[00:00:00] Speaker 00:
United States.

[00:00:43] Speaker 00:
Good morning.

[00:00:45] Speaker 00:
Good morning.

[00:00:45] Speaker 00:
May it please the court?

[00:00:46] Speaker 00:
I'm Will Havenen on behalf of the government and Mr. Robert Bigler.

[00:00:50] Speaker 00:
The Court of Federal Claims committed a host of errors in sanctioning the government and Mr. Bigler based on a misunderstanding that developed during a bid protest.

[00:01:00] Speaker 01:
John, can I ask you just one preliminary question?

[00:01:02] Speaker 01:
As I understand, we don't have the solicitation or the resulting contract in front of us, but as I understand there were two phases to

[00:01:12] Speaker 01:
contract performance, one what we'll call the preparation period, getting the subcontractors in line, making sure the line was in place, and then the 60-month performance period.

[00:01:24] Speaker 01:
Is that correct?

[00:01:26] Speaker 00:
That's correct.

[00:01:27] Speaker 00:
There are two elements to performance under the contract.

[00:01:30] Speaker 00:
One is called a lead time, which is basically the amount... And both were contract requirements.

[00:01:35] Speaker 00:
Both were under the contract.

[00:01:37] Speaker 00:
That's right.

[00:01:37] Speaker 00:
And so the disagreement that the Court of Federal Claims

[00:01:42] Speaker 00:
predicated the sanction on was the theory that the government misinformed or concealed the fact that contract performance was underway, but that is simply, and respectfully, it's not correct.

[00:01:53] Speaker 02:
That is, from the very outset... Suppose I read the somewhat confusing, at least to me, series of communications, many of them oral, some of them written, as actually not reflecting

[00:02:08] Speaker 02:
a misunderstanding about the preparatory activity, but rather about when the 16 month service period would begin.

[00:02:20] Speaker 02:
And that the court thought that it had been told more or less explicitly, but in any event, the message was conveyed that the 16 month service period

[00:02:36] Speaker 02:
of a already set up and fully prepared circuit would not begin until December 1st.

[00:02:45] Speaker 02:
And as a result of that assumption, you don't need to worry about stopping anything here, whether by TRO or preliminary injunction.

[00:02:59] Speaker 00:
If I'm understanding the court's question, so I think that that was in essence the

[00:03:06] Speaker 00:
predicate of the court's misunderstanding.

[00:03:08] Speaker 02:
You have indicated and provided much supporting material to make it clear that everybody, and now I'm going to say the court, understood that preparatory activity covered by the contract was underway.

[00:03:23] Speaker 02:
That was not what there was uncertainty about or what was, I think the court thought was that it had been told

[00:03:34] Speaker 02:
The second phase, the much larger phase, the 60 month phase would not begin until December 1st.

[00:03:42] Speaker 02:
And then November 1st came and the service began and nobody told the court until the court made an inquiry.

[00:03:51] Speaker 00:
I think that, Judge Toronto, you're right that that was the source of the court's misunderstanding.

[00:03:56] Speaker 00:
But the start date, the transition from one phase of performance under the contract to another phase of performance,

[00:04:05] Speaker 00:
was not relevant to any question of law or fact at issue on the merits of the case, that is, the adequacy of level three's bid in this case.

[00:04:14] Speaker 00:
And counsel for the government believed that it had communicated to the court that it was not relevant to the question of the relief that the court could issue to the court.

[00:04:23] Speaker 02:
Until the service on the new circuit, the STM 64, began, was level three as the incumbent providing support

[00:04:33] Speaker 02:
service for which it was being paid or not?

[00:04:37] Speaker 02:
Either under the already set up fancier circuit or under the old STM 16?

[00:04:42] Speaker 00:
It certainly was not being paid under the new circuit, and I confess I don't know the answer to the question whether it was being paid under the old circuit.

[00:04:50] Speaker 00:
But I do know that Verizon had a set of costs, of fixed costs, that it was being paid for to prepare for the commencement of the 60-month lease.

[00:05:01] Speaker 00:
And what the government communicated to Judge Braden from the very outset of the case was that the risk that a bid procurement would be found in this case laid solely with the government.

[00:05:17] Speaker 00:
That is, if the court found a procurement violation, as the court ultimately did, that what that would mean was that the government had to pay Verizon for the work it already did under the contract, and then it would have to re-solicit bids

[00:05:30] Speaker 00:
And in the event that level three earns the bid or won the bid, it would then have to pay level three for the same lead time work that Verizon had already done.

[00:05:38] Speaker 02:
What about for the same full 60 months?

[00:05:41] Speaker 00:
That's right.

[00:05:42] Speaker 00:
And that was communicated to the court on August 1st.

[00:05:44] Speaker 02:
I thought the colloquy on that was just a little bit less than fully clear.

[00:05:50] Speaker 02:
That is level three lawyer picked up on the government lawyer's attempt to answer the question gave a somewhat fuller

[00:06:00] Speaker 02:
statement, but use the word, I think, anticipated.

[00:06:03] Speaker 02:
That is, we would anticipate that if we won this protest and eventually won the re-competition that we would get 60 months, but not, and I don't think the government ever squarely said, yes, you get the 60 months.

[00:06:18] Speaker 02:
So if service begins, really not a big deal.

[00:06:21] Speaker 00:
Well, so I think that this is an important point, Judge Toronto.

[00:06:24] Speaker 00:
I believe that the reason that council for level three said anticipated

[00:06:29] Speaker 00:
is because the lease was not actually for a definite term of 60 months.

[00:06:33] Speaker 00:
It was an estimated term of 60 months.

[00:06:35] Speaker 00:
And I think that we have a good sense that the estimated 60-month lease term would, in fact, be re-provided in the event that a procurement violation were found, because that is, in fact, what happened in this case.

[00:06:49] Speaker 00:
That is, the court found a procurement violation, desolated bids,

[00:06:55] Speaker 00:
It turned out that Verizon again, Verizon won the bid this time, it won the contract, it had the lowest bid, and it was issued the contract again for an estimated 60 months, even though this was a year later.

[00:07:08] Speaker 00:
And I do think that it's important to point out two things.

[00:07:10] Speaker 00:
First, that what was communicated to the court was that the performance of the contract by Verizon would not affect the relief that Level 3 could get.

[00:07:23] Speaker 00:
if it were ultimately successful in the case.

[00:07:25] Speaker 00:
And second, just to take a step back, I mean, this was a sanction that was imposed pursuant to the court's inherent powers based on the alleged violation of the duty of candor to the court.

[00:07:36] Speaker 00:
So even if the court believes that the parties could have been clear with respect to exactly what was going on, even if the court believes that it would have been advisable to inform Judge Braden that the circuit had been delivered early

[00:07:50] Speaker 00:
The facts below simply cannot sustain the finding that anything was done for bad faith.

[00:07:56] Speaker 00:
And I do want to point out one sort of, I think, particularly troublesome element of the court's sanctioned opinion, which was the finding that this was done with a specific motive.

[00:08:09] Speaker 00:
That is, that this was done with the motive of preventing level three from being compensated for any work that it would ultimately do.

[00:08:17] Speaker 02:
What do you, can you point me to where?

[00:08:20] Speaker 00:
Sure, this is on page 17 of our appendix, and I believe that we reproduce it in our brief as well.

[00:08:29] Speaker 00:
And the court says, and this is a quote, that the alleged misrepresentation... But there's a lot of words on the page, high, low, middle, where?

[00:08:37] Speaker 00:
I can pull that out.

[00:08:38] Speaker 02:
Oh, you have it typed out.

[00:08:39] Speaker 02:
I see.

[00:08:40] Speaker 02:
It is... Near the top.

[00:08:49] Speaker 00:
That first paragraph where the court says that the alleged misrepresentation was made for the sole purpose of persuading the court not to enter an injunction so that Verizon could continue and complete performance of the circuit, depriving level three of the opportunity to do that work and be paid for that work.

[00:09:07] Speaker 00:
And there is simply no support for that suggestion in the record.

[00:09:11] Speaker 02:
But is there, is there no support for that because, and I will assume here that there is.

[00:09:16] Speaker 02:
a dual notice problem for the purposes of this question, that there was a failure to give notice that inherent authority with its high bad faith standard and a failure to give notice that the individual attorney was subject to sanctions.

[00:09:33] Speaker 02:
With such notice, there might in fact have been a more complete record, more exploration.

[00:09:39] Speaker 02:
But in order for you to get what I think

[00:09:42] Speaker 02:
you seek, which is an outright reversal as opposed to a vacate and a remand with now proper notice given, you need to, I think, tell me if I'm wrong, but persuade us that the record as we have it simply could not support or a enhanced record with a greater focus could not support an essential element, namely bad faith, of a sanction under inherent authority.

[00:10:12] Speaker 02:
And I'm not sure we know enough about the matter with a one-sided presentation and a trimmed record to know that we can end the matter.

[00:10:25] Speaker 00:
Respectfully, Judge Toronto, I think that there is enough information in the record before this court to say definitively.

[00:10:31] Speaker 00:
that even if adequate notice had been provided, and I certainly agree with you that the notice here was inadequate for the two reasons you suggested, but even with all the... I was taking those as assumptions for purposes of... For purposes of the question, I understand.

[00:10:45] Speaker 00:
But I do agree with the premise of that assumption.

[00:10:50] Speaker 00:
But even if proper notice had been provided, the facts and the record below simply cannot sustain the high showing that would be required to find

[00:11:01] Speaker 00:
bad faith in this case.

[00:11:04] Speaker 02:
Suppose it were right, I think you said early on in your argument here that you didn't actually know whether level three was getting paid for service before the new contract took effect.

[00:11:19] Speaker 02:
Suppose it turned out that one of the ways that onset date might matter

[00:11:28] Speaker 02:
is that level three would keep getting paid under its incumbent arrangement until such time as the new contract, the service part of the new contract began.

[00:11:44] Speaker 02:
Why would that not have mattered in the Court of Federal Claims consideration of whether to issue either a TR or a preliminary injunction, which I think

[00:11:58] Speaker 02:
There was never actually any ruling on the preliminary injunctions.

[00:12:01] Speaker 00:
There was no ruling on the preliminary injunction.

[00:12:03] Speaker 00:
There was an oral.

[00:12:04] Speaker 02:
But that's what the court was considering right in September and was focused on if the service part began.

[00:12:12] Speaker 02:
Does that have some adverse consequence for the protester who ultimately prevailed?

[00:12:20] Speaker 02:
Ultimately in this proceeding prevailed not on getting the contract.

[00:12:23] Speaker 02:
Right.

[00:12:24] Speaker 00:
The answer is no, it wouldn't.

[00:12:26] Speaker 00:
And that's because

[00:12:28] Speaker 00:
As the parties explained to the court, the performance of the contract, the performance by Verizon of this prep work would not affect Level 3's ability to be paid for exactly what it would have been paid for had it got the contract in the first place.

[00:12:49] Speaker 00:
And so whether or not it was being paid

[00:12:51] Speaker 00:
sort of in the interim under a pre-existing contract.

[00:12:54] Speaker 00:
You think it's just legally irrelevant?

[00:12:55] Speaker 00:
It's not relevant to the question of the relief that Level 3 could get on Level 3's challenge to this procurement.

[00:13:03] Speaker 00:
And not only is that just correct as a matter of fact, but it was communicated to the court verbally on August 1st, and it was continually communicated to the court thereafter.

[00:13:18] Speaker 00:
And the predicate for this sanction

[00:13:21] Speaker 00:
was the fact that the government allegedly concealed from the court, the fact of ongoing contract performance when in fact they had the government and Mr. Beattie.

[00:13:30] Speaker 02:
That's actually the part that, I don't know, feels not quite the right description of the premise.

[00:13:39] Speaker 02:
I'm prepared, I guess, to assume that if it was obvious to you and to Level 3 and to Verizon, including in the words of your August submission, that some part of performance was underway, namely the preparatory part, that the judge was not confused about that either, but was very focused on whether the service part would begin.

[00:14:02] Speaker 02:
And that, there was every reason to be a

[00:14:08] Speaker 02:
taking from the government's attorney the proposition that service would not begin until December 1st.

[00:14:14] Speaker 02:
There wasn't a, but of course it might start earlier if the preparatory work goes faster than we thought.

[00:14:23] Speaker 02:
And then November 1st comes, and I think the transcript indicates that the government attorney said he knew on November 1st that the change had occurred.

[00:14:34] Speaker 02:
And it wasn't until he was asked about a week later that

[00:14:38] Speaker 02:
that that was communicated to the court.

[00:14:40] Speaker 00:
That's right.

[00:14:41] Speaker 00:
But again, the reason that that was not communicated to the court was because it simply was not relevant to the question that all parties understood to be at the core of the court's concern, which is whether or not level three could get relief in the event that a procurement violation were found.

[00:14:59] Speaker 00:
And not only was it not relevant, but the parties explained to the court that it was not relevant

[00:15:04] Speaker 00:
And the court declined to stay the proceedings and in fact informed counsel for level three that the government was unwilling to stay the contract while the bid protest was resolved.

[00:15:18] Speaker 00:
And so given that fact, certainly knowing, if we had known then, if the government had known then what the government knows now, that is that the court believed that performance of the contract in some sense at least would not begin

[00:15:33] Speaker 00:
until actual delivery of the circuit to DISA at the start of this estimated 60-month lease, that that constituted performance, then of course it would have been advisable to inform the court of that fact.

[00:15:49] Speaker 00:
And we're not here to dispute that and we're not here to dispute or to suggest that we do not regret the misunderstanding that developed.

[00:15:59] Speaker 00:
But again, this was a sanction that was

[00:16:01] Speaker 00:
predicated on a finding, at least implicit, of bad faith.

[00:16:06] Speaker 00:
And it could only be sustained on a finding that the government here proceeded in bad faith.

[00:16:11] Speaker 00:
That is either knowingly or consciously with the intent to mislead the court with respect to a certain fact.

[00:16:18] Speaker 00:
And no matter how you look at it, no matter what process you give to the parties, there's no way we believe that the facts of this case can give rise to any suggestion of bad faith.

[00:16:34] Speaker 00:
There are no further questions.

[00:16:35] Speaker 00:
We ask that the court reverse.

[00:16:36] Speaker 00:
Thank you very much.

[00:16:37] Speaker 00:
Thank you.

[00:16:38] Speaker 00:
And the case is submitted.

[00:16:39] Speaker 00:
And that concludes our proceedings.