[00:00:00] Speaker 02:
Our only case for argument today is 23-1970, Percipient versus United States.

[00:00:09] Speaker 02:
Counsel, please proceed.

[00:00:12] Speaker 10:
May it please the court, Your Honor's Hamish Hume for appellant, Percipient.

[00:00:16] Speaker 10:
Your Honor, the answer to the court's question posed for en banc review is that a party is an interested party under the third prong of section 1491B1.

[00:00:28] Speaker 10:
where the alleged legal violation prevents that party from offering its goods or services to meet the procurement needs of the government agency.

[00:00:39] Speaker 10:
This definition logically follows from the plain text of section 1491.

[00:00:44] Speaker 10:
The key principle is that determining who is interested in challenging an alleged violation necessarily must be measured by what that violation is.

[00:00:57] Speaker 10:
So where the violation manifests itself in a solicitation or a contract award, this court's precedent has been held that an interested party is an actual or prospective bidder on that solicitation or contract.

[00:01:11] Speaker 13:
But where the violation is- Why if we allow subcontractors to have standing under the last part of the sentence, would it somehow still foreclose them to have standing under the first two parts of the sentence?

[00:01:26] Speaker 13:
if they can show they have an economic interest in being considered part of the solicitation, for instance.

[00:01:34] Speaker 10:
Your Honor, the subcontractor standing rules that have been articulated before fall into two categories.

[00:01:42] Speaker 10:
One is, if the subcontractor's only interest is derivative of the prime contractor, in other words, they teamed up with the prime, that prime lost.

[00:01:53] Speaker 10:
then they don't get to bring a case because they are only derivatively interested.

[00:01:57] Speaker 10:
And this court has wanted only the most directly interested party that directly harms.

[00:02:03] Speaker 13:
The government was putting together a solicitation for a contract and was considering the various types of commercial off-the-shelf goods.

[00:02:13] Speaker 13:
And in the solicitation, there were different possible goods it could use.

[00:02:18] Speaker 13:
And it decided to use two types of goods that

[00:02:22] Speaker 13:
crimes could bid on, but not two other types of goods.

[00:02:25] Speaker 13:
And a subcontractor only produced one of the two types of goods they couldn't bid on.

[00:02:31] Speaker 13:
Won't they have an interest in challenging the terms of that solicitation because the exclusion of those commercial items would have a direct economic impact on them because they couldn't be a potential subcontractor on the solicitation?

[00:02:48] Speaker 10:
I think if I followed

[00:02:49] Speaker 10:
your example, Judge Hughes, and I may not have, but if I did, the government agency, in your hypothetical, has made a determination on crafting a solicitation in a manner that could be satisfied by certain kinds of commercial items but not others.

[00:03:08] Speaker 10:
Could the manufacturer of the commercial item that is excluded challenge?

[00:03:13] Speaker 10:
And the answer to that is yes, but they would challenge it as a normal challenge to a solicitation

[00:03:19] Speaker 10:
and they would have to have some argument, it sounds like an argument would have to be outside 3453 or based on an arbitrary and capricious application of 3453.

[00:03:27] Speaker 13:
So you think in that context the subcontractor would challenge the terms of the solicitation?

[00:03:33] Speaker 10:
Yes, I think if the subcontractor.

[00:03:35] Speaker 13:
So your argument is not to expand to the last part of the 1491, it would also sweep in the first two parts?

[00:03:45] Speaker 13:
is focused on the third prong and is not focused on whether or not some- I understand that, but we're deciding this case en bloc, and it's going to potentially have a large effect depending on how we determine interest of the party.

[00:03:57] Speaker 13:
And I'm trying to figure out how you would limit the definition that you're proposing, which is you look at the underlying statute, not the term interest of party, and determine whether or some that he has an economic interest in the underlying statute.

[00:04:13] Speaker 13:
and that that's enough to bring them within an interested party.

[00:04:17] Speaker 10:
Yes.

[00:04:17] Speaker 10:
I understand your honor's concern about the implications of our argument.

[00:04:22] Speaker 10:
My answer was attempting to focus on whether the putative subcontractor has a challenge to the agency's action, that it is the most directly injured party from.

[00:04:41] Speaker 10:
If its interest is only derivative by the fact that its prime wasn't picked, it has no standing.

[00:04:48] Speaker 13:
Sure.

[00:04:49] Speaker 13:
But my hypothetical was designed to test that, which is this isn't about the prime.

[00:04:54] Speaker 13:
This is about the agency setting the universe of commercial optical items.

[00:04:59] Speaker 13:
And let's just assume.

[00:05:14] Speaker 13:
which one is going to be used.

[00:05:16] Speaker 13:
It's going to use whichever ones that work best with its bid and that the agency told them.

[00:05:22] Speaker 13:
But if you were one of the ones excluded from the solicitation, wouldn't you have a direct economic interest?

[00:05:31] Speaker 10:
Your Honor, we haven't had to confront that question.

[00:05:34] Speaker 10:
But standing here right now, I think if they can show they're the most directly injured party and that their challenge is to action by the government,

[00:05:44] Speaker 10:
I think that within this court's precedence, they would be able to say they would be offering their product, but for the legal violation.

[00:05:53] Speaker 13:
And that's something they never could have done under a pre-award Bittreau test prior to Adderall right.

[00:05:59] Speaker 13:
Some contractors couldn't afford that situation.

[00:06:04] Speaker 10:
Your Honor, I'm not sure how, but that's clear.

[00:06:09] Speaker 10:
I don't think it was clear either way.

[00:06:11] Speaker 10:
I don't think that was ever a case that's presented the question your honor presents.

[00:06:17] Speaker 06:
Mr. Hume, I'd like to ask you, I'm not sure if I agree with your answer to that question.

[00:06:22] Speaker 06:
This is what I want to ask you.

[00:06:23] Speaker 06:
So how it sounds as if you are suggesting that perhaps somebody who would have standing under prong three would be able to use that because prong three has such broad language to override

[00:06:37] Speaker 06:
the limit of what an interested party is for prong one or prong two in order.

[00:06:42] Speaker 06:
In other words, how could even though prong three

[00:06:45] Speaker 06:
is more broadly written and says it would allow a broader understanding of what an interested party is in the context of a pronged three only charge.

[00:06:55] Speaker 06:
How could it be that somebody could then say they have a pronged one and a pronged three charge?

[00:07:01] Speaker 06:
How is it that they should be able to say, I'm an interested party with a direct economic interest because of a violation of a statute of regulation in connection with the solicitation

[00:07:12] Speaker 06:
and then override prong one.

[00:07:13] Speaker 06:
That can't possibly be the right answer, could it?

[00:07:16] Speaker 10:
No, I don't think so, Judge Stoll.

[00:07:18] Speaker 10:
And if my answer suggested that, I think then my answer was probably not quite correct.

[00:07:23] Speaker 10:
The in general argument is that

[00:07:26] Speaker 10:
when one, and I want to be clear about what we mean by a prong three only claim.

[00:07:30] Speaker 06:
Because I think- So it's not a challenge to a solicitation.

[00:07:33] Speaker 06:
Exactly.

[00:07:34] Speaker 06:
It's not a challenge to a contract.

[00:07:36] Speaker 10:
Precisely, Judge Stoll.

[00:07:37] Speaker 10:
By prong three only, we don't mean to focus on how the litigant pled their case.

[00:07:43] Speaker 10:
For example, if AFGE had pled their case only under prong three, it wouldn't be what we mean to be a prong three only claim.

[00:07:50] Speaker 10:
By prong three only,

[00:07:52] Speaker 10:
We mean a claim that could only be brought under promptly because it is not challenging a solicitation or a contract.

[00:08:01] Speaker 09:
Does that mean that the AFGE case would be overruled and that the government employees in that case would now have standing to sue?

[00:08:10] Speaker 10:
Well, the holding of the case is that they would not have standing to sue.

[00:08:13] Speaker 10:
Did you say now have standing to sue?

[00:08:15] Speaker 09:
Yes.

[00:08:15] Speaker 09:
Is the effect of a decision in your favor to overrule that case

[00:08:20] Speaker 09:
And to say that the employees under those circumstances would have standing to sue under the third probe.

[00:08:26] Speaker 10:
We do not like the panel and like Judge Moss's analysis and valid data.

[00:08:30] Speaker 10:
We do not think that is correct.

[00:08:32] Speaker 10:
No, because in AFGE, and this helps elucidate my answer to Judge Stoll's question,

[00:08:38] Speaker 10:
there was a challenge to a contract award.

[00:08:40] Speaker 10:
The legal violation, the cost analysis, manifested itself in a contract award.

[00:08:46] Speaker 10:
And therefore, the holding that you need to be an actual prospective bidder on that contract stands and does not need to be disturbed in any way by addressing the standard of interest to a party when there is no contract award you are challenging and there's no solicitation you are challenging.

[00:09:03] Speaker 12:
I'm sorry, just to follow up on Judge Tech's question.

[00:09:06] Speaker 12:
My understanding of his question is, if we were to rule in your favor, based on your interpretation of 1491B1, Interested Party, would those employees in AFGE have standing to bring their action in the claims court?

[00:09:23] Speaker 10:
No.

[00:09:24] Speaker 10:
I was simply trying to be direct.

[00:09:26] Speaker 12:
Why wouldn't they meet your understanding of,

[00:09:29] Speaker 12:
what's required under Prom 3.

[00:09:33] Speaker 12:
They are alleging some kind of legal violation in connection with the procurement, aren't they?

[00:09:38] Speaker 12:
They are.

[00:09:39] Speaker 12:
So then why, under your view, would they still not have standing under Prom 3?

[00:09:45] Speaker 10:
Because in that case, the legal violation manifested itself in a contract award.

[00:09:52] Speaker 10:
And they were not able, nor did they, submit a bid for that contract award.

[00:10:00] Speaker 10:
This case, we are not challenging anything that manifests itself in a contract award.

[00:10:05] Speaker 01:
What if, I mean, the original majority opinion here seemed to rely on the fact that they had alleged prong two and prong three.

[00:10:11] Speaker 01:
Well, what if they amended their complaint to just allege prong three?

[00:10:14] Speaker 01:
So are we dealing with a

[00:10:16] Speaker 01:
experiences here?

[00:10:17] Speaker 01:
Are you saying they couldn't do it because of who they are and what potential rights they might have under Prong 2?

[00:10:23] Speaker 01:
Or is it their choice to say, okay, that's the new Federal Circuit rule now, so even though I might potentially have a Prong 2 challenge, I'm just going to go under Prong 3 because otherwise I can't use Prong 3.

[00:10:35] Speaker 10:
No, Judge Post, again, this gives me an opportunity to again try to clarify what I was saying earlier.

[00:10:41] Speaker 10:
By Prong 3 only, we mean a claim that does not challenge

[00:10:46] Speaker 10:
a contract award or solicitation, where the alleged violation- Can't you have two different claims?

[00:10:51] Speaker 01:
Yes, of course you can.

[00:10:53] Speaker 10:
Of course you can.

[00:10:54] Speaker 10:
But the facts, it's not a question of how you plead.

[00:10:57] Speaker 09:
They're not an interested party with respect to an award or a solicitation, but only with respect to prong three.

[00:11:04] Speaker 09:
In other words, the only thing they can do is interfere with contract administration, the internal contract administration.

[00:11:11] Speaker 09:
of the contract and tell the government that they are administering the contract in a proper way.

[00:11:16] Speaker 09:
That's what you're saying?

[00:11:17] Speaker 10:
That is not what we're saying, Judge Dyke.

[00:11:19] Speaker 10:
What we're saying is that certain violations in connection with the paternal will manifest themselves in a contract award.

[00:11:28] Speaker 10:
If that is what happens, then regardless of how you plead your case... Your client has no standing there.

[00:11:33] Speaker 10:
If we were challenging the contract award, we would not.

[00:11:36] Speaker 09:
Okay, so the only thing you can do is challenge internal contract administration.

[00:11:40] Speaker 09:
Why

[00:11:41] Speaker 09:
in heaven's name, would Congress create a situation in which subcontractors have the opportunity to challenge the contract administration, which is in large part discretionary.

[00:11:56] Speaker 09:
It seems to be very similar to the sort of thing that was involved in Heckler and Cheney.

[00:12:01] Speaker 09:
And they can come in and say, well, the government, you should supervise your prime contractor differently.

[00:12:08] Speaker 09:
You should do this.

[00:12:08] Speaker 09:
You should do that.

[00:12:10] Speaker 09:
where the commercial items contract can be enforced by a potential prime contractor who says the government should hire us.

[00:12:20] Speaker 09:
But here, you know, you're saying we want to come in and tell the government how to supervise the prime contractor.

[00:12:27] Speaker 09:
That seems to me very unlikely that Congress could have intended that.

[00:12:32] Speaker 10:
Well, Your Honor, I'm glad you asked that.

[00:12:33] Speaker 10:
Because this case is Palantir.

[00:12:35] Speaker 10:
And if you decide the case for the appellees, you open a gigantic hole to a man just- No, it's not Palantir.

[00:12:40] Speaker 09:
Palantir is the prime contractor that was- I understand the difference, Your Honor.

[00:12:44] Speaker 09:
That was saying the government should have hired us.

[00:12:45] Speaker 09:
Here, you're saying we want the government to supervise the prime contractor so as to tell them that they had to hire different people as subcontractors.

[00:12:55] Speaker 10:
If I may, Your Honor.

[00:12:56] Speaker 10:
If I may.

[00:12:57] Speaker 10:
I understand the differences between Palantir and this case.

[00:12:59] Speaker 10:
This case creates a gaping way to evade Palantir.

[00:13:04] Speaker 10:
And it's in the national security interests of this country not to do so.

[00:13:06] Speaker 09:
And Congress said, may I just finish my answer?

[00:13:09] Speaker 10:
No.

[00:13:09] Speaker 09:
You're not allowed to interrupt me.

[00:13:11] Speaker 09:
I can interrupt you.

[00:13:14] Speaker 09:
I understand, Your Honor.

[00:13:14] Speaker 09:
How is this like Palantir?

[00:13:16] Speaker 09:
I don't understand what you're saying.

[00:13:17] Speaker 10:
Here's why, Your Honor.

[00:13:20] Speaker 10:
In Palantir, there was a solicitation that excluded Palantir, prevent them from bidding.

[00:13:26] Speaker 10:
They can challenge that.

[00:13:27] Speaker 10:
They got it reversed.

[00:13:28] Speaker 10:
And it proves, it stands for the principle, that despite their good faith, sometimes the government gets it wrong.

[00:13:36] Speaker 10:
And the whole reason Congress enacted the commercial item preference is for that reason, because we have a vibrant private sector Silicon Valley technology sector creating technology that this country needs.

[00:13:48] Speaker 10:
And that's what my client has done here.

[00:13:50] Speaker 10:
The only difference is that instead of making that decision to say, we don't care about Silicon Valley and all that tech stuff, we're going to hire a bunch of beltway bandits and design it from scratch.

[00:14:01] Speaker 10:
Instead of doing that right up front and giving us a nice, easy target, they said,

[00:14:05] Speaker 10:
Ooh, Tiptoe over here will do it in the subcontract.

[00:14:08] Speaker 10:
Will let the Beltway Bandit make the decision on its own down the road.

[00:14:12] Speaker 10:
Congress was smarter than to let that happen.

[00:14:16] Speaker 10:
In subsections B2 and C5.

[00:14:19] Speaker 10:
of the 3453 statute, they said the obligations to look at commercial items extend after the contract award.

[00:14:28] Speaker 10:
They said in C5, the agency shall ensure to the maximum extent practical.

[00:14:35] Speaker 06:
Council, can I ask you a question?

[00:14:37] Speaker 06:
What does that have to do with the meeting of interested party in 1491 B1?

[00:14:41] Speaker 06:
That's the question today.

[00:14:44] Speaker 06:
And what you're talking about, we shouldn't be looking at the underlying statute, should we, to determine what an interested party is.

[00:14:51] Speaker 06:
Instead, we should just be looking at the language of 1491 v.

[00:14:53] Speaker 06:
1, right?

[00:14:55] Speaker 10:
That is correct, Your Honor.

[00:14:57] Speaker 06:
OK, but what about this?

[00:14:58] Speaker 06:
The definition that was adopted in AFGE for the meaning of interested party, it has an expressed limitation in it, doesn't it?

[00:15:12] Speaker 10:
Exactly.

[00:15:13] Speaker 10:
The whole definition of an interested party that's borrowed from SICA by its own terms is with respect to a contract award or solicitation.

[00:15:22] Speaker 10:
So by its terms, it does not apply to a claim that is not challenging the contract award or solicitation.

[00:15:30] Speaker 06:
Do you think that supports your position before that there's something different about prong three only cases?

[00:15:37] Speaker 06:
Absolutely.

[00:15:37] Speaker 06:
And why it is that if somebody can't

[00:15:41] Speaker 06:
Try it with V, prongs 1 and 2, by making their challenge look like it's a prong 3 challenge?

[00:15:46] Speaker 10:
Yes.

[00:15:47] Speaker 10:
You can't evade it, because if the violation is manifested in an award or a solicitation, that's what you're challenging.

[00:15:54] Speaker 01:
So if I file a complaint, and this rules the way I guess you're advocating, and even though I clearly have a prong 1 and a prong 2, I'm eligible.

[00:16:05] Speaker 01:
I am precluded from saying, I'd rather plead it as a prong three, because I've got a few.

[00:16:11] Speaker 01:
Am I precluded from doing that?

[00:16:12] Speaker 10:
You could.

[00:16:14] Speaker 10:
You're not precluded.

[00:16:15] Speaker 10:
But to be an interested party, if what you're challenging is a violation manifested in a solicitation or award, you're going to need to meet the definition this court is articulating.

[00:16:25] Speaker 01:
If I allege that is the violation.

[00:16:27] Speaker 01:
It's not whether you plead it.

[00:16:28] Speaker 10:
It's the nature of the violation.

[00:16:30] Speaker 11:
You've said, counsel, repeatedly now, it's regardless of how you plead it.

[00:16:34] Speaker 11:
That gives me some concern about what the motions practice looks like in the Court of Federal Claims.

[00:16:39] Speaker 11:
You're saying the court would not be limited to how the plaintiff in these cases actually pleads their claim?

[00:16:46] Speaker 11:
If that's not right, what does that practice look like?

[00:16:50] Speaker 10:
I think the point I'm trying to make, Your Honor, is that the critical inquiry for Interest Party is the nature of the violation being challenged.

[00:16:57] Speaker 10:
If you're challenging a contract award or solicitation, then the definition from AFG still works fine.

[00:17:03] Speaker 10:
because it is, by definition, saying you need to be a prospective or actual bidder on that.

[00:17:08] Speaker 11:
And maybe I'm misunderstanding you.

[00:17:10] Speaker 11:
I think you're suggesting, if I plead my case that I'm not challenging the solicitation or the award, I just plead Prong 3.

[00:17:19] Speaker 11:
that nonetheless the court is supposed to look beyond that and see is that really what you're alleging or are you alleging something else.

[00:17:25] Speaker 10:
I think that's correct and I think that's what this court has done.

[00:17:29] Speaker 11:
And is that motion practice just based on the complaint or are we going to have to get into discovery at a motions to dismiss stage?

[00:17:38] Speaker 10:
I think that that can be assessed based on the complaint

[00:17:42] Speaker 10:
there may be a rare circumstance where the administrative record helps flush it out.

[00:17:45] Speaker 10:
But in general, I think it's clear from the complaint what that protest is.

[00:17:49] Speaker 06:
Is there usually a statement of request for relief in the complaint that would make it clear that somebody was, that they were asking for the contract to be not awarded to the awardee?

[00:18:00] Speaker 10:
Precisely, Judge Stoll.

[00:18:01] Speaker 10:
They're either trying to set aside a contract or they're not.

[00:18:04] Speaker 10:
They're either trying to set aside a solicitation or they're not.

[00:18:07] Speaker 10:
The relief tells you all you need to know.

[00:18:09] Speaker 01:
Is there anything in the statute, what language in the statute leads you to believe that they're precluded from doing that if they seek that relief, but they seek it under Prop 3?

[00:18:20] Speaker 01:
What's the statutory hook for that division?

[00:18:24] Speaker 10:
The statutory hook is that the CFC is given jurisdiction.

[00:18:28] Speaker 10:
to render a decision or an objection of any alleged violation of law or regulation in connection with the permit.

[00:18:36] Speaker 10:
It stands alone as its own violation that can be brought, its own claim that can be brought.

[00:18:44] Speaker 10:
By definition, it can be brought even when the violation is not a solicitation or not a contract award, but is independent from either.

[00:18:54] Speaker 13:
If you thought it was an independent grant, why would Congress have put it in the very same sentence as challenges to solicitations and awards?

[00:19:03] Speaker 13:
I mean, we're talking about it in terms of prong one, two, and three for convenience, but they didn't even mark it out as this is one challenge, this is two challenges, this is three challenges.

[00:19:13] Speaker 13:
They have the word interested party.

[00:19:16] Speaker 13:
And they say, here are the decisions that interested party can challenge.

[00:19:20] Speaker 13:
The thrust of your argument, I thought I just heard you say it again, was that if you're challenging awards and solicitations, the CICA definition is OK.

[00:19:29] Speaker 13:
But if you're challenging statutes or regulations, it has to be broader.

[00:19:33] Speaker 13:
And that's not the way we do statutory interpretation.

[00:19:36] Speaker 13:
If interested party is used one time in the sentence, shouldn't it mean the same thing

[00:19:43] Speaker 13:
for all of the sentence.

[00:19:44] Speaker 10:
Yes, and it does.

[00:19:45] Speaker 10:
It is the functional equivalent, Your Honor.

[00:19:48] Speaker 10:
That's what we said in our briefs.

[00:19:50] Speaker 10:
No, but it's not.

[00:19:51] Speaker 13:
The AFGE definition limits it to prospective operers.

[00:19:57] Speaker 13:
I mean, that has always been the case in the Court of Federal Claims under pre-award bid protest jurisdiction forever.

[00:20:04] Speaker 13:
I know you don't want to concede that, but you certainly didn't.

[00:20:08] Speaker 13:
I didn't see any cases you decided from the Court of Federal Claims that had

[00:20:12] Speaker 13:
subcontractor jurisdiction in pre-award cases.

[00:20:15] Speaker 13:
And so if the SICA definition, which is for award operers, is okay, then why doesn't that apply to the last part of 1491b?

[00:20:26] Speaker 10:
Because it's a null set by its own terms.

[00:20:30] Speaker 13:
That's just not true.

[00:20:31] Speaker 13:
We've held that that last part of the sentence brings in claims that you couldn't bring under the award or procurement part.

[00:20:40] Speaker 13:
The GAO override decisions, for instance, those aren't challenging the award or solicitation, but you can challenge them under the latter part of the sentence.

[00:20:51] Speaker 13:
So the latter part does some work even for awardees or failed awardees.

[00:20:59] Speaker 10:
I'm not sure I'm familiar exactly with what you just referred to, Judge Hughes, but my point is this.

[00:21:05] Speaker 10:
The third prong, the panel held without dissent

[00:21:09] Speaker 10:
Judge Brubank held.

[00:21:10] Speaker 10:
And this court said it would not revisit that the claims here challenged a violation in connection with the procurement separate from any solicitation or contract award.

[00:21:23] Speaker 10:
You must have a definition capturing the functional equivalent of the existing definition of initiative party.

[00:21:28] Speaker 10:
You must have one that applies to a challenge that is not to a contract award or solicitation, or else you have a null set

[00:21:37] Speaker 13:
And let me just tell you, the case I cited to you is a case.

[00:21:41] Speaker 13:
And even if you might read it differently, let's just assume that I'm telling you the truth about the facts of that case, which is a GAO overwrite.

[00:21:50] Speaker 13:
When GAO, you're a procured rent lawyer, right?

[00:21:52] Speaker 13:
You understand this.

[00:21:53] Speaker 13:
GAO can issue a decision.

[00:21:55] Speaker 13:
The agency, if it doesn't like that decision, can, if it issues a decision at the right level, overwrite that decision.

[00:22:03] Speaker 13:
That's not a decision connected to a solicitation

[00:22:07] Speaker 13:
for an award, it was found under the last part of the sentence, nonetheless, to be within the court's jurisdiction under 1491B.

[00:22:15] Speaker 13:
So it does do work and isn't an all set, even if it's confined to failed awardees, failed offers.

[00:22:24] Speaker 10:
Well, if it's confined to the people who bid on the contract and who were not selected as awardees,

[00:22:33] Speaker 10:
than by definition that challenge in that case, which very much sounds like a challenge, to an award and then a reversal of a GEO decision on the award.

[00:22:42] Speaker 10:
So maybe the winning awardee says, well, you reversed it.

[00:22:45] Speaker 10:
I want a challenge.

[00:22:46] Speaker 10:
That is still a challenge around an award.

[00:22:50] Speaker 10:
It is not a challenge that is set up.

[00:22:51] Speaker 13:
That's not what we base our decision on.

[00:22:53] Speaker 10:
Well, fair enough, Your Honor.

[00:22:55] Speaker 10:
And again, I'm not saying that the third prong is that just invoking it necessarily raises the question raised in this case.

[00:23:03] Speaker 10:
The point is there are going to be some third-pronged challenges.

[00:23:06] Speaker 10:
that are not challenging a contract or order solicitation.

[00:23:09] Speaker 01:
OK.

[00:23:09] Speaker 01:
Well, as with respect to that, the language seems pretty broad.

[00:23:13] Speaker 01:
Now, this case deals with 3453.

[00:23:16] Speaker 01:
But do you have any notion as to the scope or breadth how many statutes and regulations exist in connection with the procurement or proposed procurement?

[00:23:28] Speaker 01:
I mean, the government complains about distributed solutions extending the life of the claims.

[00:23:33] Speaker 01:
But do you have any idea?

[00:23:35] Speaker 01:
of the scope of this provision?

[00:23:38] Speaker 10:
We have looked.

[00:23:39] Speaker 10:
Appellees obviously had an incentive to try to show that there would be all sorts of things.

[00:23:43] Speaker 10:
We have found very, very basically none.

[00:23:45] Speaker 10:
We found one very unique one about it.

[00:23:47] Speaker 01:
No, I'm not talking about cases.

[00:23:48] Speaker 01:
I'm talking about statutes and regulations in connection with the procurement.

[00:23:52] Speaker 01:
What's the scope of that universe?

[00:23:54] Speaker 10:
I think it's small.

[00:23:56] Speaker 10:
We have not found a lot of statutes that do what 3453 does, which is to impose them.

[00:24:01] Speaker 09:
What are the ones you did find?

[00:24:02] Speaker 10:
I found one from, we found one

[00:24:05] Speaker 10:
from the case called Alatec that involved a statute that required, believe it or not, condoms that were purchased by the USAID to be manufactured in the United States.

[00:24:18] Speaker 09:
How about the Buy America Act?

[00:24:20] Speaker 10:
Buy America is similar to that.

[00:24:24] Speaker 10:
But I don't know that it has, other than in that case, we haven't found a provision that applies after a contract award to downstream vertices.

[00:24:32] Speaker 00:
How about the Trade Assistant Just One Night?

[00:24:34] Speaker 00:
The Trade Act, the Trade Assistant Just One Night.

[00:24:38] Speaker 10:
Your Honor, I don't know that it imposes a clear obligation on the agency.

[00:24:45] Speaker 10:
to continue to ensure that the prime contractor does things after the award, which is what 3453C5 and B2 do.

[00:24:54] Speaker 10:
Those are the key provisions.

[00:24:55] Speaker 10:
3453C5 and B2.

[00:24:57] Speaker 07:
Did you challenge the conduct of the prime contractor here?

[00:25:02] Speaker 10:
No, Your Honor.

[00:25:03] Speaker 10:
We're challenging the conduct of the NGA, the agency.

[00:25:06] Speaker 07:
I understand that's what you are challenging, but did you ever consider challenging the conduct of the prime contractor here instead?

[00:25:12] Speaker 10:
I don't think the CFC has jurisdiction if you're challenging the conduct of the private party.

[00:25:18] Speaker 10:
I think the private party's conduct is relevant.

[00:25:22] Speaker 07:
You never saw any relief from the private contractor if you only went through this NGA route.

[00:25:26] Speaker 07:
That's the way I'm asking it.

[00:25:27] Speaker 10:
That is correct.

[00:25:29] Speaker 10:
We did not file a separate lawsuit against Khaki.

[00:25:31] Speaker 10:
Khaki intervened as a defendant.

[00:25:33] Speaker 10:
Khaki's conduct is relevant to informing whether the NGA complied with its obligations.

[00:25:38] Speaker 10:
We think they blatantly did not.

[00:25:40] Speaker 10:
They violated the law.

[00:25:41] Speaker 10:
They violated section 3453.

[00:25:43] Speaker 10:
Your Honors, I do see I've gone well into my rebuttal time, which I would like to preserve.

[00:25:48] Speaker 02:
That's fine, Mr. Hume.

[00:25:49] Speaker 02:
Thank you very much.

[00:25:50] Speaker 02:
Now we'll hear from the government.

[00:26:13] Speaker 04:
Good morning.

[00:26:13] Speaker 04:
May it please the court?

[00:26:15] Speaker 04:
The question before the en banc court today is not new.

[00:26:19] Speaker 04:
This court already confronted and resolved what interested party means in 1431B1 in AFGE.

[00:26:27] Speaker 04:
And for nearly a quarter of a century since then, government agencies and industry contractors have ordered their affairs based on the CICA definition AFGE adopted.

[00:26:37] Speaker 04:
An unbroken line of this court's precedent has applied that definition to protests of all stripes without reservation.

[00:26:45] Speaker 04:
Percipient has offered no special justification necessary to uproot these settled expectations.

[00:26:52] Speaker 04:
To the contrary, AFGE's statutory analysis remains correct.

[00:26:56] Speaker 04:
And if anything, congressional action and inaction in the wake of that decision only further reinforce

[00:27:04] Speaker 04:
that Congress deliberately transplanted the Interested Party term of art from CICA, and that the expressed definition Congress provided there should apply to bread protests before the Court or federal claims as well.

[00:27:16] Speaker 06:
Can I ask you, like, because it raises an interesting point.

[00:27:20] Speaker 06:
I mean, if that was Congress's intent, why didn't they just include the definition of interested party as they did with CICA and with Brooks Act?

[00:27:28] Speaker 06:
Well, I think because they thought it was unnecessary, but that by transplanting- Is that common for Congress to import an interpretation, import a definition from another statute without expressly saying so?

[00:27:42] Speaker 06:
There's just going to be an assumption that it's the same definition?

[00:27:46] Speaker 04:
So I don't know how often it happens, but it certainly, at least in George, the Supreme Court recently adopted the same method of interpretation, that when Congress takes a term of art, a known term of art, and transplants it, it brings that old flow with it.

[00:28:02] Speaker 04:
Right.

[00:28:02] Speaker 06:
But here's a question for you, which is, in this case, when CICA defines interested party, it very specifically says, in the definition itself, with respect to a contract or a solicitation

[00:28:16] Speaker 06:
or other requests for offers, comma, and then it gives the definition of interested party.

[00:28:23] Speaker 06:
It is not a definition of interested party for all circumstances, but just expressly with respect to a contract or a solicitation or other requests for offers.

[00:28:34] Speaker 06:
So how can we assume that that was intended to be incorporated into the statute at issue here, 1491B1, which is not limited

[00:28:46] Speaker 06:
to those circumstances.

[00:28:48] Speaker 04:
So I have a couple answers to that, Your Honor.

[00:28:50] Speaker 04:
I think, first of all, that the cross-reference, so if we look at the definition in 1984 and the definition in SEFA, it does refer to, when it says the term interested party with respect to a contract or proposed contract, described in paragraph one.

[00:29:07] Speaker 04:
And then it provides the rest of the definition.

[00:29:10] Speaker 04:
That sort of antecedent is necessary to make the end of that sentence make sense in terms of what your direct economic interest has to be connected to.

[00:29:20] Speaker 04:
So it draws a line.

[00:29:21] Speaker 06:
Well, so it's talking about what the challenge is.

[00:29:24] Speaker 04:
Well, so it draws a line between the procurement being challenged and that you have a direct economic interest in that procurement.

[00:29:32] Speaker 06:
Right.

[00:29:33] Speaker 06:
Well, I'm not sure if I'm following you.

[00:29:35] Speaker 06:
What is the part of the sentence that you're saying needs to have understanding for that definition?

[00:29:42] Speaker 06:
You're saying, could you repeat that?

[00:29:45] Speaker 06:
I'm sorry.

[00:29:45] Speaker 04:
Sure.

[00:29:45] Speaker 04:
So I believe the recipient notes in its brief that when Congress defines interested party in CICA, it sort of leads into the definition that AFG quotes in its decision with the clause with respect to a contract or proposed contract described in paragraph one.

[00:30:04] Speaker 04:
And Percipient tries to use that language to suggest that it's therefore only limited to challenges of a contract, a solicitation, a proposed award, an award.

[00:30:14] Speaker 04:
I think more logically that, certainly that is the context in Zika, but that clause is necessary to connect

[00:30:21] Speaker 04:
the end of that sentence where it says that the direct economic interest would be affected by the award of the contract or by failure to award of the contract.

[00:30:30] Speaker 04:
And the question becomes, which contract are we talking about for that direct economic interest?

[00:30:35] Speaker 04:
It's the one being challenged

[00:30:38] Speaker 04:
in paragraph one.

[00:30:40] Speaker 06:
Doesn't this statute have two different definitions of interest to party in it?

[00:30:44] Speaker 06:
So one of them is with respect to a solicitation or other request for offers, and the other one is with respect to another commercial product process that it's referred to in the statute.

[00:30:57] Speaker 06:
Do you know what I'm talking about?

[00:30:58] Speaker 06:
Because SICA has two different definitions of interested party.

[00:31:01] Speaker 04:
So it adds another definition of interest.

[00:31:03] Speaker 04:
So the specific definition that AFG adopted is that definition.

[00:31:09] Speaker 06:
I hear you.

[00:31:10] Speaker 06:
AFG, the facts in AFG, that did not involve a prom 3 only case, right?

[00:31:15] Speaker 06:
It was not prom 3 only, but it was primarily prom 3.

[00:31:18] Speaker 06:
Do you know of any cases that were prom 3 only cases where

[00:31:22] Speaker 06:
interested party has been limited to a contractor or a bidder?

[00:31:30] Speaker 04:
Absolutely.

[00:31:31] Speaker 04:
Distributed Solutions is one such case.

[00:31:33] Speaker 04:
In Distributed Solutions, there was no solicitation.

[00:31:36] Speaker 04:
There was therefore no award or proposed award.

[00:31:39] Speaker 04:
It could not have been anything other than a Prong 3 challenge.

[00:31:43] Speaker 04:
And the court nevertheless applied the same interested party standing definition, and in fact noted that the reason why there was standing in that case for protesters is that there was no question that they were not mere disappointed subcontractors without standing.

[00:32:01] Speaker 04:
So let's assume.

[00:32:02] Speaker 06:
But they did held it at standing, right?

[00:32:05] Speaker 06:
Our court held that there was standing in that case.

[00:32:07] Speaker 04:
Because they were prospective offerors on the, if the protest succeeded,

[00:32:13] Speaker 04:
And therefore, the government was required to proceed with a procurement and issue a solicitation.

[00:32:18] Speaker 04:
They intended to bid on that procurement that they were trying to get the government to do by virtue of the protest.

[00:32:27] Speaker 06:
That would have been a type 1 case, pronged 1 case, right?

[00:32:32] Speaker 06:
No, because no solicitation had.

[00:32:33] Speaker 04:
There was no challenge to a solicitation.

[00:32:34] Speaker 06:
But the point was, there would be a solicitation.

[00:32:37] Speaker 04:
But the protest itself was a pure prong three protest.

[00:32:40] Speaker 04:
There was no objection to a solicitation or a proposed award or an award, because none of those things existed.

[00:32:45] Speaker 04:
Another example of what prong three does, for example, is cancellation cases.

[00:32:50] Speaker 04:
So Congress amended CICA to specifically identify cancellation of solicitation as one.

[00:32:58] Speaker 04:
For GAO, they are actually separate prongs.

[00:33:00] Speaker 04:
Congress set them out as separate subsections.

[00:33:03] Speaker 04:
And it added two subsections to address

[00:33:06] Speaker 04:
cancellations of solicitations and cancellations of awards if connected to a problem with the contract formation.

[00:33:14] Speaker 04:
At the Court of Federal Court, there's no dispute, I don't think, from Percipient that a GAO, the same definition of interested party applies to those protests as well.

[00:33:23] Speaker 04:
At GAO, those would have to be pure prong three protests.

[00:33:26] Speaker 04:
And the court recognizes those as having jurisdiction under prong three for those cases.

[00:33:33] Speaker 04:
The other thing that prong three is doing, we heard again from Percipient today that if the SICA definition applies, as it has been for

[00:33:41] Speaker 04:
past many years that that would somehow render PRONG3 a null set or superfluous.

[00:33:47] Speaker 04:
And that's just not true.

[00:33:48] Speaker 04:
In addition to the cases that we've already discussed that PRONG3 covers, the other major thing that PRONG3 does is it clarifies

[00:33:57] Speaker 04:
that the Court of Federal Claims can address alleged violations of statute and regulation.

[00:34:04] Speaker 04:
And that was a shift from how the court considered big protests in the pre-Adger world, where it considered them under the implied and fact contract basis, where it therefore held that

[00:34:19] Speaker 04:
The US doesn't owe bidders, necessarily, a contractual obligation to comply with the law.

[00:34:25] Speaker 04:
And there were certain challenges to.

[00:34:26] Speaker 12:
I guess this is part of the court's problem right now is that we cannot trace the true source of where this provision, Pong 3 from 1491B1, comes from.

[00:34:40] Speaker 12:
We know where the first two ponds come from.

[00:34:43] Speaker 12:
at least through the parts of the legislative history I've looked at, or the Section 800 panel report, you just don't get any inkling where this language from Prom 3 comes from.

[00:34:55] Speaker 12:
And it invites a potential theory that maybe, just maybe, the point of Prom 3 was to sweep in anything that could have been regarded as scam well jurisdiction in the district courts into

[00:35:12] Speaker 12:
1491B1 through this language in Prong 3.

[00:35:16] Speaker 12:
Could you comment on that?

[00:35:18] Speaker 04:
Yeah.

[00:35:18] Speaker 04:
So two things.

[00:35:20] Speaker 04:
I think we do see evidence in the legislative history and in the Section 800 panel report about where that language comes from.

[00:35:25] Speaker 04:
And specifically, it comes from this concern that there were certain violations of statutes and regulations that the court of federal claims didn't hear as a result of the implied in fact basis.

[00:35:38] Speaker 12:
Well, I don't know what exactly you're

[00:35:41] Speaker 12:
pointing to when you say that.

[00:35:42] Speaker 12:
I mean, when I looked at through what I looked through, it seemed to be the whole goal was to consolidate all the pre-award and post-award bid protest jurisdictions under a single group of one forum.

[00:35:57] Speaker 12:
And at least initially, it would be concurrently with both the district courts and the claims court.

[00:36:00] Speaker 12:
I didn't see anything else beyond that.

[00:36:04] Speaker 04:
Sure, and it was absolutely to consolidate and harmonize the four forums and to sort of reduce the, I think it was called, jurisdictional chaos that was occurring.

[00:36:14] Speaker 04:
But I would direct the court to addendum page 56, which is a portion of the section 800 panel report that sets out the specific recommendations that they made for amending section 1491B1.

[00:36:27] Speaker 08:
Can I just double check on that?

[00:36:31] Speaker 08:
The defense 1993 report.

[00:36:35] Speaker 08:
So everything it said was simply preserving the version, essentially moving in from SICA, exactly what is now problems one and two.

[00:36:49] Speaker 08:
The proposed legislation does not include a problem three.

[00:36:53] Speaker 08:
It somehow appeared in late September of 1996 on the floor of the Senate.

[00:36:58] Speaker 04:
So it includes the same language, but what Congress moved it up into the Senate.

[00:37:03] Speaker 08:
Right.

[00:37:03] Speaker 08:
Well, not quite.

[00:37:05] Speaker 08:
really, really big difference.

[00:37:06] Speaker 08:
The grant of jurisdiction does not include.

[00:37:09] Speaker 08:
It then starts as the first sentence of the next paragraph, which is about how we review.

[00:37:15] Speaker 08:
It's essentially a standard review.

[00:37:17] Speaker 08:
There is no Prop 3 grant of jurisdiction in the defense 1993 report.

[00:37:22] Speaker 04:
That's right.

[00:37:23] Speaker 04:
Congress moved that language.

[00:37:25] Speaker 08:
That's the gap that maybe Judge Chen was referring to.

[00:37:28] Speaker 08:
We don't know whence it came.

[00:37:30] Speaker 04:
Well, but I think it is a reasonable inference that it came from.

[00:37:35] Speaker 04:
At least one of the things that it came from was the concern, to make it explicit, that the Court of Federal Claims, like the GAO and the GSBCA, is authorized to find improper any agency action which violates a procurement law or regulation.

[00:37:50] Speaker 08:
Sorry, that's not a jurisdictional grant.

[00:37:54] Speaker 08:
Here's what you can do in review of what, in the proposal from Defense 1993,

[00:38:00] Speaker 08:
was limited to prongs one and two.

[00:38:02] Speaker 04:
Sure.

[00:38:03] Speaker 04:
And as a result, because it moved into the jurisdictional branch, the other thing that prong three does.

[00:38:08] Speaker 08:
Wouldn't you naturally infer that that was then expanding the kinds of agency actions that are subject to the new provision?

[00:38:17] Speaker 08:
One and two specifies particular agency actions.

[00:38:22] Speaker 08:
Prong three does not itemize agency actions.

[00:38:27] Speaker 08:
It's focused on the source of illegality

[00:38:30] Speaker 08:
and then this broad class of agency actions, anything that is in connection with procurement.

[00:38:37] Speaker 08:
There therefore would naturally be overlap between three on one hand and one and two.

[00:38:43] Speaker 08:
And three needs to be accommodated to that by not overriding the specific SICA-based limit on one and two.

[00:38:49] Speaker 08:
But that doesn't imply that for a challenge to an agency action different from the solicitation

[00:38:57] Speaker 08:
proposed award in prongs one and two that the same limitation applies?

[00:39:03] Speaker 04:
Well, I think there are two different questions.

[00:39:05] Speaker 04:
There's the question of what is the scope of the jurisdictional grant?

[00:39:09] Speaker 04:
So what kind of cases can be brought?

[00:39:11] Speaker 04:
And then there's the question of who can bring them.

[00:39:14] Speaker 04:
And so I agree with Your Honor that by virtue of putting that prong three language and moving it into the jurisdictional grant,

[00:39:23] Speaker 04:
it does expand the universe of cases that can be heard.

[00:39:27] Speaker 04:
And therefore, the Court of Federal Claims has jurisdiction.

[00:39:30] Speaker 08:
To agency actions that are not challenges to solicitations, proposed awards, or rewards.

[00:39:36] Speaker 04:
Exactly, like cancellation challenges, like to challenge in distributed solutions, and like other types of challenges around the process of contract formation.

[00:39:44] Speaker 04:
But I don't think it's a reasonable inference when Congress took the same interested party term, and it doesn't tell us

[00:39:51] Speaker 04:
That sort of expansion of what kind of cases can be brought does not necessarily imply that Congress meant to expand who can break up.

[00:39:59] Speaker 08:
But then back to what Judge Stone was asking about.

[00:40:03] Speaker 08:
The actual definition in CICA that was borrowed doesn't just have a lead in to the definition.

[00:40:12] Speaker 08:
Here's what we're about to talk about.

[00:40:13] Speaker 08:
It says that the definition is only

[00:40:18] Speaker 08:
And I will just summarize it as from one and two agency actions.

[00:40:23] Speaker 08:
That's part of the definition.

[00:40:26] Speaker 08:
It's part of it.

[00:40:27] Speaker 08:
It's not just some sort of, let me tell you what I'm talking about when I use interested parties.

[00:40:32] Speaker 04:
Well, except that it's the same definition, for example, that applies at GEO to cancellation protests.

[00:40:38] Speaker 08:
Now it is, but that was added later.

[00:40:40] Speaker 04:
In 1994.

[00:40:41] Speaker 04:
It happened before ADRA.

[00:40:42] Speaker 04:
So by the time Congress was enacting ADRA, that was already part of what was covered in the CICA definition of interested party.

[00:40:51] Speaker 08:
And that's a pronged three protest.

[00:40:53] Speaker 08:
In respect to cancellation of a contract.

[00:40:55] Speaker 04:
Of a solicitation.

[00:40:56] Speaker 04:
So at GEO, it's two.

[00:40:59] Speaker 04:
Solicitation.

[00:41:00] Speaker 04:
There's a cancellation of the solicitation.

[00:41:02] Speaker 04:
or cancellation of the contract if it's based on an error in contract formation.

[00:41:06] Speaker 04:
So at the time that ADRA was enacted, the CICA definition, even at GAO, already covered what would be a pronged three protest at the Court of Federal Claims.

[00:41:16] Speaker 04:
And more importantly, I think if Congress intended that term to be broader than it was at GAO.

[00:41:24] Speaker 08:
Why doesn't one assume that the term has its ordinary meaning?

[00:41:32] Speaker 08:
get actual bitter or putative would be bitter only by transplanting from the old soil, not from anything resembling an ordinary meaning.

[00:41:43] Speaker 08:
Why doesn't the soil that is borrowed, isn't it limited to what is covered by seika itself, which is not this kind of thing?

[00:41:52] Speaker 04:
Well, but although it does include certain things that would fall under prong three.

[00:41:57] Speaker 04:
So I think even under that theory, it would have

[00:42:01] Speaker 04:
It's not covering just prong one and prong two protests at the Court of Federal Claims.

[00:42:05] Speaker 04:
But when Congress used that term and it used a known term of art in the exact same context, I think the better inference is that Congress intended to apply that definition that it took the time to expressly provide.

[00:42:22] Speaker 00:
How do you know you're dealing with a known term of art?

[00:42:26] Speaker 00:
Who decides that?

[00:42:28] Speaker 04:
I mean, I think in this context, again, because these are parallel statutes, these are the only, so for Adra and Zika, 1491 v.

[00:42:35] Speaker 04:
1, and the protests at GAO and GSBCA is the only time that Congress has ever affirmatively set out to define protest jurisdiction.

[00:42:45] Speaker 04:
And it used the same term for standing there.

[00:42:48] Speaker 04:
And I think it's, and when we look to the legislative history,

[00:42:51] Speaker 04:
We know that that wasn't an accident.

[00:42:53] Speaker 04:
The specific recommendation was that they use the same term and for the same definition to apply.

[00:42:58] Speaker 00:
Is it always the case that when you import a term of art into a statute that you bring with it all of the history of that particular term?

[00:43:06] Speaker 04:
Well, so that is the old soil principle, that when you use a term of art and it had a known meaning, and in this case it was an expressly defined meaning, that when Congress transplants it into

[00:43:18] Speaker 04:
a new statute in the exact same context that the same definition would apply.

[00:43:22] Speaker 04:
And I'll note that, in addition, like the... You just said something important.

[00:43:28] Speaker 06:
You just said, uses it in the exact same context.

[00:43:32] Speaker 06:
But it's not the exact same context, is it?

[00:43:36] Speaker 06:
It's different language for prom 3 versus whatever is in, you know, SICA, right?

[00:43:43] Speaker 06:
I mean, you have to admit that.

[00:43:45] Speaker 06:
It uses different language.

[00:43:46] Speaker 04:
I agree.

[00:43:47] Speaker 04:
1491B1 is essentially a patchwork quilt rearrangement of terms that are found in SICA.

[00:43:52] Speaker 06:
I understand you think it's the same, because some of the things that are listed in SICA might fall under Prom 3.

[00:43:59] Speaker 06:
But you admit they're different, right?

[00:44:00] Speaker 06:
It's a different language.

[00:44:02] Speaker 04:
It is not the identical language, but it is the identical context.

[00:44:05] Speaker 06:
I don't know how I'm supposed to know that.

[00:44:08] Speaker 04:
Because both are about the ability to bring a bid protest.

[00:44:12] Speaker 06:
It's different places.

[00:44:13] Speaker 06:
It could be different.

[00:44:15] Speaker 04:
It could, but the legislative history tells us that the entire goal and purpose of ADRA was to not have them be different, to harmonize and consolidate.

[00:44:23] Speaker 06:
It was to make sure that the district court cases ended up with a quarter of federal claims, right?

[00:44:29] Speaker 06:
Isn't that?

[00:44:29] Speaker 04:
Well, that was one of them.

[00:44:31] Speaker 04:
It was to eliminate the judicial confusion, but it was also to align

[00:44:39] Speaker 04:
to as much as possible with the GAO and the GSPCA.

[00:44:42] Speaker 04:
And that is an express recommendation in the section 800 panel report.

[00:44:46] Speaker 12:
If there's no jurisdiction here for recipients to bring this case in the claims court, could they bring it in the district court under an APA action?

[00:44:58] Speaker 04:
I think they probably have other problems.

[00:45:00] Speaker 12:
Well, at least make the claim that they had a direct economic interest that was injured here.

[00:45:08] Speaker 12:
by a failure by the agency to comply with section 3453?

[00:45:14] Speaker 04:
I mean, I think they could try.

[00:45:17] Speaker 12:
I don't know, frankly, whether or just- What's the government's position on that?

[00:45:20] Speaker 12:
Do they have standing under the APA to bring an action in district court?

[00:45:26] Speaker 12:
Or in other words, did the subcontractor invalidata have standing under the APA to keep that action in district court?

[00:45:37] Speaker 12:
What's the government's view there?

[00:45:39] Speaker 04:
So I think invalidate a problem.

[00:45:43] Speaker 04:
The bigger issue that the district court seemed to gloss over was that it seemed to not be a government action that they were challenging, that it was taken by the prime contractor in that context.

[00:45:55] Speaker 12:
Just try to meet me where the question is.

[00:45:58] Speaker 12:
Sure.

[00:45:59] Speaker 12:
Subcontractors would be subcontractors.

[00:46:01] Speaker 12:
They see a problem.

[00:46:02] Speaker 12:
They believe the government has violated

[00:46:04] Speaker 12:
some provision they're obligated to follow that is directly on their economic interests in the course of some government contract situation, can they bring an action under the APA and district court or not?

[00:46:18] Speaker 04:
I think they probably can't.

[00:46:20] Speaker 12:
Why not?

[00:46:21] Speaker 04:
Because generally speaking, contract administration is preempted by the CDA, and subcontractors don't have standing under the CDA.

[00:46:29] Speaker 12:
Did they pre-ADRA under so-called scandal jurisdiction?

[00:46:33] Speaker 12:
It seems like there were at least a handful of Stanwell-type cases in district court in which it was a subcontractor that was bringing the action.

[00:46:45] Speaker 04:
So I think, actually, the recipient doesn't cite any where a subcontractor was actually found to have standing.

[00:46:51] Speaker 04:
But the validated district court did cite

[00:46:54] Speaker 04:
a couple of cases where it was.

[00:46:56] Speaker 04:
And they were all sort of in unique circumstances.

[00:46:59] Speaker 09:
First of all, Where the prime contractor was sort of the agent of the government.

[00:47:03] Speaker 04:
Right.

[00:47:03] Speaker 04:
So there were two like that, where it was specific finding that the prime contractor was the agent of the government or the government specifically directed the terms of the solicitation that the prime contractor issued and directed the evaluation.

[00:47:17] Speaker 04:
Also, notably, there were actual bidders or offerors on a solicitation in all of those cases.

[00:47:23] Speaker 04:
The problem for Percipient here is that they just sat out this competition entirely.

[00:47:28] Speaker 06:
Could they have been in this competition?

[00:47:31] Speaker 06:
I mean, my understanding is that they could not have performed all of the portions of the contract.

[00:47:37] Speaker 04:
Sure, and that's why we have teaming arrangements.

[00:47:40] Speaker 04:
They could have formed a team, either as a prime contractor with somebody else, or as a subcontractor on somebody else's, or as a joint venture.

[00:47:47] Speaker 04:
What is the test under the APA?

[00:47:49] Speaker 04:
What would be the test to go to district court?

[00:47:52] Speaker 04:
For standing, it's a person adversely affected or aggrieved by agency action within the meaning of a relevant statute.

[00:48:00] Speaker 06:
And I'll note on that... So it's a zone of interest test, right?

[00:48:03] Speaker 04:
Correct.

[00:48:04] Speaker 04:
And I'll note on that that the reason why the APA looks at what is the underlying violation in order to determine standing is because Section 702 directs that inquiry.

[00:48:16] Speaker 02:
Council, the provision has

[00:48:19] Speaker 02:
what we keep calling these three different sections.

[00:48:21] Speaker 02:
The first is someone who an interested party could object to a solicitation.

[00:48:25] Speaker 02:
The second is the interested party could object to a proposed award.

[00:48:29] Speaker 02:
Do you agree that there are different groups of people that would qualify under each of those?

[00:48:38] Speaker 02:
Isn't it the case that more people could object to the solicitation than could necessarily have jurisdiction to object to the award?

[00:48:46] Speaker 02:
Correct.

[00:48:46] Speaker 02:
And particularly because of the blue and gold waiver.

[00:48:48] Speaker 02:
So the interested party differs depending on whether you're looking at prong one.

[00:48:54] Speaker 02:
The group of people who qualify as an interested party differs depending on whether you're challenging the solicitation, which is prong one, or whether you're challenging the award, which is prong two.

[00:49:05] Speaker 02:
So the application of the same definition.

[00:49:07] Speaker 02:
Answer my question.

[00:49:08] Speaker 02:
The group of people who qualifies as an interested party changes depending on whether you're looking at prong one, a solicitation, versus prong two, an award.

[00:49:19] Speaker 02:
Yes or no?

[00:49:20] Speaker 02:
As a practical matter, yes.

[00:49:22] Speaker 02:
But the definition doesn't change.

[00:49:24] Speaker 02:
That's only because you've given a definition that necessarily sweeps both in.

[00:49:29] Speaker 02:
Why wouldn't that suffice then to say since the words interested party have different meaning as applied to who can bring a challenge to a solicitation and totally different meaning depending on who can bring a challenge to an award, why couldn't it have a slightly different meaning, i.e.

[00:49:45] Speaker 02:
sweep in a different subset of people for the third prompt?

[00:49:50] Speaker 04:
Well, there'd be no basis in anything Congress has ever said to do that.

[00:49:53] Speaker 04:
Except the statute.

[00:49:56] Speaker 04:
Well, except that Congress used the term of art that it defined elsewhere to

[00:50:01] Speaker 04:
as a particular definition that I think covers the universe of people that they intended to bring any of these challenges.

[00:50:08] Speaker 04:
I mean, I think ultimately it sort of comes down to basic fairness, right?

[00:50:12] Speaker 04:
If you don't show up to class, you can't challenge the fact that you failed the test.

[00:50:17] Speaker 04:
And if you don't show up to the competition, then you can't file a bid protest.

[00:50:21] Speaker 06:
Where does that say that in 1491 v.

[00:50:23] Speaker 06:
1?

[00:50:25] Speaker 06:
Like, in the term interested party, frankly, I think that's the only.

[00:50:29] Speaker 06:
You want to borrow that definition from Seekout, even though it's limited expressly by its own terms.

[00:50:34] Speaker 06:
It says this definition is only for those circumstances in prong one and prong two.

[00:50:40] Speaker 04:
I mean, yes, I think that definition is borrowed over.

[00:50:43] Speaker 04:
But in order for interested party to mean anything.

[00:50:45] Speaker 02:
And just to be clear, as a parent, I think I can object to what my kids are taught in class, can't I?

[00:50:50] Speaker 02:
But you know what?

[00:50:50] Speaker 02:
I didn't show up for that class.

[00:50:51] Speaker 02:
But can I object to what my kids were taught in class?

[00:50:54] Speaker 02:
Well, but only if your kids actually showed up to class.

[00:50:57] Speaker 02:
OK, Farah?

[00:50:58] Speaker 02:
But that's.

[00:50:59] Speaker 13:
Council, tell me, this is a very hard case, obviously, because we're sitting here on block.

[00:51:05] Speaker 13:
We have an outer statute that doesn't specifically

[00:51:10] Speaker 13:
redefine interested party.

[00:51:13] Speaker 13:
And the only thing I read in the legislative history really is talking about consolidation in one court from two courts.

[00:51:22] Speaker 13:
So how do we determine whether they knit something different from the old court of federal claims that protest jurisdiction would have been around for decades that allowed the same kind of offers to challenge both the terms of solicitation and reward

[00:51:38] Speaker 13:
Or they meant something broader, like an APA definition.

[00:51:43] Speaker 13:
What evidence do we look to?

[00:51:45] Speaker 04:
Well, I think the best evidence is that they did not cite the APA.

[00:51:48] Speaker 04:
They specifically referenced the APA for the standard of review, and invoked section 706 there, and did not invoke section 702 in either interested party, comma, as defined in section 702, or used any of the language that appears in 702.

[00:52:05] Speaker 13:
What's your best evidence that they intended to incorporate the secret term?

[00:52:08] Speaker 13:
Is it just that interested party is something that had been long part of procurement law prior to ASRA?

[00:52:15] Speaker 04:
I think that's right.

[00:52:16] Speaker 04:
And the fact that we haven't expressed definition from Congress for that very term.

[00:52:21] Speaker 04:
They used that same term.

[00:52:22] Speaker 04:
And we have evidence in the legislative history that the recommendation was that it be that term as defined in CICA.

[00:52:30] Speaker 02:
I'm going to take a little issue with your response to my hypothetical.

[00:52:33] Speaker 02:
I could have kept my kid out of class, and I can still object to what he or she is going to be taught, couldn't I?

[00:52:39] Speaker 04:
Fair enough, Your Honor.

[00:52:40] Speaker 04:
But you're not allowed to protest a competition that you did not participate in.

[00:52:44] Speaker 09:
Could I ask you a question about the consequences of what the plaintiffs are seeking here?

[00:52:49] Speaker 09:
Because we talked a little bit.

[00:52:50] Speaker 09:
with plaintiff's counsel about that.

[00:52:52] Speaker 09:
And it seems as though there are a lot of statutes where subcontractors might come in and seek enforcement under their

[00:53:02] Speaker 04:
Absolutely.

[00:53:05] Speaker 04:
The scope of this holding would be profound and not narrow.

[00:53:09] Speaker 04:
And I'll note at the outset that when we talk about government contracts, a significant number of terms that appear in government contracts, and therefore- Why would the scope be profound?

[00:53:20] Speaker 02:
If you have to be a CICA definition type person for prong one with regard to proposals, you have to be someone who maybe would have

[00:53:28] Speaker 02:
filed a proposal solicitation.

[00:53:31] Speaker 02:
You have to be a SICA person for prong two, i.e.

[00:53:34] Speaker 02:
someone who might have been able to obtain the award.

[00:53:37] Speaker 02:
What makes three so broad?

[00:53:39] Speaker 02:
Three is just capturing other things, not otherwise delineated.

[00:53:44] Speaker 02:
The specific governs over the general.

[00:53:46] Speaker 02:
You've got prong one.

[00:53:47] Speaker 02:
You've got prong two.

[00:53:48] Speaker 02:
Three is just not that.

[00:53:52] Speaker 02:
Why is three broad?

[00:53:53] Speaker 02:
Three seems to me infinitesimally small, actually.

[00:53:57] Speaker 04:
Sure, I guess what I would say is if Percipient's position in this case is adopted, then it becomes very sweeping in scope.

[00:54:05] Speaker 02:
How so?

[00:54:05] Speaker 02:
I don't understand.

[00:54:07] Speaker 02:
It doesn't override what's required for prong one or prong two, and that's the bulk of the cases.

[00:54:12] Speaker 02:
What are the cases you think are going to get swept into three by virtue of their definition?

[00:54:18] Speaker 04:
Well, if they are allowed to protest in this case, i.e.

[00:54:22] Speaker 04:
someone who sat out the competition,

[00:54:24] Speaker 04:
and just showed up after the contract was awarded and began performance.

[00:54:29] Speaker 04:
And they can challenge.

[00:54:30] Speaker 04:
The reason that they're claiming they're able to challenge is because there is a statute or regulation that governs the conduct of that contract post-performance.

[00:54:38] Speaker 08:
The conduct of the government with respect to the contract, not the conduct of the contractor.

[00:54:46] Speaker 08:
That's an obligation in the statute on the government to sit on the contract.

[00:54:52] Speaker 08:
to get the contractor to do certain things with respect to its purchases.

[00:54:57] Speaker 04:
Sure.

[00:54:57] Speaker 04:
And those are the clauses in government contract terms, right?

[00:55:01] Speaker 04:
The terms of the contract are things that the government is supposed to require the contractor to do.

[00:55:06] Speaker 04:
In government contracts, those clauses are imposed by statute or regulation.

[00:55:10] Speaker 02:
No, but the only statutes I see are 3453C5 and B2.

[00:55:14] Speaker 02:
What else would be implicated?

[00:55:16] Speaker 02:
By prong three, you haven't articulated anything else that could be challenged under prong three.

[00:55:22] Speaker 02:
You didn't make a sky is falling argument.

[00:55:24] Speaker 02:
I don't get it.

[00:55:25] Speaker 04:
Sure.

[00:55:26] Speaker 04:
So for example, in addition to sort of the obvious parallels to commercial pride and preferences like the small business preference and the various other socioeconomic preferences.

[00:55:35] Speaker 02:
Those go into solicitations.

[00:55:37] Speaker 02:
Those go into awards.

[00:55:39] Speaker 02:
What else is there for three?

[00:55:41] Speaker 04:
Well, so does this clause.

[00:55:43] Speaker 04:
So, for example, another clause that exists in the contract between CACI and NGA is an affirmative obligation by the contractor to take affirmative steps to hire employee and advance unemployment veterans or persons with disabilities.

[00:56:00] Speaker 04:
There is a statute that requires four

[00:56:03] Speaker 04:
procurements over a certain size for the government to include that provision and obligate its contractor and subcontractors to affirmatively support the hiring of veterans.

[00:56:15] Speaker 02:
Do you think that's a bad thing?

[00:56:17] Speaker 04:
No.

[00:56:18] Speaker 02:
But you think people shouldn't be able to challenge it?

[00:56:19] Speaker 04:
But under Percipian's theory, if a veteran applies for a job at Cackegan and doesn't get hired,

[00:56:25] Speaker 04:
Suddenly, they seem to have a protest against the government about NGA insufficiently enforcing that obligation on its contractor to promote veterans and to hire veterans.

[00:56:39] Speaker 04:
And now, we're not just getting involved in contract administration.

[00:56:41] Speaker 04:
We're getting involved in employment disputes.

[00:56:45] Speaker 04:
And I think there was a question Judge Cunningham, you asked at the end of your session.

[00:56:51] Speaker 04:
Presidium didn't try to sue Khaki here.

[00:56:52] Speaker 04:
If their problem was that Khaki, they're mad about how Khaki evaluated them and didn't find their product sufficiently appealing to buy as a subcontractor.

[00:57:03] Speaker 08:
That might not be surprising given the underlying concern of the statute that they rely on, which is government and defense contractor.

[00:57:13] Speaker 08:
If you're friends on the other side, use some more derogatory terms.

[00:57:17] Speaker 08:
I'm really quite liking the idea of spending a gazillion dollars on its own to develop something it could buy at Home Depot.

[00:57:26] Speaker 04:
With all due respect, Your Honor, I think that's a real cut off your nose despite your face conspiracy theory.

[00:57:32] Speaker 04:
And frankly, it is contrary to the law of this circuit that we presume that government behaves in good faith and they comply with their obligations in good faith.

[00:57:42] Speaker 08:
You were talking about the contractors.

[00:57:46] Speaker 04:
Sure, but NGA, the point, there's certainly, there is a clause in this contract that requires CACI, to the maximum extent practicable, to use commercial solutions.

[00:57:55] Speaker 04:
And NGA has every incentive to enforce that clause against its contractor.

[00:57:59] Speaker 08:
Do you think enforcing a statute specifically providing, as alleged, for the government to take certain actions with respect to the contractor is any different from

[00:58:14] Speaker 08:
enforcement merely of a provision in the contract, which ordinarily you would have to meet a pretty tough third party beneficiary standing requirement for.

[00:58:27] Speaker 08:
I guess the question of consequences here, it seems to me, is meaningfully limited to the question of what other statutory obligations there are on the government that, by assumption, were intended to

[00:58:47] Speaker 08:
might want to sell to the contractor.

[00:58:50] Speaker 08:
I think you've identified two or three.

[00:58:57] Speaker 04:
Well, first of all, I would say that even if it's limited just to this statute, even if we assume that this commercial preference is a sui generis statute and this expanded definition of standing only applies to this one statute,

[00:59:10] Speaker 04:
That already opens up protests to an unbounded universe of plaintiffs.

[00:59:15] Speaker 04:
If you are a commercial company that has a commercial product or a commercial service that you believe should be a component part of any government contract at any stage of performance, you can now show up and file a protest.

[00:59:29] Speaker 06:
Council, what about the complaint here?

[00:59:31] Speaker 06:
I mean, you're going well beyond the facts at issue in this case.

[00:59:34] Speaker 06:
The complaint here, as I recall it,

[00:59:38] Speaker 06:
correct me if I'm wrong but I understand that recipient you know at the time solicitation was reaching out trying to make sure that its product was going to be evaluated and throughout you know while the contract was being formed and it was making sure the government knew of its product and there's a lot in the complaint that would make it so this is not just anybody coming in you know a year after the contract is formed is saying hey you should have bought my pencils it's a lot more

[01:00:06] Speaker 06:
There's a lot more to it than that.

[01:00:08] Speaker 04:
So that's actually incorrect.

[01:00:10] Speaker 04:
They did not reach out to NGA until after the contract was awarded and performance began.

[01:00:15] Speaker 04:
They did not, for example, respond to any of the RFIs or the market research that NGA conducted.

[01:00:21] Speaker 04:
They didn't come to industry day.

[01:00:23] Speaker 04:
They did not.

[01:00:24] Speaker 04:
They did not engage with the solicitation.

[01:00:26] Speaker 04:
Their first reach out to the FDA.

[01:00:28] Speaker 02:
Counsel, I mean, you've used all your time, all her time, and then some of his time.

[01:00:32] Speaker 02:
So I think if Miss Perry wants any time at all, we're going to have to give it to her now.

[01:00:38] Speaker 02:
OK.

[01:00:38] Speaker 02:
Thank you, Your Honor.

[01:00:41] Speaker 02:
And we'll balance the time out for Mr. Hume's rebuttal, please.

[01:00:51] Speaker 03:
My name is Anne Perry and I represent CACI.

[01:00:56] Speaker 03:
Even assuming that this court were to narrow the definition of standing just for 10 USA 3453 to allow potential subcontractors to file a protest challenging the government's administration of a contract, that opens up

[01:01:16] Speaker 03:
an unbounded amount of protests.

[01:01:18] Speaker 03:
And the reason I say that is because virtually all procurements, even those for sophisticated military equipment, have the ability to have commercial item components.

[01:01:31] Speaker 03:
And if a subcontractor at any point during that process can go in and protest a decision not to give the contract to that subcontractor,

[01:01:43] Speaker 03:
then that will stop performance.

[01:01:46] Speaker 03:
It could cause duplicative costs because the government would have to stop the contract of what it's doing and might have to replace whatever component is being used here.

[01:01:56] Speaker 03:
It was not actually

[01:01:57] Speaker 03:
new technology, it was government-owned technology that was selected, that would actually just cause more harm to the procurement system than had actually ever been envisioned.

[01:02:08] Speaker 03:
In fact, the whole bid protest process was designed to be efficient and effective at resolving concerns as early in the process as possible.

[01:02:19] Speaker 03:
Here, if Percipient believed

[01:02:23] Speaker 03:
that it had a product that met all of the requirements for the CV systems.

[01:02:28] Speaker 03:
It should have protested the solicitation and argued that those should not have been combined in a single procurement, but should have been broken out

[01:02:37] Speaker 03:
as a commercial item that was then provided as GFE to the contractor.

[01:02:42] Speaker 03:
They didn't do that.

[01:02:43] Speaker 08:
And what standing would it have had to protest the solicitation on that?

[01:02:48] Speaker 03:
It would have had standing to argue that the solicitation was unduly restrictive of competition by bundling requirements.

[01:02:55] Speaker 08:
For what tribunal?

[01:02:56] Speaker 03:
It could have gone to GAO or the court.

[01:02:59] Speaker 08:
That would have met the definition of interest to target?

[01:03:01] Speaker 03:
Yes, because they would argue that they were trying to get a direct contract with the government.

[01:03:09] Speaker 00:
So in your view, if we were to adopt the recipient's position, does that mean we have to necessarily have to overrule our decision in AFGE?

[01:03:20] Speaker 03:
Yes.

[01:03:20] Speaker 03:
I believe that's true.

[01:03:21] Speaker 00:
I'm not going to suffice with respect to the interest in party definition.

[01:03:25] Speaker 02:
I think that's right.

[01:03:26] Speaker 02:
I'm completely baffled by something.

[01:03:28] Speaker 02:
You want the definition for interest of the party to be the same for all three, right?

[01:03:32] Speaker 02:
All three provisions, one, two and three?

[01:03:35] Speaker 02:
Correct.

[01:03:36] Speaker 02:
You just said that they would have

[01:03:38] Speaker 02:
Jurisdiction under one to bring a challenge to solicitation.

[01:03:42] Speaker 02:
So what's your problem with giving him jurisdiction under three?

[01:03:44] Speaker 02:
If it's exactly the same group of people, you lost me completely.

[01:03:49] Speaker 03:
OK.

[01:03:50] Speaker 03:
So under prong line, you're against the solicitation terms, right?

[01:03:54] Speaker 03:
So anyone who put something.

[01:03:54] Speaker 03:
So your problem is just timing.

[01:03:55] Speaker 03:
They should have brought the protest earlier.

[01:03:58] Speaker 03:
They would have had standing.

[01:03:59] Speaker 03:
The same as even a prime.

[01:04:00] Speaker 03:
But you think they have standing under one.

[01:04:02] Speaker 03:
Under one, had they brought it against the solicitation to argue not that they should

[01:04:08] Speaker 02:
Actually, they would have had standing to argue that you see you think they're an interested party under one under one Okay, is that because they're a prospective offer correct solicitation divided correct Thank You miss Perry thank you Mr. Hume We'll give you your nine minutes and we'll be more lenient than that because they exceeded their time by way more than that So if you want to stand here longer, I'll let you I

[01:04:35] Speaker 10:
Thank you, Chief Judge Moore.

[01:04:36] Speaker 10:
I'm not sure that will be necessary, but thank you.

[01:04:39] Speaker 10:
Your Honors, when the appellees say that the same test from CECA and AFGE should apply to this case, what they mean is that Percipient had to be an actual prospective bidder on the SAFIRE contract to bring this challenge.

[01:04:58] Speaker 10:
But Percipient does not challenge the award of the SAFIRE contract.

[01:05:03] Speaker 10:
So that is an inapposite test.

[01:05:07] Speaker 10:
This court and the Court of Federal Claims have both recognized repeatedly the need, to Chief Judge Moore's point, for a flexible application of the test that depends upon the nature of the violation being alleged.

[01:05:24] Speaker 10:
We cite cases on page 40 of our opening brief.

[01:05:27] Speaker 10:
And in footnote 8, that Judge Rubinck cited showing

[01:05:31] Speaker 10:
that it is not a wooden application of the standing requirement.

[01:05:34] Speaker 10:
You have to look at the texture and the facts of each particular case.

[01:05:38] Speaker 08:
Is there a problem one claim that you could have brought the way Ms.

[01:05:45] Speaker 08:
Perry suggests there is?

[01:05:49] Speaker 10:
I don't believe so, Judge Toronto.

[01:05:50] Speaker 10:
There is nothing that required, there's no law that required the government to split apart.

[01:05:57] Speaker 10:
If it wants to do a massive IVIQ contract,

[01:06:00] Speaker 10:
including all of the structured backbone, what's called the SER, as well as other things in integration, as well as computer vision.

[01:06:09] Speaker 10:
There's no law that that violated, at least not that I'm aware of.

[01:06:13] Speaker 10:
And there's certainly nothing that required us to go and force them to split that apart.

[01:06:19] Speaker 10:
To the contrary.

[01:06:20] Speaker 08:
Never mind the require.

[01:06:22] Speaker 08:
The question is whether you could have invoking the same

[01:06:28] Speaker 08:
Substantive statute, though maybe that you're invoking here, though maybe different provisions of it.

[01:06:35] Speaker 10:
The statute had not been violated yet, is what I'm trying to say.

[01:06:39] Speaker 10:
It would not have been a viable protest.

[01:06:44] Speaker 08:
So there's nothing in the substantive statute that you're invoking that would have made an awful decision by the government to form a solicitation the way it did.

[01:06:58] Speaker 08:
combined, I'm going to just call it the two different services.

[01:07:00] Speaker 08:
That's correct.

[01:07:01] Speaker 10:
That's exactly correct.

[01:07:03] Speaker 10:
And moreover, there are provisions in the statute, I'll come back to again, sections 3453, C5, and B2, which specifically apply after the award of the contract to a prime.

[01:07:16] Speaker 10:
And say the government, after that award, must make sure the prime does the commercial item market research to see if they can meet the needs

[01:07:25] Speaker 10:
And they must procure that to the maximum extent practically.

[01:07:28] Speaker 13:
If you thought Congress felt so strongly about this statute and directed the government to do mandatory actions, why didn't they provide an enforcement action in the statute?

[01:07:40] Speaker 10:
Your Honor, they used capacious language in 3453 for the requirements.

[01:07:45] Speaker 10:
There were subsequently capacious language used in ADRA for the types of claims that can be brought.

[01:07:54] Speaker 13:
Is there any reference in the legislative history of either to suggest that these were supposed to be enforceable in the Court of Federal Claims?

[01:08:04] Speaker 10:
This Court has obviously already held that if the government violates the provisions of the Commercial Item Conference, that is actionable in the Court of Federal Claims.

[01:08:11] Speaker 13:
In connection with what we've previously limited the definition to, which is prospective offerors or people within the zone of interest, not subcontractors.

[01:08:22] Speaker 10:
That's right, Your Honor.

[01:08:23] Speaker 10:
That's why we're here.

[01:08:24] Speaker 10:
It is a different context.

[01:08:25] Speaker 13:
So I assume your answer to my question is there's nothing specifically in the legislative history of either the commercial items statute or ADRA that suggested that the commercial items statute should be enforceable by a subcontractor.

[01:08:41] Speaker 10:
I don't think there's anything either way that I'm aware of in either legislative history about a private enforceable right needing to be conferred or being conferred.

[01:08:50] Speaker 10:
I may just finish my answer.

[01:08:52] Speaker 11:
Mr. Newman, what about sovereign immunity?

[01:08:55] Speaker 11:
Shouldn't that counsel us to read the waiver of sovereign immunity narrowly and suggest that your interpretation is just a little bit too broad?

[01:09:05] Speaker 10:
No, Your Honor.

[01:09:05] Speaker 10:
I think Judge Moss's analysis of that is spot on.

[01:09:08] Speaker 10:
And it goes to a question that was asked and that we disagree with the answer on.

[01:09:13] Speaker 10:
If there, prior to Audra,

[01:09:16] Speaker 10:
This case would have been brought as an APA case under the scandal jurisdiction.

[01:09:21] Speaker 10:
After Audra, everything was supposed to be sent to the CFC.

[01:09:24] Speaker 10:
As Judge Moss said, it's not a question of whether there's a waiver.

[01:09:29] Speaker 10:
It's a question of where the case can be brought.

[01:09:31] Speaker 10:
So for that reason, we don't.

[01:09:33] Speaker 10:
And the other reason is the one Judge Rubink relies on in his decision, which is that canon of construction only applies when the statute is ambiguous.

[01:09:41] Speaker 10:
We think it is unambiguous in the third prong.

[01:09:44] Speaker 12:
One concern I have for your side is that AFGE was decided 24 years ago.

[01:09:51] Speaker 12:
Let's assume that the court

[01:09:54] Speaker 12:
concludes that AFGE did a definitive statutory interpretation of Interested Party in a comprehensive way and didn't do just some piecemeal interpretation of a portion of 1491 B1.

[01:10:10] Speaker 12:
Then isn't it incumbent upon you to somehow establish that that decision was clearly wrong

[01:10:17] Speaker 12:
I mean, obviously, we're sitting here in the bank.

[01:10:19] Speaker 12:
We can overturn precedent if we want.

[01:10:22] Speaker 12:
But story decisis, I think, still means something here.

[01:10:27] Speaker 12:
And I think, then, therefore, the burden is on you to show not only is there perhaps a better way of thinking about Crown 3, but that AFGE was, in fact, clearly wrong in its interpretation of an interested party.

[01:10:41] Speaker 10:
Yes, Judge Chen, we address that in our reply brief and in our opening brief, that we do think if the court reaches the conclusion that's the premise of your question, that it should overturn AGE and clarify the standard.

[01:10:56] Speaker 12:
But I guess the point is, if it's a close question, maybe the text, the history, everything is a bit muddled.

[01:11:05] Speaker 12:
I think then it becomes a tougher case for you to convince us

[01:11:11] Speaker 12:
set aside, started a sizes and overturned AFGE?

[01:11:15] Speaker 10:
Well, I think part of the answer, Judge Chen, first of all, I think the standard from the Bosch case is good and substantial reason of conduct, regardless of how the standard is articulated for overturning a panel decision other than Banquo.

[01:11:28] Speaker 10:
The reality is we're talking, actually, about very fine shades of gray here, which is the point I was trying to make.

[01:11:34] Speaker 10:
I mean, in AFGE itself, the appellants were trying to argue

[01:11:40] Speaker 10:
away from the APA standard and for the interested party standard because they have lost under the APA standard.

[01:11:46] Speaker 10:
These standards are intertwined and very similar and it really comes down to how they're applied.

[01:11:53] Speaker 10:
As I was saying earlier, the texture of each case dictates whether the person has a direct interest, not derivative of anyone else, and is, would be able to... Have you learned anything in the past 24 years that would suggest AFGE was wrongly decided either through

[01:12:10] Speaker 12:
a set of terrible consequences over the past generation or some other indicia that might make us think we really do need to revisit the correctness of AFGN.

[01:12:22] Speaker 10:
I think the incredible breadth of flexibility in which it's been applied shows that it needs to be broadened to make sure it captures the full texture of cases and doesn't unwittingly eliminate an entire body of cases.

[01:12:37] Speaker 10:
The panel held in this case in section 1B of its opinion

[01:12:40] Speaker 10:
that the facts we allege alleged a legal violation in connection with the procurement.

[01:12:45] Speaker 10:
There was no dissent from that.

[01:12:46] Speaker 10:
This panel said it would not revisit that.

[01:12:48] Speaker 10:
That holding will make no sense in a case like this if we are not an interested party.

[01:12:54] Speaker 10:
There is no party more interested than us in that violation.

[01:12:58] Speaker 08:
Can I ask another?

[01:13:00] Speaker 08:
This is sort of following up.

[01:13:01] Speaker 08:
On the assumption that we disagree with you about 1491B1, should we transfer the case to district court?

[01:13:12] Speaker 10:
And that assumption you should, but it would be completely inconsistent with the whole purpose of ADRA, that all these cases.

[01:13:17] Speaker 08:
And the government there could make a CDA preclusion.

[01:13:21] Speaker 10:
The CDA argument is not.

[01:13:22] Speaker 08:
And then find the merits of it.

[01:13:23] Speaker 08:
Right.

[01:13:23] Speaker 08:
That would be the forum to do it.

[01:13:25] Speaker 10:
Yes, I suppose so.

[01:13:27] Speaker 10:
I think that would be at war with the whole purpose of ADRA.

[01:13:29] Speaker 10:
But yes.

[01:13:30] Speaker 10:
And it would be consistent with the Validata decision.

[01:13:33] Speaker 10:
Just to come back, Judge Gerardo, to finish my answer to your question.

[01:13:36] Speaker 10:
Not only was there nothing that was clearly violated in the solicitation or any law that prevented them from structuring an omnibus IDIQ solicitation, but there were things in the statute we could rely on that says this statute applies after the award.

[01:13:49] Speaker 10:
And there were things NGA told us that we could rely on.

[01:13:52] Speaker 10:
They're going to do a commercial evaluation.

[01:13:55] Speaker 10:
We're going to evaluate Mirage.

[01:13:57] Speaker 10:
That's what we allege in our complaint, and that's

[01:13:59] Speaker 10:
throughout our complaint, including if you look at appendix 32, paragraph 82 of our complaint, there was contact before the award with NGA from Percipient where we were told Mirage would be considered.

[01:14:11] Speaker 08:
So where we were told Mirage, our product.

[01:14:14] Speaker 08:
One more follow-up.

[01:14:15] Speaker 08:
APA, you could only get prospective relief, right?

[01:14:20] Speaker 08:
Is there prospective relief that's viable at this stage?

[01:14:24] Speaker 10:
Yes, it would be injunctive and declaratory relief that they need to perform.

[01:14:31] Speaker 10:
They need to ensure that the commercial item research is properly done, a full, proper evaluation of Mirage, to the point of the flexibility of this standard, Your Honors.

[01:14:40] Speaker 10:
When you step right back from it, are we a prospective bidder?

[01:14:46] Speaker 10:
Of course we are a prospective bidder.

[01:14:48] Speaker 10:
That's not the part of the test that is a problem.

[01:14:51] Speaker 10:
We are a prospective bidder for the procurement that should take place.

[01:14:57] Speaker 10:
The problem, again, when they say we have to satisfy the original test, they mean a prospective bidder on the Sapphire contract because they didn't challenge that and therefore they're out a lot.

[01:15:06] Speaker 10:
But we're not challenging the Sapphire award.

[01:15:09] Speaker 10:
We're challenging the violation

[01:15:11] Speaker 10:
of the laws that apply after that award to do market research into the availability of commercial items like ours that are essential to national security, the best computer vision company in the country, procured by SOCOM.

[01:15:25] Speaker 10:
SOCOM can acquire anyone they want.

[01:15:27] Speaker 10:
I know I'm delving into the merits, but just to emphasize what's at stake here, we're not challenging the SAFIRE contract.

[01:15:34] Speaker 10:
We are a prospective bidder for the procurement that should happen if they did the market research they are legally required to do and legally

[01:15:41] Speaker 10:
failed to do, violating the law.

[01:15:45] Speaker 10:
My sense is that what is bothering some members of the panel is that that may manifest itself by them being a subcontractor.

[01:15:53] Speaker 10:
And that is giving everyone considerable, not everyone, but some people's considerable alarm.

[01:15:58] Speaker 10:
My plea to you is to put that in context.

[01:16:01] Speaker 10:
There are two ways in which subcontractors cannot come to court to complain.

[01:16:07] Speaker 10:
If they're complaining about a decision by the prime, a private decision,

[01:16:11] Speaker 10:
They cannot do that.

[01:16:13] Speaker 10:
If they are only indirectly, derivatively harmed because their crime that they teamed up with lost, they cannot come to court.

[01:16:20] Speaker 10:
But there is nothing that has ever said, and this court should not say, that when a putative subcontractor is itself the most directly harmed person, they're not downstream of anyone else who suffered harm.

[01:16:34] Speaker 10:
They are the most directly harmed person by a violation of law.

[01:16:39] Speaker 10:
then they should be able to come to court, even though they're a reputed subcontractor.

[01:16:42] Speaker 10:
And in fact, that was the law before Audra.

[01:16:45] Speaker 10:
I implore the court to reach pages 84 and 85 of Judge Moss's decision invalidated.

[01:16:51] Speaker 10:
He cites the cases showing that.

[01:16:54] Speaker 10:
And yes, Judge Dyke, some of the cases say, oh, well, you either needed to be an agent or the government needed to be intimately involved with the decision.

[01:17:03] Speaker 10:
Here, the law required the government

[01:17:06] Speaker 10:
to be intimately involved.

[01:17:07] Speaker 00:
Under your definition, all providers of commercial services are potential bidders, right?

[01:17:15] Speaker 10:
I don't know about all.

[01:17:16] Speaker 10:
All providers of commercial products, services, are potential bidders.

[01:17:22] Speaker 10:
It depends on the contractor.

[01:17:23] Speaker 10:
It depends on the procurement.

[01:17:26] Speaker 00:
So you have to show, you have to win on the merits that you're a bidder, potential bidder.

[01:17:31] Speaker 10:
You have to show, just like in any case, that you have a substantial chance

[01:17:35] Speaker 10:
of winning.

[01:17:36] Speaker 10:
If they follow the law, you have a substantial chance of being able to meet the procurement needs with your product.

[01:17:43] Speaker 00:
Would the fact of whether or not you actually submitted or prepared a bid be part of that analysis?

[01:17:49] Speaker 10:
Yes, if the bid was something you could bid on with your product.

[01:17:53] Speaker 10:
But if they take your commercial item and put it into a massive IDIQ, of course you're not going to bid, because you can't win.

[01:17:59] Speaker 10:
You can't bid.

[01:18:01] Speaker 10:
They're not allowed to evade the commercial item requirement.

[01:18:05] Speaker 10:
by putting the commercial product needs, the needs for that commercial product, in a massive contract so that you can't bid on it, and you can't challenge it, and then it's delegated to the prize.

[01:18:16] Speaker 00:
The recipient was considering bidding and decided not to.

[01:18:20] Speaker 10:
I'm not sure.

[01:18:20] Speaker 10:
I don't believe that's correct, Your Honor.

[01:18:22] Speaker 10:
I don't know where you got there.

[01:18:23] Speaker 10:
But a lot of extra record statements made by the appellees, that is not correct.

[01:18:27] Speaker 10:
They could not bid.

[01:18:28] Speaker 02:
OK, counsel.

[01:18:29] Speaker 02:
I thank both counsel for their argument.

[01:18:32] Speaker 10:
And I think this case is concluded.

[01:18:33] Speaker 10:
Thank you, Your Honor.