[00:00:00] Speaker 03:
Our next case for today is 2019-2148, Boeing versus United States.

[00:00:09] Speaker 03:
Counsel, please proceed.

[00:00:11] Speaker 00:
Thank you, Judge Moore, and may it please the court.

[00:00:14] Speaker 00:
The simplest and most straightforward way for the court to resolve this appeal would be to hold that the decision below must be reversed because the trial court refused to follow this court's binding precedent in GHS-HMO.

[00:00:29] Speaker 00:
This case is on all fours with GHS, with one exception that actually makes Boeing's case even stronger.

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As in GHS, Boeing claims that a regulation applicable to the administration of its contract with the government is inconsistent with the governing statute.

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As in GHS, the government argues that the contractor had waved its challenge to the regulation by failing to object to the contracting officer before entering the contract.

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As in GHS, it is undisputed that the challenge regulation is mandatory.

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The contracting officer had no authority to agree to disregard it, as the government admits twice at pages 12 and 50 in the red brief.

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In GHS, this court flatly rejected the government's waiver argument, going so far as to hold that it was frivolous, and the court should do the same here.

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Boeing urged the court below to follow GHS, but the court refused to do so because

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The court said, and I'm quoting from page 12 of the appendix, the short analysis justifying rejection of the defense did not clearly indicate why the government's waiver defense was deemed to be frivolous.

[00:01:38] Speaker 00:
That was error twice over.

[00:01:40] Speaker 00:
First, the GHS court did explain why the government's waiver defense was frivolous.

[00:01:46] Speaker 01:
Mr. Kirk, this is Judge Toronto.

[00:01:47] Speaker 01:
Can I ask you questions about something other than simply interpreting GHS to try to get

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a fix on the body of law about waiver which includes but is not limited to GHS.

[00:02:03] Speaker 01:
So first of all, are any of the other waiver cases that are being relied on ones in which the provision being challenged on the later appeal would

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occurred in a regulation and where we said that could not have been fixed had it by the contracting officer.

[00:02:32] Speaker 00:
GHS says that, Your Honor.

[00:02:35] Speaker 01:
Any other cases?

[00:02:36] Speaker 01:
I'm sorry, I should have emphasized the others.

[00:02:38] Speaker 01:
Is that GHS and GHS alone?

[00:02:44] Speaker 00:
Off the top of my head, I'm not thinking of another, but I'm not certain that there isn't another.

[00:02:52] Speaker 01:
Part of what I'm trying to figure out is the relationship between your argument about non-negotiability and your argument about, I'm going to summarize it as, lack of rightness had you brought a suit earlier.

[00:03:09] Speaker 01:
Why could you not

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back in whenever these contracts were entered into, brought a court challenge to get the regulation ruled invalid, thereby allowing the contracting officer to negotiate about the treatment of possible future cost accounting changes.

[00:03:37] Speaker 00:
Well, only two conceivable proceedings for making such a challenge have been identified by anyone in this case, either a bid protest or an APA challenge, and it is clear as a matter of law that neither was available to Boeing.

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A bid protest unquestionably would have been dismissed as unright because it was wholly speculative at the time of contracting that the challenge regulation would even be applied during the administration of Boeing's contract.

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This regulation only applies if several circumstances come together.

[00:04:09] Speaker 00:
Number one, the contract.

[00:04:11] Speaker 01:
Right, but I guess part of what I'm trying to understand about that, and I take the general point, which has some appeal to it, but aren't there rather a lot of contract provisions or solicitation provisions that are contingent on possible but not certain developments during the administration of the contract?

[00:04:33] Speaker 00:
Judge Toronto, there are some, but don't forget, this isn't a contract provision.

[00:04:39] Speaker 00:
The challenge regulation was not incorporated into the contract either by reference or by text, and I won't speak to the solicitation because the government didn't introduce it into evidence, and it's the government's burden, so I think the solicitation is off the table.

[00:04:56] Speaker 00:
Beyond that, Your Honor, I would direct you to the cost accounting statute itself,

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which confirms in terms that the forum for raising a dispute over the price adjustment, which is the underlying dispute here, required by changes in cost accounting practices, are to be resolved pursuant to the Contract Disputes Act, not in a bid protest.

[00:05:18] Speaker 00:
That's section 1503A.

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And more generally, this court has recognized that it is well settled that matters of contract administration must be challenged in a CDA action, not in a bid protest,

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under the Tucker Act.

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That's co-professional.

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And I think the rightness considerations are what drive that rule.

[00:05:37] Speaker 00:
And to go back to, Judge Toronto, your initial question of how these points fit in with the points we made about GHS, our point is there was no form, not the contracting officer, not a bid protest, not an APA action, and by the way, the cost accounting statute specifically precludes APA challenges that's in

[00:06:01] Speaker 00:
1503G and our overall point on this is that there was no forum that if the contracting officer or a bid protest or an APA action thought we were right on the merits could have provided us the relief.

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I mean the essence of waiver is

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You had an earlier opportunity to get your objection considered.

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Boeing had no such opportunity.

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And your honor, I would like to turn to a second independent ground.

[00:06:31] Speaker 01:
Can I just, I just want to press this just, um, just a little bit further.

[00:06:36] Speaker 01:
Your, your contention about the invalidity of the regulation is as far as tell me if I'm wrong, essentially a pure legal contention.

[00:06:48] Speaker 01:
Why exactly under Abbott Labs or whatever the current rightness standard is would a suit challenging that at the time of negotiating the contract not have been right and if successful allowing then the contracting officer to

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to make clear in the contract that the kind of aggregation that you think the statute requires would in fact be available?

[00:07:25] Speaker 00:
Because it's well settled that a bid protest is not right for review when it's contingent on future events.

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I would direct you to the system applications case that we cited, 691 F3rd at 1383 for a recent statement of that rule.

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And here, there is no question that several events had to take place during contract administration for this dispute to even come up.

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Beyond that, Your Honor, I would direct you to consider the practical implications of the rule that the court below adopted.

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contractors on pain of waiver would have to canvas the United States code, the FAR, the defense FAR to identify any provision that might conceivably be applied at some point during the administration of the contract and seek what essentially would be an advisory opinion from the Court of Federal Claims or the GAO in a bid protest.

[00:08:22] Speaker 03:
Do you believe that you would have a harder case in light of these arguments you're making if these facts were like AT&T where this particular FAR regulation was expressly called out in the contract as, and don't forget, we intend to enforce this regulation in particular against you?

[00:08:44] Speaker 00:
Well, Your Honor, I think that isn't like AT&T.

[00:08:48] Speaker 00:
I think that's like GHS.

[00:08:50] Speaker 00:
So I think I would still win

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because in GHS, the challenge regulation was actually incorporated into the contract, and this court still held that the waiver finding was, the argument was frivolous.

[00:09:03] Speaker 00:
In AT&T, what was being challenged was something very different.

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It was the fixed price nature of the contract, and the holding in AT&T 2 rested squarely on the court's finding, uh, holding that AT&T had a,

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remedy available to it because the contracting officer had the power to change it from fixed price to a cost contract if it agreed with AT&T.

[00:09:31] Speaker 02:
This is Judge Chen.

[00:09:32] Speaker 02:
Hi there.

[00:09:33] Speaker 02:
Is that true that the contracting officer in AT&T had the discretion to convert what appeared to be a solicitation for a fixed price contract into a

[00:09:49] Speaker 02:
cost reimbursement contract?

[00:09:52] Speaker 00:
Yes, Your Honor.

[00:09:52] Speaker 02:
I think he may have had to... Is that a common thing for contracting officers to convert a proposed fixed price contract into a cost reimbursement contract?

[00:10:03] Speaker 00:
It's incredibly uncommon, and the only circumstance I can think of where a contracting officer might do that is where it is convinced by the argument that AT&T was advancing that the law forbid a

[00:10:18] Speaker 00:
of fixed price contract.

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If the contracting officer agreed that AC&T was right on the merits of that, then I think the contracting officer would be compelled to switch it to a cost plus.

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But I certainly agree that would be rare.

[00:10:31] Speaker 00:
And with that, I think I heard my buzzer.

[00:10:34] Speaker 00:
So Judge Moore, if there's no further questions.

[00:10:36] Speaker 01:
Can I ask one quick question?

[00:10:38] Speaker 01:
This is Judge Toronto.

[00:10:40] Speaker 01:
Your breach of contract claim takes as a premise

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I think that the provision of 1503 that you say the regulation violates, that the statutory provision is part of the contract.

[00:10:58] Speaker 01:
Why is that so?

[00:11:00] Speaker 00:
Well, I think there's settled law on, and this is obviously a merits question, Judge Toronto, but there's settled law.

[00:11:06] Speaker 01:
Well, go on.

[00:11:07] Speaker 01:
But the reason I ask it is that you say the statute is part of the contract, but the regulation is not part of the contract.

[00:11:14] Speaker 01:
I'm trying to understand why there's a difference.

[00:11:19] Speaker 00:
Well, there's two different regulations that you need to divide here.

[00:11:24] Speaker 00:
Regulation number one is what's called the CAS clause, which is incorporated by reference into the contract.

[00:11:30] Speaker 00:
And it requires the parties to, whenever a cost accounting adjustment is made, to follow the CAF statute in figuring out whether there should be a equitable adjustment.

[00:11:43] Speaker 01:
Okay, so that regulatory provision is part of the contract, and you say that that regulatory provision necessarily incorporates the statutory standards.

[00:11:55] Speaker 01:
That's correct.

[00:11:56] Speaker 01:
Okay, that's a sufficient answer to my question.

[00:11:58] Speaker 01:
Thank you.

[00:11:59] Speaker 01:
Judge Moore, if there's no other questions, I'll reserve the balance for rebuttal.

[00:12:03] Speaker 03:
Okay, let's hear from the government.

[00:12:06] Speaker 04:
Thank you, Your Honor, and may it please the court.

[00:12:09] Speaker 04:
The court should affirm the trial court's decisions because the trial court correctly held that Boeing waived its claim and that the trial court lacked jurisdiction to hear Boeing's illegal exacting claim premised on a contract.

[00:12:20] Speaker 04:
Now, as an initial matter with respect to Weber, Boeing knew of the purported illegality of

[00:12:28] Speaker 04:
or what it claims is the illegal nature of FAR 30.606, made no attempt to raise the issue at the time of contract formation.

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And I understand that Boeing contends for various reasons that absolutely no challenges could have ever made any difference.

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But the point is that it never even tried.

[00:12:47] Speaker 04:
It provided comments to the FAR Council about its views in offsetting in approximately 2000 at appendix pages 651 to 52.

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had presumptive knowledge of the regulation through the rules implementation three years before entered into the contract.

[00:13:03] Speaker 04:
And it exchanged emails about far 30.606 six months before entering into the contract.

[00:13:10] Speaker 04:
They did not address these emails and their reply.

[00:13:14] Speaker 04:
And the emails are set out at appendix pages of 857 through 59.

[00:13:19] Speaker 01:
Council, this is Judge Toronto.

[00:13:20] Speaker 01:
What do you think the mechanism for getting the contract to incorporate an aggregation provision contrary to 606 would have been?

[00:13:37] Speaker 04:
Well, certainly, Your Honor, they would have had to raise the challenge at the time of contract formation.

[00:13:42] Speaker 01:
Tell me what you mean by raise the challenge in a way that indicates that there was a realistic possibility in so raising the challenge of securing the desired relief, assuming, obviously, that they would be right on the merits.

[00:14:05] Speaker 04:
Assuming that they would be right in the merits, first they'd have to raise it to the contracting officer.

[00:14:09] Speaker 04:
And admittedly, this is a non-wavable provision in that it is included in the regulations that interpret the cost accounting standards.

[00:14:20] Speaker 04:
And it's not something that the contracting officer has discretion to apply.

[00:14:23] Speaker 04:
And so it would have to make some sort of judicial challenge, as applied challenge, raise the issue.

[00:14:32] Speaker 01:
Right.

[00:14:32] Speaker 01:
So what sort of judicial challenge do you think?

[00:14:35] Speaker 01:
Boeing might have, could plausibly have made?

[00:14:45] Speaker 04:
Boeing could have raised a protest and Boeing could have raised possibly another, at least reserved its rights or made some sort of effort to reserve its rights as to its challenge to the provision and then proceeded on the contract.

[00:15:02] Speaker 04:
And then... I'm sorry.

[00:15:04] Speaker 01:
Let me just ask about this reservation.

[00:15:07] Speaker 01:
Reservation would do what exactly when the contracting officer had zero discretion?

[00:15:15] Speaker 01:
I don't understand why that's something other than an empty form of words.

[00:15:21] Speaker 04:
Your Honor, the fact is I simply don't know what the outcome would have been if Boeing raised this in 2008.

[00:15:30] Speaker 04:
which is the reason why it would have had to raise the issue at that time.

[00:15:34] Speaker 01:
That's the entire point of... But another way to look at it is that you're making an argument and the Court of Federal Claims agreed that there was a waiver, which means a bypass of an available opportunity, which seems to me to require some establishment of what opportunity there was that was plausibly available

[00:15:58] Speaker 01:
to at the time of entry into the contract.

[00:16:01] Speaker 01:
And I'm not sure that you've identified what that is.

[00:16:06] Speaker 04:
Well, again, Your Honor, they could have raised a protest.

[00:16:09] Speaker 04:
They could have raised before the court some sort of as-applied challenge.

[00:16:13] Speaker 04:
As soon as they entered into the contract that this provision is unenforceable, they could have raised.

[00:16:18] Speaker 02:
This is Judge Jen.

[00:16:19] Speaker 02:
Even before the regulation was actually applied against this contractor, they could have nevertheless raised an as-applied

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challenge to this regulation at the time of entry into the contract?

[00:16:36] Speaker 04:
I'm uncertain if they could have raised it at the exact time, Your Honor.

[00:16:41] Speaker 04:
Certainly when an employee... Right.

[00:16:43] Speaker 02:
I mean, I can see the bind you're in a bit because, I mean, all too often we see the government taking a position that contractors

[00:16:56] Speaker 02:
don't have standing, or they lack rightness for any allegation that they try to raise in a bid protest.

[00:17:04] Speaker 02:
And as I understand it, this isn't a facial challenge to the regulation that they're making.

[00:17:09] Speaker 02:
They're making an as-applied challenge.

[00:17:12] Speaker 02:
And it didn't get applied till many, many, many years into the performance of the contract.

[00:17:18] Speaker 02:
That's why I'm trying to figure out if you can't tell us that they definitively

[00:17:23] Speaker 02:
would have had standing and any challenge this regulation in fact would have been ripe at the time of the bid, then I'm wondering how can we say that this was in fact waived when they didn't file a protest to this non-negotiable regulation?

[00:17:47] Speaker 04:
Well, I would make two points there, Your Honor.

[00:17:50] Speaker 04:
First is that Boeing does

[00:17:52] Speaker 04:
raise a challenge to the entire regulation.

[00:17:55] Speaker 04:
Its three breach of contract claims request that the court not only invalidate the regulation as it applies to the contract here, but also invalidate the regulation as it applies to all of its contracts throughout the entire government.

[00:18:10] Speaker 04:
That type of challenge is an APA challenge that can't be raised in the first instance the manner that Boeing attempts to do so approximately nine years after it entered into the contract.

[00:18:22] Speaker 04:
The second is that this is somewhat egregious in terms of a contractor that is sitting on its rights, quote, unquote, knowing that this regulation is illegal, but not even raising the issue to the contracting officer to say, we don't think that this should apply because we believe it is illegal in contract to the CAF.

[00:18:44] Speaker 02:
In DHS, the regulation was expressly written into the contract, right?

[00:18:50] Speaker 03:
Correct.

[00:18:51] Speaker 02:
So the contractor there knew about this regulation entering into the contract.

[00:18:59] Speaker 02:
And nevertheless, this court held that the government's attempt to argue that they couldn't argue against the regulation at a later date was a frivolous argument.

[00:19:15] Speaker 04:
Well, Your Honor, the court at GHS, and I will note that the trial court's decision below, which did extensively discuss waiver, was decided approximately two months before blue and gold.

[00:19:27] Speaker 04:
But the court's decision in GHS HMO is in the last approximately page of the decision under a section titled, Reformation Was Proper, and gives no explanation why

[00:19:41] Speaker 04:
The argument is frivolous.

[00:19:42] Speaker 04:
Was it frivolous because the waiver frivolous because the section was incorporated into the contract and therefore GHS knew about it?

[00:19:50] Speaker 04:
Was it frivolous for another reason when it says it's non-negotiable?

[00:19:53] Speaker 04:
What exactly does that mean?

[00:19:55] Speaker 04:
There's no explanation as to why waiver applied or why the court.

[00:20:01] Speaker 02:
What could be the possibilities of how to understand the statement in that opinion that says,

[00:20:08] Speaker 02:
the non-reconciliation regulation was non-negotiable.

[00:20:15] Speaker 02:
To me, that strongly suggests that the contractor in that case, it would have been futile to raise any kind of challenge or bicker about the regulation at the time of entering into the contract.

[00:20:33] Speaker 02:
What's another different way of thinking about that sentence?

[00:20:38] Speaker 04:
Well, if they're talking about the non-negotiability of the regulation in the FAR itself or in the contract itself, that would be one question first, and understanding that they are virtually identical.

[00:20:52] Speaker 04:
But the fact is that there has to be a question as to the interpretation of it underscores the point that... Well, that's my question.

[00:21:03] Speaker 02:
I don't understand.

[00:21:05] Speaker 02:
how there's some ambiguity in the opinion.

[00:21:07] Speaker 02:
And I'm asking you to explain to me where is the ambiguity in the opinion.

[00:21:13] Speaker 04:
Well, simply put, the non-reconciliation regulation was non-negotiable.

[00:21:17] Speaker 04:
That's what it is.

[00:21:18] Speaker 04:
Again, is it non-negotiable because there was no way to challenge that, for instance, through the FAR, through the regulation itself?

[00:21:26] Speaker 04:
Was there no way to challenge that in the contract?

[00:21:28] Speaker 04:
Was there no way to discuss that with the contracting officer?

[00:21:31] Speaker 04:
Was there no way to protest that at the beginning?

[00:21:34] Speaker 04:
or was there, you know, why did they not protest?

[00:21:39] Speaker 04:
There's, I certainly understand Your Honor's point, but simply without any explanation as to whether this sort of rule that Boeing attempts to formulate based on a three-sentence explanation of waiver in GHS HMO that directly conflicts with

[00:22:02] Speaker 04:
and the paint and ambiguity doctrine, it's very difficult to understand why it must be applied or in what way.

[00:22:15] Speaker 02:
And with respect to... So is it the government's position that there's just something too murky about this paragraph, that it doesn't have any precedential value at all?

[00:22:29] Speaker 02:
It doesn't, there's no takeaway principle?

[00:22:32] Speaker 02:
from this paragraph in GHS?

[00:22:36] Speaker 04:
Well, it's the government's position that, for example... What's the best reading of that paragraph in the government's view?

[00:22:47] Speaker 04:
The best reading of the paragraph is that it applies simply to this case, not to all future cases.

[00:22:54] Speaker 04:
And therefore, it does not have precedential value, particularly when it conflicts with blue and gold.

[00:23:00] Speaker 04:
And if you look to, for instance, Galloway Farms, which this court cited to in County of Cook, for example, in Galloway Farms, the court discussed that there was insufficient discussion, or I'm sorry, in County of Cook, the court explained that in Galloway Farms, there was insufficient discussion of 28 USC section 1631 in a very short manner

[00:23:27] Speaker 04:
very similar to the waiver discussion in GHS-HMO.

[00:23:30] Speaker 04:
The court held in County of Cook that it couldn't rely on this section 1631 discussion because it was simply insufficient to provide any type of rule or explanation.

[00:23:41] Speaker 04:
And because the waiver discussion is not squarely addressed, it's not fully explored.

[00:23:48] Speaker 02:
Could we get to the patent ambiguity rule?

[00:23:51] Speaker 02:
Yes, Your Honor.

[00:23:53] Speaker 02:
Is there a case that you're aware of

[00:23:55] Speaker 02:
I'm not aware of, where if a contractor believes that a regulation on its face conflicts with the plain meaning of a statute, that that qualifies as a patent ambiguity that must be raised at the time of bidding?

[00:24:18] Speaker 04:
I'm not aware off the top of my head of a case that refers

[00:24:23] Speaker 04:
simply to conflict with the regulation, but certainly that's something that we'd be happy to provide further briefing on.

[00:24:30] Speaker 02:
Right.

[00:24:30] Speaker 02:
I didn't see anything in your briefing nor the other side's briefing that suggested that is the kind of thing that qualifies as a patent patent ambiguity.

[00:24:41] Speaker 02:
I always tend to think of it as, well, maybe there's conflicting statements in the solicitation as to what is the

[00:24:52] Speaker 02:
quantity of requested items or something like that or what is the scope of the work and there's two different statements that seem to conflict with each other.

[00:25:03] Speaker 02:
That's the kind of thing that seems like a very clear on its face ambiguity that the rule in cases like blue and gold is trying to induce people to clear up on the front end rather than the back end.

[00:25:17] Speaker 02:
I've never heard of a situation where a regulation

[00:25:22] Speaker 02:
on its face that arguably conflicts with the statute on its face is where we would all be invoking the patent ambiguity rule.

[00:25:33] Speaker 04:
Well, and here, Your Honor, this is a very unique circumstance where Boeing, by its own concession, stated in all of its pleadings and again at the emails at pages, appendix pages 8, 57 through 59,

[00:25:48] Speaker 04:
that this is something that it understood to be obviously illegal and contrary to the FAR.

[00:25:55] Speaker 04:
And so here, the Peyton ambiguity is one of Boeing's own making or Boeing's own understanding that it shows to stay silent over.

[00:26:03] Speaker 04:
So this is a very, in this particular circumstance where the contractor admittedly knew of something that it believed to be illegal, yet it entered into the contract

[00:26:15] Speaker 04:
understanding this inequality and sitting on its right.

[00:26:20] Speaker 04:
That's the main reason for the patent ambiguity and the waiver doctrine is to prevent these type of situations where a sophisticated contractor like Boeing did nothing.

[00:26:34] Speaker 02:
And then just, you know, rolling it back into a lot of the original questioning.

[00:26:41] Speaker 02:
This regulation was non-negotiable, so what could the contracting officer have done at the time if the contractor had said, wow, we have a patent ambiguity here between this regulation and the statute?

[00:26:56] Speaker 02:
Because I understand it.

[00:26:57] Speaker 02:
Everybody agrees on this call that the contracting officer could do nothing.

[00:27:04] Speaker 04:
The contracting officer could do nothing, which is why Boeing

[00:27:08] Speaker 04:
had to raise a judicial challenge at that time, and it did not.

[00:27:12] Speaker 04:
And my time is up.

[00:27:15] Speaker 03:
Counsel, before you sit down, I want to ask you to go over one thing I know you've gone over already, but just so I have your answer clear in my mind, and then I want to ask you to address the illegal-exaction argument as well.

[00:27:28] Speaker 03:
The first question I have for you is so

[00:27:31] Speaker 03:
What relief could the contracting officer, the contracting officer, have possibly given Boeing regarding their concerns about the FAR regulation?

[00:27:45] Speaker 03:
I mean, the contracting officer couldn't, for example, say, okay, we'll exempt this contract from that FAR regulation.

[00:27:53] Speaker 03:
Could he?

[00:27:54] Speaker 03:
Did the officer have that personal authority?

[00:27:57] Speaker 03:
He did not, Your Honor.

[00:27:59] Speaker 03:
So what relief did you say, I'm just trying to understand, what relief does the government believe the contracting officer could have provided if Boeing had made this challenge below?

[00:28:11] Speaker 04:
To my understanding, the contracting officer had no discretion to provide any relief, and that is why Boeing needed to raise its challenge in a judicial forum at that time.

[00:28:23] Speaker 03:
So your argument isn't that they have waived it by failing to raise the issue with the contracting officer?

[00:28:30] Speaker 04:
Well, certainly if Boeing knew, as it did, that this provision was illegal, it should have raised the issue to the contracting officer.

[00:28:40] Speaker 04:
But yes, there is nothing the contracting officer could have done.

[00:28:43] Speaker 04:
It would have been a precursor to a judicial challenge.

[00:28:46] Speaker 03:
So it would have been futile for them to raise it to the contracting officer?

[00:28:50] Speaker 03:
because if the contracting officer couldn't have done anything about it, it would have been futile.

[00:28:56] Speaker 04:
In front of the contracting officer, yes, which again is why they needed to raise a judicial challenge.

[00:29:02] Speaker 03:
You mean raise a judicial challenge, you mean a Title V action, right?

[00:29:07] Speaker 03:
You're talking about a separate action, not in the context of the application in this contract.

[00:29:12] Speaker 03:
You're saying if they want some sort of declaration of broad inapplicability, they should have raised that

[00:29:20] Speaker 03:
in some sort of Title V action?

[00:29:22] Speaker 03:
Is that the judicial action you're referring to?

[00:29:27] Speaker 03:
You say they should have raised it in a, quote, judicial action.

[00:29:29] Speaker 03:
I'm trying to understand what that judicial action is that you're talking about.

[00:29:34] Speaker 04:
Well, Your Honor, first, they could have protested, as we discussed, but they could have raised an APA challenge

[00:29:41] Speaker 04:
in district court as well, if they were looking to invalidate the entire regulation.

[00:29:46] Speaker 03:
But an APA challenge in district court doesn't get you to waver, right?

[00:29:52] Speaker 03:
Like, that has nothing to do with whether they waived in this case by not raising it in front of the contracting officer, right?

[00:30:04] Speaker 04:
Yes, Your Honor.

[00:30:05] Speaker 04:
It goes, however, to the fact that Boeing apparently threw up its hand

[00:30:11] Speaker 04:
years ago and said, okay, we think that this is illegal.

[00:30:15] Speaker 04:
We're going to do nothing, wait for nine years, and then bring the challenge.

[00:30:20] Speaker 03:
Okay.

[00:30:21] Speaker 03:
Let me ask you, if you don't mind, just quickly address the illegal exaction.

[00:30:25] Speaker 03:
I plan on asking on rebuttal to your opposing counsel, and so I don't want you to not have an opportunity to present your argument on whether or not the court of federal claims had jurisdiction over an illegal exaction claim.

[00:30:39] Speaker 04:
Thank you, Your Honor.

[00:30:41] Speaker 04:
And no, it did not.

[00:30:44] Speaker 04:
The trial court correctly held that it did not.

[00:30:46] Speaker 04:
The illegal action, it's a deprivation of property without due process.

[00:30:51] Speaker 04:
And those claims can only arise under Tucker Act jurisdiction if there is a statute that by expressly or by necessary implication entails the return of money.

[00:31:05] Speaker 04:
And the CAS is not money mandating in that manner.

[00:31:09] Speaker 04:
Because to get to the CAS, there must first be a contract with the government.

[00:31:15] Speaker 04:
And here the contract.

[00:31:16] Speaker 02:
This is Judge Chen.

[00:31:17] Speaker 02:
Just to get a little more specific, I believe the other side cites New York Life.

[00:31:23] Speaker 02:
And I did not see a money-mandating statute in New York Life to justify that illegal-exaction claim.

[00:31:33] Speaker 02:
I believe it was seeking a return on a tax deposit.

[00:31:40] Speaker 02:
Was there a money-mandating statute in that case?

[00:31:42] Speaker 04:
I do not know off the top of my head, Your Honor.

[00:31:45] Speaker 04:
My apologies.

[00:31:48] Speaker 03:
They also cite Ontario Power.

[00:31:51] Speaker 03:
Is that something you're familiar with?

[00:31:55] Speaker 04:
Yes, Your Honor.

[00:31:57] Speaker 04:
And I believe Ontario Power cited back to Cyprus Amex, which was based on a money-mandating statute, if I'm not mistaken in the case.

[00:32:13] Speaker 03:
And okay, I think we have your argument, counsel.

[00:32:20] Speaker 03:
Let's go ahead and give opposing counsel, Mr. Kirk, his rebuttal time.

[00:32:25] Speaker 03:
Thank you, Your Honor.

[00:32:27] Speaker 00:
Thank you, Judge Moore.

[00:32:28] Speaker 00:
On patent ambiguity, Judge Chen, in addition to the fact that the contracting officer couldn't have done anything about it had Boeing raised it, all of this court's patent ambiguity cases all involved ambiguities within the four corners of the contract.

[00:32:43] Speaker 00:
Here it's undisputed that the challenge regulation is not in the contract.

[00:32:48] Speaker 00:
My colleague, Ms.

[00:32:50] Speaker 00:
Murdoch-Park, could not definitively say that any bid protest was right, and that's because it clearly wouldn't have been right because it might not even come up.

[00:33:01] Speaker 00:
My colleagues suggested that Boeing could have brought an as-applied challenge.

[00:33:05] Speaker 00:
That's what we did.

[00:33:07] Speaker 00:
At the first moment that this regulation was applied to these contracts, to this contract, Boeing challenged it using the mechanism provided in the CAS statute itself, Section 1503A, seizure to bring a dispute under the Contracts Dispute Act.

[00:33:24] Speaker 00:
Judge Moore, a Title V action was not available for three different reasons.

[00:33:30] Speaker 00:
Number one, section 1503 G of the CAV statute expressly provides that the challenges to the price adjustment, which is the merits here, are not subject to the APA provision in Title V authorizing judicial review.

[00:33:47] Speaker 00:
Second reason.

[00:33:48] Speaker 00:
The APA itself provides that the review is not available when you have an adequate remedy in another court.

[00:33:54] Speaker 00:
And here under Section 1503A, we have a remedy in the Court of Federal Claims under the CDA.

[00:34:01] Speaker 00:
Third reason, in the Texas Health case from 2005, this court squarely held that contractors may not convert a CDA claim into a regulatory challenge under the APA.

[00:34:13] Speaker 00:
That case involved a

[00:34:15] Speaker 00:
challenged before the fact to the same regulation that was ultimately invalidated in the CDA under a CDA action in GHS-HMO, and the contractor tried to challenge the regulation in federal district court under the APA, but this court held that the challenge was governed exclusively by the Contract Disputes Act, and an APA challenge was unavailable.

[00:34:40] Speaker 00:
Judge Moore, our position on the money-mandating statute requirement in the illegal exemption claim is that New York Life is dispositive.

[00:34:51] Speaker 00:
Judge Rader's dissent in that case specifically argued that the claim should fail because there was no money-mandating statute.

[00:35:00] Speaker 00:
But the majority held following a long line of cases going back to the Court of Claims decision in Eastport and specifically approved

[00:35:09] Speaker 00:
by the Supreme Court intestine that an illegal absection claim could proceed without a money-mandating statute if it's a case in which the government has forced the private plaintiff to give the government the money, and all the plaintiff is trying to do is get it back.

[00:35:29] Speaker 01:
Mr. Kirk, this is Judge Sorrento.

[00:35:31] Speaker 01:
Can I just ask, do I understand correctly that

[00:35:37] Speaker 01:
some of the money that you are claiming Boeing has paid, but not all of it, and if that's true, does your illegal exaction claim apply only to your effort to secure back the, I don't know, $8,900 in change per month payment, or does it also apply to the yet unpaid monthly payments?

[00:36:07] Speaker 00:
To answer part one of your question, you're correct.

[00:36:11] Speaker 00:
Only some of the money has been paid to date.

[00:36:14] Speaker 00:
I don't know the exact amount, but it's accruing, as you said, at $8,900 a month.

[00:36:19] Speaker 00:
And in light of that, you're also correct that the judgment, assuming we prevail on the merits in this case, would be limited to a judgment for the amount that the government actually has.

[00:36:30] Speaker 00:
We would hope that with a definitive judgment, the government would no longer insist that future payments be made.

[00:36:37] Speaker 00:
But if they did, we would have the ability under the Indiana-Michigan line of cases to set field cases to bring follow-on suits to recover follow-on payments if the government indeed forces to make those.

[00:36:52] Speaker 02:
Mr. Kirk, this is Judge Chen.

[00:36:54] Speaker 02:
Last question on the illegal exacting claim.

[00:36:56] Speaker 02:
I believe you pled that in the alternative to your contract claim.

[00:37:00] Speaker 02:
If we were to hypothetically reverse the claims court on the CDA claim, what would be the purpose of continuing on with your legal transaction claim?

[00:37:16] Speaker 02:
In other words, would we need to address that?

[00:37:19] Speaker 00:
Judge Chen, I think you would have to address it, and here's why.

[00:37:23] Speaker 00:
The only thing before you on the contract claim is the

[00:37:28] Speaker 00:
trial court's holding that we waived it.

[00:37:31] Speaker 00:
We obviously had not litigated in the court below on the merits of that claim.

[00:37:36] Speaker 00:
And while it's hard for me to conceive of how we could lose on the merits of the contract claim, and yet not on the illegal exacting claim, I don't want to, you know, we fled in the alternative for a reason.

[00:37:51] Speaker 00:
If there's some technical reason not related to the core question of whether the statute forbids

[00:37:57] Speaker 00:
the government's regulation that somehow knocked out a contract claim, we would still want to proceed on our illegal transaction claim.

[00:38:05] Speaker 00:
I think you'd be in a different profile if both questions were up here on the merits.

[00:38:11] Speaker 00:
In that case, it may not be necessary to address them both, but given the procedural profile the case is in, we would respectfully ask you to address them both.

[00:38:20] Speaker 03:
So so is it fair to characterize your argument is we're not sure if we need the illegal exemption claim.

[00:38:25] Speaker 03:
We're not sure if there are any differences between it and the contract claim.

[00:38:29] Speaker 03:
So please don't send.

[00:38:31] Speaker 03:
Please get both of them back in.

[00:38:34] Speaker 00:
Yes, Judge Moore, but I think that's legitimate given the state of the litigation we're in.

[00:38:40] Speaker 00:
We're at the complaint filing stage.

[00:38:42] Speaker 00:
We filed a complaint.

[00:38:44] Speaker 00:
It's standard practice for a plaintiff to assert alternative causes of action.

[00:38:48] Speaker 00:
We clearly think we're right on both of them, but obviously we can't get a double recovery if we prevail on one but not the other, we would be made whole.

[00:38:57] Speaker 00:
So at this early pleading stage, I believe we're entitled to maintain both of our causes of action.

[00:39:05] Speaker 03:
Okay, counsel, anything further?

[00:39:08] Speaker 00:
If the court has no further questions, I'm prepared to subside.

[00:39:11] Speaker 00:
Thank you, Judge Moore.

[00:39:12] Speaker 03:
Okay, I thank both counsel.

[00:39:14] Speaker 03:
The argument was helpful and we'll take this case under submission.

[00:39:19] Speaker 02:
The honorable court is adjourned until tomorrow morning at 10 a.m.