[00:00:00] Speaker 04:
Devin Desch, 2516, Del Federal System versus United States.

[00:00:28] Speaker 04:
Mr. Cashman, please proceed.

[00:00:36] Speaker 06:
May it please the Court, Your Honor, the Army concluded that the initial war decisions in its procurement did not comply with the regulation calling for discussions with offerors.

[00:00:47] Speaker 06:
So the Army acted to comply with the regulation by conducting discussions.

[00:00:52] Speaker 06:
Corrective action was therefore rationally related to the procurement defect.

[00:00:57] Speaker 06:
The trial court applied an incorrect standard of review to the agency's corrective action that allowed the court to substitute its judgment for that of the agency.

[00:01:06] Speaker 06:
Indeed, the trial court told the agency what to do in this case.

[00:01:09] Speaker 04:
OK, I have to break it up, because it just sounds too canned.

[00:01:11] Speaker 04:
You're just reading from the script, and that'll put me to sleep, and you don't want to do that as the appellant.

[00:01:16] Speaker 04:
So basically, your argument is narrowly targeted test doesn't jive with arbitrary and capricious standard of review.

[00:01:21] Speaker 06:
That is correct, Your Honor.

[00:01:22] Speaker 06:
We believe that it's inconsistent with the great deference that the APA's.

[00:01:26] Speaker 04:
And we've never decided this, even though there are a number of court federal claims cases that seem, I think there's a couple that seem to embrace this narrowly

[00:01:35] Speaker 04:
targeted, but they also be written by the same judge.

[00:01:37] Speaker 04:
And then there are other judges that may be criticized that test or don't necessarily embrace it.

[00:01:42] Speaker 04:
Is that a fair characterization of the precedent?

[00:01:44] Speaker 06:
We believe that is fair, Your Honor.

[00:01:45] Speaker 06:
The trial court is certainly not in unison on what the correct standard is.

[00:01:52] Speaker 06:
The trial court in our case has embraced the narrowly targeted standard.

[00:01:59] Speaker 06:
It's been criticized outright by Judge Kaplan in the professional services case.

[00:02:03] Speaker 06:
And other court of claims judges have recognized the tension and found ways around it.

[00:02:11] Speaker 04:
And this is a question of law for us, isn't it?

[00:02:14] Speaker 04:
What the appropriate test would be under the arbitrary and capricious standard?

[00:02:18] Speaker 06:
Yes, Your Honor.

[00:02:19] Speaker 06:
The proper standard of review would be a question of law.

[00:02:22] Speaker 02:
Have we provided express guidance outlining the outer limits of what constitutes a rational basis?

[00:02:33] Speaker 06:
Your Honor, the cases from this Court that addressed corrective action typically came up in the context of reviewing a GAO decision, and examples are the Raytheon decision and Honeywell, in which the Court just asked, was the GAO recommendation or the GAO's findings, was it irrational or rational?

[00:02:53] Speaker 06:
And we believe that that's, while the Court of Federal Claims has

[00:02:58] Speaker 06:
has distilled the standard down to a reasonable under the circumstances, but we believe that's on par or consistent with what this court has said, that it has to be rational.

[00:03:10] Speaker 06:
And the problem that we have with the length, and we're not asking the court to nitpick language that the trial court used, we believe this is very important, because in order for there to be usable standards of review, there has to be fidelity to the language,

[00:03:27] Speaker 06:
It's used to use a sports analogy.

[00:03:30] Speaker 06:
The standards of review, as in soccer, it sets the width of the goalpost.

[00:03:34] Speaker 02:
The appellees argue in the alternative, that even under the legal standard you espouse, the Army's corrective action is still rationally related to the procurement defects.

[00:03:52] Speaker 02:
Do you agree we can reach this question if we disagree with the lower courts?

[00:03:58] Speaker 02:
created standard?

[00:04:00] Speaker 06:
Yes, this court may reach the ultimate decisions on rationality, because in a bid protest case, the court reapplies the administrative records, the review of the administrative records standard in 52.1 to the record.

[00:04:15] Speaker 02:
Am I correct that there are still some factual issues still in dispute, assuming that we agree with you about the standard?

[00:04:26] Speaker 02:
For example,

[00:04:27] Speaker 02:
the parties dispute how best to define the procurement defects, major and material mistakes versus clerical errors?

[00:04:39] Speaker 06:
We don't believe that there is a dispute.

[00:04:42] Speaker 06:
Let me back up.

[00:04:43] Speaker 06:
We disagree.

[00:04:44] Speaker 06:
So in the Army's corrective action memo, the Army attorney was evaluating the protests, evaluating the

[00:04:51] Speaker 06:
the record and made statements about, to the effect that these are all easy fixes, that the mistakes can be fixed very easily.

[00:05:02] Speaker 06:
Now, the trial court, and I believe what the appellees are arguing, is that, well, this was an acknowledgement that the legal clarifications as legally defined, that the Army was acknowledging that, that that was sufficient.

[00:05:13] Speaker 06:
And we disagree with the trial court's characterization of what the Army was saying.

[00:05:18] Speaker 06:
This was a lowest price, technically acceptable procurement in which the offerors just had to, they had to submit their suite of computer products and either they checked the box as complying or not.

[00:05:31] Speaker 06:
So what the Army Council was saying that it's easy to go back to the offerors, identify what was wrong with their proposals and let them correct it because they just had to resubmit this Excel spreadsheet.

[00:05:44] Speaker 06:
But the legal point in which we disagree with the trial court is

[00:05:48] Speaker 06:
To do that, they have to change, in certain instances, they have to change the types of computer equipment that they offer.

[00:05:55] Speaker 06:
And this goes to a, they're making a revision of their proposal.

[00:05:59] Speaker 06:
And in that instance, that falls out of the realm of clarifications, which are limited exchanges, and it goes to the heart of the proposal crafting process, which, and discussions on that, and that's where discussions are appropriate, rather than questions.

[00:06:15] Speaker 04:
And didn't the Army, oh, I'm sorry.

[00:06:16] Speaker 04:
Didn't the Army in this case also limit the corrective action to the proposals that you were only allowed to remedy the sections where the defects were present as a result of the confusion?

[00:06:28] Speaker 04:
They didn't allow them to make whole new proposals, correct?

[00:06:33] Speaker 06:
Yes, sure.

[00:06:34] Speaker 06:
That's the intent, Your Honor.

[00:06:36] Speaker 06:
So there is a dispute.

[00:06:38] Speaker 06:
In the record, the Army's corrective action memo at page 7021 of the record, and then we provided an example of the evaluation notice at 7097, the Army, the intent was that offerors would only revise their proposal to the extent it corrected a deficiency.

[00:06:56] Speaker 06:
However, we acknowledge that, and the appellees have pointed this out, that there is language that seemed to suggest, that seemed to crack the door for wholesale

[00:07:05] Speaker 06:
wholesale proposal revisions, whether or not they're connected to a deficiency.

[00:07:10] Speaker 06:
And so what we point out in our reply brief, and there's a passage of the oral argument that I pointed out to the trial court, that that's a very easy fix for the Army to make clear in the letter.

[00:07:23] Speaker 04:
Only where the deficiencies were.

[00:07:25] Speaker 06:
Yes, Your Honor.

[00:07:26] Speaker 04:
Not wholesale revision.

[00:07:27] Speaker 06:
Yes, Your Honor.

[00:07:28] Speaker 06:
That was an easy fix.

[00:07:34] Speaker 02:
an argument which has some appeal about the revealing of their prices.

[00:07:45] Speaker 02:
Why did the Army disclose all the pricing, and is it commonplace to disclose in a lowest price technically acceptable procurement?

[00:07:54] Speaker 06:
So, Your Honor, yes, it is common because it's actually required by law.

[00:07:59] Speaker 06:
So in any procurement, the regulation 15.506D2 requires that after the agency's made its award decision, the regulation requires the agency to release the awardees' prices.

[00:08:13] Speaker 06:
And the Army did that here.

[00:08:15] Speaker 06:
They did it pursuant to a regulation.

[00:08:17] Speaker 06:
And then the defects were discovered after the prices were released.

[00:08:21] Speaker 06:
So what the Army did in an attempt

[00:08:23] Speaker 06:
for fairness is, when they decided to take corrective action, they released anonymously all prices.

[00:08:30] Speaker 04:
We say anonymously, were the individual company names removed from the various proposals?

[00:08:37] Speaker 06:
Your Honor, so the initial awardees' prices, their prices were identified to the awardee.

[00:08:43] Speaker 04:
That happens all the time.

[00:08:45] Speaker 04:
In every contract, when it's awarded, everybody knows who got it and exactly what the amounts were.

[00:08:50] Speaker 04:
That's correct, Your Honor.

[00:08:50] Speaker 04:
That shows public record.

[00:08:51] Speaker 04:
I'm saying, following up on Judge Wallach's question, it seems that the Army then went ahead and decided, in fairness, since people now have a target to shoot at, namely, they now know what the awardee listed for everything, so they know how to come in under it, it seemed only fair, I guess, to list everyone else's as well?

[00:09:11] Speaker 06:
Yes, Your Honor.

[00:09:12] Speaker 04:
Why?

[00:09:12] Speaker 04:
Why is that only fair?

[00:09:14] Speaker 04:
Who is it fair to?

[00:09:15] Speaker 04:
What does it matter?

[00:09:16] Speaker 06:
Well, in this case, Your Honor, the initial awardees, they were not

[00:09:20] Speaker 06:
the lowest priced offerors.

[00:09:22] Speaker 06:
So if the offerors who were not initially technically acceptable, they get a chance to revise their proposals, the initial awardees may likely be pushed out of the competition.

[00:09:35] Speaker 04:
I understand.

[00:09:36] Speaker 04:
But you used the word anonymous a minute ago.

[00:09:37] Speaker 04:
And so I was trying to figure out what you meant by anonymous.

[00:09:40] Speaker 04:
When they did release all of the numbers that each person gave in the proposal, did they strip the name of the proposer from the place?

[00:09:47] Speaker 01:
That's at 73, 79, and 73, 8, correct?

[00:09:51] Speaker 01:
That's right, Your Honor.

[00:09:51] Speaker 01:
And it was the... Will you point the names that are indicated?

[00:09:54] Speaker 06:
That's correct, Your Honor.

[00:09:55] Speaker 06:
So it was the second release of prices was anonymous, Your Honor.

[00:09:59] Speaker 06:
They just released the prices of all the offers, but it was anonymous.

[00:10:03] Speaker 04:
Was it the ultimate?

[00:10:04] Speaker 04:
Is it just the ultimate offer, or did they have the breakdown of the proposals?

[00:10:08] Speaker 06:
It was the ultimate offer, the total proposed price, Your Honor.

[00:10:11] Speaker 06:
That's in, as Judge Schall pointed out, that's at 7379 and 7380.

[00:10:15] Speaker 04:
So how does that really hurt the people who

[00:10:21] Speaker 04:
I don't understand the prejudice that's being alleged as a result of that disclosure.

[00:10:37] Speaker 06:
We understand the argument to be that the initial awardees, now that their prices have been released, as Your Honor pointed out, in the revised process, that those that didn't win, that they know

[00:10:51] Speaker 06:
what the target is, as you said, Your Honor.

[00:10:54] Speaker 06:
And we understand that that would make the initial awardee unhappy.

[00:10:58] Speaker 06:
But the balance that has to be struck here is, and we believe this is, we point this out in our brief, that it is more important to have a procurement that's conducted in accordance with regulation than it is the harm that could be causing the initial awardees to re-compete.

[00:11:14] Speaker 06:
Because the initial awardee, the initial award was not conducted.

[00:11:18] Speaker 06:
Properly done.

[00:11:19] Speaker 06:
It was not properly done, Your Honor.

[00:11:21] Speaker 01:
Let me ask you a question.

[00:11:24] Speaker 01:
The complaint here is that there are, quote, discussions being held that shouldn't be held at this point, correct?

[00:11:31] Speaker 01:
Yes.

[00:11:32] Speaker 01:
Court of Federal Claims said the time to hold discussions, as that term is used, was after the offers were received but before award.

[00:11:42] Speaker 01:
And now it's improper to hold discussions.

[00:11:45] Speaker 01:
Yes, Your Honor.

[00:11:46] Speaker 01:
That's where we are.

[00:11:47] Speaker 01:
What exactly can you point to in the record

[00:11:50] Speaker 01:
as an example of a, quote, discussion about which the Court of Federal Claims was concerned and about which the appellees are concerned.

[00:12:01] Speaker 01:
Can you point me in the record to something that says, okay, here's a discussion and this is the kind of thing they're bothered by?

[00:12:09] Speaker 06:
Yes, Your Honor.

[00:12:10] Speaker 06:
We provided in the record an example of discussion in the letter.

[00:12:12] Speaker 06:
So the agency went ahead and

[00:12:14] Speaker 06:
took the step of beginning discussions and sent letters before this protest happened.

[00:12:19] Speaker 01:
So these are the letters started, 7047?

[00:12:21] Speaker 01:
Yes, Your Honor.

[00:12:25] Speaker 06:
I'll point out the specific one that I had.

[00:12:29] Speaker 01:
Show me something, if you could please, that I can be confident is a close quote that is the focus of the concern here.

[00:12:40] Speaker 01:
And I'll ask the same thing for Ms.

[00:12:43] Speaker 01:
Stetson.

[00:12:45] Speaker 06:
So, Your Honor, in the record at page 6422 is an example of a discussion letter.

[00:12:52] Speaker 06:
And this was issued to one of the offerors who was... 6422?

[00:12:58] Speaker 06:
Yes, Your Honor.

[00:13:00] Speaker 06:
And if you'll see on that page... Let me get to it.

[00:13:08] Speaker 01:
My pages have been over here.

[00:13:13] Speaker 05:
Okay.

[00:13:13] Speaker 05:
Okay.

[00:13:14] Speaker 06:
Actually, honor, that was I'm going to have to correct that and send you to a different one.

[00:13:20] Speaker 06:
That was the letter informing the offer or that they were not.

[00:13:23] Speaker 01:
I thought that we had.

[00:13:24] Speaker 01:
I thought that the discussions as that term is used were reflected in these various letters that are in the seven hundreds, for example, at 7076.

[00:13:37] Speaker 06:
Yes, Your Honor, and I apologize.

[00:13:40] Speaker 06:
I meant to direct you there.

[00:13:42] Speaker 06:
That is the discussion letter.

[00:13:43] Speaker 06:
The agency is pointing out the deficiencies and allowing the offer that you need to correct.

[00:13:49] Speaker 01:
And this is the discussion about which the Court of Federal Claims was concerned?

[00:13:53] Speaker 01:
That's correct, Your Honor.

[00:13:55] Speaker 01:
That's correct.

[00:13:55] Speaker 04:
OK, so you are way over your time.

[00:13:58] Speaker 04:
Do you have anything further?

[00:14:00] Speaker 04:
No, I'm fine.

[00:14:01] Speaker 04:
What number did he start with?

[00:14:03] Speaker 04:
What did you give him on the clock originally?

[00:14:05] Speaker 04:
11 minutes, so you've used your time, your rebuttal time, and two minutes of his time.

[00:14:11] Speaker 04:
So Mr. Baker, I'll give you two minutes, and then I'll extend Ms.

[00:14:16] Speaker 04:
Stetson's time accordingly, and I'll give you one or two minutes rebuttal.

[00:14:20] Speaker 04:
But Mr. Baker, you better have something new and different to argue if you're going to take up our time, given that he's already used everybody's time up.

[00:14:28] Speaker 04:
So make it worthwhile, or don't stand there long.

[00:14:33] Speaker 00:
I'm going to just address one point.

[00:14:36] Speaker 00:
Your honors asked and Mr. Ashman noted that the government's intent or stated intent when it opened discussions initially was to limit discussions in a way that would allow offers to only address certain deficiencies.

[00:14:54] Speaker 00:
And this was identified in the government's reply brief.

[00:14:57] Speaker 00:
I want to note this is an area where I would dispute that even that is the proper remedy here.

[00:15:04] Speaker 00:
by limiting off-roars to only revising proposals to address prices, to address, to fix deficiencies in the technical proposal and to fix prices for only those deficiencies I think is inherently unfair.

[00:15:19] Speaker 00:
And why?

[00:15:20] Speaker 00:
Because if you do that, I think it prejudices those off-roars like HPI Federal that had only a handful of errors in the technical proposal.

[00:15:31] Speaker 00:
And it would prejudice the awardees that had no errors in their technical proposals.

[00:15:36] Speaker 04:
So that if prices... But why would you think that it's unfair?

[00:15:39] Speaker 04:
I mean, you gave the numbers in the sections with no errors because that's what you thought was your appropriate bid.

[00:15:46] Speaker 04:
Now, with the hindsight of knowing what numbers the awardees had in that column, it'd be a little useful to you if you were allowed to mix up all your numbers and change them.

[00:15:56] Speaker 00:
Well, so what's going to happen, Your Honor, in the

[00:16:00] Speaker 00:
the approach that the government has now outlined, is that those offerors that had widespread errors in their proposal are now going to have a greater ability to revise those prices.

[00:16:12] Speaker 04:
But you see that those that have widespread errors, as though it was their fault.

[00:16:16] Speaker 04:
Just like it's not your fault, it's not their fault.

[00:16:19] Speaker 04:
The reason they had those errors, it has been determined, and doesn't really seem to be totally indisputable, is because the government's solicitation was

[00:16:29] Speaker 04:
confusing and caused them to submit erroneous proposals.

[00:16:34] Speaker 04:
So it is apparently through no fault of their own, according to the decision.

[00:16:39] Speaker 00:
Well, I'm not sure that's actually quite accurate.

[00:16:43] Speaker 00:
And I think that the lower court even identified that there were some proposals that had errors that were not resulting from the ambiguities.

[00:16:54] Speaker 04:
My concern here... But is the government proposing to allow people to correct errors that have nothing to do with the ambiguities as well?

[00:17:02] Speaker 00:
Correct.

[00:17:04] Speaker 00:
Because once discussions are opened, those discussions have to be meaningful.

[00:17:08] Speaker 00:
And that is... And the way meaningful discussions is defined is to allow offerors to correct all significant weaknesses and deficiencies in their proposals.

[00:17:20] Speaker 00:
Am I concerned here with the approach of the government?

[00:17:22] Speaker 04:
Well, once those discussions are opened, can't your client, if it realizes that it put a number down in the course of those discussions, makes it think that the scope of the work is greater or less than what it had thought based on the proposal?

[00:17:33] Speaker 04:
But if the discussions inform your client, wouldn't they then have the right to argue that they ought to be able to change that number as well because the discussions informed their thinking?

[00:17:44] Speaker 00:
They could change.

[00:17:46] Speaker 00:
So just as in a practical example, they could change.

[00:17:50] Speaker 00:
those prices for those handful of errors, the small number of errors that they had in their proposal, right?

[00:17:57] Speaker 00:
Whereas other companies, now with the benefit of knowing all of the prices that offers have submitted, will have a greater ability to affect their price.

[00:18:08] Speaker 00:
Thereby, so for example, my client might be able to lower prices in a handful of areas, decrease their price by a small amount.

[00:18:19] Speaker 00:
Another

[00:18:20] Speaker 00:
client may have had 30 or more errors.

[00:18:22] Speaker 00:
In fact, there are some cases where they have over 20 errors, would have a greater ability to reduce that price.

[00:18:28] Speaker 04:
What are the chances those people end up with a contract?

[00:18:31] Speaker 04:
Let's be honest.

[00:18:32] Speaker 04:
The people who came in with 20 errors originally, and as the government explained, they didn't even take the lowest price in this case because other factors matter, right?

[00:18:41] Speaker 00:
In this particular case, Your Honor, where you're dealing with commercial off-the-shelf items, once offers are informed,

[00:18:49] Speaker 00:
as to what the deficiency was, it's an easy fix.

[00:18:52] Speaker 04:
If that's true, then why didn't the government go with the lowest price contract?

[00:18:55] Speaker 00:
I'm sorry, Your Honor?

[00:18:56] Speaker 04:
If that's true, why didn't the government go with the lowest price contract?

[00:19:00] Speaker 04:
Why didn't the award go to the lowest price contract?

[00:19:02] Speaker 00:
I don't know the answer to that question, Your Honor.

[00:19:04] Speaker 04:
So obviously there are other criteria.

[00:19:06] Speaker 00:
Well, there's not.

[00:19:07] Speaker 00:
In this particular context, it had to go to the lowest price technically acceptable offer order.

[00:19:17] Speaker 00:
And there was one offer that was not

[00:19:19] Speaker 00:
being technically acceptable, and so they didn't get the award.

[00:19:24] Speaker 04:
Okay.

[00:19:24] Speaker 04:
Thank you, Mr. Baker.

[00:19:27] Speaker 04:
You made it worthwhile, Mr. Baker.

[00:19:28] Speaker 04:
Ms.

[00:19:28] Speaker 04:
Stetson.

[00:19:30] Speaker 04:
You can have it.

[00:19:31] Speaker 03:
I'll give you 15 minutes.

[00:19:32] Speaker 03:
If you need more than that, you can have it.

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

[00:19:33] Speaker 03:
Yes, thank you.

[00:19:35] Speaker 03:
Let me start with the standard that we all agree on, because while I think it's possible to defend narrow targeting, it's not necessary, for the reason, Judge Wallach, that you mentioned.

[00:19:44] Speaker 03:
I think it is possible

[00:19:46] Speaker 03:
on this record, for the usual standard to apply, and for the Army's corrective action, which was not a limited corrective action, as the Army recommended, it was wholesale corrective action, was overly broad.

[00:19:59] Speaker 02:
So can we start with saying that you've abandoned narrow targeting?

[00:20:02] Speaker 03:
I think I would say, rather than abandon it, that it's not necessary to have a referendum on narrow targeting in this case, because if you look at the standard that we already have.

[00:20:12] Speaker 02:
Well, the court rolled that way, and we're going to have to deal with that.

[00:20:15] Speaker 02:
So you're not arguing in favor of the trial court's position.

[00:20:21] Speaker 03:
I don't need to argue in favor of the trial court's position, because there is a standard on which I and my opposing counsel agree.

[00:20:28] Speaker 04:
OK, well let's suppose we don't agree with you.

[00:20:29] Speaker 04:
Right.

[00:20:30] Speaker 04:
That you can win on this other standard.

[00:20:32] Speaker 04:
So then we have to reach the narrow targeting.

[00:20:35] Speaker 04:
So what's your position on that?

[00:20:36] Speaker 03:
My position is that the narrow targeting standard actually is designed, as even Judge Jacobs recognized,

[00:20:43] Speaker 03:
in the information systems case, it's designed to be calibrated to the defects and that's exactly what the standard on which we all agree says.

[00:20:52] Speaker 03:
The standard on which we all agree says that the corrective action must be reasonable under the circumstances and appropriate to remedy the impropriety.

[00:21:02] Speaker 03:
That's the professional services case.

[00:21:05] Speaker 02:
So if some point... Narrowly targeted only comes from

[00:21:11] Speaker 02:
some disputed Court of Federal Claims cases, right?

[00:21:16] Speaker 02:
It's not our language.

[00:21:18] Speaker 03:
It's true.

[00:21:19] Speaker 03:
But I would say this, Judge Wallach, it comes from some Court of Claims cases, not because there is some rogue faction of judges.

[00:21:28] Speaker 03:
In fact, Judge Wheeler has used the other standard that I just articulated as well.

[00:21:33] Speaker 03:
It has to do with what defect is being remedied.

[00:21:37] Speaker 03:
And that's why if we're going to look at the standard,

[00:21:40] Speaker 02:
and we can discuss... Do you dispute that our prescribed rational basis test is binding precedent?

[00:21:50] Speaker 03:
No, I don't dispute it.

[00:21:51] Speaker 02:
You're saying that narrow targeting is part of rational basis?

[00:21:58] Speaker 03:
I am saying that the narrow targeting language that some courts have used is language that even Judge Wheeler in this case used in the context of

[00:22:09] Speaker 03:
that broader standard that I articulated and on which Mr. Ashman agrees, which is, was the corrective action reasonable under the circumstances and appropriate to remedy the impropriety?

[00:22:19] Speaker 02:
So you look at the- How do you square narrow targeting with what we've articulated, which is the arbitrary and capricious standard?

[00:22:30] Speaker 03:
Your Honor, I would square it again by reference to the cases that use that standard.

[00:22:36] Speaker 03:
use it in the context of the particular defect that is being targeted.

[00:22:41] Speaker 03:
When you have, for example, in the Sierra Nevada case, a defect that permeated the entire evaluation process, the Sierra Nevada judge decided that narrow targeting, that concept, wasn't appropriate because of the breadth and penetration of the defect.

[00:22:57] Speaker 03:
But again, if you would like me to say I abandoned narrow targeting so that we can get to the point on which we all agree, I will do it.

[00:23:05] Speaker 03:
My point is that narrow targeting actually is just a formulation that fits within this standard.

[00:23:10] Speaker 02:
But if we look at the standard, on which we all agree... Would you agree that it's a formulation which may lead to error on the part of the trial court?

[00:23:20] Speaker 03:
I would agree that it's a formulation that may lead to error on the part of the trial court if the narrow targeting test is applied against the kind of Sierra Nevada defect that I identified.

[00:23:31] Speaker 03:
But here, I think what the trial court is confronted with

[00:23:34] Speaker 03:
were the circumstances, Judge Moore, that you identified, which is this is a post-award protest, which means that all of the prices have been disclosed.

[00:23:44] Speaker 03:
So set that circumstance to one side.

[00:23:46] Speaker 04:
So your view is clarifications would have been good enough, right?

[00:23:49] Speaker 04:
They should have just been allowed to clarify.

[00:23:51] Speaker 04:
Does that mean alter their proposals to the extent that they didn't understand that hard line and what it meant in the spreadsheet?

[00:23:59] Speaker 04:
that you're now going to let them change the numbers and resubmit their proposals?

[00:24:04] Speaker 04:
What is your view of what the Army should have done?

[00:24:08] Speaker 03:
So two things.

[00:24:09] Speaker 03:
The first is it wouldn't just be us saying that clarifications would be appropriate.

[00:24:13] Speaker 03:
It would be HPI.

[00:24:14] Speaker 03:
You will see in the appendix that HPI says over and over again, we made minor clerical errors.

[00:24:20] Speaker 03:
These are easily resolved in a matter of moments through clarifications.

[00:24:24] Speaker 03:
But I can offer, I think, more than that, which is, Judge Moore, you asked Mr. Ashman the question about whether the government... Do you agree that those are minor clerical errors across the board?

[00:24:36] Speaker 02:
I do agree.

[00:24:37] Speaker 03:
I do agree, because HPI has represented that they are.

[00:24:40] Speaker 02:
Well, what about everybody else?

[00:24:42] Speaker 02:
How do you describe those as clerical errors when they disqualified and led unacceptable scores for 19 offenders?

[00:24:50] Speaker 03:
And that leads me to the point that I was making in response to Judge Moore's observation earlier.

[00:24:54] Speaker 03:
Judge Moore, you made the point to Mr. Ashman.

[00:24:57] Speaker 03:
You asked him, I think, didn't the government limit discussions to the defects resulting from the confusion?

[00:25:05] Speaker 03:
And Mr. Ashman said that's the intent.

[00:25:07] Speaker 03:
Now, it's also true, as Mr. Ashman pointed out, that the discussion letter that came out in the 7,000s range takes a much broader approach.

[00:25:17] Speaker 03:
It doesn't say only resolve the deficiencies resulting from the errors in the ambiguous spreadsheet.

[00:25:23] Speaker 03:
It says resolve those deficiencies.

[00:25:24] Speaker 03:
If you change anything else, it's at your peril.

[00:25:27] Speaker 03:
And by the way, give us your best prices, untethered to any of the changes that they're actually making.

[00:25:33] Speaker 03:
If this court concludes that the remedy that the trout court offered is too broad and concludes that discussions in a limited sense are appropriate,

[00:25:46] Speaker 03:
because of Judge Wallach, the reason that you pointed out, if there are things that can't simply be resolved through clarification but need some kind of negotiation, which is what a discussion is, I think a lot of the clerical errors that Judge pointed to below are all in the nature of clarifications.

[00:26:04] Speaker 03:
But if you conclude that limited discussions are appropriate, those discussions should be limited in exactly the way that Judge Moore said.

[00:26:14] Speaker 03:
which is that they should be limited to the defects resulting from the confusion.

[00:26:18] Speaker 03:
And that gets back to the standard of reasonable under the circumstances.

[00:26:23] Speaker 03:
You heard Mr. Baker argue for something much broader.

[00:26:26] Speaker 03:
Mr. Baker argued for full-scale discussions, remedy all of the deficiencies, no matter how many, no matter how egregious.

[00:26:35] Speaker 03:
But then that gets back to the pricing problem.

[00:26:38] Speaker 01:
I'm sorry to interrupt you, but let me ask you, what exactly are the, quote, discussions, close quote, about which you complain?

[00:26:48] Speaker 03:
The discussions about which we complain would be... And that bother the Court of Federal Claims?

[00:26:53] Speaker 03:
Sure.

[00:26:54] Speaker 03:
So we're not yet complaining about those discussions because, of course, we're here on a different posture because only clarifications have been permitted so far.

[00:27:05] Speaker 03:
the discussions about which we would complain and have reasons to complain.

[00:27:08] Speaker 01:
Well, the discussions that were proposed in the corrective action was challenged in the Court of Federal Claims.

[00:27:13] Speaker 01:
In other words, in the corrective action, the Army said, we're going to conduct discussions.

[00:27:20] Speaker 01:
And that was challenged in the Court of Federal Claims successfully.

[00:27:24] Speaker 01:
What are the discussions that the Court of Federal Claims was concerned about and that you are concerned about?

[00:27:32] Speaker 03:
They would be the discussions that are not

[00:27:35] Speaker 03:
related to the defects resulting from the confusion, just to use Judge Moore's formulation again.

[00:27:42] Speaker 03:
There were bidders in this procurement that had applications that were riddled with errors, including, I think Judge Wheeler used the word, egregious errors.

[00:27:53] Speaker 03:
There were bidders, you heard Mr. Ashman I think say, that had, maybe it was Mr. Baker, had 20 or more defects.

[00:28:00] Speaker 03:
Our complaint would be, if you reopen discussions to all of those bidders,

[00:28:05] Speaker 03:
and you permit them to fix all of those defects, not just the defects resulting from the confusing spreadsheet, the equipment submission form.

[00:28:14] Speaker 03:
You are inviting a situation where the winning bidders have to bid again and again themselves.

[00:28:20] Speaker 03:
And it is no answer to Judge Moore.

[00:28:22] Speaker 04:
No, are you inviting a situation where the Army is going to get the best value for the government?

[00:28:28] Speaker 04:
Isn't that the situation you're actually creating?

[00:28:31] Speaker 04:
I think it's... And isn't that the goal of

[00:28:33] Speaker 03:
military procurement, at least I hope it is.

[00:28:35] Speaker 03:
That is certainly the goal.

[00:28:36] Speaker 03:
But I think that an equal goal is to make sure that the procurement process maintains its integrity.

[00:28:44] Speaker 03:
And where you have a disclosure of prices, which by the way... And this procurement has had problems.

[00:28:51] Speaker 04:
I mean, even you all admit there are problems and you're amenable to clarifications.

[00:28:56] Speaker 04:
You don't like the solution they've achieved, proposed.

[00:28:59] Speaker 04:
But the corrective action they've proposed, quite frankly,

[00:29:02] Speaker 04:
is one that as a taxpayer I'm favorably inclined towards and you would think you would want the army to operate in this way because the corrective action that they've proposed while I think somewhat narrowly tailored and not sort of a free-for-all on new proposals is nonetheless going to result in the best value for the government, isn't it?

[00:29:24] Speaker 03:
I don't think that's entirely accurate for a couple reasons.

[00:29:29] Speaker 03:
The first is

[00:29:30] Speaker 03:
This was not a value procurement.

[00:29:32] Speaker 03:
This was a lowest price, technically acceptable procurement.

[00:29:35] Speaker 03:
which means, as I think you were told by opposing counsel, lowest price range.

[00:29:38] Speaker 04:
See, what you're really bothered by is you might have to go lower now, right?

[00:29:40] Speaker 04:
Now that everybody knows what you bid, so there's a bullseye on your back, you have to go lower.

[00:29:44] Speaker 04:
And you don't want to go lower because that stinks, because you won the procurement of a certain profit margin in place, and your client was happy.

[00:29:52] Speaker 04:
But now, because it's being redone, you might actually have to go lower to be able to hold onto the contract.

[00:29:58] Speaker 03:
We won the procurement, submitting a technically acceptable

[00:30:02] Speaker 03:
offer that the government picked up to a defective procurement, which is why I'm here conceding that if the government wishes to reopen limited discussions aimed at eliminating the defects resulting from the confusion, that reintroduces the fair playing field.

[00:30:21] Speaker 03:
It would not be fair for discussions, as they are currently scripted now, to attach to every error.

[00:30:29] Speaker 02:
How did you read the government's concession?

[00:30:31] Speaker 02:
as to the narrowness of its scope.

[00:30:33] Speaker 03:
I read there to be a gap, I think, for the reason that Mr. Ashman pointed out.

[00:30:37] Speaker 02:
There's a difference between saying, as Judge Moore did... No, no, no, what Mr. Ashman said in oral argument.

[00:30:44] Speaker 03:
No, Mr., and what Mr. Ashman said was actually two different things, and that's where the gap is.

[00:30:50] Speaker 03:
Mr. Ashman's response to Judge Moore was, that's the intent, to Judge Moore's question about defects resulting from the confusion.

[00:30:59] Speaker 03:
We are fine with that.

[00:31:01] Speaker 03:
But what Mr. Ashman said in his brief and next is broader.

[00:31:05] Speaker 03:
What he said was, to the extent that the discussions correct a deficiency.

[00:31:10] Speaker 02:
You should sit down.

[00:31:12] Speaker 02:
You've got the concession you want.

[00:31:15] Speaker 03:
I want to clarify that it's the narrower concession.

[00:31:19] Speaker 03:
The concession in the brief was not that concession.

[00:31:22] Speaker 03:
And there is a huge gap for the reason that you heard from Mr. Baker.

[00:31:25] Speaker 03:
There is, if I could finish, there's a huge gap between saying,

[00:31:29] Speaker 03:
defects occasioned by the ambiguities and all of the other defects.

[00:31:34] Speaker 03:
Those should not be subjected to discussions.

[00:31:40] Speaker 02:
If this was a moot court, I would have stood up and said, we'd like to thank the government for its concession.

[00:31:47] Speaker 02:
We agree.

[00:31:50] Speaker 03:
The reason I'm not comfortable doing that is because Mr. Baker certainly doesn't agree with the concession.

[00:31:55] Speaker 03:
I know that.

[00:31:56] Speaker 03:
And the government's concession

[00:31:58] Speaker 03:
if indeed it was, was not something that he made in his brief.

[00:32:02] Speaker 03:
So if we are going to accept that concession, and we can all get on record as doing that, I want to put a pin in the fact that that concession is to Judge Moore's formulation.

[00:32:12] Speaker 04:
What if we wrote an opinion that said that the corrective action proposed to us, which we understand to be limited to permitting discussions related to

[00:32:26] Speaker 04:
the ambiguity in the spreadsheet, the defect that was identified as creating the flawed procurement.

[00:32:33] Speaker 04:
We understand the government's representation to be that the corrective action is opening up discussions on those points.

[00:32:41] Speaker 04:
That is not arbitrary and capricious.

[00:32:43] Speaker 04:
How do you feel about that?

[00:32:44] Speaker 02:
And then rebidding it.

[00:32:45] Speaker 03:
And then rebidding it, of course, rebidding it.

[00:32:48] Speaker 03:
Right.

[00:32:48] Speaker 03:
I think I'm fine with that.

[00:32:49] Speaker 03:
I think if the discussions are limited to... Let's see what he says about that.

[00:32:53] Speaker 03:
Right.

[00:32:53] Speaker 03:
If the discussions are limited to defects resulting from that ambiguous equipment submission form, which is what the defect was identified, if it's those discussions, we don't have a problem with that.

[00:33:04] Speaker 03:
It's the broad corrective action that they initially undertook and the slightly less... If you're bothered that people screwed up other stuff, it's completely unrelated, and now they get to fix it and that's not fair.

[00:33:12] Speaker 03:
That's not fair precisely because that's the point where the circumstances and the impropriety come in.

[00:33:18] Speaker 03:
Our prices have been disclosed.

[00:33:20] Speaker 03:
If you want to level this playing field, level it.

[00:33:23] Speaker 03:
Don't tilt it.

[00:33:25] Speaker 03:
If there are no further questions.

[00:33:28] Speaker 06:
Thank you, Your Honor.

[00:33:31] Speaker 06:
Thank you, Your Honor.

[00:33:33] Speaker 04:
I'll focus on this concession idea.

[00:33:35] Speaker 06:
Yes, Your Honor.

[00:33:36] Speaker 06:
I'll get right to it.

[00:33:37] Speaker 06:
There were two defects in this case.

[00:33:39] Speaker 06:
There was the ambiguities in the solicitation.

[00:33:43] Speaker 06:
There was the failure to conduct discussions was an independent defect in and of itself.

[00:33:48] Speaker 06:
There was a regulation that called for discussions under the facts of this case.

[00:33:51] Speaker 06:
The agency didn't follow it.

[00:33:53] Speaker 06:
To correct for that defect of not conducting discussions, the agency needs to conduct discussions.

[00:34:00] Speaker 06:
To conduct discussions, the rule is they have to be meaningful.

[00:34:04] Speaker 06:
To be meaningful, the agency has to give offerors an opportunity

[00:34:09] Speaker 06:
to correct all of the deficiencies and significant weaknesses in their proposal.

[00:34:13] Speaker 04:
So even the ones that are not related to the ambiguity?

[00:34:16] Speaker 04:
That is correct, Your Honor.

[00:34:17] Speaker 04:
So you didn't, in fact, concede what I thought you did, or Judge Wallach may have thought you did.

[00:34:22] Speaker 04:
And this is why she stood up there so long, because she suspected you were going to get back up and retract from that concession.

[00:34:29] Speaker 06:
Yes, Your Honor.

[00:34:30] Speaker 06:
What we were trying to clarify is, in the discussion letters, the Army walks through each offeror's deficiency and significant weakness.

[00:34:38] Speaker 06:
It tells the offeror, you should only revise your proposal to correct these deficiencies and weaknesses.

[00:34:44] Speaker 04:
However, there is a... Are they required to have pre-award discussions for every solicitation?

[00:34:49] Speaker 04:
Is it unique to this solicitation?

[00:34:51] Speaker 06:
It is generally in FAR part 15 procurements, there is not, it's at the agency's discretion.

[00:34:57] Speaker 06:
However, there is the DFAR's regulation applicable to this procurement because it has an estimated price of over $100 million.

[00:35:05] Speaker 06:
So in those circumstances, the DFAR said agency

[00:35:09] Speaker 06:
you should conduct discussions.

[00:35:11] Speaker 04:
Should doesn't mean must.

[00:35:12] Speaker 06:
It does not, Your Honor.

[00:35:13] Speaker 04:
So are you sure that there is a defect in failing to correct, to conduct career award discussions?

[00:35:19] Speaker 06:
Yes, Your Honor.

[00:35:20] Speaker 06:
What the analysis is, is the decision, while there is still some discretion on discussions, the decision has to be a rational basis not to discuss, not to conduct discussions.

[00:35:30] Speaker 06:
And in this case, in the trial court agreed,

[00:35:32] Speaker 06:
that the record did not support the agency's decision not to conduct discussions, that they should have happened.

[00:35:37] Speaker 04:
The Army's view is that it should have conducted discussions and that it failed to, when it failed to do that, it was an error.

[00:35:44] Speaker 06:
That is correct, Your Honor, that that in and of itself was a defect.

[00:35:47] Speaker 01:
These were discussions after the offers were received.

[00:35:52] Speaker 06:
The discussions would, if it was conducted... Pre-award.

[00:35:56] Speaker 04:
They're pre-award, but I think Judge Schultz's point is important, is that after received, but pre-award.

[00:36:02] Speaker 06:
But yes, it should have happened pre-award.

[00:36:04] Speaker 01:
See, this was a kind of an off-the-shelf procurement.

[00:36:09] Speaker 01:
And there are two types of discussions, I think.

[00:36:12] Speaker 01:
You can have, in certain types of solicitations, there are sort of ongoing discussions during the procurement.

[00:36:19] Speaker 01:
But here, you had off-the-shelf items.

[00:36:22] Speaker 01:
And that's what kind of took you out of, I think, the requirement to have discussions automatically.

[00:36:30] Speaker 06:
Well, the way the regulation doesn't make that distinction, Your Honor, the only distinction in the regulation is the price threshold.

[00:36:37] Speaker 06:
And the price threshold was met in this case.

[00:36:39] Speaker 04:
So the expectation... What does post-submitted pre-award discussion even look like?

[00:36:43] Speaker 04:
I don't understand.

[00:36:44] Speaker 04:
Does it afford an opportunity to then correct your proposal, even though it's already been submitted?

[00:36:52] Speaker 06:
Yes, Your Honor.

[00:36:53] Speaker 06:
There would be an initial evaluation.

[00:36:54] Speaker 06:
The evaluators would note the problems with the proposal.

[00:36:57] Speaker 06:
They would send a letter to the offeror and say, these are the problems, these are the deficiencies.

[00:37:01] Speaker 06:
You have an opportunity to correct them and submit your best final offer.

[00:37:05] Speaker 04:
And so is that done sort of bidder by bidder?

[00:37:08] Speaker 04:
I assume that the discussions are open.

[00:37:11] Speaker 04:
Are they open, meaning publicly available?

[00:37:13] Speaker 04:
Do all the bidders have access to the question and answer?

[00:37:16] Speaker 06:
No, Your Honor, because generally that would be competitive proposal type of information.

[00:37:20] Speaker 06:
So one offeror would not know the other offeror's weaknesses and deficiencies.

[00:37:25] Speaker 06:
But the discussions have to be, the point is the discussions have to be meaningful and equal.

[00:37:30] Speaker 06:
To be meaningful, the offeror has to have an opportunity to correct all of their deficiencies and weakness.

[00:37:35] Speaker 06:
And in this case, that means those deficiencies that even went beyond just the solicitation ambiguities.

[00:37:43] Speaker 01:
Mr. Ashton, what I was referring to was at 1379, it says, in accordance with FAR 52.212-1, entitled Instructions to Offer Roars, Commercial Items, the government intends to award without conducting discussions with offerors.

[00:38:00] Speaker 01:
And I read that as saying, okay, even though we're in this high money range, given the nature of the items to be procured, as opposed to we're not building a new jet airplane,

[00:38:14] Speaker 01:
We're not going to have discussions.

[00:38:16] Speaker 01:
Because in a jet airplane, there are discussions all during the procurement process.

[00:38:21] Speaker 01:
What the complaint here is that once there were problems disclosed, ambiguities, the hard line issue, there should have been discussions then.

[00:38:31] Speaker 01:
Right?

[00:38:33] Speaker 06:
Yes, yes, your honor.

[00:38:35] Speaker 06:
So the solicitation, the solicitation did state is our intention not to conduct discussions.

[00:38:40] Speaker 06:
However, this regulation exists in the agencies.

[00:38:44] Speaker 01:
No, but I'm saying the solicitation said we're not going to conduct discussions.

[00:38:47] Speaker 01:
And my feeling was that makes sense because you have off-the-shelf items, commercial items.

[00:38:54] Speaker 01:
But the problem is once you got into this situation where there were ambiguities and problems in the solicitation,

[00:39:02] Speaker 01:
Then the government said we should have, at that point, post-offer, pre-award, have conducted discussions.

[00:39:11] Speaker 02:
That's the point, right?

[00:39:13] Speaker 02:
You also should not have said we will not conduct discussions.

[00:39:16] Speaker 02:
Isn't that correct?

[00:39:17] Speaker 06:
Well, it said, I believe, the language... Reserved the right.

[00:39:20] Speaker 06:
Reserved the right.

[00:39:21] Speaker 06:
But I'm sorry, Your Honor, the intention was not to conduct discussions.

[00:39:26] Speaker 06:
There was still the discretion.

[00:39:28] Speaker 06:
And when you read the solicitation in accordance with the regulation,

[00:39:31] Speaker 06:
that discretion, there has to be a reasonable basis not to conduct discussions.

[00:39:36] Speaker 04:
Lester.

[00:39:37] Speaker 04:
Just out of curiosity, when the awardee's proposal is accepted and the award is made, do all of the details of the proposal become public or only the bottom line figure?

[00:39:52] Speaker 06:
Your Honor, not all of the details become public.

[00:39:54] Speaker 06:
The parameters of what is released, in addition to price, there's a FAR regulation on that.

[00:40:01] Speaker 06:
That's 15.506D2, which says exactly what is released.

[00:40:06] Speaker 06:
I'd be happy to read the regulation, but price is one of the components.

[00:40:10] Speaker 06:
It's the high-level information about the awardee, but not the specifics.

[00:40:14] Speaker 04:
Not the line-by-line, this is how we're going to get to our number?

[00:40:17] Speaker 06:
That's correct, Your Honor, not how the batter or how the cake is baked specifically.

[00:40:23] Speaker 04:
So why is it your view still that the FAR regulation that Judge Schall pointed you to, why is it your view that that requires the Army to conduct discussions on all issues as opposed to only conducting discussions relevant to what was deemed to be the ambiguity that caused the problems?

[00:40:45] Speaker 06:
So, Your Honor,

[00:40:46] Speaker 06:
The regulation says, the regulation at issue, the DFAR says that it wants to... What number is it?

[00:40:52] Speaker 06:
This is 48 CFR 215.306, Your Honor.

[00:41:00] Speaker 06:
And that regulation says it sets the price threshold of $100 million, and it says contracting officers should conduct discussions, follow the procedures of FAR 15.306 C and D, and those are the procedures that govern conducting discussions.

[00:41:15] Speaker 06:
15.306 D says, when you conduct discussions, they have to be meaningful.

[00:41:21] Speaker 06:
You have to point out the significant weaknesses and deficiencies.

[00:41:23] Speaker 06:
So the Army's discussion has to be in accordance with that FAR regulation.

[00:41:27] Speaker 06:
And that means it's more than just the solicitation ambiguities, Your Honor.

[00:41:35] Speaker 04:
All right.

[00:41:35] Speaker 04:
Thank you, Paul and counsel.

[00:41:36] Speaker 04:
The case is taken under submission.

[00:41:39] Speaker ?:
All right.