[00:00:00] Speaker 01:
Cases number 20, 2165, Triple Canopy Incorporated against the Secretary of the Air Force.

[00:00:08] Speaker 01:
Mr. Schaffer.

[00:00:11] Speaker 00:
Thank you, Your Honor.

[00:00:11] Speaker 00:
May it please the Court, Jonathan Schaffer, Council for Appellant Triple Canopy.

[00:00:16] Speaker 00:
The Armed Services Board erred in holding that the government met its burden to demonstrate Triple Canopy's claims were time-barred.

[00:00:23] Speaker 00:
The Board applied an unreasonable interpretation of the Contract Disputes Act and the FAR Claim of Cruel Rules

[00:00:29] Speaker 00:
contrary to their plain language and decisions of this court.

[00:00:32] Speaker 00:
Under the board and government's view, Tribal Canopy was required to file speculative, premature, and factually inaccurate claims with the contracting officer to protect from an alleged government statute of limitations defense.

[00:00:45] Speaker 00:
But in Kellogg's Brown and Root, this court held that contractors are not required to file such protective claims.

[00:00:52] Speaker 00:
The Board of Government's position is contrary to law and will place contractors like Tribal Canopy in an unfair and untenable position, contrary to the CDA and probably contrary to the False Claims Act.

[00:01:04] Speaker 00:
Now, with regard to approval, there are no facts in dispute.

[00:01:08] Speaker 02:
This is Judge Dyke.

[00:01:09] Speaker 02:
Could you help me here?

[00:01:10] Speaker 02:
Is there anything in the FAR or the contract that requires

[00:01:17] Speaker 02:
that the contractor give advance notice of a potential liability such as this one?

[00:01:26] Speaker 00:
Well, the contractor did give advance notice and worked with the government to claim exemption.

[00:01:32] Speaker 02:
I understand that.

[00:01:33] Speaker 02:
But what I'm asking, is there a requirement in the contract for advance notice?

[00:01:40] Speaker 02:
And I'm not talking here about a client.

[00:01:42] Speaker 02:
I'm talking about advance notice that there's this contingent potential liability.

[00:01:49] Speaker 00:
Right, well in the, let me go back to look at the foreign tax clause, FAR 52.229-6.

[00:01:55] Speaker 00:
No, there's no requirement that you give advance notice other than the standard notice of a change or something like that.

[00:02:10] Speaker 00:
But no, there's no separate advance notice requirement.

[00:02:16] Speaker 00:
Okay.

[00:02:17] Speaker 00:
With regard to approval, because that's the issue here, is the approval, there are no facts in dispute.

[00:02:21] Speaker 00:
And this court reviews the board's legal findings and application of law to the undisputed facts de novo.

[00:02:27] Speaker 00:
And the board held, and the government contends, that the claim accrued on March 24 when the Afghan government made its initial assessment.

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But that is not when any of the liability fixed.

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And that contention is contrary to the far approval rules as interpreted by this court in Kellogg, Brown, and Root and other decisions.

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And importantly, it's contrary to the foreign tax clause, because that clause requires the contractor to use all reasonable efforts to seek a tax exemption.

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And if Triple Canopy had not done that, the government, and this is reflected in other board cases, the government would have said that Triple Canopy had shirked its duty, and that Triple Canopy was the fault.

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So Triple Canopy had to appeal under the Afghan procedures.

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And they did, and it was a prompt process, and they received a final decision on July 6, 27, and that's when

[00:03:15] Speaker 00:
the liability fixed.

[00:03:16] Speaker 00:
That's when the amount was known and when the liability fixed and became due.

[00:03:21] Speaker 00:
And the board erred in stating that Triple Canopy's Afghan appeal was optional.

[00:03:27] Speaker 00:
And that's the joint appendix at 10.

[00:03:29] Speaker 00:
The board said it was optional, but it wasn't optional because FAR 52.229-6 says the contractor has to use all reasonable efforts to seek an exemption.

[00:03:39] Speaker 00:
And that's exactly what Triple Canopy did.

[00:03:42] Speaker 00:
Mr. Schaefer?

[00:03:44] Speaker 03:
Mr. Schaefer.

[00:03:45] Speaker 03:
Excuse me.

[00:03:46] Speaker 03:
This is Judge Shaw here.

[00:03:48] Speaker 03:
I just want to make sure I understand one point.

[00:03:51] Speaker 03:
The provision to which you've been referring, 52.229-6, refers to taxes, is a definitional provision.

[00:04:02] Speaker 03:
It says, tax and taxes include fees and charges for doing business.

[00:04:08] Speaker 03:
I assume it's your position that the penalty that was imposed by the Afghan government

[00:04:15] Speaker 03:
for having more than a certain number of employees during the applicable period of time in these various contracts was a was a fee.

[00:04:26] Speaker 03:
Is that correct?

[00:04:28] Speaker 00:
Yes, that's right.

[00:04:29] Speaker 00:
It was a tax and

[00:04:31] Speaker 00:
That issue was never resolved by the board.

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The board made no findings as a fact.

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And it's our view, following the Fireman's Fund case in Oracle, that the court should not, this court should not sit as a trial or a fact.

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And that that should be sent back to the board to resolve any factual issues that relate to whether it's characterized as a tax or something else under Afghan law and under the relevant documentation.

[00:04:56] Speaker 03:
Okay.

[00:04:57] Speaker 03:
Thank you.

[00:04:58] Speaker 00:
But I want to come back to this idea that the board said that it was an optional process, and that Tribal Canopy, again, wasn't required to follow it.

[00:05:05] Speaker 00:
They were.

[00:05:05] Speaker 00:
The Foreign Tax Clause says that they are required to proceed that way.

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And so if they had not, the government would have come back and said, you've shirked your obligations.

[00:05:15] Speaker 00:
There's a problem.

[00:05:17] Speaker 00:
And under the CDA and the FAR accrual rules, a claim accrues when the events necessary to fix the alleged liability and permit assertion of the claim have occurred.

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And again, that did not happen in March, because at that point it was just an initial assessment.

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And the assessment said, you can appeal that determination.

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And Triple Canopy had good grounds to appeal that determination, because the US government had repeatedly told Triple Canopy that it was exempt, and had repeatedly taken those declarations of exemption, put them in letters, sent them to the Afghan government.

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And Triple Canopy had submitted them to the Afghan government.

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And Triple Canopy was, in essence, asserting a public policy exception.

[00:05:56] Speaker 03:
It was saying, Mr. Schaefer, am I, and also am I correct in understanding that the appeal, uh, the triple canopy pursued led to a reduction in the assessment?

[00:06:08] Speaker 03:
Isn't that correct?

[00:06:10] Speaker 00:
That's correct.

[00:06:11] Speaker 00:
It led to a reduction in the assessment.

[00:06:13] Speaker 00:
Um, some weapons issues were dropped, but also the numbers changed in term of the unregistered foreign citizens, a triple canopy.

[00:06:20] Speaker 00:
said these numbers aren't right and here's why.

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And the Afghan appeal authority agreed with Triple Canopy in part and reduced the assessment, which just validates the fact that Triple Canopy followed the rules of the foreign tax clause appropriately.

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And to come back to what I was saying, the government, again, gave statements of exemption to Triple Canopy.

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is doing is vital to the reconstruction efforts in Afghanistan.

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And that's the Joint Appendix at 431 and 433 and 739.

[00:06:55] Speaker 00:
And the US government said Triple Canopy is now immediately exempt.

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And it said to ensure there's no disruption to the Afghanistan reconstruction effort, that's why there has to be this exemption.

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And so Triple Canopy was no law breaker.

[00:07:08] Speaker 00:
They were following what the US government told them to do in order to perform their contract.

[00:07:13] Speaker 00:
And then when the government Afghanistan said we're going to impose an assessment of you on a certain amount, Triple Canopy followed the foreign tax clause and they appealed that within the Afghan government and the Afghan government agreed in part with Triple Canopy and then, and then reduced the amount.

[00:07:29] Speaker 00:
And that was the final fixing of liability.

[00:07:31] Speaker 00:
That July 6th date was when the claim accrued and Triple Canopy filed its claim within six years of that date.

[00:07:39] Speaker 00:
And that's why there's no statute of limitations issue.

[00:07:43] Speaker 00:
The other issue I want to briefly talk about is that the court should not adopt the government's fallback argument.

[00:07:48] Speaker 00:
The government argues that even if you agree with our position on the statute of limitations, that the amount is not a tax and that somehow Triple Canopy has done something wrong.

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And as I said, that's absolutely not the case.

[00:08:02] Speaker 00:
The record is clear that Triple Canopy was following government direction.

[00:08:06] Speaker 00:
The US government told the Afghan government repeatedly that it believes Triple Canopy was exempt.

[00:08:12] Speaker 00:
And that Triple Canopy's efforts were vital to the reconstruction effort.

[00:08:16] Speaker 00:
That's a public policy exemption.

[00:08:18] Speaker 00:
And so Triple Canopy followed the foreign tax laws, section I, and it approached the Afghanistan government with the exemption exactly as it was supposed to do.

[00:08:27] Speaker 00:
And to the extent that the court has any questions about that issue, the appropriate next step would be to remand back to the board.

[00:08:36] Speaker 00:
Under this court's oracle decision,

[00:08:39] Speaker 00:
The general rule is that federal appellate courts don't consider an issue not passed up on below, particularly when there are material facts in dispute and those facts have not been resolved by the trial or fact.

[00:08:51] Speaker 00:
There are various definitions in the record of the word penalty and at one point the Afghan government uses the phrase penalty taxes, which is not particularly helpful.

[00:09:02] Speaker 00:
And so there are factual disputes as to what that means.

[00:09:06] Speaker 00:
Although one way to think about, I was thinking about it, and one way to consider the issue is, it's similar to prohibition in the United States.

[00:09:14] Speaker 00:
At one point, the United States government said, alcohol is prohibited.

[00:09:17] Speaker 00:
If you have alcohol, it's illegal, with some exceptions, period.

[00:09:21] Speaker 00:
And that changed, and then they said, alcohol is legal, but we're going to tax it.

[00:09:25] Speaker 00:
And so the government wanted to perhaps reduce the amount of alcohol being used or whatever, so they implemented a tax.

[00:09:32] Speaker 00:
That's what basically would happen in Afghanistan.

[00:09:33] Speaker 00:
There was some debate in Afghanistan about not allowing contractors to have more than 500.

[00:09:39] Speaker 00:
But the US government repeatedly said it's vital for the reconstruction effort that contractors have more than 500 personnel.

[00:09:46] Speaker 00:
And then they changed the law.

[00:09:48] Speaker 00:
And they said, OK, we're just going to have these assessments, which sometimes they call it a penalty.

[00:09:53] Speaker 00:
Sometimes they called it a penalty tax.

[00:09:55] Speaker 00:
But the US Supreme Court, it says that those labels are not determinative, that you can have something labeled a penalty that's really a tax.

[00:10:02] Speaker 00:
And that's what you have here.

[00:10:03] Speaker 00:
This is a fee for doing business in Afghanistan.

[00:10:06] Speaker 00:
If you're one of the larger companies and you have more than 500 people in Afghanistan, you have to pay a fee.

[00:10:13] Speaker 00:
Well, that's a tax.

[00:10:15] Speaker 00:
That's not some sort of criminal penalty or something else.

[00:10:18] Speaker 00:
It's something subject exactly to this clause.

[00:10:21] Speaker 00:
So we would ask that the court reverse the board's decision

[00:10:25] Speaker 00:
deny the government's efforts to invite the court to the society's mixed question of the fact of law and the merits in the first instance, and remand to the board below for further proceedings.

[00:10:35] Speaker 00:
Unless, of course, any questions I would reserve by remaining time.

[00:10:38] Speaker 00:
Thank you.

[00:10:39] Speaker 01:
Any more questions for Mr. Schaefer?

[00:10:42] Speaker 03:
No.

[00:10:43] Speaker 03:
No, I'm fine.

[00:10:45] Speaker 01:
Thank you.

[00:10:45] Speaker 01:
All right.

[00:10:46] Speaker 01:
And for the government, Mr. Yale.

[00:10:49] Speaker 04:
Thank you, Your Honor, and may it please the court

[00:10:52] Speaker 04:
We'd first like to address the issue.

[00:10:55] Speaker 02:
This is Judge Dyke.

[00:10:56] Speaker 02:
I got to say I'm baffled that the government is taking the position it does on the statute of limitations.

[00:11:03] Speaker 02:
I mean, isn't the contract absolutely clear that they were required to appeal the assessment, that they did appeal the assessment and that they got it reduced?

[00:11:14] Speaker 02:
How could it be that you knew the amount of the claim until that had happened?

[00:11:19] Speaker 04:
Well, we think if you look at,

[00:11:23] Speaker 04:
the actual plain language of the provision at issue.

[00:11:26] Speaker 04:
It only requires that, that an appeal or reasonable action be taken when under a certain situation, which, which was not met here.

[00:11:36] Speaker 04:
And that's what the board was courting to.

[00:11:38] Speaker 04:
So if we look at the foreign tax clause and we look at little I, it has the phrase, the contractor shall take all reasonable action to obtain an exemption.

[00:11:49] Speaker 04:
That's true.

[00:11:50] Speaker 04:
But later on,

[00:11:52] Speaker 04:
The situation where you have to take reasonable action is only where, um, where the United States government, the contractor, any subcontractor where the transactions or property covered by this contract are exempt under the laws of the country concerned.

[00:12:14] Speaker 03:
This is judge shawl.

[00:12:15] Speaker 03:
If I could interrupt you cause time is fleeting here.

[00:12:19] Speaker 03:
Um, I'm, I'm not, I just don't think I can, I can agree with that.

[00:12:23] Speaker 03:
We have a finding here by the board, a determination by the board, and I'm looking at appendix page 11, where the board says triple canopy had a duty both to notify the government of the potential fine and to challenge the amount of the fine.

[00:12:43] Speaker 03:
there's the board saying, um, it had an ob the triple canopy had an obligation to do exactly what triple canopy did.

[00:12:52] Speaker 03:
And, um, why does that not bring the case within what we said in Kellogg Brown route, where the claim doesn't accrue until all necessary, uh, procedures required by the contract had been taken.

[00:13:07] Speaker 03:
I mean, it seems to hear we have a situation.

[00:13:09] Speaker 03:
We don't see it in all cases, but here we have a situation where a contractor seems to have done everything it was required to do.

[00:13:19] Speaker 03:
Why is the government fighting this?

[00:13:22] Speaker 04:
Well, respectfully, I mean, as to the as to the first point of the statute of limitations, we, you know, just based upon the plain language we just read, I recognize that in the pages you pointed to when it's addressing that False Claims Act argument,

[00:13:38] Speaker 04:
So the board has seemingly said on the one hand that it's an optional process and that's when it's looking at the plain language here.

[00:13:47] Speaker 04:
It does later on, you know, certainly state what you just said.

[00:13:55] Speaker 04:
But what matters here is the actual language of the contractual provision.

[00:14:01] Speaker 04:
And the plain language says it has to be exempt.

[00:14:05] Speaker 04:
So there's, there's no evidence in the record that Afghanistan has ever exempted, um, these, these penalties.

[00:14:15] Speaker 03:
But it might have, but it might, uh, but there was an appeal process here and, um, it's possible that it was possible that in view of the, uh, arguments advanced in support of triple canopy,

[00:14:31] Speaker 03:
by the by the government, the Air Force, I guess, whatever it was, that the there would be an exemption of some kind granted.

[00:14:41] Speaker 03:
I just I mean, it really seems like, you know, but just go ahead.

[00:14:46] Speaker 03:
I'm finished.

[00:14:48] Speaker 04:
Well, just to address that point, the board is pointing to the fact that, yes, there is a possibility, but that's not mandatory.

[00:14:56] Speaker 04:
So when we see in cases like KBR, an electric boat where

[00:15:01] Speaker 04:
There's arguments about a, quote, mandatory pre-claim procedure.

[00:15:05] Speaker 04:
Here, the only basis upon which it would be mandatory is if there actually is an agreement between the two countries.

[00:15:15] Speaker 04:
There's no evidence of that.

[00:15:17] Speaker 02:
And, wait, is your contention that they should have claimed the full amount foregone the appeal proceedings so that the government wouldn't get the benefit of the reduction in the amount?

[00:15:29] Speaker 04:
That's not what we're saying.

[00:15:31] Speaker 02:
What we're saying is they could go forward with the final determination of the amount which is necessary to make a claim until the appeals process had been completed.

[00:15:41] Speaker 02:
How's that possible?

[00:15:42] Speaker 04:
Well, because here we have a situation where the appeal was not on the basis.

[00:15:48] Speaker 04:
They're not pointing to any actual exemption that's been made by Afghanistan.

[00:15:53] Speaker 02:
So what?

[00:15:53] Speaker 02:
So what?

[00:15:54] Speaker 02:
They were still appealing the amount.

[00:15:56] Speaker 02:
How could the amount be final until the appeal process is concluded?

[00:16:02] Speaker 04:
Well, I think there may be a little bit of confusion, I guess, perhaps on my part.

[00:16:10] Speaker 04:
Under the CDA, I mean, you have to present some certain, that's for sure.

[00:16:17] Speaker 04:
But later on, I mean, there can be all sorts of situations where the final amount does not end up being the exact same.

[00:16:25] Speaker 04:
Here, what matters here is that there is liability and there's been liability was established on March 24, 2011 when this penalty assessment was made.

[00:16:38] Speaker 02:
And your theory is you have to make a claim before the events have occurred that determine the amount of the claim?

[00:16:45] Speaker 04:
Well, they had the amount of the claim on March 24, 2011.

[00:16:48] Speaker 04:
And that fixed the liability.

[00:16:51] Speaker 04:
The liability was that they were significantly over this 500 personnel limit.

[00:16:58] Speaker 04:
And so that was set both by the February 2008 document as well as by

[00:17:05] Speaker 03:
Um, you know, the, the presidential directive, but Mr. Yale, what, but Mr. Yale, excuse me, what, what concerns me is, and I can only speak for myself is that yes, a set amount was set forth, but then it said that you had a right to appeal.

[00:17:24] Speaker 03:
And obviously as your discussion with judge Dyke indicates the appeal could, and in fact did lead to a reduction in the amount for which the government.

[00:17:34] Speaker 03:
might be on the hook eventually via a claim.

[00:17:37] Speaker 03:
And then we have this contract provision that says they were required to take all reasonable steps.

[00:17:44] Speaker 03:
And then finally, as you pointed out, or as we agreed, you have a situation where the board itself said it had to follow the appeal.

[00:17:55] Speaker 03:
I mean, it just seems to me to be a reasonable, sensible approach to say, okay, your claim accrued when the final amount was determined.

[00:18:08] Speaker 04:
Well, again here, I mean, the language that we're pointing to says there needs to be an exemption.

[00:18:14] Speaker 04:
So if you think about in the context, if this was, for example, state taxes or something along those lines, and

[00:18:24] Speaker 03:
you know, there was an announcement, there had been an announcement that X state had, um, you know, but excuse me, but excuse me, if they, if, if the amount is reduced, uh, from either the amount claimed to a lesser amount or to nothing, there's been an exemption.

[00:18:46] Speaker 03:
I mean, in effect you've, you've obtained a reduction in the original claim.

[00:18:53] Speaker 04:
Well, I think an exemption is more of a term of art, which is that this entity, this contractor, they have no obligation to pay the taxes at all.

[00:19:05] Speaker 04:
Not that there are 200 people over the limit and we're going to look more closely at what's been provided here and we're going to reduce it down by a certain amount.

[00:19:16] Speaker 04:
For example, there's been an agreement that they're not on the hook, they don't have to pay

[00:19:22] Speaker 04:
the taxes at all.

[00:19:24] Speaker 04:
And so here, you know, we don't think that this contrary rule would actually benefit the contractors either, because what we're saying, what we're saying is that if there, if there is an exemption, if there is an agreement between two United States and another foreign country, at that point, you have to take reasonable action, but you don't have to go and take reasonable action

[00:19:51] Speaker 04:
any sort of appeal just to appeal, um, when there's no exemption that you're pointing to.

[00:19:57] Speaker 04:
And so in sort of the earlier findings of the board, that's what, you know, that's our reading of what they are saying that here, what we're talking about is reducing it down based upon the number of employees or whatnot, but, but they're not pointing to any actual exemption from

[00:20:17] Speaker 04:
You know, they're not pointing to an agreement between Afghanistan and the United States.

[00:20:22] Speaker 04:
They're certainly not pointing to, um... Mr. Yale, this is Judge Shawl again.

[00:20:27] Speaker 03:
So what, so I understand what you're saying is that, um, the, the, uh, the contractor did not have to appeal, uh, to the Afghan government.

[00:20:39] Speaker 03:
In other words, that the clause 229-6I doesn't apply because we're not talking about an exemption here.

[00:20:47] Speaker 03:
What they were saying is, we're not exempt from the limitation provision.

[00:20:53] Speaker 03:
We're just saying we shouldn't have to pay it because of, or it should be reduced because of.

[00:21:00] Speaker 03:
Is that your argument?

[00:21:01] Speaker 04:
That is correct.

[00:21:04] Speaker 04:
And the only thing they're really pointing to there are these government statements.

[00:21:08] Speaker 04:
But again, when you look at the provision itself, what it's talking about, there's two situations here.

[00:21:13] Speaker 04:
One is a situation where

[00:21:15] Speaker 04:
the United States and a foreign government enters into an agreement.

[00:21:19] Speaker 04:
There's no evidence of the record that occurred.

[00:21:21] Speaker 04:
The other situation would be when the taxes quote are exempt and there's, there's no evidence in the record that these, if we're going to call them taxes, that they are exempt.

[00:21:33] Speaker 03:
Let me ask you, I would assume, I would assume that the government was meaning the federal government, our government was happy

[00:21:43] Speaker 03:
that triple canopy obtained a reduction, right?

[00:21:49] Speaker 04:
Well, I don't, I'm not sure I would characterize it one way or the other.

[00:21:54] Speaker 04:
I mean, there's, there's a contract and the parties have to follow the contract now.

[00:21:59] Speaker 03:
Um, you know, no, no, let me ask you what I'm saying is if, if in fact this claim goes through and you say it shouldn't, isn't it to the government's advantage

[00:22:10] Speaker 03:
that the original amount that was assessed by the Afghan government was reduced.

[00:22:16] Speaker 03:
That's a good thing for the government, isn't it?

[00:22:19] Speaker 04:
Well, I mean, it's potentially, for this particular situation, there was some sort of a small reduction here.

[00:22:28] Speaker 04:
That's correct, but that doesn't

[00:22:33] Speaker 04:
necessarily equate with the situation whether or not a contractor has to take those steps.

[00:22:39] Speaker 04:
So if we circle back and compare it to the electric boat case, there the contractor is saying, well, we first had to go to the government.

[00:22:50] Speaker 04:
And once there was this change in law, and then they needed to, you know, sort of deny the costs or not.

[00:22:57] Speaker 04:
And so to some extent, you know, maybe for whatever reason,

[00:23:03] Speaker 04:
that process happens and costs are reduced, and the government is able to, at the end of the day, pay a lesser amount.

[00:23:14] Speaker 04:
But that doesn't mean that that affects when the claim accrues, because you have to actually look at the provision at issue here.

[00:23:24] Speaker 02:
And so that's what the board, we think, was referring to, and it said that- Did they argue on appeal that they were exempt

[00:23:33] Speaker 04:
Well, they pointed to the statements.

[00:23:36] Speaker 04:
They pointed to the statement saying that they're.

[00:23:38] Speaker 02:
Did they, yes or no?

[00:23:40] Speaker 02:
Did they argue on appeal that they were exempt?

[00:23:44] Speaker 04:
Yes, they used the word exempt.

[00:23:46] Speaker 04:
But if I can respectfully, if I could clarify that, what they were pointing to there was not an exemption made or issued by the Afghan government itself.

[00:24:02] Speaker 04:
And that's supported by the claim at issue.

[00:24:05] Speaker 04:
So just to direct, Your Honor, to one part of the appendix.

[00:24:09] Speaker 04:
And this is appendix page 484, which is one of Triple Canopy's claims.

[00:24:16] Speaker 04:
They're basically just derivative.

[00:24:18] Speaker 04:
But if I can quote that, it says, not withstanding the DOD's position, the GERA did not agree that TC was exempt and refused to grant an exemption for TC.

[00:24:30] Speaker 04:
The GERA made this determination in March 2011, continuous with its creation and imposition of fees applicable to all PSDs that exceeded the personnel limit.

[00:24:41] Speaker 04:
So we know at that point in March 2011 that Triple Canopy is on notice that this quote exemption that they have pointed to with these statements for the government

[00:24:55] Speaker 04:
has already been addressed by Afghanistan.

[00:24:59] Speaker 04:
And so they're not pointing to any agreement or any actual exemption.

[00:25:04] Speaker 04:
And frankly, it may help Triple Canopy in this case, but we don't think it would normally help every contractor to have a situation where you're imposing some sort of additional duty to go and appeal

[00:25:20] Speaker 04:
these penalty assessments when that's not what the provision, which is incorporated into the contract, requires.

[00:25:27] Speaker 03:
Well, it would be determined.

[00:25:29] Speaker 03:
It would be determined.

[00:25:30] Speaker 03:
This is Judge Schall, Mr. Chief.

[00:25:32] Speaker 03:
I think that would be determined by, you know, it would turn on what the provisions of each particular contract provided.

[00:25:39] Speaker 03:
But one final thing.

[00:25:41] Speaker 03:
What are we to make, though, and I think you touched on this earlier, of are we to conclude that the government says the board aired

[00:25:49] Speaker 03:
in saying that Triple Canopy was required to appeal?

[00:26:01] Speaker 04:
Sorry, are we required?

[00:26:04] Speaker 04:
I'm not sure I understand that question.

[00:26:06] Speaker 03:
No, I apologize.

[00:26:08] Speaker 03:
Earlier, I read the statement at page 11 of the board's opinion that said, Triple Canopy had a duty both to notify the government of the potential fine

[00:26:19] Speaker 03:
and to challenge the amount of the fine.

[00:26:23] Speaker 03:
Um, is it, is it your position now in appeal that that statement by the board was incorrect?

[00:26:30] Speaker 04:
Well, I think it's certainly inconsistent with the earlier statements that triple cannabis council was pointing to and the statements that I think we more addressed in the briefs, which is that this was not a mandatory process.

[00:26:42] Speaker 04:
So both of those can't be correct.

[00:26:44] Speaker 04:
I don't think so.

[00:26:45] Speaker 04:
To that extent, we think that the first statement that it was an optional process, we think that that is a correct statement that was not aired.

[00:26:56] Speaker 04:
And to the extent that those later statements are inconsistent, then that could be an error.

[00:27:02] Speaker 04:
But we certainly don't think that the fact that there's an inconsistency in the opinion would necessarily require reversal or whatnot.

[00:27:11] Speaker 04:
We think it can be affirmed by

[00:27:13] Speaker 04:
the plain language of the foreign tax clause.

[00:27:18] Speaker 02:
I've got to say, I cannot understand how the government is taking a position that there isn't an implied duty to challenge the amount of an assessment regardless of the contract language.

[00:27:30] Speaker 02:
It seems to me that's absolutely contrary to the government's interest and I find it really, really difficult to understand.

[00:27:38] Speaker 04:
Well, can I address that very briefly, Your Honor?

[00:27:42] Speaker 04:
Yes, please answer.

[00:27:44] Speaker 04:
Well, so there are other provisions here in the foreign tax clause as well.

[00:27:48] Speaker 04:
So you had asked about this prompt notification provision.

[00:27:51] Speaker 04:
So if you actually look, Jay does require prompt notification.

[00:27:56] Speaker 04:
And so in that situation, the government gets notified.

[00:27:59] Speaker 04:
If they have an issue, the contracting officer can direct a party in that situation, if they want to, to go and say, you know what?

[00:28:07] Speaker 04:
you have to go challenge that.

[00:28:09] Speaker 04:
And in that situation, if that's what happened and the contractor does not comply with that specific direction, then they would not be able to recover under the foreign tax clause.

[00:28:22] Speaker 04:
But we're not saying that there's sort of no situation where a contractor would not have a duty to go and challenge this.

[00:28:31] Speaker 04:
But we're saying under the plain language here, it was not required.

[00:28:38] Speaker 01:
Okay, any more questions for Mr. Yale?

[00:28:47] Speaker 04:
Okay.

[00:28:47] Speaker 01:
Okay.

[00:28:48] Speaker 04:
There's nothing further.

[00:28:49] Speaker 04:
We just ask it to affirm the board's decision.

[00:28:55] Speaker 01:
Okay, thank you.

[00:28:57] Speaker 01:
All right, Mr. Schaeffer.

[00:29:00] Speaker 00:
Thank you, Your Honor.

[00:29:01] Speaker 00:
The government's argument that there was no additional duties contrary to the foreign tax clause itself, it requires

[00:29:07] Speaker 00:
the contractor to use all reasonable efforts to pursue the exemption.

[00:29:11] Speaker 00:
And this argument that, well, it wasn't really an issue about exemption cannot be the case because the government repeatedly stated the contracting officer for these contracts

[00:29:20] Speaker 00:
repeatedly stated to the Afghan government that Triple Canopy was exempt, that Triple Canopy was vital to the reconstruction efforts, and that Triple Canopy, it was needed to do the work.

[00:29:32] Speaker 00:
And so that was the basis for the exemption that Triple Canopy was pursuing on appeal.

[00:29:37] Speaker 00:
It was following the rules laid out in the FAR, and it was following what the contracting officer told it to do.

[00:29:42] Speaker 00:
And that's a public policy exemption.

[00:29:44] Speaker 00:
The same kind of exemptions you would have if you were arguing before the IRS or a state tax

[00:29:48] Speaker 00:
authority that under public policy reasons, I should be exempt.

[00:29:53] Speaker 00:
And significantly, a triple canopy in its claims did not say, please reduce the amounts, we disagree about the weapon and we disagree about that.

[00:30:00] Speaker 00:
They said, please rescind, that's in quotes, rescind all assessments.

[00:30:04] Speaker 00:
And they said, we're exempt.

[00:30:06] Speaker 00:
And here's the explanation.

[00:30:07] Speaker 00:
And here's the documentation we're relying on from the United States government who awarded us these contracts.

[00:30:13] Speaker 00:
That's why we're in Afghanistan.

[00:30:14] Speaker 00:
We're doing the government's work.

[00:30:15] Speaker 00:
And they said, please rescind all of the assessments.

[00:30:19] Speaker 00:
So they followed the rules to the letter.

[00:30:21] Speaker 00:
And that's throughout all of Triple Canopy's claims.

[00:30:25] Speaker 00:
I think this is very clear.

[00:30:28] Speaker 00:
And I think the FAR Council has already answered the question that the government's raising.

[00:30:33] Speaker 00:
And the FAR Council said,

[00:30:34] Speaker 00:
You do have a duty to use all reasonable efforts to pursue.

[00:30:38] Speaker 00:
And as a result, under this court's Kellogg-Brown route case and under the FAR rules, no liability was fixed until that July 6th decision.

[00:30:48] Speaker 00:
Because on July 6th, Afghanistan could have come back and maybe if the political situation was different, maybe they would have.

[00:30:55] Speaker 00:
And they could have said, we agree with US government.

[00:30:57] Speaker 00:
US government says you're exempt.

[00:30:58] Speaker 00:
US government says you're vital to reconstruction efforts.

[00:31:01] Speaker 00:
We agree you don't owe anything.

[00:31:03] Speaker 00:
That's not what they did.

[00:31:04] Speaker 00:
Instead, they reduced the amount.

[00:31:06] Speaker 00:
But that's when the liability fixed.

[00:31:08] Speaker 00:
That was the point at which any claim accrued and Triple Canopy timely filed its claim within the six-year period.

[00:31:17] Speaker 00:
Unless the court has further questions, we would rest and ask that the court reverse the decision of the board below.

[00:31:24] Speaker 00:
Thank you.

[00:31:25] Speaker 01:
Any more questions from the panel, Mr. Schaefer?

[00:31:28] Speaker 01:
No.

[00:31:29] Speaker 01:
No.

[00:31:30] Speaker 01:
All right, thank you.

[00:31:31] Speaker 01:
The case is taken under submission.

[00:31:34] Speaker 01:
And that concludes this panel's arguments for this session.

[00:31:41] Speaker 00:
The Honorable Court is adjourned until tomorrow morning at 10 AM.