[00:00:48] Speaker 02: OK, the next darkened case is number 16, 1145, advantage financial services against the United States. [00:00:56] Speaker 02: Mr. Lane. [00:00:57] Speaker 00: May it please the court? [00:00:58] Speaker 00: Council for Plaintiff Appellant, advantage financial services. [00:01:02] Speaker 00: I would like to begin by giving some context to this case, which involves financial management software. [00:01:06] Speaker 00: This is a type of software that's used by all federal agencies to essentially manage the entire cycle of receipts and disbursements. [00:01:14] Speaker 00: It includes tracking their funded and budgeted dollars to their expenditures and the ability to create financial statements. [00:01:20] Speaker 00: And Savannah is one of only a handful of providers of this type of software, generally competing against large commercial enterprises. [00:01:28] Speaker 00: And Savannah has been providing and servicing its software for the Department of Homeland Security since before it was known as DHS. [00:01:35] Speaker 00: But going back to 2004, VHS and its components have been trying to, in our view, push Savantage out of this small market in favor of the large commercial brands. [00:01:47] Speaker 00: There have been big protests, there have been corrective actions, changes in technology, changes in administrations, but through all of this, Savantage's aim has been consistent. [00:01:57] Speaker 00: Savanage wants to compete for the same software and services that has been providing to DHS for over the past decade. [00:02:03] Speaker 03: Even if all of that's true, we have limitations on, and fairly strict limitations, with respect to the scope of the CFC's jurisdiction as well as ours. [00:02:16] Speaker 00: Right. [00:02:17] Speaker 00: And so the issues that we're here today are directly on point with that, the first one being the trial court's jurisdiction. [00:02:25] Speaker 00: The jurisdiction issue that we've got is that certain DHS components have interpreted a memorandum written by the Office of Management and Budget, OMB, that they must procure financial systems through a designated shared service provider, a federal shared service provider that I'll refer to as an FSSP. [00:02:46] Speaker 00: And essentially, the court took the position that our allegations in relation to this [00:02:53] Speaker 00: were only alleging arbitrary and capricious action and not violations of law. [00:02:59] Speaker 00: But if you look at the substance of what we've argued, it's that the agency's interpretations of this memorandum are in violation of the law. [00:03:06] Speaker 00: And we've named three statutes. [00:03:08] Speaker 00: These were in our complaint. [00:03:09] Speaker 00: These were in our briefs. [00:03:11] Speaker 00: And these were in our oral argument. [00:03:13] Speaker 00: We believe the court misconstrued. [00:03:14] Speaker 02: But that's not the jurisdictional question, is it? [00:03:17] Speaker 02: The jurisdictional question is whether there's any right of appeal at all when the [00:03:24] Speaker 02: contract, let's say, is kept within the government. [00:03:28] Speaker 00: I understand. [00:03:28] Speaker 02: Unless we cross that bridge, the rest of it is irrelevant. [00:03:33] Speaker 00: I understand. [00:03:34] Speaker 00: There's two jurisdictional questions I should clarify. [00:03:37] Speaker 00: One of the defendants raised on appeal, which was the jurisdiction of the court in the first place to consider this issue. [00:03:44] Speaker 00: And so I'll back up to that point. [00:03:47] Speaker 00: And we believe, as the trial court did, that this fits squarely within this court's [00:03:53] Speaker 00: findings and holding in the case distributed solutions. [00:03:56] Speaker 00: As in that case, the vendors here initiated the procurement process, which is statutorily defined, the term procurement, as beginning with the process of determining a need. [00:04:07] Speaker 00: And here, as in distributed solutions, these DHS components reached out to commercial vendors to determine a need. [00:04:15] Speaker 00: The trial court found that that is true. [00:04:18] Speaker 00: And so the trial court found there was jurisdiction in the first place. [00:04:21] Speaker 00: consistent with the holding and distributed solutions. [00:04:25] Speaker 03: But putting that question aside, the problem is that even if we accept the proposition that the memo misinterpreted certain statutes or regulations, the memo itself, while it ultimately was getting down the road toward procurement, wasn't in connection with a particular procurement for purposes of [00:04:50] Speaker 03: that exercise of jurisdiction, was it? [00:04:52] Speaker 00: I agree. [00:04:53] Speaker 00: We're not challenging. [00:04:55] Speaker 00: The OMB memorandum is a statement of policy. [00:04:58] Speaker 00: And we're not challenging the OMB memorandum that we certainly would not intend to do so. [00:05:04] Speaker 00: What we're challenging is the fact that these three DHS components made procurement decisions based on their interpretations of that memorandum. [00:05:12] Speaker 00: And in doing so, they essentially interpreted that OMB memorandum as allowing them to circumvent the Competition and Contracting Act, the Economy Act, and the Government Management Reform Act, each of which has substantive requirements that tie the agency when it's making a choice. [00:05:29] Speaker 00: A choice is between using an interagency agreement under the Economy Act. [00:05:33] Speaker 00: Or a choice is between using a federal shared service provider, as in the Government Management Reform Act. [00:05:38] Speaker 00: Or a choice is using a sole source procurement, as in CICA. [00:05:41] Speaker 00: Each of those laws has requirements that the agency has to abide by when making a choice. [00:05:47] Speaker 03: So where does the jurisdiction kick in? [00:05:49] Speaker 03: So you're saying it kicks in the minute an official reads this memorandum and interprets it? [00:05:57] Speaker 00: Whenever the agency reaches out to the commercial market to assist in determining a need. [00:06:04] Speaker 03: But is a need the same as a procurement for purposes of jurisdictional analysis? [00:06:09] Speaker 00: The statute that this court has held as defining the term procurement says that it begins with the process of determining a need. [00:06:20] Speaker 03: That a procurement, the language that says that it must be in connection with a procurement? [00:06:26] Speaker 00: Well, the statute that says in connection with procurement is the Tucker Act. [00:06:29] Speaker 00: So it says a violation of law in connection with the procurement or proposed procurement. [00:06:35] Speaker 00: In the Ramcord case, this court interpreted in connection with is a very sweeping and scope phrase. [00:06:41] Speaker 00: And then in distributed solutions, this court interpreted procurement as it's defined in, and I don't have the statute handy with me, but I know it's in our briefs, as beginning with the process of determining a need. [00:06:55] Speaker 00: And it was a very broad definition of procurement. [00:06:57] Speaker 02: Let me take you back to the fundamental question. [00:07:00] Speaker 02: Are you then saying it doesn't matter [00:07:03] Speaker 02: whether anyone in the commercial market is capable of providing, of satisfying the need that once such a contact is made, the government can never decide to withdraw from the commercial market? [00:07:19] Speaker 00: I think that would be a problem understanding as opposed to jurisdiction. [00:07:23] Speaker 02: Whatever it is, that's a fundamental question, is it not? [00:07:27] Speaker 00: It is. [00:07:28] Speaker 00: But here, Savannah's responded to the RFI, and the agency found that the commercial market could meet its needs. [00:07:35] Speaker 02: So you're saying the government was prohibited from withdrawing this procurement from the commercial market? [00:07:43] Speaker 00: No, I'm saying that the government, in making that choice, has to go to the commercial market as opposed to using the process it used here. [00:07:49] Speaker 00: It had to follow three laws in particular. [00:07:52] Speaker 00: The Competition and Contracting Act. [00:07:54] Speaker 00: the Government Management Form Act, and the Economy Act. [00:07:57] Speaker 00: And those statutes, to give an example, the Economy Act requires, before using an interagency agreement, that the agency determine that the services and goods cannot be acquired as, in the language of the statute here, at 31 USC 1535, is by contract as conveniently or cheaply by a commercial enterprise. [00:08:16] Speaker 02: So the answer to my question is yes. [00:08:20] Speaker 02: They're prohibited. [00:08:22] Speaker 00: unless they make that determination as well as the other determinations under the law. [00:08:26] Speaker 00: Yes. [00:08:29] Speaker 03: How do you deal though with the Court of Federal Claims analysis that said that to the extent that you have to fall within the reviewability component of 1491B1, that you have to be concerned with a particular procurement or contract, not just [00:08:51] Speaker 03: the procurement process? [00:08:53] Speaker 00: Well, there was a particular procurement initiated when the Coast Guard issued an RFI. [00:08:59] Speaker 00: The language of that RFI was to identify possible available sources able to provide a financial management system software as a service to include all hardware, software, system operation, and maintenance. [00:09:15] Speaker 00: for support for the financial procurement asset acquisition management domains of the US Coast Guard. [00:09:20] Speaker 00: It goes on to state specific information that it wants from respondents to that RFI. [00:09:26] Speaker 00: And so by virtue of that process, it did initiate the process of a proposed procurement. [00:09:32] Speaker 00: And that's what the trial court found and why it found jurisdiction in the first place. [00:09:38] Speaker 03: Right. [00:09:39] Speaker 03: There's two different steps, right? [00:09:41] Speaker 03: One is the broad jurisdiction of the Court of Federal Claims, which I know [00:09:45] Speaker 03: The government objects to that conclusion, but the Court of Federal Claims didn't find that conclusion to be determinative with respect to its ability to review the particular claims at issue. [00:09:59] Speaker 00: Right. [00:09:59] Speaker 00: The particular claims at issue here, if I understand what you're going for, is whether the agency's interpretations of the OMB memorandum fall within the gambit of [00:10:14] Speaker 00: that Tucker Act jurisdictional provision. [00:10:18] Speaker 00: And so where I would say the focus there is the fact that we did allege that the Government Management Reform Act, the Economy Act, and the Competition and Contracting Acts, the requirements are circumvented by the agencies reliance on this OMB memorandum to avoid competition, to avoid the commercial market. [00:10:38] Speaker 00: So that choice is made to avoid the commercial market after starting the process with the commercial market. [00:10:43] Speaker 00: They've made a choice to avoid the commercial market. [00:10:45] Speaker 00: In doing so, they never did the determinations that were required under any of those three laws. [00:10:53] Speaker 00: And that's where the violation of law in connection with the proposed procurement happens to tie it back to the Tucker Act. [00:11:04] Speaker 02: I thought you had a much better argument in saying that on withdrawing, they didn't really avoid the commercial market. [00:11:12] Speaker 02: because the government agency was provided by Oracle anyway and was in the commercial market. [00:11:18] Speaker 02: And therefore, the question that I keep asking you, because of the fundamental position, that it doesn't matter how that question is answered. [00:11:29] Speaker 02: But you're not pressing that argument? [00:11:32] Speaker 00: I'm not sure if I understand that angle. [00:11:35] Speaker 02: That they weren't really avoiding the commercial market at all when they took this project? [00:11:42] Speaker 02: within the government because the government agency was being commercially served? [00:11:49] Speaker 00: Right. [00:11:49] Speaker 00: That goes to the Competition and Contracting Act violation where they've effectively got a sole source solution by virtue of reaching out to the federal shared service provider who is entirely reliant on the Oracle software and Oracle software integrators who provide that service component to it. [00:12:09] Speaker 02: But the government position, if I understand it, is that they have every right to do that under the law. [00:12:18] Speaker 02: And it's hard to see where the boundary is. [00:12:23] Speaker 00: Well, I again think the boundary has to be whenever the agency reaches out to the commercial market, not just an RFI to [00:12:33] Speaker 00: a federal shared service provider, which they did that. [00:12:36] Speaker 00: They issued requests and engaged in market research with them as well. [00:12:40] Speaker 00: But whenever they've initiated that contact with the commercial market to determine its needs, which is a perfectly reasonable thing to do, of course, to compare the commercial market to what the federal shared service provider is offering. [00:12:55] Speaker 00: But once they've done that, that's when these statutes kick in to [00:13:00] Speaker 00: form those requirements. [00:13:01] Speaker 00: And these statutes are in place to prevent agencies from abusing interagency agreements. [00:13:07] Speaker 00: Obviously that's what the Economy Act's purpose is. [00:13:10] Speaker 00: The Competition and Contracting Act is in place to prevent abuses in regards to competition issues. [00:13:15] Speaker 00: And the Government Management Reform Act [00:13:17] Speaker 00: It has rules in its statute because it is a very unique arrangement to have these federal shared service providers in large ways competing with or providing services and products from the commercial market. [00:13:32] Speaker 00: And so these statutes have put protections in place to try and serve that. [00:13:36] Speaker 00: And those are the protections that were avoided. [00:13:38] Speaker 00: And those are the protections that we tried to assert as violations of law in connection with this main issue. [00:13:47] Speaker 02: I hear you saying that in order to prevail as a matter of law, we must hold that once a solicitation offer is made to the commercial market, it can't be withdrawn. [00:14:01] Speaker 00: It can only be withdrawn once they have complied with the statutes that [00:14:07] Speaker 00: are part of that next phase. [00:14:09] Speaker 00: So if they want to abandon the process altogether, if they reach out to the commercial market and they find that there is no alternative for them and they're done with the procurement, go a different path, then there's nothing that requires them under the Economy Act, certainly, to do anything for an interagency agreement or the GMRA or the Competition and Contracting Act. [00:14:33] Speaker 00: If they want to engage in interagency agreement, [00:14:36] Speaker 00: then they've got to comply with the Economy Act. [00:14:38] Speaker 00: If the next step is, after they've made that decision to do an interagency agreement, then they necessarily must comply with the Economy Act. [00:14:45] Speaker 00: If the next step is to use a franchise fund, they must comply with the Government Management Reform Act. [00:14:50] Speaker 00: If the next step is to engage the commercial market or sole source avenue, then they must comply with the Competition and Contracting Act. [00:14:58] Speaker 02: Okay, let's hear from the government on these points, and we'll save you rebuttal time. [00:15:10] Speaker 02: Mr. Cremont. [00:15:11] Speaker 01: Good morning, Your Honors. [00:15:14] Speaker 01: Your Honors, I'd like to start today with the fundamental question that Your Honor raised about jurisdiction here. [00:15:20] Speaker 01: The scope of the decision below, the scope of advantage arguments, is that once something goes, once the agency considers commercial alternatives, it cannot turn around. [00:15:34] Speaker 01: And this is what we find to be the jurisdictional problem in the case below. [00:15:38] Speaker 01: The court held that there's jurisdiction to choose from one procurement method over the other. [00:15:44] Speaker 02: But you're not saying that they're prohibited from questioning what the alternative turns out to be. [00:15:52] Speaker 02: That is, in this case, we're told an internal process. [00:15:58] Speaker 01: Your Honor, just to clarify your question, if I might, to challenge what was ultimately brought. [00:16:07] Speaker 01: As the court below found that there is no jurisdiction to actually challenge the interagency agreements because those were not procurement contracts. [00:16:14] Speaker 01: So in that situation, I would say no, Your Honor. [00:16:17] Speaker 02: But what's troublesome here is that apparently the agency then went out or stayed with the commercial market. [00:16:25] Speaker 02: a different purveyor, and you're not telling us that that is insulated from inquiry. [00:16:32] Speaker 01: Let me clarify the facts on there. [00:16:33] Speaker 01: The government did not use a commercial entity. [00:16:36] Speaker 01: The government here, DHS, these three DHS components, TSA, DNDL, and the Coast Guard, are utilizing the services of the Department of Interior Business Center. [00:16:46] Speaker 01: Those are federal employees. [00:16:48] Speaker 01: DOIBC, in turn, hires commercial partners to help them with their process. [00:16:54] Speaker 01: But the entity that is providing the services to the DHS components is Department of Interior. [00:17:02] Speaker 01: And I want to also clarify the concept of Oracle. [00:17:04] Speaker 01: Oracle is just a piece of software. [00:17:06] Speaker 01: It's a piece of software that can be modified. [00:17:08] Speaker 01: In fact, Savannah's product, which has a different name, Outimate, I believe, is based upon Oracle. [00:17:13] Speaker 01: And you can see that in the first footnote, I believe, of the court's decision. [00:17:17] Speaker 01: Well, the modernization of financial management services is the actual doing of the management service, the actual work. [00:17:23] Speaker 01: Of course, it involves working on software. [00:17:26] Speaker 01: But this isn't a simple software purchase, Your Honor. [00:17:29] Speaker 01: I just want to clarify. [00:17:30] Speaker 02: Well, we don't know the answer to that. [00:17:33] Speaker 02: The question that concerns me is whether that's insulated from inquiry. [00:17:38] Speaker 01: Well, yes, Your Honor. [00:17:40] Speaker 01: The court's decision below relied upon an overly broad reading of distributed solutions. [00:17:45] Speaker 01: Now, distributed solutions is a very unique case. [00:17:49] Speaker 01: This court found a jurisdiction in distributed solutions where the agencies issued an RFI saw information regarding commercial software packages. [00:18:00] Speaker 01: You received the information from vendors, considered them in scoping their own requirements, created these new requirements, and then handed them off to a prime contractor. [00:18:09] Speaker 01: instructing that prime contractor to then conduct a subcontract award to obtain the software and then implement it at the agencies. [00:18:19] Speaker 01: On top of that, the agency officials sat on the selection committee for the subcontract award. [00:18:25] Speaker 01: So I mean, really, this court saw that it walked like a duck and it talked like a duck, that it was a procurement. [00:18:30] Speaker 01: It found there to be jurisdiction. [00:18:33] Speaker 01: There needs to be a bright line rule here, Your Honors, where what is actually a proposed procurement [00:18:39] Speaker 01: In Distributed Solutions we have these unique facts where ultimately the subcontract awards were selected by the government, but they were immune from the FAR and other [00:18:51] Speaker 01: procurement regulations because they were under the guise of a subcontractor board. [00:18:56] Speaker 03: But the problem is with your theory is that if we were to buy the notion that they could go all the way down the road to the point of demanding that the procurement be an internal procurement rather than an external procurement, there would never be any ability to challenge that. [00:19:15] Speaker 03: And so I don't understand how you're not initiating a procurement or there isn't action in connection with a procurement when you're analyzing which direction that procurement is going to come from. [00:19:30] Speaker 01: Well, I mean, the problem, if we are saying that the Tucker Act jurisdiction kicks in at the point when the government is analyzing which alternative to do, every nascent thought about how to acquire something could be subject to Tucker Act jurisdiction. [00:19:47] Speaker 01: If two contracting officers are walking down the hallway and one stops and talks to the other saying, hey, should we solicit this externally to commercial contractors, or should we just do this internally? [00:19:57] Speaker 01: And the answer is no, let's just do it internally. [00:20:00] Speaker 01: That is that conversation that is subject to Tucker Act jurisdiction. [00:20:03] Speaker 01: There has to be a bright line rule. [00:20:05] Speaker 02: That's not the situation. [00:20:07] Speaker 02: No, it is not. [00:20:08] Speaker 02: We had a specific situation where there was a procurement, there were bidders, they were told after going through the process, you're all out of [00:20:17] Speaker 01: Well, that's distributed solutions, Your Honor. [00:20:20] Speaker 01: In this present case, first off, only one of the three components here today issued an RFI. [00:20:28] Speaker 01: So if Savannah makes the argument now that at the point of- Does it make a difference whether it's one or two or three? [00:20:34] Speaker 01: Well, certainly for jurisdictional purposes, because if the point of issuing the RFI created a procurement, then lower court should have dismissed the charges against DNDO and TSA, because they did not issue RFIs. [00:20:47] Speaker 03: Well, the court engaged in two different analyses. [00:20:52] Speaker 03: In distributed solutions, we said determining a need was sufficiently part of the procurement process to give rise to jurisdiction. [00:21:03] Speaker 03: That doesn't necessarily mean that you can establish that there was an abuse of discretion or that [00:21:10] Speaker 03: there was ultimately a procurement for purposes of the Tucker Act claims. [00:21:15] Speaker 01: Absolutely, Your Honor. [00:21:15] Speaker 01: And Your Honors have read our briefs and how we argue that there could be no procurement error here anyway, even if there is jurisdiction. [00:21:21] Speaker 01: So I absolutely agree with you, Your Honor. [00:21:23] Speaker 01: The distinction here is, and this is something that the Court of Federal Claims has pointed out in the VFA case in international genomics, that if there's a possibility of a Pandora's box being opened up in jurisdiction in these such cases, for instance, in the VFA case, [00:21:40] Speaker 01: The government owned its own software and attempted to use that software. [00:21:45] Speaker 03: But isn't there specifically, there was a specific finding that there the DOD never even contemplated or initiated a procurement process? [00:21:55] Speaker 01: Right, Your Honor. [00:21:56] Speaker 01: And our case is somewhere in between distributed solutions and VFA. [00:22:00] Speaker 01: And we acknowledge that. [00:22:01] Speaker 01: And we think the line for when a procurement should start and when TORC or our jurisdiction should kick in is a situation like distributed solutions, which the Court of Federal Claims has subsequently found to be unique facts. [00:22:12] Speaker 01: They certainly are unique facts, where there was the use of the RFI information to craft requirements. [00:22:18] Speaker 01: Here we don't have that. [00:22:19] Speaker 01: There's nothing in the record that indicates that the RFI was used to craft requirements. [00:22:23] Speaker 01: It was checking to comply with the OMB circulars [00:22:28] Speaker 01: whether or not the commercial market could actually supply these stuff, as well as the federal shared service providers. [00:22:34] Speaker 01: So there's a distinction right there, Your Honors. [00:22:36] Speaker 01: So there is this breadth of cases in which the government is considering what kind of border options are in terms of purchasing something. [00:22:45] Speaker 01: And a line needs to be formed. [00:22:46] Speaker 03: But you don't see a big difference between VFA where it was, can I use something I already own and not consider the possibility of going outside, versus I've always gone outside. [00:22:58] Speaker 03: Can I now decide not to go outside? [00:23:01] Speaker 01: Two points to that. [00:23:02] Speaker 01: Right now, the Coast Guard, TSA, and D&DA are receiving services from the Coast Guard. [00:23:07] Speaker 01: So they're not receiving them from outside. [00:23:08] Speaker 01: Savannah's customers are not currently before this court. [00:23:11] Speaker 01: They are the components that were dismissed as on right, and Savannah has not appealed that decision. [00:23:16] Speaker 01: So there are familiar aspects with VFA. [00:23:19] Speaker 01: Also, DOI IBC's employees do exist. [00:23:23] Speaker 01: They are there. [00:23:24] Speaker 01: They are capable of doing this work. [00:23:27] Speaker 01: They're similar to the existing software in VFA in that sense. [00:23:31] Speaker 01: So there are ties between our case and VFA. [00:23:33] Speaker 01: There are ties between our case admittedly and distributed solutions. [00:23:36] Speaker 01: But it is somewhere in between. [00:23:38] Speaker 01: And there needs to be a bright line rule demonstrating where there is a procurement that is under the jurisdiction of the Tucker Act and where there is not. [00:23:46] Speaker 01: And we believe that line to be distributed solutions, as explained in our briefing. [00:23:51] Speaker 01: Going along with that. [00:23:53] Speaker 01: Interested party standing suffers from, we believe, the same situation where this court has to find interested party to mean to be equivalent in the GAO context under the CICA definition as well as the Tucker Act. [00:24:09] Speaker 01: In this court's lower, excuse me, in the court of auto claims decision, the court simply checked whether or not it would, disadvantage would be an interested party and a prospective offer on any commercial offering. [00:24:22] Speaker 01: but did not actually take a look at the CICA definition that is required to find whether there's an interest in party. [00:24:28] Speaker 01: And the language that we point out that they ignored in our briefing is with respect to a contract or a solicitation or request for other offers described in paragraph one. [00:24:37] Speaker 01: And we believe that the lower court did not address this, finding that they were standing for its advantage to pursue its claims. [00:24:49] Speaker 01: that the court disagrees with our jurisdictional arguments. [00:24:51] Speaker 01: We do support the lower court's jurisdictional finding that there is limited jurisdiction here regarding the OMB Memorandum 13.8. [00:25:00] Speaker 01: Now, we do believe, Your Honors, that this is an attempt to get a second bite of the apple on the part of Sevantage, that this is not the claim that they pursued below. [00:25:11] Speaker 01: Below, they sought to argue that the interpretation of the memorandum by the DHS components [00:25:18] Speaker 01: was arbitrary and capricious within itself, that when we moved to dismiss it, saying that there's no jurisdiction for these pure arbitrary and capricious elements, the reply from Savannah was to say that there was jurisdiction here. [00:25:33] Speaker 01: Not that we were misunderstanding their argument that they were actually charging of alleging violations of CICA, the Economy Act, or the GMRA, but rather that there is jurisdiction in the court of federal claims for arbitrary and capricious conduct [00:25:47] Speaker 01: unrelated to a statute of regulation. [00:25:51] Speaker 01: Even before this court, in its reply brief on pages 18 and 19, Savannah still makes this argument, saying that there is jurisdiction below for arbitrary and capricious behavior. [00:26:02] Speaker 01: Just to note, Your Honors, even if this bench does not waive this, it is nothing more than a collateral attack on the actual decision of the agencies. [00:26:10] Speaker 01: Now, to be very clear, the court did review the finding of procurement error, in fact. [00:26:16] Speaker 01: the component's decision to go to a federal shared service provider without doing a SICA justification. [00:26:25] Speaker 01: And then it also dismissed the claims regarding the Economy Act and the GMRI because they did not pertain to a procurement contract. [00:26:32] Speaker 01: An argument that the agencies here, the three components here, violated SICA and these other acts based upon an interpretation of memo is just another way of arguing the same thing. [00:26:44] Speaker 01: The allegations were that they violated secret by going in-house to another part of the government. [00:26:49] Speaker 01: Whether that was done at that point or by interpreting, the interpretation of a memo leading to that isn't the actual final agency action by the government. [00:26:57] Speaker 01: It's this move to the Federal Shared Service Provider. [00:26:59] Speaker 01: Why they did it, what they were interpreting, a memorandum that Savannah still has not argued has a force and effect of law, is irrelevant. [00:27:11] Speaker 01: If Your Honors have no further questions, I'll just touch briefly on harmful error and just note that Savannah's argument would require the lower court to find harmful error, even when the record says the opposite, which is exactly what Shinseki B. Sanders of the Supreme Court says is not appropriate for a prejudice determination. [00:27:32] Speaker 01: We believe that the factual predicate exists in the record to use the Batam and Emory test for prejudice and that the lower court's decision was correct. [00:27:41] Speaker 01: If the court has no further questions, we respectfully request the court dismiss the appeal or the alternative affirm. [00:27:47] Speaker 02: Any questions? [00:27:48] Speaker 02: Any questions? [00:27:49] Speaker 02: Thank you, Mr. Penelde. [00:27:50] Speaker 02: Thank you. [00:27:52] Speaker 02: Mr. Lane. [00:28:02] Speaker 00: Thank you. [00:28:02] Speaker 00: The government's position here is that they've created such a unique procurement that it's unchallengeable in court. [00:28:10] Speaker 00: But it's not that unique. [00:28:12] Speaker 00: It is just like what happened in distributed solutions. [00:28:14] Speaker 00: There was an RFI. [00:28:16] Speaker 00: Our client, Savannah, did respond to that RFI. [00:28:19] Speaker 00: And the Coast Guard determined that the commercial market could meet its alternatives, but that in accordance with the OMB memorandum, the way it was interpreting the OMB memorandum, it was going to proceed with a federal shared service provider instead. [00:28:33] Speaker 00: And this concept that the other two agencies [00:28:36] Speaker 00: didn't do the same degree, these three agencies were working in tandem. [00:28:40] Speaker 00: And as the defendant notes, TSA and D&DO are ultimately getting it through Coast Guard. [00:28:46] Speaker 00: TSA and D&DO also engaged the commercial market. [00:28:50] Speaker 00: They just did so on a private basis. [00:28:53] Speaker 00: They didn't do it with a public RFI. [00:28:55] Speaker 00: They just engaged commercial vendors to submit rough pricing and requirements in detail in that respect. [00:29:06] Speaker 00: The next point I want to make is that the RFIs were not just, as Mr. Grimaldi stated, used as some sort of preliminary process and not used to help determine the requirements. [00:29:21] Speaker 00: The record is littered with these determinations that the agencies did, alternatives, analyses, and business cases wherein they relied expressly on that data from the commercial market to help shape where they were going with this procurement. [00:29:36] Speaker 00: The next point I'd like to make on the issue of the interested party, where they say that the AFGE decision somehow precludes the standing in this case. [00:29:46] Speaker 00: Whenever the court in AFGE went back to the Competition and Contracting Act's jurisdictional definitions of interested party, that definition was from 1984. [00:29:56] Speaker 00: And that definition prescribes the jurisdiction as to the comptroller general over bid protests. [00:30:02] Speaker 00: In 1996, that's when the Administrative Dispute Resolution Act came across and expanded the Court of Federal Claims jurisdiction to include proposed procurements. [00:30:11] Speaker 00: And what Distributed Solutions did [00:30:14] Speaker 00: was it read AFGE in a manner that's consistent with the ADRA. [00:30:19] Speaker 00: So we feel like that standing has to be assessed in the context of the proposed procurement, not necessarily limited to the actions that constrain GAOs in protest jurisdiction. [00:30:31] Speaker 00: When the ADRA came along, it expressly made these different. [00:30:35] Speaker 00: whenever it added proposed procurements. [00:30:37] Speaker 03: What's your response to the government's point that this really isn't distributed solutions? [00:30:40] Speaker 03: Even if you're right in the reading of distributed solutions, factually, you don't fall within the bounds of distributed solutions. [00:30:48] Speaker 00: Well, in distributed solutions, the facts that were critical were that they had an RFI, and they used that RFI to shape their needs. [00:30:55] Speaker 00: And here there was an RFI, and they used that RFI to shape their needs. [00:30:58] Speaker 00: And that's reflected in the alternatives analyses. [00:31:01] Speaker 00: that's reflected in the business cases that these agencies did, that's reflected in multiple presentations where they brought up and compared the technical capabilities and the cost that the commercial market was offering as compared to what the FSSP was offering, which was really just ultimately one commercial vendor that they were engaged with at that point in calling it an FSSP market. [00:31:21] Speaker 00: And so, to I think Judge Newman's point, [00:31:26] Speaker 00: At the point when they were making this decision, there was one FSSP that was on the table that they were comparing to the commercial market. [00:31:32] Speaker 00: That one FSSP provided Oracle software. [00:31:35] Speaker 00: They knew that. [00:31:36] Speaker 00: There was an integrator that they were already working with that services that Oracle software. [00:31:42] Speaker 00: And that's the integrator that they chose and moved along with. [00:31:46] Speaker 02: Let me ask you another question, because there is a certain weight to the argument that whatever the government does is subject to [00:31:55] Speaker 02: review and exposure. [00:31:57] Speaker 02: But what I still don't understand is that even if we agree with all of these threshold questions in your favor, what could conceivably happen to change the result? [00:32:10] Speaker 00: Well, what would happen to change the result is that the agencies would have to do a real comparison. [00:32:15] Speaker 00: So here, they engaged with RFIs. [00:32:17] Speaker 00: And what that process meant, we've used that term a lot, what it meant is they went out to industry and said that we're looking to do this. [00:32:24] Speaker 00: We want to procure this type of system in this type of way. [00:32:27] Speaker 00: Here's a list of some 30 requirements that we need to have met. [00:32:31] Speaker 00: And then propose to us what type of stuff that you have on what's called a rough order of magnitude, a ROM basis. [00:32:37] Speaker 00: And so the seven qualified contractors submitted ROM proposals with rough pricing based on essentially their suggested way of doing this. [00:32:48] Speaker 00: And so when the agency made these comparisons, the agency wasn't comparing apples to apples. [00:32:54] Speaker 00: The agency was comparing what the FSSP was offering through Oracle to what seven other vendors came up with as possible solutions, and then selected, based on the OMB memorandum, the FSSP, without ever giving them a common set of requirements to look at. [00:33:10] Speaker 00: And so what we want would be just a common set of requirements that advantage the commercial market could bid to to make these comparisons that are required by the statute. [00:33:20] Speaker 00: They're required by three statutes. [00:33:22] Speaker 00: Those requirements got pushed by the wayside whenever, and getting into the prejudice issue, whenever the trial court said, yes, there's not a secret justification, but I'll just make one for the agency. [00:33:34] Speaker 00: And she ignored all of the arguments we had in relation to the rationality of the inputs for that secret justification. [00:33:42] Speaker 00: So that justification requires a statutory authority. [00:33:44] Speaker 00: She just found that they had referred to the Economy Act. [00:33:47] Speaker 00: And she didn't assess whether the Economy Act was met. [00:33:51] Speaker 00: The nature of unique qualifications is another one of those elements under there. [00:33:57] Speaker 00: She didn't assess whether any of that was met in a substantive point, even though our briefs had attacked all of those different issues. [00:34:05] Speaker 02: Thank you, Mr. Lane. [00:34:06] Speaker 02: Mr. Grimaldi, do you want a minute to respond to the question that I asked Mr. Lane? [00:34:13] Speaker 01: I would appreciate that. [00:34:14] Speaker 01: Thank you very much, Your Honors. [00:34:17] Speaker 01: The answer to your question that you received from Savannah is what could be done to rectify this was a common set of requirements to which they could bid. [00:34:27] Speaker 01: So the answer to your question was give us a competition. [00:34:30] Speaker 01: That's the only thing that Savannah believes is required by the law, the only thing the government can do here. [00:34:36] Speaker 01: Yes, what's wrong with that? [00:34:37] Speaker 01: Well, then we would have a competition for everything, Your Honor. [00:34:41] Speaker 01: It's a mandatory competition. [00:34:43] Speaker 02: Not for everything, only in a situation where there has been a solicitation. [00:34:47] Speaker 02: which was then withdrawn, which I assume happens very seldom. [00:34:52] Speaker 01: A solicitation that had been withdrawn is a completely different case than we have right here. [00:34:57] Speaker 01: We have an RFI, Your Honor. [00:34:58] Speaker 01: That's a request for information. [00:35:00] Speaker 01: It's not a bid. [00:35:01] Speaker 01: There's no bid submitted to that which the government could accept creating a contract. [00:35:05] Speaker 01: It's only a request for information seeking a survey. [00:35:09] Speaker 01: It's market research. [00:35:11] Speaker 02: Is this the line that you believe should be drawn? [00:35:15] Speaker 01: No, we believe the line to be distributed solutions. [00:35:18] Speaker 01: It's a step beyond simple market research such as RFI. [00:35:21] Speaker 01: But if that is the line that Savannah advocates, and that's the line this court draws, again, DNDOTSA, neither of them issued an RFI. [00:35:29] Speaker 01: Only the Coast Guard did. [00:35:30] Speaker 01: But again, the Coast Guard was only seeking information about the commercial vendors. [00:35:35] Speaker 01: It was not seeking offers or bids that we could accept to create a contract. [00:35:41] Speaker 01: It did not cancel the RFI. [00:35:43] Speaker 01: is simply review the information and determine that it would go towards a federal shared service provider. [00:35:48] Speaker 02: OK. [00:35:48] Speaker 01: Thank you, Your Honors. [00:35:49] Speaker 02: Thank you. [00:35:50] Speaker 02: Thank you both. [00:35:51] Speaker 02: The case is taken under submission.