[00:00:00] Speaker 01:
The first is number 231018, Boeing Company against the United States.

[00:00:07] Speaker 01:
Mr. McKay.

[00:00:09] Speaker 05:
Thank you, Your Honors, and may it please the Court.

[00:00:12] Speaker 05:
This Court should reverse the Court of Federal Claims decision that it lacked jurisdiction or authority to decide this case and remain with instructions either to hold proceedings consistent with this Court's decision or to enter summary judgment for Boeing on the merits.

[00:00:28] Speaker 05:
On jurisdiction, the Court of Federal Claims reversibly erred in two ways.

[00:00:33] Speaker 05:
First, Bowling and the government agreed that Contract Disputes Act jurisdiction obtains here.

[00:00:40] Speaker 05:
You can see on page 14 of their brief where they say in our view the trial court had jurisdiction.

[00:00:45] Speaker 05:
And Bowling and the government are correct.

[00:00:47] Speaker 05:
The Contract Disputes Act amended the Tucker Act in section 1491-82 to confer jurisdiction

[00:00:54] Speaker 05:
to resolve all claims that quote relate to a contract.

[00:00:59] Speaker 04:
Is there any difference between your claim under the CDA and as style it as an illegal ex-action?

[00:01:06] Speaker 05:
The only distinction, Your Honor, is no.

[00:01:09] Speaker 05:
The short answer is no.

[00:01:11] Speaker 05:
We're going after a violation.

[00:01:14] Speaker 04:
What I'm asking is if you decide that there's jurisdiction over the CDA claim,

[00:01:18] Speaker 04:
Can we not reach the illegal-exaction claim because it seems kind of fuzzy?

[00:01:23] Speaker 05:
I think that that would in fact be the case.

[00:01:27] Speaker 05:
And the reason it would be the case is that the illegal-exaction claim is premised on a violation of the Cass statute, that the government had extracted Boeing's money in violation of the Cass statute.

[00:01:40] Speaker 05:
And we would only need to get there, Your Honor,

[00:01:42] Speaker 05:
if this court held that the Contract Disputes Act and Tucker Act do not confer jurisdiction because this is really an APA action that should be in the district court.

[00:01:52] Speaker 03:
Because the legal arguments in the scope of relief you're seeking under either legal action or a CDA claim are the same.

[00:01:59] Speaker 05:
That's correct, Your Honor.

[00:02:03] Speaker 05:
The government, and so jurisdiction here obtains under 1491A2 as long as the jurisdiction is to resolve all claims that relate to a contract.

[00:02:16] Speaker 05:
And here, the government has asserted a claim against Boeing, a contracting officer's final decision

[00:02:24] Speaker 05:
for a contract price adjustment of more than a million dollars, which the government has calculated as increased costs to government contracts in accordance with FAR Part 30.6.

[00:02:36] Speaker 05:
And the contracting officer's final decision actually stated, as the CBA mandates, that it was appealable to the Court of Federal Claims.

[00:02:45] Speaker 05:
The CAS statute for its part here states that any dispute over a contract price adjustment under the CAS statute, quote, will constitute a dispute under the Contract Disputes Act, that's section 1503A, and is not subject to the judicial review provisions of the APA, that's section 1502G, golf.

[00:03:09] Speaker 05:
Boeing also filed its own affirmative claim, which was also denied.

[00:03:15] Speaker 05:
And ultimately, Boeing timely appealed or timely filed this action in the Court of Federal Claims, challenging both of the contracting officer's final decisions, both the affirmative claim by the government against Boeing and the rejection of Boeing's claim against the government.

[00:03:33] Speaker 05:
And because Boeing and the government have satisfied all of the CDA procedural prerequisites, the Court of Federal Claims has jurisdiction over all of the contract claims, claims counts one through three.

[00:03:47] Speaker 01:
Can I ask you a question?

[00:03:49] Speaker 01:
I was left a little bit unclear from the government's brief in particular, whether it wants us to go ahead and decide the merits of the CAS argument as an alternative ground if we decide there's jurisdiction.

[00:04:04] Speaker 01:
What's your view on that?

[00:04:06] Speaker 05:
My view, as you saw in our brief, and frankly, our view has changed a little bit, and I can explain why.

[00:04:12] Speaker 05:
But our view is we are very sensitive to the fact that this is a court of review.

[00:04:18] Speaker 05:
We have never had, the case was filed nearly seven years ago.

[00:04:22] Speaker 05:
This is the second time before this court without a merits decision.

[00:04:26] Speaker 05:
And we're very sensitive to the fact that there is no merits decision for this court to review.

[00:04:33] Speaker 05:
I think where things stand right now, we would just as soon have this court review the merits of the decision.

[00:04:41] Speaker 05:
And the reason is this is the second time before the court.

[00:04:46] Speaker 05:
And in addition, what has happened since we filed our

[00:04:49] Speaker 05:
What has happened since the decision was issued by the Court of Federal Claims is the presiding judge of the Court of Federal Claims in this case has retired.

[00:04:58] Speaker 05:
So if this gets remanded back, we will have to actually brief and get up to speed an entirely new judge.

[00:05:05] Speaker 05:
the Court of Federal Claims review of the contracting officer's final decisions below is de novo, and this, and whatever decision the court, the trial... But it's pretty much a legal issue, isn't it?

[00:05:16] Speaker 04:
Exactly.

[00:05:17] Speaker 04:
The regulation is consistent with the statute or not.

[00:05:19] Speaker 05:
That's exactly, that's, and we don't think that, we think that it can be one of two things, either

[00:05:25] Speaker 05:
Either is the contracting officer's final decision itself violative of the Cass statute, or to the extent that the government relies on FAR 30.606, which it's waffled on, whether that FAR 30.606 violates the Cass statute or otherwise was informed for procedural reasons.

[00:05:49] Speaker 01:
Right.

[00:05:49] Speaker 01:
And that last point about the

[00:05:50] Speaker 01:
procedural infirmity would be the only difference between the two different characterizations, whether it's the... That's fair.

[00:05:58] Speaker 01:
That's fair, Judge.

[00:06:01] Speaker 05:
I think that's precisely right.

[00:06:03] Speaker 01:
And do you think that there's anything, I don't know, that... What would you expect to be done on the merits that has not already been presented to us?

[00:06:15] Speaker 01:
And I had said there's an open-ended question.

[00:06:19] Speaker 05:
I think that what has been presented to you, of course in our opening brief, we stuck solely to and exclusively to jurisdiction and did not address the merits very sensitive to the fact that this is a quarter of review.

[00:06:34] Speaker 05:
But when the government really pressed the merits issues in its brief that it filed here, we responded accordingly in our reply brief.

[00:06:46] Speaker 05:
And I think, to answer your question, I think everything that the court needs to know

[00:06:52] Speaker 05:
has been briefed is contained in the government's brief and our reply brief on the merits.

[00:06:59] Speaker 05:
So we think that the court has before it the arguments and the authorities that it needs to in order to render judgment.

[00:07:09] Speaker 01:
So if I'm remembering right, correct me if I'm wrong, that the most important word in the statute that you're relying on is this word aggregate, right?

[00:07:21] Speaker 05:
I wouldn't say it's the most important.

[00:07:24] Speaker 01:
I guess I'm not sure I understand entirely what the range, considering all of the statutory context and regulatory context and practices of multi-contract government contractors, what the range of possibilities are for what you are aggregating.

[00:07:46] Speaker 01:
whether it is aggregating effects within a single contract, aggregating effects across many contracts of a single change in cost accounting, whether it is aggregating the effects of multiple cost accounting changes that the contractor implements at a given time.

[00:08:10] Speaker 01:
It's not clear to me.

[00:08:15] Speaker 01:
what the relevant real world and legal world facts are that bear on that, which seems like it might have something to do with how to interpret the caste statute.

[00:08:28] Speaker 05:
I understand the concern.

[00:08:30] Speaker 05:
The way that it works and what the CAST statute permits is for the government to either – the government has to determine whether or not there has been payment in the aggregate of increased cost.

[00:08:48] Speaker 05:
So back to key language, payment is a key term.

[00:08:54] Speaker 05:
We're talking about payment by the government of increased costs as a result of the cost accounting changes.

[00:09:02] Speaker 05:
there is great flexibility in the CAS statute to permit the government to either implement whatever the increased costs are, and that's the only instance in which there would be a contract price adjustment, the government is permitted to exercise that authority, that finding, either across

[00:09:26] Speaker 05:
uh... across a number of contracts.

[00:09:29] Speaker 05:
It can just take one contract and say, you know what, we're going to exercise and implement the increased cost contract price adjustment on that one contract.

[00:09:40] Speaker 00:
Can I ask you just a follow-up?

[00:09:42] Speaker 00:
Yes, absolutely.

[00:09:43] Speaker 00:
Is your position that you have a claim regardless of how that aggregation is done?

[00:09:48] Speaker 05:
Oh, absolutely, because at the end of the day, if this court is going to review the merits, what's important to understand is that

[00:10:05] Speaker 05:
Would you mind repeating your question just one time?

[00:10:09] Speaker 05:
I'm sorry.

[00:10:09] Speaker 00:
The question was, because I think you were saying, and I'm sorry because I interrupted you, but I think you were saying that the government has great flexibility in how it aggregates.

[00:10:18] Speaker 00:
Yes.

[00:10:18] Speaker 00:
In response to Judge Tronto's point about, is it across a contract?

[00:10:22] Speaker 00:
Is it across different categories and different contracts?

[00:10:25] Speaker 00:
And I think you were saying there's great flexibility.

[00:10:28] Speaker 00:
But regardless, this is my question, is your point that regardless of how it's aggregated,

[00:10:35] Speaker 00:
you your client still has a claim.

[00:10:37] Speaker 05:
We have a claim because the government has conceded that the aggregate cost result is there is 1.5 million dollars in decreased costs.

[00:10:48] Speaker 05:
If you look for example at Pentecost.

[00:10:51] Speaker 01:
That's the set of eight changes implemented in January 2011 across some range of contracts that you're allocating.

[00:11:01] Speaker 05:
Yes, in this instance we're talking about

[00:11:04] Speaker 05:
The government implementing its contract price adjustment on a single contract.

[00:11:09] Speaker 05:
The government – there is no dispute that the change in the cost accounting practices yield an overall decrease in aggregate number of $1.5 million.

[00:11:24] Speaker 05:
That figure is comprised – there are eight changed practices.

[00:11:30] Speaker 05:
Four of the change practices are quote, immaterial in the words of the cost accounting standards.

[00:11:38] Speaker 01:
They don't have the values to small to do that.

[00:11:40] Speaker 01:
Yeah, there's nothing.

[00:11:40] Speaker 05:
Yeah.

[00:11:41] Speaker 05:
There are two cost-decreasing impacts, and they are worth... In a particular contract.

[00:11:48] Speaker 05:
Yes.

[00:11:48] Speaker 05:
And they are worth $2.5 million in decreased costs.

[00:11:54] Speaker 05:
And then there are two cost-increasing impacts

[00:11:56] Speaker 05:
that are worth $1 million for a net aggregate total of decreased costs of $1.5 million.

[00:12:06] Speaker 05:
And that's what's so important here.

[00:12:09] Speaker 05:
At the end of the day, when you look at Section 1503B, which is what this court has said, an anti-windfall provision, when you look at that,

[00:12:22] Speaker 05:
what the government is getting, they are getting the aggregate benefit of the $1.5 million in savings, and then they are turning around and going after the exact same $1 million in increased costs.

[00:12:35] Speaker 05:
in this contract price adjustment.

[00:12:37] Speaker 05:
This is a double recovery that is borrowed by 1503 Bravo.

[00:12:43] Speaker 04:
I mean, if your interpretation is correct.

[00:12:45] Speaker 04:
If my interpretation, if Bowen's interpretation is correct.

[00:12:49] Speaker 04:
I mean, I think this is not as easy as it may seem at first glance because

[00:12:54] Speaker 04:
And honestly, I admit, I did not focus in on the merits very much because this was presented to you by you, at least in your blue brick, as a jurisdictional case.

[00:13:01] Speaker 04:
Yes, Your Honor.

[00:13:02] Speaker 04:
A very strong jurisdictional case.

[00:13:04] Speaker 04:
But I thought, isn't there a provision that allows the government to designate certain changes as desirable that would give you money?

[00:13:13] Speaker 05:
The government has certainly made its argument about the desirable change doctrine.

[00:13:22] Speaker 05:
This is a complete and utter red herring.

[00:13:26] Speaker 05:
The desirable change doctrine applies only when a contractor's change in its cost accounting practices results in increased costs to the government.

[00:13:36] Speaker 05:
And in that instance, if there are increased costs to the government,

[00:13:40] Speaker 05:
The desirable change doctrine allows the contracting officer to nonetheless decide that the changes are desirable and as a result forfeit their right to a contract price adjustment.

[00:13:53] Speaker 05:
Here it simply doesn't apply because the change to the eight practices

[00:13:59] Speaker 05:
that were made here did not result in aggregate increased costs.

[00:14:05] Speaker 05:
We and the government agree that if you met them all out, it is a $1.45 million decrease.

[00:14:11] Speaker 04:
It's a very facially appealing argument, but the caste statutes, I mean, you do this, they're incredibly complicated, and the regulations are incredibly complicated, and the government's brief on this point,

[00:14:26] Speaker 04:
on the merits was very confusing to me, because a lot of it was about how this regulation wasn't for your benefit at all, which they're going to get asked about, because I don't understand that argument in any way, because clearly a regulation that dictates how you allocate costs affects the contractors

[00:14:43] Speaker 04:
rights under the caste standards.

[00:14:47] Speaker 04:
But I'm concerned about being asked to decide this on the merits without a decision to review a more fulsome briefing on the parties.

[00:14:55] Speaker 04:
I mean, I guess we could dive back.

[00:14:57] Speaker 04:
This was probably fully briefed before Judge Campbell Smith.

[00:15:01] Speaker 05:
But I completely understand the reticence.

[00:15:07] Speaker 05:
It is the reason why we did not

[00:15:10] Speaker 05:
push in our opening brief anything related to the merits.

[00:15:15] Speaker 04:
Presumably the government's depending on the merits because they know they have a loser in jurisdiction.

[00:15:19] Speaker 04:
They kind of conceded that and they just want to try to get the judgment affirmed because that's what they have to do.

[00:15:25] Speaker 05:
And we do.

[00:15:28] Speaker 05:
Boeing does believe that this court has all of the relevant arguments that truly are relevant to this individual dispute.

[00:15:37] Speaker 05:
I understand the reticence about making sure you understand the full panoply of consequences to the decision.

[00:15:44] Speaker 05:
And it certainly would not – it would not trouble

[00:15:48] Speaker 05:
Bowling if this court simply were to remain back to the court of federal claims.

[00:15:53] Speaker 05:
We're gonna have to start over of course and we're you know, we're We're almost seven years down the road from the filing of our complaint And we still have no merits.

[00:16:05] Speaker 01:
Maybe they'll win and they won't appeal and then we don't Why don't we hear from the government now?

[00:16:14] Speaker 01:
Yes, your honor.

[00:16:14] Speaker 01:
Your rebuttal time will be restarted.

[00:16:16] Speaker 05:
Thank you

[00:16:28] Speaker 02:
May it please the Court, in this contract disputes act case, Boeing seeks to invalidate a provision of a regulation, but it cannot explain how the validity of that regulation is determinative of its contract rights.

[00:16:46] Speaker 02:
The regulation at issue provides internal government direction to the government's contracting officers.

[00:16:54] Speaker 04:
whether Boeing has a right... What does it tell the contracting officer to do?

[00:17:00] Speaker 02:
It tells the contracting officers not to combine, as pertinent here, combine the effects of unilateral... How can that possibly not affect Boeing's right?

[00:17:14] Speaker 04:
It's setting out a way to implement that aggregation statute.

[00:17:18] Speaker 04:
So if it was implemented in a different way, the way Boeing suggests that the statute requires, and I know you dispute that, but if the statute means what Boeing says it means, and you pay based upon a regulation in conflict with that statute, then they have a claim under the CDA, don't they?

[00:17:39] Speaker 02:
We think they do have a claim under the CDA.

[00:17:41] Speaker 04:
I baffled why you think this regulation is irrelevant.

[00:17:47] Speaker 04:
Because the regulation tells contracting officers how to pay on these changes, right?

[00:17:55] Speaker 04:
It tells them how to do the aggregation.

[00:17:58] Speaker 04:
And that ultimately affects the bottom line for Boeing.

[00:18:03] Speaker 04:
Isn't that right?

[00:18:04] Speaker 04:
That's true.

[00:18:05] Speaker 04:
So if the regulation

[00:18:08] Speaker 04:
is inconsistent with the statute.

[00:18:11] Speaker 04:
Why doesn't Bowen get to argue that and say, if you follow the statute and not this regulation that's invalid, we get more money?

[00:18:22] Speaker 02:
Well, that's right.

[00:18:22] Speaker 02:
If the regulation is inconsistent with the statute, you get to the question, why does the regulation matter?

[00:18:27] Speaker 02:
It's the statute.

[00:18:28] Speaker 04:
If it's true that under the statute, it has this right, then that's what happens when you have inconsistent regulations and statutes all the time.

[00:18:35] Speaker 04:
You look at the regulation, which you

[00:18:38] Speaker 04:
presumably properly promulgated.

[00:18:40] Speaker 04:
I don't want to get into other procedure problems.

[00:18:42] Speaker 04:
Let's just assume you did.

[00:18:45] Speaker 04:
In any case where there's a regulation of statute or in conflict, you look at it, and if you say the regulation's inconsistent, then it's invalid.

[00:18:52] Speaker 04:
Follow the statute.

[00:18:54] Speaker 04:
That's all they're asking here.

[00:18:55] Speaker 04:
Why can't we do that?

[00:18:57] Speaker 02:
Right.

[00:18:57] Speaker 02:
And so we have a different view.

[00:18:59] Speaker 02:
And, of course, the trial... Of the merits, right?

[00:19:01] Speaker 04:
But as a procedure, why can't we do that?

[00:19:05] Speaker 02:
why, as a procedural issue, why can't you say if the regulation... If the regulation's invalid because it conflicts with the plain language of the statute.

[00:19:12] Speaker 02:
And so our view on that is, well, what's the need to do that?

[00:19:15] Speaker 04:
What's the need to couch it as a... Because you have a regulation on the books that's flatly inconsistent.

[00:19:20] Speaker 04:
Let's just assume the regulation, we've decided the regulation is inconsistent with the plain language of the statute.

[00:19:27] Speaker 04:
What else would we do but say the regulation is invalid because it's inconsistent with the plain language.

[00:19:33] Speaker 04:
Therefore, the cast board had no authority to promulgate it.

[00:19:37] Speaker 02:
So our view is the instructions to the contracting officers would follow the law, not the other way around.

[00:19:42] Speaker 02:
In other words, if the court were to decide.

[00:19:44] Speaker 04:
Let me ask you this.

[00:19:46] Speaker 04:
Hypothetically, let's get beat on the cast because it's a little weird with the cast.

[00:19:52] Speaker 04:
the secretary of the BA promulgates a regulation that says, in this instance, you get benefits for this period of time.

[00:20:00] Speaker 04:
It's flatly inconsistent with the statute that gives benefits for a longer period of time.

[00:20:05] Speaker 04:
That case comes up to us.

[00:20:07] Speaker 04:
And when we look at it, we're not going to just say, well, you follow the statute, not the regulation.

[00:20:13] Speaker 04:
We're going to say,

[00:20:14] Speaker 04:
The regulation is invalid because it's inconsistent with the plain language of the statute, right?

[00:20:18] Speaker 02:
I would agree.

[00:20:19] Speaker 02:
That regulation is different than the one you just described.

[00:20:21] Speaker 02:
And the difference is you said that regulation says you get benefits.

[00:20:25] Speaker 02:
This regulation says our government contracting officer shall do this and that.

[00:20:31] Speaker 04:
But it's still the same thing.

[00:20:32] Speaker 04:
It's telling the contracting officer this is how much money you should award in this situation.

[00:20:39] Speaker 02:
It doesn't say that, actually, Your Honor.

[00:20:40] Speaker 02:
There's different regulations, both in four courts.

[00:20:43] Speaker 04:
What does this one say?

[00:20:44] Speaker 04:
It says don't aggregate the way Boeing wants to aggregate, right?

[00:20:51] Speaker 02:
Yes.

[00:20:52] Speaker 04:
Why is that not telling you how to reach?

[00:20:55] Speaker 04:
I don't know why you're fighting this, frankly.

[00:20:57] Speaker 04:
This makes no sense to me.

[00:20:58] Speaker 04:
I know you have a bad decision from the claims court on jurisdiction that you're trying to get appellate.

[00:21:04] Speaker 04:
But the fact that you're saying this regulation somehow doesn't dictate

[00:21:09] Speaker 04:
The award of cost is just that way and consistent with what you said the regulation does, which is it directs contracting officers not to offset these change orders that both benefit the government and benefit the contractor.

[00:21:24] Speaker 04:
Isn't that what it does?

[00:21:25] Speaker 04:
And that's money.

[00:21:26] Speaker 04:
That's all we're talking about is money.

[00:21:28] Speaker 02:
In limited circumstances where the government doesn't find it to be desirable.

[00:21:32] Speaker 02:
So you'll note that in those instructions, it doesn't say anything about combining desirable.

[00:21:37] Speaker 04:
I know, but that's the merits.

[00:21:39] Speaker 04:
And I think that merits argument is much harder here about whether these two are inconsistent or not.

[00:21:45] Speaker 04:
You certainly didn't convince me in your brief that they're not inconsistent, but there's a lot going on here.

[00:21:52] Speaker 04:
I don't understand why you're fighting the notion that we can review this regulation in the context of determining whether their payments were correct.

[00:22:01] Speaker 02:
Well, I think the part that's been quite awkward for the trial court, and in our view, is misguided in this case, is that Boeing has said, we have this contract claim, and the basis for our contract claim is your instruction to your contracting officers is invalidly promulgated.

[00:22:22] Speaker 01:
I'm sorry.

[00:22:24] Speaker 01:
Invalidly promulgated and contrary to the statute.

[00:22:27] Speaker 02:
Right, that's one of the reasons they say it's invalid.

[00:22:29] Speaker 01:
But I think as I was discussing briefly with Mr. McCaleb, when the contracting officer said, I will not combine these things, part of their argument is that decision is contrary to the caste statute, a way of making the argument that doesn't even require

[00:22:56] Speaker 01:
reference to the regulation, but that also can, in the alternative, be made as a challenge to the regulation that the contracting officer said was being followed in making that decision.

[00:23:15] Speaker 02:
Right, we wouldn't dispute at all the jurisdiction of the court to say, do they have a right under the CAAS statute to combine things as they want to here?

[00:23:25] Speaker 02:
Do they have a right?

[00:23:25] Speaker 02:
Or are they rather not have a right and have to negotiate like contracting partners do with the government?

[00:23:33] Speaker 04:
So what happens then?

[00:23:34] Speaker 04:
If you agree that the Court of Federal Claims has jurisdiction to determine whether the CAAS statute

[00:23:41] Speaker 04:
requires the aggregation they're arguing for, or the aggregation, non-aggregation I guess, if they can decide that, and they decide that Barron's view is correct, then this regulation is inconsistent with it, isn't it?

[00:23:57] Speaker 04:
Then it's invalid.

[00:24:01] Speaker 04:
What makes the difference about whether the court can say it's invalid or not invalid?

[00:24:06] Speaker 02:
Well, it's just a question of if there's some regulation on the books and it's not consistent with law, well, it can't be followed.

[00:24:14] Speaker 02:
The government should take it out of the books.

[00:24:16] Speaker 02:
But does the argument that it's not valid mean that you're in federal law?

[00:24:19] Speaker 04:
This is basic administrative law.

[00:24:21] Speaker 04:
If in the context of a case, the court finds that a regulation is inconsistent with the statute, it strikes down the regulation.

[00:24:32] Speaker 02:
Sure, but generally in all those cases, we're talking about regulations that, like the example you gave... But about Texas Health.

[00:24:38] Speaker 02:
Right, that regulation purported to say what the... Let's stop.

[00:24:43] Speaker 04:
I'm not buying this argument that this regulation doesn't purport to say something, that it's only a direction.

[00:24:48] Speaker 04:
Let's just assume that it actually is an interpretation of the statute that discusses how to aggregate.

[00:24:55] Speaker 04:
I wouldn't have a distinction... If that's the case, then Texas Health controls

[00:25:02] Speaker 04:
And we can review this, right?

[00:25:03] Speaker 01:
I would agree with that.

[00:25:04] Speaker 04:
OK.

[00:25:05] Speaker 01:
Can you talk a little bit about whether we should here right now decide the merits of the question, which to my mind turns on what has already been

[00:25:24] Speaker 01:
fleshed out in briefing what has not yet either briefing here or briefing in the claims court, what a full analysis of the merits issue would look like.

[00:25:37] Speaker 01:
Because if we have it already, it's not clear what the reason for delay is.

[00:25:43] Speaker 01:
On the other hand, we don't actually have a claims court decision addressing.

[00:25:47] Speaker 01:
the merits.

[00:25:48] Speaker 01:
So can you talk about that?

[00:25:49] Speaker 01:
Right.

[00:25:50] Speaker 02:
I mean, I think it's up to this court.

[00:25:52] Speaker 02:
From our perspective, like Boeing's perspective, as stated today, we would be fine with the court resolving the issue, if it reaches it, resolving the issue of whether the statute gives Boeing the right to do as it wants or not.

[00:26:08] Speaker 02:
So what would it look like if there was more on the merits?

[00:26:11] Speaker 02:
Well, there'd be more pages.

[00:26:13] Speaker 02:
There wouldn't be more, in this case, there wouldn't be facts

[00:26:16] Speaker 02:
more facts because the parties in this case have agreed.

[00:26:20] Speaker 04:
So you're comfortable with what your red group sets out on the merits.

[00:26:24] Speaker 02:
Yes.

[00:26:26] Speaker 01:
I should know this, but what were the merits briefed on a 12b six motion or summary judgment motion or something?

[00:26:37] Speaker 02:
It was summary judgment, and that was briefed as the trial court interpreted.

[00:26:47] Speaker 02:
view of it is similar, that Boeing said the regulation is invalid.

[00:26:52] Speaker 02:
One of the reasons is that it conflicts with the statute in Boeing's argument.

[00:26:56] Speaker 02:
And then there are procedural arguments, notice and comment.

[00:27:00] Speaker 01:
Are there cross motions for summary judgment on this?

[00:27:03] Speaker 01:
Yes.

[00:27:03] Speaker 01:
And did either side say in response to the other's motion for summary judgment, there are genuine issues of material fact?

[00:27:11] Speaker 01:
Or did everybody agree this is

[00:27:16] Speaker 01:
It is ripe for summary judgment, but the only dispute is which one of us should get it.

[00:27:21] Speaker 02:
Right.

[00:27:21] Speaker 02:
No one said any factual dispute ever in this case.

[00:27:24] Speaker 02:
There's been no discovery.

[00:27:25] Speaker 02:
And that's because Boeing's approach to the case is that it believes under the law it's entitled to just a blanket rule.

[00:27:36] Speaker 02:
That it can combine, if it implements them on the same day, and there's no desirability of determination from the government, that it has a right under the law

[00:27:45] Speaker 02:
regardless of actual circumstances, to combine the effects of those changes.

[00:27:50] Speaker 02:
Our view is, no it doesn't.

[00:27:52] Speaker 02:
Congress didn't give them that right in the statute.

[00:27:54] Speaker 02:
There is nothing that gives them that right.

[00:27:55] Speaker 02:
They have to do as contracting parties do.

[00:27:57] Speaker 02:
And if they want to change the deal, which is exactly what this is, because each contract says, you will follow

[00:28:04] Speaker 02:
your existing practices.

[00:28:05] Speaker 02:
If you want to change the deal, you've got to go to the other side and negotiate an agreement.

[00:28:10] Speaker 02:
And there's not some basis to compel them to agree to your preferred combination of things.

[00:28:16] Speaker 02:
I don't disagree.

[00:28:16] Speaker 04:
Can I just ask, because you said you were happy with the red brief, is what we're talking about from there to this apart from your argument about the regulation doesn't matter, is it just the stuff at page 33 to 35?

[00:28:33] Speaker 02:
Let me go to this page.

[00:28:34] Speaker 02:
It's just a moment, Your Honor.

[00:28:36] Speaker 02:
If you're talking about just the question of the statutory interpretation, I assume it's just a word.

[00:28:42] Speaker 04:
I mean, it seems your argument is basically that the view of aggregate is wrong, and aggregate plainly means something else.

[00:28:49] Speaker 04:
But you don't really even cite anything for that.

[00:28:52] Speaker 02:
Right.

[00:28:53] Speaker 02:
On the statute, those are the pages.

[00:28:54] Speaker 02:
We have a block quoted on the prior page.

[00:28:57] Speaker 02:
I mean, their argument is not some long treatise with cases on what that statutory language means.

[00:29:04] Speaker 02:
I don't think there really are cases on that.

[00:29:06] Speaker 04:
Their argument is... I would have thought that there would have been a more comprehensive discussion of not just this one specific provision, but how it works in the entirety of the CAS scheme and statute and regulations.

[00:29:22] Speaker 02:
And I don't disagree with your point about the complexity and that the court may not feel that it has all the information.

[00:29:28] Speaker 02:
And certainly, if this was before the trial, it's a human page.

[00:29:30] Speaker 04:
You were telling me that you were happy as deciding it based upon those three pages.

[00:29:34] Speaker 04:
I mean, if you are, you can take your chances.

[00:29:37] Speaker 04:
I mean, aggregate doesn't seem to mean what you say it means.

[00:29:42] Speaker 04:
You didn't say anything for that.

[00:29:43] Speaker 02:
But one of the arguments we make is that even if the court decides that this just wasn't considered, that Congress didn't address this question of whether you can aggregate across contracts or also across simultaneous changes, suppose the statute just doesn't say.

[00:30:01] Speaker 02:
That doesn't mean that Boeing wins.

[00:30:03] Speaker 02:
What it means is we go back to the situation we started in when two parties entered into a contract, and one of them now wants to change the deal.

[00:30:10] Speaker 02:
It doesn't mean that one party has to accept what the other party wants to do.

[00:30:14] Speaker 04:
I am completely lost now, because if the language in the statute, if aggregate is not plain, then why aren't you making an argument that the regulation is a valid interpretation, and you get deference to that?

[00:30:31] Speaker 02:
We think aggregate is plain, because if you look at the context right there, it's an unrelated context.

[00:30:38] Speaker 04:
that they rely on a plain language determination.

[00:30:42] Speaker 04:
I mean, are you not going to make a difference argument?

[00:30:45] Speaker 04:
Are you willing to concede that?

[00:30:47] Speaker 02:
We're not making a difference argument.

[00:30:49] Speaker 04:
So all it is is do we agree that what this aggregate means versus you.

[00:30:56] Speaker 02:
What if the court decides that it's addressed in the statute?

[00:30:58] Speaker 02:
And that's right.

[00:30:59] Speaker 02:
If the court reads this, we read it and says, I'm willing to talk about it.

[00:31:02] Speaker 04:
But that's all we have.

[00:31:03] Speaker 04:
That's all we have.

[00:31:04] Speaker 04:
We're not going any further.

[00:31:05] Speaker 04:
We're not talking about.

[00:31:07] Speaker 04:
contract interpretation now, we're talking about statutory interpretation.

[00:31:12] Speaker 04:
And if we're going to do statutory interpretation and do plain language, and I guess if you want to roll the dice on two and a half pages in a brief where the merits wasn't even additionally, we would probably do it.

[00:31:25] Speaker 00:
So what you're saying, just to make sure I understand.

[00:31:29] Speaker 00:
if we were to decide the merits and decide it in favor of Boeing.

[00:31:34] Speaker 00:
You think there's still more work to be done in the Court of Federal Claims?

[00:31:37] Speaker 00:
What is your argument?

[00:31:38] Speaker 00:
No.

[00:31:39] Speaker 02:
No.

[00:31:39] Speaker 02:
If the court looks at this statute and one says that argument was preserved here, we have a point in that in our brief, but it says it was preserved.

[00:31:45] Speaker 02:
An aggregate means what Boeing says it means.

[00:31:47] Speaker 02:
The case is over.

[00:31:47] Speaker 02:
It resolves it.

[00:31:49] Speaker 02:
And if the court reads the statute and is comfortable doing that.

[00:31:52] Speaker 04:
Can I ask you this?

[00:31:52] Speaker 04:
Do you have a position on whether the regulation is

[00:31:57] Speaker 04:
inconsistent with the statute or not?

[00:32:00] Speaker 04:
Do you think the regulation... No, it is consistent with the statute.

[00:32:02] Speaker 04:
Do you think the regulation's a valid interpretation of the statute?

[00:32:06] Speaker 04:
Yes.

[00:32:07] Speaker 04:
But yet you're not willing to make a chevron argument?

[00:32:13] Speaker 02:
We haven't and don't.

[00:32:19] Speaker 01:
Thank you.

[00:32:21] Speaker 01:
Mr. McCaleb.

[00:32:24] Speaker 05:
Your Honor, I have no rebuttal.

[00:32:30] Speaker 01:
I do have a question.

[00:32:32] Speaker 01:
What about the point that Mr. Volk made about how

[00:32:42] Speaker 01:
And I probably will summarize this incorrectly.

[00:32:44] Speaker 01:
Even if the statute means something like what you say, you're changing the contract, and you have to get an agreement to change the contract.

[00:32:59] Speaker 01:
Something, you said, two different times along those lines.

[00:33:02] Speaker 01:
Maybe without that even if clause.

[00:33:05] Speaker 05:
Happy to address that.

[00:33:10] Speaker 05:
Part of the bargain when the government has entered this contract, because that's what the government talks about, what the essence of the bargain is, part of the bargain was the inclusion of FAR 52.230-2.

[00:33:22] Speaker 05:
And that's 2A2 completely allows, it allows a contractor to change its cost accounting practices.

[00:33:32] Speaker 05:
That is what they're allowed to do.

[00:33:34] Speaker 05:
And it is not as if the government here has suggested

[00:33:39] Speaker 05:
that Boeing's changed practices now somehow don't comply with the cost accounting standards.

[00:33:46] Speaker 05:
In fact, they say the exact opposite.

[00:33:48] Speaker 05:
In their contracting officer's final decision

[00:33:51] Speaker 05:
at page two, they say, which is at page 59 of the appendix, the government agrees that bones change practices comply with the cost accounting standards.

[00:34:05] Speaker 01:
And did the government make an argument below in the

[00:34:09] Speaker 01:
merits portion of the summary judgment briefing that some contracting officer agreement would be necessary even for a caste statute compliant accounting change in order for the government to be bound by the new accounting practices.

[00:34:34] Speaker 05:
Well, no, and the way that it happens is that

[00:34:38] Speaker 05:
The contractor gives the government notice that it's going to change its cost accounting practices.

[00:34:44] Speaker 05:
The government then looks at the proposed change practices and decides whether they are compliant or not.

[00:34:50] Speaker 05:
If they're not compliant, then they're not going to go into effect.

[00:34:53] Speaker 05:
If they are compliant, then the question becomes, what is the cost impact?

[00:34:58] Speaker 05:
And that's when you get to the issue that we are faced with today.

[00:35:02] Speaker 05:
Determining what the cost price adjustment is if there are aggregate increased costs.

[00:35:08] Speaker 01:
And there's no further choice for the contracting officer to make about whether to accept the accountability?

[00:35:16] Speaker 01:
No.

[00:35:16] Speaker 05:
No, no, no.

[00:35:18] Speaker 05:
And that gets back to the desirable change doctrine, which only applies if there are increased costs in the aggregate as a result of the change practices.

[00:35:29] Speaker 01:
Thank you.

[00:35:30] Speaker 01:
Thanks to both parties.

[00:35:32] Speaker 01:
Case is submitted.