[00:00:07] Speaker 03:
Obviously, we have been using the police in our care and not a caretaker agent.

[00:00:46] Speaker 03:
Okay, our next case this morning is number 172155 Continental Service Group versus United States.

[00:00:53] Speaker 03:
Before you begin, Mr. Major, is that how you pronounce it?

[00:00:58] Speaker 03:
Two things.

[00:00:59] Speaker 03:
One, we only want to hear rebuttal from one council, so I guess that means Mr. Sneckenberg needs to use his other minute in his opening argument.

[00:01:10] Speaker 03:
And then

[00:01:11] Speaker 03:
Second, we'd like counsel in these continental cases, both of them, to remain in the courtroom after the oral argument.

[00:01:19] Speaker 03:
The court will recess and then we will resume after some period of time.

[00:01:26] Speaker 03:
Okay, so why don't we begin, Mr. Major.

[00:01:28] Speaker 06:
All right.

[00:01:29] Speaker 06:
Thank you, Your Honor.

[00:01:30] Speaker 06:
May it please the court.

[00:01:31] Speaker 06:
The United States Court of Federal Claims issued an overly broad preliminary injunction disrupting the pre-litigation status quo.

[00:01:39] Speaker 06:
The court did so without properly weighing the agency's decision to take corrective action, which mooted the challenges before it.

[00:01:46] Speaker 03:
There are two aspects of this, and let's put aside for the moment the second aspect of it, which is called the dilution aspect of the preliminary injunction.

[00:01:58] Speaker 03:
Insofar as the preliminary injunction is directed to the original award, the 2016 award,

[00:02:07] Speaker 03:
and the government is undertaking corrective action as to that, correct?

[00:02:12] Speaker 03:
That is correct, Your Honor.

[00:02:14] Speaker 03:
And so why doesn't the Court of Throat Cleanse have the authority to continue the injunction until the corrective action is completed?

[00:02:22] Speaker 03:
What's the authority that it lacks that authority?

[00:02:25] Speaker 06:
Well, Your Honor, that would be this Court's precedent in Chapman Law Firm.

[00:02:28] Speaker 06:
Ultimately, the agency's decision to take corrective action ended up mooting the protest.

[00:02:33] Speaker 03:
And Chapman's very much on point here because... Uh-huh, that would moot the protest because

[00:02:38] Speaker 03:
As I understand it from the briefs, there may be disputes about whether the corrective action is sufficient or not, right?

[00:02:45] Speaker 06:
Well, actually, continence will never challenge the sufficiency of the corrective action.

[00:02:50] Speaker 03:
It simply challenged the fact that its injunction was going away, which makes it... How could it challenge the sufficiency of the corrective action before it knows what the corrective action is?

[00:02:58] Speaker 06:
Well, that would be the result of the corrective action, not the sufficiency of the corrective action.

[00:03:03] Speaker 06:
The agency spelled out what it was doing in terms of the corrective action,

[00:03:06] Speaker 06:
in two declarations before the court.

[00:03:08] Speaker 06:
So it knows exactly what the agency was doing.

[00:03:11] Speaker 06:
It submitted a proposal in response to the agency's corrective action.

[00:03:14] Speaker 06:
It doesn't know the evaluation yet, but there is no evaluation at this time.

[00:03:18] Speaker 06:
So the agency can't... There's no evaluation existence because that evaluation was set aside as part of the corrective action.

[00:03:26] Speaker 06:
Now, Continental could subsequently file a challenge as a result

[00:03:31] Speaker 06:
of the corrective action, if it's unsatisfied as a result of the corrective action, as could any other party that ultimately... Starting a new lawsuit?

[00:03:39] Speaker 06:
Yes.

[00:03:40] Speaker 06:
And it could have started a lawsuit, or actually in this suit, challenged the sufficiency of the corrective action, said you didn't look at small business... What case says they have to start a new lawsuit?

[00:03:54] Speaker 03:
What's that?

[00:03:55] Speaker 03:
What case says they have to start a new lawsuit?

[00:04:00] Speaker 06:
Well, I said they could, Your Honor.

[00:04:02] Speaker 06:
They could start a new lawsuit.

[00:04:03] Speaker 03:
Is there any case that says they have to do it in a new lawsuit?

[00:04:07] Speaker 06:
I'm not aware of a case that says they have to do in a lawsuit.

[00:04:10] Speaker 06:
In this case, ACSI did so, which was another party that was not happy with the sufficiency of the corrective action.

[00:04:19] Speaker 06:
They did institute a separate lawsuit.

[00:04:21] Speaker 06:
And that was dismissed?

[00:04:23] Speaker 06:
Yes.

[00:04:23] Speaker 06:
And that was dismissed.

[00:04:24] Speaker 06:
The corrective action was found by the court to be reasonable under circumstances.

[00:04:28] Speaker 06:
and also with regards to Continental.

[00:04:30] Speaker 06:
Continental, at the time, could have objected and said, and could have said simply, and I don't think it could have, well, I don't think it could have, based on the facts, but had Continental felt the corrective action was insufficient, it could have said, we have these claims in our complaint.

[00:04:47] Speaker 06:
These claims are not addressed.

[00:04:48] Speaker 06:
The only claim the corrective action doesn't address is Count 7, which the court had already dismissed and which Continental hasn't processed.

[00:04:54] Speaker 03:
What is the schedule for the corrective action now?

[00:04:57] Speaker 06:
Your Honor, the agency is undertaking corrective action.

[00:04:59] Speaker 06:
We don't know when it's going to be completed.

[00:05:02] Speaker 06:
You have no idea?

[00:05:03] Speaker 06:
No.

[00:05:03] Speaker 06:
Your Honor, the last time the government made an estimate, or the Department of Education made an estimate, it was seriously incorrect and overly optimistic.

[00:05:12] Speaker 06:
We have to acknowledge that.

[00:05:13] Speaker 06:
It had hoped to complete the corrective action sometime in August.

[00:05:17] Speaker 06:
That has proven absolutely untrue after it started going through the proposals and attempting to evaluate them.

[00:05:23] Speaker 06:
But the agency has multiple tasks.

[00:05:25] Speaker 06:
It has to

[00:05:26] Speaker 06:
evaluate the, I believe it's 36 or so or 38 offers that it's received.

[00:05:31] Speaker 06:
It needs to compare them.

[00:05:33] Speaker 06:
It needs to consider, you know, which offers the best value.

[00:05:35] Speaker 06:
It needs to determine how many awards it's going to make.

[00:05:38] Speaker 06:
And that involves a lot of back and forth between various components within the agency.

[00:05:42] Speaker 06:
And so as a result, it's taken longer than the agency had hoped.

[00:05:46] Speaker 06:
The last time the agency had done these steps, it had taken a year.

[00:05:51] Speaker 06:
I think it's safe to say it will take less than a year.

[00:05:54] Speaker 06:
Um, cause there is some replication and duplication of effort, but the last time this had taken a year.

[00:05:59] Speaker 06:
Um, started in May.

[00:06:01] Speaker 06:
Started in May.

[00:06:02] Speaker 06:
Yes, your honor.

[00:06:05] Speaker 03:
So if the second part of this injunction on the dilution theory is so harmful to the government, why is it that, uh, you didn't renew the request for a stay here?

[00:06:21] Speaker 03:
when the Court of Federal Claims didn't act on your stay motion in that court for months?

[00:06:27] Speaker 06:
Well, Your Honor, we already had the request pending.

[00:06:29] Speaker 06:
This court had held that that was going to be held in abeyance.

[00:06:32] Speaker 06:
I think we held the same perspective initially that the Court of Federal Claims would act promptly on it and that request for a stay would ultimately be resolved.

[00:06:41] Speaker 06:
It was not, that's correct, but we believe ultimately that this court

[00:06:46] Speaker 06:
is aware of what is going on and determine that we simply shouldn't be spending our time as much as we could going to the court and making a request for relief that we've already made and constantly asking this court for the same... Well, in case you don't know, there are two separate panels that deal with these matters.

[00:07:06] Speaker 03:
One is the motions panel.

[00:07:08] Speaker 03:
They enter their order and then the case goes to a merits panel which isn't assigned until six weeks before the argument.

[00:07:15] Speaker 03:
And just for future reference.

[00:07:17] Speaker 06:
And yes, Your Honor.

[00:07:17] Speaker 06:
And that's why also consistent with this court's order, as soon after we knew it was assigned to the merits panel, we got a further order asking to inquire of the court whether it was going to resolve the motion to stay.

[00:07:31] Speaker 06:
It did so on October 31st.

[00:07:33] Speaker 03:
And then soon thereafter, this court ordered us to... Maybe you should have asked earlier for the Court of Federal Acclaims as to why it hadn't acted on the motion, right?

[00:07:44] Speaker 03:
Perhaps.

[00:07:44] Speaker 06:
Perhaps, Your Honor.

[00:07:45] Speaker 06:
But at the end of the day, we do assume that the judges, the judge at the Court of Federal Claims was aware of the motion and would act on it promptly.

[00:07:55] Speaker 06:
We were incorrect.

[00:07:57] Speaker 06:
But nevertheless, we had hoped, given how motions had proceeded previously in the past in this case, they were very quickly resolved.

[00:08:04] Speaker 03:
Did the court respond to that?

[00:08:06] Speaker 03:
I don't recall whether they did or not.

[00:08:08] Speaker 03:
Did they respond to your letter?

[00:08:10] Speaker 06:
Well, we sent in, we filed it by way of a motion, and the court responded by denying the motion to stay on October 31st.

[00:08:21] Speaker 06:
And we informed the court of that soon thereafter.

[00:08:23] Speaker 03:
Why don't you address the dilution part of the injunction?

[00:08:27] Speaker 06:
Well, Your Honor, I mean, first, with regards to dilution, there are no actual findings of dilutions from the trial court.

[00:08:33] Speaker 06:
So, I mean, to the extent they're claiming dilution, that just simply, there are no findings supporting it in terms of harm.

[00:08:40] Speaker 06:
But more to the point, at the end of the day, what this does is it stays contracts that are not at issue and being directly protested at the Court of Federal Claims.

[00:08:48] Speaker 06:
Continental hasn't challenged small business awards.

[00:08:53] Speaker 06:
Well, it had challenged the award term extensions in a separate suit, which the Court of Federal Claims recently ruled on.

[00:09:02] Speaker 06:
But at the end of the day, what the court has done is stayed not

[00:09:08] Speaker 06:
matters in connection with the protested procurement or the protested award, again, which the government agreed to voluntarily stay, thus setting aside any claim of irreparable harm.

[00:09:20] Speaker 06:
Instead, what the court did was it stayed a much broader set of contracts, preventing the agency from fulfilling its programmatic responsibilities, preventing the agency from complying with Congress's directive to help borrowers with student loans in fault.

[00:09:38] Speaker 06:
in simply extrapolating from what was before the trial court.

[00:09:43] Speaker 06:
We're approaching having a million borrowers whose loans are in default who cannot obtain reconciliation services from the Department of Education, who are in a position where, quite simply, the Department of Education can't provide them the help that it would like to and that it would need to as a result of the court's injunctions.

[00:10:01] Speaker 06:
We're not aware of any case in which the Court of Federal Claims has issued so broad an injunction.

[00:10:08] Speaker 03:
and while Continental Services does... Well, you can imagine situations in which the Court of Federal Acclaims might appropriately issue such an injunction, right?

[00:10:18] Speaker 03:
If in this case there were evidence that the government said, well, there were internal emails, let's say, we can avoid the effect of this

[00:10:29] Speaker 03:
challenge to the 2016 award by simply shifting the business to the earlier contracts and therefore we can move the challenge to the 2016 awards.

[00:10:45] Speaker 03:
If there were something like that, maybe the court of law claims could issue an injunction to preserve the status quo, right?

[00:10:55] Speaker 06:
I wouldn't say necessarily in that situation.

[00:10:57] Speaker 06:
The agency does have great discretion in deciding how to basically issue its work.

[00:11:04] Speaker 06:
This is about a challenge to a procurement and a specific award.

[00:11:07] Speaker 06:
But I could imagine a context.

[00:11:09] Speaker 06:
Say perhaps we had a requirements contract.

[00:11:12] Speaker 06:
This is what's known as indefinite delivery, indefinite quantity contract, in which case there's no particular set of accounts that are assigned to that particular contract so that someone can get an award.

[00:11:23] Speaker 06:
But a requirements contract is a little bit different.

[00:11:25] Speaker 06:
in a requirements contract, you're supposed to give all of the work to one particular contractor.

[00:11:30] Speaker 06:
And in that type of scenario, I might be able to envision a situation in which a broader injunction might be appropriate.

[00:11:38] Speaker 06:
But it would need to be directly tied into the procurement itself.

[00:11:42] Speaker 05:
Can I ask you a question?

[00:11:46] Speaker 05:
This is at page 101670.

[00:11:48] Speaker 05:
It's, I think, your Dr. Bradfield's declaration from

[00:11:55] Speaker 05:
I guess it's May 19th where you kind of tell the court that there's corrective action that's being undertaken.

[00:12:02] Speaker 05:
You say in the event that any of the current awardees like Continental, I guess, are not evaluated

[00:12:21] Speaker 05:
Okay, not like Continental, but the awardees are not evaluated as having a proposal among the most advantageous to the government.

[00:12:27] Speaker 05:
The Education Department will terminate those awards for the convenience of the government.

[00:12:32] Speaker 05:
Does that mean that the, in some sense, the December 2016 awards are still active?

[00:12:40] Speaker 06:
No, they're staying.

[00:12:42] Speaker 05:
They haven't been terminated yet?

[00:12:44] Speaker 06:
They don't terminate them.

[00:12:45] Speaker 06:
Usually what happens is the government doesn't terminate an award.

[00:12:48] Speaker 06:
until, if it's taking corrective action, until such time as it's completed the corrective action, what it will do is stay the award saying you can't proceed on the contract, you can't do any work on that particular contract.

[00:12:59] Speaker 05:
And here, so if the Department of Education decides this corrective action business is just too much for us or something, and it just stops doing it, then the December 2016

[00:13:15] Speaker 05:
awards that are the subject of the current protest spring back to life.

[00:13:23] Speaker 05:
But in any event, this case can't be said to be moot simply because the department has initiated and even taken several steps down the path of corrective action.

[00:13:36] Speaker 06:
Well, the agency has committed itself to corrective action.

[00:13:39] Speaker 06:
It's put a stop work order in place.

[00:13:41] Speaker 06:
The contracts do, yes, they do continue to exist in this case.

[00:13:45] Speaker 06:
But again, you can't, because we're taking corrective action, we can't proceed with those contracts.

[00:13:50] Speaker 03:
So the court of law is obligated to believe the government?

[00:13:54] Speaker 06:
Yes, and that's what Chapman-Lowell firm stands for.

[00:13:56] Speaker 06:
There's a presumption of good faith.

[00:13:58] Speaker 06:
Unless, unless, again, unless there is something else that otherwise would incline the court to believe so.

[00:14:05] Speaker 06:
So if there was evidence of bad faith, that would be a different situation.

[00:14:08] Speaker 06:
We know that from the Garuffi case.

[00:14:10] Speaker 03:
It's not a question of bad faith with respect to the first part of the injunction.

[00:14:15] Speaker 03:
It's a question of whether it's moot.

[00:14:17] Speaker 03:
And just because the government says it's going to do something until it actually does it, why is the case moot?

[00:14:25] Speaker 06:
Well, the government didn't file its motion until the Smiths, until the government had initiated its corrective action.

[00:14:30] Speaker 06:
So we've actually started to do our corrective action.

[00:14:34] Speaker 06:
And there's no reason, as the courts may have declared Chapman, to believe that we otherwise will not do it.

[00:14:39] Speaker 06:
If someone had objected to the substance, then we would be having a dispute, an ongoing dispute about the scope of our corrective action, about what we are going to do.

[00:14:47] Speaker 06:
And in that case, yes, the case would not yet be moved.

[00:14:50] Speaker 06:
But again, here, in response to our motion to dismiss, Continental and Pioneer did not object the substance of the corrective action.

[00:14:57] Speaker 05:
Can I ask you one question before you?

[00:14:59] Speaker 05:
This is a change of topic.

[00:15:01] Speaker 05:
So let me see if I can get my hypothetical right.

[00:15:05] Speaker 05:
You have a government awarding a contract.

[00:15:09] Speaker 05:
Big protest goes to the court of federal claims.

[00:15:11] Speaker 05:
Government isn't taking any corrective action.

[00:15:14] Speaker 05:
It doesn't think it's done anything wrong.

[00:15:16] Speaker 05:
There's no stay of anything.

[00:15:18] Speaker 05:
The new contract starts to be performed.

[00:15:21] Speaker 05:
After a year, the court of federal claims, let's say it's affirmed by us, says protest is a sound protest.

[00:15:32] Speaker 05:
Contract award has to be set aside.

[00:15:34] Speaker 05:
Does the protester in that case or elsewhere have

[00:15:39] Speaker 05:
available means for securing relief from the period during which the erroneous contract was in place?

[00:15:49] Speaker 06:
No, because the only damages that, well, in a normal case, no would be the case because the damages that are available then are limited to preparation costs under the bid protest statute.

[00:16:00] Speaker 06:
So while they could get the costs of having prepared their bid, they could not get the costs sort of effectively lost profits.

[00:16:06] Speaker 06:
Now, there may be different variations on that where someone has an existing contract and then could file a CDA claim, and otherwise would have a remedy under the CDA.

[00:16:15] Speaker 06:
But that's a sort of different nuance on it.

[00:16:18] Speaker 06:
OK.

[00:16:19] Speaker 06:
Thank you.

[00:16:20] Speaker 06:
I see my time is up.

[00:16:23] Speaker 03:
We'll save two minutes of your rebuttal time and hear from Mr. Snickenberg.

[00:16:28] Speaker 03:
Thank you, Your Honor.

[00:16:45] Speaker 00:
Your Honors, may it please the court?

[00:16:47] Speaker 03:
I'd like to briefly address... You and Mr. Schaeffer are not seeking a stay of the first part of the injunction, right?

[00:16:53] Speaker 00:
Your Honors, we agree with the government that the first part should be stayed, but it's really irrelevant to us.

[00:16:57] Speaker 00:
Our focus is the second part.

[00:16:58] Speaker 00:
That is the only part that impacts us.

[00:17:02] Speaker 00:
And Your Honors, I would like to, for that reason, I would like to address the second part of the injunction, and specifically the ATE contracts, the award term extension contracts.

[00:17:10] Speaker 00:
At the beginning of Mr. Maeger's discussion, there was some talk about the different lawsuits that could be filed.

[00:17:14] Speaker 00:
Well, obviously, it's a basic principle that an injunction is an extraordinary remedy that must be tied to the specific claims at issue.

[00:17:22] Speaker 00:
Here, there are no actual claims in the lawsuits in this case.

[00:17:26] Speaker 00:
And in fact, there are no claims anywhere at this time challenging the ATE contracts.

[00:17:31] Speaker 00:
As such, there is no valid basis to enjoin those contracts.

[00:17:35] Speaker 00:
Now, while Mr. Maeger addressed this, I think it bears repetition.

[00:17:39] Speaker 00:
Consul filed the seven count complaint.

[00:17:41] Speaker 00:
The court dismissed count seven, the quote unquote dilution count.

[00:17:44] Speaker 00:
Counts one through six, they only challenge the large business procurement and the large business awards from December 2016.

[00:17:52] Speaker 00:
They do not challenge the ATE contracts.

[00:17:54] Speaker 03:
Well, I don't see that that is an answer to the question of whether an injunction is appropriate to prevent dilution.

[00:18:03] Speaker 03:
I mean, district courts and court of federal claims has some authority to preserve the subject matter of the

[00:18:12] Speaker 03:
case if it feels that action is being taken to undermine the possibility of future relief, no?

[00:18:19] Speaker 00:
Your Honor, if there was actually a showing that there would be such dilution, and if the Court of Federal Claims made findings that there would be such dilution, then maybe.

[00:18:29] Speaker 00:
However, here we have neither of those.

[00:18:31] Speaker 00:
Here the dilution theory, in fact, it was never espoused by Conserve before this litigation.

[00:18:35] Speaker 00:
It wasn't even espoused in their initial complaint.

[00:18:38] Speaker 00:
When they filed their complaint, Conserve had an ATE contract.

[00:18:41] Speaker 00:
If you carefully read Count 7 of their complaint, it actually requests that the court order education to give Conserve work under its ATE contract.

[00:18:50] Speaker 00:
It was only subsequently that once its ATE contract expired, that it came up with this new idea that there would be dilution of the large business contracts, and now we need to freeze everything.

[00:19:01] Speaker 00:
Conserve, when it had an ATE contract, never once argued that its own contract would dilute potential future work for the large business contracts, nor did Conserve

[00:19:09] Speaker 00:
for years before this litigation ever challenged the small business awards, arguing that those would supposedly somehow dilute the work that would subsequently be recorded under the large business contracts.

[00:19:21] Speaker 00:
As Mr. Mager said, this is not a situation where it's a requirements contract.

[00:19:24] Speaker 00:
It's not.

[00:19:25] Speaker 00:
These are IDIQ contracts.

[00:19:27] Speaker 00:
The Department of Education has multiple separate and distinct contract vehicles that it can distribute similar work to.

[00:19:33] Speaker 03:
Okay.

[00:19:34] Speaker 03:
I think we're out of time, Ashley.

[00:19:35] Speaker 03:
We're over time.

[00:19:36] Speaker 03:
Okay.

[00:19:36] Speaker 03:
Thank you, Mr. Steckenberg.

[00:19:39] Speaker 03:
Mr. Schaefer.

[00:19:43] Speaker 04:
Your Honor, may it please the court to answer Judge Dyke's question.

[00:19:46] Speaker 04:
Pioneer does oppose a stay of the first part of the preliminary injunction.

[00:19:50] Speaker 04:
We're only here to talk about part two of the injunction, which is overbroad because it stays contracts that were not part of the bid protest.

[00:19:57] Speaker 04:
And what's important is the judge below in trial court, it was a four-factor test, and she did not consider the irreparable harm to our client Pioneer.

[00:20:06] Speaker 04:
Pioneer's ATE contract, it's a bridge contract, so it's limited in scope and time.

[00:20:11] Speaker 04:
And every day that goes by is a day that Pioneer can never recover.

[00:20:14] Speaker 04:
So Pioneer and Altran are the only parties here that suffer irreparable harm by part two of the PI.

[00:20:21] Speaker 04:
And that's a factor that was never considered by the trial court.

[00:20:24] Speaker 04:
Now we agree with Altran and DOJ that the entire part two of the PI is overbroad, it's unsupported, there was no evidence of dilution.

[00:20:32] Speaker 04:
There is no dilution because these accounts keep coming in.

[00:20:35] Speaker 04:
So for the new awardees, they're going to get their five years of service.

[00:20:39] Speaker 04:
So if Conserve wins a new contract, it will get five years of accounts.

[00:20:43] Speaker 04:
But every day that goes by is a day that Pioneer loses accounts that it will never, ever recover.

[00:20:48] Speaker 04:
And I think it's a critical element of the injunctive relief test that was not considered by the court below.

[00:20:55] Speaker 04:
OK.

[00:20:55] Speaker 04:
Thank you, Mr. Shea.

[00:20:56] Speaker 04:
Thank you, Your Honor.

[00:20:59] Speaker 03:
Mr. Conney?

[00:21:07] Speaker 02:
Your honors, may it please the court, Todd Canney with Pillsbury Winthrop for Conserve.

[00:21:14] Speaker 02:
As a government contracts attorney... Where's the record?

[00:21:17] Speaker 03:
I mean, this record is pretty thin in terms of dilution or diversion, right?

[00:21:23] Speaker 03:
What did you put in that would support the notion that the government was diverting work from the prospective awardees that would result from the corrective action?

[00:21:37] Speaker 03:
to the small businesses and ATE contract holders.

[00:21:41] Speaker 03:
What evidence is there that it was going to divert work?

[00:21:45] Speaker 02:
So what we presented to the court, Your Honor, is that prior to the improper conduct here that is alleged in December, the large contract holders were receiving two-thirds of all transfers.

[00:21:59] Speaker 02:
Small businesses were receiving one-third.

[00:22:01] Speaker 02:
And that was presented on a spreadsheet attached to our complaint.

[00:22:06] Speaker 02:
What we also explain to the court is that immediately upon the illegal wards being enjoined, the government started sending 100% of all transfers to the other contract, effectively backdooring all the work.

[00:22:20] Speaker 02:
We call it dilution or siphoning.

[00:22:23] Speaker 02:
What we asked the court to do was to enjoin that conduct and to preserve this procurement for the ultimate awardees.

[00:22:29] Speaker 02:
The status quo being preserved effectively is two parallel procurements going forward

[00:22:34] Speaker 02:
which allowing ed to award transfers as it sees fit.

[00:22:37] Speaker 03:
No, that's not the status quo.

[00:22:38] Speaker 03:
The status quo is to allow the government to continue to make awards under these other contracts.

[00:22:45] Speaker 02:
Well, Your Honor, obviously we respectfully disagree with that view.

[00:22:49] Speaker 02:
If Ed were allowed to continue transferring accounts during the period of this protest, as you can see, one year has passed.

[00:22:58] Speaker 03:
Over one million... What's the evidence that the government was doing something different?

[00:23:03] Speaker 02:
we respected let's say the small business contracts than it was doing before but your honors if if we would look at the uh... complaint and we would look at uh... the exhibit attached to the complaint uh... attachment one there's a uh... spreadsheet can you give a page please yes your honor multi-volume joint appendix looks like it is uh... appendix one thousand one zero zero zero seven

[00:23:34] Speaker 02:
What you will see here is a chart full of data.

[00:23:43] Speaker 02:
If we look at the historical transfer history, you'll see that the large contractors, five of them, one of which was Conserve, which is the predecessor contract to the contract that's being protested, were receiving approximately two-thirds of all transfers.

[00:24:03] Speaker 02:
by month.

[00:24:06] Speaker 02:
What you'll see is immediately after the conduct, those contractors received zero and all of the work was shifted over to the small businesses.

[00:24:17] Speaker 02:
What we allege and what we believe to be the case is all of the work that would be going to those five large contractors is ultimately work destined for this procurement.

[00:24:28] Speaker 03:
What's the evidence that was shifted over?

[00:24:30] Speaker 03:
I'm looking at this

[00:24:32] Speaker 03:
bottom of this page where it says total small and it gives numbers, I guess these are numbers of accounts, right?

[00:24:40] Speaker 03:
Correct.

[00:24:41] Speaker 03:
So how does this show that they shifted work over to the small business contractors?

[00:24:48] Speaker 03:
These people have had work all along.

[00:24:52] Speaker 02:
Your honors, if you would look at the account activity for January, February, and March,

[00:24:59] Speaker 05:
Of 2017.

[00:25:00] Speaker 05:
Of 2017.

[00:25:00] Speaker 05:
Two right-hand columns.

[00:25:01] Speaker 02:
Exactly.

[00:25:01] Speaker 05:
Three right-hand columns.

[00:25:03] Speaker 02:
Three right-hand columns.

[00:25:04] Speaker 02:
You will see, look up at the line that says total to the largest.

[00:25:10] Speaker 02:
Start there.

[00:25:11] Speaker 02:
And you'll see that the largest were receiving approximately 200,000 account transfers, roughly, give or take some months, 400,000 some months, 170,000.

[00:25:22] Speaker 02:
But you'll see the activity up and through the illegal awards.

[00:25:25] Speaker 02:
You'll see it then dips down to zero.

[00:25:28] Speaker 02:
Now what?

[00:25:30] Speaker 03:
Let's take the small businesses first, because that's what you were talking about.

[00:25:33] Speaker 03:
Total small.

[00:25:35] Speaker 03:
There doesn't seem to be a pattern of increasing the awards to the accounts given to the small businesses, right?

[00:25:45] Speaker 02:
Your Honor, what we would submit to this court is that the Department of Education was not withholding transfers.

[00:25:51] Speaker 02:
As you've heard counsel for the government say, these are borrowers that they want to assist.

[00:25:57] Speaker 02:
They're not withholding transfers, they're sending all their transfers that are available at that point in time.

[00:26:02] Speaker 02:
So you're correct that the numbers fluctuate and the point is that the large businesses, this contract that we're preserving.

[00:26:08] Speaker 03:
No, my point was not that the numbers fluctuate, that there's a somewhat consistent in the sense that they're giving the 100,000, 150,000 or so accounts to the small businesses.

[00:26:22] Speaker 03:
change over time here that would suggest some sort of manipulation?

[00:26:26] Speaker 02:
Your Honor, the consistency is in the proportion of distributions.

[00:26:29] Speaker 02:
If you evaluate the historical data which we have, the large businesses up until this illegal award were receiving approximately 66% of all transfers.

[00:26:41] Speaker 03:
But focus on the small businesses.

[00:26:44] Speaker 03:
What's different about the small businesses?

[00:26:46] Speaker 02:
They're receiving 100% of all transfers, Your Honor.

[00:26:50] Speaker 05:
Let me, let me see if I, if I understand what, so if you look at like the last five columns and start with like November 16 and December 16, and you look at total large, am I allowed to read these numbers?

[00:27:04] Speaker 02:
Yes, you are.

[00:27:05] Speaker 05:
So you have, well, look at November.

[00:27:08] Speaker 05:
So you have 200 and I can't see this as too small, 205,000 or something to the large and 140 to the small.

[00:27:17] Speaker 05:
And then the next month you have 56 to the large and 139 to the small.

[00:27:24] Speaker 05:
And then the next month, January, zero to the large and a hundred and... What is that?

[00:27:29] Speaker 02:
You're exactly right, Your Honor.

[00:27:30] Speaker 05:
And that's the shift that you're... That's the shift.

[00:27:32] Speaker 02:
And the reason in December we received some transfers is because the awards came out on December 9th or 11th and the Department of Ed makes their transfers that week.

[00:27:43] Speaker 02:
So we believe they downshifted.

[00:27:45] Speaker 02:
We actually alleged at one point that we believe we were being punished for pursuing our protest rights.

[00:27:51] Speaker 02:
But you do see that shift goes from a large number each month, which we believe represents about 66% of all transfers to zero.

[00:28:00] Speaker 02:
And the key point we made and Chief Judge Braden agreed is that this was diluting this procurement and we're here to preserve this procurement.

[00:28:08] Speaker 02:
No one is harmed here.

[00:28:09] Speaker 02:
because these transfers are all available.

[00:28:12] Speaker 03:
Wait a moment.

[00:28:13] Speaker 03:
Nobody got any accounts under the 2016 contracts, right?

[00:28:19] Speaker 03:
The awardees were enjoined under the CICA, Your Honor.

[00:28:22] Speaker 03:
Yeah, so there were never any accounts given under the 2016 contract.

[00:28:28] Speaker 02:
The five large businesses that we're talking about, Your Honor, are surrogates for this contract.

[00:28:32] Speaker 02:
That's effectively an award term extension bridge contract to your contract for this contract.

[00:28:38] Speaker 03:
We challenged those contracts, the term extension contracts, and that just got dismissed, right?

[00:28:49] Speaker 03:
Your Honor, would you repeat that question?

[00:28:51] Speaker 03:
Your challenge to the extension, the bridge contracts, got dismissed, right?

[00:28:59] Speaker 02:
Count 7 was dismissed of our complaint.

[00:29:01] Speaker 03:
No, no, no, just now, just a couple of days ago.

[00:29:04] Speaker 03:
We received a notification.

[00:29:06] Speaker 02:
Your Honor, you're referring to our protests of the award term extension contracts from Pioneer and Altrin.

[00:29:12] Speaker 02:
Yeah.

[00:29:12] Speaker 02:
Let me address that.

[00:29:13] Speaker 02:
So, Your Honor, those awards were made two years after they protested their contracts in the midst of our litigation.

[00:29:19] Speaker 03:
But the diversion here involves those two.

[00:29:22] Speaker 03:
If I understand correctly, and please correct me if I'm wrong, the alleged diversion concerns diversion to those two contracts and to the small business contracts, correct?

[00:29:32] Speaker 02:
No, there's been no diversion to the award term extension contracts.

[00:29:35] Speaker 02:
They were only awarded contracts three months, four months ago in the midst of our litigation.

[00:29:39] Speaker 02:
Who is the diversion to?

[00:29:41] Speaker 02:
Diversion was to the 11 small businesses.

[00:29:43] Speaker 02:
Now the Department of Education desired, this is a very important point and I want to make it very quickly, the award term extension contracts that were just awarded were awarded over two years after their original protests.

[00:29:55] Speaker 02:
They have no relief now because they didn't obtain an injunction like conserved.

[00:29:59] Speaker 03:
I don't understand.

[00:30:00] Speaker 03:
The small business contracts were entered into 2014.

[00:30:04] Speaker 03:
There's been no challenge to those contracts.

[00:30:09] Speaker 03:
Why are not the small businesses entitled to receive accounts pursuant to those contracts?

[00:30:15] Speaker 03:
What's the matter with that?

[00:30:19] Speaker 02:
I fully understand and appreciate the concern you're expressing.

[00:30:22] Speaker 02:
And so during our May 22nd hearing, we had actually suggested to the government, and we noted this in our complaint, that the status quo before the illegal conduct was a situation where there were parallel procurements with two-thirds going to the larges, one-third going to the smalls.

[00:30:39] Speaker 02:
And what we argued in favor of, in fact, was a cap to be placed on the total number of transfers going to the smalls.

[00:30:46] Speaker 02:
The smalls were in favor of it.

[00:30:48] Speaker 02:
The Department of Justice was against it.

[00:30:51] Speaker 02:
And in fact, the court asked the parties to go back and come up with a proper... Okay, but there's no cap in this injunction.

[00:30:57] Speaker 03:
It just says you can't do it.

[00:30:59] Speaker 02:
Because the Department of Justice was unwilling to provide data to the court, and it's in the May 22nd hearing on the record in the appendix.

[00:31:08] Speaker 02:
They refused to cooperate with the court's efforts to fashion appropriate relief here.

[00:31:12] Speaker 02:
So with its hands tied behind its back, the court did what we believe was reasonable.

[00:31:16] Speaker 02:
and we don't believe it's an abuse of discretion for the court to say I'm going to pause these contracts.

[00:31:21] Speaker 02:
As soon as these awards were made, and if they were made promptly, you would have a situation where the Department of Education could begin... What you're saying is because the government didn't agree to the cap, it was

[00:31:32] Speaker 03:
appropriate for the Court of Federal Claims not to impose a cap?

[00:31:37] Speaker 02:
The Court of Federal Claims does not have access to the data, first of all, to start micromanaging or administering that contract.

[00:31:44] Speaker 03:
This is the key.

[00:31:45] Speaker 03:
But it's your job to provide the data, and if you can't provide it from your own resources, you can ask for discovery to get it.

[00:31:53] Speaker 03:
But the problem is here we have small businesses who are entitled to awards.

[00:31:58] Speaker 03:
and all of a sudden they're not entitled.

[00:32:00] Speaker 03:
Wait, please do not interrupt.

[00:32:02] Speaker 03:
And all of a sudden, under the injunction, they're not entitled to receive accounts.

[00:32:08] Speaker 03:
And what you're complaining about is the potential, I guess, that the small businesses would get more business than they would have otherwise as a result of the corrective action or actions by the government, and that you wanted to make sure that they didn't transfer the businesses

[00:32:28] Speaker 03:
the accounts to the small businesses.

[00:32:30] Speaker 03:
That would seem perhaps to justify an injunction saying, well, the small businesses have to get the same amount they were getting before.

[00:32:38] Speaker 03:
They can't get anything additional.

[00:32:39] Speaker 03:
But that's not what the injunction says.

[00:32:41] Speaker 02:
Your Honor, may I address the court and respond to this particular issue?

[00:32:46] Speaker 02:
So the small businesses are not entitled to any account transfers.

[00:32:50] Speaker 03:
It's not a question of entitlement.

[00:32:51] Speaker 03:
It's a question of whether you have any basis for denying them the kind of

[00:32:58] Speaker 03:
level of account servicing that they had before.

[00:33:03] Speaker 02:
So that was point one.

[00:33:05] Speaker 02:
There's no legal entitlement.

[00:33:06] Speaker 02:
I just want to make that point.

[00:33:07] Speaker 02:
Second of all, the small businesses received over 300,000 account transfers during the January, February, March timeframe of 2017.

[00:33:16] Speaker 02:
They were continuing to service those accounts.

[00:33:20] Speaker 02:
There's also been millions of transfers before that date.

[00:33:22] Speaker 02:
They were continuing to service those accounts.

[00:33:25] Speaker 02:
The problem for the Court of Federal Claims, as you can imagine, the number of divergent interests arguing here, would have been for the court to get involved into the administration of that contract and to set a cap and to manage that.

[00:33:38] Speaker 02:
As you can tell, the Department of Education would not give any data to the Court of Federal Claims.

[00:33:43] Speaker 02:
And so the Court of Federal Claims effectively would have had to determine each... You could do an expert discovery on this issue?

[00:33:51] Speaker 02:
Your Honor, we attempted to engage in that type of an effort with the Department of Education.

[00:33:55] Speaker 02:
Did you ask for discovery on this issue?

[00:33:58] Speaker 02:
I believe we did, Your Honor.

[00:34:00] Speaker 02:
I believe we did.

[00:34:00] Speaker 02:
You believe we did?

[00:34:01] Speaker 02:
I think it was about March time frame, Your Honor.

[00:34:03] Speaker 02:
March or April time frame.

[00:34:04] Speaker 02:
Probably April time frame, Your Honor.

[00:34:06] Speaker 02:
And what we did, I have the emails.

[00:34:07] Speaker 02:
We exchanged course.

[00:34:09] Speaker 02:
Did you file a motion to compel discovery?

[00:34:11] Speaker 02:
No motion, Your Honor.

[00:34:12] Speaker 02:
No, we did request the record in the case.

[00:34:17] Speaker 02:
But the final point I want to make on this particular issue is that

[00:34:20] Speaker 02:
For the Court of Federal Claims to get involved in the business of caps and setting caps would require the Court of Federal Claims on a monthly basis to trust the Department of Education's pool number.

[00:34:31] Speaker 02:
So the Department of Education would have to give the court a pool.

[00:34:34] Speaker 02:
We have 200,000 transfers available and now we want you to cap those at 60 or 70,000 to reflect a third.

[00:34:43] Speaker 02:
The court could not get into the business of administration and even if this court believes a cap could have been employed,

[00:34:50] Speaker 02:
The fact that the court did not employ a cap does not render its decision an abuse of discretion.

[00:34:55] Speaker 02:
The court was doing its very best under the circumstances to fashion appropriate relief.

[00:35:01] Speaker 02:
It balanced the party's interests here, it considered the divergent interests, and it ultimately determined that the best approach to preserve this procurement was a pause.

[00:35:09] Speaker 02:
And it was envisioned to be a temporary pause.

[00:35:11] Speaker 02:
The government told the court since May 2 that it would be taking corrective action.

[00:35:17] Speaker 02:
Your Honors,

[00:35:19] Speaker 02:
I want to make three final points here, and that is the issues that are involved in... You're actually out of time, so we'll give you 30 seconds here.

[00:35:29] Speaker 02:
30 seconds.

[00:35:29] Speaker 02:
Thank you, Your Honor.

[00:35:30] Speaker 02:
The issues involved in this case are so significant for government contractors.

[00:35:35] Speaker 02:
The way that you come out on these issues could determine how agencies structure procurements in the future and moreover how protests are litigated.

[00:35:42] Speaker 02:
If the agencies are allowed to set up and structure parallel procurements, a protest will never have the type of effect it was intended to.

[00:35:50] Speaker 02:
Irreparable harm will never be able to be addressed, and the agencies can always off-ramp work to another contract.

[00:35:56] Speaker 02:
This takes away the court's ability to really stop illegal procurement actions, as you all indicated at the beginning of your questioning.

[00:36:04] Speaker 03:
Okay, thank you, Mr. Conner.

[00:36:06] Speaker 03:
Mr. Coulter, we have a minute.

[00:36:21] Speaker 01:
Thank you, Your Honor.

[00:36:21] Speaker 01:
May it please the court, Tom Coulter representing Progressive Financial Services.

[00:36:25] Speaker 01:
My client Progressive has a slightly different interest before the court.

[00:36:30] Speaker 01:
And as you heard the government say, a party can in fact challenge the sufficiency of corrective action.

[00:36:39] Speaker 01:
And if they so challenge corrective action, their protest is not moot.

[00:36:42] Speaker 01:
That is precisely the position that Progressive is in.

[00:36:45] Speaker 01:
That is precisely what Progressive challenged.

[00:36:48] Speaker 01:
Progressive has in repayment accounts

[00:36:51] Speaker 01:
under its former incumbent contract that had the process been completed timely and correctly, it would have been in position to retain those accounts.

[00:37:00] Speaker 01:
So that was the status quo at the time of the illegal, improper procurement action that the GAO overturned.

[00:37:07] Speaker 01:
At that point, all we asked was the right to retain those accounts until a new award decision could be made such that we would be in the position we would have been in had a proper procurement process taken place.

[00:37:20] Speaker 01:
Education would not allow that to happen.

[00:37:22] Speaker 01:
They insisted on trying to recall those retained accounts.

[00:37:27] Speaker 01:
And so we pushed forward with an injunction.

[00:37:30] Speaker 01:
I think the trial court properly saw that without an injunction, we would suffer immediate irreparable harm.

[00:37:36] Speaker 01:
All those accounts would be recalled.

[00:37:38] Speaker 01:
And that's the very basis of our protest, was to keep those accounts.

[00:37:41] Speaker 03:
Thank you, Mr. Copeland.

[00:37:42] Speaker 03:
Thank you.

[00:37:46] Speaker 03:
Mr. Major, you have two minutes.

[00:37:48] Speaker 06:
Your Honor, just a few brief points, first taking off of that.

[00:37:51] Speaker 06:
The corrective action decision post-states the recall decision, no matter what progressive accounts.

[00:37:56] Speaker 06:
And we're going to be subject to recall on April 21, 2017.

[00:38:02] Speaker 06:
Ultimately, the recall notices went out before the agency decided to take corrective action.

[00:38:08] Speaker 06:
So it can't be part of the corrective action.

[00:38:11] Speaker 06:
With regards to dilution, Continental still insists on treating this as a limited pie of work.

[00:38:17] Speaker 06:
Ultimately, it's more like a river, as the court itself ultimately did recognize.

[00:38:21] Speaker 06:
You have a contract for a period of time.

[00:38:23] Speaker 06:
You can receive accounts on that contract during that period of time while you have that.

[00:38:28] Speaker 06:
You're not given a certain percentage of work.

[00:38:30] Speaker 06:
You're not guaranteed a percentage of work.

[00:38:32] Speaker 06:
As for the numbers and explaining the history of those, in December was when the GAO protest was filed, so we weren't assigning new work to other contracts.

[00:38:40] Speaker 06:
The smalls had been in a ramp-up period.

[00:38:42] Speaker 06:
Those who had existing award-turning extensions, such as Continental,

[00:38:46] Speaker 06:
when a ramp down period because their contracts were expiring in April of 2017.

[00:38:50] Speaker 06:
So ultimately, because these small businesses in Nalamba had demonstrated that they could sufficiently handle the work, they were handling the majority of the work as of December of 2016.

[00:39:00] Speaker 05:
Actually, in that chart, the number in the pool remains steady indeed, slightly increases between December 16 and January and February.

[00:39:16] Speaker 05:
17th of the dollar amounts drop some of the number.

[00:39:24] Speaker 05:
And yet, the smalls get everything in those two months.

[00:39:27] Speaker 06:
Yes.

[00:39:28] Speaker 06:
Because at the time, the remaining ATEs were in ramp down period.

[00:39:32] Speaker 06:
And we had existing contracts of smalls who had been spending the last several years ramping up and demonstrating that they could handle the capacity.

[00:39:40] Speaker 06:
At the end of the day, the amount of accounts that you receive

[00:39:45] Speaker 06:
depend upon the number of defaulted accounts that come into existence in the future, which will depend upon things like the economy and a number of other factors.

[00:39:52] Speaker 03:
Well, the policy of the Education Department is to favor small businesses, Your Honor.

[00:39:57] Speaker 03:
Yes, it is.

[00:39:58] Speaker 03:
And is there any question about the legality of that?

[00:40:00] Speaker 06:
No, there is not, Your Honor.

[00:40:03] Speaker 03:
Okay, we're out of time.

[00:40:04] Speaker 03:
Thank you.

[00:40:04] Speaker 03:
Thank you, Your Honor.

[00:40:06] Speaker 03:
Thank all counsel.

[00:40:07] Speaker 03:
The case is submitted, and as I mentioned earlier, counsel should remain in the courtroom.