[00:00:00] Speaker 04:
This is number 19, 1885, black gunning industries against the United States.

[00:00:06] Speaker 04:
Mr. Sieloski.

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

[00:00:09] Speaker 00:
Good morning, Your Honor, and may it please the Court.

[00:00:12] Speaker 00:
Your Honor, we're here to discuss a bid protest matter involving a solid waste collection contract at Fort Benning.

[00:00:22] Speaker 00:
My client was one of two bidders under an IFB.

[00:00:26] Speaker 00:
And simply put, Your Honor, the procurement was just replete, rife with errors from the start.

[00:00:34] Speaker 00:
And those errors bled through and materially prejudiced my client in connection with the award decision.

[00:00:41] Speaker 00:
The award went to a contractor with known errors in its bid that were identified by the agency at the time and ignored.

[00:00:52] Speaker 00:
The bid was 30% below the government estimate.

[00:00:57] Speaker 00:
And again, Your Honor, the specific errors were identified by the government, but then never followed through on.

[00:01:03] Speaker 00:
So we are asking the court under the arbitrary and capricious standard to set aside the agency's action here and find it not in accordance with the law.

[00:01:12] Speaker 00:
And Your Honor, there are so many errors in this procurement, as you've seen in our briefs, that I'm going to focus on just three today.

[00:01:20] Speaker 00:
Your Honor, and just to lay those out in advance, the first thing I'd like to discuss is the awardee zero waste, I'll call them DWS today if that's okay or zero waste, did not accept all amendments to the procurement as is specifically required by the IFB.

[00:01:41] Speaker 00:
The second issue I'd like to discuss is that there was an obvious mistake or error in the bid in that it was on a reasonably low

[00:01:50] Speaker 00:
The government, again, specifically noted that error and required a bid verification but then ignored the indications in that bid verification received from the awardee or the, at that point, the apparent awardee that it did not understand it would not be providing all of the scope required under the IFP.

[00:02:12] Speaker 00:
And the third thing I'd like to discuss, Your Honor, is the differing information

[00:02:17] Speaker 00:
regarding the lay-down yard that was provided with different offerings.

[00:02:21] Speaker 01:
And at a minimum... Okay, on that third point, Mr. Swalski, this is Judge Teich.

[00:02:27] Speaker 01:
On that third point, what is the evidence in the record that they were supplied during the award process with different information as to the availability of the lay-down yard?

[00:02:42] Speaker 00:
The evidence in the record is that

[00:02:45] Speaker 00:
The lay-down yard, the cost of the lay-down yard was included in Mark Dunning's proposal but not in the... You're not answering my question.

[00:02:54] Speaker 01:
What evidence is there in the record that they were provided with different information as to the government supplying a lay-down yard?

[00:03:06] Speaker 00:
Well, at the risk, you know, that's the evidence that we have at that time is that one off or bid it and the other one didn't based on apparent assurances which as you see in our... Where are the apparent, where are the assurances reflected in the record where there was different information given?

[00:03:28] Speaker 00:
It would be unreasonable, Your Honor, and in fact a violation, and it was a violation, to not include a required element of the bid.

[00:03:36] Speaker 01:
You're not answering my question.

[00:03:38] Speaker 01:
My question is, is there evidence in the record that they were supplied with different information?

[00:03:46] Speaker 00:
Not of the actual conversation, Your Honor, if that's where you're going, no.

[00:03:52] Speaker 00:
We'd have to go off of the way the different offerors approach the procurement differently.

[00:03:57] Speaker 00:
And we could also go off of what actually happened.

[00:04:11] Speaker 00:
So if there are no more questions on that, I'll move to the amendment number 12 issue.

[00:04:18] Speaker 00:
And this is really largely not in dispute.

[00:04:22] Speaker 00:
There's no question from the government that there was an amendment number 12.

[00:04:27] Speaker 00:
There's no argument that Zero Waste did not acknowledge that amendment.

[00:04:32] Speaker 00:
There's only two issues.

[00:04:34] Speaker 00:
There's the claim that the amendment was either not material

[00:04:38] Speaker 00:
or that it was constructively accepted by zero waste, and we think that neither is true, both arguments focus on the CLIN headings in the first part of the amendment and ignore the Q&A, which significantly addresses for the only time the question of, with respect to specific CLINs, 7, 8, and 9, what would happen if there was an overrun, and the government specifically responded to that question by saying,

[00:05:08] Speaker 00:
that if there's an overrun you must honor your pricing.

[00:05:11] Speaker 00:
That's material and it's significant and it's particularly significant, Your Honors, based on the government's brief which identifies zero waste bid as a buy-in low bid.

[00:05:24] Speaker 00:
So there is a significant risk when you identify a bid as a buy-in bid.

[00:05:29] Speaker 00:
that the awardee is going to attempt to make up its losses and change orders later.

[00:05:34] Speaker 00:
That's exactly what's being addressed in Amendment Number 12 and it's why it's material and it's why it cannot be overlooked here and it cannot be constructively accepted.

[00:05:45] Speaker 00:
One offeror, MDI, agreed to honor its pricing and the other didn't.

[00:05:51] Speaker 00:
When you have a material amendment that's not accepted, that is defective and cannot be used as a basis for award.

[00:06:03] Speaker 00:
The second point I'd like to discuss, Your Honor, is the fact that the bid was unreasonably low.

[00:06:09] Speaker 00:
And that's something that was identified in the trial court's opinion.

[00:06:12] Speaker 00:
The trial court rejected the government's suggestion that below, and that's repeated in its briefing here, that the government can accept a bid no matter how low.

[00:06:24] Speaker 00:
And relying on the Hyperion case, the trial court said that evidence of an unreasonably low bid

[00:06:32] Speaker 00:
can be evidence of a mistake or of a defect.

[00:06:36] Speaker 00:
And the court here said, well, the difference with our imperium is that even though it's low, there's no evidence of a defect.

[00:06:44] Speaker 00:
And we disagree, Your Honors.

[00:06:46] Speaker 00:
And the best evidence there is the phasing cost.

[00:06:49] Speaker 00:
The phasing cost, and it's included in the performance work statement, section 3.2, requires the offeror to provide all services during the phasing period.

[00:07:01] Speaker 00:
The government at Appendix 1150 sent a letter saying, hey, zero waste, we suspect a mistake in your bid.

[00:07:10] Speaker 00:
In response, zero waste said, no, we honor our phase-in cost of 15,000 based on travel and lodging only.

[00:07:19] Speaker 00:
That is clear evidence of a mistake.

[00:07:22] Speaker 00:
The government knew it was there.

[00:07:23] Speaker 00:
It didn't follow up.

[00:07:24] Speaker 00:
It ignored that.

[00:07:25] Speaker 00:
And that renders the decision to award to zero waste arbitrary and capricious

[00:07:31] Speaker 00:
for that reason.

[00:07:32] Speaker 00:
We also provide additional examples in the briefing, Your Honor, a second being the landfill, the landfill pricing.

[00:07:40] Speaker 00:
There's no suggestion that zero waste actually went out and got those bids and the, excuse me, the bid verification letter should have been evidence of that.

[00:07:53] Speaker 00:
And then, Your Honor, the third

[00:07:58] Speaker 00:
issue is the lay-down yard, which if you want to put aside the issue of whether there was unequal information provided, the fact remains that the government has not provided a reasonable explanation why those costs would not have been included in zero case bid.

[00:08:15] Speaker 00:
There have been two excuses provided by the trial court, which says the government reserved the right to provide a facility.

[00:08:24] Speaker 00:
And in doing that, it relies on Amendment Number 4,

[00:08:28] Speaker 00:
to the ISB.

[00:08:29] Speaker 00:
That amendment was overridden by Amendment Number 9.

[00:08:33] Speaker 00:
That was not part of the procurement and should not have been used as a basis by the trial court to overlook this error.

[00:08:40] Speaker 00:
The other excuse presented in the government's brief is that the government reserve directs provide materials, equipment, or supplies.

[00:08:51] Speaker 00:
Those are different things than facilities.

[00:08:53] Speaker 00:
The laid-on yard is a facility.

[00:08:55] Speaker 00:
And the IFD expressly said that the government will not provide facilities to off-roars.

[00:09:01] Speaker 00:
So, Your Honor, I believe I have about a minute remaining on my reserve time for argument.

[00:09:07] Speaker 00:
And if there are no additional questions, I'll just end here and reserve any additional time for rebuttal.

[00:09:13] Speaker 04:
Okay.

[00:09:15] Speaker 04:
Any questions for Mr. Swarovski?

[00:09:19] Speaker 04:
All right.

[00:09:19] Speaker 04:
Let's hear from the government.

[00:09:20] Speaker 04:
Mr. Dixley.

[00:09:21] Speaker 03:
Thank you, Your Honor.

[00:09:22] Speaker 03:
May it please the court?

[00:09:23] Speaker 03:
This is a straightforward case.

[00:09:26] Speaker 03:
In a sealed bid procurement where award is required to be made to the responsible bidder that submitted the lowest bid, the Army awarded a contract for solid waste disposal services to Zero Waste Solutions, the responsible bidder that submitted the lowest bid.

[00:09:43] Speaker 04:
Now how do you know when you have a bid that's 30% below your estimate?

[00:09:50] Speaker 04:
Is there a presumption that that's responsible or not responsible?

[00:09:55] Speaker 03:
No, Your Honor, there's no presumption of responsibility.

[00:09:58] Speaker 03:
That is, well, the case law says that acceptance is a determination of responsibility.

[00:10:06] Speaker 03:
But in this case, the contracting officer made an affirmative determination of responsibility.

[00:10:14] Speaker 03:
The contracting officer requested information from zero waste financial information, which zero waste provided, indicating

[00:10:23] Speaker 03:
It had some $6 million in lines of credit.

[00:10:28] Speaker 03:
And in addition, the contracting officer requested past performance information, which Zero Waste provided, indicating it had experience on this type of work.

[00:10:42] Speaker 03:
In addition, the contracting officer contacted these references, the financial references at Merrill Lynch and Citibank, spoke to them,

[00:10:53] Speaker 03:
and also the points of contact at the other military facilities.

[00:11:00] Speaker 03:
So the contracting officer here made an affirmative decision of responsibility, wrote up a decision letter, and a responsibility determination is a business judgment that is afforded great deference.

[00:11:20] Speaker 03:
And the contracting officer here

[00:11:23] Speaker 03:
satisfied herself that zero waste was capable of performing the contract.

[00:11:30] Speaker 03:
So there's nothing inherently wrong with submitting a low bid, even a below cost bid.

[00:11:38] Speaker 03:
Now, we, Appellants Council is incorrect.

[00:11:45] Speaker 03:
The government has not argued here that it is a below cost bid.

[00:11:51] Speaker 03:
We don't actually know that.

[00:11:52] Speaker 03:
and the trial court did not find that.

[00:11:55] Speaker 03:
We simply make the point that there's nothing inherently wrong with a lower bid.

[00:12:01] Speaker 03:
And here, actually, zero waste bid is some 14% below Dunning's bid.

[00:12:11] Speaker 03:
Hardly a huge discrepancy.

[00:12:13] Speaker 03:
But the key point is that it's not in dispute that zero wasted is a lower bid, and once the contracting officer

[00:12:22] Speaker 03:
made that determination that zero waste was responsible in a sealed bid procurement, the contracting officer was required then to award the contract to the lowest bidder.

[00:12:32] Speaker 03:
That was what was done here.

[00:12:34] Speaker 03:
It is very straightforward.

[00:12:37] Speaker 03:
If I may, I will address some of the comments raised by council.

[00:12:46] Speaker 03:
I believe it was a

[00:12:48] Speaker 03:
question at the beginning raised by, I believe it was Judge Dyke concerning the lay-down yard.

[00:12:55] Speaker 03:
What is the evidence in the record that there was different communications, unequal statements made to the two bidders?

[00:13:05] Speaker 03:
Well, the answer to that question is there is no evidence in the record, none.

[00:13:10] Speaker 03:
This is what the trial court found.

[00:13:12] Speaker 03:
And this is most apparent in appellant's opening brief on page 52

[00:13:18] Speaker 03:
They address this issue and what they reference is their own complaint because there is no evidence.

[00:13:26] Speaker 04:
In addition, the assertion that... Is it disputed that the present situation is that the craft of the lay-down yard is being absorbed by the government?

[00:13:44] Speaker 03:
Ma'am, actually that's...

[00:13:47] Speaker 03:
The trial court made a finding on that point as well that Dunning's argument that zero waste did not include the cost of the lay-down yard in their bid is just not evident, not apparent.

[00:14:04] Speaker 04:
And actually... I ask if it's now disputed.

[00:14:11] Speaker 04:
I gather that there has been some sort of confirmation or proceeding since all of this is resolved.

[00:14:26] Speaker 03:
You know, ma'am, what I would say is it's disputed in the sense that we did not concede the point they're making.

[00:14:33] Speaker 03:
It's actually not apparent from the bids, from the proposals.

[00:14:38] Speaker 04:
That wasn't my question.

[00:14:40] Speaker 03:
Yeah, I'm sorry if I'm misunderstanding your question.

[00:14:42] Speaker 04:
My question is, is it disputed?

[00:14:44] Speaker 04:
Is the government's position that the cost of the lay-down yard is not being provided to the contractor?

[00:14:57] Speaker 03:
Let me clarify what the solicitation... Yes, the government reserved the right to provide a free lay-down yard.

[00:15:08] Speaker 03:
It is not...

[00:15:11] Speaker 03:
In the solicitation itself, the solicitation did not require bidders to price that.

[00:15:19] Speaker 03:
So there's sort of conflicting provisions in the solicitation.

[00:15:24] Speaker 03:
And it's actually not clear from the bid submitted whether the bidders actually included it.

[00:15:30] Speaker 03:
It's just not apparent from their proposals.

[00:15:34] Speaker 03:
Neither proposal actually mentions a lay-down yard.

[00:15:36] Speaker 01:
The answer to Judge Newman's question is yes, the government is providing a free lay-down yard, right?

[00:15:54] Speaker 03:
That is actually on the record.

[00:15:57] Speaker 03:
The answer to that is the government reserves the right to

[00:16:02] Speaker 03:
to provide a free lay-down yard.

[00:16:04] Speaker 03:
But it is not apparent from the record whether they actually did.

[00:16:11] Speaker 04:
Are you saying that there's a dispute?

[00:16:14] Speaker 04:
Certainly by the time one works one's way through the papers, it seems to be clear that it's known what the government action is as far as the successful bidder is concerned.

[00:16:28] Speaker 04:
You're saying that that's incorrect?

[00:16:33] Speaker 03:
Yes, I'm saying precisely speaking, it was simply not clear whether that was actually done pre-award.

[00:16:42] Speaker 03:
One would have to accept, for example.

[00:16:47] Speaker 01:
It wasn't done pre-award, but after the award, the record shows they're providing a free lay-down yard.

[00:16:54] Speaker 01:
Why are you fighting this?

[00:16:58] Speaker 03:
I'm sorry.

[00:17:00] Speaker 03:
actually not fighting it, just trying to be clear.

[00:17:03] Speaker 02:
I think the evidence... Mr. Pixley, let me interrupt, Mr. Pixley.

[00:17:07] Speaker 02:
This is not a hard question.

[00:17:09] Speaker 02:
Either the government is or is not providing a lay down yard to zero waste.

[00:17:15] Speaker 02:
It may not be in the record, it may be post award, it may not be relevant for any number of reasons to the actual case, but it's a fact and either you know the answer or you don't.

[00:17:28] Speaker 02:
Is the government providing

[00:17:30] Speaker 02:
a lay-down yard to zero waste?

[00:17:34] Speaker 02:
Or is it not?

[00:17:39] Speaker 03:
To answer your question, I believe that is the case.

[00:17:42] Speaker 03:
And that is what Dunning alleges in the Rule 60 motion.

[00:17:48] Speaker 03:
And the court found assuming this to be true.

[00:17:50] Speaker 03:
So I don't have any reason to doubt that.

[00:17:52] Speaker 02:
Yes, answer to your question.

[00:17:54] Speaker 02:
So the answer is yes.

[00:17:55] Speaker 02:
You have arguments as to why that still doesn't

[00:17:59] Speaker 02:
you know, shouldn't make any difference in this case, but the answer is yes.

[00:18:04] Speaker 03:
Right.

[00:18:04] Speaker 03:
It shouldn't make any difference whatsoever.

[00:18:07] Speaker 04:
Well, if one bid is considered including the cost of the laydown yard and the other bid is considered submitted without the cost of the laydown yard, how can they be directly compared in terms of how much difference there is between them?

[00:18:27] Speaker 03:
Ma'am, that's where we don't concede.

[00:18:30] Speaker 03:
And the trial court addressed this.

[00:18:35] Speaker 03:
Zero waste may very well have included the cost of the lay-down yard in their other clins.

[00:18:41] Speaker 03:
The lay-down yard was not a specifically priced clin.

[00:18:45] Speaker 03:
The word lay-down yard does not appear in the solicitation or in the proposals.

[00:18:50] Speaker 03:
And the court found, presumably, they may have included it, just as Dunning may have included it, or not.

[00:18:56] Speaker 03:
It's just not apparent.

[00:18:58] Speaker 03:
So we do not concede that point.

[00:19:01] Speaker 03:
And actually, the trial court, in its decision on the Rule 60 motion, at footnote eight, addresses this.

[00:19:11] Speaker 03:
The court notes the two proposals look very similar.

[00:19:16] Speaker 03:
Dunning itself,

[00:19:18] Speaker 03:
in its proposal never makes references to the lay-down yard.

[00:19:22] Speaker 03:
So the only time that Dunning asserts that it included the cost of the lay-down yard in its proposal was in its verification of the bid.

[00:19:32] Speaker 03:
But again, there's no indication for either of these bidders.

[00:19:37] Speaker 03:
They may well have or not.

[00:19:39] Speaker 04:
You're saying the verification of the bid is immaterial?

[00:19:45] Speaker 04:
That's critical, is it not, to the process?

[00:19:47] Speaker 03:
Yes, ma'am.

[00:19:49] Speaker 03:
And I would point out that actually the agency sent virtually identical emails to both bidders to verify their bids because both bids came in under the government estimate.

[00:20:03] Speaker 03:
That was the reason.

[00:20:05] Speaker 03:
But yes, that is correct that Dunning, in its verification, stated that it included the cost of a laydown yard.

[00:20:20] Speaker 03:
If I still have some more time, I will address then the issue of Amendment 12 and acceptance of the amendment.

[00:20:33] Speaker 03:
Amendment 12 very quickly stated that the unit description for CLIN 2005 should be changed from job to months.

[00:20:44] Speaker 03:
And it is undisputed that Zero Waste did not submit a signed

[00:20:50] Speaker 03:
form for amendment 12.

[00:20:53] Speaker 03:
But Zero Waste did in fact accept the amendment and it did so pursuant to FAR provision 14.405 D1 which states in effect that a contractor may acknowledge receive of amendment to an invitation for bids but only if the bid received clearly indicates that the bidder received the amendment.

[00:21:19] Speaker 03:
Well

[00:21:20] Speaker 03:
There's no question that in its proposal, zero waste for CLIN 2005 changed the unit description from job to month, clearly indicating that it received the amendment and therefore, by virtue of paragraph D1, accepted the amendment in its entirety, including the Q&A section.

[00:21:43] Speaker 03:
Amendment 12 is a one-page document.

[00:21:46] Speaker 03:
It makes no sense to divide this up

[00:21:50] Speaker 03:
Clearly, by operation of that rule, Zero Waste accepted the amendment and held out that it would be bound by it.

[00:22:01] Speaker 03:
And that is simply not an issue that should be disputed.

[00:22:18] Speaker 03:
Therefore, subject to the court's questions, I think I've addressed most of the issues here.

[00:22:24] Speaker 03:
We ask, therefore, that the court affirm the decision of the trial court.

[00:22:31] Speaker 04:
OK.

[00:22:31] Speaker 04:
Any more questions for Mr. Dixley?

[00:22:35] Speaker 04:
I hear none.

[00:22:37] Speaker 04:
All right.

[00:22:37] Speaker 04:
Mr. Selefsky, you have your rebuttal time.

[00:22:41] Speaker 00:
Yes, Your Honor.

[00:22:43] Speaker 00:
Thank you.

[00:22:43] Speaker 00:
And again, may it please the court, I'd like to address

[00:22:48] Speaker 00:
Two points in the battle to Mr. Pixley's argument.

[00:22:55] Speaker 00:
The first is probably less important but easier to address.

[00:22:59] Speaker 00:
Mr. Pixley said I was wrong, that the government has identified this as a low bid, and I would just direct the court to page 32 of the government's response brief in which it specifically refers to this as a, and uses quotes, a buy-in.

[00:23:14] Speaker 00:
arguing that low bids like this are permissible as buy-in bids.

[00:23:19] Speaker 00:
That's what I was referring to there so I certainly disagree that we're wrong on that point.

[00:23:23] Speaker 00:
The second is the more important point and that's Mr. Pixley started his argument by saying this is a very easy and very straightforward case where the government identified a low bidder and awarded to that low bidder and that's incorrect.

[00:23:39] Speaker 00:
As Your Honor picked up on, there is the bid verification process here.

[00:23:44] Speaker 00:
This was not a simple case of identifying a low bidder and awarding them the bid.

[00:23:49] Speaker 00:
The government sent zero waste a letter that said we have identified problems with your bid, potential mistakes, possible errors.

[00:23:59] Speaker 00:
And as Your Honor pointed out, at that point, the response to the bid verification becomes critical.

[00:24:07] Speaker 00:
And there are two issues that we've discussed during this argument, and there are more in our brief, but I'm limited in time.

[00:24:13] Speaker 00:
The first is the phasing cost.

[00:24:16] Speaker 00:
Based on the zero waste response to the phase-in, they identified that they had bid $15,000 for travel and lodging.

[00:24:24] Speaker 00:
That is not enough to cover the actual phasing cost.

[00:24:28] Speaker 00:
It doesn't include

[00:24:29] Speaker 00:
all of the requirements of phase and work.

[00:24:32] Speaker 00:
And that should have signaled to the government that there was an error.

[00:24:36] Speaker 00:
Instead, the government did no follow-up and awarded it anyway.

[00:24:40] Speaker 00:
The second is the lay-down yard, Your Honor, as you've identified.

[00:24:42] Speaker 00:
And that becomes very material at that point.

[00:24:46] Speaker 00:
The government solicited comments from Mark Dunning about what was wrong with zero waste bid.

[00:24:52] Speaker 00:
One of the points that Mark Dunning made was they're not bidding a lay-down yard

[00:24:57] Speaker 00:
And we can have a separate conversation about the misinformation.

[00:25:00] Speaker 00:
But at that point, Mark Dunning was aware that Zero Waste had been given different information or it believed that Zero Waste had been given different information and said, our bid includes the cost of the lay-down yard, theirs doesn't.

[00:25:14] Speaker 00:
And despite Mr. Kixley said it over and over, it doesn't make it true.

[00:25:18] Speaker 00:
The government did not reserve the right to provide a lay-down yard.

[00:25:21] Speaker 00:
It did that in Amendment 4.

[00:25:23] Speaker 00:
That amendment was overridden by Amendment 9.

[00:25:26] Speaker 00:
The IFB and the performance work statement are very clear that there are no government facilities provided and no reservation of rights to provide those facilities.

[00:25:36] Speaker 00:
So at the time the government made the award, it was very aware of the lay-down yard issue and proceeded anyway

[00:25:43] Speaker 00:
And as Your Honors have noted, it is now a known fact that the government did provide a lay-down yard at no cost in violation of the IFD.

[00:25:53] Speaker 00:
If there are no questions, Your Honors, I will end my time.

[00:25:58] Speaker 04:
Any more questions for Mr. Sielowski?

[00:26:02] Speaker 04:
All right.

[00:26:02] Speaker 04:
Thanks to both counsels.

[00:26:04] Speaker 04:
The case is taken under submission.