[00:00:00] Speaker 01:
The most argued case this morning is number 21, 1837, the problem of transportation against Eagle Peak Rock and Paving Incorporated, Ms.

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

[00:00:14] Speaker 00:
Thank you, Your Honors, and may it please the Court.

[00:00:16] Speaker 00:
The Court should reverse and remand the Board's decision for failing to review the termination de novo as it's required to do, and in doing so, running afoul in several respects of this Court's longstanding precedent.

[00:00:31] Speaker 00:
This case really comes down to one issue with the Board's decision, and that is that the Board didn't answer the question it was supposed to, whether Eagle Peak was in default.

[00:00:43] Speaker 00:
Instead, the board spent pages of its determination critiquing and analyzing the contracting officer's subjective opinions and beliefs and analysis.

[00:00:56] Speaker 01:
Let me interrupt you about your first statement.

[00:00:59] Speaker 01:
You're saying that they should have reviewed everything de novo with no deference of any sort.

[00:01:06] Speaker 01:
That's correct, Your Honor.

[00:01:07] Speaker 00:
To the contracting officer, to the board?

[00:01:09] Speaker 00:
Correct.

[00:01:10] Speaker 00:
And that's consistent with the CDA, which requires a novel review.

[00:01:14] Speaker 00:
And the contracting officers finding a fact are not binding on subsequent precedent.

[00:01:19] Speaker 00:
And it also is consistent with this court's longstanding precedent.

[00:01:23] Speaker 00:
I would point, Your Honor, first and foremost to the Willner case.

[00:01:26] Speaker 01:
The contracting officers finding a fact, deference to what the board of contract appeals found.

[00:01:33] Speaker 01:
You're saying there's no deference to that finding?

[00:01:36] Speaker 01:
From this court's perspective, Your Honor?

[00:01:39] Speaker 01:
From the court's perspective, from the perspective of judicial review.

[00:01:42] Speaker 01:
of an agency decision.

[00:01:45] Speaker 00:
This court would give deference to the board's findings a fact.

[00:01:49] Speaker 00:
But what we're here today on is not a factual challenge, but it's that the board misapplied this court's law.

[00:01:56] Speaker 02:
So can I just dig a little bit deeper to, now we're talking about just how the board went about its task.

[00:02:04] Speaker 02:
And the CDA, as we've said, means that there is de novo

[00:02:11] Speaker 02:
decision-making about determination for default standard determination.

[00:02:20] Speaker 02:
How does that de novo standard fit with a bunch of other language in a lot of our opinions, going back to Darwin and through at least one or maybe both of the relevant MacDonald Douglas decisions,

[00:02:38] Speaker 02:
about the substantive standard, perhaps to be applied in de novo proceedings, being a reasonable belief on the part of the contracting officer that timely completion was not assured.

[00:02:56] Speaker 02:
And that last bit, I'm using the shorthand, OK?

[00:02:59] Speaker 00:
Sure.

[00:03:00] Speaker 02:
But the reasonable relief part seems to suggest something about the question being decided de novo being something other than simply, was reasonable, was timely completion assured?

[00:03:21] Speaker 00:
Sure, Your Honor.

[00:03:22] Speaker 00:
The standard is, way back to Lisbon, what the reasonable contracting officer would have found, right?

[00:03:29] Speaker 00:
But the board and the trial courts make their own de novo determination as to whether there was a reasonable likelihood of timely completion.

[00:03:38] Speaker 00:
And then if they answer in the affirmative, then that supports the contracting officer's reasonable determination.

[00:03:45] Speaker 00:
So it is a wholly de novo review of the fact-finding

[00:03:48] Speaker 00:
is a new at the board or the trial court, as this court has explained many times.

[00:03:54] Speaker 00:
And there's no deference that's given to the contracting officer's decision.

[00:03:58] Speaker 00:
And I would point, Your Honors, for example, to the DCF.

[00:04:02] Speaker 02:
So let me just try to understand this and how this fits.

[00:04:06] Speaker 02:
I understand how the de novo language suggests that the question straight up is whether timely assurance

[00:04:17] Speaker 02:
was reasonably assured and the contracting officer has disappeared from that formulation.

[00:04:24] Speaker 02:
On the other hand, is that what you're, you're suggesting that no matter how putting aside pretext, true pretext equivalent to bad faith, we have a bunch of language.

[00:04:38] Speaker 02:
Darwin has the language.

[00:04:39] Speaker 02:
Others have the language about arbitrariness and capriciousness.

[00:04:45] Speaker 02:
of the contracting officer's decision.

[00:04:49] Speaker 02:
What do you do with that?

[00:04:50] Speaker 02:
In the ordinary course, you would say, well, the reasoning, the actual reasoning of the contracting of the subject of an arbitrary and capriciousness review matters.

[00:05:01] Speaker 02:
The Supreme Court recently said that arbitrary and capricious means reasonable and reasonably explained.

[00:05:10] Speaker 02:
So why isn't that second piece tied to what the contracting officer said?

[00:05:17] Speaker 00:
Well, Your Honor, the arbitrary and capricious or abusive discretion standard only comes into play in termination for default reviews if there's no performance-related reason for the termination.

[00:05:30] Speaker 00:
So we don't consider.

[00:05:32] Speaker 02:
How do we get to that?

[00:05:34] Speaker 00:
So we get to that, Your Honor.

[00:05:35] Speaker 00:
First and foremost, that the CDA requires de novo review.

[00:05:39] Speaker 02:
This court has cited three- I should say, I am not for a moment doubting, because I've experienced this myself, that there is ground for confusion about the relationship between these two things.

[00:05:51] Speaker 02:
And I'm fairly desperately trying to understand how it is properly resolved, this confusion.

[00:05:58] Speaker 00:
Right, Your Honor.

[00:05:59] Speaker 00:
And in our opening brief, we explained that

[00:06:02] Speaker 00:
The CDA requires de novo review.

[00:06:04] Speaker 00:
This court's precedent requires de novo review.

[00:06:07] Speaker 02:
I don't think this court's precedent says that once you've decided that there's no pretext, which I take actually to be equivalent to meaning that is no pretext means decision was about performance, inquiry over about the contracting officer's reasoning.

[00:06:28] Speaker 02:
I don't think we've said that.

[00:06:30] Speaker 02:
That may be correct.

[00:06:32] Speaker 00:
But I don't think we said that.

[00:06:39] Speaker 00:
the lower court there looked to the abuse of discretion, arbitrary and capricious standard without first considering whether there was a performance-based reason.

[00:06:51] Speaker 00:
So we know that first, the board has to determine whether there's a performance-based reason for the determination.

[00:07:00] Speaker 00:
If that's answered in the affirmative, there was a performance-based reason for the termination,

[00:07:05] Speaker 00:
then that's sufficient to sustain the termination.

[00:07:07] Speaker 02:
So that last sentence, what establishes that last sentence?

[00:07:11] Speaker 02:
That if there was a performance-based reason articulated by the contracting officer, we now stop caring about the contracting officer's reasoning at the time of the decision, not later testimony at the time of the decision.

[00:07:26] Speaker 02:
And now we have a completely in court or in board

[00:07:31] Speaker 02:
de novo evaluation of the reasonable assurance of timely completion.

[00:07:37] Speaker 00:
I think the answer to Turner's question is best articulated in the Empire Energy case, where in that case, the board also, and the contractor in appeal, was arguing that the contracting officer didn't undertake the correct analysis.

[00:07:56] Speaker 00:
And this court in Empire Energy said, no, there's a performance-based reason.

[00:08:01] Speaker 00:
And therefore, the contracting officer's analysis, subjective beliefs and opinions,

[00:08:07] Speaker 00:
are irrelevant.

[00:08:08] Speaker 00:
All the government has to show

[00:08:10] Speaker 00:
is that the contractor couldn't perform the duration of the contract by what the board found to be the contract completion date.

[00:08:19] Speaker 00:
And so first, the board was tasked with looking de novo at whether there was a performance-based reason.

[00:08:26] Speaker 00:
And then if there is not a performance-based reason, then the abuse of discretion, arbitrary capricious standard for bad faith.

[00:08:35] Speaker 02:
I think what I'm hearing you saying, and I guess I have in my mind,

[00:08:40] Speaker 02:
fair amount of broader language in pre-empire energy decisions about arbitrary and capriciousness being the lens through which one evaluates the contracting officer's decision and the ordinary meaning of arbitrary and capriciousness, I think is clear from administrative law generally, does actually

[00:09:09] Speaker 02:
place considerable weight on the actual reasoning of the contracting officer.

[00:09:14] Speaker 02:
I think I hear you saying that Empire Energy kind of narrows the scope of the language used in previous cases to no pretext and performance-based.

[00:09:28] Speaker 00:
I think it does so expressly when it says this is not inconsistent with McDonnell Douglas and prayer cases, but what matters

[00:09:36] Speaker 00:
under the CDA is whether the government showed that the contractor had a performance-based issue that supported the termination.

[00:09:48] Speaker 00:
I think that Empire Energy did narrow and say the arbitrary and capricious abuse of discretion standard isn't relevant if we have a performance-based reason.

[00:09:59] Speaker 00:
That's consistent

[00:10:00] Speaker 00:
with the CDA and with this court's long-standing president.

[00:10:03] Speaker 03:
Do you establish the performance-based reason at the outset, or does it sort of emerge as the proceedings are going on before the board or the court of federal claims?

[00:10:14] Speaker 00:
Well, I imagine, Your Honor, because it is a de novo review, it would be established over the course of the hearing that's happening before the board, which happened in this case, a 12-day hearing that was all about the performance, or lack thereof, of the contractor.

[00:10:26] Speaker 03:
And the problem with the board... So you're saying, excuse me for jumping in on you, but what you're saying is that you have a board proceeding or a court proceeding and the court determines or the board determines at the end of the testimony and the review of the documents that this was a legitimate performance-based reasoning

[00:10:47] Speaker 03:
Hence, we don't go the arbitrary capricious route.

[00:10:50] Speaker 03:
We just look at, was there a reasonable basis situation?

[00:10:54] Speaker 00:
That's correct, Your Honor.

[00:10:55] Speaker 00:
And what I think is important to remember here is before the CDA, when we were in the Wonderlic era and the Act, we only looked at the contracting officer decision for abuse of discretion and arbitrary capriciousness, right?

[00:11:10] Speaker 00:
We looked directly at that at the outset.

[00:11:13] Speaker 00:
And as this court explained in Wilner, the CDA changed that.

[00:11:17] Speaker 00:
Post-CDA, we don't just look at whether the contracting officer was acting in bad faith or the termination was a pretextual reason for some other.

[00:11:27] Speaker 00:
We actually start at the performance of the contractor.

[00:11:30] Speaker 03:
I have just one question, sort of a technical question.

[00:11:35] Speaker 03:
You're asking that we vacate

[00:11:37] Speaker 03:
the decision of the board and remand to the board.

[00:11:40] Speaker 03:
I assume that based on what you're saying, you're not asking for a new trial.

[00:11:46] Speaker 03:
You're asking the board to go back and look at the record that presently exists, the documents, the testimony, and apply what you say is the correct approach.

[00:11:59] Speaker 03:
Is that correct?

[00:11:59] Speaker 00:
Correct, Your Honor.

[00:12:00] Speaker 00:
And the correct approach here, which is so far contrary to what the board did,

[00:12:05] Speaker 00:
is to determine the contract completion date and then make a determination as to whether there was a reasonable likelihood that this contractor could have met that date, an analysis that the board expressly declined to make.

[00:12:18] Speaker 00:
And I would point, Your Honors, to appendix seven.

[00:12:20] Speaker 02:
Can I double check something?

[00:12:21] Speaker 02:
Sure.

[00:12:21] Speaker 02:
Is there a second reasonableness layer to the, or just the one that you articulated, namely a reasonable likelihood of timely completion of the proper contract date, or is it that a

[00:12:35] Speaker 02:
hypothetical reasonable contracting officer could reasonably conclude that there is no reasonable likelihood of timely completion.

[00:12:44] Speaker 02:
Which are those two things?

[00:12:45] Speaker 00:
I think it was originally articulated in the latter example, the double reasonable.

[00:12:50] Speaker 00:
But Empire Energy didn't actually put that double reasonable.

[00:12:53] Speaker 00:
It actually just said that the government must show that the contractor could not have performed in the time that was set by the board or the court.

[00:13:02] Speaker 00:
Could not have.

[00:13:03] Speaker 01:
Exactly.

[00:13:05] Speaker 01:
What I hear and what we've been talking about, it's entirely a matter of the procedure and how it was reviewed.

[00:13:12] Speaker 01:
So you're not saying that there was anything conspicuously, so conspicuously incorrect that as a matter of law, it can't stand.

[00:13:22] Speaker 01:
You're saying it needs to be reviewed as a matter of procedure in a different way.

[00:13:28] Speaker 00:
The board needs to redo its analysis to comply with this court's procedure.

[00:13:32] Speaker 00:
But there are several ways that the board's analysis runs far contrary to this court's longstanding precedent.

[00:13:39] Speaker 00:
For example, the board relied on the contracting officer's purported failure to review FAR factors.

[00:13:47] Speaker 00:
That is directly contrary to this court's opinion in DCX, where this court said that a contracting officer's failure to review these specific FAR factors

[00:13:58] Speaker 00:
is not a reason to overturn a termination.

[00:14:01] Speaker 00:
This board's opinion is also directly contrary to this court's opinion in ACE Corporation, where this court explains that if there's a reason, if the contractor doesn't show a reasonable assurances to the agency that it can perform the contract, that is a sufficient reason to sustain the termination.

[00:14:24] Speaker 00:
The board's opinion is also contrary

[00:14:27] Speaker 02:
You didn't rely on ACE in your blue brief.

[00:14:31] Speaker 00:
I believe we did, Your Honor.

[00:14:33] Speaker 00:
AEC.

[00:14:33] Speaker 00:
It's called Danzig.

[00:14:35] Speaker 00:
Oh, the Atomic Energy Commission?

[00:14:37] Speaker 00:
Danzig v. AEC.

[00:14:39] Speaker 00:
Oh.

[00:14:39] Speaker 00:
And it's in our section.

[00:14:41] Speaker 00:
I believe on page 26 about repudiation.

[00:14:43] Speaker 02:
Not the lead name.

[00:14:45] Speaker 00:
Yeah.

[00:14:45] Speaker 00:
Sorry about that.

[00:14:47] Speaker 00:
Do you want to save your rebuttal time?

[00:14:48] Speaker 00:
Sure.

[00:14:49] Speaker 00:
Thank you, Your Honor.

[00:14:52] Speaker 00:
Mr. Wood.

[00:14:53] Speaker 04:
May it please the Court, Your Honor.

[00:14:54] Speaker 04:
David Wunderlich on behalf of the Appellee Eagle Peak Rock and Paving Inc.

[00:15:00] Speaker 04:
And Eagle Peak very much appreciates the Court's time this morning as we attempt to come to the end of the line of a saga that has now entered its seventh year since the contracting officer terminated this construction contract for default.

[00:15:16] Speaker 04:
And it's Eagle Peak's belief the Civilian Board of Contract Appeals correctly held that that termination was improper

[00:15:23] Speaker 04:
and converted it to a termination for the convenience of the government.

[00:15:27] Speaker 04:
We, in our brief, focused on five separate factors on which the court could affirm that decision.

[00:15:36] Speaker 04:
But I'm going to focus only on two here today.

[00:15:40] Speaker 04:
The first being the fact that we are faced with a complete straw man argument of what the civilian board of contract appeals actually held.

[00:15:52] Speaker 04:
The board held that the government failed to carry its burden of proof.

[00:15:57] Speaker 02:
Full stop.

[00:15:58] Speaker 02:
So as I read the board opinion, and I went through, and it's a mercifully short board opinion as these things go, but virtually every paragraph one can write in the right-hand margin, is the board discussing abusive discretion, or is the board making a de novo finding?

[00:16:16] Speaker 02:
And most of the paragraphs are about abusive discretion.

[00:16:20] Speaker 02:
There's one paragraph that

[00:16:22] Speaker 02:
Maybe if the analysis is redone on remand, if that's the way we were to go, maybe that's going to be enough for you to win.

[00:16:29] Speaker 02:
But most of the courts of the board's analysis is abuse of discretion.

[00:16:33] Speaker 02:
And then there's a couple of paragraphs, one maybe most of all, that sounds like de novo.

[00:16:39] Speaker 02:
And then at the very end, the board says, by the way, we're not actually deciding the question of reasonable likelihood of timely completion.

[00:16:51] Speaker 02:
I don't see that you can say it's a straw man to accuse the board of very substantially discussing abusive discretion of what the contracting officer reasoned.

[00:17:05] Speaker 04:
The board's holding is as clear as it could be.

[00:17:10] Speaker 04:
They said the question is whether FHWA satisfied its burden, that there was no reasonable likelihood of Eagle Peak's timely performance by October 5th, 2018, the contract completion date.

[00:17:23] Speaker 04:
We conclude that the FHWA failed to meet that burden.

[00:17:27] Speaker 04:
That is the board's holding.

[00:17:30] Speaker 04:
And that holding is based on a de novo review of the evidence, a substantial amount of evidence as Ms.

[00:17:38] Speaker 04:
Akers pointed out, 12 days of hearing.

[00:17:41] Speaker 04:
Judge Russell visited the project site.

[00:17:44] Speaker 04:
There's over 3,000 pages of testimony, nearly 5,000 exhibits in the Rule 4 record.

[00:17:52] Speaker 04:
And the board

[00:17:53] Speaker 04:
analyzed that thoroughly and found that the government did not carry its burden of proof.

[00:17:59] Speaker 04:
They did not establish that performance-based reason.

[00:18:03] Speaker 04:
The performance-based reason is Lisbon and its progeny.

[00:18:07] Speaker 04:
That is the notion that is there no reasonable likelihood of timely completion.

[00:18:13] Speaker 04:
If you don't have that, you don't have a performance-based reason for termination.

[00:18:19] Speaker 04:
And that is what the government established.

[00:18:20] Speaker 04:
Because the government did not

[00:18:24] Speaker 04:
carry its burden of proof because they did not establish no reasonable likelihood of timely completion, the board's analysis ends there.

[00:18:33] Speaker 04:
That was the only holding that they needed to make is the holding that the government did not satisfy its burden of proof as a factor.

[00:18:46] Speaker 02:
Just to help me out, the sentence that you started with,

[00:18:51] Speaker 02:
Where do I find that?

[00:18:52] Speaker 04:
I believe that's a page 11.

[00:18:54] Speaker 02:
I'm sorry, it's page 11.

[00:19:02] Speaker 02:
And that's right at the beginning of the discussion section.

[00:19:05] Speaker 02:
And then the board goes on repeatedly to talk about the contracting officer's reasoning.

[00:19:12] Speaker 02:
And in the penultimate paragraph, because we find that, I'm sorry,

[00:19:16] Speaker 02:
Based on the evidence presented, we cannot find that the contracting officer acted fairly and reasonably in terminating equal peak for default after paragraph after paragraph of criticizing the contracting officer's reasoning.

[00:19:30] Speaker 02:
Do you disagree with Ms.

[00:19:32] Speaker 02:
Akers that the contracting officer's reasoning is really beside the point in a de novo proceeding?

[00:19:42] Speaker 04:
I don't disagree that her reasoning is beside the point, but the government has taken an overly expansive view of what constitutes that, quote, subjective belief on the part of the contracting officer.

[00:19:58] Speaker 04:
This court in McDonnell Douglas 12 was very clear that... Right, but Eagle Empire came after that and rather pointedly

[00:20:12] Speaker 02:
reconstructed the language of that passage in the McDonald's Douglas 12.

[00:20:19] Speaker 02:
That's the 323F3rd, right?

[00:20:22] Speaker 04:
Yes.

[00:20:23] Speaker 04:
Right.

[00:20:24] Speaker 04:
And empire energy is completely distinguishable because in that case, the government at the hearing proved that there was no reasonable likelihood of termination.

[00:20:37] Speaker 04:
That was why that

[00:20:39] Speaker 04:
decision was sustained.

[00:20:42] Speaker 04:
And that's completely missing here.

[00:20:43] Speaker 04:
Here, the government, the board affirmatively found that Eagle Peak was ready, willing, and capable of completing time.

[00:20:51] Speaker 02:
If you're right about that, and if we were to have doubts about how much of the board's opinion may have gone off on what ultimately is a tangent, namely the quality of the

[00:21:08] Speaker 02:
contracting officer's reasoning.

[00:21:11] Speaker 02:
Why isn't the right course to vacate, remand, and you can argue to the board, never mind all of that criticism of the contracting officer's decision, just look at the evidence.

[00:21:23] Speaker 02:
Did the government prove the termination for default standard, which is mostly here concerned or maybe even entirely here concerned with likelihood of timely completion?

[00:21:33] Speaker 02:
You should find the government did not prove that and get back to the same result.

[00:21:38] Speaker 04:
because I believe pretty firmly that the board did undertake that analysis.

[00:21:45] Speaker 04:
As they pointed out, there was undisputed evidence in the record that Eagle Peak had the resources and capability to timely complete this contract.

[00:21:56] Speaker 04:
And when that was not disputed, the government failed to carry their burden.

[00:22:00] Speaker 04:
So a remand is going to lead you back to the same place because the government, the board has already undertaken that analysis.

[00:22:07] Speaker 04:
They found

[00:22:08] Speaker 04:
the testimony of Eagle Peak's scheduling expert to be persuasive that there was adequate progress being made in the first season.

[00:22:18] Speaker 04:
That's a finding of fact that goes toward the government's failure to carry its burden of proof.

[00:22:26] Speaker 04:
If we were to remand, as I said, this is just going to end up back in the same place because the board has already undertaken the analysis that's necessary.

[00:22:39] Speaker 04:
To the extent the board is mentioning discretion, it's using it in the context of what objectively did the contracting officer look at

[00:22:49] Speaker 04:
in making the termination decision.

[00:22:51] Speaker 02:
It's hard to separate those.

[00:22:52] Speaker 02:
But why does it matter under Empire Energy what the contracting officer looked at?

[00:22:58] Speaker 02:
I thought the whole point of de novo is that once the claim is put into the Court of Federal Claims or the board, contracting officer's decision is no longer

[00:23:14] Speaker 04:
part of the analysis now the question is what is the evidence put in it before the tribunal because it's impossible to separate those two in many instances here in the sense the evidence of ego peak's progress in the first season and ability to complete and what the contracting officer looked at they're one in the same

[00:23:38] Speaker 04:
The fact that there is evidence in the record that Eagle Peak was, as the board put it, ready, willing, and capable to timely complete is basically the same thing as what the contracting officer didn't look at.

[00:23:50] Speaker 04:
It's very difficult to separate those two.

[00:23:52] Speaker 02:
Did the government put in before the board as evidence additional facts, analyses that went to the timely completion

[00:24:07] Speaker 02:
issue that went beyond what the contracting officer herself looked at.

[00:24:13] Speaker 04:
They certainly did and the board found them unpersuasive.

[00:24:16] Speaker 04:
The board was persuaded by the schedules that Eagle Peak submitted that had an extensive narrative that detailed how they were going to complete this work.

[00:24:28] Speaker 04:
The communications

[00:24:29] Speaker 04:
that this court has instructed us to look at as to what constitutes objective evidence.

[00:24:37] Speaker 04:
Those communications were Eagle Peak's assurances.

[00:24:41] Speaker 04:
We are going to bring our forces.

[00:24:44] Speaker 04:
We're marshaling everybody we have, and we are going to throw it at this project.

[00:24:48] Speaker 04:
And then on January 25, 2017, they put in a schedule that lays that out in extensive detail.

[00:24:54] Speaker 04:
50-plus pages of the resources, equipment,

[00:24:58] Speaker 04:
et cetera, that Eagle Peak is going to be bringing to bear on this project.

[00:25:03] Speaker 04:
Nobody from the government ever looks at that.

[00:25:06] Speaker 04:
And who did look at it, though?

[00:25:08] Speaker 04:
The board.

[00:25:09] Speaker 04:
The board looked at it and said, yes, we find this persuasive.

[00:25:12] Speaker 04:
This is more persuasive than anything that the government has put on.

[00:25:16] Speaker 04:
And therefore, the government has failed to carry its burden.

[00:25:19] Speaker 03:
Well, you recall the discussion mainly between Judge Toronto and Ms.

[00:25:24] Speaker 03:
Akers about the arbitrary and capricious point.

[00:25:29] Speaker 03:
It doesn't seem to me, do you contend that the government's action was arbitrary and capricious here?

[00:25:35] Speaker 03:
I mean, it seems to me perhaps when all is said and done,

[00:25:41] Speaker 03:
aboard if it looks at again will say the contracting officer we uphold the default or we don't but i don't think i don't see you are between the priestess action protects to election here do you well you you would say she got it wrong but would you say that there was a malevolent textual intent here i don't think so to to be to be clear your honor the

[00:26:05] Speaker 04:
mcdonnell-douglas factors we put this out in our brief as to how those are not the exclusive consideration of what constitutes an abuse of discretion and abuse of discretion arbitrary and capricious those are the same those are the same thing and i think you can find that here because it can be found in circumstances where it is something other than a pretext

[00:26:27] Speaker 03:
you know i understand that but i mean do you do you really feel that there was again whether the contracting officer came to the right or wrong decision based on what i've seen in the case it doesn't look to me like we have some sort of malevolent intent here pretextual action that you've seen referred to in some of the other cases it's not necessarily a a pretext it is just the notion that

[00:26:56] Speaker 04:
there is not a reasonable contract-related nexus.

[00:27:00] Speaker 04:
And in McDonnell Douglas 10, there was that nexus.

[00:27:04] Speaker 04:
The contractor said, we are not going to be complete by the contract completion date.

[00:27:09] Speaker 04:
Again, that's absent here.

[00:27:12] Speaker 04:
Even the cases further back, Schlesinger, John A. Johnson, Darwin, even though the agencies in those cases were able to articulate a contractual hook

[00:27:25] Speaker 04:
for the termination but the board overturned them anyway because they found a pretext in those cases.

[00:27:34] Speaker 04:
There is no contract related basis here.

[00:27:37] Speaker 03:
There's no pretext here.

[00:27:41] Speaker 03:
You're more familiar with the record than I am, but it doesn't appear.

[00:27:45] Speaker 03:
I see one could say that the termination for default was incorrect because there was

[00:27:53] Speaker 03:
The government didn't establish no reasonable likelihood of completion.

[00:27:57] Speaker 03:
Fair enough.

[00:27:58] Speaker 03:
But that's different from saying the government acted out of some kind of malevolent

[00:28:03] Speaker 03:
for textual intent.

[00:28:04] Speaker 03:
The government can get it wrong but not be malevolent is what I'm saying.

[00:28:08] Speaker 03:
And it seems to me that that's more the situation we have here.

[00:28:11] Speaker 04:
And I would argue, Ron, that you absolutely pointed out that the key fact in this is that we're operating in a hypothetical world here in the sense that we only get to this analysis if

[00:28:23] Speaker 04:
the government carries its burden of proof, which the board was very clear after a thorough review of the evidence that they did not do so.

[00:28:33] Speaker 04:
But again, I would argue strongly that the abuse of discretion, arbitrary and capricious standard isn't limited to, as you put it, the malevolent intent, the pretextual cases.

[00:28:46] Speaker 04:
It can be

[00:28:47] Speaker 04:
a wrong decision reached in a... it can be satisfied on a negligence standard as opposed to a malevolent one if the contracting officer doesn't do the level of analysis that's required under the FAR.

[00:29:08] Speaker 02:
What would be a case that actually

[00:29:14] Speaker 02:
So held in the sense that there was no pretext, but the contracting officer's decision was notwithstanding that it referred to deficiency of performance was nevertheless in your view, arbitrary and capricious.

[00:29:39] Speaker 02:
And do we have a case that said, and therefore without any

[00:29:45] Speaker 02:
additional de novo on new evidence review, we change the termination for default into a termination for convenience.

[00:29:55] Speaker 04:
And I would point your honor to, at the end of my time here, but I would point your honor to pages 37 and 38 of our brief in which we cite a host of decisions from the boards of contract appeals and the court of federal claims that.

[00:30:09] Speaker 04:
What about from this court?

[00:30:10] Speaker 04:
I do not have any from this court.

[00:30:12] Speaker 02:
Because I think that Darwin is part of the whole Schlesinger line, where it's all just basically pretext.

[00:30:21] Speaker 04:
That's correct.

[00:30:23] Speaker 04:
And I thank you, Your Honor.

[00:30:24] Speaker 04:
I respectfully request that the Court affirm the decision of the Board of Contract Appeals.

[00:30:32] Speaker 01:
Anything else for counsel?

[00:30:34] Speaker 00:
Thank you.

[00:30:36] Speaker 00:
Just a few points, Your Honours.

[00:30:38] Speaker 00:
First, I think it's important to look at Appendix 17 that Judge Toronto pointed out, where the Board said that it could not sustain the termination because the contracting officer did not act fairly and reasonably.

[00:30:52] Speaker 00:
That language, that conclusion and termination, cannot be reconciled

[00:30:57] Speaker 00:
with this court's precedent that says a contracting officer's subjective beliefs, opinion, analysis, consideration of the FAR factors is irrelevant in its determination.

[00:31:08] Speaker 00:
Eagle Peak is arguing here that there was a thorough review of the factual performance-based reasons, and respectfully, Your Honor, that is preposterous.

[00:31:17] Speaker 00:
What happened in this board opinion is critique after critique of the contracting officer's analysis.

[00:31:25] Speaker 00:
That is, outside the review of the board's determination.

[00:31:28] Speaker 02:
So let me just ask this.

[00:31:29] Speaker 02:
So it seems to me there is a logical possibility, and the question is going to be, is this what happened here, that if the government puts on two kinds of evidence, or there are two kinds of evidence in the de novo proceeding.

[00:31:47] Speaker 02:
One is,

[00:31:47] Speaker 02:
Look at all the stuff that the contracting officer did and said, and then other stuff, new expert or something comes in and says, even though the contracting officer didn't mention it, here are some other reasons why Eagle Peak could not have finished on time.

[00:32:04] Speaker 02:
Now let's suppose there isn't actually much in this new evidence bucket.

[00:32:12] Speaker 02:
Then it's perfectly sensible for the board or the court of federal claims in a 1491

[00:32:18] Speaker 02:
case to talk about the sufficiency of what the contracting officer had to say.

[00:32:25] Speaker 02:
Why is that not an accurate description of this?

[00:32:29] Speaker 00:
Well, respectfully, on two reasons in general, no, it's not appropriate for the board to look at what the contracting officer did.

[00:32:37] Speaker 00:
It's to look at the facts again and anew on a clean slate and to say, this is what happened.

[00:32:44] Speaker 00:
These are the performance issues or not.

[00:32:46] Speaker 00:
In this case, for example, things that the contracting officer didn't discuss, the government's independent scheduling analysis that it put forward.

[00:32:55] Speaker 00:
Eagle Peak's own schedule that showed it would not complete by the contract completion date.

[00:33:02] Speaker 00:
That is proof that there is no reasonable likelihood of timely completion.

[00:33:06] Speaker 00:
Its own schedule showed beyond timely completion.

[00:33:09] Speaker 00:
And the board is permitted to look at any basis to sustain the termination, not only just those considered by the contracting officer.

[00:33:19] Speaker 00:
And so the board here really abdicated its responsibility in full by looking at the performance-based reasons, by looking at all of the evidence and considering it and analyzing all of the evidence that the government put forward as to the performance-based reasons,

[00:33:35] Speaker 00:
And instead, what it did was it substituted that proper analysis under this court's longstanding precedent with improper critiques of the contracting officer's final decision, which plays no part in a de novo review, as this court has explained time and time again.

[00:33:50] Speaker 01:
Thank you.

[00:33:53] Speaker 01:
Anything else for counsel?

[00:33:54] Speaker 01:
Any more questions for counsel?

[00:33:56] Speaker 01:
Thank you.

[00:33:57] Speaker 01:
Thank you both.

[00:33:58] Speaker 01:
The case is taken under submission.