[00:00:00] Speaker 03:
OK.

[00:00:02] Speaker 03:
We'll next hear argument in appeal number 21-2169, Microtechnologies LLC versus United States Attorney General.

[00:00:15] Speaker 02:
Mr. Prince, please begin whenever you're ready.

[00:00:20] Speaker 02:
Good morning.

[00:00:20] Speaker 02:
May it please the court.

[00:00:21] Speaker 02:
My name is Zachary Prince.

[00:00:23] Speaker 02:
I'm here today on behalf of the appellant, Microtechnologies LLC, also referred to as Microtech.

[00:00:29] Speaker 02:
This case is relatively straightforward.

[00:00:32] Speaker 02:
Microtech was required by its contract with the government to purchase a name brand software solution as well as the maintenance to support that solution in year batches.

[00:00:43] Speaker 02:
This is no different than if microtechnologies have been obligated to purchase any other commercial software like an Apple product with AppleCare subscription.

[00:00:53] Speaker 02:
It comes at standard commercial terms that Microtech was required to abide by.

[00:01:00] Speaker 02:
The maintenance was sold in year packages or greater only?

[00:01:03] Speaker 00:
Can I ask you, I'm going to jump right in and ask your question about FAR 52.21241.

[00:01:12] Speaker 00:
So I believe that in your reply brief, you make it clear that you're not relying on a percentage of contract price reflecting the percentage of work performed prior to the notice of termination.

[00:01:24] Speaker 00:
That's right, Your Honor.

[00:01:25] Speaker 00:
Instead, you're relying only on reasonable charges

[00:01:29] Speaker 00:
the contractor can demonstrate to the satisfaction of the government have resulted from the termination?

[00:01:35] Speaker 00:
Yes, that's correct.

[00:01:38] Speaker 00:
What is your basis for saying that the payment made a year prior resulted from the termination?

[00:01:53] Speaker 02:
Well, Your Honor, at the time the contract was terminated, this was a cost required for performance of the contract.

[00:01:59] Speaker 02:
And the government makes much of the fact that we weren't actually required to provide maintenance in the brief period between the government's extension of the performance period and termination.

[00:02:09] Speaker 02:
But we can easily envision a scenario in which one of the US Attorney's Office had an emergency filing on a Sunday evening, and they realized that their software was down.

[00:02:18] Speaker 02:
They would have called.

[00:02:18] Speaker 02:
They would have found that they don't have a maintenance package.

[00:02:22] Speaker 02:
And they probably would not have taken kindly to Microtech saying, we're sorry.

[00:02:25] Speaker 02:
We still need time to buy the maintenance here.

[00:02:29] Speaker 00:
I had a little bit of a problem with the causation just from a practical point of resulting from the termination because that payment was made as a business judgment to go ahead and make the payment with the understanding that it's less expensive, therefore the bid would be less expensive, more likely to get the contract then.

[00:02:51] Speaker 00:
And so I'm having a hard time with the causation part of have resulted from the termination.

[00:02:58] Speaker 02:
Understood, Your Honor.

[00:03:00] Speaker 02:
This clause should be understood in the context of this Court's long-standing interpretation of the Termination for Convenience principle going back decades and decades now.

[00:03:11] Speaker 02:
It's a unique right of the government.

[00:03:13] Speaker 02:
The government can get out of its contract rights at any time for any reason, but in exchange, it promises the contractor that it will be made whole.

[00:03:20] Speaker 02:
The way that this clause implements that understanding, which is also codified in the regulations at FAR 49201A,

[00:03:28] Speaker 02:
is by providing two bases for the contractor to recover.

[00:03:31] Speaker 02:
The first is the basis we are not seeking, a straightforward application of the percentage of the contract value commensurate with the percentage of work performed.

[00:03:40] Speaker 02:
In many situations, this amongst them that will not make the contractor whole.

[00:03:44] Speaker 02:
So the second prong of this analysis requires the contractor to be made whole also for reasonable charges established in the books and records of the contractor resulting from the termination.

[00:03:55] Speaker 02:
Here, this is a charge that the contractor would have recovered from the government, but for the termination.

[00:04:01] Speaker 02:
The regulatory, the FAR council considered language that would have used the words direct cost resulting from the termination.

[00:04:09] Speaker 02:
And in the final version of this clause, they instead adopted reasonable charges, which in our view must be interpreted in light of the greater purpose of termination for convenient settlements and FAR 49201.

[00:04:21] Speaker 00:
Do you think in a case that isn't a grant of summary judgment, this normally would be decided as a matter of fact or as a matter of law?

[00:04:33] Speaker 02:
I think there are mixed questions of fact and law here.

[00:04:37] Speaker 02:
The interpretation of this FAR clause is a matter of law.

[00:04:40] Speaker 02:
Whether we satisfied the prongs of the analysis, the reasonableness of the charges, whether we could have avoided the charges, those were questions of fact.

[00:04:49] Speaker 02:
that should have been decided appropriately in a hearing.

[00:04:54] Speaker 00:
You're saying they should have been assumed or weighed in your favor?

[00:04:58] Speaker 02:
I'm saying to the extent that the only evidence in the record, which is submitted by us, doesn't satisfy the factual burden here.

[00:05:08] Speaker 02:
The board erred by not proceeding to a hearing on those facts and conducting an evidentiary hearing.

[00:05:14] Speaker 00:
Unless it wouldn't matter.

[00:05:16] Speaker 00:
There's a scenario where

[00:05:19] Speaker 00:
the facts even when weighed in your favor, if that could still result in summary judgment against you as a matter of law, then that would be fine, right?

[00:05:28] Speaker 02:
That's right, Your Honor.

[00:05:29] Speaker 02:
But in our view, and we believe this is the reason that every one of the boards and the courts that have considered this issue have interpreted that second prong of FAR 52 212-4L as inclusive also of preparation costs is because of the regulatory context.

[00:05:46] Speaker 02:
And we take instruction from the ASPCA and the SWR decision, the District of Maryland on an appeal and an admiralty decision.

[00:05:53] Speaker 03:
The question though is the reference point for how to determine what are fair reasonable preparation costs in this case.

[00:06:02] Speaker 03:
And if we look at the proper reference point as being the time that modification two was entered into, then I think that's why the BCA concluded that there just were no preparation costs because

[00:06:24] Speaker 03:
In that 12 hour period where modification two was alive, you did not undertake any costs going towards the agreed upon task of executing on option year one.

[00:06:40] Speaker 03:
And so I think as a legal matter, that's the challenge you have.

[00:06:44] Speaker 03:
Why is that the wrong way to think about it?

[00:06:47] Speaker 02:
Well, Judge Chen, the moment that that contract modification was issued and became legally effective,

[00:06:53] Speaker 02:
Microtech was required to have available the maintenance services.

[00:06:58] Speaker 02:
If it had waited until after the modification was issued, there was a possibility that there would be a gap in services to the government.

[00:07:05] Speaker 02:
And Microtech may have been in a position where it would have breached its contract.

[00:07:09] Speaker 02:
Adopting this bright line rule would result in penalizing prudent contractors that are preparing for performance and incentivizing contractors to wait until the very last moments engaging in brinksmanship

[00:07:23] Speaker 02:
to see how long they can wait before incurring a necessary performance cost.

[00:07:27] Speaker 03:
So what if instead of being a base year, the contract was for 20 years, and then there was option year 21, 22, 23, 24, 25, et cetera.

[00:07:43] Speaker 03:
And then you had bought up all of the software maintenance services for 25 years instead of 20 years on day one.

[00:07:53] Speaker 03:
of this 20-year contract with five separate option years after that.

[00:08:00] Speaker 03:
Would you say that assuming everything else was the same with the facts that happened here, you should be able to collect on the fees you paid upfront 20 years ago for option year 21?

[00:08:17] Speaker 03:
Not in last option year one were exercised.

[00:08:21] Speaker 02:
And that's why we draw the line here between.

[00:08:23] Speaker 03:
Right.

[00:08:23] Speaker 03:
It was exercised for 12 hours.

[00:08:26] Speaker 03:
And so obviously, there was nothing, again, just like in the facts of your case, that the contractor would have, or even conceivably could have done in terms of undertaking any preparation costs for providing services in year 21.

[00:08:42] Speaker 03:
It would still, in your view, be reasonable for the contractor 20 years ago to have

[00:08:50] Speaker 03:
made the bet that it did to prepay for all of the services for 25 years?

[00:08:57] Speaker 02:
It may have been reasonable for it to have made the bet to lock in for 25 years, but only that 21st year and the prior years would have been compensable because only those costs were required for performance.

[00:09:11] Speaker 02:
Here the contractor could have, had it not locked itself into a maintenance cost in advance, gone out and secured that cost.

[00:09:19] Speaker 02:
It may have taken time

[00:09:21] Speaker 02:
And it ran the risk that the government would have required services that we would have been unable to provide.

[00:09:25] Speaker 03:
Would your argument be the same on the facts that are before us if the Justice Department, five minutes after, still on Sunday night, September, what was it, 30th, I assume, 2018,

[00:09:43] Speaker 03:
came back to you and reneged on the execution of modification two and said we were here by terminating?

[00:09:51] Speaker 02:
Yes, Your Honor, we would have the same order.

[00:09:52] Speaker 03:
So the five minutes would still be enough in your view to assert that you've incurred reasonable costs.

[00:10:01] Speaker 03:
Yes, your honor.

[00:10:02] Speaker 04:
I'm going to ask you to pick up on that if I could, to even make it a more interesting hypothetical.

[00:10:08] Speaker 04:
The Justice Department representative and the contracting officer, I'm sorry, the contracting officer and the microtech representative are seated across the table.

[00:10:19] Speaker 04:
The contracting officer says, okay, here's mod two and hands it over.

[00:10:27] Speaker 04:
Ten seconds after that, the contracting officer's cell phone goes off.

[00:10:33] Speaker 04:
He gets a text message that says, mistake.

[00:10:36] Speaker 04:
We're not supposed to enter into this.

[00:10:39] Speaker 04:
And at that point, within a minute, the contracting officer says, this is a mistake.

[00:10:45] Speaker 04:
Here's a retraction, a termination.

[00:10:50] Speaker 04:
Would you still be making this argument?

[00:10:53] Speaker 04:
It's getting to the point where

[00:10:57] Speaker 04:
I have, you're making a good argument for your client, but it seems to be getting to a point where it leaves kind of a bad taste in one's mouth.

[00:11:05] Speaker 04:
Do you know what I mean?

[00:11:07] Speaker 02:
I understand, Your Honor.

[00:11:08] Speaker 04:
I mean, it's just something about it.

[00:11:11] Speaker 00:
What about the contracting officer actually left a voicemail on that Friday preceding the Sunday saying that they didn't want to exercise mod 2?

[00:11:22] Speaker 02:
Your Honor, that was the contracting officer's representative who didn't have the warrant to bind the government in this case, and there's no evidence in the record that Microtech actually heard that message.

[00:11:31] Speaker 02:
As far as, and even if we had heard it, as far as we knew, the government had changed its mind and decided to exercise it.

[00:11:38] Speaker 02:
The person who actually had the authority to bind the government

[00:11:41] Speaker 02:
issue that modification to us, and that's what we're talking about.

[00:11:43] Speaker 00:
There were two people, right?

[00:11:44] Speaker 00:
That was the contracting officer supervisor, I think?

[00:11:47] Speaker 00:
Right.

[00:11:47] Speaker 02:
There was another warranted contracting officer here, but they both had authority to bind the government, as opposed to the contracting officer's representative who did not.

[00:11:55] Speaker 04:
Mr. Prince, what about the situation I gave where it's literally less than a minute?

[00:12:03] Speaker 02:
Well, Judge Schall, just to... But under your theory, the government would be stuck, right?

[00:12:07] Speaker 02:
The government would be stuck, but conversely, if Microtech had received the text right after accepting the agreement saying, don't accept it, we can't provide the services, it would have been in a position where it couldn't get out of the contract.

[00:12:19] Speaker 02:
It's only the government's unique termination for convenience mechanism that lets it correct these errors.

[00:12:24] Speaker 03:
Under the contract,

[00:12:26] Speaker 03:
Wasn't the government required to give you 60 days notice ahead of the expiration of the base year to exercise option year one?

[00:12:35] Speaker 03:
They were, your honor.

[00:12:36] Speaker 03:
So even if we just play along and assume that modification two was actually a legal, valid document, I would think the government would not be able to have a legitimate case to say that

[00:12:52] Speaker 03:
there was something wrong with your side if on that following Monday, October 1, 2018, you weren't able to instantly provide the kind of software services that they were seeking, given that you had just entered into mod two the night before.

[00:13:08] Speaker 02:
I think in this case, they would have your honor because we don't believe this was necessarily a validly exercised option.

[00:13:14] Speaker 02:
This was a bilateral agreement to extend performance separate from the option clauses of FAR 52.

[00:13:19] Speaker 03:
So it's its own separate contract.

[00:13:21] Speaker 02:
It's a separate contract incorporated by references, the terms and conditions of the initial contract.

[00:13:28] Speaker 02:
That's why it required bilateral acceptance before it became decided.

[00:13:31] Speaker 03:
Then again, why is it a reasonable cost incurred full year beforehand for these services when we have just decided that this was a separately

[00:13:45] Speaker 03:
you know, generated and distinct contract.

[00:13:48] Speaker 02:
It became a necessary cost for performance at the time modification two was effective.

[00:13:53] Speaker 02:
It was a preparation cost in advance.

[00:13:56] Speaker 02:
And at that point, had the government not extended performance, it would have been a sunk cost, just like the costs for the subsequent period of performance.

[00:14:04] Speaker 03:
I guess what I'm wondering is, is it fair to say that it was reasonably foreseeable back in 2017 that you would have this separate bilateral agreement a year later such that you would want to and need to prepay and buy all these services ahead of time?

[00:14:21] Speaker 02:
In 2017, we took a business risk.

[00:14:23] Speaker 02:
believing that the government likely would extend performance for these two additional performance periods.

[00:14:29] Speaker 02:
Whether they did that through a technical option mechanism or they did it through a separate agreement was of no moment to our assessment of whether the government would need these services.

[00:14:40] Speaker 02:
If the government hadn't extended performance, we would acknowledge that we are not entitled to these costs.

[00:14:45] Speaker 04:
Something to ask you.

[00:14:48] Speaker 04:
No one was at fault here.

[00:14:50] Speaker 04:
The contracting officer's representative called over Friday afternoon and said, we're not going to exercise it.

[00:14:56] Speaker 04:
And that did not get listened to until Monday.

[00:14:58] Speaker 04:
And nobody's to be criticized.

[00:15:00] Speaker 04:
That happens.

[00:15:01] Speaker 04:
But assume for the moment that the microtechnology representative had heard that phone call.

[00:15:09] Speaker 04:
And then everything else had played out the way it did.

[00:15:14] Speaker 04:
She received later a government modification number two.

[00:15:21] Speaker 04:
And then 12 hours later, the next Monday morning, it's retracted.

[00:15:26] Speaker 04:
Would the facts be any different because of the fact that the person had heard the phone call on Friday?

[00:15:35] Speaker 02:
Your Honor, the facts wouldn't be different.

[00:15:37] Speaker 02:
but it was a result of the fact that that should be different but with the result of the difference that it may have given the government a better basis to argue unilateral mistake in argument it has not pressed as far as we can tell in this appeal because then it would have established perhaps that microtech have shared the government's uh... understanding of erroneous facts

[00:16:01] Speaker 02:
We would have a legal basis to believe that the warranted contracting officer who issued the modification, who had the authority to issue the modification, was representing that the government had changed its mind.

[00:16:14] Speaker 00:
The relevant FAR provision also says the contractor should not be paid for any work performed across incurred, which recently could have been avoided.

[00:16:23] Speaker 00:
Did anybody argue that below or to your knowledge?

[00:16:27] Speaker 02:
They did, Your Honor, and in our view, reasonably could have been avoided as referring to a duty to mitigate after the termination.

[00:16:36] Speaker 02:
This cost couldn't have been reasonably avoided for us after the modification was issued because it was necessary for performance.

[00:16:42] Speaker 00:
But that's not an initial appeal, right?

[00:16:46] Speaker 02:
I believe it is, but

[00:16:49] Speaker 02:
We would be glad to say it is not because I believe it would be the government's issue.

[00:16:54] Speaker 03:
Right.

[00:16:54] Speaker 03:
Okay.

[00:16:54] Speaker 03:
You've used up all your rebuttal, but we'll give you three minutes.

[00:16:58] Speaker 03:
Thank you, your honor.

[00:16:59] Speaker 03:
Appreciate it.

[00:16:59] Speaker 03:
Let's hear from the government.

[00:17:03] Speaker 01:
Good morning, your honor.

[00:17:04] Speaker 01:
May it please the court?

[00:17:06] Speaker 01:
The board's decision below should be affirmed.

[00:17:08] Speaker 01:
As this court's hypotheticals point out, the court should not indulge the appellant's attempt to capitalize here on the agency's mistaken issuance of modification two.

[00:17:18] Speaker 01:
The cost sought in this appeal simply cannot be an unavoidable reasonable charge resulting from determination, as would be convencible under prong to the applicable clause at issue.

[00:17:29] Speaker 03:
The costs... Sorry to interrupt here, but what if microtechnologies had entered into some agreement with NWICS, if that's the correct pronunciation, in that 12-hour window?

[00:17:43] Speaker 01:
Your honor, if the contractor had an agreement with the manufacturer for the software during that 12-hour window, they would have a much better case for attempting to be compensated.

[00:17:54] Speaker 03:
They may have a winning case?

[00:17:56] Speaker 01:
They may have a winning case if they were able to establish that the cost could not have been avoided, because as Judge Stoll pointed out, there is a specific limitation on cost awardable under the clause, and those being those that are reasonably avoidable cannot be compensated.

[00:18:12] Speaker 01:
So the contractor would have needed to show that entering into the contract with the manufacturer during those 12 hours could not have been avoided reasonably.

[00:18:20] Speaker 01:
That would have been a prerequisite showing to make that compensation theory work for them.

[00:18:28] Speaker 01:
In this case, the costs sought were incurred at the beginning of the base year, as the court pointed out.

[00:18:35] Speaker 01:
They were for the first option year, not knowing whether or not that option year would be exercised.

[00:18:40] Speaker 01:
And that modification, too, was then in effect for 12 hours.

[00:18:44] Speaker 01:
It does not change the character of that avoidable cost into a convencible one.

[00:18:52] Speaker 04:
So you would agree, Mr. Bird, that even if some work had been done,

[00:18:57] Speaker 01:
during that twelve-hour period that under the clause determination for convenience clause that we've been discussing they would be entitled to recover for that even if it was quite minimal under the first prong of the clause your honor if they had performed work under the agreement under modification two then yes they would have been entitled to a percentage of work performed percentage of contract value representing percentage of work performed what is uh...

[00:19:27] Speaker 00:
that Thursday preceding this Sunday.

[00:19:30] Speaker 00:
They had thought, hey, we think the government is going to go ahead and exercise this.

[00:19:33] Speaker 00:
We'd better go ahead and purchase the maintenance contract or purchase the maintenance license.

[00:19:41] Speaker 00:
What if they would have done it then?

[00:19:43] Speaker 00:
Could that have been a reasonable cost incurred?

[00:19:48] Speaker 01:
Well, Your Honor, as Judge Chin pointed out earlier, there was a 60-day notice requirement with the contract to exercise options.

[00:19:55] Speaker 01:
That notice had not been given to the contractor.

[00:19:57] Speaker 01:
Therefore, neither the 60-day nor the 30-day notice had been given to the contractor as required by the clause, the dash 9 clause in the contract.

[00:20:06] Speaker 01:
Therefore, incurring the costs for the software a few days before the agency entered into modification two or executed modification two erroneously would not have meant that the contractors would not have helped the contractor any in this case.

[00:20:22] Speaker 01:
It would still be a reasonably avoidable charge that is not a reasonable charge resulting from the termination.

[00:20:31] Speaker 03:
Given that

[00:20:34] Speaker 03:
The requirements for exercising an option were not actually fulfilled here.

[00:20:40] Speaker 03:
Do you view modification two as like a separate and distinct contract from the contract that was entered into in 2017?

[00:20:52] Speaker 03:
Or does the government view it as a proper exercise of option year one?

[00:20:59] Speaker 01:
Your honor, given that the base period had expired under the original award, the original agreement, the base year had expired, that, as we explained in footnote seven of our brief, meant that the option, the ability to exercise the option in that base year, that original award, expired with it.

[00:21:19] Speaker 01:
And therefore entering into modification two meant that the agency and the contractor entered into a new agreement.

[00:21:26] Speaker 01:
And as Mr. Prince agreed on that point, therefore that calls into question further the reasonableness of having incurred these costs a year before entering into this new agreement, because you have now a whole separate agreement being entered into on September the 30th, 2018, as opposed to a modification.

[00:21:47] Speaker 01:
As we also explained in our footnote seven of our briefing, and the board's silence on the issue also lends credence to,

[00:21:55] Speaker 01:
It doesn't really matter whether it's a modification exercising an option or a modification entering into a new agreement because it still is the case that the charge incurred here by the contractor was not a reasonable charge resulting from the termination of that modification too.

[00:22:13] Speaker 01:
The timing and the purpose for which the contractor incurred that cost simply under no reasonable reading of the clause at issue could be compensable.

[00:22:25] Speaker 01:
And if there are no further questions, I can conclude.

[00:22:31] Speaker 03:
Microtech was contractually obligated to provide those services immediately upon execution of modification two.

[00:22:40] Speaker 03:
Is that fair to say?

[00:22:42] Speaker 01:
No, Your Honor.

[00:22:43] Speaker 01:
The contractor before the board failed to establish that they had an immediate obligation to provide the services.

[00:22:51] Speaker 01:
What other way of understanding modification two would there be?

[00:22:55] Speaker 01:
In the context of the case that we have, this Modification 2 was entered into at approximately 9 o'clock on a Sunday night, and there was nothing offered from the contractor that they performed any work under the agreement immediately after.

[00:23:14] Speaker 03:
Maybe the point is, assuming for now that Modification 2 is a separate, distinct contract, independent of the 2017 contract,

[00:23:25] Speaker 03:
There just weren't enough terms and conditions in terms of timing of performance, because it was such a skeletal agreement.

[00:23:38] Speaker 01:
Yes, Your Honor.

[00:23:38] Speaker 01:
I mean, this was a new agreement, and the parties have not delineated what the terms of that separate agreement would be.

[00:23:44] Speaker 03:
But the government's view, we could, based on the way the decision was written by the board,

[00:23:54] Speaker 03:
Even though it said some things about refundable, non-refundable, and the question of whether the obligations were triggered immediately and other things, this court wouldn't have to reach those kinds of issues because it could just affirm based on a legal interpretation of the FAR and how it applies to the undisputed facts here.

[00:24:16] Speaker 03:
That's correct.

[00:24:16] Speaker 03:
Not the disputed facts.

[00:24:18] Speaker 03:
That's correct.

[00:24:20] Speaker 00:
I have one more question.

[00:24:21] Speaker 00:
In your brief, you refer

[00:24:23] Speaker 00:
multiple times to substantial evidence, that there's substantial evidence supporting the judges' fact findings.

[00:24:31] Speaker 00:
Why is that something I would think about on summary judgment?

[00:24:34] Speaker 01:
In your honor, I have to admit that was an article drafting on my part.

[00:24:38] Speaker 01:
As the court is aware, it is a de novo standard of review here and the question for this court is whether there is a

[00:24:45] Speaker 01:
factual dispute as to a material fact that would either preclude summary judgment for the appellant or mean that summary judgment was appropriate for the government.

[00:25:00] Speaker 01:
Thank you.

[00:25:01] Speaker 03:
Thank you.

[00:25:04] Speaker 03:
Mr. Prince, you have three minutes.

[00:25:08] Speaker 02:
Thank you, Your Honor.

[00:25:10] Speaker 02:
The language of modification to

[00:25:13] Speaker 02:
In our view, it does not brook more than one interpretation.

[00:25:17] Speaker 02:
It has an appendix from page 190.

[00:25:18] Speaker 02:
You see the list of supplies and requirements here.

[00:25:22] Speaker 04:
What page is that, Mr.?

[00:25:24] Speaker 02:
190.

[00:25:25] Speaker 02:
Of the joint appendix?

[00:25:26] Speaker 02:
Yes, sir.

[00:25:28] Speaker 02:
It requires annual software maintenance.

[00:25:33] Speaker 02:
The modification has an effective date of 9-29-2018.

[00:25:37] Speaker 02:
In fact, the day before, the modification became legally effective.

[00:25:43] Speaker 02:
We understood, and we believe that the government shared this understanding at the time, that this had an immediate effect.

[00:25:50] Speaker 02:
This required Microtech to be available to provide the software maintenance.

[00:25:55] Speaker 02:
We do not believe that the government would have taken kindly to our response in the event that the government did need this maintenance in the short period of time at issue, say that, sorry, it's unavailable.

[00:26:05] Speaker 02:
We can envision a scenario where a U.S.

[00:26:06] Speaker 02:
attorney's office has an emergency filing,

[00:26:09] Speaker 02:
They need a litigation document that is stored in this NUIC software.

[00:26:13] Speaker 02:
They couldn't get it, and they're harmed as a result.

[00:26:16] Speaker 02:
I know that I am no stranger to having technology issues prevent me from getting urgent filing deadlines.

[00:26:22] Speaker 02:
I know the stress that that has caused, and I know the sympathy that I get from the courts in which I am filing as a result.

[00:26:32] Speaker 02:
That's why they contracted for this service.

[00:26:35] Speaker 02:
Microtech isn't getting a reward.

[00:26:37] Speaker 00:
Is it your position that if there is an obligation that

[00:26:39] Speaker 00:
resolves the legal issue of whether there are reasonable charges that were the result of determination.

[00:26:48] Speaker 00:
That's just one fact to consider, right?

[00:26:51] Speaker 02:
It's our position that that resolves one part of the legal issue because our interpretation of FAR 52-212-4 is that it must be considered in light of FAR 49-201.

[00:27:03] Speaker 02:
which cautions that in a termination for convenience settlement, the contractor is to be made whole, including for the cost that it reasonably incurred in preparation for performance of the terminated work.

[00:27:13] Speaker 02:
That gives the context for termination for convenience settlements and this separate FAR clause as well.

[00:27:19] Speaker 02:
So in that context, we posit that given that Microtech was required to provide the NUIC software maintenance, it had to have that ready and available.

[00:27:32] Speaker 02:
the only way it could do that was ordering it in advance.

[00:27:35] Speaker 02:
Whether that was a moment in advance or a year in advance, it was required to have that available.

[00:27:40] Speaker 02:
And the record does show that by having it available a year in advance, we were able to secure for the government substantially reduced pricing.

[00:27:48] Speaker 02:
The list price for the software maintenance per unit was 6,500.

[00:27:52] Speaker 02:
We brought it down to 3,700 for the option period because we ordered in advance.

[00:27:57] Speaker 02:
The rule that the government advocates for here would have an unreasonable effect

[00:28:01] Speaker 02:
likely causing the government to incur substantially increased costs from contractors who can't lock in costs until after the performance period begins.

[00:28:10] Speaker 02:
Your Honor, I see I'm over my time.

[00:28:14] Speaker 02:
Thank you very much.

[00:28:15] Speaker 02:
Thank you.

[00:28:15] Speaker 02:
In case you submitted.