[00:00:00] Speaker 01:
Good morning.

[00:00:02] Speaker 04:
Good morning, Your Honor.

[00:00:07] Speaker 04:
May it please the Court.

[00:00:08] Speaker 04:
Congress in the MAC statute twice commanded CMS to follow the FAR and CICA.

[00:00:13] Speaker 02:
The FAR and CICA provide the exclusive procedure... Do you agree your challenge to the Jurisdiction 8 limitations is moot?

[00:00:20] Speaker 04:
I believe, Your Honor, that Jurisdiction 8 is moot.

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

[00:00:24] Speaker 04:
Jurisdiction 8 is still alive.

[00:00:25] Speaker 04:
That's just all housekeeping.

[00:00:27] Speaker 04:
Yes, Your Honor.

[00:00:29] Speaker 04:
that the foreign SICA provide the exclusive procedures that CMS must follow.

[00:00:33] Speaker 01:
So the first argument here is whether or not this was fair and open competition.

[00:00:39] Speaker 01:
And you're saying it wasn't.

[00:00:40] Speaker 04:
We're saying that the exclusive way that CMS must engage in to manage the marketplace for MAC services in the manner they're attempting to do is FAR 6.202 and the SICA at 41 USC 3303.

[00:00:55] Speaker 04:
that if they want, if the agency wants to manage the marketplace in the long- Okay, the obvious question is why?

[00:01:03] Speaker 01:
What is it that you can point to that would limit it?

[00:01:06] Speaker 01:
But frankly, we're getting away from my question.

[00:01:08] Speaker 01:
My first question was just on the question of fair and open competition, because the government maintains that's their main hook for this.

[00:01:15] Speaker 01:
Correct.

[00:01:15] Speaker 01:
So if there are

[00:01:21] Speaker 01:
There are circumstances where somebody competing is not going to make it because you need certain licenses at the end of the day in order to be awarded the competition.

[00:01:31] Speaker 01:
So that person, there's still full and fair competition, even though at the end of the day, a limited number of people are going to be excluded from getting the award.

[00:01:40] Speaker 01:
So presumably they may not even bother to apply.

[00:01:43] Speaker 01:
You wouldn't suggest that those criteria that might preclude someone from successfully trying to get a contract mean that there's not fair and full and fair competition, right?

[00:01:55] Speaker 04:
Correct, Your Honor.

[00:01:56] Speaker 01:
We have no form.

[00:01:56] Speaker 01:
So why is this different?

[00:01:57] Speaker 01:
Just because at the end of the day, there might be a certain criteria that's going to be applied that's going to preclude your client

[00:02:05] Speaker 01:
from getting the contract.

[00:02:06] Speaker 01:
Why does that bump into full and fair competition?

[00:02:09] Speaker 04:
Because in all of the cases that the government cites and that the Court of Federal Claims, the GAO and the Federal Circuit have dealt with in that regard involve solicitation requirements that are designed to meet a technical need that the government has or something that goes to capability or performance.

[00:02:26] Speaker 02:
Across statutes, regulations, cases, full and open competition are

[00:02:35] Speaker 02:
is presented as referring to a lack of discrimination in allowing submission of bids or proposals, right?

[00:02:46] Speaker 04:
No, Your Honor, that is the one statute read literally that the government provides.

[00:02:51] Speaker 04:
But if that were the case, FAR 6.202 would be read out of existence, because FAR 6.202 says that if you want to exclude an offeror from an award,

[00:03:02] Speaker 04:
In order to manage the broader marketplace, you must issue a DNF.

[00:03:05] Speaker 04:
You must issue a determinations and findings.

[00:03:07] Speaker 04:
Why should we ignore 41 USC 107?

[00:03:09] Speaker 04:
I don't think, Your Honor, that it would be ignoring 107.

[00:03:15] Speaker 04:
What you have to do is interpret 107 in light of 41 USC 3303 and FAR 6.202.

[00:03:22] Speaker 01:
So how do we know that the exclusion under 3302 is the exclusive means by which the government can try to protect it?

[00:03:33] Speaker 04:
So a few answers, Your Honor.

[00:03:37] Speaker 04:
Number one is that the MAC statute itself compels CMS to procure MAC services consistent with the FAR.

[00:03:44] Speaker 04:
The FAR, in turn, says if you want to manage the marketplace for services, then where you're concerned about the types of things the government is concerned about, that is to say the continuity of services or the competitive nature of the market,

[00:03:59] Speaker 04:
in a manner that would exclude a otherwise capable offer from winning, then the means of doing so is to issue determinations and findings.

[00:04:08] Speaker 04:
If that is not the case, then this Court will write FAR 6.202 out of existence, because you could always formulate a solicitation provision to accomplish the same end.

[00:04:18] Speaker 04:
That is something the government does not dispute here.

[00:04:21] Speaker 01:
What about the continuity exception?

[00:04:25] Speaker 01:
I mean, if that's consumed broadly enough, then how does that affect, I'm back to the clear and open competition question.

[00:04:31] Speaker 04:
That is exactly the type of concern that FAR 6.202 is meant to address.

[00:04:36] Speaker 04:
The whole point is excluding a particular offeror, a particular source to, quote, increase or maintain competition, or in 6.202A4, ensure, quote, the continuous availability of reliable supplies.

[00:04:54] Speaker 04:
or services.

[00:04:56] Speaker 04:
So that is exactly the case that FAR 6.202 is meant to address.

[00:05:02] Speaker 04:
Now what the government says is that because there's this other FAR provision that says as long as it's not excluded, as long as it's not made unlawful, we can do this other means.

[00:05:12] Speaker 04:
But of course that would have the effect of reading any mandatory procedure

[00:05:17] Speaker 04:
out of existence unless the same mandatory procedure also contained a simultaneous list of, and you may not accomplish this in any other way.

[00:05:26] Speaker 04:
That is not something that this Court has ever held applies to mandatory FAR procedures anywhere else.

[00:05:33] Speaker 00:
So, for example, is... I'm just making the same argument today.

[00:05:37] Speaker 00:
It's my understanding that prior to adopting this workload cap in a very affirmative, almost binding way, granted there's discretion

[00:05:46] Speaker 00:
to not comply with it if necessary.

[00:05:49] Speaker 00:
But before that, didn't they actually have this as one of the factors they would nonetheless consider in deciding whether to award contracts to a particular person?

[00:05:59] Speaker 04:
Yes, Your Honor.

[00:05:59] Speaker 04:
In fact, in a 2010 memo that's in the record at Appendix 11842, which was, again, in 2010, CMS explicitly noted that they had considered these workload caps as kind of a blanket rule.

[00:06:14] Speaker 04:
and decided to go with the case-by-case approach because they thought that the blanket rule would limit competition as it entered new, far, full and open contracting environments.

[00:06:26] Speaker 00:
But would you have the same argument today if instead of a hard line cap, if instead this was just one of many things being considered, but if nonetheless it was one of the many things being considered,

[00:06:41] Speaker 00:
which in your case resulted in your client not securing the contract.

[00:06:46] Speaker 04:
If the government included as technical specifications a requirement that offerors address how an award would impact the general continuity of services or the competitive environment.

[00:06:59] Speaker 00:
Why can't they just say the small number of contracts you may have had

[00:07:06] Speaker 00:
could impact our decision to give it to you, because under that, theoretically, maybe you're not capable, or we don't have enough confidence you're capable.

[00:07:13] Speaker 00:
Likewise, too many contracts being held by any one provider could impact our desire.

[00:07:19] Speaker 00:
I mean, it's, look, I'm an economist.

[00:07:22] Speaker 00:
It's useful to have lots of people producing goods and services.

[00:07:26] Speaker 00:
Monopolies, despite my love of patents, are inefficient in many ways.

[00:07:33] Speaker 00:
What's wrong with the government wanting to spread around the contracts to ensure that one contractor doesn't have a computer crash which brings down just an enormous number of government programs?

[00:07:48] Speaker 04:
Nothing at all, Your Honor.

[00:07:49] Speaker 04:
But in that kind of a case, the exclusive remedy for the government is in FAR 6.202.

[00:07:54] Speaker 04:
That is a mandatory procedure that if they want to exclude an offeror in order to maintain... Well, not exclude an offeror.

[00:08:00] Speaker 00:
But why can't they, could they have just taken this factor into account as they used to do, I believe, in deciding whether or not to award the contract to an individual person who did in fact submit a bid?

[00:08:15] Speaker 04:
Right.

[00:08:15] Speaker 04:
But what they used to do in the case-by-case approach was assess the degree to which an award to a particular contractor, given all of the material in the offerors and the proposal record, could create that kind of risk.

[00:08:28] Speaker 04:
And that kind of risk is something that they can assess.

[00:08:30] Speaker 04:
on a case-by-case basis.

[00:08:32] Speaker 04:
And if that were the case, if there were no bright line rule, if all they were saying is, will NGS pose a specific risk in this procurement,

[00:08:41] Speaker 04:
then we would have no objection.

[00:08:42] Speaker 04:
That is the terms on which we are happy to participate.

[00:08:45] Speaker 01:
There's a rigmarole of procedures they have to go to to make that assessment, right, which I have to assume is a practical matter, is the reason they tried to adopt the small blanket rule, right?

[00:08:54] Speaker 04:
That's exactly right, Your Honor.

[00:08:56] Speaker 04:
What they said in the record multiple times and in the government's brief is that they went to the blanket rule, the bright line rule, if you will, because they said that they did not have the ability to make the record for the case-by-case exclusion or for the DNF.

[00:09:11] Speaker 04:
which is astounding confession in our view, that because they didn't have the data or the underlying rationale to be able to make a case-by-case assessment, that the remedy for the government was to go more broad and limit competition even more.

[00:09:25] Speaker 04:
So if they couldn't survive a challenge under 6.202, that's what the government is effectively saying here, then this court should not permit them to take an end run around 6.202 by allowing them to include this and rewrite it as a solicitation provision.

[00:09:41] Speaker 02:
interacted extensively with industry in reaching this point, right?

[00:09:46] Speaker 02:
Correct.

[00:09:47] Speaker 02:
They tried different methods.

[00:09:51] Speaker 02:
They were seeking to obtain a competitive marketplace and still mitigate risk to the national AB workload.

[00:10:00] Speaker 02:
Yes, Your Honor.

[00:10:02] Speaker 02:
Why doesn't that by itself satisfy our differential, very differential, rational basis?

[00:10:09] Speaker 04:
Because the question isn't whether or not the caps are rational.

[00:10:13] Speaker 04:
The question is whether or not the agency was obligated to follow BAR 6.202, which is the implementing regulation for 41 USC 3303, and that

[00:10:23] Speaker 04:
that statute and that regulation have specific steps that the agency must take in order to effectively exclude an offeror, an otherwise best value offeror.

[00:10:33] Speaker 04:
I mean, the record is clear that they take the position that the solicitation provision that effectuates the workload caps can eliminate us from the procurement, even if we, you know, where we are the number one, we are the otherwise best value selection, even if it, yes.

[00:10:47] Speaker 00:
Almost all the discussion thus far has really been, I think,

[00:10:50] Speaker 00:
within the umbrella of whether or not this constitutes full and open competition.

[00:10:55] Speaker 00:
The government also argues that there are two provisions, statutory provisions in the MAC, which allow it to act contrary to full and open competition.

[00:11:05] Speaker 00:
Don't bother with the capability provision, because they're gonna get nowhere with me on that.

[00:11:09] Speaker 00:
But what about the other requirements provision, which I'll call the eligibility provision?

[00:11:13] Speaker 00:
The eligibility provision is expressed in 42 USC, what, 1395 KK-1A2,

[00:11:19] Speaker 00:
Thank you for filling that in.

[00:11:24] Speaker 00:
So there is this eligibility provision that permits CMS to impose other requirements for eligibility.

[00:11:32] Speaker 00:
Why isn't this a workload cap fairly within the umbrella of the other requirements the statute expressively allows them to adopt

[00:11:42] Speaker 04:
even though it may curtail full and open competition.

[00:12:00] Speaker 04:
If that is the case, Your Honor, that means that we are capable by definition.

[00:12:04] Speaker 04:
There is no other way to, you're not allowed to perform a government contract unless there's a finding of responsibility and a refining of capability.

[00:12:11] Speaker 04:
It cannot be the case that if there's no one else that's responsible, we are suddenly capable.

[00:12:17] Speaker 04:
But if there is anyone else that's responsible, because of the caps, we are not capable.

[00:12:21] Speaker 04:
That makes no sense.

[00:12:22] Speaker 04:
You can't have kind of the springing capability.

[00:12:24] Speaker 04:
that for some purposes were capable and some purposes were not capable.

[00:12:28] Speaker 02:
In addition, Your Honor... You'd agree that the government has a substantial interest in avoiding a situation in which one bitter

[00:12:40] Speaker 04:
captures the entire market yes your honor and that that the ability of the government to address that is squarely within forty one u.s.c.

[00:12:47] Speaker 00:
thirty three oh three and far six point two oh two but why isn't the government's argument a strong one that the eligibility criteria and in particular uh... this other requirements section that they'd be analogized if i remember it right this

[00:13:03] Speaker 00:
eligibility criteria to the conflict of interest eligibility criteria, which they also have the authority to waive.

[00:13:09] Speaker 00:
So you would think a conflict of interest would make you not eligible, and that's the general rule.

[00:13:15] Speaker 00:
But the provision expressly allows the government, in necessary circumstances, to waive that conflict of interest.

[00:13:21] Speaker 00:
And all this is expressed under the eligibility prong, right?

[00:13:24] Speaker 00:
I mean, this isn't

[00:13:25] Speaker 00:
this isn't the government just making up an analogy these are actually expressed factors that have been adopted and discussed and so why isn't this exactly like the conflict of interest which can be waived it's still an eligibility criteria and you might not be eligible to get the award because you have a conflict of interest or because you have too many other contracts currently but the government has the ability to waive either of those I mean that analogy feels

[00:13:51] Speaker 00:
really close to me.

[00:13:52] Speaker 04:
Your Honor, because in 41 USC 1395 KK 186 is where Congress said that the government must follow the FAR unless there is a specific requirement to the contrary.

[00:14:07] Speaker 04:
The OCI regulations at FAR Part 9 exist in the FAR, and there's no reason why the existence of the whole structure of FAR regulations, which allow the government to waive an OCI that's in the best interest of the government, for example, does not compare to a case where the government is going to say, well, you're capable, you're eligible if there's nobody else, but you're not eligible if there is someone else.

[00:14:34] Speaker 04:
When, if you want to exclude us,

[00:14:37] Speaker 04:
you have far six point two oh two I mean you have to interpret the statute that your honor was talking about the eligibility of entities provision consistent with far six point two oh two and what the government would have this court do is view

[00:14:51] Speaker 04:
the broad statement in 1A2D as an implied repeal somehow of FAR 6.202 and 41 USC 3303.

[00:15:01] Speaker 04:
There is no reason for this court to do that.

[00:15:04] Speaker 00:
And there is every reason to believe the government if they have the... Okay, so you've thrown a lot of little numbers and letters at me.

[00:15:09] Speaker 00:
Let me see if I get this right because you're sort of...

[00:15:12] Speaker 00:
discussing this at a level of assumption about my knowledge that is absolutely wrong.

[00:15:17] Speaker 00:
So let me just back it up.

[00:15:19] Speaker 00:
So are you saying the conflict of interest analogy breaks down because the FAR expressly articulates what happens in conflict of interest situations and the FAR doesn't expressly articulate what happens in workload cap type situations similarly and therefore the overarching, you gotta follow the FAR unless something expressly tells you something different

[00:15:42] Speaker 00:
governs here even though it doesn't cover in conflict of interest.

[00:15:46] Speaker 00:
I think I actually got your argument.

[00:15:48] Speaker 00:
Is that right?

[00:15:49] Speaker 04:
I think that's right, Your Honor.

[00:15:52] Speaker 04:
In other words, because the max statute says you must follow the FAR unless there is a specific requirement in the max statute to the contrary.

[00:16:01] Speaker 04:
So the question is simply

[00:16:03] Speaker 04:
Why can't?

[00:16:04] Speaker 00:
And are you saying there's an express statement with regard to conflict of interest, but there isn't one with regard to what?

[00:16:09] Speaker 04:
Correct.

[00:16:10] Speaker 04:
The FAR contains all of the OCI provisions, including the waiver provision.

[00:16:14] Speaker 04:
So there's no reason why that can't be consistent with the notion with our argument that you cannot have workload caps because the exclusive way of effectuating the management of the marketplace for Mac services and the way the government is trying to do is FAR 6.202.

[00:16:31] Speaker 01:
Is that exclusive?

[00:16:32] Speaker 01:
That's not exclusive to this.

[00:16:33] Speaker 01:
This is government-wide stuff.

[00:16:34] Speaker 01:
This tells every government agency this is the way you can manage the competitive concerns.

[00:16:39] Speaker 04:
Correct.

[00:16:40] Speaker 04:
For any procurement governed by the FAR, which would be nearly all procurements,

[00:16:45] Speaker 04:
than the exclusive way the government has in order to manage the marketplace for services in terms of restricting the amount of awards that someone who is otherwise eligible and capable can win, which we most certainly are, we have 19.8% as we stand here today.

[00:17:01] Speaker 04:
So the idea that somehow, because we're going to, we could cross 26%, we're somehow not eligible, that is the problem with the government invoking this eligibility and compliance with requirements.

[00:17:12] Speaker 04:
Yeah, yeah, but your argument is you could get 100%.

[00:17:15] Speaker 04:
and they couldn't stop you other than to go through this provision.

[00:17:18] Speaker 04:
Other than to go through this provision.

[00:17:19] Speaker 04:
And that's all they have to do.

[00:17:20] Speaker 04:
And presumably if they have the goods in terms of being able to explain it, then indeed that determination and finding would only be subject to a rational basis review.

[00:17:29] Speaker 04:
But the government has said we can't come up with that.

[00:17:32] Speaker 04:
And so what we've done is because we can't articulate a DNF that would survive a challenge, what we've done instead is create a bright line, a bright line test.

[00:17:42] Speaker 01:
Thank you, Your Honor.

[00:17:50] Speaker 03:
In its appeal, NGS effectively asked this court to ignore the plain language of the statutory definition of full and open competition and second guess the agency's business judgment in determining how to best fulfill its vital need for continuous uninterrupted Medicare claims administration services.

[00:18:05] Speaker 03:
This court should do neither.

[00:18:06] Speaker 03:
Instead, like the GAO and the Court of Federal Claims before it, this court should deny NGS's protest and affirm the trial court's judgment.

[00:18:15] Speaker 02:
Don't the jurisdiction age limitations on their face vitiate full and open competition?

[00:18:22] Speaker 03:
No, Your Honor, because the statutory definition of full and open competition is that it means all responsible sources are permitted to submit sealed bids or competitive proposals.

[00:18:32] Speaker 02:
Isn't the hindering of competition post-submission still a hindering of competition?

[00:18:38] Speaker 03:
Well, we have to go with the statutory definition here, and no, it's not a hindering of competition because...

[00:18:45] Speaker 00:
If the government adopted a rule like this workload cap, a policy that said, we're not giving contracts to women, but feel free to submit them, that's not hindering full and open competition.

[00:19:01] Speaker 00:
You can submit them.

[00:19:02] Speaker 00:
They're not giving you a contract.

[00:19:04] Speaker 03:
Well, if the government's explicitly stating that you have no way to win, and it's not based on the agency's needs, which that... I mean, we have the discretion of no men come forward to give it to you.

[00:19:13] Speaker 03:
But it still has to rationally relate to the agency's needs, and I don't know how that would be in that case.

[00:19:21] Speaker 03:
Here, instead, the agency has a vital need for continuous uninterrupted Medicare claims administration services.

[00:19:27] Speaker 01:
Why didn't they do the rule?

[00:19:29] Speaker 01:
Why didn't they rely on the FAR provision among 3303 or whatever the number is?

[00:19:35] Speaker 01:
There seems to be a statutory mechanism

[00:19:38] Speaker 01:
under which you're supposed to, nobody's quibbling or arguing that the government should not try to, you know, to one single source, that they could show if a breakdown would bring the whole system down unnecessarily, or the competitive thing, not let the little guys prosper because these big guys, nobody's suggesting those aren't appropriate criteria.

[00:19:59] Speaker 01:
How could we?

[00:20:00] Speaker 01:
They're already enshrined in the statute.

[00:20:02] Speaker 01:
So why didn't the government just use that?

[00:20:05] Speaker 03:
Well, if the agency had wanted to exclude a particular source from the procurement, which is the language in 41 USC 3303, then it would have done that and it would have had to follow the DNF procedure in the FARC.

[00:20:17] Speaker 03:
The agency is not excluding any particular source from this procurement.

[00:20:20] Speaker 03:
Everyone's allowed to submit bids and NGS has in fact submitted a proposal.

[00:20:26] Speaker 03:
They're competing on the same evaluation criteria as everyone else.

[00:20:30] Speaker 01:
So is this argument you're making based on the fact that there's an exclusion?

[00:20:34] Speaker 01:
So if there were no exclusion, like they can get it as a fallback of the reasonable.

[00:20:38] Speaker 01:
I don't know what you call it.

[00:20:39] Speaker 01:
There's an exclusion, right?

[00:20:41] Speaker 01:
There's a name for it.

[00:20:42] Speaker 01:
it's exclusive exclusive sources is excluded of a particular sources that no no but you're saying there's an exception to this far it's not a bright line bar twenty percent in your house the reason i think you're saying

[00:20:55] Speaker 01:
that there was full and fair competition is because there's this one circumstance under which they might be able to obtain the contract.

[00:21:03] Speaker 03:
That is one reason why there is.

[00:21:05] Speaker 03:
It goes beyond that though.

[00:21:07] Speaker 03:
The agency had a particular reason for not just saying that if you have 26% at the beginning of the competition, you can't submit a proposal.

[00:21:16] Speaker 03:
These things can change over time how much a particular entity has.

[00:21:20] Speaker 03:
procurements, you know, in the ordinary course, they can last for, you know, many months up to a year.

[00:21:25] Speaker 03:
I thought a lot of them in this area were 10 years.

[00:21:29] Speaker 03:
Well, I'm talking about the actual competition.

[00:21:32] Speaker 03:
In fact, some competitions have lasted.

[00:21:36] Speaker 01:
So you're arguing it's full of your competition, even though if they lose on the 26% yard line, they're out of it.

[00:21:43] Speaker 01:
this, you know, one day they may have 22 percent or six months later while this is pending they may have fewer.

[00:21:50] Speaker 01:
So that's your argument for why this satisfies the full and fair competition.

[00:21:55] Speaker 03:
Our position is that they're committed to, it satisfies full and open competition because they're permitted to submit proposals and they're permitted to compete pursuant to the same evaluation criteria as everyone else and they may in fact win the award.

[00:22:06] Speaker 03:
Whether it's because their position changes

[00:22:09] Speaker 03:
during the course of the procurement or because there is only one awardable proposal, whether it's because of responsibility, fair and reasonable price, whatever it is, there's full and open competition because they're allowed to submit proposals and they're allowed to compete.

[00:22:24] Speaker 03:
That's the reason there's full and open competition in this procurement.

[00:22:29] Speaker 01:
So you're saying this 3303 and this FAR provision have no applicability because it deals only with excluding a particular source?

[00:22:39] Speaker 01:
Correct, Your Honor.

[00:22:40] Speaker 01:
Yes.

[00:22:40] Speaker 01:
How do we know?

[00:22:41] Speaker 01:
So excluding your view is you have to, this only means excluding them from even submitting a bid?

[00:22:48] Speaker 01:
I'm just trying to understand your argument.

[00:22:50] Speaker 03:
We can look at two sources of statutory language here.

[00:22:53] Speaker 03:
One is 41 USC 107.

[00:22:54] Speaker 03:
So yes, that talks about the submission of proposals, but also 41 USC 3303A1.

[00:23:02] Speaker 03:
Executive agency may provide for the procurement of property or services covered by Section 3301 using competitive procedures, but excluding a particular source.

[00:23:12] Speaker 03:
So they're excluding the source from the procurement under 3303.

[00:23:16] Speaker 03:
So the agency has not excluded any sources from this procurement.

[00:23:19] Speaker 03:
It has no reason to invoke 41 U.S.C.

[00:23:21] Speaker 03:
3303 at this time.

[00:23:23] Speaker 01:
So tell me again, you're saying this is different than what was contemplated here because we're letting them submit a bid and under unique circumstances they maybe even win at the end of the line because there's no other responsible bidder.

[00:23:42] Speaker 01:
So that means this provision doesn't apply?

[00:23:46] Speaker 03:
This provision is a source, it's a tool that the agency can use to permit other than full and open competition.

[00:23:54] Speaker 02:
But closing the only submitting bidders exceed the cap.

[00:24:02] Speaker 03:
Well, in that case, the exception would certainly be both.

[00:24:06] Speaker 01:
In the award case, there's no other responsible bidder other than one.

[00:24:10] Speaker 03:
Right.

[00:24:10] Speaker 03:
And they would have competed pursuant to the same evaluation criteria as everyone else, including the award limitation provision, and they would prevail under the terms.

[00:24:18] Speaker 02:
So you would use other criteria to determine which one?

[00:24:22] Speaker 03:
I think that's correct, Your Honor, the trade-off process that's used.

[00:24:29] Speaker 03:
So in this case, because there's there's full and open competition and the court doesn't need to reach the question.

[00:24:35] Speaker 01:
I'm just trying to understand the point you were making about A1, 3303A1, excluding a particular source.

[00:24:41] Speaker 01:
So you're saying this only applies when the government decides it's not even going to let somebody submit a bid.

[00:24:48] Speaker 01:
Like if you if you're at 26%, you don't bother bidding.

[00:24:52] Speaker 01:
Is that what you're saying this is limited to?

[00:24:55] Speaker 03:
Right.

[00:24:55] Speaker 03:
If the agency had said, NGS, because you're at 19.8% now, you're excluded from the jurisdiction age procurement, they would need to justify that under 3303A1.

[00:25:06] Speaker 01:
Don't you think this suggests a little bit of a gamesmanship?

[00:25:11] Speaker 01:
The way to avoid going through these criteria is to let them

[00:25:18] Speaker 01:
file a bid, prepare a bid, go through the competition, even though they know at the end of the day, as long as there's one of the responsible bidder, that 26% guillotine is going to come down.

[00:25:31] Speaker 03:
Well, what the agency is allowed to do then is create evaluation criteria that reflect its needs.

[00:25:37] Speaker 03:
So that's really the question in this procurement.

[00:25:40] Speaker 01:
I thought you had said in other places this wasn't the evaluation criteria.

[00:25:44] Speaker 01:
They go through the evaluation and then at the end of the evaluation,

[00:25:47] Speaker 01:
this percentage is imposed?

[00:25:51] Speaker 03:
No, our position's been clear.

[00:25:53] Speaker 03:
Is part of the evaluation group?

[00:25:56] Speaker 03:
Yes, it's in Section M, which is entitled the Evaluation Factors for Award.

[00:26:00] Speaker 03:
That's a standard section of solicitations.

[00:26:03] Speaker 03:
And it's something the agency has to apply in deciding who it's going to award the bid to.

[00:26:08] Speaker 03:
It is certainly one of the evaluation factors for award.

[00:26:12] Speaker 03:
And that's a position that we've taken throughout.

[00:26:15] Speaker 01:
Is there any other

[00:26:18] Speaker 01:
evaluation criteria that seems to be global and have nothing to do with the parameters of this individual solicitation.

[00:26:26] Speaker 03:
It does it does have to do with the parameters of this individual solicitation or honor because the agency has a it has a vital need for continuous uninterrupted Medicare claims administration services in jurisdiction age and that's that's threatened if if a company becomes essentially too too big to fail where the agency doesn't where the agency well we're going in circles now because their argument would be well yeah that's exactly why we have 3303A the agency does have a mechanism

[00:26:54] Speaker 01:
under which to preclude that.

[00:26:56] Speaker 01:
Nobody's arguing that those safeguards are necessary.

[00:26:58] Speaker 01:
The only question is how you get there.

[00:27:00] Speaker 01:
So you're saying here that in every solicitation under the evaluation criteria, you're including 26 percent?

[00:27:09] Speaker 01:
You're including what?

[00:27:13] Speaker 03:
Most of the max solicitations that have been issued since 2010 have included that provision.

[00:27:19] Speaker 03:
Under the evaluation criteria?

[00:27:21] Speaker 03:
I believe so, yes.

[00:27:23] Speaker 03:
I haven't looked at every single one of them, but yes, I believe they're all in Section M. But of course, it includes the exclusion.

[00:27:29] Speaker 03:
Yes, the exception?

[00:27:31] Speaker 03:
Exception.

[00:27:31] Speaker 03:
Yes, yes.

[00:27:33] Speaker 03:
It would be essentially the same provision.

[00:27:36] Speaker 02:
One of the arguments that your opposing council makes is that basically,

[00:27:42] Speaker 02:
the government just threw up its hands and said, we don't know how to do this sober.

[00:27:46] Speaker 02:
We created this fallback.

[00:27:49] Speaker 03:
No, what the agency said, they applied this case by case basis approach during the first, I think it was about three to five years of the MAC procurements.

[00:28:00] Speaker 03:
And what they determined during this time was essentially that it didn't

[00:28:05] Speaker 03:
It didn't allow the agency to put in the solicitation the clear criteria that was going to determine whether or not somebody would be eliminated from the award.

[00:28:15] Speaker 03:
So they decided, we think we want to do these award limitation provisions that we considered initially when the Medicare Modernization Act was passed.

[00:28:22] Speaker 03:
They took that question to industry and the response was very favorable.

[00:28:26] Speaker 03:
Some quibbled about what the percentage should be, particularly whether affiliates should be included and that sort of thing.

[00:28:32] Speaker 03:
But the agency took this to industry, and industry basically said, yes, this is a good idea.

[00:28:38] Speaker 03:
It allows the industry to know right up front what their position is going to be in the procurement, not have to guess whether or not the agency is going to exclude them because they've gone too high.

[00:28:52] Speaker 01:
Can I ask this, just back to, I'm having a hard time talking about evaluation criteria and having this be among them.

[00:28:59] Speaker 01:
Obviously, this isn't my field.

[00:29:00] Speaker 01:
I doubled down on what Judge Moore said about our level of expertise.

[00:29:04] Speaker 01:
But it seems to me you're drawing a comparison between offerors if you're dealing with evaluation criteria, which to me suggests if you've got one offeror that's got 26% and another that's got 25%, this would be the evaluation criteria.

[00:29:24] Speaker 01:
One gets in and one doesn't.

[00:29:27] Speaker 03:
So the agency puts criteria into its solicitation to exactly say who's going to get the, what the offers will be evaluated against.

[00:29:38] Speaker 03:
So yes, for this particular provision, if the offer exceeds 26%,

[00:29:43] Speaker 03:
as a single contractor, then they will not be eligible for the award unless the exception comes into play, if they exceeded at the time of the award.

[00:29:53] Speaker 03:
This is essentially a pass-fail criteria.

[00:29:58] Speaker 00:
Do you not see the wisdom in the question?

[00:30:00] Speaker 00:
The wisdom in the question is, back in the day, prior to this, when it was one of many factors, one of the things the government could have looked at is, this contractor's got 26% of all,

[00:30:12] Speaker 00:
but our next best guy has 25%.

[00:30:14] Speaker 00:
It's only 1% and this one's got a much better package that they're offering the government overall, so we shouldn't render them ineligible as a result of that.

[00:30:24] Speaker 00:
In the day when it was one of many factors, that would have been a very rational approach.

[00:30:29] Speaker 00:
I think inherent in Judge Prost's question was, wait a minute, you're telling us that as an automatic cap, you're gonna say no to the 26% person despite the fact they might have a much more valuable and better proposal

[00:30:41] Speaker 00:
prepared for you, and it might be in the interest of the taxpayers, quite considerably better, because they've got 26%, even though all the other bidders are at 25%.

[00:30:50] Speaker 00:
And that's, I think, part of what is bothering me

[00:30:55] Speaker 00:
about this being a black leather rule of sorts, rather than, you know, just one of many factors to be considered.

[00:31:01] Speaker 03:
But this gets into the broad discretion of the agency to create its evaluation criteria.

[00:31:06] Speaker 00:
And as we pointed out in our first rule, 28-J letter, there can... You don't have the broad discretion to create evaluation criteria if it is inconsistent with the FAR's full and open competition clause.

[00:31:17] Speaker 00:
You only have the requirements provision, right?

[00:31:20] Speaker 03:
If it's inconsistent with full and open competition, but the questions that I think are being asked here is what's the best way for the agency to go about getting these MAC services?

[00:31:29] Speaker 03:
Shouldn't it be able to compare, I think your question was, shouldn't it be able to compare whether they have, you know, 27 or 28 percent versus whether they've

[00:31:39] Speaker 03:
submitted a $100 million lower proposal or something like that.

[00:31:43] Speaker 03:
And that could be a rational way to go about doing that, but the agency has the discretion to instead say, in the interest of transparency and in the interest of just saying 26% is too much, we've determined, and that was one of the, in determining the 26% number, that was one of the things the agency considered was, you know... Did you take public input on that number?

[00:32:04] Speaker 03:
They submitted in the July 2010 RFI as well as the August 2010 RFI, and the 2015 RFI was considering that as well.

[00:32:13] Speaker 03:
So what the agency is basically saying is 26% is too much.

[00:32:19] Speaker 03:
If we look at the LMI report, it was effectively recommending a cap of 20.8%.

[00:32:25] Speaker 03:
at that time.

[00:32:26] Speaker 03:
And one of the things the agency wanted to do in 2010 was say, well, we want offers to be able to win at least the two largest awards.

[00:32:34] Speaker 03:
We could justify a lower cap, perhaps, than 26 percent.

[00:32:38] Speaker 03:
But in the interest of competition as well, that balancing test, the agency decided the 26 percent was the right number.

[00:32:44] Speaker 01:
But that can change over time, right?

[00:32:46] Speaker 01:
If you don't have, if these contracts indeed go for 10 years, if you don't have the 26 percent

[00:32:52] Speaker 01:
If you can meet that criteria, if you're at 24% at the get-go, then, and your contract, you can never compete through the term of that contract, but what if you have another, another contract that expires sometime within it, right?

[00:33:08] Speaker 01:
This is sort of a moving target, isn't it?

[00:33:10] Speaker 03:
It could be.

[00:33:11] Speaker 03:
It's possible that somebody could have that situation where five years into the contract they might dip below 26 percent, but we would still have five years where the threat to the continuity of the agency's vital Medicare claims administration services would be threatened.

[00:33:31] Speaker 03:
Do they all expire at the same time?

[00:33:33] Speaker 03:
No, it's a staggered process.

[00:33:35] Speaker 00:
But I'm still struggling with whether this is full and open competition.

[00:33:38] Speaker 00:
Can you help me by perhaps giving me other examples of policies like this if they exist?

[00:33:46] Speaker 00:
Because the whole reason, it seems like you've hung an awful lot on what feels like a very small technicality at best, which is, oh no, they just don't submit a bid, therefore it's full and open competition, even though there's a rule that says we're not going to give it to them unless nobody else qualified comes forward.

[00:34:01] Speaker 00:
I mean, that to me doesn't feel like full and open competition.

[00:34:04] Speaker 00:
It feels like back

[00:34:05] Speaker 00:
back door bad stuff.

[00:34:06] Speaker 00:
I don't like the sound of that at all.

[00:34:10] Speaker 00:
Can you give me another example where there are policies and this is somehow relevant to the eligibility criteria but nonetheless they are not impeding

[00:34:19] Speaker 00:
full and fair competition?

[00:34:21] Speaker 00:
Is there any other example?

[00:34:22] Speaker 03:
The limiting rule here is that the provision, whether it's evaluation criteria or technical specifications, it has to be rationally related to the agency's legitimate needs.

[00:34:32] Speaker 03:
So we have lots of case law, like the CHE case, where the agency was combining hardware and software maintenance requirements, and there was only one company and its licensees that could perform the software side of it.

[00:34:43] Speaker 03:
So somebody that could do the hardware side came in and said, you're not providing full and open competition.

[00:34:48] Speaker 03:
you're unduly restricting that.

[00:34:50] Speaker 03:
And this court said, no, that's unobjectionable because the combination is rationally related to the agency's needs.

[00:34:56] Speaker 00:
You don't have the ability to perform the contracted issue.

[00:34:59] Speaker 00:
This criteria does not go to the ability to perform the contracted issue at all.

[00:35:03] Speaker 00:
This criteria goes to sort of an agency-large macro view of the world of health, Medicare, administrative services.

[00:35:14] Speaker 00:
But those criteria go to ability to perform under an actual contract.

[00:35:19] Speaker 00:
And this criteria doesn't.

[00:35:20] Speaker 03:
But one of the agency's key needs is continuous uninterrupted Medicare claims administration services.

[00:35:27] Speaker 03:
Not simply claims administration services while this company can do it, but continuously.

[00:35:33] Speaker 03:
And there's a provision specifically incorporated into the solicitation that provides that that NGS hasn't challenged.

[00:35:40] Speaker 02:
Let me ask you a question about the shifting numbers.

[00:35:44] Speaker 02:
Over time, people move.

[00:35:50] Speaker 02:
Say there's a substantial shift of people who are eligible for benefits from one region to another.

[00:35:58] Speaker 02:
And as a result, the percentages change.

[00:36:03] Speaker 02:
When does that kick in for recalculation?

[00:36:08] Speaker 02:
By the census?

[00:36:10] Speaker 03:
I'm not sure when the... In each solicitation, there's the list of the percentages that will be applied for that particular solicitation.

[00:36:17] Speaker 03:
So perhaps for the next one, maybe the numbers will be different.

[00:36:21] Speaker 03:
I don't know.

[00:36:22] Speaker 03:
But the agency could recalculate that basically when it deems it appropriate.

[00:36:28] Speaker 02:
So what I'm saying is if someone has a Region H in the contract, if the numbers drop in Region H, it could affect their eligibility

[00:36:39] Speaker 02:
Region A. That's possible.

[00:36:46] Speaker 03:
I see I've gone past my time.

[00:36:48] Speaker 03:
Unless the court has any further questions, respectfully request that the court affirm the trial court's judgment.

[00:37:03] Speaker 04:
Thank you.

[00:37:03] Speaker 04:
The government hangs a lot of its argument on both of the timing of the caps

[00:37:08] Speaker 04:
and whether or not the caps really operate as an exclusion in some broad sense or whether there is a large percentage chance that at the back end of this process we can still win.

[00:37:19] Speaker 04:
But the record is extraordinarily clear.

[00:37:21] Speaker 04:
In fact, at appendix 432 in the government's brief below, which is the government's brief at 20, the government agreed that we were unlikely to win the JH contract due to the workload caps before we had even submitted our proposal.

[00:37:37] Speaker 04:
Number two.

[00:37:39] Speaker 04:
There's a document at the appendix at 11-8-10 called the Klotz Declaration.

[00:37:46] Speaker 04:
It was a declaration submitted below by a CMS official that recounts that in a 2014 GAO protest that NGS had filed at the GAO, the government argued that we were not even an interested party because the award of that contract would have caused us to exceed the caps.

[00:38:02] Speaker 01:
Let me ask you about the evaluation criteria.

[00:38:05] Speaker 01:
Do you agree that this is the way the government is using it as an evaluation criteria and doesn't that give them more of a chance?

[00:38:12] Speaker 04:
No, we do not.

[00:38:13] Speaker 04:
Well, the government shifts in at least three different places.

[00:38:16] Speaker 04:
Sometimes they argue that they are pass fail technical criteria.

[00:38:20] Speaker 04:
Sometimes they have argued that they suggest that their technical evaluation criteria

[00:38:27] Speaker 04:
due to the citation of CHE and other cases, but at least one point in their brief at page 39, the government concedes that the workload caps are not, quote, functional performance or design requirements.

[00:38:39] Speaker 04:
They have nothing to do with our ability to perform the contract or to ensure a reliable and continuous performing of the MAC contract.

[00:38:47] Speaker 01:
And is the way, the way I understand it works is they do everything until the end.

[00:38:52] Speaker 01:
So you get whatever normal evaluation you would get vis-a-vis the other offerors.

[00:38:57] Speaker 01:
And it's only at the end of the day, I guess, so once they determine, yeah, there's some other people left standing too, then they oppose the 26%?

[00:39:05] Speaker 01:
Correct.

[00:39:06] Speaker 04:
And to the point that Judge Moore asked about, we could be evaluated as the best value by far ahead of the pack and still be excluded.

[00:39:17] Speaker 01:
But still, there's a line at the bottom, right?

[00:39:22] Speaker 01:
Someone has to be within certain criteria.

[00:39:25] Speaker 01:
It can't be that somebody is asking some astronomical amount of money.

[00:39:30] Speaker 01:
A responsible offeror has to be within certain criteria, right?

[00:39:35] Speaker 04:
No, Your Honor.

[00:39:36] Speaker 04:
According to these workload caps, if there is any responsible offeror that would be below the 26% cap, they would win.

[00:39:43] Speaker 01:
Yeah, but doesn't a definition of a responsible offeror include someone who meets

[00:39:50] Speaker 04:
some sort of reasonable

[00:40:06] Speaker 04:
that the caps are counterproductive because they may result in the offeror with the best value not receiving the award.

[00:40:12] Speaker 04:
And the government says, yeah, we were well aware of this possibility when we implemented the workload cap.

[00:40:17] Speaker 04:
So we could be the best combination of price and performance and still not win, even though the next best value offeror who would be below the caps would be ranked number five in a field of seven.

[00:40:31] Speaker 01:
So how hard would it be for them to apply the 3303?

[00:40:35] Speaker 01:
I mean, you know, we all kind of understand at a visceral level, and they obviously did their homework and went off the comments, getting to this 26%.

[00:40:46] Speaker 01:
The suggestion is, which has a lot of appeal, right, if one person is controlling a lot of this market and they're hacked or something goes awry, everything falls, and it's responsible to try to guard against that, right?

[00:40:59] Speaker 04:
Yes, and that's our point, is that to the extent the government maintains that the workload caps are rational in this instance, they should be able to issue a DNF under 6.202.

[00:41:10] Speaker 04:
They say they can't, but they can't have it both ways.

[00:41:14] Speaker 04:
If 6.202 is too difficult to follow because they don't have the evidence in the record to support a determination and finding that they have not issued,

[00:41:22] Speaker 04:
then they should not be able to sustain the broader cap on the same basis.

[00:41:27] Speaker 04:
It's saying why should we use a sharp tool when a blunt one will do?

[00:41:30] Speaker 04:
It makes no sense.

[00:41:32] Speaker 04:
They don't have the evidence for 6202.

[00:41:35] Speaker 04:
The other thing that I think is an issue that Mr. Rayl raised is the timing of the... You're going to keep talking past your time.

[00:41:45] Speaker 02:
I have some questions I want to answer.

[00:41:47] Speaker 02:
Okay.

[00:41:48] Speaker 02:
Sorry, Your Honor.

[00:41:49] Speaker 02:
the reference you gave us to Appendix 449 indeed says, where the government says yes, we were well aware, but then it says we're concerned about antitrust implications.

[00:42:08] Speaker 02:
Somebody can capture the market and drive the smaller

[00:42:11] Speaker 02:
competitors out of business and that's why we're willing to accept a higher than fair value bid in that circumstance.

[00:42:23] Speaker 04:
And to the extent that the FAR is

[00:42:26] Speaker 04:
primarily concerned with the results of full and open competition.

[00:42:30] Speaker 04:
The FAR anticipates that there may well be off-roars driven out of the marketplace as a result of full and open competition, but that if the government wants to protect against that eventuality, its remedy is in CICA and FAR 6.202.

[00:42:44] Speaker 04:
And they can address that no problem if they have the evidence in the record to sustain the determination and findings that was never issued here.