[00:00:19] Speaker 01: Yes please come forward. [00:00:51] Speaker 00: Yeah, I had no highlighting. [00:00:53] Speaker 00: I was like, what's he talking about? [00:00:57] Speaker 03: I had no idea. [00:00:58] Speaker 03: This is serious. [00:01:01] Speaker 03: It was irritating as heck. [00:01:04] Speaker 01: Why is this coming? [00:01:05] Speaker 01: I don't remember if I lied, but I left it home. [00:01:08] Speaker 01: Got to be too heavy. [00:01:11] Speaker 01: Okay. [00:01:11] Speaker 01: The next case is number 16, 1630, Avcare Incorporated against the United States, Mr. Phillips. [00:01:23] Speaker 02: Good morning, Your Honors. [00:01:25] Speaker 02: If it please the Court, we're here on a procurement case today. [00:01:28] Speaker 02: And I'd like to start by reviewing the nature of that procurement. [00:01:32] Speaker 03: The Court of Federal Claims quoted multiple documents that were protected under a protective order. [00:01:38] Speaker 03: But when it issued its opinion under seal, neither party requested redactions. [00:01:47] Speaker 03: Do you object to our discussion and oral argument of that information? [00:01:50] Speaker 03: Absolutely not, Your Honor. [00:01:51] Speaker 03: OK, thanks. [00:01:53] Speaker 01: OK. [00:01:53] Speaker 02: And with respect to the procurement, what we're dealing with is a standing solicitation under the Federal Supply Schedule Program to supply pharmaceutical products, both brand name and generic drugs. [00:02:08] Speaker 02: The procurement results in an award where drugs, packaged drugs are available. [00:02:15] Speaker 00: But these are new task orders under a general supply contract. [00:02:19] Speaker 00: This involves an RFM, correct? [00:02:21] Speaker 02: Now, we have an offer for a new five-year contract, Your Honor, which we submitted in October of 2014 that is still sitting in front of the VA and has not been acted on. [00:02:32] Speaker 02: The standing solicitation gives you a five-year term and then says at the expiration, you may submit a new five-year contract. [00:02:39] Speaker 02: In the contract, you offer a range of products. [00:02:43] Speaker 02: We had the contract in 2010. [00:02:45] Speaker 02: We applied for a new contract in 2014. [00:02:49] Speaker 02: some of the same products, some different products, that offer is the procurement that's still sitting there. [00:02:57] Speaker 03: Do you dispute any of the CFC's factual findings? [00:03:02] Speaker 02: The only factual finding I dispute is an inferred finding where the COFC, the trial court, presumes that my client was aware that there was an alternative [00:03:17] Speaker 02: to supply supplier CSPs. [00:03:21] Speaker 02: The record documents that GSA, this program is managed by GSA. [00:03:27] Speaker 02: VA runs it under a delegation of authority from GSA. [00:03:31] Speaker 02: And there was a dialogue where GSA expressly told VA, you can determine price reasonableness without getting CSPs. [00:03:42] Speaker 02: And the relevant document, which is at the appendix 603, the government said, [00:03:47] Speaker 02: not to be shared outside the government, but GSA has told us this. [00:03:52] Speaker 02: If you look at the decision, the decision seems to suggest that Avcare is being difficult because we haven't pursued that option. [00:04:01] Speaker 02: The problem is we weren't told of that option. [00:04:04] Speaker 03: So it's sort of a mixed law in fact? [00:04:06] Speaker 02: Yes, sir. [00:04:08] Speaker 02: And if you look at [00:04:09] Speaker 02: the record, there's an audit report by the OIG. [00:04:12] Speaker 02: They performed routine pre-award audits and they said to the contracting officer in the appendix 565, we recommend you get supplier CSPs. [00:04:25] Speaker 02: The CO then, and this is the document that resulted in the litigation said, we're requiring that you give us manufacturer CSPs. [00:04:36] Speaker 02: So there's the confusion. [00:04:39] Speaker 02: The government knows internally, we don't have to supply these CSPs. [00:04:43] Speaker 02: There is an alternative. [00:04:45] Speaker 02: They've never communicated that to my client. [00:04:47] Speaker 00: Okay. [00:04:48] Speaker 00: But backing up to my question, only because it pertains to jurisdiction. [00:04:51] Speaker 02: Yes, ma'am. [00:04:52] Speaker 00: The CFC decided it had no jurisdiction over objections you raised to what are called RFMs. [00:04:59] Speaker 00: Right. [00:05:00] Speaker 00: It then decided the merits on the bid protest. [00:05:04] Speaker 00: Is that accurate? [00:05:05] Speaker 02: It decided the merits on our offer to renew the contract. [00:05:08] Speaker 00: Right, right. [00:05:09] Speaker 00: Okay. [00:05:09] Speaker 00: Okay. [00:05:10] Speaker 00: But to the extent that you are appealing, are you appealing? [00:05:14] Speaker 00: I thought you were. [00:05:15] Speaker 00: The CFC's determination that it lacked jurisdiction over the RFM objection. [00:05:21] Speaker 00: Yes. [00:05:21] Speaker 00: So let's go back to my question then. [00:05:23] Speaker 00: To the extent that you're appealing claims related to the CFC's determination, it didn't have jurisdiction. [00:05:30] Speaker 00: Why would request to modify an existing contract [00:05:35] Speaker 00: be a new procurement under the federal law or regulations? [00:05:39] Speaker 02: Because they're not requests to modify an existing contract. [00:05:42] Speaker 00: Well, what are RFMs? [00:05:43] Speaker 00: What does it stand for? [00:05:44] Speaker 02: Well, it's just the title of the VA uses. [00:05:45] Speaker 00: Well, what does it stand for? [00:05:47] Speaker 02: It says request for modification. [00:05:48] Speaker 00: Right, okay. [00:05:49] Speaker 02: I understand. [00:05:50] Speaker 02: But the procurement is to offer a range of drugs which go into a catalog. [00:05:58] Speaker 02: Those drugs can then be supplemented during the life of the contract. [00:06:01] Speaker 00: I understand, but it's during the life of the contract [00:06:04] Speaker 00: It is supplementing the contract by adding new drugs. [00:06:07] Speaker 00: I get it. [00:06:08] Speaker 02: We agree it's supplementing the contract. [00:06:09] Speaker 02: We're not changing the term of the contract. [00:06:12] Speaker 02: We're just exercising our right under the Federal Supply Program. [00:06:16] Speaker 00: But you've got law out there, right? [00:06:18] Speaker 00: We've got all this procurement law on this jurisdiction space. [00:06:21] Speaker 00: And I know, because I've been involved, and so has Judge Wallach, in a number of these cases recently, including the Coastal Products case, where we decided that task orders are, in fact, new contracts and therefore [00:06:34] Speaker 00: are bid protestable because they fall under the procurement law. [00:06:38] Speaker 00: But what we also said expressly in Coastal is modifications to existing contracts have long been held by our law not to be new procurements and therefore don't fall under bid protest law. [00:06:51] Speaker 00: So you've got to convince me that somehow your RFM, despite its title, is not a request for modification which we have traditionally held does not fall under the jurisdiction of the Court of [00:07:03] Speaker 00: federal claims for a bid protest, you can still do a CDA. [00:07:06] Speaker 00: There's still another vehicle for you to appeal that. [00:07:09] Speaker 00: It's just not this vehicle. [00:07:11] Speaker 00: So tell me from a factual matter, why should I somehow depart from our precedent, which says modifications to existing contracts don't fall under this vehicle for appeal, and I should find this is more like a new task order or something along those lines? [00:07:28] Speaker 00: Try and make an argument to explain to me why that does. [00:07:31] Speaker 02: It's not a new task order. [00:07:33] Speaker 02: Your Honor, it's a procurement of drugs. [00:07:37] Speaker 02: The FSS program, what does the vendor do? [00:07:40] Speaker 02: They submit an offer, and they say in the offer, we're producing the drugs at these facilities that comply with FDA good manufacturing practices, and the price are fair and reasonable. [00:07:51] Speaker 02: The VA reviews that. [00:07:53] Speaker 02: If they agree it, they award the contract. [00:07:55] Speaker 02: All those items get uploaded into a catalog, which then orders can be placed against. [00:08:01] Speaker 03: Let me ask you a couple of factual questions. [00:08:04] Speaker 03: Sure. [00:08:05] Speaker 03: In the blue break at 39, you say Avcare, quote, takes the raw drugs and processes them into packaged, saleable doses. [00:08:14] Speaker 03: What process is that describing? [00:08:18] Speaker 02: Well, it's describing the repackaging process. [00:08:21] Speaker 03: And I've actually brought some drugs. [00:08:24] Speaker 03: So you're dividing the pharmaceutical products that you receive? [00:08:30] Speaker 02: But after is a repackage. [00:08:34] Speaker 03: Unless you're going to show us something that's in the record. [00:08:39] Speaker 02: They get drums. [00:08:40] Speaker 02: This is inappropriate. [00:08:42] Speaker 00: Is this in the record? [00:08:45] Speaker 02: The process is, yes. [00:08:47] Speaker 00: Then put it away. [00:08:47] Speaker 00: If this exhibit is not in the record, it's totally inappropriate for you to bring it to court. [00:08:51] Speaker 02: I'm trying to read your request. [00:08:54] Speaker 02: So what they do is they get a bulk of pharmaceuticals. [00:08:59] Speaker 02: decide how are we going to, they do market research, how are we going to offer this to the customer? [00:09:04] Speaker 03: But the bulk pharmaceuticals are pills. [00:09:06] Speaker 03: They're not drugs that you form into pills. [00:09:08] Speaker 02: So we don't press the pills. [00:09:10] Speaker 02: That's undisputed. [00:09:12] Speaker 03: So when you divide the pharmaceutical products, you're simply taking a great big drum of them and putting them into smaller containers. [00:09:22] Speaker 02: Well, it's a mass production facility, Your Honor. [00:09:25] Speaker 02: It goes through a processing line where you have a big vat [00:09:29] Speaker 02: The math quantities of pills are put in the VAT. [00:09:32] Speaker 02: It goes through. [00:09:33] Speaker 02: They're packaged in whatever the quantity is, 30 count, 50, 500. [00:09:38] Speaker 03: Okay, here's another fact question. [00:09:42] Speaker 03: There was a finding made by the Court of Federal Claims that Avcare made no attempt before the VA to substantiate that its supplier's CSP information cannot be obtained. [00:09:55] Speaker 03: Did Avcare request the CSP [00:09:59] Speaker 03: information from its suppliers, and if so, where's that in the record? [00:10:03] Speaker 02: It's not in the record because we were not aware that that was an option. [00:10:07] Speaker 02: The government never said, hey, if you show us the suppliers won't give you your CSPs, we'll waive the requirement. [00:10:14] Speaker 02: They didn't tell that to us. [00:10:15] Speaker 02: Had they done, that's the inherent conflict in this procurement. [00:10:20] Speaker 03: So when the Court of Federal Claims says, in its dismissal of the original bid protest, [00:10:26] Speaker 03: Avcare indicated it would submit requests to its suppliers to ascertain their willingness to supply their CSP information, which is 125 Fed claims at 21. [00:10:39] Speaker 03: That wasn't correct? [00:10:41] Speaker 03: Well, it wasn't correct, Your Honor. [00:10:43] Speaker 03: I'll quote it again. [00:10:44] Speaker 03: Avcare indicated it would submit requests to its suppliers to ascertain their willingness [00:10:51] Speaker 03: to supply their CSP information. [00:10:53] Speaker 02: During oral argument, I was asked that question. [00:10:55] Speaker 02: I said, if we're given that option, we'll do it. [00:10:57] Speaker 02: Yes. [00:10:58] Speaker 03: OK, that's how it comes out. [00:10:59] Speaker 02: That's how it came out. [00:11:00] Speaker 02: OK. [00:11:01] Speaker 02: So that's the conflict in the procurement. [00:11:04] Speaker 02: And the hallmark of procurement law is the government needs to tell it. [00:11:09] Speaker 03: Let me just follow up on that. [00:11:10] Speaker 03: Did you ask them? [00:11:11] Speaker 03: And then you say you did ask them. [00:11:14] Speaker 03: What do you mean? [00:11:14] Speaker 03: How about that? [00:11:15] Speaker 02: It's not in the record. [00:11:16] Speaker 02: You want me to ask what we've done off the record? [00:11:18] Speaker 03: No, I don't. [00:11:19] Speaker 03: So there's nothing in the record that shows that that was right. [00:11:21] Speaker 02: Because we were never given the opportunity during the procurement and told, hey, if you go ask them and they say no, we won't press ahead with this requirement. [00:11:32] Speaker 03: When the court said that and you said, well, we'll ask, you didn't submit anything afterwards to show that you did ask. [00:11:43] Speaker 02: At that point, the record is closed, Your Honor. [00:11:45] Speaker 01: But the record does not show that the government insists that it was clear in terms of what it was that they were asking for and that they didn't receive. [00:11:57] Speaker 01: But they don't say that they offered to waive the requirement if certain threshold information was provided. [00:12:05] Speaker 01: Your view is that had they said they would waive the requirement, that that would have satisfied the [00:12:16] Speaker 02: My client just wants a new contract. [00:12:20] Speaker 02: We're not trying to win a debate about CSP requirements. [00:12:23] Speaker 02: If they had said, you ask your suppliers if they'll provide CSPs, and if the answer is no, we'll do something else. [00:12:32] Speaker 02: Absolutely, we would have pursued that option. [00:12:34] Speaker 02: But literally, during the course of the procurement, the underlying procurement, remember, we submit the offer in October 2014. [00:12:42] Speaker 02: It's reviewed by the VA. [00:12:45] Speaker 02: There are exchanges. [00:12:46] Speaker 02: We updated in June of 2015. [00:12:49] Speaker 02: And they then give us a take and relieve it. [00:12:52] Speaker 02: You have to submit supplier CSPs. [00:12:56] Speaker 02: At that point, we go to the court. [00:12:59] Speaker 02: We have no further dialogue with the government. [00:13:01] Speaker 03: In the blue brief, one of the points you raise is that there was an anonymous letter to the Office of the Inspector General and then internal audit reports, and that you've never seen them. [00:13:15] Speaker 02: Well, correct. [00:13:17] Speaker 02: I've seen them. [00:13:18] Speaker 02: My client was never given the opportunity to address them or above. [00:13:21] Speaker 03: Okay, so you do have them. [00:13:23] Speaker 02: Only as part of the record in this case. [00:13:26] Speaker 02: It was filed under seal in the record of this case. [00:13:28] Speaker 02: Again, my client has not been subject to a due process proceeding where it was allowed to address those allegations. [00:13:36] Speaker 01: Okay, let's hear from the government. [00:13:39] Speaker 01: There are things we need to clear up. [00:13:44] Speaker 03: Yeah, there are a lot of things we need to clarify. [00:13:52] Speaker 04: Mr. Poirier? [00:13:53] Speaker 04: That is correct. [00:13:58] Speaker 01: There are marked inconsistencies between what the appellant says was offered and was the position, and as it's represented in your brief. [00:14:11] Speaker 01: Can you clarify? [00:14:14] Speaker 01: They said they were never told that if the supplier, the basic supplier, didn't want to tell what its profit was or whatever it was that might have followed from the requested information, that that would have met the government's requirement for information. [00:14:31] Speaker 04: Right. [00:14:32] Speaker 04: I don't believe it does meet the government's requirements for information. [00:14:35] Speaker 04: I think counsel is mistaken. [00:14:39] Speaker 04: In other words, [00:14:40] Speaker 04: The solicitation requires a company like Gavcare to provide certain information, including the manufacturer price information. [00:14:50] Speaker 01: But what information? [00:14:51] Speaker 01: I mean, here we're told that had the information which was available been requested, [00:15:00] Speaker 01: From your brief, I have the impression that what was being requested was some of the threshold manufacturers' profit and loss statements, raw material costs, and so on, which is not generally made available to the public. [00:15:19] Speaker 04: The standard provision, which is at page 132, Your Honor, is from a [00:15:27] Speaker 04: GSA regulation and it's required mandatory provision in the VA solicitation. [00:15:36] Speaker 04: And at section five on page 132, it lists six different items that are required to be provided. [00:15:44] Speaker 04: And I guess the one that's most contentious is the manufacturer's list price and the dealer's reseller's percentage discount from list price or net prices. [00:15:57] Speaker 04: So that is pricing information that's required. [00:16:02] Speaker 04: The page from the record that counsel cited when he stood up is page 603. [00:16:09] Speaker 04: And it says to the VA, look, if they try as hard as they can to get this information and they really convince you that it was just impossible and you verify that it was simply impossible, [00:16:28] Speaker 04: you have authority to waive this requirement. [00:16:33] Speaker 04: That had not been the VA's understanding prior to that email, if that's fair to say. [00:16:41] Speaker 04: This is in April of 2015 they got that email. [00:16:45] Speaker 04: It had not been the VA's understanding. [00:16:49] Speaker 04: However, the VA did say when the first protest was dismissed, [00:16:57] Speaker 04: Go out and try and get this information at a minimum and come back to us, we'll talk. [00:17:03] Speaker 04: If there was nothing to talk about, if it were incomprehensible that there would ever be a waiver, there's no need to even tell the person to go out there and see what you can find and bring the information. [00:17:17] Speaker 04: The way the council has described the waiver authority that GSA told VA they have, it's an option. [00:17:26] Speaker 04: You don't really have to go get the information. [00:17:28] Speaker 04: You can just get a note from the manufacturer saying, no, we don't want to, and that's good enough. [00:17:35] Speaker 04: Well, that's not what the regulation provides, and that's not a reasonable understanding of when you might be able to get a waiver. [00:17:45] Speaker 04: The information we're talking about is product by product, and there are [00:17:49] Speaker 04: hundreds of different products on the schedule. [00:17:52] Speaker 00: Well, you've made sort of two different arguments here. [00:17:54] Speaker 00: And let me see if I understand both of them. [00:17:57] Speaker 00: Are you saying, number one, the regulation requires the information to be produced. [00:18:04] Speaker 00: And while we may have been informed that we have waiver authority, we don't have to tell all of the contractors that. [00:18:11] Speaker 00: Is that your position? [00:18:13] Speaker 00: Is one of your positions that [00:18:15] Speaker 00: you are not obligated to provide that information to contractors. [00:18:20] Speaker 00: It's not in the regulations. [00:18:22] Speaker 00: It's something by email someone told you that you could do. [00:18:27] Speaker 04: Right. [00:18:31] Speaker 04: It's an interesting question. [00:18:32] Speaker 04: I don't know whether, first of all, it's interesting as to whether or not somebody at the GSA can send a note by email. [00:18:44] Speaker 04: and grant the VA waiver authority. [00:18:47] Speaker 00: So are you also arguing then that you're not even certain that such waiver authority is legally authorized in light of the regulation? [00:18:53] Speaker 04: Yeah, it's hard to say. [00:18:55] Speaker 04: I haven't really researched whether waiver authority is always inherent. [00:19:01] Speaker 04: The problem with waiver authority is in the context of a solicitation is that you have to treat all the offerors equally. [00:19:09] Speaker 04: And so if you are waiving certain solicitation provisions for one offeror, [00:19:13] Speaker 04: and not waiving the solicitation provision for another offeror, even though it's an open solicitation, is that equal treatment? [00:19:22] Speaker 00: But there's three possible arguments, and I kind of feel like you're sort of but not really making all three of them. [00:19:28] Speaker 00: So I'm trying to figure out what your argument is. [00:19:30] Speaker 00: Wait. [00:19:31] Speaker 00: Argument number one is we may not actually legally have waiver authority. [00:19:35] Speaker 00: Argument number two is even if we have waiver authority, we don't have to tell everybody that. [00:19:40] Speaker 00: That's not part of what's required because it's not expressed in the regulation. [00:19:43] Speaker 00: And then argument number three is you said, well, we did tell them at least go out and try. [00:19:49] Speaker 00: That implies that there is some authority to do something if they try and are unable to get the information. [00:19:57] Speaker 00: And that sort of seems to be a fallback argument. [00:19:59] Speaker 00: If you decide, if court, if you decide there's waiver authority, and if you decide we had to inform them, then we sort of kind of did because we told them go out and try and get the information. [00:20:10] Speaker 00: which implies that if they're unsuccessful, maybe there's something that could be done. [00:20:15] Speaker 00: So I'm trying to figure out precisely where your argument lies. [00:20:18] Speaker 00: And you can make arguments in the alternative. [00:20:20] Speaker 00: That's never a bad thing to do. [00:20:22] Speaker 00: But I just need to know precisely what the government's position actually is. [00:20:27] Speaker 04: Yeah. [00:20:28] Speaker 04: I think it's fair to say I said all three of those things, but none of those are really the issue. [00:20:32] Speaker 04: They didn't seek a waiver. [00:20:34] Speaker 04: What's in the administrative record, and it's very clear, is [00:20:38] Speaker 04: Throughout the process, the dispute was the government saying, we want you to get this information, the contracting officer. [00:20:45] Speaker 04: And Avcare saying, no, we won't do it. [00:20:49] Speaker 04: We refuse to do it. [00:20:50] Speaker 04: We're a manufacturer. [00:20:51] Speaker 04: We don't have to do it. [00:20:52] Speaker 04: And we're not going to do it. [00:20:54] Speaker 04: And there's a long history of correspondence back and forth between Avcare and the contracting officer. [00:20:59] Speaker 04: So that was the dispute. [00:21:02] Speaker 04: And that was the issue that was posed. [00:21:06] Speaker 04: does the contracting officer have authority to enforce this information disclosure requirement? [00:21:15] Speaker 03: Mr. Poirier, am I pronouncing you right? [00:21:18] Speaker 03: Poirier. [00:21:19] Speaker 03: Poirier. [00:21:21] Speaker 03: I find this case confusing. [00:21:23] Speaker 03: Let me tell you why. [00:21:24] Speaker 03: You referenced the record, and yesterday you filed a motion to supplement, which I printed out and I reviewed, and still, [00:21:36] Speaker 03: At least one document, the OIG September 2014 report, is listed in the Joint Appendix Table of Contents, and it's not in there, and it's not in the supplement. [00:21:52] Speaker 03: The Joint Appendix doesn't include multiple documents that were sent over to the Court of Federal Claims findings. [00:21:58] Speaker 03: And in the red brief, and this just frosted me, [00:22:06] Speaker 03: at the bottom of 13 and continuing on to 14, you purport to quote from Avcare's initial offer. [00:22:12] Speaker 03: And you cite to JA 4515 to 32. [00:22:16] Speaker 03: Those are transcript pages. [00:22:20] Speaker 03: And they don't appear. [00:22:23] Speaker 03: None of those pages contain the quoted language. [00:22:27] Speaker 03: So I thought, geez, well, this supplemental will fix that. [00:22:31] Speaker 03: It doesn't. [00:22:34] Speaker 03: You know, it's sort of hard to do this kind of work if the references, page references, are a mystery. [00:22:45] Speaker 04: Right. [00:22:46] Speaker 04: Absolutely. [00:22:47] Speaker 04: As far as the general part in terms of the supplemental, those pages, through confusion, our pages had the same page numbers as some of the pages that they had. [00:23:00] Speaker 04: I know what you did. [00:23:01] Speaker 04: I saw your mug. [00:23:02] Speaker 04: That's what happened. [00:23:03] Speaker 04: So you're right. [00:23:04] Speaker 04: The page you just cited from the Avcares should appear at 14532, just adding a 1. [00:23:12] Speaker 04: And if it doesn't, then that's my responsibility. [00:23:16] Speaker 04: And I apologize to the court. [00:23:18] Speaker 04: I don't know why. [00:23:19] Speaker 04: But anything, any page number higher than 4500 should have a 1 in front of it. [00:23:25] Speaker 04: And it should appear in that third volume. [00:23:27] Speaker 04: No, it just doesn't appear. [00:23:31] Speaker 04: all I can say is that's completely my responsibility, and I apologize. [00:23:34] Speaker 04: I don't think that particular fact is in dispute. [00:23:37] Speaker 03: In other words... No, it's not, because it appears elsewhere in a totally separate document at J.A. [00:23:43] Speaker 03: 155 to 58. [00:23:47] Speaker 03: But that's not my point. [00:23:50] Speaker 04: No, it's a mess, and I apologize. [00:23:53] Speaker 01: Okay, perhaps you can prove it. [00:23:55] Speaker 01: review the submission and see if anything else has been omitted. [00:24:00] Speaker 05: I'll go citation by citation, Your Honor, as soon as I get back to my office. [00:24:04] Speaker 01: Okay. [00:24:04] Speaker 01: Now, I'm trying to figure out what's really going on here. [00:24:08] Speaker 01: As far as I can tell, all right, here we have the governance of the contracting officer asked for manufacturing information. [00:24:16] Speaker 01: So AFCAIR says eventually, we don't make the drugs, but we do other things. [00:24:24] Speaker 01: And then [00:24:25] Speaker 01: It looks as if, but it's hard to tell because no one really says, that perhaps what the contracting officer does say was we want to make sure that there aren't undue profits. [00:24:37] Speaker 01: We want to know what you buy and what you sell and what's really happening. [00:24:42] Speaker 01: Is that in fact what was going on? [00:24:45] Speaker 01: That the question would have been resolved if Avcare had said this is what we pay the producers of the drugs and [00:24:55] Speaker 01: This is what it costs us to put it in the smaller bottles and to resell. [00:25:01] Speaker 01: And then the contracting officer looks at that and says, you're making too much money on this contract, and therefore we're not going to renew it. [00:25:10] Speaker 01: There is this gap. [00:25:12] Speaker 01: It seems that at least at the threshold, there was no uncertainty as to who was producing these complex molecules that are the drug molecules that [00:25:25] Speaker 01: There was the assertion, well, we're a manufacturer, which certainly seems to have put the government off. [00:25:33] Speaker 01: But in due time, particularly with renewals, and then with the short-term renewals, the apparent absence of, at that stage at least, a competitive bid that was at a stage that seemed to press for just granting something to a competitor. [00:25:56] Speaker 01: What, in fact, was the government after? [00:25:58] Speaker 01: It must have been very clear at one stage that Avcare was not a manufacturer of the raw drug, or even they didn't make the pills. [00:26:12] Speaker 01: They bought in bulk and they repackaged, they used the official label, they complied with everything that the VA needed to know for prescribing. [00:26:23] Speaker 04: I think honestly, Your Honor, the biggest picture, if you really want to understand what the case is all about, Congress has been unhappy with the VA, doesn't think that they get good prices. [00:26:34] Speaker 04: Some point in time, somebody said you were supposed to be requiring certain information to do your price analysis and so forth. [00:26:42] Speaker 01: They went through and- The price analysis, but once it became clear that they were not the manufacturer from the raw materials, but we're looking for a price analysis. [00:26:53] Speaker 01: I thought the regulation was not unreasonable in that it required a comparison with sales on the market, if there are sales on the market. [00:27:04] Speaker 04: What's happened is this particular provision that we've been talking about, the reseller requirement, is a narrow provision. [00:27:12] Speaker 04: It's a standard form provision. [00:27:15] Speaker 04: It's in the solicitation. [00:27:16] Speaker 04: It was notice in comment, promulgated by the GSA many years ago. [00:27:23] Speaker 04: And it says that if you are a reseller without significant sales to the general public, that narrow class, that you have to provide this extra information, including the manufacturing price. [00:27:36] Speaker 04: That's a different kind of information. [00:27:39] Speaker 04: So what's at issue in this case is can the VA require a reseller without significant sales to the general public to provide this additional information? [00:27:51] Speaker 04: Avcare argued throughout, you don't need it. [00:27:54] Speaker 04: You have other ways of doing your price comparison. [00:27:56] Speaker 04: You don't have to have it. [00:27:58] Speaker 04: We don't want to give it to you. [00:27:59] Speaker 04: Our manufacturers don't want to give it to you. [00:28:02] Speaker 04: You can't have it. [00:28:03] Speaker 04: And what the contracting officer said is, it's a requirement, and we want it, and we want you to get it. [00:28:10] Speaker 04: And Avcare said no. [00:28:13] Speaker 04: Now, as to the merits, the only one thing that I wanted to- Well, your opposing counsel says you never asked for it. [00:28:20] Speaker 04: Well, that's in the administrative record, you know, we asked for it many times. [00:28:25] Speaker 04: We said, you're not a manufacturer, therefore you have to provide this information. [00:28:30] Speaker 04: There's one point that I just want to point out. [00:28:34] Speaker 04: The GSA does not, anywhere in the preambles or anything else, describe what they mean by manufacturer or reseller. [00:28:42] Speaker 01: Well, eventually, apparently, there seems to have been an understanding that the regulation [00:28:48] Speaker 01: was relating to actually producing from the raw materials in the chemical manufacture. [00:28:57] Speaker 04: I think that's a good common sense understanding, but I don't think it's really spelled out anywhere in the, it's just that's fictionary understanding and it's fine. [00:29:07] Speaker 01: As opposed to being a manufacturer because you buy the already packaged pills, whatever you call them, and just put them in smaller bottles. [00:29:16] Speaker 01: that that's not manufactured? [00:29:18] Speaker 04: In this case, what I think is key is that there, if you read the solicitation as a whole, there are solicitation provisions, as cited in my brief, at page 48 and page 53 of the Joint Appendix, that say if you are a regulated dealer, you have to have an FDA, unique labeler requirement, an FDA requirement. [00:29:42] Speaker 04: And if, in that case, you have to have letters from the manufacturer. [00:29:46] Speaker 01: So in other words... Not to comply that the CEO wasn't enforcing the FDA requirement. [00:29:53] Speaker 04: No, exactly. [00:29:54] Speaker 00: But is it your point that since the solicitation says you have to let us from the manufacturer, the manufacturer's got to be the producer of the drug. [00:30:02] Speaker 04: Right. [00:30:02] Speaker 04: The solicitation has these other provisions that make clear that a reseller, even a regulated reseller... They're still not the manufacturer. [00:30:10] Speaker 04: Right. [00:30:10] Speaker 04: They're not an additional manufacturer. [00:30:13] Speaker 04: They're a reseller. [00:30:14] Speaker 01: Well, in that case, they should have prevailed. [00:30:17] Speaker 01: by saying that we meet the requirements. [00:30:22] Speaker 04: They did have a label or requirement. [00:30:24] Speaker 04: All I'm saying is the argument that they pressed before today in their briefs was that because they're a regulated entity, they should not be viewed as a reseller. [00:30:34] Speaker 04: They should be viewed as an additional manufacturer. [00:30:37] Speaker 04: That was their main argument before today. [00:30:40] Speaker 04: And all I'm saying is that there are provisions within the solicitation, page 48 and page 53, [00:30:46] Speaker 04: that make clear that even a regulated entity is not a manufacturer. [00:30:53] Speaker 00: It's not. [00:30:53] Speaker 00: Even if they comply with all of the restrictions, it doesn't suddenly morph them into a manufacturer. [00:30:58] Speaker 04: Exactly. [00:30:58] Speaker 04: And I think that the GSA provision on its own, to be fair, is pretty vague. [00:31:03] Speaker 04: It's meant to apply to all kinds of different industries. [00:31:07] Speaker 04: But this solicitation has provisions that tailor your understanding of a fairly read [00:31:14] Speaker 04: to show that they are not a manufacturer. [00:31:16] Speaker 01: Well then, in that case, if everyone agrees they're not a manufacturer, then why should they have been objected to? [00:31:24] Speaker 01: Because they didn't provide the manufacturing information. [00:31:28] Speaker 04: No, I don't think they agree that they're not. [00:31:31] Speaker 04: They still claim that they are exempt from the reseller requirement because they claim to be a manufacturer. [00:31:37] Speaker 04: I think they're still making that argument. [00:31:38] Speaker 04: You can ask them. [00:31:39] Speaker 00: That's actually the primary argument on appeal, as far as I can tell. [00:31:42] Speaker 00: They're saying, we qualify as a manufacturer and are therefore exempt from these requirements. [00:31:47] Speaker 03: But in any case, as I understand it, if they're not a manufacturer and they're a reseller, you're entitled to look behind to see what they're [00:31:58] Speaker 03: the people who do manufacture the drugs they resell, price it at. [00:32:02] Speaker 04: Correct. [00:32:02] Speaker 04: If they're a reseller without significant sales to the general public. [00:32:06] Speaker 04: In that case, they think, well, there's enough information. [00:32:08] Speaker 04: That apparently was the GSA's policy position at the time. [00:32:14] Speaker 01: OK, any more questions from the government? [00:32:17] Speaker 01: Thank you. [00:32:18] Speaker 01: Thank you, Mr. Praher. [00:32:20] Speaker 01: Mr. Phillips. [00:32:22] Speaker 02: Very briefly, Your Honor. [00:32:28] Speaker 02: I'm confused whether the government's saying there was an option beyond providing supplier CSP information. [00:32:35] Speaker 02: Clearly, as you read to me, the court said that they determined there was. [00:32:41] Speaker 02: There's been no showing that was shared with my client. [00:32:43] Speaker 02: The document that we've discussed, Appendix 603, says clearly not an option to be shared outside the government. [00:32:52] Speaker 02: It wasn't shared with Avecare. [00:32:54] Speaker 02: The GSAR, which governs the FSS program, makes it clear that CSP data is one means to do pricing analysis. [00:33:04] Speaker 02: There are other means. [00:33:05] Speaker 02: As you noted, compare prices of the same product. [00:33:09] Speaker 01: There is... But you said there was nothing to compare with. [00:33:12] Speaker 01: Is that right? [00:33:13] Speaker 02: No, no. [00:33:15] Speaker 02: The products we are offering on the contract, there are other offers providing the same products. [00:33:21] Speaker 02: So we maintain [00:33:23] Speaker 02: Determining price reasonableness isn't a problem here. [00:33:26] Speaker 02: I'd be appropriate 400 milligrams 30 count. [00:33:29] Speaker 02: You've got four offers on the schedule. [00:33:31] Speaker 02: We're cheaper Ergo, our price is reasonable. [00:33:35] Speaker 00: That's really the core position we offered but whether whether we agree with you that that is an efficient and logical argument or not isn't at all the point right the point is does the government have the authority to make this request of you and [00:33:49] Speaker 00: And were you correct to say you don't have to comply with it because you are a manufacturer and don't fall in to the narrow category of resellers that are required to comply with this? [00:34:00] Speaker 00: Isn't that the question? [00:34:01] Speaker 00: The question isn't do we think it makes sense for them to require this? [00:34:04] Speaker 00: The question is your argument was we don't have to comply because we are a manufacturer and we have to evaluate that argument. [00:34:11] Speaker 02: So our argument is there is no one path to doing price analysis. [00:34:17] Speaker 02: CSPs are not a requirement. [00:34:19] Speaker 02: The GSAR 538-271 says otherwise. [00:34:25] Speaker 02: GSA confirmed it to VA. [00:34:27] Speaker 02: The VA acknowledged it. [00:34:29] Speaker 02: It's not the only way of doing it. [00:34:31] Speaker 02: That's the reality. [00:34:33] Speaker 03: Did you tell me in your primary argument that the government did not ask for CSP information prior to that court hearing? [00:34:49] Speaker 02: So we submitted a contract in 2010. [00:34:51] Speaker 03: That's a yes or no. [00:34:54] Speaker 02: Well, I don't understand the question. [00:34:55] Speaker 02: Okay. [00:34:55] Speaker 03: We submitted our... I said to you, I said to you that the court of federal claims said, AVCARE made no attempt before the VA to substantiate its supplier's CSP information cannot be obtained. [00:35:12] Speaker 03: And you said it was never asked for prior to that. [00:35:14] Speaker 02: And you asked me, did we ever do it? [00:35:16] Speaker 02: And I said, it's not in the record. [00:35:18] Speaker 02: because we were never given the option to do it. [00:35:21] Speaker 03: Well, your opposing counsel says there are plenty of requests for your supplier's CSP information in the record, which is true. [00:35:30] Speaker 02: There are. [00:35:31] Speaker 02: There are. [00:35:31] Speaker 02: But there's no statement saying, if you provide a statement that they declined to provide it, we will pursue another option. [00:35:40] Speaker 02: They never shared that with us. [00:35:42] Speaker 02: That's the problem. [00:35:43] Speaker 02: And again, what are the ground rules of the procurement? [00:35:47] Speaker 02: We want a contract. [00:35:48] Speaker 02: We don't want to debate, you know. [00:35:51] Speaker 00: But why do they have to share that with you? [00:35:53] Speaker 00: This is the part I don't understand. [00:35:54] Speaker 00: Why do they have to tell you there might be other options? [00:35:58] Speaker 00: Because it's not that there are automatically other options. [00:36:01] Speaker 00: The email from GSA or whoever the government service is that sends it to them said you could waive under certain circumstances such as their manufacturer or suppliers are unwilling to provide the information. [00:36:15] Speaker 00: But you provided no evidence along those lines to suggest that you needed or were entitled to such a waiver. [00:36:22] Speaker 00: You responded not that we can't get the information or we need a waiver or we're unsure. [00:36:27] Speaker 00: You responded, we don't have to give you this information. [00:36:30] Speaker 00: Not in general, but because we are a manufacturer. [00:36:33] Speaker 02: Your honor, all I can say is we were given a mandatory direction. [00:36:37] Speaker 02: Provide this information. [00:36:38] Speaker 00: Yes. [00:36:38] Speaker 00: And what's wrong with that? [00:36:40] Speaker 02: Because it's not what the rules say. [00:36:41] Speaker 02: The GSAR says that's not... We say it's not what the rules say. [00:36:45] Speaker 00: No, no. [00:36:45] Speaker 00: The rule actually says that. [00:36:47] Speaker 00: You're saying that email that was supplied to the government, the VA, which indicated they had the ability to waive the rule, says something different, right? [00:36:55] Speaker 02: Your honor, the FSS program is managed by GSA. [00:36:59] Speaker 02: They control the policy, not the VA. [00:37:02] Speaker 02: And GSA has had a long-standing position. [00:37:06] Speaker 02: They don't even require CSPs on their schedules anymore, by the way. [00:37:08] Speaker 00: That's not relevant. [00:37:10] Speaker 02: I'm sorry. [00:37:11] Speaker 02: That's why we got into this trap, because CSPs are not a requirement either under the regs. [00:37:17] Speaker 00: Well, the reason you got into the trap is because the only argument you made is we don't have to give it to you because we're a manufacturer. [00:37:22] Speaker 00: And that seems like an unwinnable argument now for you. [00:37:24] Speaker 00: That's why you're in the trap. [00:37:26] Speaker 00: All these other things you're saying are just [00:37:28] Speaker 00: statements in the ether that actually aren't relevant to the only issue decided and argued in the field before us. [00:37:36] Speaker 02: The government, what gave us one option, we pushed back against that option. [00:37:40] Speaker 02: That's what we did. [00:37:42] Speaker 02: And you pushed back, saying we are a manufacturer. [00:37:45] Speaker 02: Yep, we did. [00:37:46] Speaker 02: Right. [00:37:47] Speaker 02: And we believe we are a manufacturer. [00:37:52] Speaker 01: That's all I have. [00:37:52] Speaker 01: Thank you. [00:37:52] Speaker 01: OK. [00:37:53] Speaker 01: Thank you. [00:37:53] Speaker 01: Thank you both. [00:37:55] Speaker 01: We'll work on it. [00:37:56] Speaker 01: This case is taken into submission.