[00:00:03] Speaker 03: The United States Court of Appeals for the Federal Circuit is now open and in session. [00:00:07] Speaker 03: God save the United States and this honorable court. [00:00:14] Speaker 00: Okay, welcome everybody. [00:00:15] Speaker 00: The first case before the court is Optimum Services, Inc. [00:00:19] Speaker 00: versus Secretary of the Interior, case number 201-087. [00:00:25] Speaker 00: I understand, counsel, that you have reserved your rebuttal time. [00:00:29] Speaker 00: Are you prepared to begin? [00:00:29] Speaker 04: Yes, Your Honor. [00:00:32] Speaker 00: All right. [00:00:33] Speaker 00: Thank you. [00:00:33] Speaker 00: You may begin. [00:00:35] Speaker 04: Good morning, everyone. [00:00:36] Speaker 04: This is James Walton Copeland of the Copeland Law Firm in Atlanta, Georgia for the Appellant Optimum Services, Inc. [00:00:43] Speaker 04: May it please the court. [00:00:45] Speaker 04: Appellant is appealing a decision by the Civilian Board of Contract Appeals in which the board denied appellant's motion for summary judgment and granted the government's defensive motion for summary judgment and denied appellant's appeal to the board. [00:01:01] Speaker 04: At the Board, Appellant was appealing a National Park Service contracting officer final decision dated June 12, 2015, in which the agency denied Appellant's certified claim for lost profits dated January 15, 2015. [00:01:19] Speaker 04: The time limits will prevent me from arguing every point of Appellant's appeal today, so let me begin by expressly incorporating [00:01:30] Speaker 04: Appellant's final corrected versions of Appellant's filing, including the final version of Appellant's principal brief, dated February 28, 2020, the final version of Appellant's reply brief, dated April 20, 2020, and the final... That's fine, Counsel. [00:01:50] Speaker 00: We always incorporate your briefs into the proceedings. [00:01:54] Speaker 04: Yes, Your Honor. [00:01:56] Speaker 04: And the final version of the Joint Appendix was July 16, 2020. [00:02:01] Speaker 04: There were numerous filings. [00:02:03] Speaker 04: I just wanted to clear that up. [00:02:05] Speaker 04: I'd also like to thank everyone in the clerk's office for all their work with the voluminous filing. [00:02:09] Speaker 03: Counsel, this is Judge Raina. [00:02:12] Speaker 03: Let me ask you a question. [00:02:13] Speaker 03: Are you seeking to recover unearned profits? [00:02:18] Speaker 04: Excuse me, Your Honor. [00:02:19] Speaker 03: Are you seeking to recover unearned profits? [00:02:26] Speaker 04: Yes, Your Honor. [00:02:27] Speaker 03: What's your legal authority? [00:02:30] Speaker 04: My legal authority is that a termination for convenience is a breach of contract when it is a clear abuse of discretion. [00:02:46] Speaker 04: That is a established standard in the federal circuit. [00:02:50] Speaker 04: When there is a contract termination for convenience, [00:02:55] Speaker 04: contractor's recovery is not constrained by the termination for convenience clause. [00:03:02] Speaker 00: Council, as I understand it, you've got two separate arguments. [00:03:06] Speaker 00: One is that because of the guaranteed minimum and the order of precedence, the termination for convenience shouldn't even be considered until the minimum is satisfied or paid. [00:03:20] Speaker 00: But having said that, your other argument appears to be that [00:03:26] Speaker 00: The standard is abuse of discretion and that this constitutes an abuse of discretion. [00:03:33] Speaker 00: So, first of all, if the government is right and the standard is bad faith and that that's what you would have to prove, is there anything in the record that would show bad faith? [00:03:46] Speaker 04: Your Honor, I would submit that the standard is not bad faith. [00:03:53] Speaker 04: The standard is abuse of discretion. [00:03:56] Speaker 04: That is the language that this court has used numerous times. [00:04:02] Speaker 04: Bad faith is an alternative grounds for finding that a termination for convenience was improper. [00:04:12] Speaker 00: I'm just asking you if we were to accept the government's proposition that it's supposed to be bad faith. [00:04:22] Speaker 00: I'm not saying whether we would or wouldn't. [00:04:24] Speaker 00: But I'm saying, if we would, is there evidence of actual bad faith in the record? [00:04:31] Speaker 04: Well, I believe there is, Your Honor. [00:04:34] Speaker 04: But that argument was too voluminous and lengthy to breathe in this appeal. [00:04:41] Speaker 04: So I dropped back the use of discretion, which is reflected in the court's case law. [00:04:50] Speaker 04: I could have attempted to prove the bad faith, but I don't have to prove bad faith under the court's law. [00:04:58] Speaker 04: I only have to prove clear abuse of discretion. [00:05:01] Speaker 04: That's the standard. [00:05:02] Speaker 00: And I understand on your abuse of discretion argument that your primary point is that the bid protest that had been filed was so weak that it shouldn't have prompted any termination. [00:05:18] Speaker 04: That's correct. [00:05:19] Speaker 04: It was weak, and it was untimely under the blue and gold rule as a matter of law. [00:05:24] Speaker 04: And that was apparent from the face of the bid protest. [00:05:31] Speaker 00: There is a protest after award clause in the contract, is there not? [00:05:36] Speaker 04: Yes, there is, Your Honor. [00:05:38] Speaker 00: And is there anything in that clause that says that the right to terminate for convenience is dependent upon the strength [00:05:47] Speaker 00: of the bid protest? [00:05:52] Speaker 04: No, but the government does not have unlimited discretion to terminate for convenience in response to any bid protest. [00:06:04] Speaker 04: That would be an arbitrary and capricious amount of discretion. [00:06:08] Speaker 04: The cases that are out there looked at the strength of the protest in this situation. [00:06:17] Speaker 04: to authorize a contracting officer to automatically terminate merely because there's a protest filed post-award would undermine the entire system. [00:06:32] Speaker 04: There's got to be some review of the merits of the protest to make sure that the decision is not an abuse of discretion. [00:06:48] Speaker 04: The closest case that I think we have is the GC case bolt decision that the board relies on. [00:06:57] Speaker 04: And in that 1970 Court of Claims decision, the court looked at the merit of the bid protest when it was reviewing [00:07:15] Speaker 04: the agency's decision to terminate. [00:07:18] Speaker 04: It looked at all the circumstances, the merit of the bid protest, the timing situation that the protest put the agency into, and then concluded, then the court concluded, after considering the merits and the affidavits that the government submitted to show the merits, then the court concluded that the termination was reasonable in that situation. [00:07:41] Speaker 04: In this case, we have a completely different situation. [00:07:45] Speaker 04: The face of the bid protest shows that it was untimely as a matter of law under the blue and gold rule. [00:07:52] Speaker 04: All the cases on unfair competitive advantage that WCI cited in its motion for TRO tell everyone that there was no competitive advantage and that the protest lacked merit. [00:08:08] Speaker 00: Is that the only basis for termination that was articulated? [00:08:15] Speaker 04: The basis that was articulated for the termination in the contracting officer's final decision is really threefold. [00:08:29] Speaker 04: The government defended or attempted to justify the termination based on the strength of the protest, which is clearly lacking in merit. [00:08:43] Speaker 04: The government also defended [00:08:45] Speaker 04: based on an alleged reduction in funding. [00:08:50] Speaker 04: And I've shown in the appendix and in the interrogatory answers and in the brief that the alleged reduction in funding was no basis for termination for convenience because the alleged reduction in funding would not have prevented the government from ordering the guaranteed minimum. [00:09:11] Speaker 04: The record also shows that the government did in fact order [00:09:15] Speaker 04: $2 million guaranteed minimum. [00:09:18] Speaker 04: And that the government had $10 million or $12 million of funding on hand at all times for that $2 million minimum. [00:09:26] Speaker 04: And also the contract put the bidders on notice that funding levels were uncertain and they couldn't expect anything more than the $2 million minimum. [00:09:36] Speaker 04: So the alleged funding reduction justification was totally immaterial under the court's precedent and the FAR clause. [00:09:46] Speaker 04: In the final decision, the government also defended determination based on an alleged defect in the solicitation. [00:09:56] Speaker 04: Now, I nailed down what they were asking about there in the interrogatory answers, and the government indicated that the defect in the solicitation that the government was so concerned about was actually an immaterial variance in some of the evaluation terms [00:10:14] Speaker 04: that the government had already rejected based on a WCI agency-level protest in 2008. [00:10:24] Speaker 04: So the record shows that all of the government's proper justifications for the termination lack merit. [00:10:32] Speaker 04: It's right there in the documents in the record. [00:10:34] Speaker 00: So is it your contention that the government just did it so it could do the small business solicitation? [00:10:45] Speaker 04: I'm not sure what your question is, but why they did it, I can't necessarily prove why they did it, but I can prove that they didn't have a reasonable basis for doing it. [00:11:04] Speaker 04: All the justifications they've offered lack merit. [00:11:09] Speaker 04: There was no unfair bid competitive advantage. [00:11:12] Speaker 04: There was no material change in the funding. [00:11:15] Speaker 04: And the defect in the solicitation that the government is relying on is immaterial as well. [00:11:22] Speaker 00: Okay, thank you, Counsel. [00:11:23] Speaker 00: We'll save your rebuttal. [00:11:28] Speaker 04: Let me continue and also say that I actually have three arguments. [00:11:32] Speaker 04: The second argument is the order of precedence clause, and the third argument is failure of consideration. [00:11:42] Speaker 04: I'll come back to those. [00:11:43] Speaker 04: And that's all I have for my lead argument. [00:11:45] Speaker 04: Thank you. [00:11:46] Speaker 00: Okay. [00:11:46] Speaker 00: Thank you. [00:11:51] Speaker 00: Okay. [00:11:51] Speaker 00: Let's hear from the government. [00:11:55] Speaker 01: This is Daniel Volk and may it please the court. [00:11:58] Speaker 01: The board's decision should be affirmed. [00:12:01] Speaker 01: There is no conflict between the termination for convenience clause and the contracts guaranteed minimum. [00:12:09] Speaker 01: These two provisions have different roles. [00:12:11] Speaker 01: The guaranteed minimum. [00:12:13] Speaker 01: identifies the bottom of the ordering range in this indefinite quantity contract. [00:12:19] Speaker 01: This provision takes the place of a fixed quantity in a traditional fixed price contract. [00:12:25] Speaker 01: So instead of saying that the government will buy, say, 10 units for $10 each, an indefinite quantity contract specifies a minimum and a maximum, setting the range for orders to be placed later. [00:12:40] Speaker 01: The termination for convenience clause by contrast gives the government a right to cancel the contract. [00:12:48] Speaker 00: Let me jump ahead and talk about some of the things we were talking about with your friend on the other side. [00:12:54] Speaker 00: I was kind of shocked by the government's red brief. [00:12:59] Speaker 00: You basically put all your eggs in the basket of [00:13:02] Speaker 00: of saying that we as a panel should change the law or clarify the law and say it's not an abuse of discretion standard. [00:13:11] Speaker 00: It is a pure bad faith standard. [00:13:16] Speaker 00: I was kind of surprised because you don't ever then address the question of what if we are operating under an abuse of discretion or arbitrary and capricious standard. [00:13:29] Speaker 00: You don't ever [00:13:31] Speaker 00: join with the facts and say why this wouldn't satisfy that standard. [00:13:37] Speaker 00: You just say it has to be bad faith and there's no bad faith, period. [00:13:43] Speaker 01: Well, Your Honor, we think that it doesn't satisfy that standard, even if it were looked at for the same reasons the board found that. [00:13:51] Speaker 01: And to start out, there was a jurisdictional issue for the board even before, you know, getting to the substance. [00:13:57] Speaker 01: And that being that the board doesn't have jurisdiction to review bid protest, bid protest. [00:14:05] Speaker 01: And Optimum's arguments here, they start with trying to re-argue [00:14:11] Speaker 01: uh... long ago decided big protest claims and so optinums council says well what about this particular bid protest claim. [00:14:19] Speaker 00: I mean even if the board doesn't have the authority to decide a bid protest it certainly has the authority to look and see if on the face of it the protest was frivolous or untimely [00:14:36] Speaker 01: Actually, your honor, we don't agree with that. [00:14:38] Speaker 01: And the reason is that the only thing that the board had jurisdiction to review here is the government's termination for convenience. [00:14:47] Speaker 01: And so if you look at the contract, you know, the plain language of the contract, the contract says that the government can terminate for convenience. [00:14:55] Speaker 01: If the government's contracting officer determines that a termination is in the government's interest. [00:15:01] Speaker 01: So what the board can look at there is there is no. [00:15:06] Speaker 00: There's no review of that determination of government interest? [00:15:13] Speaker 01: There's really nothing of substance to review. [00:15:15] Speaker 01: Certainly the board could look at, did that actually happen? [00:15:20] Speaker 01: Did the contracting officer determine that a termination is in the government's interest? [00:15:24] Speaker 01: As a factual matter, certainly, you know, that could be looked at. [00:15:27] Speaker 01: But then could the board then go further and say, was it a good decision? [00:15:33] Speaker 01: Is that really in the government's interest? [00:15:35] Speaker 01: Uh, no, no, our position is definitely not that what's in the government's interest is for the government to decide. [00:15:42] Speaker 01: And we think this court has recognized that it's not for the, a quarter, a judge to decide, uh, what's in the government's interest and the plain language of the contract. [00:15:53] Speaker 01: Doesn't say that the government can terminate for convenience. [00:15:56] Speaker 01: If the contracting officer decides it's in the government's interest and the judge agrees or and a judge finds that that's not an abuse of discretion. [00:16:05] Speaker 01: The government acquires a contract right like any contracting party acquires a contracting right, and there's no extra layer of sort of an APA-like administrative review of government decision-making. [00:16:20] Speaker 01: This is in contrast, of course, to bid protests. [00:16:24] Speaker 01: Bid protests, although not reviewable in the boards of contract appeals, bid protests when they get reviewed at the Court of Federal Claims, they are reviewed [00:16:34] Speaker 01: It is a review of government decision-making. [00:16:36] Speaker 01: The APA standard is used. [00:16:39] Speaker 01: That is not the case. [00:16:40] Speaker 00: It's too late to make a bid protest at this point when the government chooses to terminate the contract, right? [00:16:46] Speaker 01: Absolutely. [00:16:47] Speaker 01: There should be no bid protest arguments that are part of this case. [00:16:52] Speaker 01: Optimum had the opportunity and it did pursue its bid protest about 12 years ago. [00:16:59] Speaker 01: And so this case is solely a question of whether the government [00:17:03] Speaker 01: had the right and exercised its right properly under the termination for convenience clause. [00:17:09] Speaker 01: And so the government's right to do that is governed by the language in the contract. [00:17:16] Speaker 01: And that gives the government a very expansive unilateral right to terminate the contract through no fault of the contractor. [00:17:26] Speaker 01: And it's the government's decision. [00:17:28] Speaker 01: There's really nothing of substance [00:17:32] Speaker 01: within that language, within that clause for a judge to review. [00:17:37] Speaker 01: Now, if a contractor wants to pursue affirmatively its own claim of bad faith and say, well, you've breached the contract by acting in bad faith or wants to pursue some other kind of, you know, there haven't really been others identified, but conceivably, a contractor can still pursue any kind of affirmative claim for breach it wants to pursue [00:18:00] Speaker 01: But just because the government terminates the contracts for convenience, it doesn't then create an opportunity for the contractor to go to a judge and ask to have that, to have sort of an administrative review of government decision making. [00:18:17] Speaker 00: It's only a question of whether... But again, you're back to the bad faith. [00:18:20] Speaker 00: I mean, I have a little bit of trouble with the notion that, I mean, basically you're just saying that we've got a lot of cases where we [00:18:29] Speaker 00: we ever use language about abuse of discretion and or arbitrary and capricious or we use that language and you pretty much just say that's just been sloppy on our part or dicta and yet we continue to say it over and over. [00:18:47] Speaker 00: How is we as a panel, how are we supposed to say all of a sudden that's not the law? [00:18:54] Speaker 01: Well, we, we think you should start with the statute. [00:18:57] Speaker 01: So obviously it's a CDA case and there shouldn't really be any question that de novo is the, the board stand and the review of any contracting officer's decision by a board or the court of federal claims under the CDA is always de novo. [00:19:10] Speaker 01: So there shouldn't be any question there. [00:19:12] Speaker 01: And then the next step is in this de novo review, what is being reviewed? [00:19:18] Speaker 01: Well, it's the contract. [00:19:19] Speaker 01: And so there's nothing in the contract where abuse and discretion comes in. [00:19:23] Speaker 01: And the way we would do the analysis is, you know, we only get to the question of abusive discretion by looking at, by optimum gardens. [00:19:33] Speaker 01: Optimum points to all these cases where it is suggested that if it can show abusive discretion, it can overturn the termination for convenience. [00:19:44] Speaker 01: But when you look at all of these cases, we don't find any of them [00:19:49] Speaker 01: where there's a holding. [00:19:50] Speaker 01: I mean, almost every one of them just rejects the argument that there was any abuse of discretion. [00:19:56] Speaker 01: But we don't find any of these cases with a holding that really even directly addresses the question of post-CDA, why this language is still being used. [00:20:08] Speaker 01: The citations usually just go back to cases like John Reiner, cases before the CDA was put in place. [00:20:16] Speaker 01: where there was a highly deferential standard to the contracting officer's decision making under the Wonderlic Act, they just cite back the language from these previous cases. [00:20:25] Speaker 01: So rather than, you know, go put that language again into another case, we really should consider why is it there? [00:20:33] Speaker 01: Does it belong there? [00:20:36] Speaker 01: Certainly in some of these cases, like CalVar, you can find, you know, some kind of, there's some suggestion of, [00:20:45] Speaker 01: Well, perhaps abuse of discretion is just part of bad faith, and it could all be reconciled that way. [00:20:52] Speaker 01: We don't think that's a good idea. [00:20:54] Speaker 01: I mean, abuse of discretion is not the same as bad faith. [00:20:58] Speaker 01: This court regularly reviews trial court decisions for abuse of discretion, and sometimes it finds it. [00:21:04] Speaker 01: It's not finding in those situations that the trial judge acted in bad faith. [00:21:09] Speaker 01: They're different things. [00:21:10] Speaker 00: How do you define bad faith in this context, meaning for, like, [00:21:13] Speaker 00: something that would be an unconstitutional reason? [00:21:18] Speaker 00: Or what else? [00:21:19] Speaker 00: What other bad faith? [00:21:19] Speaker 00: Or some personal animus toward the contractor? [00:21:23] Speaker 01: Yes. [00:21:23] Speaker 01: It's that second one. [00:21:24] Speaker 01: We don't see it as a constitutional issue. [00:21:26] Speaker 01: It's a contract law issue. [00:21:28] Speaker 01: And the cases on bad faith reflect generally that there needs to be a showing of a specific intent to injure the contractor. [00:21:39] Speaker 01: And obviously, there was just nothing like that presented here as the board [00:21:43] Speaker 01: recognized, and so there was never really an opportunity to find bad faith here. [00:21:49] Speaker 03: But so... This is Judge Raina. [00:21:53] Speaker 03: Would the appellant prevail under either a bad faith or an abuse of discretion requirement? [00:22:00] Speaker 01: No. [00:22:00] Speaker 01: No. [00:22:01] Speaker 01: Even if the court were to find that those both are avenues to establishing a breach, there was just simply no evidence as the board [00:22:11] Speaker 01: there was no evidence under which optimum could prevail under either of those standards. [00:22:24] Speaker 00: Okay, do you want to address the other arguments that count the consideration or the border of precedence arguments that Council has preserved? [00:22:37] Speaker 01: Certainly, Your Honor, and as to the order of precedence, there is no need to look at that clause at all because there is no conflict here. [00:22:45] Speaker 01: As I was explaining to start out, the two provisions, the ordering minimum and the termination for convenience, they have different roles. [00:22:57] Speaker 01: The specifying, the minimum and maximum range, that just takes the place of what would otherwise be a fixed quantity. [00:23:06] Speaker 01: What does a guaranteed minimum mean then? [00:23:09] Speaker 00: It does sound to me like in the contract that at least if you're the contractor, you think you're guaranteed a certain amount. [00:23:20] Speaker 01: No, you shouldn't think that, Your Honor, because you should understand, going back to the case like Christian and Associates, that the termination for convenience clause [00:23:29] Speaker 01: is so deeply ingrained, even if it had been left out by omission, it would be read into the contract. [00:23:35] Speaker 01: That's such a deeply ingrained part of government contracting that government contractors always should be going into contracts with the government, understanding that the government is bargaining for this very expansive unilateral right. [00:23:50] Speaker 01: And so there is no additional protection, as I think it was explained in the Armed Services Board, [00:23:57] Speaker 01: case, the Montana refining, there's no additional protection or different circumstances in an indefinite quantity contract versus a fixed price contract. [00:24:08] Speaker 01: Just as the government can terminate for convenience in a fixed price contract with a fixed quantity before it orders any unit, the government also can exercise the termination for convenience rate in an indefinite quantity contract before it's ordered any amount [00:24:26] Speaker 01: They just work differently. [00:24:27] Speaker 01: The termination provision terminates the government's rights and obligations under the contract, all of them. [00:24:35] Speaker 01: So if it exercises the termination provision whenever it does, it has no further right or obligation to order any unit under the contract. [00:24:46] Speaker 01: The ordering range applies to if the contract is performed, if it is not terminated. [00:24:53] Speaker 01: So there's no conflict between those two. [00:24:55] Speaker 01: And there's no lack of consideration either. [00:24:58] Speaker 01: There's even within the termination for convenience clause, it specifies compensation to be paid to the contractor in the event that the termination for convenience clause is exercised. [00:25:10] Speaker 01: And that was paid to Optimum here. [00:25:12] Speaker 01: Optimum received every penny that it requested under the terms of the termination for convenience clause, under the terms of its contract. [00:25:21] Speaker 03: So what do you think that they're looking for, under-profits? [00:25:29] Speaker 01: Exactly, Your Honor. [00:25:29] Speaker 01: They're seeking their anticipated profits from if they had been allowed to perform the contract. [00:25:39] Speaker 01: And it's clear that that's not recoverable. [00:25:42] Speaker 01: So they got what they were entitled to under the contract, under the agreement, and the board correctly determined [00:25:48] Speaker 01: that there is no claim for, or there's no validity to a claim for breach to try to recover these unimpeded profits. [00:25:58] Speaker 03: Other than that, in your view, what are the damages is the appellant claiming? [00:26:04] Speaker 01: That's it from our understanding, Your Honor. [00:26:07] Speaker 01: There were two categories. [00:26:08] Speaker 01: There was roughly $21,000. [00:26:10] Speaker 01: This contract, of course, was terminated for convenience basically right after that. [00:26:16] Speaker 01: Optimum claimed about $21,000 in costs under the termination for convenience settlement provisions. [00:26:23] Speaker 01: That was paid. [00:26:25] Speaker 01: And what was denied was the claim for the lost profits. [00:26:29] Speaker 01: So that's it. [00:26:30] Speaker 01: That's all that's outstanding. [00:26:32] Speaker 01: And there's just no right to recover that under the contract. [00:26:38] Speaker 01: For these reasons, and those expressed by the board as well as in our brief, we respectfully request that the court affirm the board's decision. [00:26:47] Speaker 00: Thank you, Counsel. [00:26:49] Speaker 00: Mr. Copeland? [00:26:52] Speaker 04: Let me first begin by pointing out the major fallacy in the agency's position and the board's position and the government's brief. [00:27:04] Speaker 04: The government repeatedly says that the bid protest matters were decided long ago and that appellant is seeking to relitigate those. [00:27:13] Speaker 04: That is simply not true. [00:27:15] Speaker 04: There was never a decision on the merits of WCI's bid protest because the government threw in the towel back in 2009. [00:27:27] Speaker 04: The court of federal claims dismissed WCI's bid protest without any ruling on the merits because the government mooted the protest by terminating the contract and canceling the solicitation. [00:27:43] Speaker 04: Also, in April of 2009, there was a GAO decision in Optimum's protest of the cancellation of the solicitation. [00:27:54] Speaker 04: In that protest, Optimum was not protesting the termination for convenience. [00:28:02] Speaker 04: And significantly, the GAO did not address the merits [00:28:07] Speaker 03: of WCI's bid protest in... Counselor, this Judge Rayner, I kind of want to get back to that question of damages because I think that pretty well can determine the case. [00:28:19] Speaker 03: Now, you submitted a bid to the... You submitted, rather, a claim for $21,468, $21,468, and you were paid that, correct? [00:28:36] Speaker 04: Yes, Your Honor. [00:28:37] Speaker 03: So what's left? [00:28:39] Speaker 03: What's left in this case that's legally supportable in terms of damages? [00:28:44] Speaker 04: What's left in this case is appellants anticipated profits on the guaranteed minimum. [00:28:51] Speaker 03: What's the legal authority that you're entitled to anticipated profits? [00:28:56] Speaker 04: The legal authority is that when a termination for convenience is an abuse of discretion, [00:29:05] Speaker 04: the termination is a breach of contract for which the contractor is entitled to... I'm looking for a case. [00:29:17] Speaker 04: Well, SecuraForce in 2018 applied the clear abuse of discretion claim to a claim for unanticipated lost profits or an improper termination for convenience and there are [00:29:34] Speaker 04: The whole line of clear abuse of discretion cases involving terminations for convenience are cases in which the contractor was seeking its anticipated profits. [00:29:46] Speaker 04: In these clear abuse of discretion cases, the measure of damages is the anticipated profits. [00:29:53] Speaker 04: Now, there are some cases that flatly say that unanticipated profits are not recoverable [00:30:02] Speaker 04: in the event of a termination for convenience. [00:30:05] Speaker 04: However, those cases do not deal with the abuse of discretion exception. [00:30:13] Speaker 04: So there's an exception to the rule that anticipated profits are not recoverable in the circumstance where the termination decision is an abuse of discretion. [00:30:24] Speaker 03: Where do I find that exception? [00:30:27] Speaker 04: Well, that goes, you can find it in the Reiner, John Reiner case in the court of claims. [00:30:33] Speaker 04: And it, it perceived all the way through up to secure a force. [00:30:38] Speaker 04: Now granted in virtually all of the cases, the government finds a reason to justify the termination for termination decision. [00:30:51] Speaker 04: I respectfully submit in this case, [00:30:54] Speaker 04: There is no reasonable basis for determination for convenience. [00:30:59] Speaker 04: Therefore, the exception applies, and appellant is entitled to its lost profits. [00:31:09] Speaker 00: Counsel, I'll give you another two minutes, because you haven't gotten to the points that you wanted to make. [00:31:15] Speaker 04: Yeah, also, with respect to the Terminate the Order of Precedence Clause, [00:31:22] Speaker 04: The government council argues that the government contractor is just supposed to know that the termination for convenience clause takes precedence. [00:31:30] Speaker 04: Well, that's not the way the government drafted the contract. [00:31:34] Speaker 04: The termination for convenience clause is back in the standard terms and conditions. [00:31:39] Speaker 04: The government drafted the contract to put the $2 million guaranteed minimum up in the schedule. [00:31:46] Speaker 04: And the government drafted the order of precedence clause to give precedence to the terms in the schedule. [00:31:51] Speaker 04: So if you map out the government's written contract, the $2 million guaranteed minimum takes precedent over the determination for convenience clause limitation on lost profits. [00:32:06] Speaker 04: Similarly, on the failure of consideration argument, the Supreme Court held long ago that an indefinite quantities contract has to have a guaranteed minimum. [00:32:19] Speaker 04: The remedy for breach of guaranteed minimum is anticipated profits on the guaranteed minimum. [00:32:27] Speaker 04: Now if the government inserts a clause that exculpates the government from the remedy for breach of the guaranteed minimum, then the guaranteed minimum is illusory. [00:32:39] Speaker 04: There's no consideration there because the government really doesn't have to enforce it. [00:32:44] Speaker 04: So for each of my arguments, I submit that [00:32:48] Speaker 04: Appellant's appeal should be granted. [00:32:51] Speaker 04: That's all I have. [00:32:52] Speaker 00: Thank you, Council. [00:32:53] Speaker 04: The case will be submitted.