[00:00:00] Speaker 05:
First case for argument today is 2019-1330, DAI Global versus Administrator of USAID.

[00:00:11] Speaker 05:
Mr. Schaeffer, please begin.

[00:00:12] Speaker 02:
May it please the Court, I'm Jonathan Schaeffer for the appellant, DAI Global.

[00:00:23] Speaker 02:
The board erred as a matter of law below in dismissing DAI's appeal.

[00:00:28] Speaker 02:
And the court should reverse based on at least three alternative grounds.

[00:00:32] Speaker 02:
First, the board failed to follow the plain language of the statute.

[00:00:36] Speaker 02:
And instead, the board relied on language that had been rejected by Congress, never became part of law.

[00:00:43] Speaker 02:
The board relied on language to talk about a technical defect, like a reckless disregard.

[00:00:49] Speaker 02:
That language was in the Senate bill, and the Senate bill, it passed the Senate, never passed the House, never became law.

[00:00:55] Speaker 05:
Other way around, right?

[00:00:55] Speaker 05:
Wasn't it in the House bill, not the Senate bill?

[00:00:57] Speaker 02:
Well, if you look at the legislative history, it's convoluted.

[00:01:00] Speaker 02:
It started off in the Senate bill, and it passed the Senate.

[00:01:08] Speaker 02:
It was dropped.

[00:01:10] Speaker 02:
In the final analysis, those words that the board relied on, technical and reckless disregard, are not in the law that was passed and signed by the president.

[00:01:20] Speaker 01:
What is the status?

[00:01:22] Speaker 01:
I know there was a claim filed on April 3rd of 2018.

[00:01:26] Speaker 01:
What is going on with that now?

[00:01:29] Speaker 02:
Right now, nothing's happening with that.

[00:01:32] Speaker 02:
But as a matter of, I guess the important thing is that

[00:01:38] Speaker 02:
claim, if that was the only claim there was, was April 2018, that's time barred.

[00:01:42] Speaker 02:
It's beyond the statute of limitations.

[00:01:44] Speaker 02:
And that's really a critical aspect of this case.

[00:01:46] Speaker 02:
The law abhors a forfeiture.

[00:01:49] Speaker 02:
It's an ancient maxim.

[00:01:50] Speaker 02:
And that's the case here.

[00:01:51] Speaker 02:
By dismissing on jurisdictional grounds, contrary to the statute,

[00:01:55] Speaker 02:
The board basically has caused our client to forfeit their claim.

[00:02:01] Speaker 01:
And so statute of limitations and interest are what's really the key.

[00:02:05] Speaker 02:
Well, it's statute of limitations is really what's key here because that April certification is beyond that time period.

[00:02:13] Speaker 02:
But the important thing is that the May 10 letter, the certification, met the requirements of the statute in terms of being a defective certification.

[00:02:22] Speaker 02:
In the plain language of the statute, the 1992 amendment, and the amendment, remember, was supposed to fix these problems.

[00:02:28] Speaker 02:
There had been hundreds of cases at the boards and the court of federal claims involving certification.

[00:02:33] Speaker 02:
Congress wanted to fix that.

[00:02:35] Speaker 02:
And they said, no longer is certification a jurisdictional issue.

[00:02:39] Speaker 02:
If you have a defective certification, it can be cured.

[00:02:42] Speaker 02:
And that's what our client did.

[00:02:44] Speaker 03:
They submitted a certification that I thought met I think the government Recognizing that makes as its principal argument that the May 10th Submission was not a certification at all so what is I guess the distinction and second

[00:03:08] Speaker 03:
Assuming that to clear the this is a certification, though defective, it needs to somehow resemble what the statute requires, why does the May 10th letter somehow resemble what the statute requires?

[00:03:24] Speaker 02:
Right.

[00:03:25] Speaker 02:
And let me start with that last point.

[00:03:26] Speaker 02:
It's in the appendix, page 29.

[00:03:28] Speaker 02:
And the government responds to that May 10 certification.

[00:03:34] Speaker 02:
On July 19, which is more than 60 days beyond the statutory response period,

[00:03:38] Speaker 02:
They came back and they said, you never submitted a certification.

[00:03:41] Speaker 02:
All you have is something from your subcontractor.

[00:03:43] Speaker 02:
But if you turn to appendix page 29, the certification is on DAI letterhead.

[00:03:48] Speaker 02:
That's the prime contractor.

[00:03:49] Speaker 02:
It's signed by a DAI official.

[00:03:51] Speaker 02:
And it specifically invokes the Contract Disputes Act.

[00:03:54] Speaker 02:
It says, these sponsors' claims are submitted in accordance with the FAR and the Contract Disputes Act.

[00:04:01] Speaker 02:
Then it has five contracts listed.

[00:04:03] Speaker 02:
And those are the five prime contract numbers.

[00:04:07] Speaker 02:
And then it says,

[00:04:08] Speaker 02:
DAI believes there's a sound basis for the claim.

[00:04:10] Speaker 02:
And they say, we submit this certification in satisfaction of the requirements of the Contract Disputes Act.

[00:04:18] Speaker 02:
So they were clearly invoking a certification under the Contracts Disputes Act.

[00:04:23] Speaker 02:
Now, they didn't follow all the formal words.

[00:04:25] Speaker 02:
They didn't use the magic words, the four prongs of the CDA.

[00:04:29] Speaker 02:
But they invoked it.

[00:04:30] Speaker 02:
They said on the cover letter, we're following the CDA certification requirements.

[00:04:35] Speaker 02:
And the government responded.

[00:04:37] Speaker 02:
More than 60 days later.

[00:04:38] Speaker 02:
They were supposed to respond within 60 days They didn't follow the rules, but they responded later, and they said we never got a certification from you We only have a subcontractor certification, but this is not a subcontractor certification.

[00:04:49] Speaker 02:
It says right on it It's it's from DAI.

[00:04:51] Speaker 02:
It's signed by DAI and it says that there's sound basis for the claims and that It's submitted in accordance with the contract it uses language that talks about ER SM's certified claims

[00:05:07] Speaker 03:
Why does that not suggest that this isn't really DAI's certification?

[00:05:14] Speaker 02:
Well, it's a pass-through claim.

[00:05:15] Speaker 02:
And you're always going to have that type of language in a pass-through claim.

[00:05:18] Speaker 02:
And this court in Turner and Transamerica approved of that approach, because the prime contractor is the only one who has privity with the government.

[00:05:26] Speaker 02:
So it has to be that the prime is passing through the claim.

[00:05:31] Speaker 02:
Now, the subcontractor is the one who has the books and the records.

[00:05:34] Speaker 02:
They have all the knowledge about, in this case, fines and how it's allocated between the various contracts.

[00:05:39] Speaker 02:
So the first step is the prime gets from the subcontractor a certification.

[00:05:43] Speaker 02:
And then they take it, and they put on top of it their own certification in accordance with the Contract Disputes Act.

[00:05:48] Speaker 01:
And let me ask you, we have at A47 an example of one of the subcontractor certifications.

[00:05:57] Speaker 01:
There were five of these, one for each subcontractor.

[00:06:01] Speaker 01:
Is there any relevance to the subcontractor certification in this case?

[00:06:07] Speaker 01:
Because it does seem that that certification, albeit by a subcontractor, has the magic language required by the regulation.

[00:06:18] Speaker 02:
Well, under Turner and Transamerica and under the court's jurisprudence, you still need a certification of some sort from the prime contractor.

[00:06:27] Speaker 02:
So the subcontractor certification all by itself would not be sufficient.

[00:06:31] Speaker 02:
But what's important, though, is Turner and Transamerica says you can have these pass-through claims, you just have to say that there's good ground for them.

[00:06:39] Speaker 02:
And then in 1992, Congress said, we're tired of all this litigation over what's a certification, who's the authorized official, did they use all the magic words?

[00:06:48] Speaker 02:
And so Congress expressly stated that defective certification is no longer jurisdictional.

[00:06:54] Speaker 02:
And this case really is a classic example of what Congress was trying to fix.

[00:06:58] Speaker 02:
This is a certification that did not meet all of the formal requirements of the Contract Disputes Act, but it was a defective certification.

[00:07:05] Speaker 02:
And if you look at the Black's law dictionary definition of defective or dictionary definitions, it's something that lacks legal sufficiency, that's something that's inadequate.

[00:07:15] Speaker 02:
And that's what this is.

[00:07:15] Speaker 02:
It's not something that's made with reckless disregard of the law or some other standard that the court might come up with, because they said on the face that we're invoking the Contract Disputes Act.

[00:07:27] Speaker 02:
And they followed the language.

[00:07:30] Speaker 02:
They identified the specific federal government contracts that are issued.

[00:07:33] Speaker 02:
And that should be sufficient.

[00:07:35] Speaker 02:
Now, Judge Toronto did have a question about jurisdiction.

[00:07:39] Speaker 02:
Under the Supreme Court's recent decisions in Arbaugh and Auburn, it's my view that certification at all is not jurisdictional.

[00:07:48] Speaker 02:
And the Supreme Court has said, basically, don't go looking for jurisdictional language in a statute if it's not there.

[00:07:54] Speaker 02:
If Congress hasn't clearly said a requirement is jurisdictional,

[00:07:57] Speaker 02:
don't treat it as jurisdictional.

[00:08:00] Speaker 02:
And that's really what the board has flipped out on the head and said, we're going to treat this requirement as jurisdictional.

[00:08:07] Speaker 01:
Well, in a sense, isn't it jurisdictional in the sense that you, in other words, to have jurisdiction, as I understand it, correct me if I'm wrong, Mr. Schaffer, under the CDA, you have to have a claim submitted to a contracting officer.

[00:08:21] Speaker 01:
And in the case of a claim worth more than $100,000,

[00:08:26] Speaker 01:
there has to be a certification.

[00:08:29] Speaker 01:
So I think the government could say that if it receives a claim for $150,000 without a certification, there's no claim under the CDA and hence no jurisdiction.

[00:08:43] Speaker 02:
I would understand that position before the 1992 amendment.

[00:08:47] Speaker 02:
The 1992 amendment specifically addressed that.

[00:08:50] Speaker 02:
that if you have a defective certification, it's not jurisdictional.

[00:08:53] Speaker 02:
And then it told the board and the court.

[00:08:55] Speaker 01:
No, I'm saying if there was no certification at all.

[00:08:57] Speaker 02:
Oh, if there's no certification at all.

[00:09:00] Speaker 02:
Well, I don't think that you have to reach that, because there was certification here.

[00:09:03] Speaker 01:
Oh, no, I understand.

[00:09:04] Speaker 01:
But just thinking hypothetically, in that respect, it seems like certification could be part of the jurisdictional trail, if you will.

[00:09:12] Speaker 02:
It could be, but I think that's an unanswered question at this point, because Arbaugh and Auburn, I think the court has said,

[00:09:20] Speaker 02:
don't look for a jurisdictional meaning in a statute when it's not there, when it's not clear on its face.

[00:09:25] Speaker 02:
Now here, again, you don't have to reach that because the language talked about effective certification.

[00:09:29] Speaker 05:
You wouldn't necessarily have a final decision in the situation Judge Schall is articulating, right?

[00:09:35] Speaker 05:
Because the deemed denial 60 days out is from when the claim was filed with

[00:09:42] Speaker 05:
The defective certification and the officer doesn't notify you.

[00:09:46] Speaker 05:
Is that right?

[00:09:47] Speaker 02:
That's right.

[00:09:48] Speaker 02:
So what happens?

[00:09:49] Speaker 05:
You might not, in Judge Shaw's scenario, have a final decision from which could be appealed.

[00:09:54] Speaker 02:
You could have that situation.

[00:09:55] Speaker 02:
I see what you're saying.

[00:09:56] Speaker 02:
Yes, you could have that situation, although... But that's not the case here.

[00:10:01] Speaker 05:
No certification at all.

[00:10:02] Speaker 01:
Yes, no.

[00:10:03] Speaker 01:
My question was premised on no certification.

[00:10:05] Speaker 05:
So your entire case, as I understand it, hinges on whether we agree

[00:10:10] Speaker 05:
That the May 10th letter on page appendix 29 amounts to a defective certification because the August letter Then the the contracting officer came back within the 60-day period and said it's effective So you don't have a deemed denial for the August letter correct?

[00:10:28] Speaker 02:
That's correct.

[00:10:29] Speaker 05:
It wouldn't be a final decision if I said May 10th what the May 10th letter wasn't a defective certification

[00:10:36] Speaker 05:
But maybe the August one was, you have action by the contractor within 60 days, so you have no final decision from which you can appeal at that point.

[00:10:45] Speaker 02:
The May 10 certification is critical because, first of all, anything more than 60 days beyond that is beyond the statute of limitations.

[00:10:51] Speaker 02:
So really, if the court rules that the May 10 letter certification is not a certification,

[00:10:57] Speaker 02:
then there's a statute of limitations problem.

[00:11:01] Speaker 03:
Just to be clear, and I don't think this matters at all to your point, I thought that the timing provision said 60 days the COO has to tell you it's defective or give you a decision and the COO here on the 61st day, which was on Monday,

[00:11:22] Speaker 03:
did that by saying, I'll give you a decision in 45 days, 45 days elapsed, I thought it's at that point that there's a deemed denial, not back on July 10th.

[00:11:36] Speaker 02:
Well, no, on July 10th, the statute says that within 60 days of the claim submission, the government has to tell you why any attempted certification was found to be defective.

[00:11:47] Speaker 02:
And that was never provided.

[00:11:49] Speaker 03:
It doesn't say or, when I'm going to make a decision.

[00:11:52] Speaker 02:
That's a different part of the statute.

[00:11:53] Speaker 05:
7103B3 is what you're talking about.

[00:11:56] Speaker 05:
7103F2 is what you're talking about.

[00:12:00] Speaker 02:
That's the language that talks about a decision, but with regard to defective certification.

[00:12:04] Speaker 03:
Was there a deemed denial on July 10th?

[00:12:07] Speaker 03:
Yes, because... Weren't you out of time in seeking your appeal if July 10th was the date?

[00:12:13] Speaker 03:
I'm sorry, the... Weren't you out of time in filing in the board if July 10th started the clock?

[00:12:19] Speaker 02:
Well, no, the clock would start with May 10 in terms of what the statute of limitations would run from.

[00:12:24] Speaker 03:
I'm sorry.

[00:12:25] Speaker 03:
Help me out because these details in your head.

[00:12:27] Speaker 03:
I thought there is either a 90 or 120 day statute of limitations from the decision to file in the board.

[00:12:36] Speaker 03:
Yeah, I'm sorry.

[00:12:37] Speaker 03:
When did you file in the board?

[00:12:39] Speaker 02:
We filed it in November, but when I talk about a statute of limitations problem,

[00:12:42] Speaker 02:
I forget about the label.

[00:12:44] Speaker 02:
I was talking about the six-year statute.

[00:12:46] Speaker 02:
That's a different issue.

[00:12:49] Speaker 03:
I'm not interested in that.

[00:12:52] Speaker 03:
If things started on May 10th or July 10th, did you meet the timing requirement for going to the board?

[00:12:58] Speaker 02:
Yes, because under a deemed denial in this court, there's a case called Case, and there are others.

[00:13:04] Speaker 02:
And under the statute.

[00:13:05] Speaker 02:
Is it 90 or 120 days?

[00:13:07] Speaker 02:
It's 90 days to go to the board, a year to go to the court.

[00:13:10] Speaker 03:
When did you file in the board?

[00:13:12] Speaker 03:
When did you file in the board?

[00:13:13] Speaker 03:
In November.

[00:13:15] Speaker 02:
But it doesn't start after 60 days.

[00:13:17] Speaker 02:
The contractor's election.

[00:13:18] Speaker 02:
There's a case from this court called Case.

[00:13:20] Speaker 02:
I can get the citation to it, that says that it's at the contractor's election as to when that period starts to run.

[00:13:27] Speaker 02:
In other words, the contractor doesn't have to say it's deemed denied on day 61.

[00:13:32] Speaker 02:
There's extensive case law on that where the federal circuit has said that it's at the contractor's election.

[00:13:40] Speaker 02:
Because otherwise they were afraid, I think the circuit was concerned, that otherwise the government would

[00:13:46] Speaker 02:
let 90 days go by, and then say, well, it's too late to go to the board.

[00:13:49] Speaker 02:
And that defeats the whole purpose of this having the board as a solution for him.

[00:13:56] Speaker 02:
The case I mentioned is a case of the United States, 88 F3D 1004 from 1996.

[00:14:05] Speaker 02:
And there are other decisions, I think, cited there to talk about how the deemed denial provision is at the contractor's election.

[00:14:14] Speaker 02:
So they don't have to immediately treat it as a deemed denial on day 61.

[00:14:18] Speaker 01:
What's the page number on that 88 Fed 3rd site, Mr. Chairman?

[00:14:22] Speaker 02:
Yeah, 88 F3D 1004.

[00:14:23] Speaker 02:
OK, thank you.

[00:14:25] Speaker 02:
I wanted to come back.

[00:14:29] Speaker 05:
You're well beyond your rebuttal.

[00:14:31] Speaker 05:
Do you want to save any?

[00:14:32] Speaker 02:
Yes, I deserve my time.

[00:14:33] Speaker 05:
Thank you.

[00:14:34] Speaker 05:
Let's hear from Mr. Long.

[00:14:49] Speaker 00:
May I please the court?

[00:14:50] Speaker 00:
I think the court does understand that the focus here is that May 10 submission.

[00:14:57] Speaker 05:
Can you start where we left off, though?

[00:14:59] Speaker 05:
Absolutely.

[00:15:00] Speaker 05:
Has the government argued that if the May 10th submission is a defective certification, and therefore if there was a deemed denial because the contracting officer didn't respond within 60 days, is Mr. Schaefer correct

[00:15:17] Speaker 05:
that the law allows the contractor more than the typical 90-day period in which to appeal to the board when you have a deemed denial.

[00:15:26] Speaker 00:
I confess, Your Honor, I did not review that case law in preparation here.

[00:15:30] Speaker 00:
That is my general recollection of the law.

[00:15:32] Speaker 00:
I don't have any reason standing here to believe that my friend is incorrect.

[00:15:36] Speaker 00:
But I couldn't verify a case.

[00:15:37] Speaker 05:
Because you all didn't raise, for example, any kind of jurisdictional impediment in this case

[00:15:44] Speaker 05:
with vis-a-vis that appeal to the board, at least thus far, right?

[00:15:47] Speaker 00:
Correct, Your Honor.

[00:15:48] Speaker 00:
Our argument has been, as set forth in the briefs, that it was no certification at all.

[00:15:53] Speaker 00:
And so there was no deemed denial on July 10, 2017.

[00:15:58] Speaker 00:
Rather, there was no certification in the May 10 submission.

[00:16:01] Speaker 00:
And the reason we've taken that position is, as this Court recently said in Hezran-Hezrat, certification is designed to trigger a contractor's liability for fraudulent claims.

[00:16:12] Speaker 00:
and to discourage the submission of more warranted claims and encourage settlement.

[00:16:17] Speaker 00:
So the way that the structure is designed is that it flows through the contracting officer.

[00:16:23] Speaker 00:
And without the certification in front of the contracting officer, the contracting officer has no way of knowing whether the claim has been submitted in good faith, whether the amounts are accurate, whether the facts are complete, and the additional requirement that the signer of the claim certify that they're authorized to bind the contractor.

[00:16:42] Speaker 00:
That's simply absent from that May 10 submission.

[00:16:46] Speaker 00:
As we point out in our briefs, DIAI specifically said that... Can I just ask?

[00:16:52] Speaker 03:
So the statute with respect to the accuracy point doesn't say you have to certify it's accurate.

[00:16:58] Speaker 03:
You have to certify it's accurate to the best of your knowledge.

[00:17:01] Speaker 03:
And at that point, DIAI seems to me essentially says that.

[00:17:05] Speaker 03:
It's just that its knowledge was about this thin at the moment.

[00:17:08] Speaker 00:
I think that's right.

[00:17:09] Speaker 00:
And so I think you have to...

[00:17:11] Speaker 00:
I agree that what they said was not that they had undertaken any sort of investigation.

[00:17:18] Speaker 00:
And I understand that's not in the statute.

[00:17:20] Speaker 00:
That's not exactly what your honor is asking.

[00:17:21] Speaker 00:
But what they say is that they have no reason to believe that EI is not proceeding in good faith.

[00:17:28] Speaker 00:
But that's different from averring that the facts are complete.

[00:17:31] Speaker 00:
And so rather than saying, we have determined that this is a complete submission, they've said, we have no reason to think it's not, which is sort of the mirror image and not what's permitted by the statute.

[00:17:43] Speaker 05:
And so also- No, but the statute says, as just Toronto pointed out, the supporting data are accurate and complete to the best of the contractor's knowledge and belief.

[00:17:54] Speaker 05:
Are you what what are you suggesting that requires the contractor to do and say in this case?

[00:18:01] Speaker 05:
What if they simply said?

[00:18:02] Speaker 05:
We certify the supporting data are accurate and complete to the best of our knowledge and belief that would be sufficient That would be sufficient well Why isn't that kind of what they've done they said look?

[00:18:14] Speaker 05:
We didn't we don't have access to all their numbers so as far as we know this looks great and

[00:18:20] Speaker 00:
Well, I mean, looking at that May 10 submission, they said that they have no knowledge to suggest that EI has knowingly or intentionally failed to comply with the requirements of the CDA or has acted in that faith.

[00:18:32] Speaker 00:
That's different from saying that the supported data are accurate and complete to the best of DAI's knowledge and belief.

[00:18:37] Speaker 00:
They're suggesting that they have no reason to believe that EI has not complied with the CDA.

[00:18:42] Speaker 00:
Again, that's different from saying that the facts and data set forth

[00:18:46] Speaker 00:
accurate to the best of DAI's knowledge and beliefs.

[00:18:49] Speaker 03:
So I think that... I'm having trouble with that difference.

[00:18:52] Speaker 03:
It's just that their knowledge was paper thin.

[00:18:57] Speaker 03:
So they are saying this is as much as we know.

[00:19:01] Speaker 03:
We don't know a lot.

[00:19:02] Speaker 00:
Right.

[00:19:02] Speaker 03:
But this is as much as we know.

[00:19:04] Speaker 00:
But they're not saying that it's accurate and complete.

[00:19:08] Speaker 00:
So they're not saying that the sporting data is complete.

[00:19:12] Speaker 00:
All they're saying is that they have no reason to think that it is

[00:19:15] Speaker 00:
that DAI is not complying with CDA or is acting in bad faith.

[00:19:19] Speaker 00:
That is a different statement from what's required in 7103B1.

[00:19:24] Speaker 00:
They didn't do that.

[00:19:26] Speaker 00:
And it's worth pointing out.

[00:19:27] Speaker 05:
They say DAI hereby submits this certification in satisfaction of the requirements of the Contact Disputes Act.

[00:19:32] Speaker 05:
So they believe that they're satisfying it.

[00:19:35] Speaker 05:
And they say DAI must accept and rely on ERSM certification at face values.

[00:19:41] Speaker 05:
They're telling you that we have to rely on their representations.

[00:19:45] Speaker 05:
We have no way of looking beyond the curtain to get a peek at the wizard.

[00:19:50] Speaker 05:
We can't do it.

[00:19:51] Speaker 05:
And then they say, in addition, we have no knowledge that suggests that they've

[00:19:55] Speaker 05:
done anything that isn't accurate.

[00:19:58] Speaker 00:
I think that point, Your Honor, goes back to my friend's contention that somehow the fact of this being a pass-through claim is somehow significant under the CDA.

[00:20:09] Speaker 00:
It's not.

[00:20:09] Speaker 00:
The CDA doesn't have any provision for pass-through claims.

[00:20:12] Speaker 00:
DAI has a relationship with EI.

[00:20:15] Speaker 00:
And it may be that whatever relationship they have precludes DAI from understanding the basis for EI's claim, but that's not

[00:20:24] Speaker 00:
that's insignificant or irrelevant under the CDA.

[00:20:26] Speaker 00:
The point is that the contractor itself needs to take responsibility for the claim to avoid what's been done here, which is the effect of punting it into the contracting officer's lap.

[00:20:36] Speaker 01:
Mr. Long, let me ask you, what would be the, we have here, there is, we have the May 10 letter and then we've got the,

[00:20:44] Speaker 01:
the certification by the subcontractor.

[00:20:48] Speaker 01:
What would be the situation if instead of the May 10 letter that we have here, DAI had said, we incorporate by reference as a certification all of the statements made by EI or ERSM in its certification?

[00:21:05] Speaker 01:
What would the government's position be then?

[00:21:08] Speaker 00:
Well, I think, Your Honor, the wording of that

[00:21:11] Speaker 00:
Preface wouldn't would matter so they could certify that that Not merely that we are incorporating the certification because the under the under the CDA the certification must be tendered by the contractor It's not as if we incorporate as our cert if we incorporate by references our certification the certification by EI I don't think that would be sufficient because at that point They're not the da I would not be standing

[00:21:41] Speaker 00:
as verifying and certifying.

[00:21:45] Speaker 00:
the facts and the underlying information, they can say, yes, we are saying that EI has certified this, but that's insufficient.

[00:21:51] Speaker 00:
The contractor has to provide the certification.

[00:21:53] Speaker 00:
In the language that you're proposing, Your Honor, the EI would not be doing that.

[00:21:57] Speaker 00:
They would still be doing almost the exact same things they've done here, which is to say, look, EI has certified that, and that's sufficient.

[00:22:04] Speaker 01:
That's not what the CDA contemplates.

[00:22:07] Speaker 01:
I think the parties have brought everything to our attention, but are you aware of any particular case

[00:22:12] Speaker 01:
that focuses on exactly what a prime contractor has to do in this situation when a prime contractor is presenting the claim of a subcontractor that is on its own certified.

[00:22:29] Speaker 01:
Are there any cases that really talk about the magic words?

[00:22:34] Speaker 01:
I don't think that the

[00:22:37] Speaker 01:
Exact facts here have been addressed by this and there's no Regulation I guess that talks about it is there that's correct your honor as you point out.

[00:22:45] Speaker 01:
There's no statute that Right correct.

[00:22:48] Speaker 00:
I will say that in the Arnold Diamond case trans American Turner which have been briefed by the parties there were certain subcontractor issues but they the facts were different in those cases as we point our briefs because in each of those three cases and

[00:23:05] Speaker 00:
the contractor had submitted a CDA compliance certification, the question in those cases was whether some reservation of mind in the mind of the contractor as to whether the CO should ultimately grant those claims, whether that negated a CDA compliance certification.

[00:23:22] Speaker 00:
And that's not this case because there's no, in the May 10 submission, there's no underlying correct, procedurally correct certification.

[00:23:30] Speaker 00:
And so the question of a qualification doesn't arise here.

[00:23:35] Speaker 03:
Can I just ask you this?

[00:23:36] Speaker 03:
The statute has pretty limited language in saying what has to be certified, mostly because it builds into the crucial thing, to the best of my knowledge and belief, which is literally satisfied if you just don't have any real knowledge.

[00:23:58] Speaker 03:
Why isn't, though,

[00:24:01] Speaker 03:
kind of normal way interpreting a statute as a

[00:24:07] Speaker 03:
executed by applied by an agency here the CEO would be that if the CEO thinks that the Contractor hasn't done enough to acquire The knowledge that the government wants in order to hold the contractor liable for claims ultimately traceable to the subcontractor, but that's a matter of the contracting officer telling

[00:24:37] Speaker 03:
the claimant contractor this is not enough i.e.

[00:24:41] Speaker 00:
it's defective and then and therefore all in the bucket of a defective certification which they're entitled to correct if they can well your honor I think if I understand your question the responsibility to respond the contractors officers contracting officers responsibility to reply

[00:25:04] Speaker 00:
to a defective certification is different from a non-certification.

[00:25:08] Speaker 00:
And we can see that in 41 U.S.C.

[00:25:10] Speaker 00:
7103b3.

[00:25:11] Speaker 00:
Right.

[00:25:12] Speaker 03:
I guess just maybe try to simplify.

[00:25:14] Speaker 03:
I'm not sure I can.

[00:25:15] Speaker 03:
It seems that in the absence of language in the statute demanding a certain level of knowledge, it's hard to get a

[00:25:27] Speaker 03:
this is not a certification conclusion out of a premise that you don't know enough for us to rely on it.

[00:25:36] Speaker 03:
That seems more a matter of defect than non-existence.

[00:25:41] Speaker 00:
Well, I think that at some point, Your Honor, a difference in degree becomes a difference in kind.

[00:25:47] Speaker 00:
And there are four requirements set forth in the CDA.

[00:25:51] Speaker 00:
And we've shown that DAI and the May 10 submission met none of them.

[00:25:56] Speaker 00:
So I, of course, understand your Honor's point about at some point, if they say we don't know, they just don't know.

[00:26:04] Speaker 00:
And that could be sufficient on a statute.

[00:26:06] Speaker 00:
There's also the requirement of statement that the claims made in good faith.

[00:26:09] Speaker 00:
They don't say that.

[00:26:10] Speaker 00:
They say sound basis, which is different from good faith.

[00:26:14] Speaker 00:
We've talked, of course, about accurate complete.

[00:26:16] Speaker 00:
There's the amount accurately reflecting the amount that the contractor believes the government is liable.

[00:26:20] Speaker 00:
That statement's absent.

[00:26:21] Speaker 00:
And there's no statement at all about authority to certify the claim on behalf of the contractor.

[00:26:26] Speaker 00:
So the requirements are so absent, or the pieces required are so absent here, that it becomes a non-certification.

[00:26:35] Speaker 00:
And I understand that I do think it's a fact-based inquiry that requires the CBCA, in the first instance, in this court, to look at what's been submitted.

[00:26:48] Speaker 00:
But on these facts or on this submission, nothing's there.

[00:26:55] Speaker 00:
And so there is no requirement to issue a final decision.

[00:26:58] Speaker 00:
And that, again, Your Honor, goes back to my point that what's happened is that DIA has punted

[00:27:04] Speaker 00:
the requirement for developing a complete and good faith claim into the contracting officer's lap and that hasn't happened here.

[00:27:13] Speaker 00:
And so on those grounds, contracting officers right to refuse to issue a final decision.

[00:27:18] Speaker 01:
Is it the government's position that there has to be a subcontractor certification?

[00:27:24] Speaker 01:
Assume for the moment that we had a full and complete

[00:27:28] Speaker 01:
certification with all the magic words from the prime contractor.

[00:27:34] Speaker 01:
But there was no subcontractor certification.

[00:27:40] Speaker 01:
What's your position in that situation?

[00:27:42] Speaker 00:
Well, Your Honor, I would say that the CDA doesn't create that requirement.

[00:27:46] Speaker 00:
The relevant actor here is the contractor.

[00:27:50] Speaker 01:
And throughout the statute and regulations... So you're saying the contractor could receive documents from the subcontractor

[00:27:58] Speaker 01:
but no certification from the subcontractor.

[00:28:01] Speaker 01:
And it would be enough if, in that situation, the contractor presented the certification that's required under the statute and regulation.

[00:28:10] Speaker 00:
Yes, Your Honor.

[00:28:11] Speaker 00:
And I think, as a practical matter, that goes back to the relationship between the prime and the sub and the prime's ability to develop the claim, ask questions of the sub, determine whether it believes that there's enough there for the prime itself to make the required certification.

[00:28:26] Speaker 00:
put the package in front of the CEO and go forward.

[00:28:29] Speaker 01:
Does the government view a situation like this as being presented with a subcontractor claim that the prime is just passing through, or does the government view this as really being a prime contractor claim?

[00:28:44] Speaker 00:
The latter, Your Honor.

[00:28:45] Speaker 00:
It's a prime contractor claim.

[00:28:46] Speaker 00:
And it is relevant that there's a subcontractor involved, but it ultimately

[00:28:51] Speaker 00:
There has to be a good faith.

[00:28:53] Speaker 00:
It's a claim by the prime contracts.

[00:28:55] Speaker 00:
Absolutely.

[00:28:55] Speaker 00:
That's what's recorded.

[00:28:56] Speaker 00:
And your honor, you asked earlier.

[00:28:58] Speaker 03:
I'm sorry.

[00:28:58] Speaker 03:
And even though the subcontractor doesn't have to certify when the contracting officer is deciding whether the claim is valid,

[00:29:09] Speaker 03:
Is there opportunity for the contracting officer to communicate with the subcontractors so as to get submissions that might be subject to, I don't know, 18 USC 1001 and other requirements?

[00:29:24] Speaker 00:
I believe that would be possible, Your Honor.

[00:29:26] Speaker 00:
I'm not thinking of a process right here, but I don't see why that wouldn't be possible.

[00:29:32] Speaker 03:
The contracting officer does investigate the claim?

[00:29:36] Speaker 00:
Yes.

[00:29:36] Speaker 00:
The contracting officer can ask follow-up questions.

[00:29:38] Speaker 00:
I mean, the purpose here is, part of the purpose is to encourage settlement.

[00:29:41] Speaker 00:
And so there's no reason why in the process of those discussions you couldn't develop more information.

[00:29:45] Speaker 00:
I don't see why not.

[00:29:47] Speaker 05:
Well, one concern I have is on August 3, DAI

[00:29:52] Speaker 05:
attempted to correct the problems with the certification.

[00:29:55] Speaker 05:
And on August 24th, the contracting officer responded.

[00:30:04] Speaker 05:
That's on page 124, is that right?

[00:30:06] Speaker 00:
Correct, Your Honor.

[00:30:07] Speaker 05:
And what he, she, I don't know, what the contracting officer said was DAI's letter dated August 3rd does not mirror the certifications cited in Transamerica.

[00:30:21] Speaker 05:
And again, it says this is not a complete certification.

[00:30:26] Speaker 05:
Do you think that the August 3rd letter satisfied the defective certification standard that you would have us adopt?

[00:30:34] Speaker 00:
No, we don't, Your Honor.

[00:30:36] Speaker 00:
So we've made an alternative argument.

[00:30:38] Speaker 00:
And as an initial matter, no.

[00:30:40] Speaker 05:
It seems like the contracting officer did.

[00:30:42] Speaker 05:
It seems like he or she, in this letter on page 124, understood the August 3rd

[00:30:50] Speaker 05:
submission to amount to a defective certification.

[00:30:54] Speaker 05:
Is that a fair reading of the contracting officer's response on page 124 and 125?

[00:30:59] Speaker 00:
I would agree, Your Honor, that it seems ambiguous from the submission, and I think that is a fair reading.

[00:31:05] Speaker 00:
I think it also could be read as the certification is lacking, but I think that the wording that you're pointing to does suggest that the CO saw this is defective.

[00:31:14] Speaker 05:
I guess the reason we just time out the reason that I'm doing this is because if

[00:31:19] Speaker 05:
The August 3rd letter amounts to a defective certification.

[00:31:23] Speaker 05:
I'm struggling to find much daylight between the May 10th submission and the August 3rd submission.

[00:31:28] Speaker 05:
I don't see that the August 3rd cured the defects that you've identified in the May 10th letter.

[00:31:34] Speaker 05:
And so if the contracting officer nonetheless looked at the August 3rd letter and said, this is a defective certification, why wouldn't the May 10th

[00:31:43] Speaker 05:
likewise be a defective certification.

[00:31:45] Speaker 05:
Are there any critical differences between May 10th and August 3rd that you could point me to that would say, OK, well, this got over the hurdle and went from being no certification at all to being a defective certification?

[00:31:57] Speaker 00:
Well, I think that the phraseology of the May 10 letter is much more focused on pointing out that these were claims certified by EI rather than DAI.

[00:32:10] Speaker 00:
Whereas if you look at the August 3rd letter, I think DAI says that this is the best we can do, and we believe that this complies with Transamerica.

[00:32:19] Speaker 05:
No, but it still says, DAI believes there are good grounds for these claims.

[00:32:22] Speaker 05:
We are sponsoring ERSM's certified claims.

[00:32:26] Speaker 05:
DAI, hereby submits this certification and satisfaction requirements.

[00:32:30] Speaker 05:
That language just looks so much like the language in the May 10th letter that I guess I'm not seeing a lot of daylight between the two letters.

[00:32:40] Speaker 05:
And my problem is that the contracting officer seemed to treat the second letter as a defective, not a non-certification.

[00:32:49] Speaker 00:
Right.

[00:32:49] Speaker 00:
I think that here, the contracting officer was within her power to decide that this was defective rather than a non-certification, and therefore say, fix this.

[00:33:01] Speaker 00:
And that sort of discretion lies in her.

[00:33:06] Speaker 00:
And I think that, for example, what can happen, and this is what my friend was getting to,

[00:33:10] Speaker 00:
a contracting officer could issue a final decision despite a defective certification and it could go to Board of Contract Appeals or the Court of Federal Claims and that can be corrected where there's a final decision because that's the jurisdictional hook.

[00:33:24] Speaker 05:
So the government, one last question and then I'll let you sit down unless my colleagues have anything further.

[00:33:30] Speaker 05:
The government

[00:33:31] Speaker 05:
I think it's fair to say, in the red brief, pivots a little bit from the board decision.

[00:33:35] Speaker 05:
You don't have to acknowledge that.

[00:33:37] Speaker 05:
You can just say nothing.

[00:33:38] Speaker 05:
But I understood it to be a bit of a pivot.

[00:33:41] Speaker 05:
One of the things that the board said on page eight in particular is to determine whether a certification is correctable.

[00:33:49] Speaker 05:
We look at whether the defect is only technical in nature.

[00:33:52] Speaker 05:
And they even quoted the word technical as a quotation.

[00:33:55] Speaker 05:
Does the government believe that that is the correct standard under the statute

[00:34:00] Speaker 05:
to apply because the board then cites a series of contract board only cases thereafter.

[00:34:06] Speaker 05:
And I'll admit, I haven't gone through each of those.

[00:34:08] Speaker 05:
But I'm just a little nervous that the board has adopted the statute that didn't get enacted as opposed to the one that did.

[00:34:15] Speaker 05:
And I'd like the government's views on whether this is a correct statement of the statute that did get enacted.

[00:34:23] Speaker 00:
Your Honor.

[00:34:26] Speaker 00:
We would submit that you don't need to reach that question.

[00:34:29] Speaker 00:
Ultimately, the question of whether it's reckless or grossly negligent is an intent question that you don't need to resolve.

[00:34:36] Speaker 00:
The CBCA doesn't need to resolve.

[00:34:39] Speaker 00:
You can stop and look at what's been submitted and ask whether it provides enough information and enough certainty for the contracting officer to go forward.

[00:34:48] Speaker 05:
But certainly it would matter.

[00:34:49] Speaker 05:
For example, if the board is correct,

[00:34:52] Speaker 05:
that the only kinds of defects that can be corrected are small technicality type defects, then it seems to me you have a clear victory with this May 10th letter.

[00:35:02] Speaker 05:
So it does matter to me.

[00:35:04] Speaker 05:
If the board is wrong and correctability is, in fact, much broader and the nature of the defects could be of a greater scope, then you have a much tougher, possibly insurmountable case for the May 10th.

[00:35:16] Speaker 05:
So actually, it does matter to me in terms of the outcome of the case

[00:35:20] Speaker 05:
So I'd like to know whether or not the government thinks this technical-only defects is a proper interpretation of the statute that was, in fact, adopted.

[00:35:30] Speaker 00:
Well, I think, Your Honor, this may not be fully satisfying to you, but to answer the question, I think that you can look to the definition of a defective claim in the FAR, which talks about language that alters or deviates from the required certification in the FAR.

[00:35:47] Speaker 00:
And that's, I apologize.

[00:35:50] Speaker 00:
That's at FAR 33-201.

[00:35:54] Speaker 00:
And the Court of Federal Claims has held that alters or deviates suggest some relation to the required language.

[00:36:03] Speaker 00:
I think that that plainly allows the kind of analysis that I'm advocating, which is to look at the papers.

[00:36:09] Speaker 05:
Except that it actually goes quite a bit further, right?

[00:36:11] Speaker 05:
Because FAR 33-201 doesn't just talk about altered or deviating language.

[00:36:16] Speaker 05:
It says or, which is not even executed by a person that actually had the authority to bind the contractor.

[00:36:22] Speaker 05:
So wow, that wouldn't be a technical defect, not in the world of contracts, right?

[00:36:27] Speaker 05:
I mean, somebody signed it who had no authority?

[00:36:30] Speaker 05:
That would not be a technical defect.

[00:36:31] Speaker 05:
qualifies a technical defect.

[00:36:33] Speaker 05:
That seems like a big time defect.

[00:36:36] Speaker 00:
That, as I understand it, Your Honor, the 1992 amendments were designed to fix situations where claims were being considered completely wanting jurisdictionally because the wrong person had signed.

[00:36:51] Speaker 00:
And so the purpose of this approach is to allow the correct person to step in and certify a claim.

[00:36:59] Speaker 00:
after the contracting officers entered the final decision, and it's before Board of Contract Appeals.

[00:37:04] Speaker 00:
So I agree with you that that's an important point, that you have someone who's actually on the hook for the contractor.

[00:37:10] Speaker 05:
The idea here is to allow that kind of correction to occur later, whereas... Is it fair to say that as you've stood here today, you have not defended the board's opinion to the extent that it held

[00:37:25] Speaker 05:
that only technical defects qualify for defective certification?

[00:37:30] Speaker 00:
Yes, Your Honor, because I think that that approach is looking at a distinction between technical and the sort of grossly negligent sort of behavior that's described in the draft bill and the bill.

[00:37:45] Speaker 00:
And so we don't think you need to get there.

[00:37:47] Speaker 00:
We think that's an intent question that need not be considered, because this is so far, as I said, a difference in degree becomes a difference in kind, and we think that that's the case here.

[00:37:55] Speaker 05:
Thank you, Mr. Long.

[00:37:57] Speaker 05:
Mr. Schaeffer will restore three minutes of rebuttal time.

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

[00:38:04] Speaker 02:
I want to come back to the plain language of the statute, because that's where the court is supposed to start with.

[00:38:09] Speaker 02:
And one phrase that we haven't talked about in 41 U.S.C.

[00:38:14] Speaker 02:
7103b3 is an attempted certification, because the statutes, the 1992 amendment says that

[00:38:23] Speaker 02:
The contracting officer is supposed to notify the contractor in writing of the reasons why any attempted certification was found to be defective.

[00:38:31] Speaker 02:
And we would say that under any analysis, the DAI certification letter at page 29 of the appendix is an attempted certification.

[00:38:40] Speaker 02:
And with regard to the various CDA elements that government counsel was talking about, the DAI letter meets those because it says, in a sense, we are invoking

[00:38:53] Speaker 02:
the Contract Disputes Act.

[00:38:55] Speaker 02:
It says these sponsored claims are submitted in accordance with the Contract Disputes Act.

[00:38:59] Speaker 02:
Now, that's not the magic language.

[00:39:01] Speaker 02:
That's not perfect.

[00:39:02] Speaker 02:
But it is certainly defective in the sense that it didn't have every single word of the Contract Disputes Act.

[00:39:07] Speaker 02:
So it didn't meet the formal requirements, but it was an attempt to meet them.

[00:39:11] Speaker 02:
And then they said there was a sound basis for these claims.

[00:39:14] Speaker 02:
And when they said that, they were talking about the Trans America case and the Turner case that says that a

[00:39:20] Speaker 02:
A prime contractor should have good grounds for relying on a subcontractor's certification.

[00:39:26] Speaker 02:
And so they were trying to take advantage of that.

[00:39:29] Speaker 02:
The August letter, the second letter that they submitted, we agree that there's virtually no daylight between those two letters.

[00:39:36] Speaker 02:
And if you look at that letter, it was in response to the contracting officer's statement that said, you never submitted any certification.

[00:39:44] Speaker 02:
And that's critical.

[00:39:45] Speaker 02:
And that's in Appendix 122.

[00:39:47] Speaker 02:
In response to DAI's letter,

[00:39:49] Speaker 02:
The contracting officer said, you never submitted a prime contractor certification.

[00:39:54] Speaker 02:
All we have is the subcontractor certification.

[00:39:56] Speaker 02:
And DIA didn't understand that, because they had had their official sign a letter that said we were invoking the CDA certification requirements.

[00:40:04] Speaker 02:
So they tried to explain in the second letter, which they said it was a supplement, that relying on the advice of legal counsel, they were relying on the Trans America case, which allows a prime contractor

[00:40:17] Speaker 02:
to sponsor a subcontractor claim as long as they have good grounds.

[00:40:20] Speaker 02:
And that's what they were trying to accomplish.

[00:40:24] Speaker 02:
And another point I wanted to make that we're maybe losing sight of is that at the end of the day, the government's protected because the contractor files the claim they want to get paid.

[00:40:35] Speaker 02:
But the statute, and I think Congress may have been ingenious in coming up with this, basically they say to the contractor, you will never get paid unless you properly certify.

[00:40:44] Speaker 02:
Because the 1992 amendment says,

[00:40:46] Speaker 02:
prior to entry of a final judgment by a quarter board, the quarter board shall require a defective certification to be corrected.

[00:40:54] Speaker 05:
So this idea that... To be clear, Mr. Schaefer, even if we were to side with you and consider this to be a defective certification that was deemed denied, we then just reverse and remand for the consideration of the merits of the claims.

[00:41:07] Speaker 05:
We're not resolving these claims here today, correct?

[00:41:11] Speaker 02:
Absolutely.

[00:41:11] Speaker 05:
So the contracting officer will decide whether these amounts should or should not be paid.

[00:41:17] Speaker 02:
Right.

[00:41:17] Speaker 02:
And ultimately, the Board of Contract Appeals, if necessary, will go through that.

[00:41:20] Speaker 02:
We're seeking our day in court.

[00:41:22] Speaker 02:
And because the board viewed it as jurisdictional, there was never discovery or the other.

[00:41:27] Speaker 02:
due process rights that a contractor normally has when they're pursuing a claim against the government.

[00:41:32] Speaker 02:
They were deprived of that because the board had treated it as jurisdictional when it's something that can be fixed under the 1992 amendment.

[00:41:39] Speaker 02:
But my point was, at the end of the day, even if we prove up that we're entitled to every penny of our costs, still, the contractor does not get paid.

[00:41:47] Speaker 02:
They can't go to the judgment fund.

[00:41:48] Speaker 02:
They can't get a judgment from the board until they have a proper certification.

[00:41:52] Speaker 02:
So this will be fixed.

[00:41:53] Speaker 02:
And I think that's what Congress had in mind,

[00:41:56] Speaker 02:
Contracting officer would tell the contractor okay, we have to cut you off.

[00:42:00] Speaker 05:
You're well beyond your time.

[00:42:01] Speaker 05:
Mr. Schaefer I think both counsel for their argument.

[00:42:04] Speaker 05:
It was very helpful the court will take this case under submission