[00:00:00] Speaker 03:
Final appeal this morning is docket number 23-1087.

[00:00:07] Speaker 03:
Alysa Desak handling Service Air 2 SCARL versus United States.

[00:00:16] Speaker 04:
I'm sure that is Al Gacy, Your Honor.

[00:00:17] Speaker 03:
Al Gacy.

[00:00:18] Speaker 03:
Much easier.

[00:00:19] Speaker 03:
Okay, we'll work with Al Gacy.

[00:00:20] Speaker 03:
Thank you.

[00:00:22] Speaker 03:
Miss Ivek?

[00:00:22] Speaker 03:
Yes.

[00:00:23] Speaker 03:
Please begin whenever you're ready.

[00:00:33] Speaker 04:
Good morning, your honors, and may it please the court.

[00:00:34] Speaker 04:
I'm Kristin Idig from Ardleton Porter.

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With my colleagues, we represent the appellant here, Al Gacy.

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Al Gacy is an Italian contractor that provides airport operations and ground handling support for commercial and government operations all over Europe, including support for the Navy for the last 40 years in Italy.

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This case relates to the procurement of that operational support for the Navy's air station in Naples, Italy.

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In this procurement, the Navy chose a different contractor, not Al Gacy.

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They chose a company called Louisberger to be the successor contractor.

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Our court challenge to the Navy's decision raised a large range of bid protest grounds, but our appeal only brings four of those grounds to you today.

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As we looked at the grounds that are before the court, really the primary issue that we'd like to focus on relates to a DEFARS clause, the Defense Acquisition Regulation Supplement, which governs all Department of Defense procurements.

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And this clause requires that contractors who are working overseas have to observe local labor laws.

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And this is a clause that makes sense, right?

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The Navy is using Italian land adjacent to an Italian commercial airport

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There are status of forces agreements.

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There are NATO agreements.

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There are all sorts of issues that say we need to make sure that we're treating the local labor force in this situation properly.

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And so there's a defarce clause that says you've got to comply with all local labor laws.

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So in selecting the contractor for the Naples work, the Navy was looking at the prospective contractor's past performance.

[00:02:10] Speaker 02:
The DeFarce clause, though, does not say what happens if you don't comply with all local labor laws.

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And in particular, it doesn't say you are now disqualified from even being considered for an award, does it?

[00:02:23] Speaker 04:
You're correct, Your Honor.

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The clause does not have that provision.

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The clause just says, you must comply with the local labor laws.

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It does not specify a penalty.

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It's not an automatic debarment that says you can't contract.

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So what is unreasonable or arbitrary or capricious about how the agency here interpreted and applied that DEFARS provision?

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So the problem with how the agency applied the DFARS provision, Your Honor, is at first they said that they didn't even really look at the issues about previous labor law compliance.

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And then when they went back and they looked at labor law compliance, they had a member of the Spanish bar who was part of the Navy team.

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He looked at the allegations and looked at the labor law performance of the company in Spain and said,

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These are kind of routine.

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They're not really a big deal.

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Some people got terminated.

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But most of the time, Louis Berger won the cases and just had to pay people some back wages.

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And that is the problem here, Your Honor, because in the Navy deciding that it doesn't really matter, we don't really care about this, they were misinterpreting the law.

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And the court should have held the Navy

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to a higher standard.

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The court should have said, maybe you need to make the wrong legal interpretation here.

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When you said that this clause is not important, it's just routine, that was the Navy's decision on a matter of law.

[00:03:56] Speaker 02:
So they should have read into the provision a sort of death penalty for as soon as you're found to have one violation in Spain, you can't have the contract?

[00:04:06] Speaker 04:
No, Your Honor, we're not advocating for any sort of death penalty, because there are labor law violations that will come up.

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But when the Navy decided, as a matter of law, that the clause was not important, that they didn't care about whether a contractor complied with it, they basically read that clause out of existence.

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And so they had to take into consideration.

[00:04:27] Speaker 01:
Well, did they really go that far?

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Didn't they take the time to look carefully over

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the past history and the issues where there were labor disputes and analyze, well, some of them were valid, some of them were not valid, and give an assessment in context of what in the big picture that means.

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And what was wrong with that?

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So Your Honor, they did that assessment, first of all, in the heat of litigation.

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when they were in the midst of litigation, and they only did it on remand when the matter went back to the Navy for another set of considerations.

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I understand, but nonetheless, they did consider it.

[00:05:06] Speaker 04:
They did consider it, but they had the wrong legal interpretation, Your Honor.

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They started with the legal conclusion that the clause was not important to this matter.

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And so when they made a legal conclusion, that legal conclusion was not entitled to any deference from the Court of Federal Claims.

[00:05:23] Speaker 01:
But if that was the case, then why did they take the time and trouble to go through and analyze this if it didn't matter?

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Your Honor, they went through a process to say, we've looked at all of this.

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We've decided that it doesn't matter.

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So that they could paper the record and say, we've looked at this issue.

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But looking at the factual issue is one thing.

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And if this were a factual issue, they would be accorded some deference.

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But this was a legal interpretation that the Navy contracting officer was making.

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I guess when we look at the contracting officer remand decision, I think I see two different things going on here.

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apparently they didn't believe that there was any violation of the DFARS provision but then I see the contracting officer going further and saying even if this particular DFARS provision would be interpreted to mean that losing a few cases would be considered a breach of the contract, the contracting officer is going to go

[00:06:27] Speaker 03:
beyond that and then consider the context and significance of these losses of these breaches to try to figure out to what extent would it affect the contracting officer's view of the past performance and responsibility determination factors in trying to assess whether this bidder is capable of performing this contract in Naples.

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then the contracting officer says, after I consider all the context and everything, I don't think these particular defeats in these labor law cases rise to the level of something so serious that it jars the contracting officer's confidence.

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And once we get to that question,

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the actual question about the person's, the contracting officer's determination on past performance and things like that, that's something that the courts give heavy deference to.

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So I don't see at this moment how we can disrupt that finding, that conclusion about past performance after taking all this into consideration and also even considering

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the theory that this would be a defarce violation for every labor case loss.

[00:07:43] Speaker 04:
Your Honor, part of the issue here is that in making the determination, the contracting officer was making a legal determination about what the DFARS clause meant.

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So the contracting officer wasn't just looking at it.

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I understand that piece of your argument.

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But I never saw you respond to, I think, which is the both red briefs position that the contracting officer also made essentially an alternative holding.

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And that alternative holding is

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at A31010 where the contracting officer said, even if the DFARS provision should be interpreted in this particular way that you want it, when the contracting officer goes further and considers these particular breaches of the DFARS, it doesn't amount to something enough to shape their confidence about this person's performance.

[00:08:36] Speaker 04:
Right, but that's a legal finding, Your Honor.

[00:08:38] Speaker 04:
It's not a factual finding.

[00:08:40] Speaker 03:
Well, which part is the legal finding?

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A legal finding in determining what does the solicitation require.

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That's a legal finding.

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And what does the DFARS clause require?

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That's a legal finding.

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Right, but didn't the contracting officer give in to your theory, at least alternatively,

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in accepting your theory that not complying with a particular labor law due to getting an adverse judgment in the labor courts could be a violation of DFARs.

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But nevertheless, that violation of DFARs doesn't get you all the way to where you want to be.

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But that was not something that the contracting officer had the authority to do.

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The DFAR's regulation says you've got to take this into account.

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And the contracting officer in saying, you know what, I don't really mind about these.

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I don't really care.

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It's just paying people back wages.

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was making a legal determination.

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And that was beyond the authority of the contracting officer to do.

[00:09:43] Speaker 03:
The contracting officer- And now I'm lost, because I'm not sure what you expected the contracting officer to do at that point if the contracting officer accepted the legal theory that adverse labor court judgments amount to a DFARS violation.

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Right.

[00:10:01] Speaker 04:
So the DFARS clause, Your Honor, should mean the same thing whenever it's applied.

[00:10:06] Speaker 04:
Right?

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So a contracting officer in Italy shouldn't be able to say, I'm not really worried about this, whereas a contracting officer in Iraq says, I'm worried about this and what happens with local labor law in Iraq.

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So we need a legal examination of what the DFARS clause requires.

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And that cannot happen from the contracting officer.

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So the contracting officer made her judgment

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But then the court was to review that, and the court was to review that without deference to the contracting officer's interpretation of that.

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We owe this heavy deference when there are fact decisions that a contracting officer

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makes if a contracting officer says, is that Humphrey going to go faster than that one?

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Or is that radar going to go faster, better than another?

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That's a factual decision that the contracting officer.

[00:10:57] Speaker 02:
Can I just try 31010?

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The contracting officer says, after reconsidering all of this, I continue to have substantial confidence in Louis Berger's ability to perform the requirements of the contract and affirm the original past performance rating and responsibility determination.

[00:11:15] Speaker 02:
Isn't that a factual finding?

[00:11:17] Speaker 04:
It's not, Your Honor.

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It's a legal determination.

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And the court needed to review that legal determination and did not.

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The court simply adopted the contracting officer's finding as its own and said, we're going to provide deference to that.

[00:11:32] Speaker 03:
So just for my own clarity, what is it that you expected the claims court to have done in the face of this alternative ruling by the contracting officer?

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that accepted your interpretation of the DFAR's provision?

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Right.

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We expected the judge to make his own legal determination of whether that was a correct legal judgment that was made by the contracting officer.

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And the court did not.

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The court afforded deference to the contracting officer's decision and said, there's heavy deference.

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We're not going to look at this.

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We're going to accept it.

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The court didn't do what it was supposed to do.

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It overly deferred.

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And it should have undertaken its own analysis.

[00:12:13] Speaker 03:
I guess I'm still lost, because I feel like why couldn't we, on review, say this interpretation question doesn't matter?

[00:12:25] Speaker 03:
Because the contracting officer looked at these labor cases either way.

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Either it complies with DFARS still, or it does not comply with DFARS, and in either event,

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In the contracting officer's view, it doesn't affect her view on the confidence of LBAS's ability to perform the contract.

[00:12:48] Speaker 04:
Right.

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The contracting officer's determination was made based on an internal legal determination that a Navy lawyer made.

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So it was all based on the legal standards.

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And the interpretation of the legal standards was incorrect.

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So the court needed to go ahead and make its own review of that to look at the analysis.

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The court also

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and that it did not take into account all of the information about the labor law violations.

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When the Navy made its conclusion and said, it's OK, it's just standard stuff, there was a lot of other information that should have been part of the Navy's decision.

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We asked that on remand that that be part of it.

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We were denied there.

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And then we asked that the record be supplemented with additional information about the seriousness of the labor law regulations.

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The court did not rule on that while the case was pending and only ruled on it after we had already appealed

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to the Federal Circuit, so never actually ruled on it when it was a live issue.

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There are a number of appeal grounds here.

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Before you filed your notice of appeal, did you go back to the claims court and say, oh, excuse me, Judge, you overlooked our motion when you issued the final judgment?

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And we asked the court to stay the decision pending further action, but they did not.

[00:14:04] Speaker 03:
So you did ask the claims court to rule on your motion to supplement the record?

[00:14:09] Speaker 04:
I need to confirm.

[00:14:10] Speaker 03:
After the decision issued?

[00:14:13] Speaker 04:
Am I correct on that?

[00:14:15] Speaker 04:
We'd have to look at our things to be sure, Your Honor, because I don't want to misrepresent anything.

[00:14:20] Speaker 03:
What's the current situation with the Naples contract?

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Is LBAS performing it now, or are you performing it now?

[00:14:27] Speaker 04:
They are.

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LBAS is performing the contract.

[00:14:29] Speaker 03:
OK.

[00:14:29] Speaker 03:
All right.

[00:14:31] Speaker 03:
It's time to hear from the other side.

[00:14:32] Speaker 04:
Thank you.

[00:14:47] Speaker 03:
Ms.

[00:14:47] Speaker 03:
Fleming?

[00:14:49] Speaker 05:
Good morning, Your Honor.

[00:14:51] Speaker 03:
You're government counsel, right?

[00:14:52] Speaker 03:
I am.

[00:14:53] Speaker 05:
OK.

[00:14:55] Speaker 05:
And today, I'd like to make three points immediately, which is that Al-Ghazi is proposing that the court first impose evaluation criteria that were not in the solicitation, second, find a violation of the DFARS clause that does not govern procurement at all, but instead is a matter of contract administration

[00:15:13] Speaker 05:
And finally, it's asking that the court reweigh the facts that the Navy considered and relied upon in evaluating the awardees' past performance, responsibility, and staffing criteria.

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On the first issue, an important point that ALDESI has consistently failed to address in its briefs and its argument today is that the solicitation did not identify DFARS 252.222-7002 as a factor

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that was supposed to be used in the evaluation of the criteria for award in this case.

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There are only really two ways that this provision comes up at all.

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The first is the RODA contract that Louisberger listed as one of its past performance examples did include the DFARS clause as part of the contract, as well as many, many other contracts.

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And secondly, the solicitation mentioned that the future contract that would come out of this award would include the same term.

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What if they're assuming there were very, very serious, willful, you know, malicious violations of Spanish labor laws?

[00:16:26] Speaker 03:
Are you saying those are not relevant to the procurement process?

[00:16:29] Speaker 05:
They could be relevant if they impacted the performance of

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the contractor under his past performance.

[00:16:36] Speaker 03:
So for example, I mean, if there was a huge employer employee breakdown and there was a massive strike, I mean, wouldn't all these sorts of things be relevant to trying to understand whether a particular bidder is capable of performance?

[00:16:53] Speaker 05:
In fact, there was a massive strike in one of Louisberger's contract performances

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And the Navy specifically looked at that both before the litigation act.

[00:17:04] Speaker 03:
My point is, I'm trying to make sure I understand the government's view, is that you're not suggesting that it's entirely appropriate and correct for the contracting officer to turn her blind eye to massive labor problems in the performance of a different prior contract.

[00:17:24] Speaker 05:
Well, in fact, this solicitation helps us answer this question, because it provides a standard for- Well, just give me an answer to my question.

[00:17:30] Speaker 03:
The answer is- You're not suggesting that the contracting officer should turn a blind eye to all of this terrible labor unrest.

[00:17:38] Speaker 05:
If there was labor unrest that affected the quality of the performance of the contract under the terms, under the examples that listed in the past performance offering, then yes.

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And in fact, that's one of the reasons why the Navy considered it here.

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Likewise, if there was

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such an egregious breach of law or civility that it amounted to an ethical violation, it's possible that under the responsibility determination, the contracting officer could have considered that fact as well.

[00:18:08] Speaker 05:
So yes, there are paths to considering those facts.

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In this case, the Navy took those paths, made that consideration, and determined that to the extent that there was labor unrest, to the extent that there was labor litigation in the Spanish courts,

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Those facts were not sufficiently weighty to reduce the rating that the contracting officer assigned to Lewisberger's performance.

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And in particular, the Navy actually considered adding an evaluation criteria of labor relations in the solicitation and ultimately elected not to do so.

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The Navy decided that they didn't think that it was important to independently evaluate labor relations because, again,

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To the extent that those relations are impacting performance, it would be part of the past performance evaluation.

[00:19:00] Speaker 05:
The clause itself, however, is also instructive.

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ALGESI has, at every step of this litigation, focused on only the first two, the first provision in some part of DFARS 252.

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Those first provisions do indeed, as we have conceded,

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say that the contractor shall comply with local laws, regulations, labor union agreements, et cetera.

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But there are two other subparts to that provision.

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Subpart B talks about indemnifying the contractor's obligation to handle and settle without cost to the United States government any claims or litigation.

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If you lose

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a case involving a foreign labor law violation, this provision tells you what will happen.

[00:19:43] Speaker 05:
It doesn't say that it will debar you from future contracts with the government.

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It doesn't say that you must be immediately rescinded the contract award.

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Rather, it provides a way to handle the costs associated with those claims and doesn't separately require any sort of penalty to the contractor.

[00:20:01] Speaker 05:
Likewise, even further, subsection C talks specifically about circumstances where a violation of a foreign law, labor law or otherwise, might actually be in conflict with a duty or obligation the contractor has under the contract.

[00:20:17] Speaker 05:
It says that the contractor will be reimbursed for costs of all fines, penalties, and reasonable litigation expenses incurred as a result of compliance

[00:20:25] Speaker 05:
with specific contract terms.

[00:20:28] Speaker 05:
So this provision, writ as a whole, actually doesn't just say any violation of local laws is the end of the analysis.

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Rather, it says there may be violations of the local laws, and there should be a mechanism for reimbursement, if appropriate.

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And in fact, we may require you to violate local laws just because of the operation of the contract.

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is not a procurement regulation.

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It is a contract administration provision.

[00:21:00] Speaker 05:
And that's why it designs this system for handling issues that may arise during the performance of the contract.

[00:21:06] Speaker 05:
The Navy, like many other of the services and other federal agencies, operate across the globe.

[00:21:12] Speaker 05:
And there are lots of different kinds of quote, local laws that exist in many other countries that we work in that are inconsistent with obligations contractors may have under US law.

[00:21:24] Speaker 05:
I mean, even if you just look at employment laws, typically an employer in the United States cannot make decisions on employment based on race or gender or religion.

[00:21:37] Speaker 05:
But there are countries in which the Navy operates where local laws require you to make decisions based in part on some of those criteria.

[00:21:45] Speaker 05:
So it's easy to understand why the Navy wanted the flexibility to say to contractors, yes,

[00:21:52] Speaker 05:
You should obey the local laws when you can.

[00:21:54] Speaker 05:
But if you don't or you can't, there's a way to address that.

[00:21:59] Speaker 05:
None of the ways that this section addresses those issues include

[00:22:03] Speaker 05:
any impact on procurement or award.

[00:22:05] Speaker 03:
But in any event, the contracting officer on Lee Man did, in fact, consider this DFARS provision and concluded, at least in the alternative, that even if these adverse judgments could be considered breaches of the contract or violations of the DFARS provision, that alone isn't going to ultimately sway her view about this particular bidder's past performance rating.

[00:22:31] Speaker 03:
Is that right?

[00:22:32] Speaker 05:
That's absolutely correct, Your Honor.

[00:22:33] Speaker 05:
In fact, the Navy went to great lengths to try to look into some of these allegations the protester had raised during the GAO phase of the protest.

[00:22:41] Speaker 05:
And even though they had considered Lewisberger's past performance in the context of some strikes that had occurred at its facilities and found that those strikes did not impact contract performance, because Aldizzi raised the issue of Spanish court cases in the GAO, the Navy, out of an abundance of caution,

[00:23:02] Speaker 05:
took the time to look into those allegations, used its own expert.

[00:23:07] Speaker 05:
It didn't rely on expert offered by Louis Berger or by Algizio.

[00:23:12] Speaker 05:
It used its own expert who had experience with Spanish labor law to look into the allegations and see what was there.

[00:23:18] Speaker 03:
Before you go, what to do about this pesky motion to supplement the record that maybe the claims court

[00:23:27] Speaker 03:
tried to make a ruling on after the claims court lost jurisdiction of the case.

[00:23:33] Speaker 03:
And so I'm not entirely certain that that's appropriate for us to assume that there was a legitimate ruling on the record for that motion to supplement.

[00:23:46] Speaker 05:
Well, for instance, at the first instance, there was a motion under 60B pending by Algizia at the time that the court decided.

[00:23:54] Speaker 05:
that are rather registered in the record and a clear decision that the motion supplement was not going to be granted.

[00:24:01] Speaker 05:
So it had an entirely let go of jurisdiction of the case, still considering the merits as Algizi was submitting them.

[00:24:08] Speaker 05:
But even if it wasn't, Algizi can't identify any harm that would come out of the failure to properly rule on the motion supplement.

[00:24:20] Speaker 05:
Everything that Algizi wanted to submit

[00:24:23] Speaker 05:
is just includes facts that already were before the agency to some extent.

[00:24:30] Speaker 05:
And there's no evidence, and they've made no showing, that the Navy would have made a different decision if it had the incremental additional facts that LGZ wanted to submit in its declaration, which, by the way, was prepared three months after the remand concluded, so clearly wasn't timely.

[00:24:47] Speaker 03:
And there's a pretty strong rule against adding evidence into the record after the agency's issued its final decision, right?

[00:24:57] Speaker 05:
Yes, Your Honor.

[00:24:58] Speaker 05:
The ability to supplement the record certainly shouldn't follow the court's decision, or rather the end of the remand, because the court is properly reviewing the agency's administrative record

[00:25:15] Speaker 05:
in existence at the time it made a decision, not the record made by the reviewing court or supplemented by whatever evidence that the protester appears to think is relevant.

[00:25:28] Speaker 02:
The timing here is curious to me.

[00:25:29] Speaker 02:
Was the 60B motion pending in the trial court at the same time briefing was ongoing here in the appellate court?

[00:25:38] Speaker 05:
I believe the timing was that LGC had filed their notice of appeal.

[00:25:43] Speaker 05:
They filed a motion to stay on appeal, and at the same time, filed a motion for relief under 60B.

[00:25:50] Speaker 05:
Do I have that correct question?

[00:25:51] Speaker 02:
Could both courts have jurisdiction at the same time?

[00:25:58] Speaker 05:
I view that the 60B is akin to a motion for consideration, albeit not terribly timely.

[00:26:05] Speaker 05:
So I think certainly it implies maybe we didn't have appellate jurisdiction at that time.

[00:26:12] Speaker 05:
I think that that is a reasonable interpretation.

[00:26:15] Speaker 02:
Thank you.

[00:26:20] Speaker 05:
Thank you, Your Honor.

[00:26:33] Speaker 00:
May it please the court and counsel for Elbas, Lewis Berger,

[00:26:38] Speaker 00:
This case is about the deference owed to a contracting officer's past performance and responsibility to do anything.

[00:26:44] Speaker 03:
Do we have jurisdiction to hear this appeal?

[00:26:47] Speaker 00:
Yes, you have jurisdiction.

[00:26:49] Speaker 00:
They filed their notice of appeal after a judgment was entered.

[00:26:52] Speaker 00:
And this court therefore has jurisdiction.

[00:26:55] Speaker 03:
Does the Rule 60B motion that was filed below somehow disrupt that?

[00:27:00] Speaker 00:
Regardless if it disrupted that, that decision was then issued and the case was resolved.

[00:27:15] Speaker 00:
So I think the government covered quite extensively that

[00:27:21] Speaker 00:
There was no 7,000.

[00:27:22] Speaker 00:
The DFAR 7002 clause was not included in the evaluation criteria.

[00:27:27] Speaker 00:
And even though it was not, and the contracting officer did not have to review compliance with local labor law, she still went back, brought in a lawyer from her department and her office of general counsel.

[00:27:41] Speaker 00:
to review the cases that Al-Ghazi identified, found that even under Al-Ghazi's purpose.

[00:27:47] Speaker 02:
Al-Ghazi suggests that your client's allegedly repeated violations of foreign labor laws allows you to be a lower cost bidder than those companies that make a better effort to comply with local laws.

[00:28:06] Speaker 02:
Is there evidence of that in the record?

[00:28:08] Speaker 02:
And should we be concerned with that?

[00:28:11] Speaker 00:
So the issue here was that the Navy and the Rota contract had actually reduced its requirements, which required us to therefore reduce the number of employees that we had on the airfield, because not as many were required.

[00:28:26] Speaker 00:
So because of the reduced requirements, we were able to quote a lower price.

[00:28:32] Speaker 00:
And correspondingly, we didn't need as many employees.

[00:28:36] Speaker 00:
And if you see in the record, and according to the Navy's own legal expert, El Bas won the vast majority of the cases that were brought against it in the Spanish courts.

[00:28:47] Speaker 00:
The way Spain operates is that the courts act as almost a dispute resolution tribunal between the employees and the employers whenever a termination occurs.

[00:28:57] Speaker 00:
Because Spain is not an at-will country.

[00:29:02] Speaker 00:
Employees are generally entitled to a certain level of severance.

[00:29:06] Speaker 00:
once their positions are terminated.

[00:29:08] Speaker 00:
And here, what happens is, under Spanish law, an employee can go to the court, if they're terminated for economic reasons, ask the court to verify the stated reason that they were terminated.

[00:29:19] Speaker 00:
And if the court does, they're entitled to a standard level of severance, 20 days per year worked.

[00:29:25] Speaker 00:
If the court can't verify, the employee can request enhanced severance, 33 days per year worked.

[00:29:33] Speaker 00:
The courts operate as this function that determines whether they're entitled to a normal amount of severance or an enhanced amount of severance based off of the stated reasons.

[00:29:43] Speaker 00:
And this is all built into Spanish law and how the system operates.

[00:29:47] Speaker 00:
The contracting officer reviewed these underlying facts when she reviewed the report prepared by her Navy attorney and found that they did not disrupt her award decision and reaffirmed her award decision

[00:30:02] Speaker 00:
We believe that that decision is owed substantial deference by this court and that the court should affirm the lower court's decision.

[00:30:10] Speaker 03:
Your client's been handling the air terminal and ground services in Naples?

[00:30:14] Speaker 00:
Yes.

[00:30:15] Speaker 03:
For how long?

[00:30:15] Speaker 00:
For over a year now.

[00:30:18] Speaker 03:
Any labor unrest?

[00:30:19] Speaker 00:
No, they were able to resolve everything within a week in terms of negotiating with the union.

[00:30:26] Speaker 03:
In Naples?

[00:30:26] Speaker 00:
In Naples.

[00:30:27] Speaker 03:
OK.

[00:30:28] Speaker 03:
Thanks.

[00:30:34] Speaker 03:
Let's give Ms.

[00:30:36] Speaker 03:
Yiddick three minutes, OK?

[00:30:38] Speaker 03:
Thank you.

[00:30:44] Speaker 04:
I have to figure out where to start here.

[00:30:46] Speaker 04:
Your Honors, the labor violations that

[00:30:50] Speaker 04:
Louisberger has engaged in are not just about severance and about paying a minor amount of severance.

[00:30:56] Speaker 04:
These are labor violations that are about undermining union activity, about spying on employees, and other very serious things.

[00:31:04] Speaker 04:
So please do not be persuaded that these are only routine labor violations.

[00:31:10] Speaker 04:
There are serious labor law violations happening in RODA.

[00:31:14] Speaker 04:
And they are such that the Spanish government declared that Louisberger was non-grada.

[00:31:20] Speaker 04:
So there are serious violations happening there.

[00:31:22] Speaker 03:
That was some local authority, right?

[00:31:23] Speaker 03:
That's not the actual Spanish government that has the power to authorize or deauthorize a contractor.

[00:31:30] Speaker 04:
Right.

[00:31:31] Speaker 04:
And on that point, Your Honor, one of the things that the government has pointed out is that the Spanish government didn't say Louisberger can't operate here.

[00:31:40] Speaker 04:
The Spanish government actually didn't have the authority

[00:31:43] Speaker 04:
to do that.

[00:31:43] Speaker 04:
In this situation, they were only looking at Spanish military contracts and not at U.S.

[00:31:48] Speaker 04:
government contracts.

[00:31:49] Speaker 04:
So there was not, there should be no imprimatur of good housekeeping seal of approval from the Spanish government.

[00:31:55] Speaker 04:
There was no such thing that happened here.

[00:31:58] Speaker 04:
In addition, you asked about the labor situation in Naples since Louisberger has been performing for the last year.

[00:32:04] Speaker 04:
And there are

[00:32:05] Speaker 04:
are remarkably few labor issues right now, because our client Al Gacy took care of a lot of those by hiring the employees.

[00:32:11] Speaker 04:
And the Italian government is paying the severance of the employees who were let go for three years.

[00:32:18] Speaker 04:
After three years, I don't know what happens, because the Italian government is taking that on.

[00:32:23] Speaker 04:
And what is happening here through this process is this Navy contracting shop has said, we don't really care about this.

[00:32:31] Speaker 04:
It's going to be fine.

[00:32:33] Speaker 04:
We can have this job done, and we can have it done for a lot less.

[00:32:35] Speaker 04:
They can have it done for a lot less because the employees are being paid less and employees are being terminated.

[00:32:41] Speaker 04:
So that's the reason that the local- Is there any evidence of that in our record?

[00:32:45] Speaker 04:
It's in the record that we put before the Court of Federal Claims that doesn't seem to have been taken into account.

[00:32:53] Speaker 04:
The newest Naples thing, obviously, is not Judge Stark, because it's just the latest update from this week when I inquired of our client what the status was.

[00:33:01] Speaker 04:
But this is all about the Navy contracting shop and one contracting shop saying, this is what this clause means to us, and this is how we're going to interpret it.

[00:33:09] Speaker 04:
And of course, that's their view, right?

[00:33:11] Speaker 04:
They get something that is less expensive, and they don't really care about what the impact is on the United States' relations with the host countries that host our air bases.

[00:33:20] Speaker 04:
Because we have these NATO agreements, these status of forces agreements.

[00:33:23] Speaker 04:
We have this clause, because we have said, as a country, this is important.

[00:33:28] Speaker 04:
We care about this.

[00:33:30] Speaker 04:
These guys don't really care about it, but we as a country do.

[00:33:33] Speaker 04:
And that's why you can't let one contracting officer decide, this is how we're going to interpret this clause.

[00:33:38] Speaker 04:
I'm going to make this legal interpretation that says, this isn't really important, because it's not their role.

[00:33:44] Speaker 04:
If DOD writ large were to make that decision, maybe that's something we'd need to look at.

[00:33:48] Speaker 04:
But DOD writ large.

[00:33:50] Speaker 04:
in the DFARS has said, this is what the requirement is.

[00:33:53] Speaker 04:
We should not allow a single contracting shop to act in contravention to those policies and to speak for all of DOD on this.

[00:34:03] Speaker 04:
They do not speak for all of DOD.

[00:34:06] Speaker 04:
This is not the level where you would give a deference to someone who is at a high level of an agency and speaks for the entire agency.

[00:34:12] Speaker 04:
This is one contracting officer speaking for that contracting shop.

[00:34:15] Speaker 03:
OK, thank you very much.

[00:34:16] Speaker 03:
Thank you.

[00:34:17] Speaker 03:
The case is submitted.

[00:34:18] Speaker 03:
And that concludes today's oral argument.