[00:00:01] Speaker 00:
I will hear argument now in number 2019-1931 and 1975 Parsons Evergreen LLC versus Secretary of the Air Force.

[00:00:14] Speaker 00:
And first, we have Mr. Hamrick.

[00:00:17] Speaker 00:
And I doubt very much as to whether you're going to end up with 10 minutes for rebuttal.

[00:00:22] Speaker 00:
That's kind of unusual, but we'll see where it goes.

[00:00:25] Speaker 02:
Well, may it please the court, the clerk indicated this morning that the court

[00:00:31] Speaker 02:
uh... may have some issues with our allocation of time uh... we aligned our time to match the issues in our opening brief the five minutes and then the reply brief ten minutes but we are happy to allocate the time in whatever way is most helpful to the court and of course focus on the issues in which the court is most interested uh... for example if the court is okay with us talking for twelve minutes about any issue in the appeal including

[00:00:58] Speaker 02:
The government's issues, we're happy to do that and reserve three minutes for rebuttal.

[00:01:03] Speaker 00:
Okay.

[00:01:03] Speaker 00:
Well, we're not going to try to micromanage your time allocation, but why don't you just start with the main appeal and we'll see where we go.

[00:01:12] Speaker 00:
Thank you.

[00:01:14] Speaker 02:
Again, my name is Cameron Hamrick and I represent Parsons Evergreen or Parsons in these appeals, which involve an IDIQ contract awarded by the Air Force to Parsons.

[00:01:23] Speaker 02:
and a delivery order issued by the Air Force to Parsons under that contract for the design and construction of two buildings and an Air Force base.

[00:01:32] Speaker 02:
Parsons' appeal involves three claims, and all three claims involve fundamental errors of law.

[00:01:38] Speaker 02:
The first claim is called the triarch claim, where the board decided entitlement in Parsons' favor based on a theory involving paint that no one had ever raised prior to the board's decision.

[00:01:51] Speaker 02:
The board then denied Parsons any recovery, claiming there was no information to estimate the paint cost.

[00:01:57] Speaker 02:
That claim is incorrect.

[00:01:58] Speaker 02:
The evidence was in the record, but because the board adopted a novel quantum theory, Parsons had no reason to cite that evidence.

[00:02:06] Speaker 02:
Remarkably, when Parsons presented the evidence in its motion for reconsideration, the board still denied recovery.

[00:02:12] Speaker 02:
The board erred as a matter of law.

[00:02:15] Speaker 00:
I think your problem here is that, as you just said,

[00:02:19] Speaker 00:
theory of recovery that the board articulated was not one that you made before.

[00:02:27] Speaker 00:
So why aren't you kind of stuck with the fact that you didn't raise that particular claim?

[00:02:35] Speaker 02:
Well, I think there's two answers to that.

[00:02:37] Speaker 02:
One is the board never, in fact no one, the Air Force, Parsons, or the board ever raised the board's unique theory of quantum

[00:02:48] Speaker 02:
until the very end of the litigation process.

[00:02:52] Speaker 02:
The parties had no chance to brief this issue.

[00:02:56] Speaker 02:
If the board had raised it, if the Air Force had raised it, Parsons would have identified the evidence.

[00:03:02] Speaker 02:
And I think the second answer to that is it becomes irrelevant by the time of the motion for reconsideration because the board acknowledged that the evidence in fact existed.

[00:03:15] Speaker 02:
And so that

[00:03:15] Speaker 00:
But the problem, it seems to me, is that it's not a new theory of quantum.

[00:03:22] Speaker 00:
It's a new theory of liability.

[00:03:23] Speaker 00:
Your original theory of liability is that you were allowed to apply the Sherman Williams paint.

[00:03:32] Speaker 00:
You didn't have to approve, use a triac.

[00:03:37] Speaker 00:
So the board says, no, you're wrong about that.

[00:03:39] Speaker 00:
You couldn't use Sherman Williams.

[00:03:41] Speaker 00:
But they confused you by telling you at one point that you could.

[00:03:46] Speaker 00:
So that seems to me a different theory of liability than you'd articulated in the beginning.

[00:03:53] Speaker 02:
And I will agree with that.

[00:03:54] Speaker 02:
And what happened after the board found for entitlement, in other words, the recovery of the paint costs, the board said, you know what, we're left with nothing on quantum.

[00:04:04] Speaker 02:
It decided entitlement.

[00:04:06] Speaker 02:
That's water under the bridge.

[00:04:08] Speaker 02:
We're not contesting that.

[00:04:09] Speaker 02:
The Air Force is not contesting that.

[00:04:11] Speaker 02:
But the board then turned to the issue of quantum and said,

[00:04:15] Speaker 02:
I don't have any evidence.

[00:04:17] Speaker 02:
And our point is, number one, the evidence was in the record, but Parsons would have easily pointed to it if the board had simply given the parties a reason to address the issue before he issued his decision, as he did in another case, which we cited in our brief.

[00:04:35] Speaker 02:
And again, by the time of the motion for reconsideration, entitlement is set.

[00:04:42] Speaker 02:
But the board's conclusion that there is no quantum evidence is a mistake of fact.

[00:04:50] Speaker 02:
And we also think it's a mistake of law because under this court's predecessor, Southwest Electronics versus United States case at 655S2nd, 1078, the board was under a heavy obligation to provide compensation.

[00:05:07] Speaker 02:
So to say that you didn't present it the first time around, I'm not going to take it now, even though it's here, is, we think, in clear defiance of the board's heavy obligation to provide compensation, and it elevates form far above substance.

[00:05:25] Speaker 04:
Well, on the question of whether or not, Mr. Judge Clevenger, whether this was a novel theory that got sprung on you unfairly, I thought the board made a finding that,

[00:05:36] Speaker 04:
There was a patent ambiguity here the contractor should have noticed.

[00:05:40] Speaker 04:
The contract clearly says the spec prevails over the drawings.

[00:05:44] Speaker 04:
And so the notion that you thought you could apply the paint doesn't have any legs.

[00:05:51] Speaker 02:
Well, I think the board also found that, number one, that the Air Force created confusion throughout this process.

[00:05:57] Speaker 02:
But at one point, Parsons prepared an architect, an ASI 13,

[00:06:05] Speaker 02:
stating that it was going to provide TRIARC to the VQ building and the contracting officer signed it.

[00:06:14] Speaker 02:
And on that basis, I believe Parsons created a quantum theory and an entitlement theory based on the right to apply TRIARC.

[00:06:24] Speaker 02:
So I think they had a good faith basis to build that quantum approach.

[00:06:35] Speaker 00:
Well, less to further questions.

[00:06:37] Speaker 00:
I just want you to move on to the next claim.

[00:06:41] Speaker 02:
The next claim is the structural brick claim involves walls for one of the buildings.

[00:06:47] Speaker 02:
The board, again, ruled for Parsons on entitlement.

[00:06:51] Speaker 04:
I know that on that claim, help me out with mod 2 release.

[00:06:57] Speaker 04:
In this case, there was a mod 2 release.

[00:07:00] Speaker 04:
And what got released?

[00:07:02] Speaker 04:
What happened?

[00:07:03] Speaker 02:
There were issues released, including the time it took to reconfigure and negotiate the proposed structural brick design.

[00:07:16] Speaker 02:
But if you look at the Mod 2 release, it does not talk about construction costs.

[00:07:21] Speaker 02:
And therefore, the board held that the cost of construction related to the structural brick not covered by the mod, and the Air Force has not challenged that in this appeal.

[00:07:32] Speaker 04:
Can you stop for a second?

[00:07:33] Speaker 04:
What does it mean to say release the time?

[00:07:36] Speaker 00:
Judge Clevenger, you're kind of faint.

[00:07:39] Speaker 04:
Oh, can you hear me?

[00:07:41] Speaker 00:
That's better, Judge.

[00:07:42] Speaker 04:
Yeah.

[00:07:44] Speaker 04:
I don't know what you mean by release of the time.

[00:07:47] Speaker 04:
As I understood the mod to release, Parsons agreed to give up using structural BIC and to go forward with the double wall with fixes

[00:07:59] Speaker 04:
so as to solve the progressive collapse.

[00:08:01] Speaker 04:
Is that correct?

[00:08:03] Speaker 02:
I am not sure that's exactly correct.

[00:08:05] Speaker 02:
But what I do know is that.

[00:08:07] Speaker 02:
Why is it not exactly correct?

[00:08:10] Speaker 02:
Because the point is that the mod did not cover construction costs involved with the structural brick design.

[00:08:18] Speaker 02:
And I believe that's what the board held.

[00:08:20] Speaker 02:
And that's why I allowed Parsons to go forward and find entitlement on the structural brick design.

[00:08:27] Speaker 00:
And if I'm correct, I don't think that the government is arguing that the mod 2 release is broader than that, is it?

[00:08:35] Speaker 02:
I have not raised that issue in this appeal.

[00:08:40] Speaker 04:
No, but the question in my mind was whether or not what you were doing in the mod was just saying you were giving up a right you might have to have proceeded with structural brick, and that you were agreeing to go forward with the

[00:08:56] Speaker 04:
double wall with the fix.

[00:09:02] Speaker 02:
I think that's right, but I think that it was carefully worded and again they left out construction.

[00:09:08] Speaker 04:
Right, but the basis for you having an equitable adjustment claim would be that you had a right to proceed with your claim as you wanted to do it with structural brick.

[00:09:20] Speaker 01:
Right.

[00:09:21] Speaker 04:
That's the basis on which you would have an equitable adjustment claim under the law.

[00:09:26] Speaker 04:
But if you gave up your right to proceed with your proposed structural brick and instead agreed to go forward with the double wall proposal, then why aren't you stuck with the board's way of looking at quantum for that?

[00:09:47] Speaker 02:
Because the board ruled that mod 2 did not cover the entitlement to which Parsons

[00:09:55] Speaker 02:
for which he ruled they were entitled to receive, and the Air Force has not challenged that here in this appeal.

[00:10:05] Speaker 00:
You didn't give up your construction cost plan.

[00:10:07] Speaker 04:
I agree.

[00:10:08] Speaker 04:
It didn't cover construction costs, but the question is whether it covers construction costs under your theory or under the other theory.

[00:10:17] Speaker 04:
I don't think it matters.

[00:10:19] Speaker 04:
You were allowed that the board would give you construction costs for how much more it cost you to do it with the double wall with the fix.

[00:10:34] Speaker 02:
Isn't that?

[00:10:35] Speaker 02:
Mod 2 expressly covers delays or costs arising from varying design approaches

[00:10:43] Speaker 02:
including delays in reviewing approaches.

[00:10:46] Speaker 02:
That was the several months where the parties debated whether Parsons could go ahead with the structural brick design.

[00:10:54] Speaker 04:
OK, help me there.

[00:10:55] Speaker 04:
So that's what it covers.

[00:10:57] Speaker 04:
Did you release a claim to any of that?

[00:11:02] Speaker 02:
We did not.

[00:11:03] Speaker 04:
It does not mention construction.

[00:11:05] Speaker 04:
What's the release?

[00:11:08] Speaker 02:
It expressly covers delays or costs arising from varying design approaches, including delays in reviewing approaches.

[00:11:17] Speaker 02:
That's design and the time to review design.

[00:11:21] Speaker 02:
That has nothing to do with either the double wall construction or the structural brick construction.

[00:11:27] Speaker 04:
What did the mod release?

[00:11:28] Speaker 04:
Did you give something up?

[00:11:31] Speaker 04:
Who gave what up?

[00:11:33] Speaker 04:
That's what a release is.

[00:11:36] Speaker 04:
That is at the board's

[00:11:39] Speaker 04:
We don't have the mod in the record, but who gave what up in the release?

[00:11:48] Speaker 00:
You gave up the claim to increase design costs, right?

[00:11:52] Speaker 02:
Yes.

[00:11:56] Speaker 02:
Extended the period of performance 126 days that accounted for 126 days associated with the structural brick discussion.

[00:12:05] Speaker 04:
Excuse me, if you gave up the claim to increase design costs, what's the $776,000 you got given?

[00:12:13] Speaker 02:
That was for the time to review the varying design costs during those months when the parties were hashing it out.

[00:12:23] Speaker 04:
So that was the time to review.

[00:12:25] Speaker 04:
And you gave up what?

[00:12:29] Speaker 02:
I guess we gave up.

[00:12:32] Speaker 02:
the right to come after them for anything other than the extension of time they gave us for that period of time where they were negotiating.

[00:12:42] Speaker 04:
But also, in the mod, you agreed to go forward with, you know, Baker's 30% of the zone collapse, correct?

[00:13:02] Speaker 02:
Hello?

[00:13:03] Speaker 02:
The board's decision doesn't talk about which.

[00:13:07] Speaker 04:
I know that.

[00:13:08] Speaker 04:
You have the mod in front of you.

[00:13:10] Speaker 04:
I don't have it in front of me, because you didn't put it in the record.

[00:13:14] Speaker 02:
Well, it's at appendix 46, the board's decision.

[00:13:20] Speaker 02:
PE was willing to accept 120,000 plus 100,000 for a six-month extension with no money.

[00:13:28] Speaker 02:
To add greater details to the understanding of this agreement, Parsons is estimating the following impacts that have been absorbed to date and will have to be absorbed with the execution of a contract mod under the proposed resolution mod.

[00:13:42] Speaker 02:
They listed $100,000 in actual redesign expenses and some other costs for the 35% design and signed a release of claims for direction given on the design effort to date.

[00:13:56] Speaker 02:
That's the scope of the release.

[00:14:00] Speaker 00:
Maybe you should move on to your third point here.

[00:14:06] Speaker 02:
The third claim is the delayed payroll claim.

[00:14:09] Speaker 02:
Judge Clark issued a minority opinion explaining that this claim is based on the government's violation of FAR 22.406-1 dealing with enforcement of labor standards and concluded that payroll reviews must be prompt or the entire regulatory scheme becomes meaningless.

[00:14:27] Speaker 02:
And a majority of judges disagreed finding that FAR 22.406-1 does not provide contractors a remedy.

[00:14:34] Speaker 02:
And they relied on Cessna Aircraft versus Dalton 126 F-3rd 1442 for the proposition that the primary intent of a statute of regulation must be to protect or benefit a class of persons.

[00:14:48] Speaker 00:
Well, why don't you address first the jurisdictional issue as to whether your appeal with respect to that item is timely.

[00:14:57] Speaker 02:
Absolutely.

[00:15:01] Speaker 00:
What the board did was to create two separate dockets, two separate appeals from the contracting officer.

[00:15:09] Speaker 00:
And this one was put in a separate docket.

[00:15:13] Speaker 00:
And with respect to that appeal, you were not timely.

[00:15:18] Speaker 00:
So why isn't that fatal to you?

[00:15:21] Speaker 02:
Well, the government relies solely on the fact that the ASPCA assigned it

[00:15:26] Speaker 02:
a different number, but the board explained that it assigned a separate number for reasons of judicial efficiency and clarity, even though it was fully litigated under the present appeal, establishing that the delayed payroll claim was not a separate case.

[00:15:42] Speaker 02:
In fact, that claim was litigated with all of Parson's other claims at the same trial involving the same parties, the same contract, and the same judge

[00:15:54] Speaker 02:
and significantly all under the same number assigned by the board at the outset, 58634.

[00:15:59] Speaker 02:
The board only assigned a different number at the very last minute.

[00:16:04] Speaker 03:
And also, all of Parson's claims... Mr. Hammer, can I... This is Judge Hughes.

[00:16:09] Speaker 03:
Can I interrupt just a minute?

[00:16:10] Speaker 03:
Sure.

[00:16:11] Speaker 03:
If the board had at the outset, even though you filed this as one case, divided this up into two cases into the payment claim we're talking about and the rest of the case.

[00:16:23] Speaker 03:
and issued two separate decisions.

[00:16:28] Speaker 03:
Wouldn't you be entirely in that circumstance from the outset?

[00:16:31] Speaker 02:
I think if they had conducted separate trials, had separate rule four files, separate post-hearing briefs, and rendered separate judgments all under the same number, yes.

[00:16:45] Speaker 02:
Even though they're all under the same set of facts?

[00:16:48] Speaker 02:
Same contract, same parties,

[00:16:52] Speaker 02:
Same rule four files, same transcripts, everything.

[00:16:55] Speaker 02:
Same judge.

[00:16:57] Speaker 03:
Right.

[00:16:57] Speaker 03:
So what difference does it make that the bifurcation came at the end of the process rather than at the beginning of the process if they decided to bifurcate?

[00:17:08] Speaker 02:
Because they mitigated everything together and made an administrative decision to assign a number at the very end of the case.

[00:17:17] Speaker 02:
And the majority even showed that the two

[00:17:22] Speaker 02:
decisions are inextricably linked by adopting the material findings of fact in Judge Clark's main decision as part of its decision.

[00:17:33] Speaker 03:
And also, all of Harson's claims arose... I still don't... Mr. Hamrick, you have to stop talking.

[00:17:37] Speaker 03:
I know it's hard because we're all on the phone, but as soon as you hear me, you have to stop talking.

[00:17:42] Speaker 03:
I don't understand what difference it makes that they adopted the original thing, his original findings,

[00:17:49] Speaker 03:
if they separated it out and bifurcated it as a separate decision.

[00:17:52] Speaker 03:
They're allowed to do that, aren't they?

[00:17:54] Speaker 02:
They're allowed to do that.

[00:17:57] Speaker 03:
And isn't it clear that once it's a separate decision, it has to be appealed independently?

[00:18:02] Speaker 02:
I would say it's not clear.

[00:18:07] Speaker 02:
Well, what support do you have for that?

[00:18:08] Speaker 03:
I think you answered my prior hypothetical that if they bifurcated at the outset, you would have had to appeal independently.

[00:18:16] Speaker 03:
I just don't understand what difference it makes if they bifurcated at the very end.

[00:18:21] Speaker 02:
Well, all of Parsons' claims arose from the same contracting office's final decision, and we cited precedent from this court.

[00:18:29] Speaker 02:
That would be true, too, if they had bifurcated at the beginning, right?

[00:18:35] Speaker 02:
If they had bifurcated it at the beginning, and again,

[00:18:40] Speaker 02:
I would agree with that if they had conducted this as two separate cases, but they did not.

[00:18:48] Speaker 00:
But they wrote two separate opinions at the end, right?

[00:18:52] Speaker 02:
At the very end, they did.

[00:18:53] Speaker 00:
Okay.

[00:18:57] Speaker 00:
Well, unless there are other questions, maybe we should pause here and hear from the government on the main appeal and the cross appeal.

[00:19:08] Speaker 00:
Hearing no further questions for the moment, Mr. Hamrick, thank you.

[00:19:13] Speaker 00:
Mr. Kaikouras, if I'm pronouncing that correctly, why don't you go ahead.

[00:19:18] Speaker 01:
Yes, thank you, and good morning, Your Honors, and may it please the Court.

[00:19:22] Speaker 01:
And as Your Honor indicated, absent questions from the Court on the issues raised by Parsons and its appeal, I'd like to move directly to

[00:19:32] Speaker 01:
the jurisdictional question raised in our cross-appeal and time permitting also move, discuss the cost reasonable issue as well.

[00:19:43] Speaker 00:
I have a couple of questions about the structural brick claim and I don't understand why having been forced to abandon an approach that they wanted to take that is using structural brick, they weren't entitled to the difference between what they

[00:20:03] Speaker 00:
performance did cost, construction performance did cost, and what it would have cost if they'd gone with the structural brick design in the first place.

[00:20:13] Speaker 01:
Yes, the difference that the board highlighted, Your Honor, was that the cost estimate that Parsons provided in its brief did not line up with the entitlement that the board found.

[00:20:30] Speaker 01:
Parsons presented a cost

[00:20:33] Speaker 04:
You're avoiding Judge Dyke's question.

[00:20:38] Speaker 04:
Judge Dyke was asking when the board didn't apply the wrong legal metric opinion cited by Parsons.

[00:20:50] Speaker 04:
They're saying in the facts here, they're entitled to an act of law adjustment.

[00:20:56] Speaker 04:
And they make that legal argument.

[00:20:58] Speaker 04:
And, Reed, you did not even respond to that argument in the reply.

[00:21:04] Speaker 04:
Well, Your Honor, why is it that the facts here didn't entitle them to the relief they want under metric for the quantum assessment you would have, which is the one, Judge, that I just described?

[00:21:21] Speaker 01:
Well, Your Honor, the board found that they were entitled to construction costs, but that they didn't present them properly

[00:21:32] Speaker 01:
in their brief and in their argument before the board.

[00:21:36] Speaker 00:
What do you mean you were to present them?

[00:21:38] Speaker 00:
Are we talking about the same claim?

[00:21:39] Speaker 00:
We're talking about the structural brick claim.

[00:21:41] Speaker 00:
They argued for the difference in what it would have cost them to do it with structural brick and what it actually did cost them.

[00:21:50] Speaker 00:
What's the matter with that?

[00:21:53] Speaker 01:
Your Honor, the board found that

[00:21:56] Speaker 01:
The reason that Parsons presented for using structural brick was not entirely tied to the issue of progressive collapse.

[00:22:10] Speaker 00:
I have no idea what you're talking about.

[00:22:12] Speaker 00:
They argued they were entitled to use structural brick, and it would have cost them a lot less to do it, right?

[00:22:19] Speaker 01:
Yes.

[00:22:21] Speaker 00:
So why aren't they entitled to recover

[00:22:24] Speaker 00:
the excess cost that they incur?

[00:22:29] Speaker 01:
Because, Your Honor, the board found there were two different issues presented with regard to the structural brick.

[00:22:37] Speaker 01:
One was the design and whether or not they were entitled to switch from the 35% design that was given to them, which was the double wall design, whether or not they were allowed to switch to the structural brick.

[00:22:54] Speaker 01:
And the board found that they were and they were compensated for that.

[00:22:58] Speaker 01:
That was the $700,000 and change that they were given.

[00:23:04] Speaker 00:
That's the excess design costs, right?

[00:23:08] Speaker 00:
We're not talking about that now.

[00:23:09] Speaker 00:
We're talking about the excess construction costs.

[00:23:13] Speaker 01:
Correct.

[00:23:14] Speaker 01:
And the board found that the difference in construction costs

[00:23:20] Speaker 01:
was tied to the issue of progressive collapse.

[00:23:25] Speaker 01:
The 35% design that was originally given to Parsons as part of the project did not account.

[00:23:33] Speaker 04:
That's the dividing point there when you say that they said it was the cost were designed to have much more at cost to shore up the 35% design.

[00:23:46] Speaker 04:
The other side's arguing, no, that's not the wrong approach.

[00:23:52] Speaker 04:
Yes, Your Honor, and the board... And why didn't you respond in your brief to their legal argument that they were entitled as an equitable judgment, they were entitled to the metric from the Court of Federal Appointment's test for how you compute the costs?

[00:24:12] Speaker 01:
Your Honor, we responded to this issue that they had not presented

[00:24:21] Speaker 01:
their costs properly because they were claiming that they were entitled to the difference between the entire difference between their structural brick design and what it actually costs to construct.

[00:24:36] Speaker 00:
Yeah, what's wrong with that theory?

[00:24:37] Speaker 00:
What's wrong with that theory?

[00:24:39] Speaker 01:
The board found that Parsons' own expert explained that their proposal of structural brick was not

[00:24:50] Speaker 01:
entirely tied to the rationale of entitlements that the board found, which was correcting for this issue of progressive collapse.

[00:25:02] Speaker 01:
So what the board was finding was that Parsons was entitled to damages, but only to the extent that those damages or those costs, excuse me, corrected for the increased construction costs

[00:25:17] Speaker 01:
to correct for the progressive collapse issue.

[00:25:20] Speaker 01:
And that's not what they present before.

[00:25:22] Speaker 00:
OK, let me give you a hypothetical.

[00:25:23] Speaker 00:
Suppose I contract with the government to build a building.

[00:25:26] Speaker 00:
And I have a choice between structural brick and some other method.

[00:25:32] Speaker 00:
And the government says, no, you can't use structural brick.

[00:25:36] Speaker 00:
And I say, the other method that you're requiring me to use costs me a million dollars extra in construction costs.

[00:25:43] Speaker 00:
Are they not entitled to recover that million dollars?

[00:25:51] Speaker 01:
They would be entitled in that hypothetical, Your Honor, but I don't believe that lines up with what's happening in this case.

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

[00:26:00] Speaker 00:
I don't have any further questions on this.

[00:26:02] Speaker 00:
Unless my colleagues do, why don't we move on to your other arguments?

[00:26:07] Speaker 00:
OK.

[00:26:08] Speaker 00:
Thank you, Your Honor.

[00:26:09] Speaker 01:
Turning to the jurisdictional question, the ASVCA determined that it had jurisdiction over this case pursuant to the Contract Disputes Act.

[00:26:20] Speaker 01:
And as support for that finding, the board cited this court's 2011 slattery decision, and this was a legal error.

[00:26:28] Speaker 01:
Slattery does not apply to the instant matter because the statute at issue in this case was the Tucker Act and not the CDA.

[00:26:37] Speaker 04:
The court confirmed... Can I ask a first question before we get into this?

[00:26:41] Speaker 04:
The board said that this was a NAFTA contract.

[00:26:46] Speaker 04:
even though on the face of the contract, the contract was entered into the Air Force, not with a NAFTA.

[00:26:54] Speaker 04:
So why is this a NAFTA contract?

[00:26:57] Speaker 04:
Why are we talking about this?

[00:27:01] Speaker 04:
Because, Your Honor, in the first place, there was funding from a NAFTA source.

[00:27:07] Speaker 04:
But we know from slattery that where the funding comes from is irrelevant to a jurisdictional question.

[00:27:16] Speaker 01:
Well, Your Honor, two responses there.

[00:27:20] Speaker 01:
First is that it was a NAFTA contract because the NAFTA was providing the funding for the contract and the Air Force Material Command was simply providing the contracting services in terms of the contracting officer.

[00:27:40] Speaker 04:
Right.

[00:27:40] Speaker 04:
Other than the funding, why else would it be a NAFTA contract?

[00:27:45] Speaker 04:
Is there any other basis?

[00:27:48] Speaker 01:
Well, Your Honor, the contract was entered into on behalf of the Air Force Services Agency, which is a NAFTA.

[00:27:55] Speaker 01:
Where did you put in the records for that?

[00:28:01] Speaker 01:
Your Honor, I'm sorry.

[00:28:06] Speaker 01:
Was there a second question I didn't hear?

[00:28:08] Speaker 04:
Judge Hughes is asking, is there support from the fact that the contract was entered into by the Air Force on behalf of a NAFTA?

[00:28:19] Speaker 01:
Yes, Your Honor.

[00:28:20] Speaker 01:
The contract itself specified that only NAFTA funds would be used.

[00:28:28] Speaker 03:
That's not what you just said though.

[00:28:31] Speaker 03:
You just said that the contract was entered into on behalf of the NAFTA.

[00:28:36] Speaker 03:
All I can tell is that the contract documents specify that non-appropriated funds are to be used for this.

[00:28:44] Speaker 03:
But they don't say anything about who this is going to be entered onto in behalf of or who's the contracting entity.

[00:28:52] Speaker 03:
So do you have something besides the funds evidence, which is a couple of lines in the task order to suggest that it was entered into on behalf of an AFI?

[00:29:05] Speaker 01:
Well, in the contract itself, Your Honor, there's the reference to the Air Force Services Agency.

[00:29:13] Speaker 01:
I believe there is a reference to an individual who is a point of contact from the Air Force Services Agency.

[00:29:25] Speaker 01:
And then the source of the funding is our primary support for the fact that the contract was being entered into on behalf of the NAFTA.

[00:29:34] Speaker 03:
Is there any language that suggests that the contract is strictly limited to non-appropriated funds and that no appropriated funds can or shall be used for this contract?

[00:29:49] Speaker 01:
Yes, Your Honor.

[00:29:52] Speaker 01:
Where?

[00:29:53] Speaker 01:
I'm finding the appendix site as we speak.

[00:30:04] Speaker 01:
In the Joint Appendix at 804, it states that only non-appropriated funds were allocated for the contract.

[00:30:16] Speaker 01:
There was no other source of funding.

[00:30:18] Speaker 01:
And the Air Force Material Command does not have access to those funds.

[00:30:25] Speaker 04:
Or it says only non-appropriated funds.

[00:30:27] Speaker 04:
I'm looking at 804.

[00:30:29] Speaker 01:
Yes.

[00:30:31] Speaker 04:
Or it says only.

[00:30:32] Speaker 04:
The word only doesn't appear.

[00:30:35] Speaker 03:
Well, the... This is the same evidence we've been talking about that you're over-reading.

[00:30:41] Speaker 03:
It just specifies a non-appropriated fund source, but it doesn't limit it to non-appropriated funds, and it doesn't tell you anything about who the contractor name is.

[00:30:53] Speaker 01:
Do you have anything else that... Well, you're... Well, that's the primary evidence in the contract, Your Honor, and... It's the only evidence.

[00:31:05] Speaker 03:
It's the only evidence, right?

[00:31:07] Speaker 03:
You keep saying it's the primary evidence, but when I ask you for more, you don't happen.

[00:31:13] Speaker 03:
So this is it.

[00:31:17] Speaker 01:
Yes, that's the only evidence in the contract.

[00:31:19] Speaker 03:
So then can I ask you the follow-up question?

[00:31:22] Speaker 03:
Do you have any legal authority that you've cited, I didn't see any in your brief, that suggests that just because funding may come from a non-appropriated fund,

[00:31:33] Speaker 03:
that it's necessarily a contract with the NAFTA.

[00:31:47] Speaker 01:
The issue here, well... I'm asking about precedent.

[00:31:52] Speaker 03:
This is a simple question.

[00:31:53] Speaker 03:
Do you have case law to cite to me or not?

[00:31:55] Speaker 03:
Because I think you've all jumped over and got straight to the question of saying, this is a NAFTA, because it's a really interesting issue, post-flattery.

[00:32:03] Speaker 03:
But it's not clear to me at all that this is a NAFTA.

[00:32:06] Speaker 03:
And the fact that there's non-appropriated funds doesn't solve for me the question of whether this is a contract with the NAFTA, or it's with the contract with the Air Force itself,

[00:32:16] Speaker 03:
that relies on non-appropriate funds, which seems to me, under our case law, to be a big distinction.

[00:32:23] Speaker 01:
Understood, Your Honor.

[00:32:24] Speaker 01:
I think the issue arose when the board itself made the finding that the AFSVA was the counterparty to the contract and asked for supplemental briefing.

[00:32:39] Speaker 03:
I get that, but what evidence did the board rely on?

[00:32:43] Speaker 03:
Again, this is what I think happened.

[00:32:46] Speaker 03:
The board just jumped over this, too, and decided, well, it looks like there's not an appropriate fund, so it must be a non-appropriate fund entity.

[00:32:53] Speaker 03:
But there's nothing in the IBIQ, you know, parent order, you know, contract or the task order that suggests that it's directly with the NAFTA.

[00:33:07] Speaker 01:
Yeah, that's correct, Your Honor.

[00:33:09] Speaker 01:
Go ahead.

[00:33:13] Speaker 01:
OK.

[00:33:14] Speaker 01:
The board, again, I think this goes to the procedural process that happened where this issue was raised on supplemental briefing based on the board making the determination that it was a NAFCE and that the NAFCE was the counterparty.

[00:33:33] Speaker 01:
So the record.

[00:33:36] Speaker 04:
The board was eager to get to the issue.

[00:33:41] Speaker 04:
Oh, does it look like the board manufactured an issue here?

[00:33:47] Speaker 01:
I wouldn't characterize it as manufacturing an issue, Your Honor.

[00:33:51] Speaker 01:
We do believe that the NAFTA, that the SVA was the counterparty and that it is a NAFTA, but I would agree with you that there is limited discussion of that point both in

[00:34:09] Speaker 01:
the decision and the record.

[00:34:10] Speaker 01:
However, if that is... Did you... Can I interrupt again?

[00:34:16] Speaker 03:
In the supplemental briefing at the board, I don't think we have that in the record or we don't have it fully in the record.

[00:34:22] Speaker 03:
Did the government put forth evidence about, further evidence beyond these contract documents about why the contract was with the NAFTA?

[00:34:33] Speaker 03:
Did you read the supplemental briefs?

[00:34:37] Speaker 01:
Yes, Your Honor.

[00:34:39] Speaker 01:
But again, the primary issue that was focused on there was this question over slattery.

[00:34:45] Speaker 03:
Well, yes, but that's the problem.

[00:34:48] Speaker 03:
Sorry, I know I'm interrupting and this is difficult on the phone, but the primary issue that the Board resolved is completely dicta and not relevant if this isn't a contract with an athlete.

[00:35:03] Speaker 03:
And you can't jump over that important, I think, factual argument about whether this is actually a contract with the NAFTA.

[00:35:14] Speaker 03:
Are you aware of anything in the supplemental briefing that would help us with this question, or did you all just jump over it too in the supplemental briefing and get straight to slaughtering?

[00:35:24] Speaker 01:
The issue was raised in the supplemental briefing, Your Honor, but again, when looking at the board's decision, there wasn't any

[00:35:33] Speaker 01:
analysis of that point.

[00:35:36] Speaker 03:
And... That's not... Well, that's not really what I asked.

[00:35:39] Speaker 03:
Did you, in your supplemental briefing to the board, and I know that this was handled by the agency, probably not you, but did the agency put forth specific evidence why it thought this was a contract with the NAFTA beyond the citation to the funding limitations we've already talked about?

[00:36:02] Speaker 01:
To my knowledge, they did not, Your Honor.

[00:36:06] Speaker 01:
But the one thing I would say about that is that the Air Force and all the military departments have strict regulations as to how non-appropriated funds can be used and dispersed.

[00:36:22] Speaker 01:
So the fact that the funding was coming from non-appropriated funds can be dispositive of this issue.

[00:36:32] Speaker 03:
because... What's your legal support for that?

[00:36:37] Speaker 03:
I'm not aware of any case law that says that because the question is ultimately whether appropriated funds can be used to satisfy a judgment, isn't it?

[00:36:53] Speaker 03:
So even if the initial contract is with non-appropriated funds, if it's with

[00:36:58] Speaker 03:
an entity that also has access to appropriated funds that can satisfy a judgment, then it's not an ASCII contract.

[00:37:06] Speaker 03:
Are you saying that appropriated fund entities can never use non-appropriated funds for contracts?

[00:37:17] Speaker 01:
Your Honor, what I'm saying is that there is a... Yes, but there's a distinction.

[00:37:22] Speaker 01:
There's a clear regulatory scheme

[00:37:25] Speaker 01:
for how non-appropriated funds can be used.

[00:37:29] Speaker 01:
And the distinction I would draw, and again, this is also a distinction with the flattery decision, is that it's not that the non-appropriated funds would be paid for a judgment-determined jurisdiction.

[00:37:45] Speaker 01:
It's that the existence of the non-appropriated funds determine the entity

[00:37:50] Speaker 01:
that is in question, in this case, the Air Force Services Agency, and that that entity falls outside the scope of the waiver of sovereign immunity that exists within the CDA.

[00:38:05] Speaker 01:
And so the fact that non-appropriated funds were being used for this project, specifically this project, as we discussed in our reply brief, this is why we brought up the issue of military construction.

[00:38:20] Speaker 01:
is that the Air Force is prohibited from using appropriated funds for this project because of the requirements, the statutory requirements for military construction projects.

[00:38:36] Speaker 01:
So the fact that non-appropriated funds were being used shows that it was not the Air Force

[00:38:45] Speaker 01:
that was the counterparty to Parsons.

[00:38:47] Speaker 01:
It had to be the AFSBA because the Air Force was prohibited from using these funds, was prohibited from using its own funds to engage in a project of this type.

[00:39:03] Speaker 00:
Okay, if there are no further questions, I think we're out of time.

[00:39:07] Speaker 00:
May my colleagues have further questions?

[00:39:11] Speaker 00:
Hearing none, thank you, Mr. Kaipora.

[00:39:14] Speaker 00:
Mr. Hamrick, I think you're over the time, but we'll give you two minutes there.

[00:39:21] Speaker 02:
Thank you very much.

[00:39:22] Speaker 02:
We view this as a straight-up contract interpretation issue.

[00:39:25] Speaker 02:
There is zero evidence in the contract, IEIQ or delivery order.

[00:39:30] Speaker 02:
The AFSBA is the contracting party.

[00:39:35] Speaker 02:
The government said in one of its briefs that the buildings were built on behalf of AFSBA.

[00:39:39] Speaker 02:
They cited page one of Judge Clark's decision.

[00:39:43] Speaker 03:
Mr. Hamrick, this is Judge Hughes.

[00:39:49] Speaker 03:
There's not zero evidence.

[00:39:51] Speaker 03:
I don't want you to overshoot the record either.

[00:39:53] Speaker 03:
There are definitely the points that the government pointed to that says non-appropriated funds can be used for, are to be used for this contract.

[00:40:02] Speaker 03:
Are you aware of legal authority one way or another?

[00:40:06] Speaker 03:
and particularly responds to the government's argument that regulations prohibit it from using non-appropriated funds for government construction, that would suggest that the use of non-appropriated funds is or is not determinant of whether it's with an AFI.

[00:40:22] Speaker 02:
Excellent question.

[00:40:24] Speaker 02:
And by the way, Judge Hughes, I apologize for talking over you previously.

[00:40:27] Speaker 02:
That won't happen again.

[00:40:28] Speaker 02:
But the government... It's fine.

[00:40:31] Speaker 02:
The government tries to distinguish a Contract Disputes Act, or CDA case we cited, U.S.

[00:40:38] Speaker 02:
versus General Electric 727, F-second 1567, by arguing that the Air Force, notice they didn't say AFSBA, did not receive appropriations for this particular project

[00:40:50] Speaker 02:
at McGuire, but the GE opinion rebuts that project-by-project approach.

[00:40:56] Speaker 02:
You don't judge whether the NAFTA doctrine applies based on whether appropriated funds were or were not used for a particular contract.

[00:41:05] Speaker 02:
The court explained that the NAFTA doctrine applies only if the activity, the court didn't say the contract, specifically intended to operate without using appropriated funds.

[00:41:16] Speaker 02:
And here, just as in the GE case, the Air Force

[00:41:19] Speaker 02:
is not an activity that is specifically intended to operate without using appropriated funds.

[00:41:25] Speaker 02:
And as you noted, the reference on one page and I think appendix 804 in the delivery order to non-appropriated funds does not mention AFSVA and it certainly does not say that amounts for equitable adjustments like those awarded to Parsons by the ASBCA cannot be paid from appropriated funds.

[00:41:49] Speaker 02:
Nothing

[00:41:50] Speaker 02:
by Congress prohibits the Department of the Air Force from asking for appropriated funds at this juncture.

[00:42:00] Speaker 00:
Suppose the contract said they could only use non-appropriated funds.

[00:42:05] Speaker 00:
Would that make it a contract with a NAFTA?

[00:42:07] Speaker 02:
Under GE, no, because what matters is whether the contracting is responsible for paying damages, taxpayer money for damages,

[00:42:18] Speaker 02:
is walled off from ever receiving appropriated funds.

[00:42:23] Speaker 02:
So you can't go project by project.

[00:42:26] Speaker 00:
I don't think that was a response to my question.

[00:42:28] Speaker 00:
My question is if they were barred from using appropriated funds and could only use non-appropriated funds for the contract, would that make it a nappy contract?

[00:42:40] Speaker 02:
I don't think it would.

[00:42:41] Speaker 02:
And I'll cite another case that we cited.

[00:42:48] Speaker 02:
Lafond Plaza properties.

[00:42:55] Speaker 02:
Bear with me one second.

[00:43:01] Speaker 00:
What level of decision is this?

[00:43:03] Speaker 02:
This is from this court.

[00:43:07] Speaker 02:
The court stated, this is 668F second, 1211, the court stated that the

[00:43:12] Speaker 02:
at the controller, the government agency that was the party to the contract has been financially self-sufficient is not this positive.

[00:43:22] Speaker 02:
There must be a clear expression by Congress that the agency was to be separated from general federal revenues.

[00:43:30] Speaker 02:
And in Breitbach versus US 500F, second 556, this court's predecessor stated there was no clear cleavage

[00:43:40] Speaker 02:
between the funds of the St.

[00:43:41] Speaker 02:
Lawrence Seaway Development Corporation and those of the United States that one can say that Congress wished to cut the agency loose from the Treasury or from appropriated funds.

[00:43:52] Speaker 02:
So it's not a project-by-project determination.

[00:43:57] Speaker 00:
Okay.

[00:43:57] Speaker 00:
Mr. Hamrick, unless there are further questions from my colleagues, I think we're out of time.

[00:44:02] Speaker 00:
Mr. Taikura will give you one minute on the cross appeal.

[00:44:07] Speaker 01:
Thank you, Your Honor.

[00:44:09] Speaker 01:
Just the one point that I'd like to make on this.

[00:44:13] Speaker 01:
The issue of whether or not the AFSBA was the party in issue, I would say that at best it's a mixed question of law and fact.

[00:44:29] Speaker 01:
And if the court determines that

[00:44:34] Speaker 01:
the record doesn't support the board finding, that doesn't automatically mean that Parson's argument is correct, that the Air Force was the party at issue.

[00:44:46] Speaker 01:
I would say that the proper recourse in that case would be for a remand for further development of the record and finding from the board on this particular point.

[00:45:02] Speaker 00:
OK.

[00:45:02] Speaker 00:
Thank you, Mr. Kaikoura.

[00:45:03] Speaker 00:
Thank you, Mr. Hamrick.

[00:45:06] Speaker 00:
The case is submitted.