'd be bound by the country officer's final decision. [00:19:37] Speaker 01: Under the CDA, we're entitled to appeal to the Board of County Appeals and the Court of Federal Claims and Federal Circuit. [00:19:42] Speaker 01: The district court's decision below doesn't address that. [00:19:46] Speaker 01: Essentially, the judge would shift it back to the GSA, which, again, doesn't make sense and effectively would be repealing the CDA. [00:19:54] Speaker 02: Can you help me understand 3726 I? [00:19:58] Speaker 02: If you can get that language in front of you. [00:20:03] Speaker 02: In particular, I-1. [00:20:08] Speaker 02: It says that a carrier or freight forwarder [00:20:12] Speaker 02: may request the administrator of general services to review the action of the administrator if the request is received not later than six months after the administrator acts, et cetera, et cetera. [00:20:29] Speaker 02: I don't understand how, why would you request the administrator to review the administrator's own action? [00:20:37] Speaker 02: Who is, what administrator are they referring to there? [00:20:41] Speaker 01: So my understanding of that is essentially the statutory basis for the appeal process. [00:20:48] Speaker 01: So if the Transportation Audit Division, which is GSA, and I think that's why they refer to it as the administrator in that context, if a GSA office adjudicates the claim against Crowley, then the appeal would be to go higher. [00:21:05] Speaker 01: So I think I is the appeal right under the statute, under GSA's process. [00:21:11] Speaker 02: So when it says to review the action of the administrator, they don't mean the administrator of general services. [00:21:18] Speaker 02: They just mean the contract administrator. [00:21:22] Speaker 01: My understanding is that they're referring to GSA's transportation audit division and that authority who would review [00:21:31] Speaker 02: Okay, so not the contract administration, but someone within GSA, but not the administrator of GSA, even though it uses the administrator capitalized, which would seem to infer they're talking about the head of the agency or the administrator of the agency. [00:21:52] Speaker 02: That's right, your honor. [00:22:08] Speaker 02: I guess I'm just trying to make sure I understand. [00:22:11] Speaker 02: Your position. [00:22:20] Speaker 02: Okay, so let's suppose. [00:22:23] Speaker 02: We believe that 3726 should be interpreted the way that you said, in that GSA only has the authority to audit carriers, bills of carriers. [00:22:47] Speaker 02: Why aren't you a carrier? [00:22:49] Speaker 01: Because under the contract, Crowley does not hold itself out as the entity moving, physically moving the freight. [00:22:57] Speaker 01: That's an important distinction. [00:23:00] Speaker 01: The contract refers to the carriers as subcontractors. [00:23:03] Speaker 01: There's a clear distinction between the two. [00:23:05] Speaker 01: It's in writing, and we think under the 11th Circuit's Essex decision, [00:23:15] Speaker 01: Our role Crowley's role is in writing so there's the public does not think that Crowley is the carrier under the FTS everyone knows it's the actual carrier common carriers that are doing the movement Crowley is just the prime government contractor who's coordinating that's all for DOD. [00:23:32] Speaker 01: But, you know, so we think the court can determine that we're not a carrier on that basis alone. [00:23:40] Speaker 01: But at a minimum, it's something that the lower court did not decide because the court determined that that was not relevant. [00:23:46] Speaker 01: But we think at a minimum, it's something that should be examined for further consideration below. [00:23:59] Speaker 03: Just to go back to the main statutory interpretation question, I think one outcome of your reading would be that for this category of entities called brokers, whether you are one or not, your reading would mean GSA cannot audit them. [00:24:14] Speaker 03: even though they are performing some role in carrying out transportation contracts for the government. [00:24:20] Speaker 03: And I'm just wondering if you have an explanation of why Congress would have set up the system that way, where GSA can only audit carrier contracts and not broker contracts. [00:24:31] Speaker 01: So I'm not sure if I can give you a definitive answer, but my understanding is the carriers are the ones billing the government. [00:24:38] Speaker 01: And so, I mean, and that's part of why, you know, that goes sort of our interpretation of the statute. [00:24:44] Speaker 01: The carrier is, the carrier presents a bill to the government. [00:24:50] Speaker 01: They're the one, and it's an under- Probably doesn't present bills to the government. [00:24:54] Speaker 01: We don't present carrier bills. [00:24:55] Speaker 01: We don't, the government's not paying the carrier under this contract. [00:25:00] Speaker 01: Probably does, but it's not a cost reimbursement contract. [00:25:03] Speaker 01: the government pays Crowley invoices under our government contract. [00:25:09] Speaker 01: Those invoices include the services that were performed by Crowley and the subcontractors, but those rates are not tariffs, they're not ICA regulated carrier rates. [00:25:20] Speaker 01: The three circumstances, that's one of the reasons why we think the court's analysis would lead to an irrational result. [00:25:27] Speaker 01: The whole purpose of these audits is to determine that common carriers are not billing the government more than they're allowed to. [00:25:34] Speaker 01: which doesn't make any sense in a contract like this because the government has no privity with carriers under this contract. [00:25:41] Speaker 01: No carrier is billing the government anything. [00:25:43] Speaker 01: They're billing Crowley. [00:25:44] Speaker 01: It doesn't matter what they're billing Crowley because Crowley has set rates, set prices that Crowley proposed in a competitive acquisition six, seven years ago. [00:25:54] Speaker 01: Those rates were entitled to contract rates or contract price. [00:25:57] Speaker 01: And Transcom is certainly capable of determining whether we're billing correctly and whether our services are performed correctly. [00:26:06] Speaker 01: That's one reason why we disagree with the government's argument that GSA is needed for expertise. [00:26:10] Speaker 01: We don't need, no one needs GSA's expertise here. [00:26:12] Speaker 01: In fact, GSA, the problem with GSA is that they don't understand what's actually going on in this contract. [00:26:16] Speaker 01: It's one of the reasons why Transcom below said, told GSA to stop issuing these knocks because they don't understand the realities of performance. [00:26:29] Speaker 01: But I guess, Your Honor, to answer the question, I don't know that the brokers would be billing the government and that you'd have that same issue where, I don't know how the broker would be paid, but you don't have the same issue where you would have a carrier with an ICA regulated rates, whatever they're allowed to bill. [00:26:44] Speaker 01: That's all GSA's doing. [00:26:45] Speaker 01: They're just making sure that common carriers are not over billing the government. [00:26:49] Speaker 01: That's the whole purpose of 3726. [00:26:51] Speaker 01: In fact, you go back to the 1940 statute, the original statute, it even refers to, [00:26:57] Speaker 01: upon presentation of bills by the carriers subject to the ICA. [00:27:03] Speaker 01: That was the original purpose of this statute. [00:27:07] Speaker 03: I guess I just don't understand why they couldn't be auditing and checking whether the broker is abiding by whatever rates they secured in the FAR process. [00:27:16] Speaker 03: It doesn't seem nonsensical to me. [00:27:18] Speaker 03: It might be different. [00:27:20] Speaker 03: Sounds fundamentally the same. [00:27:21] Speaker 03: You're checking whether the contractor is submitting a bill that accords with, if they've actually provided the services they promised to. [00:27:29] Speaker 01: Right. [00:27:30] Speaker 01: I don't know if I can understand why Congress did not, but they had the opportunity. [00:27:33] Speaker 01: They had freight forwarders 30, 40 years ago. [00:27:35] Speaker 01: They did not have rovers. [00:27:37] Speaker 01: So at least we know that was Congress at the time. [00:27:42] Speaker 02: All right. [00:27:42] Speaker 02: Unless there's other questions, we'll give you some time on rebuttal. [00:27:47] Speaker 02: We'll hear from Mr. Hazel. [00:27:49] Speaker 01: All right. [00:28:00] Speaker 04: Good morning, your honors. [00:28:01] Speaker 04: May it please the court, Stephen Hazel for the government. [00:28:06] Speaker 04: one about the letter and two on the merits. [00:28:11] Speaker 04: The letter states that GSA would not continue auditing this contract, which as counsel pointed out, the time has almost run. [00:28:21] Speaker 04: GSA stands by the letter. [00:28:24] Speaker 04: The letter does not state that GSA would not audit future contracts, including the second round of this contract, which has been awarded, or at least preliminarily awarded, [00:28:34] Speaker 04: It's a multi-billion dollar government transportation contract. [00:28:38] Speaker 04: It's important both to GSA and to DOD that GSA's auditors be available to audit that contract. [00:28:47] Speaker 04: So that's sort of the state of play with the letter. [00:28:50] Speaker 00: I am having difficulty understanding it. [00:28:53] Speaker 00: Could you repeat that? [00:28:55] Speaker 04: Of course, Your Honor. [00:28:56] Speaker 04: The letter states, and we stand by, that GSA will not audit the DFTS Defense Freight Transportation Services contract. [00:29:06] Speaker 04: There is a second round of that contract called the DFTS-2 that has been awarded to Crowley. [00:29:13] Speaker 04: And it's important to the government. [00:29:14] Speaker 00: But that's not the subject of the lawsuit, is it? [00:29:17] Speaker 04: That's right, Your Honor. [00:29:19] Speaker 00: So the only contracts that are the subject of the lawsuit [00:29:23] Speaker 00: GSA has represented that it will not order. [00:29:27] Speaker 04: That's correct, Your Honor. [00:29:29] Speaker 00: And it's refunded, what, how many millions of dollars to Crowley? [00:29:35] Speaker 04: It was north of $20 million, Your Honor. [00:29:37] Speaker 04: That's correct. [00:29:39] Speaker 00: So on behalf of GSA, do you have any objection to memorializing that letter in the form of a consent decree? [00:29:49] Speaker 04: So Your Honor, I'd have to talk to GSA about that. [00:29:52] Speaker 00: What possible objection could you have? [00:29:55] Speaker 04: So Your Honor, as I said, we stand by the letter. [00:29:58] Speaker 04: We haven't contested the district court's mootness ruling. [00:30:01] Speaker 04: Neither side has briefed mootness here. [00:30:04] Speaker 04: So I think if that's something the court is going to address, supplemental briefs or letters may be appropriate. [00:30:13] Speaker 00: The letter came in before the district court's decision, correct? [00:30:18] Speaker 04: That's correct, Your Honor. [00:30:20] Speaker 04: Again, we don't contest the mootness ruling. [00:30:22] Speaker 04: We haven't addressed it. [00:30:23] Speaker 00: And your GSA stands by it, which means they're going to adhere to it. [00:30:30] Speaker 04: That's right, Your Honor. [00:30:32] Speaker 04: GSA has issued the letter. [00:30:34] Speaker 04: We stand by it. [00:30:34] Speaker 04: I'm not aware of any reason or any plan to retract it. [00:30:39] Speaker 00: When do those contracts expire? [00:30:41] Speaker 04: I'm not sure of the exact date, Your Honor. [00:30:43] Speaker 04: I think we're approaching the point when it will transition from the DFTS-1 to the DFTS-2 contract. [00:30:50] Speaker 04: But I believe Crowley's contract when council would have [00:30:54] Speaker 00: You don't know when they expire? [00:30:56] Speaker 00: Is that what you're trying to say? [00:30:58] Speaker 04: I'm not sure of the exact date when it switches from the first round to the second. [00:31:01] Speaker 04: Are they close? [00:31:03] Speaker 04: I believe so, Your Honor. [00:31:04] Speaker 04: How close? [00:31:05] Speaker 04: Again, Crowley's counsel will have the exact answer. [00:31:08] Speaker 00: Well, I'd like to know that, because that's another reason why this case might be moot. [00:31:11] Speaker 00: I mean, if the contracts expire, then that would be an additional reason why the case is moot, because they're only seeking retrospective relief. [00:31:22] Speaker 00: So let me ask you, when do these contracts expire? [00:31:27] Speaker 01: Contracts still ongoing. [00:31:30] Speaker 01: The new award is under protest. [00:31:32] Speaker 01: And so I think that the current contract will run at least four or six more months. [00:31:40] Speaker 01: But the new contract has been approved. [00:31:43] Speaker 00: That's what I'm asking. [00:31:46] Speaker 04: So Your Honors, I do want to make sure I discuss the merits. [00:31:50] Speaker 04: And I think we have two arguments here. [00:31:53] Speaker 03: One is- One second. [00:31:54] Speaker 03: One second on moodness. [00:31:55] Speaker 03: So the opposing counsel also mentioned that there might be different terms in this future contract. [00:32:03] Speaker 03: So if the idea is this second contract is going to keep this case alive somehow, there might be material differences if that [00:32:13] Speaker 03: if they've agreed in that contract to be treated as a carrier, for example, it seems even if any future contract could keep the case about this contract alive, it might not be that one. [00:32:26] Speaker 03: I mean, how do we think about that? [00:32:28] Speaker 04: So, Your Honor, I mean, we obviously haven't provided a comprehensive comparison of these two contracts. [00:32:33] Speaker 04: I mean, what I would say is the contract that the court has before it, the first round DFDS contract, I think makes sort of everything clear [00:32:42] Speaker 04: needs to be clear for the court to resolve this case with respect to the carrier issue in particular. [00:32:48] Speaker 04: The question is, do you have legal responsibility for the shipment? [00:32:53] Speaker 04: You can move it yourself. [00:32:54] Speaker 04: You can choose to outsource that to someone else. [00:32:57] Speaker 04: But if you're legally responsible, if the shipment is damaged or lost, then you're a carrier. [00:33:03] Speaker 04: And this contract makes that clear. [00:33:06] Speaker 04: There's a section that I believe it's at JA 107 that talks about contractor liability. [00:33:10] Speaker 04: and it spells out explicitly that if the shipments are lost or damaged, Crowley is responsible. [00:33:17] Speaker 04: And then it goes on to make explicit that that is true regardless whether Crowley self-performs or whether it chooses to outsource. [00:33:27] Speaker 04: So this legal question. [00:33:29] Speaker 02: Where does this legal responsibility test, how does that comport with definition of carrier in the statute? [00:33:36] Speaker 04: Yes, your honor. [00:33:37] Speaker 04: So this is that legal responsibility tax, which comes from Essex. [00:33:41] Speaker 04: That's how circuits that's our district courts. [00:33:43] Speaker 04: That's our understanding of how every court to look at those that statutory language has interpreted those definitions. [00:33:51] Speaker 04: as part of the Transportation Act. [00:33:54] Speaker 04: As we've emphasized, the definition of a carrier is broad. [00:33:57] Speaker 04: It includes not just performing the movement yourself, but arranging for someone else to do that. [00:34:04] Speaker 02: So if that were the case, then every broker would be a carrier. [00:34:09] Speaker 02: But that clearly doesn't make sense, right? [00:34:12] Speaker 02: Because the broker [00:34:17] Speaker 02: in 13102-2, definition of broker, says that a broker is someone other than a carrier, right? [00:34:29] Speaker 02: So Congress intended for those to be two different things. [00:34:34] Speaker 02: And it says that a broker also arranges for transportation by motor carrier for compensation. [00:34:45] Speaker 04: That's right, your honor. [00:34:46] Speaker 04: And I think as you read that you actually highlighted the key language, which is other than a carrier. [00:34:51] Speaker 04: So Congress recognized that when these definitions overlap, if you fall in the carrier definition, then you're not a broker, right? [00:34:59] Speaker 04: If the sort of Venn diagram overlaps. [00:35:01] Speaker 04: then you're a carrier, not a broker. [00:35:04] Speaker 04: And that's the case for Crowley here. [00:35:07] Speaker 04: We've cited Essex. [00:35:08] Speaker 04: We've cited a number of circuit court decisions. [00:35:11] Speaker 04: They've, in their reply, pointed to a couple district courts. [00:35:15] Speaker 04: Those cases say the same thing that we do, which is you don't need to actually move the cargo. [00:35:21] Speaker 04: It's enough if you're legally responsible for it. [00:35:25] Speaker 04: Under that definition, given the language of the contract, which we've just discussed, [00:35:31] Speaker 04: clear that Crowley is a carrier as as a matter of law and the court can affirm on that basis. [00:35:37] Speaker 02: So when will a broker not be a carrier? [00:35:40] Speaker 02: So you're on I think it's when they're arranging for or transportation with a motor carrier. [00:35:49] Speaker 04: So your honor, in a situation where the broker is not taking on liability for the shipments, if they're lost or damaged, you could imagine a different version of this contract that made clear that Crowley would not be liable for these shipments. [00:36:02] Speaker 02: But that's why I asked you at the beginning, what does legal liability have to do with the text of the statute? [00:36:09] Speaker 02: I don't see that anywhere in the text. [00:36:12] Speaker 04: Your honor, this is the way that courts have understood the statute, and it's [00:36:16] Speaker 04: The place that this legal responsibility test comes from, my understanding, and I think Essex's understanding as well, is in the common law of bailment. [00:36:25] Speaker 04: So courts were reading the statute in light of those common law of bailment principles, which recognize that when someone is hired to transport something, they can't get out of their liability by outsourcing it to someone else. [00:36:38] Speaker 04: I think that's the principled basis underlying [00:36:42] Speaker 04: all of these decisions. [00:36:43] Speaker 04: And I'll just note that the contract itself adopts a very similar definition of what a carrier and a broker is. [00:36:52] Speaker 04: I believe that's at JA 177. [00:36:55] Speaker 04: It has a broker definition that's the same as the Department of Transportation definition that Essex relied on. [00:37:01] Speaker 04: So those are the authorities that we've pointed to. [00:37:05] Speaker 04: Crowley really hasn't pointed to any contrary authority on the carrier broker question. [00:37:11] Speaker 04: I do also want to address the district court's ruling and our other alternative argument, which is that regardless of whether Crowley is a broker or a carrier, these are transportation bills under 3726B. [00:37:27] Speaker 04: Judge Wilkins, I think you asked my friend [00:37:31] Speaker 04: you know isn't the plain language of subsection E doesn't that indicate that you know these are transportation bills regardless what kind of provider you are. [00:37:41] Speaker 04: I think the statutory definition of transportation is clear it's not limited to carriers it covers all services related to the movement of people or property Crowley doesn't have an answer. [00:37:53] Speaker 04: To that definition, the district court relied on it. [00:37:56] Speaker 04: We've relied on it in our briefs. [00:37:58] Speaker 04: Crowley just hasn't addressed that part of the statute. [00:38:03] Speaker 04: Instead, they focused on legislative history. [00:38:05] Speaker 04: We think that history supports us. [00:38:08] Speaker 04: This provision used to authorize GSA to audit carriers. [00:38:12] Speaker 04: It did that expressly. [00:38:14] Speaker 04: Congress later amended it to say you can audit carriers and freight forwarders. [00:38:18] Speaker 04: And then in this 1998 change, Congress removed that language and said all transportation bills. [00:38:27] Speaker 04: Our reading and the district court's reading gives effect to that 1998 shift. [00:38:32] Speaker 04: Crowley's reading does not. [00:38:34] Speaker 04: So there are these significant problems with Crowley's reading under the text, under the structure, and under the legislative history as well. [00:38:43] Speaker 03: The definition of transportation certainly helps you, but the term bill is undefined. [00:38:48] Speaker 03: And their argument is, as a matter of structure and context, that the statute is always using the word bill to refer to a bill from a carrier. [00:39:00] Speaker 03: And that, in fact, it would be very odd to have a statute that has subsections, ACDEF, all about carrier bills. [00:39:11] Speaker 03: subsection B sort of sticking out like a sore thumb and talking about something else entirely. [00:39:17] Speaker 03: And I guess what's the response to that? [00:39:20] Speaker 03: contextual argument about what the word bill means. [00:39:23] Speaker 04: So, Your Honor, I think that aspect of Crowley's argument is really the opposite of how this court normally interprets statutes. [00:39:30] Speaker 04: I mean, when Congress uses limiting language in one provision, but not in others, usually this court would give effect to that congressional choice. [00:39:39] Speaker 04: And just to take a step back and explain how we think about how all of these provisions fit together, Congress created [00:39:46] Speaker 04: a system where the government's transportation audit specialist has broad audit authority, but less expansive authority over non-audit activities, things like dispute resolution. [00:39:57] Speaker 04: You can see that in the statute's text and structure. [00:39:59] Speaker 04: Congress, when it wanted to limit something like dispute resolution to carriers or freight forwarders, it said that. [00:40:07] Speaker 04: But it didn't do that in subsection B, the provision about GSA's audit authority. [00:40:13] Speaker 02: And that's the problem. [00:40:17] Speaker 02: with, I take your point that, okay, yeah, in a sense, you know, when we see language that's missing from a provision that's added that significant, but we also are supposed to look at the whole, you know, context of the statute and have it make sense. [00:40:39] Speaker 02: And this lawsuit shows why your interpretation doesn't make sense in this [00:40:46] Speaker 02: with respect to the fact that you have GSA performing an audit and you have the contracting officer disagreeing with the audit and nobody knows how that's supposed to be resolved because it doesn't fit within the scheme of 3726 and it's nonsensical. [00:41:09] Speaker 02: So why isn't the easiest thing [00:41:11] Speaker 02: And the most sensible thing for us to conclude, kind of the best reading and most reasonable reading of the statute, is that this sort of audit just is outside the scope of 3726B. [00:41:27] Speaker 04: So, Your Honor, a couple responses to that. [00:41:30] Speaker 04: I mean, first, there's nothing surprising or unreasonable about what Congress did here. [00:41:35] Speaker 04: It makes sense for Congress to say, look, we want our specialist transportation auditor to have this broad authority. [00:41:42] Speaker 04: But with respect to resolving disputes, [00:41:46] Speaker 04: There you know there's always a contracting agency there's always a contract involved so there's always going to be some other agency that's in a position to resolve a dispute doesn't always need to be how is this supposed to get resolved. [00:41:59] Speaker 04: This this particular dispute your honor. [00:42:02] Speaker 04: I think because of the letter that we discussed earlier and because. [00:42:06] Speaker 02: Let's suppose the letter didn't exist and we've got this controversy and it's not going away. [00:42:14] Speaker 02: How is this going to get resolved? [00:42:16] Speaker 02: How under this statutory scheme does this get resolved? [00:42:20] Speaker 04: Your honor, we haven't challenged the district court's [00:42:24] Speaker 04: ruling on the dispute resolution issue, which was in Crowley's favor, as I think that they acknowledged. [00:42:30] Speaker 04: So the court recognized that for these audits, it would be Crowley's preferred resolution process, which is the Contract Disputes Act. [00:42:38] Speaker 04: So going through the contracting officer and eventually going to the Court of Federal Claims if the case gets that far. [00:42:44] Speaker 02: And how did they get relief in the Court of Federal Claims against GSA? [00:42:50] Speaker 04: So, Your Honor, my understanding is that Court of Federal Claims cases are always against the United States. [00:42:54] Speaker 04: They're not against a particular agency. [00:42:57] Speaker 04: And so this idea that GSA wouldn't be subject to a Court of Federal Claims ruling, I'm not sure that there's a basis for that. [00:43:06] Speaker 04: aspect of Crowley's argument. [00:43:08] Speaker 04: I think under either of these dispute resolution processes, whether it's the Transportation Act or whether it's the Contract Disputes Act, at the end, you get to go to the Court of Federal Claims and get a hearing there. [00:43:22] Speaker 04: I did just want to mention. [00:43:24] Speaker 02: What about the fact that you can't get interest [00:43:30] Speaker 04: So your honor, I think the whether or not you get interest is is perhaps more complicated than Crowley let's on both whether you are always going to get interest under the contract disputes act whether you get it under the transportation act I believe depends on a separate statute on the payment act which has. [00:43:46] Speaker 04: different conditions. [00:43:47] Speaker 04: I think the key point here is whether or not Crowley gets interest. [00:43:51] Speaker 04: I mean, that can't be what drives the court's decision about how these statutes interact, especially because the case as it comes to this court is about the audit authority issue and not the dispute resolution issue. [00:44:03] Speaker 04: We didn't cross appeal on that. [00:44:05] Speaker 04: That's not something the court needs to resolve in this case. [00:44:08] Speaker 02: Well, we do have to resolve whether your proffered interpretation makes sense in light of the entire statutory scheme, both the Transportation Act and the Contract Disputes Act, right? [00:44:23] Speaker 02: That's correct. [00:44:23] Speaker 02: I went back and I looked at a lot of treatises, and they all seem to say that the Contract Disputes Act scheme is separate than the Transportation Act scheme. [00:44:39] Speaker 02: you know, following basically the reasoning of Dalton, right, from the Federal Circuit in the Comptroller General decision that it cites or the case that, or other cases cites that are cited in Dalton. [00:44:57] Speaker 02: So what about that? [00:45:00] Speaker 04: So Your Honor, just to be clear about how the CDA and the Transportation Act fit together with respect to this case, the CDA, as Your Honor points out and as the name suggests, it's about disputes. [00:45:13] Speaker 04: It's not about audits. [00:45:14] Speaker 04: It's not about reviews, inspections. [00:45:16] Speaker 04: And so as the district court recognized, there's just no conflict between the part of the Transportation Act that's at issue here and the Contract Disputes Act. [00:45:27] Speaker 04: One allows GSA to perform audits. [00:45:31] Speaker 04: One sets out a dispute resolution process that might apply after one of those audits are complete. [00:45:38] Speaker 04: So, you know, in our view, the federal circuit cases that your honor is referring to support GSA's reading and then the district court's reading as well. [00:45:48] Speaker 00: There were no further disputes between Crowley and the GSA. [00:45:56] Speaker 00: from the date of the letter because GSA agreed to refund all the charges that were posted by this notice of overcharge. [00:46:09] Speaker 00: Is that right? [00:46:10] Speaker 04: That's right, Your Honor. [00:46:11] Speaker 04: I had understood the question to be sort of asking more generally how these statutory schemes fit together rather than with respect to the [00:46:19] Speaker 00: Well, there is one dispute, isn't there? [00:46:21] Speaker 00: There's $11.8 million in the Court of Claims. [00:46:26] Speaker 04: That's right, Your Honor. [00:46:27] Speaker 04: Crowley has brought a separate Court of Federal Claims case where that money is at issue, and that case has been stayed pending this one. [00:46:36] Speaker 04: I know I'm way over time. [00:46:38] Speaker 04: If I could just go ahead. [00:46:41] Speaker 03: Can you just clearly lay out what GSA thinks its authority is with respect to this audit? [00:46:49] Speaker 03: So one way to tee it up might be in their reply brief, Crowley says, if all we're talking about here is an advisory audit that I guess the agency could take and run with it as it pleases or not, then they would have no problem with that. [00:47:02] Speaker 03: Is that all you're saying GSA can do? [00:47:05] Speaker 03: So no, Your Honor. [00:47:06] Speaker 04: I mean, with respect to an audit, yes. [00:47:08] Speaker 04: I mean, for GSA, an audit means the same thing as an audit means to anyone else, which is a review. [00:47:13] Speaker 04: It's not sort of a final interpretation of a contract. [00:47:16] Speaker 04: Because Crowley is a carrier, the other GSA authorities are implicated here as well. [00:47:24] Speaker 03: So if they're not a carrier, which is the main audit 3726B statutory interpretation question in front of us, if they're not a carrier, you think you can perform an audit, and then here's two things that might happen after. [00:47:38] Speaker 03: One is you send a demand for payment. [00:47:41] Speaker 03: The third would be you actually withhold future payments from them. [00:47:46] Speaker 03: You seem to be conceding you don't have that latter authority for it if they were a non-carrier. [00:47:52] Speaker 03: Is that correct at least? [00:47:53] Speaker 04: So, Your Honor, we're not taking a definitive position on the construction of every provision here. [00:47:59] Speaker 04: What I can say is [00:48:00] Speaker 04: We think it's important to the reading of the statute that subsection B includes the word transportation and brings in that broader definition and doesn't include carrier. [00:48:10] Speaker 04: And that's a difference that any court interpreting the statute would need to take account in looking at those other provisions that you've identified. [00:48:19] Speaker 03: Absolutely true and I think if the government is going to say we have statutory authority to conduct an audit there should be an explanation of what that audit would entail and what happens next and I think that's what the fact that there is not a. [00:48:37] Speaker 03: provision that explains what happens next. [00:48:39] Speaker 03: It doesn't say, for non-carrier audits, all disputes will be funneled to the Contract Disputes Act. [00:48:45] Speaker 03: It just doesn't seem to fit together when we read the whole statute. [00:48:50] Speaker 04: So Your Honor, I guess one thing I'll say, and again, I apologize. [00:48:54] Speaker 04: I know I'm way over. [00:48:55] Speaker 04: But if the court has questions about this broader interpretation of transportation bills, the court doesn't need to reach that because Crowley is a carrier. [00:49:07] Speaker 04: And so I think the court can properly affirm on that narrower basis as well. [00:49:12] Speaker 04: So you just don't need to get there. [00:49:15] Speaker 04: The last thing I'll say on the carrier point in particular is to point out some of the implications of Crowley's interpretation of what a carrier is. [00:49:26] Speaker 04: This is a contract that involves thousands of freight shipments. [00:49:29] Speaker 04: Crowley's argument is that from shipment to shipment, they get to decide whether or not they count as a carrier, whether or not they're subject to the other requirements for carriers, whether or not they can be audited by GSA. [00:49:43] Speaker 04: That's an interpretation of the statute that just, frankly, doesn't make a lot of sense. [00:49:50] Speaker 02: They're not saying that they get to decide. [00:49:51] Speaker 02: They said that you decided by signing a contract with them that specified that carriers are their subcontractors and that they're not carriers. [00:50:01] Speaker 04: That's absolutely not what the contract says, Your Honor. [00:50:04] Speaker 04: So let me point the court to a couple parts of the JA that I think are relevant. [00:50:09] Speaker 04: One, as I think I've cited previously, the provision that deals with contractor liability and makes Crowley legally responsible. [00:50:19] Speaker 04: Two, the glossary, which defines both broker and carrier. [00:50:23] Speaker 04: What pages are you on? [00:50:29] Speaker 04: 171 defines broker and I believe it's 177 defines a motor carrier. [00:50:36] Speaker 04: Next to motor carrier in parentheses, the contract puts contractor. [00:50:40] Speaker 04: That's the term that the contract uses to refer to Crowley again and again. [00:50:44] Speaker 04: So I don't think there was any doubt by anyone at the time this was signed that Crowley would be acting as a carrier. [00:50:53] Speaker 04: And I think that's something that everyone has recognized. [00:50:56] Speaker 04: GSA's regulations certainly recognize that a transportation provider like Crowley would be subject to audits. [00:51:03] Speaker 04: DOD's own rules that are about this contract in particular say expressly that it is subject to GSA audits. [00:51:10] Speaker 04: And the contract itself says that it's subject to independent auditing. [00:51:16] Speaker 04: So this, you know, this is not news to Crowley. [00:51:18] Speaker 04: It's not a surprise. [00:51:19] Speaker 04: It's something in the contract that Crowley signed. [00:51:24] Speaker 04: Your honors, unless the court has further questions, we would ask that you affirm. [00:51:31] Speaker 02: All right, thank you. [00:51:32] Speaker 02: Mr. Boland will give you three minutes on rebuttal. [00:51:40] Speaker 01: Thank you, Your Honor. [00:51:41] Speaker 01: I want to hit just a couple quick points. [00:51:43] Speaker 01: One, on the issue of mootness and Judge Randolph, I appreciate you raising the $11.8 million. [00:51:50] Speaker 01: I had overlooked that initially in my answer, and that was one of the reasons why, actually, why we think this is not moot. [00:51:55] Speaker 01: That money is out there. [00:51:56] Speaker 01: And even though we are not requesting the money in this action, it's a logical consequence of this action and the declaratory relief that we seek. [00:52:08] Speaker 00: This letter. [00:52:10] Speaker 00: Although I don't find any evidence of this, but it appears to have been the result of a mediation between GSA and your client that began sometime in the fall. [00:52:26] Speaker 00: Is that correct? [00:52:28] Speaker 01: It followed a mediation, yes. [00:52:31] Speaker 00: Was the mediation directed by the district court? [00:52:38] Speaker 01: The district court, I think, asked the parties to consider it, and we agreed. [00:52:41] Speaker 00: And was the mediator an individual appointed by the district court? [00:52:50] Speaker 00: Is there a body? [00:52:51] Speaker 00: There's a body of mediators in this circuit. [00:52:54] Speaker 00: And I wondered, the mediator was not someone from the outside. [00:52:59] Speaker 00: It was someone affiliated in one way or another with the court. [00:53:03] Speaker 01: No, Your Honor, there was actually no independent mediator. [00:53:06] Speaker 01: The parties just interacted together. [00:53:09] Speaker 01: So it was more of an ADR, just an informal ADR. [00:53:11] Speaker 00: So the mediation was just between the parties with no appointed mediator? [00:53:14] Speaker 00: That's correct. [00:53:16] Speaker 01: There was no discussion in this letter, but it came after that, after the parties were unable to reach agreement. [00:53:21] Speaker 01: And we had no advance notice of that letter. [00:53:23] Speaker 01: But if I may, I want to turn [00:53:28] Speaker 01: And we summarize this on page six of our opening brief. [00:53:32] Speaker 01: But again, we disagree with the government's characterization of the contract. [00:53:37] Speaker 01: The performance work statement says the contractor's carrier shall pick up and deliver the shipment. [00:53:42] Speaker 01: It assigns the prime contractor ultimate responsibility for its motor carriers. [00:53:49] Speaker 01: I think when you read the contract as a whole, it's very clear there's a difference between the prime contractor and the carriers. [00:53:55] Speaker 01: Judge Garcia, I wanted to address and sort of respond to one of your questions about GSA's process. [00:54:02] Speaker 01: I would turn your attention to GSA's regulation at 41 CFR 102 118.430. [00:54:11] Speaker 01: That's the section that talks about what GSA considers to be its post-payment audit. [00:54:15] Speaker 01: That's the 3720 speed. [00:54:17] Speaker 01: It covers everything. [00:54:18] Speaker 01: It's not just an audit. [00:54:19] Speaker 01: It covers adjudication, offsets, and all of that. [00:54:22] Speaker 01: And that's, again, that's why we're here. [00:54:25] Speaker 01: And you're right. [00:54:25] Speaker 01: We would not have an issue if this was merely, I mean, I wouldn't concede GSA had the legal authority to do the audit. [00:54:31] Speaker 01: But if it was simply an advisory audit, and they're just telling Transcom, hey, we think there's an overcharge, we would not object. [00:54:38] Speaker 01: That's the entire issue here is the fact that they're acting under that authority and then they believe they can unilaterally move forward irrespective of the CDA. [00:54:49] Speaker 01: I also wanted to go back briefly on the statutory language. [00:54:55] Speaker 01: Mr. Hazel mentioned that Congress removed language. [00:54:58] Speaker 01: There was no removal of language in the 1998 amendment, removing carrier from transportation bill. [00:55:05] Speaker 01: 3726B was an addition in that amendment. [00:55:10] Speaker 01: And it simply said transportation bills because that's what the entire section was talking about. [00:55:15] Speaker 01: And the government has pointed to nothing, no hint that Congress thought that it was expanding audits to not just to non-carriers, but to broader contracts outside of those regulated by the ICA. [00:55:29] Speaker 01: In fact, the legislative history that does exist talks about the opposite. [00:55:32] Speaker 01: It talks specifically about the historically regulated carriers. [00:55:36] Speaker 01: And those are the transportation bills that Congress talked about when they enacted the 98 Amendment. [00:55:42] Speaker 01: I would also just remind the court, 3726H talks about a bill under this section. [00:55:48] Speaker 01: And that alone, to me, means that Congress understood that there's only one type of bill throughout the section of 3726. [00:55:55] Speaker 01: If they were referring to a certain type and there were different types of bills, they would have referenced those. [00:56:00] Speaker 02: So just so I'm clear, under your reading of the statute, what new authority was created by 3726B? [00:56:11] Speaker 02: If any. [00:56:15] Speaker 01: We do not believe there was any new authority. [00:56:18] Speaker 01: In fact, I think when you trace the old language, [00:56:22] Speaker 01: In my view, that language was simply clarifying what GSA was already doing, or GAO before GSA. [00:56:33] Speaker 01: The statute talked about GSA's audits, but there was never an affirmative sentence that said that GSA can do the audit. [00:56:40] Speaker 01: And I think that's all that sentence was doing. [00:56:43] Speaker 02: Subsequently, and there's... Why did Congress need to do that? [00:56:48] Speaker 02: I mean, why did Congress need to add 3726B then? [00:56:54] Speaker 02: I think. [00:56:55] Speaker 02: Was there any court case that had brought into doubt whether GSA had the authority to audit motor carrier? [00:57:04] Speaker 01: To my knowledge, no. [00:57:06] Speaker 01: I don't know why, but I think the fact that Congress did not even mention this. [00:57:11] Speaker 01: There's no reference in this. [00:57:12] Speaker 01: It's not discussed in summary of the bill in the preamble. [00:57:15] Speaker 01: It was all about requiring prepayment audits so that postpayment audits would go down. [00:57:20] Speaker 01: and diminishing importance because they're not cost effective. [00:57:23] Speaker 01: That was specifically why Congress did this. [00:57:25] Speaker 01: And so I think the government's suggesting that they're pushing the opposite, that this now gives them some blanket right to audit far outside of any historical authority is not supported. [00:57:39] Speaker 02: All right. [00:57:40] Speaker 02: Thank you. [00:57:41] Speaker 02: We will take the matter under advisement.