[00:00:03] Speaker 01:
Okay.

[00:00:03] Speaker 01:
The first argued case this morning is Palantir, USG, Incorporated against the United States.

[00:00:11] Speaker 01:
Ms.

[00:00:11] Speaker 01:
Krishnan.

[00:00:17] Speaker 02:
May it please the court.

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The underlying issue in this case is whether an agency may purchase consolidated software products together with software engineering products in one procurement action.

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and or whether the agency has to conduct a full and detailed investigation of whether a commercial software product meets all or part of the agency requirements.

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As the Army explained in the October 2015 determination of the contracting officer and Miss Heidi Shue, what the Army needs in this case is to acquire a complete package

[00:00:59] Speaker 02:
of commercial software products together with software engineering services.

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And so what is happening?

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Is there a re-procurement?

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Is that what ensues?

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Would it ordinarily ensue from this decision?

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We're here because the court enjoined the agency from proceeding further with the procurement action.

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There was a permanent injunction saying that we cannot go any further.

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With the procurement or with the award that was made?

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Where no action is taking place?

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Offers were submitted which consist of software products and engineering services.

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The agency was evaluating those offers and then the court issued its permanent injunction saying that we cannot go any further until we essentially redo the market research.

[00:01:53] Speaker 01:
So the answer is everything has stopped?

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Is that what you're telling me?

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We are saying that everything has stopped.

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There's no procurement.

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There's no activity of any sort.

[00:02:02] Speaker 02:
That's correct.

[00:02:03] Speaker 02:
There's no, there's no, on D6 increment two, there's a permanent injunction.

[00:02:08] Speaker 01:
As a result of that permanent injunction against the award that was made.

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Yes.

[00:02:14] Speaker 02:
No, no, there was no award to clarify.

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There's never been an award.

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The injunction precludes us from going any further.

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unless we redo the market research.

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So this is a pre-award bid protest.

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It is a pre-award bid protest.

[00:02:32] Speaker 01:
OK.

[00:02:32] Speaker 01:
And so does that mean that the internal development is not proceeding also?

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That the internal development of the information is essentially the subject of the initial?

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The procurement is stopped as a result of the permanent injunction.

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OK.

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I have a question for you.

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I understand that our standard of review is de novo, applying the same standard that was applied by the Court of Federal Claims.

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So there's a law in your brief that talks about fully investigating and emphasizing the word fully.

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Given that we're applying a de novo standard of review, we're not bound to follow that requirement of full leader, as you argue an additional requirement of full leader.

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We're just going to look at the statute and do a de novo review.

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Is that correct?

[00:03:27] Speaker 02:
That's correct.

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But also, in addition to the statute, the statute directs the court to look to the FAR, the Federal Acquisition Regulation.

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And it's to the Federal Acquisition Regulation

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that the court should have looked to in this case in deciding whether or not there was a violation of the statute.

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And what in particular in the FAR do you think specifies that there was an error as compared to looking at the statute itself?

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What is the difference that the FAR provides?

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What the FAR provides is clarification.

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For example, the FAR in

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Paragraph 2.1.01 defines market research as, quote, collecting and analyzing information about capabilities within the market to satisfy agency needs.

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It's our contention that the court should have looked to the far

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in interpreting the statute, followed the FAR.

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And in this case- But wasn't it that the Court of Federal Claims said that it was really the problem here, she found, was that there was no use or little use of the results of the market research to determine whether there are commercial items.

[00:04:41] Speaker 03:
So then how does your definition help in that manner?

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What the FAR also does is talk to the techniques of doing market research.

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What about the determination requirement, using the market research to make a determination?

[00:05:00] Speaker 02:
Yes.

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In that respect, what the record showed here was that the contracting officer used the market research in making his determination that there was not

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either a commercial product or a commercial service that met the entire requirements of increment two.

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And there, the FAR has very specific definitions of a commercial service and a commercial product that constitute a commercial item.

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And he relied specifically on those FAR provisions in making his determination.

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These are separate provisions of the FAR in section 2.101, specifically in paragraphs.

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This is subparagraphs five and six.

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There is a definition of a commercial service.

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And he made the determination that the market research showed that there was no

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commercial service.

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Do you mean commercial items, or do you mean commercial service?

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I'm looking at the far right now, the definitions you're referring to, and I think it's commercial item.

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Am I incorrect?

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Yes, but within the, no, the court is correct, but within the definition of commercial item, there are several subparagraphs, and we would direct your attention to the subparagraphs

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of five and six, which deal with services.

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And for a service to come within a commercial item definition, it must fall within those paragraphs five and six.

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The contracting officer found, and this is explained in his report to the GAO and also in his declarations, that based on the market research, the engineering services, the software engineering services,

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that were part of increment two do not fall within paragraphs five or six.

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This is an aspect of the contracting officer's determination that was not addressed by the court of federal claims.

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The court did not address the definition of a commercial service, and it did not address the contracting officer's determination that the software engineering services that are part of increment two

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are not a commercial item.

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They do not fall within the definition.

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If I could turn back to the market research itself, the court here has added this new requirement that we have to have a full investigation of whether a commercial item, for example, Palantir's platform, meets all or part of the increment two requirements.

[00:07:59] Speaker 02:
This is not set forth in the FAR, and it's especially unreasonable in the context of D6.

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The Army knew, based on its experience, that commercial software products were going to be part of increment two.

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In fact, the solicitation requires that the contractor list out all of the commercial software products

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together with government-owned software products and open source software products that are going to be part of the whole combination of services that is being provided to the government.

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The government has not precluded the contractor from using any particular commercial software product.

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For example, an offeror could come in and its proposal hypothetically

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hypothetically now, could include a Palantir platform as part of the solution for increment two.

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What the government did not know in this case is what combination of commercial software products, government-owned software products, open source software products, plus software engineering services would provide the best value to the government.

[00:09:23] Speaker 03:
Where in the record is that spelled out?

[00:09:28] Speaker 02:
We're in the record?

[00:09:31] Speaker 02:
Yeah.

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I cite the court to this is from the solicitation that the contractor has to maximize the reuse

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gots and cots software products, appendix page 11877, 11901, 11880.

[00:09:54] Speaker 03:
Sorry, I apologize.

[00:09:55] Speaker 03:
118, I couldn't hear you.

[00:09:58] Speaker 02:
I'm sorry.

[00:09:59] Speaker 03:
You start over.

[00:10:00] Speaker 02:
Yes.

[00:10:02] Speaker 02:
The slower, I apologize.

[00:10:04] Speaker 02:
11877, 11901, 11880, 11876.

[00:10:15] Speaker 03:
Thank you.

[00:10:19] Speaker 02:
Further, as I said, the Army hasn't placed any prohibition on the use of commercial software products.

[00:10:26] Speaker 02:
That citation would be 1009.

[00:10:34] Speaker 02:
The Army's research method in this case was to issue requests for information and then to contact the contracting officers and product managers

[00:10:45] Speaker 02:
for the contracts that companies identified and verify the capabilities that companies asserted in response to these requests for information.

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That's in our brief at the opening brief pages 18, 58, reply brief at 13.

[00:11:04] Speaker 02:
The record sites would be 11796, 11826 to 27, 11841, 12271,

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and 16350.

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This was a reasonable method of conducting market research.

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And there are no hard facts in the record that demonstrate that the Army abused its discretion.

[00:11:31] Speaker 02:
What the court suggested as an alternative was that the Army conduct perhaps demonstrations or that the Army engage in a follow-up correspondence

[00:11:44] Speaker 03:
with Palantir to... One of the things the Court of Federal Claims said is that the requests for information were focused on developing as opposed to encouraging the use of commercial products or even seeking information about commercial products.

[00:12:04] Speaker 03:
What is your response to that finding?

[00:12:07] Speaker 02:
The court did not construe those requests

[00:12:13] Speaker 02:
in the context of what the Army knew.

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The Army knew that it needed both integration and development based on the requirements for increment two.

[00:12:25] Speaker 02:
And what the requests for information asked for is, what past experience do you have in integrating?

[00:12:34] Speaker 03:
It also said developing, didn't it?

[00:12:36] Speaker 02:
Yes, also development.

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in integrating with also other software products and also developing new software.

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Now the reason this is important is because D6 itself is an integrated solution.

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It includes both government-owned software and commercially-owned software.

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And whoever is going to take on this task

[00:13:06] Speaker 02:
has to be an integrator.

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They have to have experience in integrating, for example, targeting software, operations on the move software with other software.

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So it asks that question.

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There are also new requirements.

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Specifically, this is brought out in our brief and also in the record, there is a new requirement for a

[00:13:33] Speaker 02:
counterintelligence, human intelligence, single software solution.

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That's addressed in our opening brief, pages 9 to 10, page 59, and the reply brief at page 12, with the citations being there.

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This is part of the very first task order, and it would be new development.

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What it is is a software solution

[00:14:00] Speaker 02:
that supports collection reporting and mission support functions in accordance with DOD standards, and it builds a software interface between the Army's D6 and the Defense Intelligence Agency system.

[00:14:14] Speaker 02:
There's no commercial marketplace for such services, and there are no commercial products

[00:14:20] Speaker 02:
that perform such services.

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I understand you to be saying that what was sought here was something that would be the use of commercial products, maybe more practical, combined with integration.

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And you may have already given me these sites, but one thing that I haven't really appreciated from the record that I've reviewed is the emphasis on the commercial items.

[00:14:46] Speaker 03:
So is the sites that you gave me earlier your best sites for the government's encouragement of the use of commercial items in responding to the RFI?

[00:15:03] Speaker 02:
There are additional sites in our brief.

[00:15:06] Speaker 02:
There's a discussion of the December report and the July report.

[00:15:15] Speaker 02:
I would point the court to our brief and the citations in our brief at pages, this is the government's opening brief, pages 49 to 55 to 56, and the reply brief pages 10 to 11.

[00:15:29] Speaker 02:
And there there are citations to specific paragraphs of the market research report that address the capabilities of individual companies.

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And those paragraphs identify commercial products of those companies.

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And they assess those companies' capabilities in terms of the products that they have, as well as their engineering services.

[00:16:04] Speaker 03:
And also, I wanted to ask you, where in the market research report is there a discussion of integration?

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and integration capabilities.

[00:16:19] Speaker 02:
It goes through the RFIs and the RFIs themselves ask for your capabilities at integrating, specifically the first and second RFI ask for capabilities in integrating

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government-owned software with commercially-owned software.

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That's what the information we were looking for.

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And specifically, Palantir did not provide that information in response to the second RFI.

[00:16:52] Speaker 03:
Do you think integration is discussed in the market research report?

[00:16:58] Speaker 02:
It discusses the request for information, quotes those requests,

[00:17:05] Speaker 02:
And those requests ask for information about past experience in integration.

[00:17:12] Speaker 01:
It was requested.

[00:17:14] Speaker 01:
That's part of the problem, isn't it?

[00:17:17] Speaker 01:
I see.

[00:17:18] Speaker 01:
It was requested and not provided.

[00:17:19] Speaker 01:
Excuse me?

[00:17:20] Speaker 01:
It was requested but not provided.

[00:17:22] Speaker 01:
Isn't that part of the issue that was before the Court of Federal Claims?

[00:17:30] Speaker 01:
I'm sorry.

[00:17:30] Speaker 01:
I'm not hearing you.

[00:17:32] Speaker 01:
The market research.

[00:17:35] Speaker 01:
These were very far-ranging requests for information.

[00:17:41] Speaker 01:
And part of the problem that the Court of Federal Claims was concerned with and relied on was what was viewed as the inadequacy of the response.

[00:17:54] Speaker 01:
Isn't that accurate?

[00:17:59] Speaker 02:
What the court did is conclude that the presumption of administrative regularity was overcome.

[00:18:08] Speaker 02:
And because of that, it put aside all of the information that the agency had collected in response to the RFIs.

[00:18:19] Speaker 02:
It characterized over 1,000 pages of information as being, quote, no evidence.

[00:18:27] Speaker 02:
That body of information,

[00:18:30] Speaker 02:
contains information about commercial products and information about engineering services.

[00:18:37] Speaker 02:
And it was all assessed by the Army for each company individually, and they assessed their capabilities of providing the services for increment two based on the information they provided.

[00:18:52] Speaker 01:
Let's hear from the other side, and we'll save you some regrettable time.

[00:19:02] Speaker 01:
Mr. Olson.

[00:19:04] Speaker 00:
Thank you, Judge Newman.

[00:19:05] Speaker 00:
May it please the court?

[00:19:07] Speaker 00:
Congress knew exactly what it was doing in 1994 when it unanimously enacted the Federal Acquisitions Streamlining Act.

[00:19:18] Speaker 00:
It was fed up, Congress, there's ample testimony and congressional hearings, Congress was fed up with wasteful, corrupt, expensive, incompetent development contracts.

[00:19:30] Speaker 00:
And therefore, it unambiguously

[00:19:32] Speaker 00:
explicitly and without a single dissenting vote in Congress, ordered military procurement officials to research and seek out and give a preference to commercial items to the maximum extent practical.

[00:19:50] Speaker 00:
In short, what Congress ordered the military services to do is to stop perpetually reinventing the wheel at great expense

[00:20:01] Speaker 00:
and great delay and bad results.

[00:20:04] Speaker 00:
The Army in this case ignored that command.

[00:20:09] Speaker 00:
It's important to focus on what Congress explicitly did

[00:20:14] Speaker 03:
And Congress could not have... I'd like to ask you one question.

[00:20:18] Speaker 03:
Could I get your response to Ms.

[00:20:20] Speaker 03:
Kirchner's reliance on the definition of commercial service?

[00:20:26] Speaker 03:
I mean, I understand that the statute is requiring market research regarding commercial items.

[00:20:32] Speaker 03:
So I'm having a hard time understanding the relationship there with commercial service.

[00:20:37] Speaker 00:
I think in the first place, the FARC cannot and does not amend the statute itself.

[00:20:42] Speaker 00:
and we all know what a commercial product is.

[00:20:45] Speaker 00:
It's something that you can go out and buy and purchase.

[00:20:49] Speaker 00:
The whole background of the enactment of this statute is, and this statute is specific, it talks in terms of commercial items and then it says if commercial items aren't available go to non-developmental items and then lastly go to a developmental item.

[00:21:07] Speaker 00:
Commercial item means that

[00:21:09] Speaker 00:
if it's out there in the marketplace and you can purchase it or you can purchase it with modifications or if you can suggest modifications in your requirements to make it available to purchase something that already exists, if there are wheels out there, buy wheels.

[00:21:26] Speaker 00:
Change your configuration of your product if necessary, but do all of those things to avoid developmental contracts.

[00:21:35] Speaker 00:
So what

[00:21:36] Speaker 00:
And it's interesting because Congress could not have been more specific about the fact that it was commanding focus on available items in the marketplace.

[00:21:47] Speaker 00:
There's a stipulation.

[00:21:49] Speaker 00:
In this case, it's stipulation three, I believe it is, that says, and this is on page 00816 of the appendix, the Palinter Gotham platform is a data management platform

[00:22:05] Speaker 00:
that is licensed to customers on a commercial item basis.

[00:22:11] Speaker 00:
So what this new argument about somehow there wasn't commercial items out there is something that's new to me in this oral argument.

[00:22:22] Speaker 00:
I don't see it in the briefing.

[00:22:24] Speaker 00:
It's inconsistent with the stipulation itself that the platform that the Army kept saying when

[00:22:34] Speaker 00:
These requests for information were all, as the Court of Federal Claims specifically thought about and determined, were all predicated on the notion that the Army started, we're going to develop this from scratch.

[00:22:48] Speaker 00:
This is after the first increment, after 15 years, after $6 billion, was deemed by the GAO as inefficient, ineffective, unsustainable, and even by the Army

[00:23:02] Speaker 00:
And this is another stipulation.

[00:23:06] Speaker 00:
It's stipulation seven, which is the very next page of the stipulations, is based on technology that is nearing obsolescence.

[00:23:15] Speaker 00:
So what the Army did one time is develop this data management platform from scratch.

[00:23:24] Speaker 00:
It was 15 years into it now, $6 billion, and it wasn't working.

[00:23:30] Speaker 00:
And so

[00:23:31] Speaker 00:
that it then, when it decided, and it decided right at the beginning, we're going to develop it from scratch.

[00:23:37] Speaker 00:
That's what the Court of Federal Claims found.

[00:23:40] Speaker 00:
That's what these requests for information were all about.

[00:23:43] Speaker 00:
They're talking about a development contract.

[00:23:45] Speaker 00:
And when Palantir came back,

[00:23:47] Speaker 03:
Can I ask you a question about that?

[00:23:49] Speaker 03:
The DIVA study, okay?

[00:23:50] Speaker 03:
So the DIVA study seems to be talking about commercial items.

[00:23:54] Speaker 03:
You agree with that, right?

[00:23:56] Speaker 00:
Yes, it does.

[00:23:56] Speaker 03:
Is it part of the market research?

[00:23:59] Speaker 03:
And the reason why I ask that is because I pulled the stipulation.

[00:24:02] Speaker 03:
I didn't have the full stipulation in my appendix, but I pulled it from the record.

[00:24:06] Speaker 03:
And I saw that there was stipulation number 10, and it says the Army's market research included the following.

[00:24:13] Speaker 03:
And it lists a number of things, but the DIVA study was not included.

[00:24:17] Speaker 00:
Right.

[00:24:17] Speaker 00:
And it wasn't included in the litigation before the Court of Federal Claims.

[00:24:23] Speaker 00:
It wasn't included as a market research item before the GAO when the GAO considered this.

[00:24:29] Speaker 00:
Ms.

[00:24:30] Speaker 00:
Kirchner, at the oral argument on page 137, was asked about this and specifically said, the court said, what was RFI number one, when was RFI number one issued?

[00:24:46] Speaker 00:
She responded, August 2014, beginning the market research.

[00:24:52] Speaker 00:
That's on page 137 of that transcript.

[00:24:56] Speaker 00:
And the DIVA study, which was presupposed various different items, but it preceded the so-called market research.

[00:25:06] Speaker 00:
And it wasn't listed before as an item of the market research.

[00:25:10] Speaker 00:
It did tell the Army.

[00:25:12] Speaker 00:
There are commercial items out there.

[00:25:14] Speaker 00:
You ought to be considering those commercial items.

[00:25:17] Speaker 00:
I think it said there's a rich field of commercial items.

[00:25:21] Speaker 00:
But then what the Army did with its request for information is assume we're going to develop it from scratch when Palantir came back three different times in response to the request for information, said, we have it.

[00:25:37] Speaker 00:
We have a data management platform.

[00:25:40] Speaker 00:
It's being used by the Army.

[00:25:42] Speaker 00:
It's being requested often by units in the Army.

[00:25:47] Speaker 00:
It's being used by the FBI.

[00:25:50] Speaker 00:
It's being used by the Marine Corps.

[00:25:52] Speaker 00:
It's being used by the Central Intelligence Command.

[00:25:56] Speaker 00:
And it's been characterized by the intelligence community as the intelligence community's knowledge management tool.

[00:26:08] Speaker 00:
In other words,

[00:26:10] Speaker 00:
The IRFIs start with the premise that the Army started with.

[00:26:14] Speaker 00:
We're going to develop something from scratch.

[00:26:17] Speaker 00:
They put out these requests for information all predicated.

[00:26:20] Speaker 00:
Tell us what your experience is and what your ability is with respect to development of these items.

[00:26:27] Speaker 00:
Palantir came back fully aware of Section 2377, this important statute unanimously passed by Congress, and said,

[00:26:36] Speaker 00:
We have commercial items available to you.

[00:26:40] Speaker 00:
We can do it all.

[00:26:41] Speaker 00:
Come and ask us about it.

[00:26:43] Speaker 03:
Did Palantir mention integrating?

[00:26:46] Speaker 03:
I just don't recall.

[00:26:47] Speaker 00:
Well, if you look at this is, I don't know whether the word integrated was in those responses, but if you look at footnote five of our brief, we talk of the, there's an evaluation and I won't get into record pages because that'll just slow us down.

[00:27:02] Speaker 00:
But it's mentioned in footnote five of the brief, there was an evaluation by the government of Palantir's system, which is capable of integration.

[00:27:14] Speaker 00:
Of course, that's what knowledge data management platforms do.

[00:27:20] Speaker 00:
They take integration.

[00:27:21] Speaker 00:
They take information.

[00:27:23] Speaker 00:
They integrate that information.

[00:27:25] Speaker 00:
They put it in a way in which you can analyze it and retrieve it, and like your iPhone,

[00:27:31] Speaker 00:
You can put various, it's an open application system.

[00:27:35] Speaker 00:
You can put different applications on it.

[00:27:38] Speaker 00:
If you want to put a weather thing on it, you want to put something about a geographical terrain, you can put that on it.

[00:27:44] Speaker 00:
However, this system is already being used by the Marine Corps, the FBI, for these very same purposes.

[00:27:54] Speaker 00:
So this is what this statute is all about.

[00:27:58] Speaker 03:
Can I ask you, do you think that was footnote nine?

[00:28:01] Speaker 03:
It says Palantir Gotham was designed to be extensible, meaning it features open application programming interferences.

[00:28:07] Speaker 03:
Is that the footnote you're referring to?

[00:28:10] Speaker 00:
Yeah.

[00:28:11] Speaker 00:
I should have been referring to both of them.

[00:28:12] Speaker 00:
It's also footnote five.

[00:28:14] Speaker 00:
And is that page 50?

[00:28:15] Speaker 00:
I'm not quite sure.

[00:28:17] Speaker 00:
But there's two footnotes that deal with this, plus the stipulations, plus the submissions by Palantir.

[00:28:24] Speaker 00:
Now, the fact is we don't really

[00:28:27] Speaker 00:
need to know all of these things because the statute is as explicit as it could be.

[00:28:33] Speaker 00:
It uses the word preference for commercial items twice.

[00:28:38] Speaker 00:
That's the name of the statute, preference for the acquisition of commercial items.

[00:28:43] Speaker 00:
And the first word of the statute says preference.

[00:28:47] Speaker 00:
Then what the statute does, it says several times, it says that what

[00:28:56] Speaker 00:
It says maximum extent practicable twice.

[00:29:03] Speaker 00:
That's about as strong a language as you could get.

[00:29:06] Speaker 00:
It used to say in the earlier draft, where practicable, then it was modified to mean maximum extent practicable.

[00:29:13] Speaker 00:
There's use of the word shell four times in the statute, and twice it says insure.

[00:29:20] Speaker 00:
So what the statute specifically said is before you do this, before

[00:29:26] Speaker 00:
You conduct the solicit, before you solicit bids, before you award contracts, before you develop specifications, on three different occasions, you must do research with respect to the availability of products in the marketplace that can satisfy your demands.

[00:29:44] Speaker 03:
It's not that I think it's necessarily relevant to this case.

[00:29:47] Speaker 03:
Are you suggesting that they need to conduct market research, separate market research, before each of those events and between each of those events?

[00:29:57] Speaker 00:
I think it can be a cumulative process.

[00:29:59] Speaker 00:
But what the statute is trying to do, and Congress, as you know, is not always this explicit.

[00:30:06] Speaker 00:
This is a pretty explicit statute.

[00:30:09] Speaker 00:
It says we want, before you go out there and decide what you want, look at what's available, then before you determine the specifications again, and before you award a bid, and then, speaking of the FAR, there's a provision in the FAR.

[00:30:26] Speaker 00:
OOC2, which says if you've made all of these determinations and then you have found that the commercial products aren't available to suit, go back and rethink what you want.

[00:30:46] Speaker 00:
Rethink what your requirements are and then do it all over again.

[00:30:51] Speaker 03:
The answer Judge Stor... Is it also in Section 2C of 2377 where it says that it should see if commercial products would meet the agency's requirements if those requirements were modified?

[00:31:05] Speaker 00:
Yes, and that's the three separate... it's actually four determinations because it's A, B, C, and there's two components to B. You must use the research

[00:31:18] Speaker 00:
which wasn't done.

[00:31:19] Speaker 00:
The research wasn't done here, because there's no record of it having been done.

[00:31:23] Speaker 00:
And the Court of Federal Claims said, I searched the records.

[00:31:25] Speaker 00:
We don't find evidence that the research was done.

[00:31:29] Speaker 00:
So the research wasn't done.

[00:31:30] Speaker 00:
That's a violation of the statute.

[00:31:32] Speaker 00:
Then the part that you're referring to then says, you must, you shall use the research to ensure and then make these determinations.

[00:31:42] Speaker 00:
You must make the determination that whether commercial items are available,

[00:31:48] Speaker 00:
whether commercial items can be modified in two different respects.

[00:31:52] Speaker 00:
And then thirdly, if that doesn't satisfy the requirements, then go back and rethink your requirements.

[00:31:58] Speaker 00:
Because maybe if you modify your requirements to some degree, then you will be able to go out and buy something.

[00:32:05] Speaker 00:
Instead of spending $6 billion and 15 years on getting something that doesn't work, by the record, the Army is, units of the Army in the field are asking for this

[00:32:18] Speaker 00:
So there's plenty of records of that.

[00:32:21] Speaker 00:
Now, the – we know that the Army did not do this because the record doesn't reflect the research.

[00:32:32] Speaker 00:
It doesn't reflect the determinations in any of these respects.

[00:32:36] Speaker 00:
And the Army is now saying, well, we didn't really need to do that.

[00:32:40] Speaker 00:
This is – you asked this question before, Judge Stoll.

[00:32:43] Speaker 00:
They say,

[00:32:45] Speaker 00:
We don't need to fully, this is page 35 of the Army's opening brief at the bottom.

[00:32:51] Speaker 00:
It says, the Court of Federal Claims unfairly imposed a duty on us to fully investigate, to fully explore, to examine, to evaluate.

[00:33:04] Speaker 00:
So what the Army is saying to this Court is that what this statute says the Army must do, they don't have to do.

[00:33:14] Speaker 00:
This is what this statute is enacted for, again, unanimously.

[00:33:21] Speaker 03:
What about the word fully?

[00:33:23] Speaker 03:
I mean, I guess the government is concerned that fully is going to later imply something more than what the statute's requiring.

[00:33:34] Speaker 00:
Well, the statute says to the maximum extent practicable.

[00:33:39] Speaker 00:
Now, that is a common sense term saying

[00:33:42] Speaker 00:
It is not practicable to do it.

[00:33:44] Speaker 00:
If you'd have to drill to the center of the earth, you'd have to put, you know, if there's something that doesn't work.

[00:33:50] Speaker 00:
I looked up the term practicable because I thought that this question might cover.

[00:33:54] Speaker 00:
Insofar as it can be done, to the maximum extent, you shall do this research.

[00:34:00] Speaker 00:
You shall make these determinations.

[00:34:02] Speaker 00:
We don't have a record of the research.

[00:34:05] Speaker 00:
We don't have the record of the determinations.

[00:34:08] Speaker 00:
They weren't done because the Army never intended to comply with this statute.

[00:34:13] Speaker 03:
The Army would like this that.

[00:34:17] Speaker 03:
Yes, and I agree with that.

[00:34:28] Speaker 00:
Certainly as a reviewing court, and this is de novo, that you would want to give deference to it, but you'd have to have something to defer to.

[00:34:36] Speaker 00:
There isn't anything to defer to.

[00:34:38] Speaker 00:
There isn't any research in the record to defer to.

[00:34:41] Speaker 00:
There clearly are not the determinations that are required by the statute to defer to.

[00:34:47] Speaker 00:
The three RFIs use the word developmental 27 times.

[00:34:56] Speaker 00:
There's a couple of references to commercial, but that's not what it was all about.

[00:35:00] Speaker 00:
The Army was intending to develop this.

[00:35:03] Speaker 00:
When there were commercial suggestions in response to the RFIs, what the Army said is, those are not responsive, non-responsive.

[00:35:13] Speaker 00:
So when the Palander, my client, was saying, there's a statute here.

[00:35:19] Speaker 00:
We have the product.

[00:35:21] Speaker 00:
It's commercially available.

[00:35:22] Speaker 00:
It's already being used by the government.

[00:35:24] Speaker 00:
It's available.

[00:35:25] Speaker 00:
We can do the work.

[00:35:27] Speaker 00:
And Palinter's expert pointed out that it can do all of the things that the Army's requiring.

[00:35:34] Speaker 00:
When the Army's expert was said, what about that?

[00:35:37] Speaker 00:
Palinter says they can fulfill all your requirements.

[00:35:41] Speaker 00:
The Army's expert said, well, I don't have sufficient knowledge to be able to answer that question.

[00:35:46] Speaker 00:
Well, how could you have a more

[00:35:49] Speaker 00:
obvious admission by the Army that they didn't do the research when they're expert at the end of all of this process, as I don't have sufficient information to answer your questions about the suitability of the product.

[00:36:03] Speaker 00:
So we know that Section 2377 wasn't complied with, because from the outset, this was a developmental project, which Congress said don't do, if you can possibly avoid it, that were commercial

[00:36:18] Speaker 00:
Suggestions were deemed not responsive.

[00:36:22] Speaker 00:
There is no evidence of research.

[00:36:24] Speaker 03:
Do you have a site for that testimony where the expert said, I don't have sufficient information?

[00:36:30] Speaker 00:
It's in the brief.

[00:36:32] Speaker 00:
I don't have it as I stand here this moment.

[00:36:34] Speaker 00:
But what he said was, I have insufficient information to answer that question.

[00:36:41] Speaker 00:
But all of this is cumulative because it's a cumulative of the fact that the Army never intended to comply with this statute.

[00:36:49] Speaker 03:
It started... How do you read the DIVA study?

[00:36:51] Speaker 03:
Do you read the DIVA study as suggesting in any way that a commercial item couldn't be used?

[00:36:57] Speaker 00:
No.

[00:36:57] Speaker 00:
What the DIVA study basically does is before the Army does its research, it said that there are commercial items out there.

[00:37:04] Speaker 00:
There's a full range of menu of things that you ought to be looking at.

[00:37:08] Speaker 00:
And then what the Army does is they didn't intend

[00:37:10] Speaker 00:
to do that.

[00:37:12] Speaker 00:
Then they come up with their request for information, and they talk about a developmental product.

[00:37:17] Speaker 00:
And when someone comes back and says, well, we do have the commercial product, which could have been something that the DIVA study was referring to, they say, well, that's not responsive.

[00:37:28] Speaker 00:
So basically, that's further proof of the lack of intent right from the beginning to comply with this statute.

[00:37:35] Speaker 00:
And it's reinforced by the Army saying we don't have to

[00:37:39] Speaker 00:
the full research or full examination or full review.

[00:37:44] Speaker 00:
I mean, when you have a statute that says you must do it to the maximum extent practicable, and then the Army basically says, on that same page, it doesn't just say fully investigate.

[00:37:57] Speaker 00:
It says, we were unfairly put to the test of examining.

[00:38:01] Speaker 00:
They use the word examine in their brief or evaluate.

[00:38:05] Speaker 00:
Now, what the statute

[00:38:07] Speaker 00:
wants this process to work.

[00:38:10] Speaker 00:
This, what the Army did was write out of existence 2377, and if their decision and their conduct in this case is sustained, that we might as well repeal that statute, because this is the classic example of consider what's available, look at it, make determinations so you, giving full deference to the agency,

[00:38:37] Speaker 00:
have something to review.

[00:38:38] Speaker 00:
They didn't do it.

[00:38:40] Speaker 00:
You can't give deference to something that isn't in the record.

[00:38:44] Speaker 00:
It's a responsibility when the statute says, shall ensure that this research must be used to make determinations, and those determinations aren't here.

[00:38:56] Speaker 00:
It's a clear case that the Army didn't comply with the statute, never intended to, maybe well-intentioned, because they may have thought we'd rather invent it ourselves.

[00:39:06] Speaker 00:
But Congress

[00:39:07] Speaker 00:
unanimously require them to do so.

[00:39:14] Speaker 00:
I have the site.

[00:39:17] Speaker 00:
It's on page 57 of our brief.

[00:39:25] Speaker 00:
Yeah, 57 of the brief.

[00:39:27] Speaker 00:
And then there's a record site there.

[00:39:29] Speaker 00:
I just won't read those numbers into it.

[00:39:34] Speaker 01:
Where does all of this stand now under the injunction?

[00:39:40] Speaker 00:
The injunction is that the Army has been instructed.

[00:39:44] Speaker 00:
The injunction I had in front of me a moment ago basically says, which is this is at 00105, that the Army must set aside the solicitation.

[00:39:59] Speaker 00:
And only after the Army has properly and sincerely

[00:40:04] Speaker 00:
I think that means in good faith, complied with 10 U.S.E.

[00:40:09] Speaker 00:
2377 should defend and proceed to award a contract.

[00:40:13] Speaker 00:
In other words, don't award a contract until you comply with congressional mandate with respect to how you get to that point.

[00:40:20] Speaker 01:
And is your understanding that that's ongoing, or are we waiting to finish the motion?

[00:40:26] Speaker 00:
It's my understanding, and I don't think it's in the record, but I did ask that same question.

[00:40:30] Speaker 00:
It's my understanding that there is some process going on in which

[00:40:33] Speaker 00:
There may be some evaluation of commercial items out there going on.

[00:40:41] Speaker 00:
I don't know where that exactly is, and I don't think it's in the record.

[00:40:44] Speaker 00:
And I do think that as far as what the Court of Federal Claims did, it was fully justified, completely justified on the record, and it's the only outcome that would be appropriate.

[00:40:57] Speaker 00:
The process that went on before

[00:40:59] Speaker 00:
was not in compliance with the statute, the Army is being told that don't go forward until you comply with what Congress told you to do.

[00:41:13] Speaker 01:
Thank you.

[00:41:24] Speaker 02:
Thank you, Your Honor.

[00:41:29] Speaker 02:
I just want to make a couple points.

[00:41:30] Speaker 02:
First of all, this argument about commercial services and having to fall within the definition of a commercial service is not a new argument.

[00:41:39] Speaker 02:
It is an argument that was made at the GAO.

[00:41:41] Speaker 02:
It was made before the Court of Federal Claims, and it's throughout our appellate briefs before this Court.

[00:41:49] Speaker 02:
And the contracting officer in this case has explained in his declarations that were submitted to the GAO

[00:41:57] Speaker 02:
made particular findings that the software engineering services required for increment two were not a commercial service as defined in the FAR.

[00:42:08] Speaker 02:
And he explains that in his declarations, which I'd ask the court to look to.

[00:42:13] Speaker 02:
The second point is just a brief one.

[00:42:17] Speaker 02:
D6 increment one was not built from scratch.

[00:42:23] Speaker 02:
It is, in fact, comprised of over 150

[00:42:27] Speaker 02:
commercial software products and this includes software platforms.

[00:42:32] Speaker 02:
We're not going to build increment two from scratch.

[00:42:36] Speaker 02:
What it requires is a reuse of available commercial software products and government owned software products to the maximum extent.

[00:42:48] Speaker 02:
And that is what is going to be used together with software engineering services to build increment two.

[00:42:57] Speaker 02:
With regard to the requirement to do market research, what the statute says is that it shall be appropriate to the circumstances, not that it shall be to the maximum extent practicable.

[00:43:15] Speaker 02:
I'd also like the court to look specifically at our brief, which was not fully quoted for the court.

[00:43:24] Speaker 02:
What we objected to was the requirement, the new legal requirement fashioned by the Court of Federal Claims that we fully investigate, fully explore, examine, evaluate whether all- What about examine?

[00:43:37] Speaker 03:
What about examine?

[00:43:38] Speaker 03:
I mean, I hear your concern about the adjective fully investigate.

[00:43:42] Speaker 03:
But what's wrong with examine?

[00:43:46] Speaker 02:
If I could complete the sentence?

[00:43:47] Speaker 02:
The sentence in the brief is whether all or part of agency requirements could be satisfied by a commercially available alternative.

[00:43:57] Speaker 02:
We're concerned particularly about the requirement that fully investigate and also that you make a determination as to whether a commercial software product can meet part of agency requirements.

[00:44:11] Speaker 02:
We already know that commercial software products can meet

[00:44:16] Speaker 02:
part of agency requirements.

[00:44:18] Speaker 02:
There shouldn't be a requirement to go out and do a full investigation of that in the context of D6.

[00:44:26] Speaker 02:
What we don't know is what mixture of commercial software products plus government-owned software products plus software engineering services will prove to be the best value to the government.

[00:44:42] Speaker 02:
And that's what increment two is supposed to determine based on a competition between competing proposals that are submitted.

[00:44:57] Speaker 02:
The DIVA study was addressed before the Court of Federal Claims and at the GAO.

[00:45:05] Speaker 02:
The DIVA study pointed out that there was a need for both integration and

[00:45:11] Speaker 02:
development.

[00:45:13] Speaker 03:
I had asked about stipulation of fact number 10, which says the Army's market research included the following list of number of things, not including DIVA.

[00:45:26] Speaker 03:
Who do I take from that?

[00:45:27] Speaker 02:
There are other stipulations about the DIVA study.

[00:45:31] Speaker 02:
Right.

[00:45:33] Speaker 03:
Is it part of the Army's market research for this project?

[00:45:37] Speaker 02:
Certainly.

[00:45:38] Speaker 02:
It's part of the process.

[00:45:39] Speaker 02:
That's why the Court of Federal Claims addressed it.

[00:45:41] Speaker 02:
That's why the GAO addressed it.

[00:45:43] Speaker 02:
It was part of the process.

[00:45:45] Speaker 03:
Why is there a stipulation that doesn't include it as being part of the market research?

[00:45:53] Speaker 03:
I'm not trying to be difficult.

[00:45:54] Speaker 03:
I'm just asking a practical question.

[00:45:56] Speaker 02:
The Palantir would not agree to that particular wording.

[00:46:01] Speaker 02:
Therefore, there are several paragraphs about the DIVA study.

[00:46:05] Speaker 02:
But really, it is just the beginning.

[00:46:08] Speaker 02:
And what it tells the Army is that you need both integration

[00:46:12] Speaker 02:
and development.

[00:46:14] Speaker 02:
Now, I need to explain integration.

[00:46:17] Speaker 02:
Integration in the context of D6 is not about bringing in more pieces of data.

[00:46:24] Speaker 03:
It's about making the components talk to one another, right?

[00:46:27] Speaker 02:
Yes, that's exactly right.

[00:46:29] Speaker 02:
It's between, for example, different software platforms.

[00:46:35] Speaker 02:
These different software platforms have to be integrated.

[00:46:39] Speaker 02:
And it all has to have code going between it.

[00:46:42] Speaker 02:
that works properly.

[00:46:43] Speaker 02:
And this is referred to as glue code.

[00:46:47] Speaker 02:
And there has to be integration testing of that glue code.

[00:46:51] Speaker 02:
And you test it all against particular military requirements to make sure those military requirements are met.

[00:47:00] Speaker 03:
And why wouldn't that integration requirement involve modifying a commercial item so that it would be seeking commercial items and the ability to modify them?

[00:47:16] Speaker 02:
It may or may not involve a modification of a commercial product.

[00:47:22] Speaker 02:
Perhaps there is a piece of software that is added to a commercial product to build the bridge to another platform.

[00:47:30] Speaker 02:
But ultimately, what you have to do is you have to build code that joins into, for example, a government platform.

[00:47:39] Speaker 03:
Why isn't the material that Mr. Olson referred to in footnote five and footnote nine in the brief, for example, where it talks about having apps and different things that can be add-ons to Palantir's platform, why wouldn't that be integration or development or modification?

[00:47:59] Speaker 03:
of the commercial item?

[00:48:05] Speaker 02:
It might.

[00:48:07] Speaker 02:
For example, if you have something as Palantir, they talk about a toolbox.

[00:48:12] Speaker 02:
They take a piece of Lego out of their toolbox and they stick it into their platform, then perhaps that is a modification, certainly a minor modification of their platform because they've got that in their toolbox.

[00:48:26] Speaker 02:
But what we're talking about here is

[00:48:30] Speaker 02:
bridges that go from commercial software platforms to government-owned software platforms.

[00:48:39] Speaker 02:
And testing all this new development, new glue code between these software platforms, for example.

[00:48:48] Speaker 02:
And that takes engineering services, and the engineering services have to be then tested to see whether it happened

[00:48:58] Speaker 02:
They've actually been successful.

[00:48:59] Speaker 03:
Do you think that that integration is unique to the government system being requested here?

[00:49:05] Speaker 03:
Or do you think integration is required for most commercial systems that involve Palantir's commercial product?

[00:49:17] Speaker 02:
Well, I don't think I can speak to the entire universe.

[00:49:23] Speaker 02:
But based on the record before the court,

[00:49:27] Speaker 02:
There is, integration is necessary to build increment two.

[00:49:33] Speaker 02:
And this would be integration between, for example, a government platform.

[00:49:38] Speaker 02:
For example, one that's cited in our brief is the Dib.

[00:49:44] Speaker 02:
The D6 integrated backbone is itself a government software platform.

[00:49:51] Speaker 02:
And you have to, in increment two,

[00:49:55] Speaker 02:
The contractor will have to integrate the government platform with all of the other software that is part of increment two and then test it against unique military requirements to make sure it all works.

[00:50:13] Speaker 02:
Now those are military requirements.

[00:50:16] Speaker 02:
There's no commercial marketplace out there to make sure, for example, software that goes between

[00:50:25] Speaker 02:
D6 and the Defense Intelligence Agency.

[00:50:30] Speaker 02:
There's no commercial marketplace for software like that.

[00:50:35] Speaker 02:
So that would be software that is peculiar to the government.

[00:50:39] Speaker 02:
It wouldn't be a modification of an existing commercial product within the definition, nor would it be a commercial service within the definitions and

[00:50:54] Speaker 02:
Paragraph five and six.

[00:50:55] Speaker 03:
I understand what you're saying.

[00:50:57] Speaker 03:
Just one last question, which is, and this goes again to my questions earlier about whether the request for information talked at all about developing as in modifying a commercial item or integrating a commercial item so that it could communicate with the different existing systems.

[00:51:19] Speaker 02:
Yes, it does do that specifically because

[00:51:23] Speaker 02:
It speaks to development and integration.

[00:51:27] Speaker 02:
There are, if I could just have one second here.

[00:51:36] Speaker 02:
This is from the first RFI, quote, contract vehicles your company has been awarded that address the scope of services required to develop and integrate a system such as D6 focused on integrating COTS,

[00:51:53] Speaker 02:
Gotts and internally developed software products into a software baseline.

[00:51:59] Speaker 03:
But it doesn't say anything about commercial integrating with commercially available software.

[00:52:07] Speaker 02:
It says focused on integrating COTS which is commercial off-the-shelf software products and then Gotts is the government owned software products and you have to integrate all of these

[00:52:21] Speaker 02:
software products into a software baseline.

[00:52:26] Speaker 02:
And that's going to be the new baseline.

[00:52:28] Speaker 02:
And then I would point the court to the, and the site for that would be appendix 11880.

[00:52:36] Speaker 02:
And in response to that, Palantir identified commercial item contracts.

[00:52:42] Speaker 02:
Then we asked in RFI number two for more information.

[00:52:47] Speaker 02:
We need more information.

[00:52:48] Speaker 02:
We want to know the contract vehicles you've had,

[00:52:51] Speaker 02:
and the domains that your company has experience developing and integrating with these types of software applications or capabilities.

[00:53:02] Speaker 02:
So the concern here is, what experience do you have integrating with, for example, your software product and some other software product?

[00:53:14] Speaker 02:
But specifically, we identified the domains that were of concern to the government.

[00:53:19] Speaker 02:
And these are peculiarly military domains.

[00:53:24] Speaker 02:
For example, counterintelligence and human intelligence, targeting, on the move operations, and the DIP.

[00:53:32] Speaker 02:
So that's the type of integration experience we were looking for.

[00:53:39] Speaker 02:
Thank you.

[00:53:40] Speaker 01:
Thank you.

[00:53:41] Speaker 01:
Thank you both.

[00:53:42] Speaker 01:
The case is taken under submission.