[00:00:02] Speaker 03: The United States Court of Appeals for the Federal Circuit is now open and in session. [00:00:06] Speaker 03: God save the United States and this honorable court. [00:00:11] Speaker 03: The first case this morning is AISG versus Secretary of the Army, number 20, 2105. [00:00:18] Speaker 03: Mr. Anikoff, you've reserved five minutes for rebuttal, is that correct? [00:00:22] Speaker 01: That is correct, Your Honor. [00:00:23] Speaker 01: May I use two minutes of that rebuttal on my director? [00:00:28] Speaker 03: Sure. [00:00:28] Speaker 03: So you just want to reserve three. [00:00:30] Speaker 03: Yeah. [00:00:31] Speaker 03: Okay. [00:00:31] Speaker 03: Michael, I think we'll take care of that on the, on the time, but we'll watch it too. [00:00:35] Speaker 03: Um, you may proceed. [00:00:37] Speaker 03: Yeah. [00:00:38] Speaker 01: May I please the court. [00:00:41] Speaker 01: The court should overturn the decision of the four reasons that we are articulating properties. [00:00:48] Speaker 01: First and foremost, the board simply ignored one of the fundamental issues that were argued below, which is the implied duty of good faith and fair dealing. [00:00:57] Speaker 01: Moreover, not only in ignoring that issue, it missed a substantial amount of facts, both in the August to December timeframe and other undisputed facts that would have established that the duty of good faith and fair dealing was breached. [00:01:12] Speaker 01: Second, the record establishes sufficiently that there was a significant breach of the good faith and fair dealing duty, such that this court either itself, based on the record or on remand, could direct [00:01:24] Speaker 01: that entry of liability be entered against the secretary of the army. [00:01:30] Speaker 01: Third, because the board erred with respect to its determination that there wasn't an eight-month delay, which in fact the Corps of Engineers admitted in its basic change document. [00:01:43] Speaker 01: And fourth, because the board erred with respect to finding that there was no differing site condition. [00:01:50] Speaker 01: First, I'll deal briefly with the omission to address the good, safe, and fair dealing. [00:01:55] Speaker 01: It's quite clear that that occurred. [00:01:58] Speaker 01: It's simply not mentioned in the decision. [00:02:00] Speaker 01: No facts, no discussion were mentioned about it. [00:02:04] Speaker 01: And because of that, the board did not consider the period from August to December 2012, which as we've articulated in the brace, it contained a whole host of facts where the Corps of Engineers whipsawed AISD. [00:02:20] Speaker 01: But it also omits a whole series of other facts that were undisputed. [00:02:25] Speaker 01: which also support the fact that the good, safe, and fair dealing obligation was breached. [00:02:33] Speaker 01: The government argues that one should forgive that either because the board addressed it sub-solentio or that there was harmless error. [00:02:41] Speaker 01: That simply can't be the case. [00:02:43] Speaker 01: One cannot have, if one looks at agility and the key to the other cases we cited, [00:02:48] Speaker 01: The failure to articulate any reason regarding a major fact, major legal issue, simply can't be excused. [00:02:56] Speaker 01: And on that basis alone, this court should reverse the decision of the board. [00:03:02] Speaker 01: Moving on to the good faith and fair dealing argument. [00:03:06] Speaker 01: You know, although the claim of AISG focuses on the period from May to December 2012, [00:03:13] Speaker 01: Under the rubric of the Lewis Nicholson case, which on its early pages discussed the fact that the groundwork of this breach started two years before. [00:03:23] Speaker 01: It started when AISG had to alert the Corps that Site 1 had been overrun by military activities. [00:03:32] Speaker 01: They weren't aware of it. [00:03:34] Speaker 01: It continues in selecting a site that surrounds the only security point and proposes to breach the security wall of the village. [00:03:43] Speaker 01: It continues in a license, which was not made available to AISG, that on page 14, as judge, uh, the judge at the board, Judge Kinner asserted. [00:03:54] Speaker 03: Mr. Annick house, Mr. Annick house, are you saying that the selection of fight to itself was a breach of the good faith and fair dealing? [00:04:02] Speaker 01: No, your honor. [00:04:03] Speaker 01: It shows what we're showing is that the courts really bureaucratic indifference. [00:04:08] Speaker 01: existed for a long time before we got to Site 2. [00:04:13] Speaker 01: So that is just another example that the Corps wasn't paying attention and didn't care. [00:04:18] Speaker 03: And that's... So your client agreed to Site 2? [00:04:23] Speaker 01: Ultimately, it did. [00:04:24] Speaker 01: But that was noted originally signed to, but it did agree to Site 2. [00:04:28] Speaker 01: And it visited. [00:04:29] Speaker 01: And the OE that it expected was a site which they could bring bulldozers on, knock down the AMD, and move forward. [00:04:38] Speaker 01: And that proved to be impossible. [00:04:41] Speaker 03: And with regard to that, in the good faith and fair dealing argument, the- Well, didn't the board make contrary findings that even though Site 3 was ultimately chosen and is preparable to you, that you agreed to Site 2 and that you could have moved forward on it? [00:04:58] Speaker 01: Well, in agreeing to Site 2, we agreed that we could do two things. [00:05:02] Speaker 01: We could physically take down the AMD, and we could physically remove the wall if that was necessary. [00:05:08] Speaker 01: But what the board didn't consider is the undisputed testimony appearing on pages 295 to 312 of the record, where the project engineer and the contracting officer unequivocally testify that one, the AMP had to come down, two, that the Corps of Engineers had to take the AMP down because it was a sovereign police force, that a contractor could not come and take it down, [00:05:38] Speaker 01: And as the contracting officer testified on page 298, that if AISG had walked up to the ANP and suggested they leave, they would have been laughed off and ignored. [00:05:52] Speaker 01: So the fact is it's undisputed that AISG could not remove the ANP force and that it had to be removed. [00:06:00] Speaker 01: And that what it agreed to was the ROE, which was right of access. [00:06:05] Speaker 01: The right of access also included the obligation to be able to enter the AMP to take it down. [00:06:11] Speaker 01: And that never occurred. [00:06:12] Speaker 01: And that's what triggered the obligation of the Corps to assist it. [00:06:18] Speaker 01: We're not claiming the period from January to May. [00:06:23] Speaker 03: Can you point to anything in the record where you asked the government to assist in taking down the AMP and they refused? [00:06:33] Speaker 01: No, Your Honor, the reason was that everybody knew it, the project engineer, the contracting officer, and we knew it. [00:06:41] Speaker 01: That was an understood fact. [00:06:44] Speaker 01: And we were waiting for that to occur. [00:06:46] Speaker 01: It didn't occur. [00:06:47] Speaker 01: The explicit point in the record where we made that request is ultimately in RFI 4, which was late in the game, where we said you either have to move to Site 3 or don't get official permission. [00:07:01] Speaker 01: But prior to that, it was simply understood there was no ambiguity. [00:07:05] Speaker 01: There was no need to go ask. [00:07:07] Speaker 00: Excuse me, this is Judge Schultz. [00:07:10] Speaker 00: In response, though, there were some communications from the government saying, hey, you were supposed to do certain activity on Site 2, and you haven't yet. [00:07:18] Speaker 00: And there was some push from the government for AISG to take some action on Site 2. [00:07:24] Speaker 00: Did AISG ever respond, well, we can't do anything yet because you have not done what you need to do first? [00:07:31] Speaker 01: Yes. [00:07:31] Speaker 01: Yes, Your Honor. [00:07:32] Speaker 01: The first activity that was required to be done was [00:07:35] Speaker 01: the site preparation, the geotesting, and the leveling. [00:07:39] Speaker 01: The problem was that that had to be done at the high ground where the AMP was located. [00:07:46] Speaker 00: And so it couldn't be commenced until... Where did you communicate that to the government that it couldn't be commenced until the government had the AMP removed? [00:07:58] Speaker 01: I know it's in dialogue. [00:08:00] Speaker 01: I can't put my... [00:08:01] Speaker 01: can file something with the court. [00:08:03] Speaker 01: I believe that was in communications. [00:08:04] Speaker 01: It was understood that one needed to geotest the site, demine it, because that's what occurred on site three. [00:08:13] Speaker 01: And there is evidence in the record that the first thing that AISG was in creating their logistics staging zone next to site two, they had to demine it, they had to clear it, and they had to do geotesting. [00:08:29] Speaker 01: And all of that on site two would have had to have occurred at the location of the AMP, which the board agreed that the AMP had to be moved to do the construction. [00:08:45] Speaker 01: So it was undisputed, as I've noted, that the Corps of Engineers had to do the removing of the AMP. [00:08:57] Speaker 01: And that was either based on the ROE, a contractual obligation, or the fact that when everybody arrived, there was opposition. [00:09:07] Speaker 01: The opposition is not disputed. [00:09:10] Speaker 01: It's throughout the record. [00:09:11] Speaker 01: And AISG were the only people on site. [00:09:15] Speaker 01: They were living and breathing and working with the locals, the ANP and the villagers. [00:09:21] Speaker 01: Nobody from the Corps ever came out. [00:09:24] Speaker 01: Not from February, March, April, May. [00:09:27] Speaker 01: In July, two members of the court came out and they immediately agreed that they need to move to site three. [00:09:33] Speaker 01: And it wasn't until project engineer came in December when she too decided that very day that it was necessary to move to site three. [00:09:44] Speaker 01: And the fact of opposition, the board and the government repeatedly say that no violence was visited on the, on ASG. [00:09:54] Speaker 01: There is no statute, regulation, or case law in this jurisdiction or anywhere else that said a contractor needs to be shot or to suffer what occurred in Afghanistan to prove that there is significant opposition. [00:10:08] Speaker 01: We were embedded there. [00:10:10] Speaker 01: AISG was embedded there. [00:10:12] Speaker 01: They knew the opposition, and they were conveying it. [00:10:14] Speaker 01: It was conveyed increasingly in RFI 1 and then in RFI 2 in letters and in RFI 3 in more letters and the ministry support [00:10:24] Speaker 01: and ultimately in RFI 4. [00:10:28] Speaker 01: So it's clear that there was opposition and that's the very kind of situation where the government can't stand mute, hiding in bunkers and not provide help. [00:10:39] Speaker 01: The only thing that was required for the project engineer to come out to the site. [00:10:44] Speaker 01: And one has to remember that this is in Fort Belvoir in Washington. [00:10:48] Speaker 01: This is at the top of the mountain at the end of the road in Afghanistan. [00:10:53] Speaker 01: It is some of the most violent places on the world. [00:10:57] Speaker 01: And one needs to keep that in mind when thinking about how this happens. [00:11:02] Speaker 01: It's not just a simple little bit of contract. [00:11:05] Speaker 01: It was necessary, not unlike the R.W. [00:11:08] Speaker 01: Jones case where they were trying to build river abutments. [00:11:11] Speaker 01: I know that's not binding on the court, but the facts are not dissimilar. [00:11:16] Speaker 01: Where one encounters difficulties, the duty of good faith and fair dealing includes cooperation. [00:11:23] Speaker 01: It includes doing what's necessary, quote, to enable the contractor to perform, and then not to interfere. [00:11:30] Speaker 01: And so both of those duties were breached. [00:11:36] Speaker 01: They were breached in the duty to cooperate and help resolve the AMP issue. [00:11:42] Speaker 01: And then from May, when the Corps invited- Can I just ask you one more time, Mr. Anico? [00:11:48] Speaker 03: Yes. [00:11:49] Speaker 03: How did they breach a duty to resolve the AMP issue [00:11:53] Speaker 03: when you didn't ask them to move it. [00:11:56] Speaker 01: Because they always knew they had an issue. [00:11:59] Speaker 01: That's the point. [00:11:59] Speaker 01: It's undisputed in the record. [00:12:02] Speaker 01: They knew it. [00:12:02] Speaker 01: We knew it. [00:12:04] Speaker 03: But where in the record does it show that your progress as Site 2 had progressed to the point where the ANP had to be moved? [00:12:17] Speaker 03: It seems to me that the problem here was you didn't want to build on Site 2, and you asked over and over again to move to Site 3, and the government ultimately exceeded. [00:12:28] Speaker 03: But you didn't even complete the initial [00:12:31] Speaker 03: And I don't know the record completely well, but some submittals and things like that to move forward and progressing to Site 2 before the question of moving the ANP would have even come up. [00:12:44] Speaker 01: Well, Your Honor, moving the ANP is the initial act. [00:12:48] Speaker 01: If you look at the contract, it says the first thing to AISG is to demolish all buildings. [00:12:55] Speaker 01: So the ANP had to come down first. [00:12:57] Speaker 01: Once the ANP came down, you can do the geotesting at the site to prepare your submittals. [00:13:04] Speaker 01: And until you do that, you can't prepare the submittals. [00:13:07] Speaker 03: So where in the record is your response to the government when they say you're not moving forward quickly enough on your submittals that the response that before we can do this, you need to remove the ANP? [00:13:21] Speaker 01: Those were in the responses to the letter of concern in April, to the cure notice in August, [00:13:27] Speaker 01: and the show cause in December, where we explained at some length the reasons why what was occurring was occurring. [00:13:37] Speaker 01: We admitted that we started out at Site 3 incorrectly. [00:13:41] Speaker 01: And part of that was, be it a mistake or otherwise, when Mr. Riles gave the coordinate, he is the project engineer, although he can't change the contract, that's where they all started. [00:13:53] Speaker 01: And that was by mistake, and we're not laying any claim to what occurred up until May, which is the date that the core invited us to submit a request to change the site. [00:14:07] Speaker 01: So up until then, the best I can say, your honor, is it wasn't asked because everybody understood it. [00:14:13] Speaker 01: The project engineer, the contracting officer, and AISG all understood it, and nothing happened. [00:14:20] Speaker 00: Mr. Anneke, one thing that the board emphasized repeatedly was that when you were submitting those RFIs to change the site from site two to site three, there was no statement or suggestion that site two was unworkable or that anything in particular needed to be done, for example, with the ANF. [00:14:40] Speaker 00: I mean, what is your response to that? [00:14:42] Speaker 00: Why, why isn't that a reasonable thing for the board to rely on in making its fact findings? [00:14:47] Speaker 01: Your honor, in submitting RFIs one to four, [00:14:50] Speaker 01: It was very clear that the AMP chief and the villagers all opposed Site 2, and that was becoming increasingly vocal. [00:15:01] Speaker 01: So, as I said before, the reason we couldn't start on Site 2 was because the AMP was there. [00:15:09] Speaker 00: Let me ask you one other question. [00:15:12] Speaker 00: The board also relied on Mr. Francis' testimony, who said that the AMT post did not present a problem. [00:15:20] Speaker 00: Why couldn't the board rely on that? [00:15:23] Speaker 00: I think there's evidence supporting it's fact-finding. [00:15:26] Speaker 01: Absolutely. [00:15:27] Speaker 01: Mr. Francis was a corporate official. [00:15:29] Speaker 01: He was not on site. [00:15:31] Speaker 01: And there were all sorts of discussions that went on about whether he could or couldn't perform at site two. [00:15:37] Speaker 01: he was the view that you might be able to. [00:15:40] Speaker 00: He's the AISG vice president, right? [00:15:43] Speaker 01: He was a corporate official. [00:15:45] Speaker 00: OK. [00:15:47] Speaker 00: I mean, so his representations matter, right? [00:15:50] Speaker 00: Whether he is on site or not. [00:15:53] Speaker 01: They did matter, and it was an assessment that somehow that we could try to do it. [00:15:57] Speaker 01: In fact, AISG said that they would make it work if they had to. [00:16:03] Speaker 01: At the end, it was clear that you couldn't cite it [00:16:07] Speaker 01: until you took down the A&P. [00:16:12] Speaker 03: I think we've run through all of your time, including your rebuttal. [00:16:16] Speaker 03: Let's hear from the government. [00:16:17] Speaker 03: I'll restore three minutes. [00:16:19] Speaker 01: Thank you, Your Honor. [00:16:23] Speaker 02: Good morning, Your Honor, and may it please the court. [00:16:26] Speaker 02: The decision below should be affirmed for two reasons. [00:16:28] Speaker 02: First, the board did not commit prejudicial error or any error for that matter and not specifically addressing [00:16:34] Speaker 02: the legal elements of AISG's good faith and fair dealing claim. [00:16:39] Speaker 02: And second, the remainder of AISG's arguments in this appeal amount to an impermissible request for this court to reweigh the evidence and retry its case in AISG's favor. [00:16:51] Speaker 02: On the good faith and fair dealing point, even though the board did not specifically address the legal elements of such a claim, the board made the multitude of factual findings that are relevant to AISG's [00:17:02] Speaker 02: To any good thing considering claims that AISG may have presented to the board, AISG primarily claimed that it had a reasonable expectation that it was going to receive a tenable site in Site 2 and that additionally the Army Corps somehow did not move quickly enough in approving AISG's request to move to Site 3 from Site 2. [00:17:26] Speaker 02: The board on these points, approximately 10 pages of factual findings, concluded that AISG failed to establish that it was prohibited from building at Site 2 during the relevant period. [00:17:41] Speaker 03: Mr. Board, AISG's argument, at least here today, seems to rest primarily upon removing the AMP outpost and that it was impossible to proceed until that was done. [00:17:51] Speaker 03: What board act findings support the notion [00:17:54] Speaker 03: the conclusion that that didn't cause a breach of the good faith and fair dealing. [00:18:00] Speaker 02: Your Honor, the board finds that in AISG's proposal to build at Site 2, AISG represented to the Army Corps, that it had visited the site in July 2011 and had determined that it could remove the A&P post as part of performing at Site 2. [00:18:20] Speaker 02: And in that proposal, the contractor presented no concerns about performing at Site 2, including moving the A&P post. [00:18:29] Speaker 02: The board also found that to the extent AISG presumed that the government would clear [00:18:35] Speaker 02: the whatever occupants there may have been at the A&P post, that was simply an unwarranted presumption. [00:18:42] Speaker 02: And that it would have been some kind of hate and ambiguity, essentially, if a SG had done the site visit and installed the A&P post, did not inquire of the government about whose obligation it would have been to remove potential occupants of that post. [00:19:03] Speaker 02: Ultimately, it was unproven on the part of the burden here that it could not move. [00:19:11] Speaker 02: whatever occupant of the post, because the record revealed that AISG actually never attempted to perform at Site 2 at all. [00:19:20] Speaker 02: And again, this is following AISG having represented to the government as part of this proposal to perform at Site 2, that it could perform and build the headquarters at Site 2 without any concerns. [00:19:36] Speaker 02: The board also found as a [00:19:41] Speaker 02: antithetical to any good phrase and fair dealing claim in the case, that the eventual adoption of Site 3 as the project location did not undermine the Army Corps' reliance and sticking to Site 2 as a project site before moving to Site 3. [00:19:59] Speaker 02: And in that regard, the Army Corps had the license to construct, as the Court is aware, that set the limits of the ability and authority to build in the host country. [00:20:10] Speaker 02: In the end, regarding the boards that the board did not address specifically due to good faith and fair dealing claims, the board did conclude that specifically that there is no legal theory upon which AISG can support its claim. [00:20:23] Speaker 02: And the board in that regard certainly appears to have considered each possible legal theory and concluded that AISG could not support its claim. [00:20:38] Speaker 02: through a couple of specific allegations from Mr. Ennike this morning. [00:20:42] Speaker 02: He mentioned the board not mentioning certain facts between August and December 2012. [00:20:49] Speaker 02: That amounts to, in some ways, concerns with the board's credibility determinations. [00:20:58] Speaker 02: Several of the facts articulated in Mr. Ennike's brief amount to the board's weighing of testimony from AISG's witnesses itself. [00:21:07] Speaker 02: And that disagreement with mentioning them in the opinion is not an error for this court to reverse, given the administrative judge is presumed to have considered all facts in the record and there's nothing in the opinion in this case that gives the court any pause in having considered the entire record. [00:21:33] Speaker 02: Additionally, when the, Mr. Anneke mentioned this morning, the change circumstance in December 2012, when the Army Corps did actually approve the site to change, to change to Site 3, by that point, the record demonstrates that the circumstances simply hadn't changed. [00:21:50] Speaker 02: By December 2012, when the project was moved to Site 3, the Army Corps accepted from ASG [00:21:58] Speaker 02: the authority that AISG had obtained from the Ministry of the Interior to move to Site 3. [00:22:04] Speaker 02: The board found it reasonable on the Army Corps' part before it received such authority to have held AISG to Site 2 given, again, the limitations and the license to construct that the Army had and that the board found not to be infirmed despite contrary allegations made by AISG before the board. [00:22:31] Speaker 02: Turning to the other, just briefly, Your Honor, the other part of the case, which amounts to a request for this court to readway the evidence, and that is primarily the change claim and the destructive differing psych conditions claim in this case. [00:22:46] Speaker 02: And to be brief, there simply is no change that occurred given that the agency was attempting to hold [00:22:53] Speaker 02: the contractor to the bargain that it agreed to. [00:22:58] Speaker 02: The Army Corps was requiring AISD to perform at the site that it agreed to in modification to under the contract and therefore there was no direction to perform extra contractual work and therefore no change. [00:23:11] Speaker 02: Regarding the differing site condition claims, that would have required there to have been a physical condition at the site that differed materially from those in the contract or otherwise reasonably encountered in this type of work. [00:23:25] Speaker 02: And here, neither the occupants of the AAC post nor the villagers themselves could constitute such a physical condition as they were known or should have been known definitely by the proposal presented by the contractor to perform a site two. [00:23:45] Speaker 02: And if there are no further questions, I can conclude. [00:23:49] Speaker 03: Mr. Bird, we'll hear from Mr. Anacuff. [00:23:54] Speaker 03: You have three minutes. [00:23:55] Speaker 03: Thank you. [00:23:59] Speaker 03: Mr. Anacuff, you're still on mute. [00:24:05] Speaker 01: Sorry, Your Honor. [00:24:06] Speaker 03: That's OK. [00:24:08] Speaker 01: On to Mr. Bird. [00:24:10] Speaker 01: First, what AISG proposed was what it does. [00:24:15] Speaker 01: It constructs and it demolishes. [00:24:17] Speaker 01: And what it found was something different. [00:24:20] Speaker 01: It found a foreign police force that it had the right to have not there. [00:24:25] Speaker 01: The undisputed testimony that the Corps agreed that they had to do it and they didn't do it. [00:24:32] Speaker 01: The duty of good faith and fair dealing sits outside of the contract. [00:24:37] Speaker 01: It exists when problems occur. [00:24:40] Speaker 01: And that is the obligation that the Corps had [00:24:43] Speaker 01: for whatever reason, it had to cooperate and not hamper the ability of AISG to do its job. [00:24:53] Speaker 01: The argument that there's no legal theory that the board made, there's nothing to indicate that it considered the duty of good, safe, and fair dealing. [00:25:01] Speaker 01: If one looks at the agility case and some of the others we signed, this court has never held a complete silence about a major issue [00:25:09] Speaker 01: suffices to treat something as having been dealt with subsilentia. [00:25:14] Speaker 03: With regard to credibility, the board only... Mr. Anico, can I just ask you about that last point? [00:25:21] Speaker 03: Even if we agree with you that the board didn't address the duty of good faith and pure dealing, if we conclude that the factual findings otherwise support that there was no breach, can't we just decide that it was harmless there? [00:25:37] Speaker 03: I know you dispute that, that the factual findings support that, but why wouldn't that be subject to a harmless error analysis? [00:25:46] Speaker 01: Oh, I think your honor can't do that because there were so many facts that weren't considered by the court, by the board below, and that its failure to address them in the context of the good faith and fair dealing would preclude this court from finding harmless error. [00:26:02] Speaker 01: There are simply too many facts that were in the record that the board didn't consider to allow you to do that. [00:26:09] Speaker 00: Um, what about the fact findings that the board made on the bottom of page 11? [00:26:14] Speaker 00: It's the last paragraph on page 11. [00:26:18] Speaker 00: And there's a lot of fact findings there that I think if they're supported by substantial evidence, they're very current to your argument. [00:26:31] Speaker 00: Specifically, fact-finding said AISG do not encounter physical interference. [00:26:36] Speaker 00: That the residents, there is no evidence that the residents of police were asked to cooperate or that AISG employees asked them to honor the prior license. [00:26:46] Speaker 00: Um, all these, there's a lot of different facts there. [00:26:49] Speaker 00: I just want to make sure that I understand your position. [00:26:52] Speaker 00: You think those, those facts do not undermine your, uh, argument of good faith in your dealing breach respectfully. [00:27:00] Speaker 01: Your honor. [00:27:01] Speaker 01: I believe that the board was passed on to this project, a standard that doesn't apply, which is that AISG had to show violence or, uh, physical opposition in order to prove its point. [00:27:14] Speaker 01: And that has never been the standard. [00:27:16] Speaker 03: And I think we have the rest of the minutes. [00:27:24] Speaker 03: Thank you.