[00:00:00] Speaker 02: Our next case is Newamar versus US and J&J Maintenance, 2022-1949. [00:00:11] Speaker 02: We'll be ready when you are, Mr. Schor. [00:00:14] Speaker 03: Yes, Your Honor. [00:00:15] Speaker 03: Thank you for your patience. [00:00:17] Speaker 03: Good morning, Your Honor. [00:00:19] Speaker 03: May it please the Court, I'm Lawrence Schor, and I'm here on behalf of Newamar as a connection with this matter. [00:00:29] Speaker 03: A big protest stemming from a 2019 RFP, which has been hotly contested for many years with more than one protest in the Court of Federal Claims. [00:00:41] Speaker 03: And the second decision, issued May 2022, is the one which is at issue now. [00:00:50] Speaker 03: And there are three grounds of protest, one arising out of the decision of the lower court. [00:00:58] Speaker 03: The issue, which we believe is primary, is one of contractor responsibility. [00:01:06] Speaker 03: Did J&J maintenance have to be registered in the Spanish registro mercantil, have an office in Spain, be given a tax number with a W, or not? [00:01:18] Speaker 03: Because without that, they were not capable of performing the contract in Spain as a matter of Spanish law. [00:01:25] Speaker 02: Why weren't those issues raised by not having been raised until the reply breach? [00:01:34] Speaker 03: Why weren't they waived? [00:01:36] Speaker 03: We disagree with that, Your Honor, if I may. [00:01:39] Speaker 03: The registro mercantile and the tax number issues were raised in the Newmar opening, MJAR, at appendix 121 and 122. [00:01:49] Speaker 03: We said, for example, [00:01:53] Speaker 03: J&J was nonresponsible because of its failure to be properly registered. [00:01:58] Speaker 03: We said, as Newamor had previously argued, J&J was and is required to be registered to conduct business in Spain. [00:02:04] Speaker 03: We said, here, both the Navy and J&J knew or should have known from Newamor's first bid protest that J&J was unregistered in Spain. [00:02:14] Speaker 03: Now, Your Honor, both the Department of Justice and J&J has the opportunity to respond and did respond in their amjars [00:02:22] Speaker 03: which were the opposition to our MJAR and also putting forth their own case. [00:02:31] Speaker 03: So the DOJ, in support of the cross-motion for judgment that they filed at Appendix 308, stated clearly that Neumark intends that the awardee was not a responsible bidder because J&J was ineligible for reward. [00:02:47] Speaker 03: and contending that they were not in compliance. [00:02:50] Speaker 03: J&J's report stated at Appendix 343 of their MGR submission, Newmar claims that J&J was not eligible for a warrant and should have been found not responsible because allegedly Spanish law requires a foreign entity with a permanent establishment in Spain to register in the Registro Mercantil and was not registered in the Registro Mercantil at the time. [00:03:14] Speaker 02: Why aren't these post-award issues? [00:03:18] Speaker 03: They are not post-award issues, Your Honor, because the Spanish law, among other things, requires that in order for any foreign company to be able to perform a contract in Spain, they must be registered in the registro mercantile. [00:03:35] Speaker 03: They must have a proper W tax number in order to do that. [00:03:39] Speaker 03: Now, that law is totally independent of any type of treaty that was involved here. [00:03:48] Speaker 03: This is an independent law. [00:03:50] Speaker 03: And these people were fully knowledgeable that had had to do this. [00:03:57] Speaker 03: Why? [00:03:58] Speaker 03: Because capability required by far [00:04:04] Speaker 03: 9.104-3 said, be otherwise qualified and eligible to receive an award under applicable laws and regulations where the contract is to be performed. [00:04:16] Speaker 03: Now, in order to do this, there's a significant requirement, just like the Service Contract Act in the United States, when one service contractor takes over another, they're supposed to hire the people, which means they have to deal [00:04:33] Speaker 03: with the Spanish tax laws. [00:04:35] Speaker 03: They have to deal with the Spanish equivalent of Social Security. [00:04:39] Speaker 03: They have to deal with a bunch of other benefits. [00:04:41] Speaker 03: And in order to do that, you must be registered in the registro mercantile. [00:04:46] Speaker 03: And you must have the proper tax number. [00:04:49] Speaker 03: And in this case, J&J did not have it. [00:04:53] Speaker 01: So therefore, the FAR regulation you just quoted from, it said to be eligible, you have to [00:04:59] Speaker 01: be qualified to receive the award under all applicable laws and regulations. [00:05:05] Speaker 01: It doesn't say you have to be ready to go to perform the award. [00:05:11] Speaker 03: I guess that's correct. [00:05:12] Speaker 01: And that's it. [00:05:13] Speaker 01: So I guess maybe in that way, what the re-solicitation makes clear, which is that you don't have to have all of these licenses or registrations or whatever at the time of the award. [00:05:26] Speaker 01: Just at the time of performance is entirely consistent with what the regulation is calling for and contemplating, which is merely that you just have what you're [00:05:38] Speaker 01: What you need to be qualified for at the time of the award is different than what you need at the time of performance of the award. [00:05:47] Speaker 03: And we disagree with that, Your Honor, completely. [00:05:49] Speaker 03: That's the argument of the other side. [00:05:51] Speaker 03: It's our position that you must have the capability to perform all of the elements of the scope of work at the time you will receive the award of the contract. [00:06:01] Speaker 03: And you must have that capability [00:06:05] Speaker 03: at the time in order to be able to be found responsible. [00:06:10] Speaker 03: And in this particular case, in particular here, we believe that the lower court erred in finding that this was deferred. [00:06:22] Speaker 03: Instead, our position is that what the lower court did in making a mistake is that they looked at the movement of certain specific activities, such as pest control, [00:06:35] Speaker 03: and other licenses that a contractor must have as a matter of performance once they get the award did not have to have those particular licenses. [00:06:45] Speaker 03: This is not pest control. [00:06:46] Speaker 03: This is the capability to deal with a different Spanish law which mandates that the employees must be hired and must deal with all of the functions with the employees that they argue. [00:07:07] Speaker 00: But I'm not seeing that at page H 121 and A 122, the specific argument that you're making right now about the type of licensing required. [00:07:21] Speaker 00: Where specifically did you have her look on pages A 121 and 122 to find that? [00:07:28] Speaker 00: It seems to be more general. [00:07:31] Speaker 00: It says licensing, and then it says end number, tax number, and then it says registered for best control. [00:07:40] Speaker 00: That's what I'm seeing. [00:07:43] Speaker 03: Well, what we have explained within our brief is the difference between capability at the time of award versus having a license to do certain specific activities. [00:07:57] Speaker 00: one of the issues in the very thing. [00:08:08] Speaker 03: Well, Your Honor, to the best of my knowledge, if I have the wrong page, I really think that it is in there. [00:08:23] Speaker 03: The lower court mentioned [00:08:25] Speaker 03: her Pest Control at Appendix 45, in her opinion. [00:08:30] Speaker 03: And we responded to that, that the registration itself was not delayed. [00:08:34] Speaker 00: This definitely mentions Pest Control. [00:08:37] Speaker 00: The only thing I see here is the tax number and the Pest Control. [00:08:40] Speaker 00: And there's a more general statement about properly registered to conduct business. [00:08:49] Speaker 00: I think that's the tax number. [00:08:51] Speaker 03: You must be registered, and you must have the proper tax number to conduct business in Spain. [00:08:58] Speaker 03: Your Honor, I would have to take valuable minutes. [00:09:11] Speaker 03: I will try to do that, OK? [00:09:18] Speaker 03: OK, thank you very much, Your Honor. [00:09:20] Speaker 03: I'll proceed then. [00:09:24] Speaker 03: Now, we have argued in connection with this particular requirement that the lower court ignored written evidence that the Navy knew that registration was mandated as part of responsibility for purposes of the award. [00:09:37] Speaker 03: And we did this looking at appendix 11, 114-809, 114-835, where at 114-809, [00:09:52] Speaker 03: May 14 of 2020, email from the Navy to J&J and all of the proposed bidders said, per FAR part 9, we are reaching out to all offerors on the subject solicitation to inquire if they have a Spanish tax ID number, commonly referred to as a CIF. [00:10:15] Speaker 03: At appendix 114833, [00:10:20] Speaker 03: June 24, 2020, the Navy to J&J says, as part of ongoing responsibility determination related to the solicitation for BOS services at Naval Base Rota, please advise if J&J services is registered with the Spanish registro mercantile and approved to conduct business. [00:10:41] Speaker 03: We've looked at the opinion of the court at Appendix 34, which she ties this in [00:10:49] Speaker 03: somehow to the treaty. [00:10:52] Speaker 03: And she's absolutely wrong, because the treaty of the ADC for operation has nothing to do with it. [00:10:59] Speaker 03: We say that the lower court ignored the explicit statement from DOJ counsel, that oral argument before her, that said the contracting officer assumed that some issue with the permanent committee was a responsibility issue. [00:11:18] Speaker 03: But then she went on to argue that it was not required in advance of award, and it simply reflects an evolving understanding. [00:11:26] Speaker 03: Now, the lower court also ignored contradictory evidence on other parts of the record to conclude that the Navy adequately investigated responsibility. [00:11:37] Speaker 03: She did this at appendix 25. [00:11:39] Speaker 03: She goes through a whole bunch of other reasons and concludes that there is adequate rationale to support the award without further discussion. [00:11:46] Speaker 03: And she's absolutely wrong. [00:11:49] Speaker 03: The FAR requires an affirmative at 103, an affirmative finding by the contracting officer of responsibility. [00:11:59] Speaker 03: And it says that without that finding, you cannot make the award. [00:12:03] Speaker 03: And so looking at appendix 11, 113236 to 113429, the Navy's responsibility determination memorandum completely ignored the tax and registration issues [00:12:17] Speaker 03: and contains no reason whatsoever for dispensing with that relationship. [00:12:25] Speaker 03: The Navy's business clearance memorandum and appendix 113430 to 113440, it's totally silent on the registration. [00:12:38] Speaker 03: The lower court also found that J&J did not pay attention to the fact that J&J told the Navy [00:12:46] Speaker 03: that it was not registered and did not have to be. [00:12:49] Speaker 03: At appendix 114813 to 114814, Mr. Kelly of J&J emailed, J&J is not registered with the Spanish registro Marcantil. [00:13:00] Speaker 03: And the same Mr. Kelly at appendix 114812, July 15, 2020, explaining why registration is not necessary. [00:13:10] Speaker 03: And they absolutely did not do it. [00:13:13] Speaker 03: What happened in this particular matter, and it is a matter which is outstanding before the court right now, is on December 22 of last year, we submitted a motion asking the court to take judicial notice of a letter which was sent from J&J, Secursa, and EspaƱa, which means J&J Spain, a different company founded by J&J. [00:13:38] Speaker 02: Mr. Shaw, we have your motion. [00:13:41] Speaker 02: And we will want to hear what the other side has to say about it. [00:13:46] Speaker 02: You're well into your rebuttal time, so we can save that for you. [00:13:52] Speaker 03: OK, thank you, Your Honor. [00:13:54] Speaker 02: And we'll give you two minutes for rebuttal. [00:13:56] Speaker 03: Thank you, Your Honor. [00:14:05] Speaker 02: Ms. [00:14:05] Speaker 02: Koenig. [00:14:14] Speaker 04: Good morning, Your Honors, and may it please the Court. [00:14:18] Speaker 04: As an initial matter, the trial court did not abuse its discretion in rejecting J&J's responsibility challenges, both on waiver grounds and on the merits. [00:14:35] Speaker 04: To address your honor's point as to what exact issues were raised in the initial MJAR at page 121 of the appendix, in the heading, Newmar argues that J&J was required to be registered to do business in Spain. [00:14:55] Speaker 04: But it's clear from the argument that follows that heading that the argument focuses on the end tax number and on the pest control licenses. [00:15:05] Speaker 04: and does not argue either that J&J needed a W tax number or the registration within the Registrar Mercantile. [00:15:14] Speaker 00: So it's the registration in the Spanish Registrar Mercantile, also the W tax number, and then also the agreement on defense cooperation. [00:15:27] Speaker 04: Correct. [00:15:28] Speaker 04: Those were the issues that the trial court found waived and which were not specifically argued in the initial MJAR. [00:15:35] Speaker 04: There is a general responsibility argument, but it's focused on the end tax number and on the pest control licenses. [00:15:43] Speaker 04: And so the trial court was correct to find those waived. [00:15:48] Speaker 00: So in your view, what standard would you view that under? [00:15:56] Speaker 04: reviewed by this court under an abuse of discretion standard, because matters of waiver are within the discretion of the trial court. [00:16:02] Speaker 04: And so the abuse of discretion would be the appropriate standard. [00:16:07] Speaker 01: So when this brief argues that J&J wasn't registered to conduct business in Spain, are you saying that [00:16:19] Speaker 01: that could be referring to some other kind of registration other than being registered with Registral Mercantile? [00:16:28] Speaker 04: Yes, Your Honor. [00:16:28] Speaker 01: It's too vague because we don't know if it's referring to Registral Mercantile? [00:16:33] Speaker 04: Well, no, Your Honor. [00:16:35] Speaker 04: I'm not arguing that it's too vague. [00:16:38] Speaker 04: I'm saying that when you look to the actual argument that follows the heading, the argument is that J&J has no [00:16:48] Speaker 04: tax number to conduct business in Spain, so that being registered to conduct business in Spain is specifically referring to not having an end tax number. [00:16:56] Speaker 04: It's only once the government submitted its motion for judgment on the administrative record and demonstrated that Newmar was wrong factually about whether J&J had an end tax number that it pivoted to the argument that it needed now a W tax number and changed the argument. [00:17:14] Speaker 04: in its reply brief. [00:17:15] Speaker 02: What about the motion for judicial notice that these have already been taken care of? [00:17:21] Speaker 02: And if they really didn't need to be done earlier, if it was sufficient that they be done before performance, why hasn't the requirements been satisfied? [00:17:37] Speaker 04: Well, Your Honor, as we argued in the response to the motion for judicial notice, those documents are not appropriately part of the appellate record in this case. [00:17:48] Speaker 04: But they do demonstrate that the requirements could be satisfied post-award and were in fact satisfied prior to actual conducting of business in Spain. [00:18:00] Speaker 04: And that's consistent with the RFP. [00:18:04] Speaker 04: with the solicitation in this case that required permits, licenses, and authorizations to perform work post-award. [00:18:12] Speaker 04: And these types of post-award requirements are simply not matters of responsibility. [00:18:18] Speaker 04: They're instead matters of contract administration. [00:18:21] Speaker 04: Moreover, this court's decision in allied tech [00:18:29] Speaker 04: allows for a contracting officer to rely on the certifications that are provided in a proposal about these types of things. [00:18:36] Speaker 04: So J&J certified in its proposal that it had or could obtain the licenses that were necessary to perform work, and the contracting officer was reasonable in relying on that certification. [00:18:49] Speaker 04: The responsibility memorandum that is in the administrative record addresses [00:18:57] Speaker 04: the appropriate matters of responsibility, which include financial capability and those types of other appropriate responsibility matters. [00:19:09] Speaker 04: And the provision at 9.104-1G, which is the catch-all provision in the list of responsibility matters, should be read in the context of the rest of that provision, which I'll deal with. [00:19:26] Speaker 04: capacity of the company as a whole, independent of any particular procurement, to be a responsible contractor and to perform the contract. [00:19:34] Speaker 04: But requirements which are specific to the contract, such as licenses, permits, authorizations to perform work, these are the types of things that are rather than responsibility contract administration. [00:19:49] Speaker 01: Could you comment a little bit on the treaty? [00:19:52] Speaker 01: And I got a little confused in the briefing on to what extent the treaty is in play or what the state of the argument is that's a version of that treaty argument, but it's not really relying on the treaty anymore. [00:20:10] Speaker 01: It's relying on Spanish law. [00:20:12] Speaker 04: Your Honor, if I understand the appellant's argument, [00:20:20] Speaker 04: At the trial court level, Newmar had been arguing that the ADC, the Agreement on Defense Cooperation, had been violated, specifically Article 2, Section 4. [00:20:36] Speaker 04: The argument that Newmar presents on appeal is not [00:20:45] Speaker 04: not arguing that this treaty has been violated. [00:20:49] Speaker 04: And so I don't think that it raises the jurisdictional concerns that the trial court had found because, again, the arguments changed a little bit on appeal. [00:21:00] Speaker 04: And we don't think it's necessary for this court to interpret any international treaty in deciding the responsibility. [00:21:09] Speaker 04: I think the one element of Newmar's argument that it had raised at the trial court level that would be problematic would be an argument that the contracting officer should have deferred to the Spanish section of the permanent committee when it had mentioned that J&J was not registered in the registro mercantile. [00:21:36] Speaker 04: To the extent that argument is not presented to this court in that way, we don't think that there is a concern about the jurisdiction over international treaties, because it's not necessary for resolution of the responsibility issues. [00:21:51] Speaker 01: Do you think the appellant's unbalancing argument fails for a lack of showing of prejudice? [00:22:03] Speaker 04: Your honor, the unbalancing argument, it fails to show prejudice in the sense that Neumar's argument fails to demonstrate the materiality of any unbalancing, and it fails to show any effect or any risk to the government of any unbalancing. [00:22:25] Speaker 04: Simply an argument that prices are higher or lower, either than the [00:22:30] Speaker 04: government cost estimates or then new MRZone prices is not sufficient to demonstrate material unbalancing. [00:22:38] Speaker 04: There would have to be something more. [00:22:40] Speaker 04: A protester would have to show that the unbalancing would have an effect or have a risk that the government would pay too much money. [00:22:52] Speaker 04: In this case, the [00:22:55] Speaker 01: It seems like the other side incorporated by reference briefing from below to establish that, in fact, the other side's elans were unbalanced. [00:23:06] Speaker 01: And beyond that, it was rises to the level of being material. [00:23:11] Speaker 01: All of that was not actually briefed in their blue brief. [00:23:13] Speaker 01: They were referring to pages from another brief elsewhere. [00:23:19] Speaker 04: Yes, correct, Your Honor. [00:23:22] Speaker 04: The Newmar's arguments on appeal failed to demonstrate unbalancing. [00:23:27] Speaker 04: They failed to demonstrate the materiality of any unbalancing, and they failed to demonstrate any risk to the government of any unbalancing. [00:23:33] Speaker 04: So this court can [00:23:39] Speaker 04: dispose of those issues for failure. [00:23:43] Speaker 01: What's the right way to think of price reasonableness? [00:23:46] Speaker 01: Is it only when there's a suspicion that the price of the bid is too high and not at all, ever, whether it's a question of whether it's such a lowball offer that it might put the government at risk of a failure to perform? [00:24:02] Speaker 04: Your Honor, a price-reasonable analysis [00:24:07] Speaker 04: exclusively looks to whether a price is too high. [00:24:11] Speaker 04: And it does not. [00:24:12] Speaker 01: Where do we get that law from? [00:24:17] Speaker 04: Well, I think several cases, your honor, that we've cited in the brief. [00:24:28] Speaker 04: This court? [00:24:33] Speaker 04: This court is cases? [00:24:34] Speaker 04: I think Dine Corp was a court. [00:24:35] Speaker 04: a decision of this court, if I'm remembering correctly, and perhaps the Court of Federal Claims decision in Agile Defense. [00:24:42] Speaker 04: But this solicitation did not include a price realism requirement, which would look to whether a price is too low. [00:24:51] Speaker 04: And in the context of a firm fixed price contract such as this one, there isn't really a risk of a price being unreasonably low, Your Honor. [00:25:04] Speaker 04: which is why the agency reasonably chose to only conduct a price reasonableness analysis and not a price realism analysis. [00:25:13] Speaker 04: And we believe that New Amar is simply incorrect to argue that under a price reasonableness analysis the agency should be looking to whether a price is too low. [00:25:24] Speaker 04: Unless your honors have [00:25:32] Speaker 04: Further questions, we would ask the court to affirm the decision of the trial court in this case. [00:25:38] Speaker 02: Thank you, counsel. [00:25:39] Speaker 02: Mr. Shaw has a couple of minutes for water. [00:25:46] Speaker 03: Thank you, Your Honor. [00:25:58] Speaker 03: Thank you, Your Honor. [00:25:59] Speaker 03: In connection with the court [00:26:02] Speaker 03: The appendix pages, Your Honor, I'm looking at appendix 121 and 122 with the heading of Roman numeral 2. [00:26:12] Speaker 03: The Navy improperly evaluated J&J's responsibility and fitness to perform the contract because J&J lacked the appropriate licensure to perform the required duties and was not registered to conduct business in Spain when it submitted the original proposal and when it was awarded the contract. [00:26:27] Speaker 03: And we go into continue the discussion [00:26:32] Speaker 03: through the top of page 123. [00:26:37] Speaker 00: I don't see him there where the Spanish mercantile register was mentioned, or the agreement on defense cooperation, or the W tax number. [00:26:51] Speaker 00: Am I missing something? [00:26:54] Speaker 00: It's not mentioned expressly. [00:26:56] Speaker 00: I understand it wasn't your argument [00:26:59] Speaker 00: that the broad language should be read to encompass those things. [00:27:06] Speaker 00: Well, that is right, Your Honor, because we get into... I just want to make sure you have an opportunity to tell me where those things are more specifically mentioned, if they are. [00:27:28] Speaker 00: I just want to give you the opportunity to identify it. [00:27:33] Speaker 03: I understand that, Your Honor. [00:27:34] Speaker 03: And I believe that the thrust of our position was set forth in our opening, and in the arguments as well before the lower court, in which we specifically [00:27:57] Speaker 03: went right after the registration requirement. [00:28:02] Speaker 02: It sounds like there's nothing more specific. [00:28:09] Speaker 03: I understand that. [00:28:12] Speaker 02: And your red light is on. [00:28:14] Speaker 03: Do you want to finish your argument? [00:28:17] Speaker 03: Yes. [00:28:18] Speaker 03: I would just like to also add, with regard to the question on unbalancing and materiality, specifically in this particular case, [00:28:27] Speaker 03: There was materiality because the Navy specifically made a point of one, insisting that every single one of these islands be filled out or the bid would be non-responsive. [00:28:38] Speaker 03: And secondly, they stated that they would evaluate that as part of their evaluation of the propriety. [00:28:45] Speaker 01: Do you know that there's a rule that you're not allowed to incorporate by reference briefing from other briefs into your appellate briefs? [00:28:54] Speaker 01: I mean, I see that your blue brief was 13,978 words, which is right up against the 14,000-word limit. [00:29:01] Speaker 01: And then you incorporated by reference multiple pages from other briefing into this brief, thereby blowing through the 14,000-word limit if we were to accept those other pages as truly being incorporated by reference. [00:29:14] Speaker 03: We have our argument on page 44 and 45 that goes right to this point about the fact that [00:29:22] Speaker 03: The statements, I understand what you're saying, Your Honor. [00:29:26] Speaker 03: I appreciate that. [00:29:29] Speaker 03: But we do believe it was material. [00:29:31] Speaker 03: And because the Navy made it material, we do believe that all of the arguments about the treaty and the ADC are not applicable simply because the lower court found that the ADC was the only way that we had a claim. [00:29:52] Speaker 03: And she ignored the fact that our protest was based on the failure to meet the independent. [00:30:00] Speaker 03: How long has Newmar been on the bridge contract now? [00:30:04] Speaker 03: Newmar is no longer on the bridge contract. [00:30:06] Speaker 03: They were given. [00:30:10] Speaker 03: So at the beginning of 2023, the contract was given for performance to J&J. [00:30:19] Speaker 03: OK. [00:30:22] Speaker 03: So we were on it for, I guess, the remainder of 2021 and 2022. [00:30:28] Speaker 03: That was the decision made by the Navy, the way they would handle it. [00:30:34] Speaker 02: Thank you, counsel. [00:30:35] Speaker 02: I think we have arguments from both sides. [00:30:37] Speaker 02: The case is submitted. [00:30:38] Speaker 03: Thank you, Your Honor.