[00:00:00] Speaker 01:
Before we begin our proceedings, I'd like to turn it over to Judge Hughes who has a motion.

[00:00:13] Speaker 02:
Thank you.

[00:00:14] Speaker 02:
I have an admission this morning.

[00:00:16] Speaker 02:
It's sadly the last week of one of my very excellent law clerks and I'm incredibly sad to see her go, but I'm also very excited to see her move on to

[00:00:29] Speaker 02:
um, her law firm and, and watch her pursue what I know is going to be brilliant and fabulous career.

[00:00:35] Speaker 02:
She spent about a year and a half with me.

[00:00:37] Speaker 02:
She was with Judge Sleet in the district of Delaware for the year before that.

[00:00:41] Speaker 02:
And she's just been an outstanding clerk and really truly an outstanding person as well.

[00:00:47] Speaker 02:
So I moved the admission of Katochi Okimbo, who is a member of the bar and is in good standing with the highest courts of the Commonwealth of Virginia.

[00:00:56] Speaker 02:
I have knowledge of her credentials and am satisfied that she possesses the necessary qualifications.

[00:01:04] Speaker 05:
I don't have any questions.

[00:01:05] Speaker 05:
It's good enough for Judge Ooze.

[00:01:07] Speaker 05:
You're certainly good enough for him.

[00:01:09] Speaker 01:
Well, we're delighted to grant the motion.

[00:01:11] Speaker 01:
Please proceed.

[00:01:13] Speaker 00:
She's ready to write it.

[00:01:15] Speaker 00:
Do you solemnly swear or affirm that you will support yourself as attorney and counsel of this court, uprightly and according to law, and that you will support the Constitution of the United States of America?

[00:01:27] Speaker 00:
Thank you.

[00:01:27] Speaker 00:
Welcome to the Bar of the United States Court of Appeals on Federal Circuit.

[00:01:31] Speaker 00:
You're welcome.

[00:01:32] Speaker 01:
Congratulations.

[00:01:33] Speaker 05:
Mazel tov.

[00:01:38] Speaker 01:
The first case of argument this morning is 171859, MECO USA versus Army.

[00:01:45] Speaker 01:
Ms.

[00:01:46] Speaker 01:
Picard?

[00:01:49] Speaker 04:
Yes.

[00:01:49] Speaker 04:
Good morning.

[00:01:50] Speaker 04:
May it please the Court, Nicole Picard for RICO-USA, Inc.

[00:01:54] Speaker 04:
The issue before the Court today is one of basic contract formation and the concepts of offer and acceptance.

[00:02:02] Speaker 04:
This case centers on the government-issued Standard Form 1449, or SF 1449, which is a form document that government agencies use as a cover sheet of countless government contracts.

[00:02:15] Speaker 04:
Specifically at issue here today is the legal significance of Block 29 on the SF 1449 that the Army issued to Rico in February of 2012.

[00:02:26] Speaker 04:
Rico contends that when the contracting officer checked Block 29, she accepted Rico's offer to provide the Army with multifunctional devices or MFDs.

[00:02:37] Speaker 04:
Upon this acceptance, a contract was formed that contained the terms of Rico's offer,

[00:02:42] Speaker 04:
which contained termination fee provisions that entitled RICO determination fees in the event of a discontinuance of any number of the MFDs.

[00:02:52] Speaker 04:
The Army asserts that the SF-1449 was not an acceptance, but was rather a counter offer that rejected RICO's proposal entirely and replaced it with something different.

[00:03:03] Speaker 01:
Well, I don't know.

[00:03:03] Speaker 01:
I mean, I'm looking at, I guess, Block 29.

[00:03:07] Speaker 01:
I guess I'm not exactly clear.

[00:03:10] Speaker 01:
on how you're reading it.

[00:03:11] Speaker 01:
I mean, the government is saying it's part of the SF 1449.

[00:03:17] Speaker 01:
And what this signifies is that the SF 1449 continuation sheets were part and parcel of this agreement, and they were not consistent with the changes that you were recommending.

[00:03:30] Speaker 01:
So what about Block 29, read in the context of the whole SF 1449,

[00:03:39] Speaker 01:
gives you the clarity and the certainty that, indeed, all this was was an acceptance of your offer and not a counteroffer.

[00:03:46] Speaker 04:
Block 29 specifically identifies RICO's offer by date, the January 13, 2012.

[00:03:51] Speaker 04:
So it identifies RICO's offer.

[00:03:53] Speaker 04:
And then it says, your offer is accepted.

[00:03:55] Speaker 04:
And with that, that was an objective manifestation of the assent to the terms of RICO's offer that created the contract.

[00:04:03] Speaker 01:
Well, it doesn't say it's accepted.

[00:04:06] Speaker 01:
is accepted as to items C schedule.

[00:04:10] Speaker 04:
Correct and then attached to the SF 1449 it listed the specific MFDs that the Army was going to be procuring but that doesn't mean that it didn't incorporate the terms of RICO's offer that attached to those MFDs for example specifications such as

[00:04:26] Speaker 04:
TAA compliance and speed of the machines and things like that.

[00:04:29] Speaker 01:
But there was other stuff in the SF-1449 that clearly established that there was going to be these terminations that were inconsistent with what you were proposing in your offer, right?

[00:04:41] Speaker 04:
We would submit to you that the documents that are physically attached to the SF-1449 don't conflict with the terms of Rico's offer and that

[00:04:49] Speaker 04:
taken together all the documents can be read consistently.

[00:04:51] Speaker 02:
Including the statement of work and the exercise of options and the statements that there's no early termination fees?

[00:04:58] Speaker 04:
That's correct.

[00:04:59] Speaker 02:
And specifically... Let's say we disagree with you because I think your reading on that is pretty implausible.

[00:05:03] Speaker 02:
Let's say that there's a direct conflict because it's the same... Isn't all the terms that are attached to the solicitation are the terms that were proposed earlier on that you disagreed with, right?

[00:05:15] Speaker 02:
This is the same document.

[00:05:17] Speaker 02:
The statement of work, yes.

[00:05:20] Speaker 02:
Yes, it's the same document that was sent out as a solicitation for quotes.

[00:05:24] Speaker 02:
Correct.

[00:05:25] Speaker 02:
And you attempted to reject that and turn in a counter proposal.

[00:05:30] Speaker 02:
So if you thought that was consistent with your counter proposal, you wouldn't have needed to reject it.

[00:05:36] Speaker 04:
So we rejected the fact that the statement of work didn't anticipate having termination charges, which is a

[00:05:43] Speaker 04:
you know, commercial industry practices.

[00:05:45] Speaker 02:
Right.

[00:05:45] Speaker 02:
You proposed a different offer.

[00:05:47] Speaker 02:
Correct.

[00:05:49] Speaker 02:
So for you to now come in and say, well, that earlier statement of work that you proposed a counter offer to is actually consistent with your offer seems frankly inconsistent with your course of action here.

[00:06:03] Speaker 04:
So RICO proposed an offer, not a counter offer to irresponsible solicitation.

[00:06:07] Speaker 04:
And I think the provision that you're speaking about specifically says that there are no, there's no exercise of termination fees.

[00:06:14] Speaker 02:
Let's just, I don't want to get hung up in this point.

[00:06:16] Speaker 02:
Let's just assume that we disagree with you, that your offer is consistent with the statement of work that's attached in what happens.

[00:06:25] Speaker 04:
I think you can read the entire contract with the offer in it harmoniously so that you can give it back to all of the terms.

[00:06:33] Speaker 02:
Well, I don't think you can.

[00:06:34] Speaker 02:
The basis for my hypothetical is your offer is inconsistent with the statement of work attached to the solicitation where you say they accepted your offer.

[00:06:47] Speaker 02:
What do we do when we have two inconsistent documents?

[00:06:51] Speaker 04:
I would submit that you read them as harmoniously as possible.

[00:06:55] Speaker 04:
And what happened here was... Okay, let me make this clear.

[00:06:58] Speaker 02:
Your offer says you get early termination fees.

[00:07:02] Speaker 02:
Correct.

[00:07:02] Speaker 02:
Their response says we will not pay termination fees.

[00:07:06] Speaker 02:
Then what do we do?

[00:07:08] Speaker 04:
Their response says you can't pay termination fees.

[00:07:09] Speaker 02:
No, my hypothetical is their response says we won't pay termination fees.

[00:07:13] Speaker 02:
I'm not talking about the document.

[00:07:15] Speaker 02:
I'm talking about a hypothetical.

[00:07:16] Speaker 04:
In that case, it would be a rejection of the offer and a counteroffer, yes.

[00:07:20] Speaker 04:
But it would have to also justify RICO understanding and that it had the power to accept or reject that counter offer.

[00:07:27] Speaker 05:
Did RICO ever tell the government directly that its proposed prices were contingent upon the changes to the terms of the solicitation?

[00:07:36] Speaker 04:
RICO's offer was very clear that it had early termination fees.

[00:07:41] Speaker 04:
It was listed in the cover letter of the proposal as well as twice in the proposal accept.

[00:07:47] Speaker 05:
So I guess the answer is no.

[00:07:48] Speaker 04:
There was no direct phone call or email that said we're proposing these, but the proposal itself is very clear that, yes, we're proposing termination fees.

[00:07:59] Speaker 05:
You say in your brief that RICO was willing to walk away from the deal if RICO's terms weren't accepted.

[00:08:11] Speaker 05:
Where's that in the record?

[00:08:13] Speaker 04:
In the transcript before the board and in a lot of the emails going back and forth internally with Enrico, which is towards the end of the appendix, it's clear that they would walk.

[00:08:24] Speaker 05:
Internally, you were saying that.

[00:08:26] Speaker 05:
I mean, internally, the way I read it, you were saying, if we can't put this over on the Army, we're not going to do it.

[00:08:32] Speaker 05:
But leaving aside my characterization, where did you tell the Army, unless you accept our new terms, we're going to walk away from this agreement?

[00:08:42] Speaker 04:
I think it's just a matter of offer and acceptance.

[00:08:44] Speaker 04:
RICO understood that it was offering something that didn't comport with the solicitation, so it knew that if it was rejected, it wasn't.

[00:08:49] Speaker 05:
The question is, did the Army understand it?

[00:08:52] Speaker 04:
I'm sorry, did the Army understand?

[00:08:53] Speaker 05:
That what you were sending was inconsistent, because the Army's position is, we just saw the pricing, and that was good enough for us.

[00:09:02] Speaker 04:
Had the Army read the offer, it would have seen that what RICO was proposing was inconsistent with the solicitation.

[00:09:07] Speaker 05:
On the other hand, as Jeff Hughes said,

[00:09:10] Speaker 05:
had Rico read the solicitation, it was also inconsistent.

[00:09:15] Speaker 04:
I don't think that our position is that the SF-1449 that came back to Rico that said here is the contract, when the contracting specialist said here in the contract, was not inconsistent and in no way demonstrated to Rico that its terms had been rejected.

[00:09:30] Speaker 04:
In fact, they checked Block 29 that said your offer has been accepted.

[00:09:34] Speaker 02:
But I still fail to understand how if

[00:09:38] Speaker 02:
the terms of that solicitation and statement of work weren't inconsistent with early termination fees.

[00:09:45] Speaker 02:
Why you submitted a offer in the first place instead of just accepting that solicitation, which now, in your interpretation, includes early termination fees.

[00:09:57] Speaker 02:
I mean, at some point, you understood this solicitation to prohibit early termination fees.

[00:10:03] Speaker 02:
But it's the same solicitation you got back

[00:10:07] Speaker 02:
when the Army signed Box 29 and attached the same solicitation.

[00:10:14] Speaker 02:
So why did your understanding of that solicitation change from when it was first issued to when it was signed after you submitted an offer?

[00:10:24] Speaker 04:
Because Block 29 accepted the terms of the offer.

[00:10:27] Speaker 04:
That's why their understanding changed.

[00:10:28] Speaker 02:
Yes, but it included a solicitation that you had previously seen as inconsistent with how you would perform.

[00:10:36] Speaker 02:
I mean it seems to me very clear what happened here and that is the army didn't read your offer and you didn't read the solicitation that was attached to the offer when it came back and nobody understood on either side that you were trying to get early termination fees and that they were going to refuse them.

[00:10:54] Speaker 02:
But I still don't understand what we're supposed to do about that.

[00:10:57] Speaker 04:
I think just by basic contract law there was an offer and there was there was an acceptance of that offer regardless of what the army read or didn't read.

[00:11:04] Speaker 05:
Your response to Judge

[00:11:05] Speaker 05:
Q should be, in that case, there's no meeting of the minds and there's no contract.

[00:11:10] Speaker 04:
In which case, we'd probably be in an applied in fact contract situation.

[00:11:13] Speaker 05:
Terminal rule, it will.

[00:11:19] Speaker 04:
But I would submit, you're correct, that the solicitation that was put out.

[00:11:24] Speaker 02:
I mean, how can you say the Army accepted your offer if it responded with a contract document that's inconsistent with your offer?

[00:11:32] Speaker 04:
Because it said that your offer is accepted, and that's all that's needed is an objective manifestation.

[00:11:36] Speaker 02:
But it didn't just say your offer is accepted.

[00:11:37] Speaker 02:
It goes on.

[00:11:38] Speaker 02:
It has other language.

[00:11:39] Speaker 02:
And it also includes the solicitation.

[00:11:42] Speaker 02:
I mean, you know enough about government contracts that this cover page is not the contract.

[00:11:49] Speaker 02:
It is this cover page with all the included attachments, including the statement of work.

[00:11:55] Speaker 02:
And so the fact that it says accepted here means accepted based upon the terms of this entire document.

[00:12:02] Speaker 04:
But it's not just the papers that were physically affixed to the SF-1449 that comprise the terms of the contract here.

[00:12:08] Speaker 04:
It was also the terms of Rico's offer, which were clearly identified on the piece of the SF-1449 and then accepted and imported into the contract.

[00:12:18] Speaker 05:
In that case, don't at least you have ambiguity?

[00:12:22] Speaker 04:
As to the termination fees?

[00:12:24] Speaker 05:
As to the existence?

[00:12:26] Speaker 04:
I don't believe so.

[00:12:28] Speaker 04:
There is no contention here that no contract exists.

[00:12:31] Speaker 04:
Both the government and RICO contend that a contract exists.

[00:12:35] Speaker 05:
Is the termination fee a key portion of the contract?

[00:12:39] Speaker 04:
Yes, Your Honor.

[00:12:40] Speaker 05:
You have ambiguity about the termination fee, do you not?

[00:12:44] Speaker 04:
No, Your Honor, because the solicitation stated that the terms of the contract state that there's no termination fees in

[00:12:54] Speaker 04:
that there's no termination fees for the exercise of an option year.

[00:12:57] Speaker 04:
Enrico's not looking at no termination fees for the failure to exercise an option year.

[00:13:03] Speaker 04:
In fact, all option years were exercised here.

[00:13:05] Speaker 04:
We're looking for termination fees for the partial discontinuance of an order for just 208 of multifunctional devices.

[00:13:11] Speaker 02:
So if they discontinued all 500 or 600 because they didn't exercise the option, you would get nothing.

[00:13:17] Speaker 02:
But if they continue the option, but partially reduce something, you get an early termination fee?

[00:13:23] Speaker 02:
They exercise the... That's not the way the options or determination fees generally work in that industry, is it?

[00:13:31] Speaker 04:
We recognize the fact that they were dealing with the government here, not a commercial entity, so that the government couldn't obligate funds beyond a fiscal year.

[00:13:37] Speaker 04:
So it understood that there were these option years or these renewal periods upon each year for which it would have to exercise... Doesn't that logic, the same logic apply to a reduction or a complete

[00:13:50] Speaker 02:
a lack of exercising an option.

[00:13:52] Speaker 02:
I don't understand why that appropriations argument makes any difference as to a partial or a complete reduction.

[00:13:58] Speaker 04:
I'm just saying in the government space that they have to obligate the funding.

[00:14:03] Speaker 04:
Whereas in a commercial space they could just discontinue whenever they will please.

[00:14:08] Speaker 04:
But here there was a full option year exercise.

[00:14:11] Speaker 04:
Option year one was exercising full and then a partial discontinuation after that.

[00:14:15] Speaker 04:
This concept that there was no termination fees for the non-exercise of an option year just doesn't apply in this case.

[00:14:22] Speaker 04:
And I see that I've now gone into my rebuttal.

[00:14:38] Speaker 03:
The decision of the board in this matter should be affirmed because the board correctly determined that the army did not assent to the proposed non-compliant early termination provisions.

[00:14:49] Speaker 02:
Although you're not arguing that the board's reasoning should be affirmed, I take it.

[00:14:54] Speaker 03:
Not in its entirety, no, but the fundamental underlying basis of the board's reasoning, which was RICO was on notice based upon the contents of the contract award document that the army hadn't accepted the

[00:15:06] Speaker 02:
This is a little difficult on both sides.

[00:15:09] Speaker 02:
I mean, it pretty much seems that the Army didn't read the terms of Rico's offer fully and just accepted the prices.

[00:15:17] Speaker 02:
And then Rico didn't read the solicitation.

[00:15:20] Speaker 02:
They got back and realized you weren't actually accepting their offer.

[00:15:24] Speaker 02:
You were going back to the terms of the original solicitation.

[00:15:31] Speaker 02:
What would we do if we find there was no meaning of the minds?

[00:15:35] Speaker 03:
So if there's no mean of the mines, there can be no contract either expressed or implied.

[00:15:40] Speaker 03:
And that doesn't make a difference, to be quite honest, to the resolution of this matter.

[00:15:46] Speaker 03:
If there is no contract whatsoever, then there's no basis for RICO to claim early termination fees.

[00:15:53] Speaker 03:
And as a result, the board's decision should still be affirmed because RICO still cannot prevail on its claim.

[00:16:00] Speaker 05:
Can you argue standard business practice that the Army never reads those?

[00:16:04] Speaker 05:
contracts before it's signed?

[00:16:07] Speaker 03:
I would not make that argument, no.

[00:16:12] Speaker 03:
I think that there was the circumstances of this particular solicitation and procurement process were a bit unusual in that the Army was not contemplating the submission of any terms other than prices and was not looking for proposed alternative terms.

[00:16:32] Speaker 03:
And it is also true that it is not precisely clear from the contents of RICO's proposal that its proposal was contingent upon the acceptance of those alternative provisions as opposed to just one question.

[00:16:46] Speaker 01:
Well, the box 29 seems to be quite clear on what's going on here.

[00:16:50] Speaker 01:
You've checked the box and it says your offer, blah, blah, blah, including any additions or changes which are set forth herein is accepted as to items.

[00:17:00] Speaker 01:
What does that mean?

[00:17:02] Speaker 03:
It means that it's accepted as to the items that are specified in the attached sheets.

[00:17:09] Speaker 03:
And yet, as we acknowledge, it is a purported acceptance because as a matter of well-established black-letter contract law, an acceptance is not effective where it includes terms that are not the same as the ones that were offered.

[00:17:23] Speaker 03:
And the contract.

[00:17:25] Speaker 01:
So is your view that the praise, including any additions or changes which are set forth herein, meaning that's what establishes your counter-opera?

[00:17:34] Speaker 01:
Because you say, we're accepting it, except where we're not, where there's inconsistencies in the existing contract.

[00:17:41] Speaker 03:
I think that that language is consistent with the fact that RICO couldn't rely upon that box as a sign that its offer had been

[00:17:52] Speaker 03:
accepted in total and that it had no reason to look at the rest of the contract document.

[00:17:58] Speaker 03:
But I don't think that language standing alone is essential, even if that language hadn't been included.

[00:18:04] Speaker 03:
The contract document, in this case as in every government procurement, contains the terms that the government understands to represent the party's agreement.

[00:18:16] Speaker 05:
It seems to me your best position is, assuming that there is a meeting of the minds, that

[00:18:22] Speaker 05:
By attaching the original terms, in effect, you're making it counter-counter.

[00:18:29] Speaker 05:
And then by action, Rigo accepts it.

[00:18:33] Speaker 05:
The whole thing's a mess, really.

[00:18:36] Speaker 03:
Yes, Your Honor.

[00:18:37] Speaker 03:
I had experienced the same sentiment while I was preparing the briefing in this matter.

[00:18:42] Speaker 03:
But I believe that that is the best logic that can be made and applied to the situation that arose.

[00:18:50] Speaker 03:
If we look just at the external manifestations of the parties, which is what we are to do, the Army gave Rico a contract document that plainly did not include the proposed non-compliant terms, and that hewed to the original terms of the solicitation.

[00:19:08] Speaker 05:
And then lived by it.

[00:19:10] Speaker 03:
Yes.

[00:19:10] Speaker 03:
And then Rico received that document, made no objections, made no comments, and simply went ahead and performed when the

[00:19:19] Speaker 03:
when the army began issuing orders against it.

[00:19:21] Speaker 01:
What's the law?

[00:19:22] Speaker 01:
Years ago, we had cases involving patent ambiguities and latent ambiguities.

[00:19:28] Speaker 01:
Right.

[00:19:28] Speaker 01:
So what's the law?

[00:19:29] Speaker 01:
Who's got the burden when there's a patent after patent ambiguity?

[00:19:34] Speaker 03:
The contractor has the burden when there's a patent ambiguity in the solicitation terms to ask for clarification before entering into the contract.

[00:19:47] Speaker 03:
a latent ambiguity is one that doesn't become clear until the parties have entered into performance.

[00:19:52] Speaker 03:
And then there is a series of different factors that have to be assessed to be determined whose position is the correct one.

[00:19:59] Speaker 03:
But this is not a latent ambiguity.

[00:20:01] Speaker 05:
So your position is, if somebody bothered to read it, it would be Peyton.

[00:20:05] Speaker 03:
It is Peyton.

[00:20:06] Speaker 03:
Even Rico's own language is patently ambiguous.

[00:20:11] Speaker 03:
It contains conflicting terms about what the proper

[00:20:16] Speaker 03:
damages are to be in the case of a termination.

[00:20:19] Speaker 03:
It contains conflicting terms regarding what the initial order is supposed to say when it's issued.

[00:20:25] Speaker 03:
And no one could have looked at those provisions and thought it would be okay to enter those wholesale into a contract without amending them to make them make sense, to be quite frank.

[00:20:37] Speaker 03:
The simple fact of the matter is that the Block 20 line, use of the word acceptance, is all that RICO has.

[00:20:45] Speaker 03:
to cling to, to attempt to demonstrate that there is a contract that includes the provisions that it's depending on.

[00:20:51] Speaker 03:
And frankly, that's simply not a tenable position in light of the rest of the contents of the contract award document.

[00:21:00] Speaker 02:
Are there any material differences between the solicitation and the statement of work that's attached to this form and the one that was originally issued as a request for codes?

[00:21:13] Speaker 03:
No, the only difference is that there were, and I suppose this wouldn't be part of the statement of work, the statement of work is exactly the same.

[00:21:19] Speaker 03:
There were a few solicitation provisions related to, you know, the bidding process that were not included because that was over, but otherwise it's the same.

[00:21:30] Speaker 03:
And just as one last point, although I don't think it actually makes a difference, but RICO has

[00:21:37] Speaker 03:
repeatedly made assertions of fact on appeal that were not found as a factual matter by the board.

[00:21:43] Speaker 03:
The board didn't find that RICO was unaware that its provisions hadn't been included in the final contract document.

[00:21:50] Speaker 03:
The board didn't find that RICO would have walked away if it had known that the imposed early termination provisions weren't included.

[00:21:57] Speaker 03:
And of course, those aren't factual findings that can be made in the first instance on appeal.

[00:22:02] Speaker 03:
So RICO's arguments based upon those

[00:22:06] Speaker 03:
those proposed factual findings, in addition to being irrelevant as a matter of law, are also ill founded in this procedural posture.

[00:22:15] Speaker 03:
Unless the court has further questions.

[00:22:17] Speaker 03:
Thank you.

[00:22:31] Speaker 04:
I would just like to turn back now to the language of Block 29.

[00:22:34] Speaker 04:
It specifically says, award of contract, this is your offer, including any additions or changes which are set forth herein.

[00:22:43] Speaker 04:
So to the extent that there were any additions or changes included in the pages that were physically affixed to the SF-1449, those were subsumed within the acceptance and don't undermine the validity of that acceptance or the existence of a contract.

[00:23:00] Speaker 04:
Moreover, if we accept the government's position here that this were a counter offer, then practically speaking, RICO could refuse to perform.

[00:23:09] Speaker 04:
And once the first delivery order was issued, RICO could have said, no, we reject this.

[00:23:13] Speaker 04:
We're not going to perform.

[00:23:14] Speaker 04:
And in that case, certainly the government would have found RICO tough in breach of its contract.

[00:23:19] Speaker 04:
So I think just when you step back and practically look at the effect of a counter offer that just couldn't pan out that way.

[00:23:26] Speaker 02:
I don't understand that.

[00:23:27] Speaker 02:
If this would have been a government counteroffer and you had decided not to perform, how would there be a contract to breach?

[00:23:37] Speaker 04:
I was just saying it for practical purposes.

[00:23:40] Speaker 02:
If the government issued this SF-1449... If you had read this as a counteroffer and said, no, we're not going to do this, this is an unacceptable counteroffer, there's no contract.

[00:23:51] Speaker 02:
The government can't sue you for breach.

[00:23:53] Speaker 04:
That's correct.

[00:23:55] Speaker 04:
And RICO maintains that that would be the situation.

[00:23:57] Speaker 04:
But I think for practical purpose here, the government understood that there was a contract and it would have gone after RICO for non-performance once that SF 1449 was issued.

[00:24:07] Speaker 05:
Well, they understood that there was a contract under their terms.

[00:24:12] Speaker 04:
Correct.

[00:24:12] Speaker 05:
But if this weren't... But you just gave away the case when you said correct.

[00:24:18] Speaker 02:
I mean, it sounds like you would have had a pretty good affirmative defense if they would have tried to sue you for breach of contract when you said there is no contract because they didn't accept our offer.

[00:24:29] Speaker 02:
They impose new terms that we decline.

[00:24:34] Speaker 02:
I mean, you said they may have tried to sue you, but they would have lost.

[00:24:39] Speaker 04:
And that's correct.

[00:24:41] Speaker 04:
But I'm just thinking, in practical purposes, when you step back and you look at the practicality of this, an SF-1449 was issued and accepted the terms of RICO's offer.

[00:24:48] Speaker 04:
This is very standard practice in the government contract world.

[00:24:51] Speaker 04:
And at that point, RICO didn't understand it.

[00:24:53] Speaker 02:
It's also very standard practice to include the solicitation and the statement of work as part of the contract.

[00:24:59] Speaker 02:
And given that you had objected to the statement of work before, but now appeared to go ahead and accept it, it seems like the government

[00:25:06] Speaker 02:
was also reasonable to understand that you had changed your position.

[00:25:11] Speaker 04:
May I respond?

[00:25:11] Speaker 04:
I see the amount of time.

[00:25:12] Speaker 04:
Yes.

[00:25:15] Speaker 04:
In that case, though, RICO did understand that its offer was accepted.

[00:25:18] Speaker 04:
So it understood that the terms that it proposed that were different from the solicitation, which it knew were different than the solicitation, had been accepted and formed the basis of the contract.

[00:25:27] Speaker 04:
Thank you.

[00:25:28] Speaker 05:
I want to just follow up on one thing.

[00:25:30] Speaker 05:
I said to you, the government understood

[00:25:33] Speaker 05:
it had a contract under its terms, and you said correct to me, and I said you just gave away the case.

[00:25:38] Speaker 05:
Do you want to respond to that, or just leave it alone?

[00:25:40] Speaker 04:
I'm sorry.

[00:25:40] Speaker 04:
I meant to say that the government understood a contract had been formed and that RICO was obligated to perform.

[00:25:46] Speaker 04:
The terms of those contracts, though, were the terms of RICO's offer, which contained the termination fee provision.

[00:25:52] Speaker 04:
I'm sorry if I misspoke.

[00:25:56] Speaker 01:
Thank you.