[00:00:23] Speaker 04:
Okay, the next target case is number 19, 1157, ECC Centcom Constructors against the Secretary of the Army.

[00:00:33] Speaker 04:
Mr. Hare.

[00:00:37] Speaker 02:
Good morning, Your Honors.

[00:00:38] Speaker 02:
May it please the Court.

[00:00:42] Speaker 02:
In this case, appellant believes that the contracting officer

[00:00:46] Speaker 02:
for this construction project on a Navy transient enlisted quarters in Manama base Bahrain, abused his discretion in terminating ECC, our client, by default.

[00:01:01] Speaker 02:
We believe this case is consistent with this court's prior rulings in Lisbon Constructors versus United States and Darwin Construction Company versus United States.

[00:01:12] Speaker 02:
Lisbon has been cited approvingly in 108 cases, most recently, interestingly enough, in Al-Yutique Manufacturing Contractors versus United States.

[00:01:23] Speaker 02:
The site on that is 143 Federal Claims, 689.

[00:01:27] Speaker 02:
That case has actually been docketed in this court on September 4.

[00:01:32] Speaker 02:
ECC maintains the contracting officer abused his discretion in several ways that are very similar to Lisbon, Darwin, and Al-Yutique.

[00:01:42] Speaker 02:
One theme that runs through all these cases is this court's concern about the requirement that a contracting officer who terminates for default evaluate whether the terminated defaulting contractor could complete the project sooner than the replacement contractor could be procured.

[00:02:06] Speaker 02:
In the hearing, we asked a number of questions of the contracting officer different ways.

[00:02:11] Speaker 02:
What kind of process did you go through?

[00:02:12] Speaker 02:
How did you make your determination on if the ECC, the allegedly defaulting contractor, could complete the project sooner than a replacement contractor?

[00:02:23] Speaker 02:
There is no real clear answer in the record that the contracting officer would never describe what process he went through.

[00:02:32] Speaker 02:
The clearest example in the appendix at appendix page 1014 and then onto the top of appendix 1015

[00:02:41] Speaker 02:
kind of captures the issue we had.

[00:02:44] Speaker 02:
There was no evidence in the record, no discovery was ever provided and no testimony was ever had that showed that the contracting officer did anything other than simply write a memo, a termination memo.

[00:02:57] Speaker 02:
That said, he considered whether the project could be completed faster by ECC or a replacement contractor.

[00:03:05] Speaker 04:
Is that accurate?

[00:03:06] Speaker 04:
He had evidence as to the state of completion of the project?

[00:03:12] Speaker 02:
had evidence as to the state of completion of the project, but that doesn't go to the material issue of whether he evaluated whether or not the ECC, the defaulting contractor, could have completed the project sooner than bringing in what ultimately was a replacement contractor named Vertex.

[00:03:29] Speaker 02:
There's a line of cases that the government cites, DCX, Empire,

[00:03:33] Speaker 02:
Imperial.

[00:03:34] Speaker 02:
And in those cases, they're different from the Lisbon line of cases.

[00:03:39] Speaker 02:
Lisbon stands for the proposition that the contracting officer is bound to exercise reasonable discretion in that terminating decision.

[00:03:49] Speaker 02:
That issue in these DCX and the other lines of cases is never gotten to or it's dealt with in a very clear evidentiary way.

[00:03:59] Speaker 04:
So... Are you saying that the discretion was abused when the project, I think it was undisputed, was only half done at the completion time?

[00:04:11] Speaker 02:
I believe the evidence that ECC put forward showed that the project was 64% complete at the time of termination and that's in the record.

[00:04:18] Speaker 02:
The issue, the distinction between the two cases, or the two lines of cases that this court has ruled on, is just because the contractor is late, even if we stipulate, and Al Utique at page 699 is very clear about this point, even if you stipulate that the defaulted contractor is late, is missing the contract completion date,

[00:04:42] Speaker 02:
That's not the end of the inquiry in terms of whether the contracting officer has abused his discretion.

[00:04:47] Speaker 02:
There's a separate question, and it goes to what presumably is a policy position of the United States government.

[00:04:54] Speaker 02:
The FAR in section 202-3F states, 3F4, states that it's required before the term is shall in the regulation.

[00:05:10] Speaker 02:
it's required that the government contracting officer review whether the project could be completed faster by the defaulting contractor or whether it can be completed faster by repercuring and completing and presumably the policy rationale behind that is

[00:05:25] Speaker 02:
The government already includes a liquidated damages clause in its contracts.

[00:05:29] Speaker 02:
So if the government is correct, if the contracting officer is correct, and the contractor actually is inexcusably late.

[00:05:37] Speaker 03:
Well, first of all, we do have case law that says not every single one of those factors in that particular regulation need to be actually considered, weighed, and with articulated findings by the contracting officer.

[00:05:54] Speaker 03:
Secondly, it seems like the contracting officer actually did consider this factor, but ultimately concluded that he had lost faith in ECC's unreliable estimates.

[00:06:09] Speaker 03:
And I think that's basically what he said.

[00:06:11] Speaker 03:
He said ECC is blown well past the time of completion provision in this contract.

[00:06:18] Speaker 03:
And when ECC comes forward with renewed

[00:06:23] Speaker 03:
proposals for end dates, it's already falling behind schedule for those renewed proposals.

[00:06:30] Speaker 03:
So I've really now, as the contracting officer that's responsible for managing this situation, have lost faith in the ECC's ability to even give me a reliable new contract completion date.

[00:06:46] Speaker 03:
When you're at a loss like that, we can debate whether that was a reasonable conclusion by the contracting officer.

[00:06:53] Speaker 03:
But given that the contracting officer did make that conclusion, it seems like he is telling us that he isn't in a position anymore to even weigh the relative timeliness of sticking with ECC versus going with another contractor.

[00:07:10] Speaker 03:
So I'd like you to explain that.

[00:07:12] Speaker 02:
Sure.

[00:07:14] Speaker 02:
DCX stands for the proposition that a contracting officer is not bound, as you say, by the seven specific factors he's required to review.

[00:07:29] Speaker 02:
But it does say that it does provide useful evidence as to whether or not the contractor may have abused his discretion.

[00:07:37] Speaker 02:
I think the issue here is not whether or not ECC is late.

[00:07:42] Speaker 02:
I think the issue here that we think is important

[00:07:44] Speaker 02:
and it serves the government's policy position behind 3F4, is that there's already a remedy for the government in the event that they are correct and the contractor is late.

[00:07:59] Speaker 02:
So what happened in this case, and it's very similar to- Well, it's not just being late.

[00:08:03] Speaker 03:
per se, it's being late and then coming up with new proposals and then falling behind schedule with those unilaterally proposed schedules, and then trying now for the poor contracting officer to guesstimate the reliability of yet another new proposed schedule from ECC.

[00:08:24] Speaker 02:
So the government, the Corps of Engineers had a scheduler on the project.

[00:08:27] Speaker 02:
His name was Raymond Sunquist.

[00:08:29] Speaker 02:
And Mr. Sundquist consulted with the contracting officer on the submission of ECC's recovery schedule.

[00:08:38] Speaker 02:
And if you look in the appendix at page 1085 and 1086, the Corps of Engineers professional scheduler on the project came to the conclusion that ECC would have finished the project by November of 2016.

[00:08:57] Speaker 02:
That's both in the in the hearing transcript, which I just cited to you.

[00:09:01] Speaker 03:
It's also in the contemporaneous memorandum Dated March 16th of 2016 about 1082 Pardon me a 1082 a 1085 no, I'm talking about a 1082 where he says So it can be done.

[00:09:21] Speaker 03:
I mean, it's not like it's impossible.

[00:09:22] Speaker 03:
Is it probable probably not and

[00:09:25] Speaker 03:
And he goes further and says, I would say not probable, only because in the history of this project, they have struggled to meet their own schedules all the way through.

[00:09:35] Speaker 03:
And then further, I would say there is a very low probability that they would meet November 19.

[00:09:40] Speaker 03:
So that's Mr. Sunquist, right?

[00:09:44] Speaker 02:
Yes, but that testimony, which was taken about a year and a half after the project was over, or after they were terminated, contradicts what Mr. Sunquist said contemporaneously.

[00:09:54] Speaker 02:
in appendix 1142.

[00:09:56] Speaker 02:
So what happened was on the project, Mr. Sunquist wrote a memo, a two-page memo, which is appendix 1141 and 1142, analyzing the recovery schedule.

[00:10:08] Speaker 02:
And he basically says in the memo, it looks like this is a more realistic recovery schedule.

[00:10:14] Speaker 02:
ECC seems to be responding to some of the concerns we've raised about subcontractor manpower and things of that nature.

[00:10:20] Speaker 02:
And then in his recommendation, which you see in the last paragraph at the bottom of Appendix 1142, in the third sentence he states, or third line, he states, it appears to be projecting an end of project date that should be achievable.

[00:10:33] Speaker 02:
And if you look back up four paragraphs up from there, he says, the narrative states that the critical deliveries are the switch gear and the doors, and that is what is driving the new end of project date from September to November 2016.

[00:10:45] Speaker 02:
If we go back to the appendix, and you're citing to,

[00:10:50] Speaker 02:
Page 1082, which is where the government's lawyer was asking him to speculate on hypotheticals, which were not based on the contemporaneous documentation that he provided.

[00:11:03] Speaker 02:
You'll notice then on cross-examination, which is 1085 and 1086, I asked, starting on line 14, I asked Mr. Sunquist, and I just want to confirm that prior to the termination date,

[00:11:15] Speaker 02:
The advice that you gave or the analysis that you gave to Mr. DiMatti was that November 30th project date in the schedule was achievable if the manpower remained at the needed level and materials remained as planned.

[00:11:25] Speaker 02:
Is that correct?

[00:11:26] Speaker 02:
And he says, yes.

[00:11:29] Speaker 02:
And then my follow-up question to that was, in your statement, if the manpower remains at the needed level, from that I infer that from what you were analyzing, they, meaning the ECC, had supplied manpower consistent with this recovery schedule for at least a few months prior to

[00:11:45] Speaker 02:
And he says, that's my recollection, yes.

[00:11:47] Speaker 02:
The problem was the contracting officer didn't actually support any of his conclusions that he wrote in his memorandum.

[00:11:53] Speaker 02:
They never produced a single email.

[00:11:55] Speaker 02:
They never produced a single document.

[00:11:57] Speaker 02:
No contemporaneous record to support the conclusion that he made.

[00:12:01] Speaker 02:
And it is particularly noteworthy that there were no emails because the contracting officer was here in DC.

[00:12:06] Speaker 02:
The project's in Bahrain.

[00:12:07] Speaker 02:
The time difference means that most of the interaction between the DC folks and the project folks in Bahrain was done by email because of the time change.

[00:12:19] Speaker 02:
I think going to our argument that the contracting officer abused his discretion,

[00:12:24] Speaker 00:
So the schedule, the only person from the government side that... What about the fact that the contracting officer said, for example, on 10-14, that he just didn't trust ECC because of its past history, and he talks about a project where it took them over a year to finish the last 5% of the project.

[00:12:45] Speaker 00:
And so he just, based on their past history, he just can't believe that they're going to do it.

[00:12:51] Speaker 00:
I mean, isn't there even the point, even the

[00:12:54] Speaker 00:
The thing you pointed me to from the analyst on the ground said, well, if this effort is worth one more chance, then maybe it can be monitored closely so we'll know if they're going to screw up, basically.

[00:13:08] Speaker 00:
This is paraphrasing, so I don't have that page in front of me.

[00:13:10] Speaker 00:
But both of these individuals seem, at a minimum, frustrated recognizing that ECC has had multiple opportunities to comply with which it's failed to do.

[00:13:20] Speaker 00:
And that is impacting the contracting officer's decision as to whether to trust ECC to be able to finish the project under any set of circumstances.

[00:13:29] Speaker 00:
Yes, it could be feasible.

[00:13:31] Speaker 00:
That doesn't mean it's going to happen.

[00:13:32] Speaker 00:
And the contracting officer has to figure out whether he thinks it's going to happen.

[00:13:36] Speaker 00:
And here he says he doesn't think he can trust that they can.

[00:13:39] Speaker 02:
But that doesn't alter his mandatory responsibility to evaluate whether ECC, limping along or however otherwise the contracting officer wanted to characterize it, could complete the project sooner.

[00:13:50] Speaker 02:
than a replacement contractor.

[00:13:52] Speaker 02:
There's testimony.

[00:13:53] Speaker 00:
What do you say, could?

[00:13:54] Speaker 00:
It's not could.

[00:13:55] Speaker 00:
It's kind of would, right?

[00:13:56] Speaker 00:
I mean, does he believe ECC would actually get it done sooner, given their past history of many failures to do so?

[00:14:07] Speaker 00:
Bring in a different contractor that doesn't have a past history of all those failures.

[00:14:11] Speaker 00:
Maybe you could trust them more, and therefore you have greater confidence.

[00:14:15] Speaker 02:
Well, on appendix 1142 in that last paragraph, his own professional scheduler told him they

[00:14:20] Speaker 02:
He says, as far as recovery schedule, this is one of the more thorough attempts.

[00:14:24] Speaker 02:
With manpower loading, subcontractor buying... He told them they could.

[00:14:27] Speaker 00:
He didn't say he thought they would.

[00:14:29] Speaker 00:
Do you understand the difference?

[00:14:31] Speaker 02:
He said should, if you look at line three.

[00:14:33] Speaker 02:
Should be achievable.

[00:14:35] Speaker 00:
It should be achievable.

[00:14:36] Speaker 00:
But then he says, if this effort warrants one more chance to the contractors continuing towards finishing the project, I think this plan is one that can be monitored and tracked from the field perspective.

[00:14:45] Speaker 00:
If he didn't have doubt about whether they would actually get it done, he wouldn't have to throw in there.

[00:14:50] Speaker 00:
We can stay on top of them and watch them closely.

[00:14:53] Speaker 00:
so that we'll know if they're not going to do it, because obviously everybody was suspicious.

[00:14:57] Speaker 00:
I mean, ECC had had many shots at completion.

[00:15:01] Speaker 00:
Let's see, the stats.

[00:15:02] Speaker 00:
As of the completion date, you're only 37% complete.

[00:15:05] Speaker 00:
37%, that's not close.

[00:15:08] Speaker 02:
That's not, that was at the time he was entertaining the show cause order, and that

[00:15:13] Speaker 02:
percentage was from the September 2015 project schedule.

[00:15:19] Speaker 02:
By the time they reached the termination date in April of 2016, the government signed off on a pay request that showed 63% completion.

[00:15:30] Speaker 02:
I don't believe it's actually in the appendix, but it's in the trial record.

[00:15:38] Speaker 04:
that part of your argument is that they didn't bring in a different contractor.

[00:15:43] Speaker 04:
They kept the same personnel except for, what, the topmost management?

[00:15:48] Speaker 02:
So they did bring in a replacement contractor.

[00:15:50] Speaker 04:
The replacement?

[00:15:51] Speaker 04:
They had a replacement.

[00:15:52] Speaker 04:
But then, all right, so but your argument, I thought you were putting great weight on that, other than having the insurer take over as the responsible person at top of the project, that everything else was the same.

[00:16:06] Speaker 02:
Vertex was the replacement.

[00:16:07] Speaker 02:
Is that correct?

[00:16:08] Speaker 02:
Your Honor, Vertex was the replacement contractor.

[00:16:10] Speaker 02:
Vertex hired 11 of the 13 management personnel that were formerly ECC employees.

[00:16:17] Speaker 02:
They went from being ECC management employees to being Vertex, the takeover contractor management employees.

[00:16:22] Speaker 02:
They also retained the same

[00:16:25] Speaker 02:
what's called super subcontractor, Kohiji.

[00:16:27] Speaker 02:
Kohiji was doing 90% of the actual work.

[00:16:31] Speaker 00:
Just out of curiosity, did the contracting officer know at the time he made the decision that that's what their intention was?

[00:16:38] Speaker 02:
He did.

[00:16:39] Speaker 02:
And in fact, he was relieved of his duties as contracting officer a few months after the replacement contractor.

[00:16:46] Speaker 02:
And Major Hahn was the replacement contractor.

[00:16:49] Speaker 02:
Major Hahn testified at the hearing at appendix

[00:16:54] Speaker 02:
at Appendix 701 and 702 that Mr. DiMatti's decision to keep the same management and subcontractor was unreasonable.

[00:17:10] Speaker 00:
Well, what do you think he would have thought of the decision to keep ECC?

[00:17:15] Speaker 00:
If he thought keeping a significant portion of ECC's employees was unreasonable, what do you think he would have thought about keeping ECC?

[00:17:23] Speaker 02:
It's a distinction without a difference because you basically took 500 laborers and 11 management personnel and changed out literally two, Vertex put two people in, two management people.

[00:17:39] Speaker 02:
So the project was virtually unchanged from a work performance standpoint.

[00:17:44] Speaker 02:
You had the same team, the same management personnel, you just had a different

[00:17:50] Speaker 02:
corporate banner at the top, if you will.

[00:17:55] Speaker 02:
And in fact, there's also testimony in the appendix from ECC's owner, Paul Sabrewal, his CEO, where at the time of termination, he informs Mr. DiMatti.

[00:18:08] Speaker 02:
This was in the trial transcript testimony.

[00:18:11] Speaker 02:
He informs Mr. DiMatti, if you terminate us, it's going to take a replacement contractor much longer to complete this project.

[00:18:19] Speaker 02:
So practically speaking, they terminated.

[00:18:23] Speaker 02:
They kept all the same management team.

[00:18:24] Speaker 02:
They kept the same super subcontractor who was doing all the work.

[00:18:27] Speaker 02:
They added two and a half months of additional time in order to negotiate the takeover contract with Vertex.

[00:18:41] Speaker 02:
What's interesting at appendix 1146 and 1147, after this changeover takes place, you can see in these slides.

[00:18:49] Speaker 02:
So at the time of termination, ECC was averaging 523 men per day in March of 2016.

[00:18:59] Speaker 02:
They were terminated April 12 of 2016.

[00:19:03] Speaker 02:
If you turn to the next slide, which is appendix 1147, so now you have Vertax in charge with the same

[00:19:11] Speaker 02:
subcontractor and the same laborers.

[00:19:15] Speaker 02:
And you can see for the months of August, September, October, November, and December.

[00:19:19] Speaker 02:
They never even approach the manpower loading that the number of workers out on the job site that ECC had when they were terminated.

[00:19:27] Speaker 03:
This is a different question, though.

[00:19:30] Speaker 03:
This is the question of whether it was reasonable to have hired this other contractor.

[00:19:35] Speaker 03:
And that's a different and irrelevant question to whether it was reasonable for this contracting officer to terminate ECC when it did, based on everything that had happened with ECC and its failures to meet any deadlines.

[00:19:49] Speaker 02:
But I think the failing the contracting officer made was his failure to evaluate whether ECC or Vertex or some other company could have completed the project faster.

[00:19:59] Speaker 02:
At the testimony, excuse me, in July of 2017 when the hearing took place, there was testimony and it's in the appendix eight, page eight.

[00:20:15] Speaker 02:
The board found that as of July and August 2017,

[00:20:19] Speaker 02:
Vertex had not completed the project.

[00:20:22] Speaker 02:
Now we go back to Mr. Sunquist's contemporaneous memorandum and subsequent testimony at the hearing where he said, ECC, even with all of its problems, if it had not been terminated, would have completed by November of 2016.

[00:20:35] Speaker 02:
So the government terminates.

[00:20:38] Speaker 02:
They now get the project more than one year later, which is, and the contracting officer didn't do the required analysis,

[00:20:46] Speaker 02:
from 3F4 where he was supposed to, he's required to evaluate whether in this case ECC or another contractor could complete the project faster.

[00:20:56] Speaker 02:
It's important because this project was for transient enlisted quarters sailors.

[00:21:01] Speaker 02:
So there was other testimony in the evidence that where the contracting officer testified he had talked to the base commander and that it was very important to the government that they get the structure completed as fast as possible to get the sailors off the ship.

[00:21:16] Speaker 02:
They were in the harbor.

[00:21:17] Speaker 02:
So I think the failing of the government contracting officer was not doing the evaluation, because if he had done the evaluation, it would have demonstrated to him that ECC, even though it was allegedly in schedule default, still would have completed the project faster than the takeover contractor.

[00:21:36] Speaker 04:
Let's hear from the government.

[00:21:38] Speaker 04:
We'll save you a rebuttal, John.

[00:21:40] Speaker 02:
Thank you, Your Honor.

[00:21:46] Speaker 01:
May it please the court.

[00:21:50] Speaker 01:
The board found that ECC was in default without excuse and accordingly upheld the default termination.

[00:21:57] Speaker 04:
ECC doesn't... I think, and the thing that troubles me, it's clear they were in default.

[00:22:04] Speaker 04:
It's more likely than not perhaps they overbid or overestimated or whatever or the contracting officer felt that they had make representations

[00:22:15] Speaker 04:
that they had a sense they might not be able to meet.

[00:22:20] Speaker 04:
I think it's hard to argue with that.

[00:22:23] Speaker 04:
But after they were in default, they changed one or two people at the top and kept on going as they had before to complete the contract.

[00:22:37] Speaker 04:
And why isn't that a significant factor that should have been taken into

[00:22:44] Speaker 04:
consideration at the time the contracting officer, when it was clear that they were in default, in terms of remedying the default.

[00:22:56] Speaker 01:
So there are a number of issues there.

[00:22:58] Speaker 01:
The first is, before even getting into the factual analysis, we have to say, how is this going to affect the conclusion as to whether they were or were not in default, which is the issue.

[00:23:09] Speaker 01:
So assuming we clear that hurdle somehow with things that happen afterwards.

[00:23:15] Speaker 01:
The second point I'd want to make on that is the record reflected that the government did not think that it was OK for the same management to be managing the project.

[00:23:26] Speaker 01:
The government was told by the sureties contractor vertex that they wanted to change the people at the top.

[00:23:33] Speaker 04:
It looks as if they didn't care for the management style or emphasis or whatever.

[00:23:40] Speaker 04:
But they didn't.

[00:23:41] Speaker 04:
We're told.

[00:23:42] Speaker 04:
They didn't change anything else.

[00:23:44] Speaker 04:
The subcontractor was doing all the work.

[00:23:46] Speaker 04:
They didn't change the subcontractor.

[00:23:49] Speaker 04:
Isn't that where the delay arose in the subcontractor's performance?

[00:23:55] Speaker 01:
In the government's estimation, that subcontractor, super subcontractor that they referred to, wasn't actually the problem.

[00:24:02] Speaker 01:
The government's belief was that it was ECC's management.

[00:24:05] Speaker 01:
One of the claims that are assertions that really didn't get addressed by the board because the board just found they were in default

[00:24:12] Speaker 01:
that excuse was this question of whether they were paying.

[00:24:14] Speaker 00:
Yeah, failure to pay.

[00:24:15] Speaker 00:
So if you take ECC out of the equation, maybe Vertex will actually pay them, and they'll show up and do the work.

[00:24:20] Speaker 01:
Certainly, that was the government's expectation.

[00:24:25] Speaker 01:
But just more broadly, when we look at the arguments that ECC presented to the board and is now presenting to this court,

[00:24:33] Speaker 01:
The threshold question of how does this show that you weren't in default is?

[00:24:38] Speaker 00:
So you're saying that when a contractor is in default, the government has a right to terminate that contract.

[00:24:44] Speaker 00:
And they don't have to, incident to that determination or as part of that determination, decide for sure whether it would be better to have someone else complete the contract or not.

[00:24:55] Speaker 00:
The government can simply terminate and then move forward to have the work done in any manner it sees fit.

[00:25:01] Speaker 01:
That's right.

[00:25:02] Speaker 01:
The government gets contract rights like anyone gets contract rights.

[00:25:05] Speaker 01:
And if the conditions are there for a default, it's for the government to decide what's the best way forward.

[00:25:10] Speaker 01:
There are factors that, sure, the government is supposed to consider those.

[00:25:13] Speaker 01:
That's what the FAR says.

[00:25:14] Speaker 01:
But that doesn't mean that there's some right, that that creates a source of a right for the contractor to then add a second layer of, well, yes, you might have the contract right.

[00:25:23] Speaker 01:
But now we also need to do some sort of like an APA review of government decision making.

[00:25:28] Speaker 01:
There's no source for that kind of right.

[00:25:30] Speaker 01:
And so certainly, the government needs to take into a variety of factors into account to decide, how should we move forward?

[00:25:36] Speaker 01:
But when it comes to the litigation of whether the default will be upheld or not upheld, what the contractor needs to show is that they weren't in default.

[00:25:45] Speaker 01:
And here, ECC just isn't even making those arguments.

[00:25:49] Speaker 00:
There's not really just a separate cause of action that allows ECC to dispute the remedy the government chooses to undertake in light of the default.

[00:25:58] Speaker 00:
There is no separate cause of action they can bring.

[00:26:03] Speaker 00:
We were in default, but the government didn't choose the best interests to the government remedy.

[00:26:10] Speaker 00:
Therefore, we can bring a claim.

[00:26:12] Speaker 00:
I don't know.

[00:26:12] Speaker 00:
It's like a qui tam action or something.

[00:26:14] Speaker 00:
I don't know what it is.

[00:26:15] Speaker 01:
I do not believe that there is any right or clause or basis for ECC to be bringing any claim like that.

[00:26:23] Speaker 01:
To be sure, a contractor can bring other claims.

[00:26:25] Speaker 01:
They can say the government acted in bad faith.

[00:26:27] Speaker 01:
They can say all kinds of things about the government's conduct.

[00:26:31] Speaker 01:
But without those, there isn't just some additional layer where these decisions by the government are subject to a kind of a review of government decision making.

[00:26:42] Speaker 00:
What's in the best?

[00:26:43] Speaker 00:
Even if there was a best interest

[00:26:46] Speaker 00:
laws, which there isn't, the idea that we would review whether the government made the right choice of who to go forward with once they deemed the contract defaulted.

[00:26:58] Speaker 00:
Even if we were to do that, here isn't there evidence regarding why the contracting officer, maybe he didn't make all the best judgments, but why he made the determinations he did about ECC just can't be trusted for completion purposes.

[00:27:14] Speaker 01:
Right, so even if we get through all these legal hurdles of why is this even matter, why is it material, we're just ending up with ECC disagreeing with the board on its factual conclusions, but there's definitely substantial evidence for all those conclusions that the board found.

[00:27:30] Speaker 01:
The board found the contracting officer did do the right job, did look at the right factors, did make reasonable determinations on these factors, and just didn't have a basis

[00:27:37] Speaker 01:
to trust that ECC would be able to get the job done on any schedule.

[00:27:43] Speaker 01:
It just didn't have any schedule from ECC.

[00:27:45] Speaker 01:
So there's no way to compare it to what somebody else could do if you don't think that ECC can give you any reliable schedule.

[00:27:50] Speaker 01:
But at the end of the day, the question of best interest, it's for the government to decide what's in the best interest.

[00:27:55] Speaker 01:
There's not some decision for ECC or even for the court to try to decide what's in the best interest of the government.

[00:28:00] Speaker 01:
That's just something internally for the government to consider.

[00:28:04] Speaker 01:
For these reasons and those expressed more in greater detail in our brief, we respectfully request that the court affirm the decision of the board.

[00:28:16] Speaker 04:
Thank you.

[00:28:17] Speaker 04:
Mr. Hare.

[00:28:18] Speaker 02:
Thank you, Your Honor.

[00:28:20] Speaker 02:
On the issue of best interest, FAR 49-401B specifically mandates, they use the term shall, that any default termination shall be in the best interest of the government.

[00:28:33] Speaker 02:
If you look at

[00:28:34] Speaker 02:
Appendix 635 and 636 there is a The contracting officer was being questioned about what benefit the government got from terminating ecc on line 5 the question states What benefit did the government get from terminating ecc?

[00:28:52] Speaker 02:
the contracting answer answers what benefits question mark and The question is what benefits did you get and the contracting officer responds?

[00:29:01] Speaker 02:
I would say there wasn't any benefit at all

[00:29:03] Speaker 02:
This was a loss that the government gave up.

[00:29:06] Speaker 02:
And then also addressing the issue of late is late and the right of the government to terminate for default simply on the basis that a contractor is behind schedule or can't meet the contract completion date.

[00:29:20] Speaker 02:
In Alutek, which at 699, there is a specific statement

[00:29:32] Speaker 02:
in the last paragraph about the fourth line down, where the court states, again, the court notes that the government cannot satisfy its burden by merely showing that the contractor was behind schedule.

[00:29:45] Speaker 02:
And the references there are to McDonnell Douglas 12 citing Lisbon again.

[00:29:51] Speaker 02:
So I think the issue is not, as the government presents it, that if the contractor is behind schedule and the contracting officer determines

[00:30:01] Speaker 02:
that he doesn't think the contractor can meet the contract completion date.

[00:30:04] Speaker 02:
That doesn't give the absolute right to terminate.

[00:30:08] Speaker 00:
If that were the case... But just to be clear, were you behind schedule or at the time of the termination had the completion date already passed?

[00:30:14] Speaker 02:
The completion date had already passed.

[00:30:15] Speaker 00:
So this case isn't like the ones you just cited, where the contractor in those cases was behind schedule, but the completion date had not yet passed.

[00:30:22] Speaker 00:
So I guess, conceivably, those could have been completed.

[00:30:25] Speaker 02:
There's a mix of cases on this.

[00:30:27] Speaker 02:
In some of them, their contractor was past the completion date.

[00:30:30] Speaker 02:
Others, they weren't.

[00:30:32] Speaker 02:
There was an interesting.

[00:30:33] Speaker 00:
So is it your view that there, what is the cause of action that you have to bring here?

[00:30:37] Speaker 00:
How is it that you're entitled

[00:30:41] Speaker 00:
And what are you entitled to?

[00:30:42] Speaker 02:
We believe the contractor abused his discretion because he didn't evaluate as required by the FAR.

[00:30:46] Speaker 00:
In deciding whether you were in default, he abused his discretion?

[00:30:50] Speaker 00:
No, no.

[00:30:50] Speaker 00:
OK, so he did not abuse his discretion in deciding whether you're in default.

[00:30:54] Speaker 02:
Correct.

[00:30:54] Speaker 02:
He abused his discretion by refusing to evaluate whether ECC, the defaulting contractor, could have completed the project sooner than a replacement contractor.

[00:31:04] Speaker 03:
And even though DCX says that the contracting officer doesn't have to itemize and explain and discuss every single one of these regulatory factors, you're saying the contracting officer was in error here because the particular factor you want him to address, he was required to address.

[00:31:23] Speaker 02:
If you look at this from an outcome standpoint, so the failure to evaluate, the record shows that the failure to evaluate

[00:31:32] Speaker 02:
ended up costing the government a lot more money, right?

[00:31:35] Speaker 02:
So if the contracting officer is correct.

[00:31:37] Speaker 03:
That's an ex-post analysis.

[00:31:39] Speaker 03:
We're talking about ex-ante at the time in April when

[00:31:44] Speaker 03:
This contracting officer basically saw ECC not being able to meet not only the original deadline, but was falling behind ECC's own proposed new deadlines and was losing faith in their ability to perform even to new proposed deadlines.

[00:32:00] Speaker 03:
I don't know why they needed to try to go further and say, well, now let me speculate what date I think ECC might eventually be able to hit.

[00:32:11] Speaker 03:
Despite what they're telling me, because I can't rely on what they're telling me.

[00:32:15] Speaker 03:
And now let me go ahead and compare that to see what some unknown new contractor might be able to do.

[00:32:21] Speaker 02:
But the default termination requirement mandates that the government do exactly that.

[00:32:27] Speaker 02:
They have to be forward-looking.

[00:32:29] Speaker 02:
The requirement is, OK, you're late.

[00:32:33] Speaker 02:
Let's see if you can still finish sooner.

[00:32:35] Speaker 02:
than bringing somebody else in and that requires both with respect to any incumbent defaulting contractor as well as any potential new contractor it requires

[00:32:46] Speaker 03:
the contracting officer to estimate, essentially, whether he thinks based on... So you would want us to say, even though DCX says that the contracting officer isn't required to consider every single one of these factors, in this particular case, this particular contracting officer was required to consider this particular factor, or at least more than he had done in this particular instance?

[00:33:10] Speaker 02:
This particular contracting officer, like every single

[00:33:13] Speaker 02:
default termination circumstance in every single government contract was required to make a forward-looking analysis as to whether the defaulting incumbent could complete the project faster than a replacement contractor.

[00:33:26] Speaker 02:
And the importance of that, as stated in LUTEC, is that they state at page 690, 691, the improvident termination for default delayed completion by approximately

[00:33:43] Speaker 03:
basically do a corollary to DCX.

[00:33:47] Speaker 03:
Not every factor has to be considered, but this factor has to be considered.

[00:33:50] Speaker 02:
DCX is different from the Lisbon line of cases because there was a jurisdictional determination of excusable delay at the trial level.

[00:33:59] Speaker 02:
And the same holds true for Empire and Imperial in that whole line of cases.

[00:34:02] Speaker 02:
That's a totally separate analysis, different line of questioning.

[00:34:06] Speaker 02:
That's where the merits of the delay were not

[00:34:12] Speaker 02:
were settled upon by the trial court and the boards in those various cases, depending on whether they're in the board or the court of federal claims.

[00:34:21] Speaker 02:
There was no dispute over abuse of discretion in the DCX empire and so forth.

[00:34:30] Speaker 02:
In some cases, it wasn't even brought up.

[00:34:32] Speaker 02:
In other cases, there was a determination at the trial level that the contracting officer did, in fact, go through the required analysis.

[00:34:40] Speaker 02:
Our argument is he didn't go through.

[00:34:42] Speaker 02:
the required analysis, and if he had gone through the required analysis, he would have relied upon his scheduler who told him that ECC was going to finish by November of 2016, which would have saved at least a year

[00:34:57] Speaker 02:
on the project, and if the government was right that in fact ECC was responsible for the delay, not only would they have gotten their project a year sooner, they would have been able to assess liquidated damages against ECC.

[00:35:09] Speaker 02:
That's the bargain they get for the harm that is supposedly caused by the delay, right?

[00:35:15] Speaker 02:
There's a liquidated damages clause in every construction contract of the government.

[00:35:18] Speaker 02:
So if the government is correct and they are late, but they can finish sooner,

[00:35:24] Speaker 02:
Vertex and the record certainly showed that they could have finished sooner than vertex then they would have received the project a year sooner They would have gotten the sailors off the ship into the transient listed quarters a year earlier, and they could have charged DCC for being late that's determination of the default is a drastic remedy As repeated in all of these lines of cases.

[00:35:48] Speaker 02:
It's a disfavored remedy

[00:35:49] Speaker 02:
The contracting officer didn't go through the required analysis, and he failed to make an evaluation of what was in the best interest of the government.

[00:35:57] Speaker 02:
We don't disagree with the government.

[00:35:59] Speaker 02:
It is the government's decision as to what is required in the government's best interest.

[00:36:07] Speaker 02:
There's no right created for the contractor.

[00:36:10] Speaker 04:
Anything else right?

[00:36:16] Speaker 04:
No.

[00:36:17] Speaker 02:
Thank you, Your Honor.

[00:36:17] Speaker 04:
Thank you.

[00:36:18] Speaker 04:
Thank you both.

[00:36:19] Speaker 04:
The case is taken under submission.