[00:00:39] Speaker 05: Next case is Safeguard Base Operations versus the United States in B&O Joint Venture, 2019, 1160. [00:00:55] Speaker 05: Mr. Ginsburg. [00:01:06] Speaker 00: Thank you, Your Honors. [00:01:07] Speaker 00: May it please the Court [00:01:08] Speaker 00: This appeal presents this court with two important opportunities. [00:01:12] Speaker 00: The first is to resolve a split at the Court of Federal Claims and clarify a legal standard of great import to the government contracts community. [00:01:21] Speaker 05: We should go looking for issues rather than be deciding a case? [00:01:27] Speaker 00: Your Honor, I think in this instance, the issue I'm referring to is the importance of the so-called Riley's wholesale factors, the Riley's factors. [00:01:35] Speaker 00: What we have is a clear split at the Court of Federal Claims [00:01:38] Speaker 00: We have confusion among federal agencies and among contractors about the applicable standard. [00:01:44] Speaker 00: And what we see in the case law [00:01:46] Speaker 00: is a significantly different standard applied for the last 15 years. [00:01:50] Speaker 02: There's no actual relief we can give to your client at this point here, right? [00:01:56] Speaker 02: What you wanted to do was overcome the override of the stay. [00:02:02] Speaker 02: And there's no way we can grant that relief now. [00:02:06] Speaker 02: The GAO has come up with its recommendation. [00:02:09] Speaker 02: Any potential period for a stay you could enjoy is long gone. [00:02:16] Speaker 02: Well, Your Honor, let me address that. [00:02:18] Speaker 02: What you are ultimately asking us to do is issue some declaration defining on something where the underlying dispute has evaporated. [00:02:27] Speaker 02: I guess that's the concern I have. [00:02:29] Speaker 02: So I think you need to speak to mootness first. [00:02:33] Speaker 00: I'd be happy to. [00:02:35] Speaker 00: Clearly, I'll start by saying clearly, the exception to mootness capable of repetition evading review is very salient here. [00:02:43] Speaker 00: We have a 100-day period at GAO. [00:02:46] Speaker 00: And no appeal will ever reach this court and be decided. [00:02:50] Speaker 03: Yeah, but what if GAO recommended you get the contract? [00:02:52] Speaker 03: Then you could appeal the stay. [00:02:55] Speaker 03: There would be more than 100 days. [00:02:58] Speaker 00: Well, at that point, it still wouldn't be the seekest. [00:03:00] Speaker 00: According to the arguments of the defendant appellees, it still wouldn't be the stay would be appealing. [00:03:04] Speaker 00: It would be the relief offered by. [00:03:06] Speaker 03: No, you couldn't be able to stay at that point. [00:03:09] Speaker 03: I don't see that it is capable of repetition and evading review. [00:03:16] Speaker 03: We could review the Riley factors in a scenario in which the GAO recommended you to get the contract. [00:03:23] Speaker 03: That's not a slam dunk. [00:03:24] Speaker 03: You don't have it yet, so maybe you still do want a stay. [00:03:27] Speaker 03: I don't know. [00:03:29] Speaker 00: I understand. [00:03:29] Speaker 00: I think, again, it's not specifically the override determination. [00:03:34] Speaker 00: It would be appealing, potentially, the relief granted or not granted by the court. [00:03:39] Speaker 00: In the view of the defendant appellees, this case became moot after 100 days. [00:03:45] Speaker 00: And that clearly can't be right. [00:03:46] Speaker 00: This court does have jurisdiction to hear an appeal of a SIGO override determination. [00:03:51] Speaker 03: GAO has already ruled in this case. [00:03:54] Speaker 03: So what relief could your client receive? [00:03:57] Speaker 00: Well, there are a couple of things. [00:03:58] Speaker 00: One is, right now the merits of the underlying case are on appeal before this court. [00:04:03] Speaker 00: We expect that the merits will be remanded back to the Court of Federal Claims. [00:04:07] Speaker 00: And at that point, whether the override ever should have happened in the first place, we think is going to be very relevant to the relief crafted by the court. [00:04:15] Speaker 02: Can you explain how? [00:04:16] Speaker 02: Because I can't think of any at the moment. [00:04:18] Speaker 00: I'll state it simply. [00:04:19] Speaker 00: If BNO, the intervener defendant at Pellee, never should have been performing all along, it has to be important to the Court of Federal Claims [00:04:28] Speaker 00: that BNO never should have been performing, should have been under an injunction. [00:04:33] Speaker 00: Let's play this out. [00:04:36] Speaker 02: Let's say there had never been an override, and this day it had been in place. [00:04:40] Speaker 02: And then the GAO issues the recommendation that it did issue, which is bid protesters wrong. [00:04:47] Speaker 02: So the contracting officer got it right. [00:04:52] Speaker 02: Isn't it? [00:04:53] Speaker 02: Then at that time, a B&O could have started practicing the contract, and you would be exactly where you are right now, appealing an adverse decision from the Court of Federal Claims to us, trying to convince us that the contracting officer got it wrong. [00:05:09] Speaker 00: Well, there's a big difference, Your Honor, because we would have had an injunction, presumably, or certainly would have asked for one and fought for one all along. [00:05:16] Speaker 00: So a different contractor, presumably the incumbent contractor, not B&O, [00:05:22] Speaker 00: would have been performing. [00:05:23] Speaker 00: The status quo was inverted, as we've discussed in the briefs, by the SICA override, which we think was illegal. [00:05:29] Speaker 03: I don't understand how that harmed you or changed your rights. [00:05:33] Speaker 03: And I think Judge Chen's example is the perfect one. [00:05:36] Speaker 03: And I don't see how that would have changed your rights or harmed your client. [00:05:40] Speaker 03: I don't see what relief we could give you. [00:05:44] Speaker 00: Well, again, Your Honor, either this court has jurisdiction over the appeal of a SICA override or it doesn't. [00:05:50] Speaker 03: And maybe we would had GAO not ruled against you. [00:05:57] Speaker 03: But they did. [00:05:58] Speaker 03: So now the whole stay issue is moot, because there would no longer be a stay. [00:06:03] Speaker 03: There would no longer be anything if this had happened. [00:06:09] Speaker 00: Let me address one other practical issue in addition to this. [00:06:13] Speaker 00: The incumbent contractor is the 49 [00:06:17] Speaker 00: The former incumbent contractor, before the status quo was overridden, is the 49% owner of the appellant in this case. [00:06:26] Speaker 00: So there was a concrete economic impact. [00:06:29] Speaker 00: No one cited a case in any of the briefs that say an economic harm to the 49% minority owner of a JV is not economic harm upon the joint venture. [00:06:39] Speaker 03: That's not harm to this party. [00:06:42] Speaker 03: That's a whole different party. [00:06:44] Speaker 03: So maybe that party would have standing to bring some sort of lawsuit complaining. [00:06:47] Speaker 03: But that's not the party involved in this case. [00:06:50] Speaker 00: Your Honor, I will say that- Is it? [00:06:53] Speaker 00: Again, the incumbent was the 49% owner of the current appellant. [00:06:58] Speaker 00: It's a different entity. [00:06:58] Speaker 00: Which is a different company. [00:06:59] Speaker 00: It's a different entity. [00:07:00] Speaker 00: Correct. [00:07:01] Speaker 03: OK. [00:07:02] Speaker 03: Different corporate entities have different meaning under the law. [00:07:05] Speaker 00: Your Honor, I'm trying to address the common sense economic impact that still affects the actual appellant in this case. [00:07:12] Speaker 00: But separately, we have a competitive injury. [00:07:14] Speaker 03: That's like saying if you're somebody's girlfriend, you should be able to bring a case that they should be able to bring, because you'd benefit if they got the money. [00:07:22] Speaker 00: Your Honor, no one's addressed that case before in the briefs, but I understand your point. [00:07:26] Speaker 00: I think here what we have is we have a competitive injury based on the statute. [00:07:32] Speaker 00: And then we separately have this practical economic impact. [00:07:35] Speaker 00: But focusing only on the question of movement from the statutory perspective [00:07:40] Speaker 00: Somebody had a right, that is, appellant had a right, to appeal to seek an override. [00:07:44] Speaker 00: It should not matter to this court what happened at GAO. [00:07:48] Speaker 00: Otherwise, cases like this will forever be capable of repetition evading review. [00:07:54] Speaker 02: I guess another concern I have is that what we have here is a decision to issue the override that's just very, very fact bound. [00:08:05] Speaker 02: And it's not so clear to me that the decision maker was [00:08:09] Speaker 02: employing some statutory interpretation or something like that, that we could say that it's very likely that the agency or the department is going to be employing this same statutory interpretation over and over and over again in future override decisions. [00:08:31] Speaker 02: And so therefore, there's a distinction here with this fact-bound discretionary decision versus what we saw in Kingdomware, where the department there was making a very specific position on how to construe the rule of two. [00:08:50] Speaker 02: And so that's why I also wonder whether what you're arguing as a capable of repetition [00:09:00] Speaker 02: less than clear here on this fact-bound discretionary decision? [00:09:07] Speaker 00: What I can tell you, Your Honor, is that if this decision is allowed to stand, federal agencies, particularly DHS, but I assume other federal agencies, will be extremely emboldened and empowered to override CECA states. [00:09:20] Speaker 00: In this case, by the way, we've got a clear statutory violation. [00:09:23] Speaker 00: We've got a determination and findings issued after the override was affected in a DNF. [00:09:30] Speaker 00: the document that's supposed to announce and explain the reasons for an override was issued only after the court ordered it, that is the Court of Federal Claims, ordered it to be issued. [00:09:39] Speaker 00: There was an effective override that took place over the weekend on a Sunday without notice. [00:09:46] Speaker 00: So that's a clear statutory violation, because an agency can't override until it presents its reasons to GAO. [00:09:53] Speaker 00: And we also have several rationale for the override. [00:09:58] Speaker 00: In particular, let me tell you, the [00:10:00] Speaker 00: the quote unquote most important reason for the override. [00:10:05] Speaker 00: And I'm quoting from the DNF, which is appendix 569 to 570. [00:10:09] Speaker 00: Most importantly, says the DNF, this is an 8A designated service, and the incumbent continuing to perform the work via bridge contract would go against the rules of the 8A program. [00:10:21] Speaker 00: That is the important reason offered by the DNF. [00:10:24] Speaker 00: And as everyone has admitted or conceded since the issuance of the DNF, [00:10:29] Speaker 00: That's just false. [00:10:30] Speaker 00: There's no such rule. [00:10:32] Speaker 00: A bridge contract could have gone to the incumbent. [00:10:34] Speaker 00: And I can tell you that the defendant acknowledged this on page 1194 of the appendix during the hearing. [00:10:42] Speaker 00: And in the court's opinion at appendix 5, the trial court also acknowledged that this is incorrect. [00:10:47] Speaker 00: So we have a shoddy at best DNF issued after the court ordered it to be issued that offers reasons that are exactly contrary to fact [00:10:59] Speaker 00: That is, whether you apply the rallies factors or not, that is basically the definition of arbitrary and capricious under State Farm and Overton Park and other Supreme Court precedent. [00:11:09] Speaker 00: And so we have technical arguments as to mootness. [00:11:13] Speaker 00: These guys also have argued standing throughout. [00:11:16] Speaker 00: And I have cases on standing. [00:11:17] Speaker 00: They're presented in the briefs. [00:11:18] Speaker 00: I think that shouldn't be a question. [00:11:21] Speaker 00: But the bottom line is we have a variety of technical arguments to try to get this court not to review [00:11:26] Speaker 00: What is a clear, arbitrary, and capricious determination by DHS that significantly impacted people's rights? [00:11:38] Speaker 02: How far along are we in the appeal on the merits? [00:11:42] Speaker 00: Appellant's briefs are fully submitted. [00:11:44] Speaker 00: Appellee's briefs are imminent, I think, next week, something like that. [00:11:50] Speaker 00: So this case is going to be heard on the merits soon. [00:11:53] Speaker 00: At a minimum, what this court has to do [00:11:55] Speaker 00: is here the issue on the merits. [00:11:57] Speaker 00: I think you guys will be very interested in that case. [00:12:00] Speaker 00: It involves some facts I'm sure you have not seen before. [00:12:03] Speaker 05: We're not you guys. [00:12:05] Speaker 00: I'm sorry, the court will be very interested. [00:12:08] Speaker 00: And at the very minimum, we need this case to be reversed and remanded because we think it's still relevant to the relief we're going to ask for at the Court of Federal Claims on remand. [00:12:23] Speaker 05: We will save your rebuttal time, if you like. [00:12:27] Speaker 05: I'll do that, thanks. [00:12:28] Speaker 05: Mr. Oliver. [00:12:34] Speaker 01: May it please the court. [00:12:36] Speaker 01: Clement Ehrlich just want to make note that Intervenors' Council, who's sitting at the table here, intends to address standard review and standing for probably four minutes. [00:12:46] Speaker 01: Right. [00:12:46] Speaker 01: Let's begin with mootness. [00:12:47] Speaker 05: And you will leave him the four minutes. [00:12:49] Speaker 01: Yes, Your Honor, thank you. [00:12:51] Speaker 01: I want to start with mootness. [00:12:52] Speaker 01: This court does not have jurisdiction over this appeal because it's moot. [00:12:56] Speaker 01: It's moot because there is no live controversy. [00:12:59] Speaker 01: There is no relief that this court or the trial court can afford the appellants, because what they seek is a reinstatement of the seek-a-stay, which expired on December 18, 2018, when GAO [00:13:13] Speaker 01: dismissed their bid protest. [00:13:15] Speaker 01: Therefore, there's nothing that this court can do to affect relief. [00:13:18] Speaker 03: But they argue they're under the exception capable of repetition, yet evading review. [00:13:24] Speaker 03: So just tell me how that's not true. [00:13:25] Speaker 01: Yes, that applies an exception. [00:13:27] Speaker 01: That only applies in exceptional circumstances, Your Honor, which are not the case here. [00:13:34] Speaker 01: One, it's not capable of repetition for several reasons. [00:13:39] Speaker 01: The issue of the override, the pride of override, is really enmeshed in a determination of specific, unique, factual circumstances as they applied in this particular case. [00:13:50] Speaker 01: So unlike in Kingdomware, where the issue was the VA had a particular interpretation of the Rule of Two, and that was going to be the same interpretation for that particular petitioner who had, unlike Safeguard, who had won several federal contracts and therefore it was [00:14:04] Speaker 01: They had shown in that case that that particular petitioner was likely going to face that particular interpretation of the Rule of Two. [00:14:11] Speaker 01: That's not the case here. [00:14:13] Speaker 01: One, this agency has been around since 1975. [00:14:16] Speaker 01: There's never been an override. [00:14:17] Speaker 01: But even if that weren't the case, the idea that this particular petitioner would face another override is not something they can prove, and it's very speculative. [00:14:24] Speaker 03: So there's never been an override before by this agency, and this particular petitioner has never actually gotten a government contract. [00:14:30] Speaker 01: Yes, Your Honor, that's correct. [00:14:31] Speaker 01: So they cannot meet the high bar for purposes of establishing the evading review in terms of reputational harm. [00:14:39] Speaker 02: this company exists to try to get government contracts and then perform them. [00:14:45] Speaker 02: And it stands to reason they're going to continue to bid on contracts. [00:14:55] Speaker 02: The point is, is they're going to keep bidding on contracts. [00:14:57] Speaker 02: And for the ones that they don't win, they might protest. [00:15:02] Speaker 02: And then if they protest, then there's a chance for an override during a GAO review. [00:15:09] Speaker 01: It's a long chain of possibilities, speculative possibilities. [00:15:12] Speaker 01: That's a far cry from what you saw in Kingdomware, in which it was far more certain that you had a contractor who had in. [00:15:18] Speaker 02: So as a practical matter then, [00:15:23] Speaker 02: Any party that wants to challenge an override can never get judicial review. [00:15:32] Speaker 02: Is that fair to say? [00:15:33] Speaker 02: I mean, what would be the circumstances where a big protester who is subjected to an incorrect, irrationally decided override succeed in getting judicial protection? [00:15:46] Speaker 01: I think it's difficult, given the nature of [00:15:51] Speaker 01: the issues with respect to an override. [00:15:53] Speaker 01: The override is necessarily going to involve an issue on the APA, as we discussed in the merits portion of our brief, as to whether or not the override was arbitrary and capricious under 5 U.S.C. [00:16:03] Speaker 01: 705. [00:16:04] Speaker 01: So that is necessarily usually a fact-bound determination as to whether in this particular circumstance, what is the justification that the agency used? [00:16:13] Speaker 01: What's the rationale? [00:16:14] Speaker 01: What's the evidence in support of it? [00:16:15] Speaker 01: Is there any counter-evidence? [00:16:17] Speaker 01: There are a whole host of things that a court will look at. [00:16:20] Speaker 01: fact-bound to determine whether or not, in a particular instance, an override is proper or not, which, again, so to answer your question, it will be difficult, precisely because the capable repetition components can be very difficult to be met because of the nature of the inquiry regarding overrides. [00:16:41] Speaker 02: I guess if a department issued some kind of memorandum that said, we're going to override every single time, [00:16:50] Speaker 01: In that speculative world, if you had something closer to kingdom where and which. [00:16:54] Speaker 02: And then the 100 days ran out, and then the person came up here and said, gee, this override is capable of repetition because this department has announced to the world, for whatever reason, that it's going to override every time. [00:17:12] Speaker 01: In that scenario, that perhaps would be an example where it's closer to kingdom where the issue is more the legality of that particular rule, which petitioners would face if they're going to do an override. [00:17:25] Speaker 01: But again, that's not the case here. [00:17:26] Speaker 01: I mean, here there's no broad legal rule that would apply in multiple overrides as opposed [00:17:31] Speaker 01: In essence, it's the APA standard review arbitrary and capricious. [00:17:35] Speaker 03: Well, in fact, if we acquiesce in what the petitioner is requesting here, then wouldn't we allow every incumbent contractor almost always to block an override? [00:17:48] Speaker 03: Because if you think about it, if this person under these circumstances is capable of repetition and evading review, then any time [00:17:56] Speaker 03: an override took place, a bidder, especially if they were the incumbent, could come in, seek the stay, and then if the stay gets lifted, they could complain about the stay. [00:18:08] Speaker 03: And I can't see how any circumstance, if this one fits into the very narrow exception, I think everyone would, right? [00:18:14] Speaker 03: Because every incumbent could always argue that this is capable of repetition. [00:18:19] Speaker 01: Yes, Your Honor, that would be the exceptional circumstance that swallows the rule, and that can't be the case. [00:18:23] Speaker 01: The exception simply does not apply here. [00:18:28] Speaker 05: that you have nothing further you wish to say. [00:18:49] Speaker 04: As Mr. Oliver mentioned for the sake of efficiency, Appellee B&O rests on its briefing on merits and mootness issues. [00:18:58] Speaker 04: And I will briefly address the standard of review and standing. [00:19:04] Speaker 04: The standard of review. [00:19:06] Speaker 03: Did the appellant address the standard of review in its opening argument? [00:19:11] Speaker 04: No, Your Honor. [00:19:12] Speaker 03: So if you address it, you open it up to their possibility of rebuttal. [00:19:15] Speaker 03: So you may do so at your peril. [00:19:17] Speaker 04: We'll rest on our briefs, Your Honor. [00:19:22] Speaker 05: Mr. Ginsburg, you have some rebuttal time. [00:19:26] Speaker 05: 3.41. [00:19:27] Speaker 00: Thanks, Your Honor. [00:19:30] Speaker 00: I just want to clarify a couple of things. [00:19:33] Speaker 00: We're talking about exceptions and rules. [00:19:36] Speaker 00: Let me be very clear about what the rule is. [00:19:38] Speaker 00: And here we're talking about CICA. [00:19:41] Speaker 00: That's the Competition and Contracting Act and the automatic stay. [00:19:44] Speaker 00: That's the rule, and it's an important rule. [00:19:46] Speaker 00: It's something Congress took very seriously. [00:19:49] Speaker 00: Congress wanted to see big protests at the GAO have some teeth, some impact, some importance. [00:19:56] Speaker 00: And there are limited exceptions to CICA. [00:20:00] Speaker 00: And that's exactly what we're talking about here. [00:20:02] Speaker 00: We're talking about urgent and compelling circumstances and best interests. [00:20:06] Speaker 00: So in terms of exceptions, swallowing rules, as I think was the terminology I just heard, if this kind of DNF with [00:20:14] Speaker 00: clear errors issued after the fact is allowed to stand and also arguably if this court doesn't give the Court of Federal Claims some guidance as to the relevant factors for APA review. [00:20:27] Speaker 00: which is what the Riley's wholesale decision attempted to do. [00:20:30] Speaker 03: So just to be clear, when you keep saying after the fact, my facts here on my screen are the override occurred on September 30, and the DNF came out on October 2. [00:20:41] Speaker 03: You think that two-day period is just, per se, totally radically improper? [00:20:49] Speaker 00: Your Honor, and specifically the facts of this are that on Friday, which was, I think, September 28, perhaps, [00:20:56] Speaker 00: The agency announced for the first time its intent to kick out the incumbent contractor on Sunday over the weekend. [00:21:05] Speaker 00: And on that same Sunday, although obviously the Court of Federal Acclaims was closed, we moved for a TRO and preliminary injunction, which was heard Monday afternoon. [00:21:15] Speaker 03: Wait. [00:21:15] Speaker 03: We didn't move. [00:21:17] Speaker 03: Because we are here representing the petitioner. [00:21:20] Speaker 03: The incumbent moved. [00:21:21] Speaker 03: Or did you move? [00:21:22] Speaker 00: No, the appellant moved. [00:21:23] Speaker 03: Oh, the appellant moved. [00:21:24] Speaker 03: OK, I wanted to make sure I was understanding. [00:21:25] Speaker 00: I'm sorry. [00:21:26] Speaker 00: Go ahead. [00:21:27] Speaker 00: By we, I mean the appellant. [00:21:28] Speaker 00: But you're correct in saying that the incumbent does have a clear economic interest and is part of the appellant. [00:21:33] Speaker 00: But the appellant moved. [00:21:35] Speaker 00: And by then, the transition had already happened according to DHS. [00:21:39] Speaker 00: And the trial court relied on that representation that the overnight Sunday transition had been effected. [00:21:46] Speaker 00: So the trial court denied the TRO. [00:21:48] Speaker 00: And then the fact of the inversion of the status quo was also [00:21:52] Speaker 00: extremely salient to the trial court in its decision. [00:21:55] Speaker 00: It said that, you know, there's going to be a significant harm to trying to undo that transition or undo BNO's performance. [00:22:03] Speaker 00: And so the fact is, if the, if [00:22:06] Speaker 00: the agency had abided by its statutory duty and given notice to GAO, we would have been in court asking for a TRO within hours and probably would have gotten it. [00:22:15] Speaker 03: So it was illegal because the DNF should have been before the override. [00:22:19] Speaker 00: Correct. [00:22:20] Speaker 00: And GAO needed notice. [00:22:21] Speaker 03: I didn't understand it before. [00:22:22] Speaker 03: I do now. [00:22:23] Speaker 00: But in any event, Your Honors, we've got a critical federal statute that Congress intended to have significant weight. [00:22:30] Speaker 00: And we have what can only be described as an extremely spotty DNF [00:22:35] Speaker 00: supporting a haphazard override decision. [00:22:39] Speaker 00: And that can't be the state of the law. [00:22:42] Speaker 00: And I'll address just a couple of other things. [00:22:45] Speaker 00: In terms of mootness and capable repetition in evading review, as Judge Chen said, we have a government contractor here that is going to continue to compete for contracts specifically at DHS. [00:22:57] Speaker 00: And we have the 49% owner of the entity, which is a longtime DHS contractor, [00:23:03] Speaker 00: And like I said before, if something isn't done about this DNF, I can almost guarantee that agencies will be emboldened to brazenly seek to override CICA stays. [00:23:15] Speaker 00: And with that, we will rest. [00:23:17] Speaker 00: Thank you, Your Honor. [00:23:18] Speaker 05: Thank you, Counsel. [00:23:19] Speaker 05: The case is submitted.