[00:00:00] Speaker 03:
It is Omron Holding Group, Inc.

[00:00:09] Speaker 03:
vs. U.S.

[00:00:35] Speaker 03:
Ms.

[00:00:35] Speaker 03:
Santora, I've now lost my cheat sheet in terms of how much time you wanted for rebuttal.

[00:00:41] Speaker 03:
What was it?

[00:00:42] Speaker 04:
Five minutes, Your Honor.

[00:00:43] Speaker 03:
Okay.

[00:00:55] Speaker 03:
You may begin.

[00:00:56] Speaker 04:
May it please the Court?

[00:00:58] Speaker 04:
We asked the Court today, under Sandoval Standard of Review, which is the applicable standard,

[00:01:03] Speaker 04:
to determine that the government did not meet its burden to obtain summary judgment before the trial court.

[00:01:10] Speaker 04:
And the reason for this, Your Honor, is that... This is a procedural point.

[00:01:15] Speaker 04:
Yes.

[00:01:17] Speaker 02:
As I read your opposition to the government summary judgment motion, it never said

[00:01:28] Speaker 02:
There is a triable issue of fact that we want to trial.

[00:01:33] Speaker 02:
It was rather the government is wrong in seeking summary judgment.

[00:01:37] Speaker 02:
We're right in seeking summary judgment full stop.

[00:01:42] Speaker 02:
So I mean, is there essentially on the state of this record a who's right as a matter of law question in front of us?

[00:01:51] Speaker 04:
Your honor, we would say that the main contentions are ones of law.

[00:01:57] Speaker 04:
That being said, we understand there are dueling motions, but we wouldn't ask this court, given the evidentiary standard before it, to say that we are absolutely right and the government is absolutely wrong.

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We would say that there are enough gaps and ambiguities in this record to require further evidentiary proceedings before the trial court.

[00:02:17] Speaker 03:
As I understand it, if government contractors have to, if they allege an ambiguity in the contract, they have to argue that the ambiguity is either patent or latent, right?

[00:02:28] Speaker 03:
Correct, Your Honor.

[00:02:29] Speaker 03:
So is your position that it's a latent ambiguity?

[00:02:33] Speaker 04:
Yes, that's correct.

[00:02:34] Speaker 03:
Right.

[00:02:34] Speaker 03:
And that would mean, as I understand it, that you would have to establish

[00:02:40] Speaker 03:
not only that there's a reasonable interpretation that's different than the government's, and that's what you spend a lot of time on, but you'd also have to establish that you relied upon that ambiguity in terms of preparing and submitting your bid and entering into the contract.

[00:02:58] Speaker 03:
Isn't that right?

[00:03:00] Speaker 04:
Yes, that's correct, Your Honor.

[00:03:01] Speaker 03:
All right.

[00:03:02] Speaker 03:
So did you present any such reliance evidence?

[00:03:06] Speaker 04:
Your Honor, our contention would have been, and I believe this is in the briefs, that Omran would have relied on a rate that was publicly available.

[00:03:16] Speaker 04:
Initially, Omran had believed that that was the Bank of Afghanistan rate that you see in the initial pleadings, the initial claim that we were letting for our appeal.

[00:03:27] Speaker 04:
That developed and changed as a result of receiving the contracting officer's decision saying, no, the Treasury sets the rates.

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And therefore, you should look to the Treasury for this.

[00:03:37] Speaker 03:
Doesn't that kill your reliance argument, though, if you were relying on a mistake of fact?

[00:03:44] Speaker 03:
So you weren't relying on the fact that it was the Treasury rate.

[00:03:48] Speaker 03:
You were relying on the fact that it was some other rate that you now admit couldn't have been right.

[00:03:54] Speaker 04:
I don't believe that's exactly correct, Your Honor.

[00:03:56] Speaker 04:
We were relying on a prevailing rate, a known rate, a publicly available rate.

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At the time, again, we believed that was the Bank of Afghanistan rate.

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But irrespective, it was a market-based rate.

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That's what we reasonably assumed when we entered into the contract.

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And that could be, again, the Bank of Afghanistan.

[00:04:14] Speaker 04:
The Treasury rate and those rates aren't materially different in what they would have offered.

[00:04:20] Speaker 04:
What is materially different is the undisclosed ITS.gov rate that the government contends was the properly, I quote unquote, official rate for purposes of this clause.

[00:04:31] Speaker 00:
The rate you relied on, was it to your detriment?

[00:04:34] Speaker 04:
Yes, Your Honor.

[00:04:35] Speaker 04:
Under either the Bank of Afghanistan rate or the Treasury rate, which are both different iterations of the prevailing rate, the difference between, and these are three contracts, I should add, that are at issue in this appeal, the difference would have been about 1.5 million.

[00:04:49] Speaker 04:
Slightly less under the Bank of Afghanistan rate, but still on the same ballpark.

[00:04:56] Speaker 03:
Did you present any evidence in the record that there could be any other possible rate other than the

[00:05:04] Speaker 03:
3%, 5%, and the Treasury rate?

[00:05:07] Speaker 04:
We believe, Your Honor, that the government has admitted as much.

[00:05:10] Speaker 04:
They introduced into the record a declaration of Mr. Walker Wood, actually two declarations of Mr. Walker Wood, who works for ITS.gov.

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And what Mr. Wood testified to through his declaration is that ITS.gov offers multiple rates to the government and doesn't advocate for any particular one or ones.

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And that option is essentially one to the government

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tell ITS.gov.

[00:05:35] Speaker 03:
But did his testimony say that there were multiple rates or that as between the 5% and the 3% there was flexibility?

[00:05:42] Speaker 04:
It said multiple rates, Your Honor.

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We can look at the declaration if that would be helpful.

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Appendix page 157 and paragraph 6 of this declaration, ITS.gov provides multiple rate options

[00:06:02] Speaker 04:
including spot or advanced rates capabilities for federal agencies to use foreign payment processing.

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Federal agencies are free to choose what rate option they will use, and that selection is configured by ITS.gov.

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And then moving on, ITS.gov does not approve, deny, or otherwise mandate a participating federal agency's use of an ITS.gov established rate structure.

[00:06:25] Speaker 04:
So while the court certainly seems to come to the conclusion that it was either the five-day rate or the three-day rate,

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Uh, that certainly is left open and ambiguous in the record that, uh, this Court has.

[00:06:37] Speaker 00:
Which one would have been most favorable to your client, the three-day or the five-day?

[00:06:41] Speaker 04:
Uh, the five-day.

[00:06:42] Speaker 03:
That was, no, excuse me, the three-day that was actually applied was more favorable by... More favorable overall, but weren't there a couple instances in which the three-day was less favorable than the five-day?

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There were two individual payments that would have been more favorable under the five-day rate.

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the value difference as to those two individual payments?

[00:07:05] Speaker 04:
Nominal, Your Honor.

[00:07:06] Speaker 03:
OK.

[00:07:10] Speaker 03:
One of my problems is that the language of the contract, whatever it means, does talk about the DOD finance office, local DOD finance office.

[00:07:24] Speaker 03:
And how do you equate the Treasury with the Department of Defense?

[00:07:28] Speaker 04:
We wouldn't, Your Honor.

[00:07:30] Speaker 04:
I believe what our argument was before the trial court is that there is no posted rate promulgated by the DOD local finance office, irrespective of how you define local DOD finance office.

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As Your Honor is aware, there was kind of this issue where the government posited that at three different occasions that location changed.

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First it was Apache, then it was

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the 368th Battalion at Badrum, and then the 159th again at Badrum.

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None of these locations are where Armama's actually performing contract work.

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And given the contracting officer's statement that the local office is milled in Tennessee, they would have no reason to even search out these alternative locations.

[00:08:19] Speaker 00:
Did you ever ask the contracting officer to explain that term?

[00:08:23] Speaker 00:
To explain what rate was applicable?

[00:08:26] Speaker 04:
In our claim, Your Honor, in the initial claim we had posited that there was no correct rate applied and in response to that the contracting officer said there is no local DOD finance office in Afghanistan, in the entirety of Afghanistan.

[00:08:43] Speaker 04:
Both parties now agree that that is incorrect and logically wouldn't be a correct interpretation of the contract clause.

[00:08:50] Speaker 03:
At what point in time did they start posting these

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things that AGRAM Air Force base?

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The government affidavits indicate that according to the person who declared it was replacing.

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This was ongoing for the entire contract period.

[00:09:10] Speaker 04:
I'm not sure we have an affidavit that covers the very early on contract payments from a person with first-hand knowledge.

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However, they've given us one sample of how they posit they posted

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or fix these rates to the bank teller.

[00:09:25] Speaker 03:
Is there evidence, what I'm trying to figure out is the point in time, is there evidence that anything at Bagram was posted before you started down the road of having a claim dispute over this issue?

[00:09:40] Speaker 04:
There is a declaration from one of the individuals at either Bagram, I believe Bagram, maybe also Apache, that says that it was their standard operating procedure to

[00:09:52] Speaker 04:
affix a piece of paper to the outside of the bank teller window at the base, essentially for military banking transactions.

[00:09:59] Speaker 04:
So if someone who comes onto the base for a financial transaction who has access to the base, they would see the rate at the time it was being applied, which logically makes sense, Your Honor.

[00:10:09] Speaker 03:
But they didn't say when that standard operating procedure started?

[00:10:13] Speaker 04:
I believe, in fairness to the government, they posit that it was the entire contract period.

[00:10:18] Speaker 04:
That's declared.

[00:10:20] Speaker 04:
We don't have an evidence every single

[00:10:22] Speaker 04:
quote-unquote, posting that the government posits were under this clause.

[00:10:26] Speaker 03:
We've sampled one.

[00:10:27] Speaker 03:
Do you accept the proposition that that bank teller at an Air Force base in Afghanistan is the equivalent of the local DOD finance office?

[00:10:39] Speaker 04:
Your Honor, it's ambiguous.

[00:10:40] Speaker 04:
The clause doesn't define what constitutes a local finance office, and we would suggest that having a location somewhere in the country

[00:10:48] Speaker 04:
that the contractor is informed of and can access would not satisfy the purpose of that posting requirement in the contract clause.

[00:10:57] Speaker 00:
What are you upset about?

[00:10:58] Speaker 00:
The rate that you received or the fact that this ambiguity existed?

[00:11:05] Speaker 04:
I would say both, Your Honor.

[00:11:06] Speaker 00:
I would say that Omran is most aggrieved by the fact that it doesn't... I mean, would you be here if he had received an unfavorable rate and the ambiguity existed?

[00:11:18] Speaker 04:
Obviously, if we believe that the railing rate was in line with what was paid, we wouldn't be here today.

[00:11:24] Speaker 00:
I think what Omron has truly aggrieved at... At the time of the bid, you submitted your bid, but you didn't know that.

[00:11:31] Speaker 00:
You didn't know what rate was going to apply, correct?

[00:11:33] Speaker 04:
That's an interesting question, Your Honor, because the senton clause that's at issue in this case says that when a contract is awarded to a host nation vendor, such as Omron, it should be awarded in the local currency.

[00:11:45] Speaker 04:
In this case, it appears that an error occurred at the onset,

[00:11:48] Speaker 04:
resulting in the contract being awarded in the US dollars, potentially creating this whole issue that we're discussing today.

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It would seem logical that if it was correctly awarded in the host nation currency, Omron would submit progress agreements against that amount.

[00:12:05] Speaker 00:
Do you argue you should have been paid in Afghanis?

[00:12:08] Speaker 04:
I believe both parties are in agreement that we should have been paid in Afghanis.

[00:12:12] Speaker 04:
The question is that when Omron submitted for payment, it was requested to do so in dollars, and then it got converted.

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to Afghanis.

[00:12:20] Speaker 00:
And at that time, what rate were you suggesting that they used?

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Or did you believe it was going to be used?

[00:12:27] Speaker 04:
Omron is an agreement that the rate would fluctuate across the contract period, depending on when it submitted its request for payment.

[00:12:34] Speaker 04:
The question, again, is whether the rate that was used is in any way fair to Omron, given their lack of notice and the fact that it differs from prevailing rate that could be known

[00:12:45] Speaker 04:
by any parties at the time.

[00:12:46] Speaker 03:
So why did you give up on the local exchange rate argument in favor of this Treasury argument?

[00:12:55] Speaker 04:
The understanding, Your Honor, was at the time that the contracting officer would be correct.

[00:13:00] Speaker 04:
We were understanding that they were telling us that the Treasury sets the rates, and therefore we looked for a posted rate by the Treasury.

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And having found one, we determined that we'd satisfied what the contracting officer was referencing

[00:13:13] Speaker 04:
And, of course, that rate, which we found, the quarterly Treasury rates, which are available on the Treasury's website, are in line with the Bank of Afghanistan rates, a little bit more favorable.

[00:13:25] Speaker 04:
So we adopted that as being insubstantial compliance that the contracting officer was telling us would apply.

[00:13:31] Speaker 04:
And then comparing that to the payments we received, obviously there was a disconnect, which is where we kind of got this Treasury rate argument from.

[00:13:39] Speaker 04:
And then reading the government's cross-motion,

[00:13:43] Speaker 04:
once we got to the trial court, it also seemed to fit squarely in line with what the FMR, the Financial Management Regulations for DOD, would suggest are proper.

[00:13:53] Speaker 04:
And we can kind of get into this issue of, I see I'm kind of running out of time already, this issue of whether the government purchases currency and therefore whether the acquisition rate would be the official rate that applies under Chapter 12.

[00:14:09] Speaker 04:
We would posit that it is, and we would also say as a factual matter,

[00:14:12] Speaker 04:
to answer Judge Taranto's question from before, one of the issues that we find contradicted in the factual record is Lieutenant McManus's affidavit, which clearly states that they do do cash transactions in Afghani.

[00:14:28] Speaker 04:
Therefore, you can't do a cash transaction without having purchased Afghani currency.

[00:14:34] Speaker 04:
So having established that factual contradiction or at least factual question that hasn't fully developed,

[00:14:40] Speaker 04:
we would say that Chapter 12 of the IHMR specifies that the acquisition rate be the official rate.

[00:14:47] Speaker 04:
And when you look at the Treasury's website once again, it states that the acquisition rate provided by dispersing officers

[00:14:56] Speaker 04:
is the quarterly rate, which kind of gets us back to the point where we thought we had reached the contracting officer's interpretation.

[00:15:03] Speaker 02:
What do we know about the relationship between the dispersing officers and the DOD finance offices?

[00:15:13] Speaker 04:
I believe Lieutenant McManus is a dispersing officer, so we have in the record some of that testimony.

[00:15:19] Speaker 04:
The dispersing officers appear to work directly at the local, what the government posits of the local DOD finance offices.

[00:15:28] Speaker 04:
Your Honor, I seem well into my time for rebuttal, so I'll stop right there.

[00:15:31] Speaker 03:
All right.

[00:15:31] Speaker 03:
We'll give you two minutes for rebuttal.

[00:15:33] Speaker 01:
Thank you.

[00:15:39] Speaker 01:
May it please the Court.

[00:15:42] Speaker 01:
The trial for this decision that Amron failed to establish that it is ODD damages should be of help.

[00:15:48] Speaker 01:
Because undisputed evidence shows that the three-day rate that Omron received is more favorable than the five-day rate, which is the rate that applies pursuant to the contract that caused that issue.

[00:16:01] Speaker 03:
It's true that that wasn't true.

[00:16:04] Speaker 03:
It wasn't true in every instance.

[00:16:06] Speaker 03:
They may be small amounts, but there were at least two instances in which the five-day rate was actually more favorable than the three-day rate.

[00:16:14] Speaker 01:
To be clear, what I'm saying, Your Honor, is that over the 60 payments at issue,

[00:16:18] Speaker 01:
between June 2013 and August 2015.

[00:16:21] Speaker 01:
$58 out of those $60 were more favorable.

[00:16:24] Speaker 01:
So in the aggregate, when you aggregate all the payments at issue, Armron received more money than was in time.

[00:16:32] Speaker 03:
Well, that's assuming, A, assuming we're aggregating.

[00:16:34] Speaker 03:
But more importantly, that's assuming we only have a choice between three and five.

[00:16:41] Speaker 03:
And the whole point of this case is that there are alternatives.

[00:16:45] Speaker 03:
That three and five are not the only two options.

[00:16:48] Speaker 03:
unless we conclude that the contract is unambiguous.

[00:16:55] Speaker 01:
Well, Your Honor, there are not more than two alternatives.

[00:16:59] Speaker 01:
Because the issue is, one, what is the rate required by the contract?

[00:17:04] Speaker 01:
And the contract is unambiguous that the rate that will be determined under the contract is the rate that is posted by the local DOD financial office for each payment

[00:17:14] Speaker 03:
Well, I'm having a hard time with this notion that it's unambiguous, because the government was all over the place in terms of what the rate was.

[00:17:23] Speaker 03:
The contracting officer said one thing, you know, you've

[00:17:27] Speaker 03:
You've had different positions between the 3% and 5%.

[00:17:30] Speaker 03:
I mean, how can you say it's completely unambiguous when you can't seem to land on a definition?

[00:17:37] Speaker 01:
Well, we did land on a definition.

[00:17:38] Speaker 03:
Well, when you finally got to the court of claims, you decided to land on a definition.

[00:17:42] Speaker 01:
That's right.

[00:17:42] Speaker 01:
And there was no question that the contract.

[00:17:44] Speaker 03:
But you had to land on that definition with the assumption that that definition was unambiguously required by the contract.

[00:17:52] Speaker 01:
Absolutely.

[00:17:53] Speaker 01:
Look, there's no question that the contracting officer

[00:17:56] Speaker 01:
got it wrong, saying that there is no DOD finance office in Afghanistan, saying that it's in Millington, Tennessee, which is where the Coors finance office is.

[00:18:04] Speaker 01:
That was wrong.

[00:18:04] Speaker 01:
Both parties agree it's wrong.

[00:18:05] Speaker 01:
It doesn't make sense when you read the plain text of the clause where local means Afghanistan or Afghani.

[00:18:11] Speaker 01:
So clearly, we're talking about a DOD finance office in Afghanistan.

[00:18:14] Speaker 01:
The next question, Your Honor.

[00:18:15] Speaker 03:
Is there actually an office that's titled DOD financing office, or is it simply a place where someone comes to a

[00:18:25] Speaker 03:
bank tellers office.

[00:18:26] Speaker 01:
Right, but we have uncontroverted evidence, a declaration from Captain McManus that there are two army, just DOD, army finances finance offices in Afghanistan.

[00:18:39] Speaker 01:
There's no contrary evidence that there are any other finance offices in DOD, finance offices in Afghanistan, other than the two that are identified in a declaration by Joseph McManus, First Lieutenant McManus.

[00:18:51] Speaker 01:
That's uncontroverted.

[00:18:52] Speaker 01:
Second, there's only one

[00:18:55] Speaker 01:
DOD, that is to say, Army Finance Office that has posted an exchange rate.

[00:19:02] Speaker 01:
And it's because there is only one finance office that has posted, during the entire payment period, from June 2013 to August 2015, there's a single DOD finance office that has posted the five-day rate every week for the entire period in question.

[00:19:19] Speaker 01:
That makes it unambiguous, Your Honor, because there is no contrary evidence that there is any other

[00:19:24] Speaker 01:
DOD finance office out there that's posting a different rate.

[00:19:28] Speaker 01:
I would agree.

[00:19:28] Speaker 01:
This would be a different case if you had a DOD finance office, let's say two DOD finance offices, and one is posting a three-day rate, one is posting a five-day rate.

[00:19:36] Speaker 03:
But your argument is that basically we created a set of facts that would satisfy the language in this contract.

[00:19:45] Speaker 03:
But we're supposed to look at the language on its face to determine if it's unambiguous.

[00:19:49] Speaker 01:
No, Your Honor.

[00:19:50] Speaker 01:
I would disagree with your characterization that we created.

[00:19:52] Speaker 01:
We didn't create facts.

[00:19:55] Speaker 01:
procured testimony under oath, which, again, the plaintiffs in their motion for summary judgment did not attach a single piece of evidence, no testimony.

[00:20:05] Speaker 01:
They didn't take a single piece of discovery, controverting us.

[00:20:07] Speaker 01:
So this is undisputed.

[00:20:09] Speaker 01:
And so it's not that we created it.

[00:20:10] Speaker 01:
This is facts under oath that there is one DOD finance office, and that is a single five-day rate that's been posted over the entire period.

[00:20:19] Speaker 01:
That's dispositive, and that's uncontroverted.

[00:20:22] Speaker 01:
And so for purposes of determining whether or not it's an ambiguity,

[00:20:25] Speaker 01:
Yes, we can see that you cannot determine what rate, what the actual rate is simply by reading the text of the class.

[00:20:35] Speaker 01:
So you have to understand what.

[00:20:37] Speaker 01:
Right.

[00:20:37] Speaker 03:
And you can see there's no publicly available rate.

[00:20:40] Speaker 03:
I mean, even the contracting officer, even the contracting officer didn't know about this rate.

[00:20:45] Speaker 01:
Well, yes.

[00:20:47] Speaker 01:
Well, the contracting officer got it wrong.

[00:20:48] Speaker 01:
There's no question.

[00:20:49] Speaker 01:
But Laura, what I'm saying, Your Honor, however,

[00:20:52] Speaker 01:
Even though the rate is not in the clause itself, it doesn't say the rate is X. It says the rate will be determined by the local DOD finance office, and we have produced uncontroverted evidence during the entire payment period as to what those rates were.

[00:21:08] Speaker 01:
For each payment period, there is no issue of fact, as the trial court correctly held, that that is the rate that applies for each of the payments at issue, Your Honor.

[00:21:19] Speaker 02:
maybe even the central theme, but an important theme of the other side's position is that there is something extremely strange, that's not a legal term, but extremely strange about saying the rate is one that we can't know, only the other side can know.

[00:21:37] Speaker 02:
Can you explain why that's not strange?

[00:21:42] Speaker 01:
Sure.

[00:21:42] Speaker 01:
It's not the rate they can't know.

[00:21:44] Speaker 01:
I just read the premise of the rate they can't know.

[00:21:46] Speaker 01:
One, they

[00:21:47] Speaker 01:
argue at or lurking below a truck whore.

[00:21:49] Speaker 01:
uh... who's missing for said all we have no action from ron had no access unauthorized that's not in the record one factually there is no after david for many months and we can access it so that's not something that's before the court there's no judicial weight that should be afforded well those things but first i think you're going to be prior to that you'd you're the one who asked for summary judgment you didn't put any evidence in that they could access it right we both went for summary judgment and yes and there is and yes and so the prior question regardless of whether or not

[00:22:19] Speaker 01:
They had notice or not.

[00:22:20] Speaker 01:
The first question is, were it not the contract requires that they have that notice and the contract doesn't.

[00:22:27] Speaker 03:
So A, they have no access to it.

[00:22:30] Speaker 03:
B, they asked the contracting officer and the contracting officer had no access to it and didn't even know it existed.

[00:22:36] Speaker 01:
Well, first, as a matter of, this is an issue of contract administration.

[00:22:40] Speaker 01:
There's no question in that one.

[00:22:41] Speaker 01:
And there's no evidence that Omron asked before they filed a certified claim.

[00:22:45] Speaker 01:
what the rate was.

[00:22:45] Speaker 01:
So yes, on a particular day, they asked the contracting officer during the certified claim, what was, you know, where's the DOD finance officer?

[00:22:52] Speaker 01:
And the contracting officer got it wrong.

[00:22:55] Speaker 01:
But the point, Your Honor, is, is it a contractual requirement that they have notice as to what the rate is?

[00:23:02] Speaker 01:
And the answer is no.

[00:23:03] Speaker 01:
The rate is determined.

[00:23:06] Speaker 02:
Yes, Your Honor, please.

[00:23:07] Speaker 02:
I tried to ask you a question that was common sense of the statute.

[00:23:10] Speaker 02:
I know your position is,

[00:23:12] Speaker 02:
We don't care under this contract, on this record, whether they couldn't have access or not.

[00:23:18] Speaker 02:
Tell me why if it's, give me an intuition about why that's not very strange.

[00:23:24] Speaker 01:
Okay.

[00:23:25] Speaker 01:
Well first, the issue, the only issue really that there is, the legal issues I think are on our side, the issue is a matter of how could we know what the rate is.

[00:23:35] Speaker 01:
It seems unfair that we have to pay a rate and we don't know what it is.

[00:23:40] Speaker 01:
And

[00:23:41] Speaker 01:
As a matter of contract administration, you have a client who has a relationship with a contracting officer or contracting officer's representative, and it is the contracting officer's representative to say, as we had here, we have a picture of what the rates are.

[00:23:55] Speaker 01:
If for some reason you can't access the base or you can't access the personnel on the base,

[00:24:00] Speaker 01:
Let me send you evidence of what that rate is.

[00:24:02] Speaker 01:
That should have happened in this case.

[00:24:04] Speaker 01:
No question, Your Honor.

[00:24:05] Speaker 01:
The contracting officer should... I didn't mean to interrupt you.

[00:24:07] Speaker 02:
No, no.

[00:24:07] Speaker 02:
So there's some idea here that there's a relationship between the contractor and the contracting officer that can effectively supply information that they may not be able to get directly.

[00:24:17] Speaker 01:
If it's true that they can't access the base, that they can access the contracting officer who should be able to tell them, as we did in this case,

[00:24:29] Speaker 01:
Here's a picture of what's posted.

[00:24:32] Speaker 03:
You didn't tell them until after a claim was made.

[00:24:36] Speaker 01:
There's no question.

[00:24:37] Speaker 01:
They raised it in their certified claim.

[00:24:39] Speaker 01:
They didn't raise it during the payments at issue.

[00:24:41] Speaker 01:
They filed a certified claim and the contracting officer at that time, not during the earlier administration of the contract, gave them incorrect information.

[00:24:50] Speaker 01:
That's correct.

[00:24:50] Speaker 01:
That's not dispositive here for the reasons I mentioned, Your Honor, as to

[00:24:56] Speaker 01:
who should win as to whether or not they have contract damages.

[00:24:59] Speaker 01:
I mean, it's really a case about contract damages.

[00:25:01] Speaker 01:
There's no question that the government's position is that the five-day rate controls, and there's no question they don't dispute, as you heard Ms.

[00:25:08] Speaker 01:
Santana-Torres say, that the three-day rate's more favorable.

[00:25:10] Speaker 01:
The rate they received is more favorable.

[00:25:12] Speaker 01:
So they weren't damaged.

[00:25:13] Speaker 01:
They benefited, not by much, but they benefited.

[00:25:16] Speaker 01:
The question that you're focused on is, well,

[00:25:19] Speaker 01:
Where's the fairness if they don't know what the rate is?

[00:25:21] Speaker 01:
And putting aside what I said earlier as to, there's no evidence they didn't know, but assuming they didn't know, they could have picked it.

[00:25:26] Speaker 01:
Theoretically, they could have picked it.

[00:25:29] Speaker 02:
Yes, you're on.

[00:25:30] Speaker 02:
Yes, please.

[00:25:31] Speaker 02:
They make this point, they don't exactly feature it, but I'm not sure that matters.

[00:25:37] Speaker 02:
You read this claim language and you say, huh, I wonder what that is.

[00:25:41] Speaker 02:
So your position ends up being, because you wrote McManus' declaration and nothing contrary, that there are these three-day, five-day rates and only one of them was posted and there's nothing else to consider.

[00:25:56] Speaker 02:
They make the point, if we're trying to figure out what the right meaning of this slightly odd term is, why don't we start with McManus saying there's an actual exchange rate being, there must be dollars exchanged for Afghanis, and one of those rates is higher.

[00:26:20] Speaker 02:
Don't they have some point that

[00:26:23] Speaker 02:
And you distinguish it, and I think the CFC distinguishes it as saying, that's not really this kind of exchange rate.

[00:26:29] Speaker 02:
That's about conversions.

[00:26:31] Speaker 02:
Why shouldn't the conversion rate be a meaningful way of interpreting this?

[00:26:38] Speaker 01:
I agree.

[00:26:40] Speaker 01:
That's the point, Your Honor, is that this case, as the trial court below correctly stated and found, is about currency conversion through the ITS.gov system, which is a way you convert

[00:26:51] Speaker 02:
dollars to afghani there's another mechanism i think i'm not asking okay and so you're gonna have to help me uh... you understand this record i don't have the details they have some arguments about and there was something in the cfc opinion about cash transactions or something and wrong rate wrong kind of thing that's not about context can you address that yes let me try to explain the context of that okay we'll start with arman's argument arman's argument is that

[00:27:21] Speaker 01:
This contract is the biggest one.

[00:27:23] Speaker 03:
Can you just answer the question?

[00:27:25] Speaker 01:
I'm trying, Your Honor.

[00:27:26] Speaker 01:
I'm trying.

[00:27:26] Speaker 01:
But it's pretty straightforward.

[00:27:30] Speaker 01:
Make sure I understand your question.

[00:27:32] Speaker 01:
Because your question was that there was some discussion in the trial court about the difference between purchasing currency versus converting.

[00:27:47] Speaker 01:
Exactly.

[00:27:47] Speaker 01:
And that's what I'm trying to get at.

[00:27:49] Speaker 02:
I'm going to assume here that

[00:27:52] Speaker 02:
Other rate is more favorable to them than either this three or five day thing.

[00:27:55] Speaker 01:
Well, you don't have to assume that.

[00:27:56] Speaker 01:
They agree that the three day rate is more.

[00:28:00] Speaker 02:
They want that other rate.

[00:28:02] Speaker 02:
And the CFC said, no, no, no, wrong rate.

[00:28:04] Speaker 02:
Can't possibly be.

[00:28:06] Speaker 01:
Why is that not the same?

[00:28:07] Speaker 01:
I'll ask you what you're saying.

[00:28:08] Speaker 01:
They want the Treasury quarterly rate.

[00:28:11] Speaker 01:
I apologize if I didn't understand your question.

[00:28:14] Speaker 01:
You're asking about the Treasury quarterly rate and why that does not apply according to the government.

[00:28:17] Speaker 01:
Well, what about the cash exchange rate?

[00:28:19] Speaker 01:
Well, that's why I was, the cash exchange rate.

[00:28:22] Speaker 01:
That's why I was trying to answer, Your Honor, because I thought you were asking about their argument that there is a reference in Chapter 12 of the FMR, the Department of Defense Financial Management Regulation, concerning the purchase of securities and a reference to an official rate.

[00:28:41] Speaker 01:
And that official rate is not the five-day rate, conceded.

[00:28:44] Speaker 01:
And what the trial court said, and what we argue the trial court agreed, and we have evidence to that effect, this case does not involve the purchase of

[00:28:51] Speaker 01:
currency.

[00:28:52] Speaker 01:
It involves the conversion of currency.

[00:28:54] Speaker 01:
These are two different transactions.

[00:28:57] Speaker 01:
This case involves conversion, so it means the core providing a dollar amount through ics.gov and then the Afghani amount that corresponds to that is then transferred to an Afghani bank

[00:29:10] Speaker 01:
for the benefit of Omron.

[00:29:14] Speaker 03:
So what is the default official rate under the regulations?

[00:29:17] Speaker 03:
I mean, you can argue that it doesn't apply to the contract.

[00:29:22] Speaker 03:
But under the regulations, what would be the acquisition rate that's defined in the regulations?

[00:29:29] Speaker 01:
The acquisition rate under the regulations.

[00:29:31] Speaker 01:
That's a rate that would apply in the context of a purchase of securities.

[00:29:36] Speaker 01:
So we're dispersing officer as a limited depository account.

[00:29:40] Speaker 01:
and purchase securities, and then pays vendors through that.

[00:29:42] Speaker 01:
But as we've shown, though, however, the dispersing officer, Kevin Heath, has an affidavit saying there are only three currencies for which the Corps has done that.

[00:29:52] Speaker 01:
The won, the yen, the euro, not the Afghani.

[00:29:55] Speaker 01:
That's not what's going on here.

[00:29:56] Speaker 01:
You don't have purchase going on here.

[00:29:57] Speaker 01:
You have conversion through ITS.gov.

[00:30:00] Speaker 01:
The five-day rate that was posted during the entire payment period is the official rate per the contract.

[00:30:06] Speaker 01:
And Omron concedes that the rate they received

[00:30:10] Speaker 01:
is more favorable than the five-day rate, which is a contract rate.

[00:30:14] Speaker 01:
Therefore, they have no damages.

[00:30:16] Speaker 01:
They, in fact, benefited from the fact that the court used a more favorable rate than was acquired by the contract.

[00:30:24] Speaker 01:
And so the distinction that the trial court addressed, Your Honor, Judge Toronto, that you're asking about between the purchase of securities and inversion, because they're relying upon

[00:30:33] Speaker 01:
a revision that talks about the acquisition rate, which is a rate applied to the purchase of securities.

[00:30:38] Speaker 01:
Again, there's uncontroverted evidence that there is no purchase of securities here.

[00:30:43] Speaker 01:
None of Omron's payments were made as a result of the purchase of securities from a limited depository account.

[00:30:48] Speaker 01:
It was made through conversions of dollar amounts through ITS.gov pursuant to the three-day rate, which is more favorable than the five-day rate.

[00:30:57] Speaker 03:
So what we have is you enter into contracts, and then you decide later what you're going to pay them?

[00:31:03] Speaker 03:
You can set the rate at whatever you want.

[00:31:05] Speaker 01:
Oh, no, I'm not going to say whatever you want because it's set the dollar amount.

[00:31:09] Speaker 03:
It's not a hard and fast set.

[00:31:12] Speaker 03:
It is.

[00:31:13] Speaker 01:
Well, it's not hard and fast because by contract... There's flexibility.

[00:31:16] Speaker 01:
I mean to talk over your honor, I'm sorry.

[00:31:17] Speaker 03:
There's flexibility.

[00:31:18] Speaker 03:
So in other words, you've got a contract.

[00:31:20] Speaker 03:
You enter into a contract that says we're going to pay you and we're going to pay you at an official rate and then we're going to decide later whatever that official rate is.

[00:31:28] Speaker 01:
Well, no, what the contract says is that the currency... This is the exact word to the contract.

[00:31:31] Speaker 01:
Contract says.

[00:31:32] Speaker 01:
that the currency exchange rate will be determined at the official exchange rate that is posted by the local DOD finance offices for each payment in accordance with DOD regulations.

[00:31:43] Speaker 01:
So in the contract language itself, which is the contract clause at issue, the rate that will be determined is the rate that is posted by a local DOD.

[00:31:52] Speaker 01:
And we entered in evidence that for Afghanistan, in fact for the Middle East, they're actually, the army has chosen the five-day rate for the entire payment period

[00:32:00] Speaker 01:
it had no option other than to use to post the five-day rate.

[00:32:06] Speaker 03:
When we make it the fact that the contracts have now been changed to set a specific rate?

[00:32:12] Speaker 01:
I'm sorry, what was the first part of your question?

[00:32:14] Speaker 03:
When we make it the fact that now, in your contracts, you set a specific rate?

[00:32:17] Speaker 01:
Oh, nothing.

[00:32:18] Speaker 03:
Well, if it was so unambiguous.

[00:32:20] Speaker 03:
No, no, no, it was nothing, because that's... Why would you bother to change the contract?

[00:32:22] Speaker 03:
Well, I don't want any of the core... Can you let me finish?

[00:32:25] Speaker 03:
Oh, I apologize, Your Honor.

[00:32:26] Speaker 03:
I apologize.

[00:32:27] Speaker 03:
You don't have to get angry because I'm asking a question.

[00:32:29] Speaker 01:
I'm not angry at all, Your Honor.

[00:32:30] Speaker 01:
I'm sorry.

[00:32:30] Speaker 03:
So what do we make of the fact that if it was so incredibly unambiguous, the government now felt the need to change the contract to set a specific rate?

[00:32:43] Speaker 01:
Well, Your Honor, one, it's not clear to me.

[00:32:46] Speaker 01:
And I apologize.

[00:32:46] Speaker 01:
I did not mean to talk over you.

[00:32:47] Speaker 01:
And I'm certainly not angry.

[00:32:50] Speaker 01:
The different language that they started in their brief, like, oh, now there's a different clause out there.

[00:32:56] Speaker 01:
which does not have this language about local DOD posting.

[00:33:00] Speaker 01:
In fact, it's going to be a different rate.

[00:33:02] Speaker 01:
That's true.

[00:33:02] Speaker 01:
That change was made.

[00:33:03] Speaker 01:
There's no evidence in the record as to why that was made.

[00:33:06] Speaker 01:
But more importantly, Omron has conceded that that clause doesn't apply.

[00:33:12] Speaker 01:
It's not a clause that is incorporated into any of the three contracts at issue.

[00:33:19] Speaker 01:
And there's no inference, no reasonable inference can be made that that change was somehow made

[00:33:23] Speaker 01:
because there's some ambiguity with respect to what the local DOD finance office is.

[00:33:30] Speaker 01:
Because there is no ambiguity with respect to what the local DOD finance office is based upon the fact that there has been only one army finance office during this entire period that's posted a single five-day rate for all 60 payments at issue.

[00:33:48] Speaker 01:
So there is no ambiguity.

[00:33:50] Speaker 01:
as to that, and because there's no ambiguity as to what rate applies under the contracts, the five day rate, and there's no disputed evidence as to the three day rate that's more favorable to what they received, they are not entitled to any damages because the court decided to give them that more favorable rate.

[00:34:06] Speaker 02:
I think I may at least be getting a little closer to understanding my own question before.

[00:34:15] Speaker 02:
The acquisition rate.

[00:34:17] Speaker 02:
Yes.

[00:34:18] Speaker 02:
This is where I think that the appendix page seven, CFC from page six.

[00:34:25] Speaker 02:
Yes.

[00:34:26] Speaker 02:
I think the CFC relies on Mr. Heath, who's a core dispersing officer, testimony that that acquisition rate, the one that is

[00:34:35] Speaker 02:
more favorable than either the five-day or three-day, wouldn't apply to Afghanis at all?

[00:34:42] Speaker 02:
I mean, Afghanis as a currency.

[00:34:45] Speaker 02:
That's right.

[00:34:46] Speaker 02:
But only the yuan, yen, and euro?

[00:34:48] Speaker 01:
Yes, Your Honor.

[00:34:49] Speaker 02:
Is that right?

[00:34:49] Speaker 02:
That's right.

[00:34:51] Speaker 01:
Yeah, that's his testimony.

[00:34:52] Speaker 01:
He's the dispersing officer of the Corps saying that we do purchase securities in certain limited circumstances with the yuan, the yen, and the euro, not the Afghanis.

[00:35:02] Speaker 01:
What we have here is conversion.

[00:35:04] Speaker 01:
which is a very different process.

[00:35:06] Speaker 01:
There's no U.S.

[00:35:07] Speaker 01:
financial institution intermediary involved with a depository account that's purchased this currency.

[00:35:11] Speaker 01:
Instead, it's the Corps saying, okay, we have Omron's owed, say, a million dollars.

[00:35:19] Speaker 01:
Please use the, well, in this instance, the three-day rate to convert that into Afghanis, so that it's transferred into Afghanis into Omron's bank account, the three-day rate.

[00:35:29] Speaker 03:
So that's what we have.

[00:35:30] Speaker 03:
One last question.

[00:35:31] Speaker 01:
Yes, Your Honor.

[00:35:31] Speaker 03:
Is there anything in the regulations at all

[00:35:33] Speaker 03:
that discusses posting of rates?

[00:35:37] Speaker 01:
I'm not aware of anything in the DOD financial regulations that specifically discuss the posting of rates.

[00:35:46] Speaker 01:
The only thing to know, Your Honor, I'm not aware of that.

[00:35:50] Speaker 03:
OK, you're way over time.

[00:35:53] Speaker 01:
I see that I'm way over time.

[00:35:54] Speaker 03:
We'll restore your full five minutes so that we keep it clear.

[00:36:06] Speaker 04:
I'd like to draw the court's attention to appendix page 108.

[00:36:10] Speaker 04:
And this is second to the first, actually, affidavit of Lieutenant McManus.

[00:36:15] Speaker 04:
And paragraph four states that the 159th FMSD serves as one of two currently existing army finance offices located in Afghanistan.

[00:36:28] Speaker 04:
So in fact, Your Honor, the evidence suggests that there were two at one time.

[00:36:31] Speaker 04:
I'm not sure what the ever

[00:36:34] Speaker 04:
office was posting that's not a fact in evidence but it's certainly one that would be helpful to determining a fair and equitable results in this case.

[00:36:45] Speaker 00:
As the court just heard... What equitable result are you looking for in this case?

[00:36:52] Speaker 04:
Again your honor we believe that the prevailing rate... The answer is 1.5 million dollars right?

[00:36:56] Speaker 04:
Yes the answer is 1.5 million dollars.

[00:37:00] Speaker 00:
When you signed on to the when you submitted your bid

[00:37:03] Speaker 00:
How did you know you were going to come out that that $1.4 million was going to be paid to you?

[00:37:10] Speaker 00:
You agreed that you would get it at a specific rate.

[00:37:13] Speaker 00:
At that time, nobody knows what that rate's going to be.

[00:37:18] Speaker 04:
Our central position, Your Honor, is that the rate should be based on something.

[00:37:22] Speaker 04:
It shouldn't just be this magical.

[00:37:24] Speaker 00:
It was based on the three-day rate, which

[00:37:28] Speaker 00:
In fact, you were entitled to the five-day rate, but you got the three-day rate, so you're ahead of the gate, not behind.

[00:37:33] Speaker 00:
Where have you been harmed?

[00:37:37] Speaker 00:
I've read through your brief very carefully.

[00:37:40] Speaker 00:
It seems to me that you brought an appeal based on principle.

[00:37:44] Speaker 00:
You want there to be an admission, that there's an ambiguity, that there was an error.

[00:37:50] Speaker 00:
That's been admitted to.

[00:37:51] Speaker 00:
That's been acknowledged.

[00:37:53] Speaker 00:
But when it comes down to it,

[00:37:55] Speaker 00:
There was a prevailing rate, I mean a posted rate.

[00:37:58] Speaker 00:
That rate was a five-day rate.

[00:38:01] Speaker 00:
You got paid the three-day rate.

[00:38:03] Speaker 00:
You got paid more than what you should have.

[00:38:06] Speaker 00:
What's the appeal here?

[00:38:08] Speaker 04:
Thank you for that question, Your Honor.

[00:38:10] Speaker 04:
Our question in return would be the three-day rate is based on what?

[00:38:15] Speaker 04:
Is it a market-based rate?

[00:38:16] Speaker 04:
Is it based on the acquisition costs of the government?

[00:38:18] Speaker 04:
Is this money in, money out?

[00:38:21] Speaker 04:
And so far we've seen no evidence.

[00:38:23] Speaker 00:
It's not a question, your bill is not a question of whether something is publicly posted or not or whether it's available to you or not.

[00:38:33] Speaker 00:
The problem you're having is how did they actually, what's the financial computation used in order to arrive at that rate?

[00:38:40] Speaker 00:
That's what you would like to be disclosed.

[00:38:43] Speaker 04:
That's certainly a large portion of it, Your Honor.

[00:38:46] Speaker 04:
We know what the prevailing rate is and it's more favorable to us.

[00:38:49] Speaker 04:
If the government is paying something else, then we would certainly like to know what that is.

[00:38:53] Speaker 04:
The quarterly elates are based on the acquisition rate, and they report something for Afghani, meaning they must acquire Afghani at some point.

[00:39:03] Speaker 00:
There's a cost.

[00:39:04] Speaker 00:
This is not about acquisition.

[00:39:05] Speaker 00:
It's not about buying currencies.

[00:39:07] Speaker 00:
It's about converting currencies.

[00:39:09] Speaker 04:
It's about fairness, Your Honor.

[00:39:11] Speaker 04:
If the government is receiving a certain rate to get Afghani and to pay us in that currency, and we're seeing something different,

[00:39:18] Speaker 04:
then that doesn't seem to be fair to the contractor in this position.

[00:39:22] Speaker 03:
Are you saying that the contract should have actually said, we're going to pay you at a non-market rate?

[00:39:28] Speaker 04:
No, Your Honor.

[00:39:28] Speaker 04:
I think the contract, if it was trying to be clear, would say what the current contract clause says, that the rate will be, and there's a blank space to post that rate, so that every party is on the same page about what's going to be applied during the pendency of the contract.

[00:39:41] Speaker 03:
But you didn't inquire at the time of the bid, did you, as to what that was?

[00:39:45] Speaker 03:
all that language about local DOD Finance Office meant?

[00:39:49] Speaker 04:
No, Your Honor.

[00:39:50] Speaker 04:
Again, we would posit that isn't a patent ambiguity, and we had no reason to question it until we received money that wasn't tied to anything we had notice of.

[00:39:58] Speaker 00:
Now, reading your brief, I do understand well the argument that you're making, that there should be some fairness involved so all parties should know what the rate is.

[00:40:07] Speaker 00:
And that seems to me to be one of the

[00:40:11] Speaker 00:
the principle arguments that you're making.

[00:40:14] Speaker 00:
That's almost what your appeal is about.

[00:40:16] Speaker 04:
Correct.

[00:40:17] Speaker 00:
That fairness.

[00:40:18] Speaker 00:
You're looking for fairness.

[00:40:20] Speaker 00:
This is a court of law.

[00:40:22] Speaker 00:
We look at controversies.

[00:40:24] Speaker 00:
And the Court of Federal Claims basically said that you have no damages here.

[00:40:31] Speaker 00:
Because even at this point, you're not alleging damages.

[00:40:35] Speaker 00:
You should have gotten a certain rate, but you didn't.

[00:40:40] Speaker 00:
You're just saying it wasn't fair, however way they came about it.

[00:40:44] Speaker 00:
But the fact is that you did get a rate.

[00:40:48] Speaker 00:
That rate was a three-day rate.

[00:40:51] Speaker 00:
The facts in the record show you should have gotten the five-day rate.

[00:40:55] Speaker 00:
You got more than what you should have.

[00:40:58] Speaker 00:
What is your appeal?

[00:41:00] Speaker 00:
What is your damage?

[00:41:02] Speaker 04:
Ombra would say, Your Honor, it isn't a dichotomy between three-day and five-day.

[00:41:05] Speaker 04:
The question is, we have a prevailing rate that's more favorable.

[00:41:08] Speaker 04:
We were paid less.

[00:41:09] Speaker 04:
And why is that?

[00:41:10] Speaker 04:
Why are we restricting it to these three-day or five-day rate?

[00:41:13] Speaker 03:
You're saying more favorable even than the three-day rate.

[00:41:17] Speaker 04:
Correct, Your Honor.

[00:41:18] Speaker 04:
More favorable than the three-day rate.

[00:41:20] Speaker 00:
What rate was that?

[00:41:22] Speaker 04:
Pardon me, Your Honor?

[00:41:22] Speaker 00:
Which was the most favorable rate?

[00:41:25] Speaker 04:
The Treasury quarterly rates, Your Honor.

[00:41:28] Speaker 00:
The acquisition rate?

[00:41:29] Speaker 04:
The acquisition rate was the most favorable.

[00:41:31] Speaker 00:
But this is not an acquisition matter.

[00:41:32] Speaker 00:
This is a conversion.

[00:41:35] Speaker 00:
When you submitted your bid, you agreed to be paid in Afghanis.

[00:41:40] Speaker 00:
That's a conversion matter.

[00:41:42] Speaker 04:
And if the government incurs any cost for that conversion that relates to dollars and cents, we would love to see that, Your Honor.

[00:41:49] Speaker 04:
It isn't in evidence.

[00:41:50] Speaker 04:
We know that the three-day rate is a number.

[00:41:52] Speaker 04:
You put in the dollars in its.gov and it generates a separate number.

[00:41:57] Speaker 00:
And that's your fairness argument.

[00:41:58] Speaker 04:
And we don't know what's behind that black box.

[00:42:00] Speaker 00:
We have no idea.

[00:42:04] Speaker 04:
Thank you.

[00:42:05] Speaker 03:
OK.

[00:42:05] Speaker 03:
Thank you.

[00:42:06] Speaker 03:
The cases will be submitted.

[00:42:07] Speaker 03:
We thank counsel.

[00:42:09] Speaker 03:
This court is adjourned.