[00:00:00] Speaker 05: The next case for argument is 23-1273, Michael Stapleton versus United States. [00:00:08] Speaker 05: Mr. Bridell? [00:00:10] Speaker 00: It's Bridell, Your Honor. [00:00:12] Speaker 00: Good afternoon, Your Honors. [00:00:14] Speaker 00: Ryan Bridell on behalf of Michael Stapleton. [00:00:17] Speaker 00: May it please the court. [00:00:20] Speaker 00: This court has robust precedence on the deference that the trial court owes to an agency's decision. [00:00:27] Speaker 00: And that deference has to mean something. [00:00:30] Speaker 00: As this court said in Dell, the Federal Circuit has to review the standard that the Court of Federal Claims applied, not just the standard that the Court of Federal Claims recited. [00:00:42] Speaker 05: But what is our review of what the Court of Claims does, and what deference, if any, is owed to fact finding and that sort of thing? [00:00:53] Speaker 00: So the basic standard of review is de novo. [00:00:58] Speaker 00: And there's no deference to the fact finding that the court of federal claims found required in this case. [00:01:06] Speaker 00: And that's because what the court of federal claims was doing was it was reviewing the agency decision, and it was reviewing it for arbitrariness. [00:01:18] Speaker 05: So are we in essence reviewing the agency decision for arbitrariness? [00:01:22] Speaker 00: That's correct. [00:01:23] Speaker 00: And that's what this court said in Turner, as well as Bannum, [00:01:28] Speaker 00: is that the federal circuit is essentially reviewing the agency decision anew. [00:01:35] Speaker 00: For Robert, I'm just going to appreciate it. [00:01:37] Speaker 03: That's just for whether there was a procurement violation, right? [00:01:41] Speaker 03: Once the court determines there's a procurement violation, then whether there's prejudice to the protester is a fact question for the trial court that we'd review deferentially. [00:01:54] Speaker 00: That's correct, Your Honor. [00:01:55] Speaker 00: And that's the standard articulated in Bantam. [00:02:01] Speaker 04: Was there a prejudice part of the claims court's decision in this case, or is it all... [00:02:10] Speaker 00: Yeah. [00:02:11] Speaker 00: Your Honor, there was a prejudice piece with regard to the issue related to the male security specialist. [00:02:19] Speaker 00: I'm going to try to avoid saying his name, because it's confidential. [00:02:22] Speaker 00: But the issue with the male security specialist, the court of claims never actually made a determination of prejudice related to that issue. [00:02:33] Speaker 00: However, with the rest of the decision [00:02:36] Speaker 00: There's no issue with regard to prejudice. [00:02:39] Speaker 00: The court didn't make any findings regarding prejudice, and the prejudice issue is not really in dispute. [00:02:47] Speaker 04: So a good deal of this confuses me. [00:02:52] Speaker 04: But I want to ask you if this is possible. [00:02:55] Speaker 04: As I understand it right, this term, organizational conflict of interest, has to be reduced to some very concrete things. [00:03:06] Speaker 04: I want you to correct everything that I say that's wrong. [00:03:11] Speaker 04: But the concrete issues have been described in two buckets. [00:03:18] Speaker 04: One is unequal information. [00:03:20] Speaker 04: And the other is this biased ground rule, some of which actually sounds like unequal information. [00:03:28] Speaker 04: And there's those questions all about what led to the 2020 solicitation and the award based on it, and then what led to the 2022. [00:03:42] Speaker 04: And I guess I'm interested in hearing very concretely what the specific unequal information [00:03:52] Speaker 04: of issues were and what specifically the bias ground rules. [00:03:57] Speaker 04: The bias ground rule one is the one that I've had the hardest time pinpointing what specifically was going on, what the bias even was, let alone what its effects were. [00:04:12] Speaker 00: Well, that's a fair question, Your Honor, and I think that is part of the problem with the court of claims decision. [00:04:19] Speaker 00: is that it never found. [00:04:21] Speaker 00: I'm sorry. [00:04:22] Speaker 04: No, no. [00:04:22] Speaker 04: I mean, if we're doing it de novo, why don't you go directly to what the charges were as opposed to what the claims were found about? [00:04:34] Speaker 00: I understand. [00:04:35] Speaker 00: So Contract Master Franklin, initially, in the initial OCI review that took place in 2021 regarding the 2020 solicitation, [00:04:45] Speaker 00: He said the bias ground rules arose from four things. [00:04:50] Speaker 00: And we kind of addressed this in our brief at pages 11 and 12, in our opening brief and reply brief at 16 and 17. [00:05:00] Speaker 00: But there were four things. [00:05:01] Speaker 00: There was an internal audit control document. [00:05:04] Speaker 00: There was the best practices speed of mail document. [00:05:08] Speaker 00: There was a playbook. [00:05:10] Speaker 00: And there was a program fundamentals document. [00:05:13] Speaker 04: Can you actually now describe each of those four things, please? [00:05:17] Speaker 00: Sure. [00:05:17] Speaker 00: So the internal audit control document had to do with the ways in which the contractor was doing the audits of its performance of the explosive detection. [00:05:32] Speaker 00: uh... the best practice in the speed of mail. [00:05:35] Speaker 04: I don't think you appreciate just how much I need to go down to ABCs. [00:05:42] Speaker 04: There's a document. [00:05:44] Speaker 04: There are lots of documents. [00:05:45] Speaker 04: Tell me why it has something to do with ground rules. [00:05:48] Speaker 04: When I hear the word ground rule, I think there was a requirement in the solicitation. [00:05:54] Speaker 04: The bidders both saw the same requirement, but there was something wrong with including that requirement because it was somehow unfairly biased in favor. [00:06:05] Speaker 04: It's inclusion, perfectly understandable, no difference in access to information. [00:06:11] Speaker 04: about it, but one party, MSA, must have had a capability that was different from the capability that the other bidders had and therefore an easier ability or greater ability to meet that particular requirement [00:06:28] Speaker 04: in a way that's improper, as opposed to perfectly proper, because maybe it's just a justified requirement. [00:06:33] Speaker 04: Now, what does that have to do with this audit thing? [00:06:37] Speaker 00: Well, Your Honor, that's exactly our position. [00:06:40] Speaker 04: No, no, that's not helpful. [00:06:42] Speaker 04: Was there a ground rule in the solicitation having to do with this audit thing? [00:06:48] Speaker 00: Our position is no. [00:06:51] Speaker 00: MSA's position is that these documents never created a biased ground [00:06:56] Speaker 00: And the SDRO, which is the Postal Services... Let me just try one more time. [00:07:03] Speaker 04: Put aside the term bias. [00:07:05] Speaker 04: When I need to understand whether there was a bias ground rule, the first thing I need to be told is what is the ground rule that is asserted to be biased. [00:07:14] Speaker 04: Don't tell me whether it's biased or not. [00:07:16] Speaker 04: Just tell me what the ground rule is. [00:07:19] Speaker 00: In this case, there was no ground rule related to the internal audit. [00:07:22] Speaker 03: But what did the other side assert was the ground rule? [00:07:25] Speaker 00: Your Honor, I'm not sure that they ever did. [00:07:27] Speaker 03: I mean, their whole case was... What it was that the federal claims find was the ground rule. [00:07:35] Speaker 00: Once again, Your Honor, the Court of Federal Claims never made that finding either. [00:07:39] Speaker 03: Then why are we talking about biased ground rules? [00:07:41] Speaker 00: Because the Court of Federal Claims said that MSA has to be disqualified because there were biased ground rules. [00:07:49] Speaker 00: And what were the biased ground rules the Court identified? [00:07:52] Speaker 00: The Court never identified any. [00:07:53] Speaker 00: I mean, that's the problem with the Court. [00:07:54] Speaker 00: That's a big problem. [00:07:56] Speaker 00: That's a problem with the Court's opinion. [00:07:58] Speaker 00: I mean, the Court said that, oh, MSA was involved in this pilot program. [00:08:02] Speaker 00: and the pilot program influenced the 2020 solicitations. [00:08:06] Speaker 00: And some of the documents that the postal service in its OCR review said, well, MSA never touched the statement at work, but they did help create these documents. [00:08:17] Speaker 00: The internal audit control documents, speed of mail, playbook, program fundamentals. [00:08:23] Speaker 00: And the Court of Claims never found- So is that what we're talking about when we're talking about ground rules? [00:08:29] Speaker 00: That's correct, Your Honor. [00:08:30] Speaker 05: But they had an unfair advantage because they had had this participation in developing all these documents that were relevant to how this program was going to work. [00:08:40] Speaker 00: That's exactly correct, Your Honor. [00:08:42] Speaker 04: And with respect to what ground rule did MSA's participation have an unfair advantage? [00:08:51] Speaker 00: The court never made a finding. [00:08:53] Speaker 04: Was there an allegation that there was some ground rule, namely a requirement of the solicitation or something in the solicitation that was going to affect who won the competition? [00:09:12] Speaker 00: No. [00:09:12] Speaker 00: I mean, the answer is no. [00:09:13] Speaker 00: Nobody made a specific allegation regarding a ground rule. [00:09:16] Speaker 00: What the other side said, and now I'm kind of making their argument for them, [00:09:20] Speaker 00: is that these documents influenced how the work was to be performed. [00:09:26] Speaker 00: For example. [00:09:27] Speaker 00: Who cares? [00:09:28] Speaker 03: I mean, I know I'm making your argument for you, but who cares if it influenced how it was going to be performed as long as both of you had an equal chance to perform it? [00:09:38] Speaker 00: I completely agree, Your Honor. [00:09:40] Speaker 00: And that's the problem with the Court of Federal Claims decision is that it never actually is. [00:09:46] Speaker 03: Are there stronger arguments on the unequal access to information problem? [00:09:50] Speaker 05: Let me make the argument. [00:09:53] Speaker 05: The argument I understood and the confusion I have, one of the issues of confusion I have is the solicitation in 2020 and the solicitation in 2022, and half the time I wasn't sure what we were talking about for which period. [00:10:08] Speaker 05: But at the end of the day, [00:10:10] Speaker 05: You were all involved in this pilot program, which morphed into what you thought was going to be a sole solicitation, which I assume, so you had access to all the information. [00:10:21] Speaker 05: You also set it all up. [00:10:24] Speaker 05: And presumably, the setup at the airports and the number of dogs, et cetera, you were all in on that, right? [00:10:31] Speaker 00: I don't really agree that we were all in on it. [00:10:34] Speaker 00: I mean, we performed a pilot program that demonstrated to the Postal Service how this [00:10:39] Speaker 05: OK, but then, well, even after the 2020 thing, you were performing this work. [00:10:45] Speaker 05: And so you had a leg up to the other competitors. [00:10:49] Speaker 05: So could I ask you a similar question, which is what's unclear to me globally is you've got in the government, you get contractors. [00:10:57] Speaker 05: And then when they have a second bid and another previous incumbent gets to bid, how is the advantage that [00:11:07] Speaker 05: people were saying you had here from your action different than what an existing contractor here who bids, rebids on a contractor, and he's the incumbent. [00:11:20] Speaker 05: How is that different than incumbency? [00:11:22] Speaker 00: Well, Your Honor, we don't think it is different. [00:11:24] Speaker 00: I mean, we think that whatever advantages MSA may have had with regard to the 2022 solicitations were the natural advantages of incumbency. [00:11:34] Speaker 00: right? [00:11:34] Speaker 00: That came from having performed the pilot program, which nobody said was improper. [00:11:39] Speaker 00: Now, I'm sure my other friends' arguments are going to be, well, MSA never should have had the 2020 contract. [00:11:47] Speaker 00: It gained experience from performing the 2020 contract. [00:11:51] Speaker 00: Therefore, we have to mitigate that somehow when it comes to the 2022 contract, because the 2020 contract was improperly obtained by MSA. [00:11:59] Speaker 05: And the government agreed to that, right? [00:12:01] Speaker 00: I don't know that the government necessarily agreed. [00:12:04] Speaker 00: The Postal Service did take steps to mitigate MSA's past performance advantage and other advantages that it had obtained from performing the 2020 contract. [00:12:16] Speaker 05: So yes, that's correct. [00:12:18] Speaker 05: I don't want to throw out names because, as you said, some of them are confidential. [00:12:21] Speaker 05: But there was some agreement that something had gone awry. [00:12:25] Speaker 05: So that didn't seem to be in dispute by 2022. [00:12:28] Speaker 05: I think it then became the issue before the court of claims, whether or not the actions taken to mitigate those problems were sufficient. [00:12:39] Speaker 05: And I'll just throw out another question to start the discussion on this. [00:12:45] Speaker 05: I think the Court of Federal Claims concluded that it was immeasurable, whatever that word is. [00:12:53] Speaker 05: But I thought in other places the Court of Federal Claims seemed to evaluate the sufficiency [00:13:01] Speaker 05: of the mitigation. [00:13:03] Speaker 05: To me, though, seems like it's either one or the other. [00:13:06] Speaker 05: So how do you construe what the court was saying? [00:13:09] Speaker 00: Yeah, you raise a good point, Your Honor. [00:13:11] Speaker 00: So I think the [00:13:12] Speaker 00: The court of federal claims said that the bias ground rules was immittigable. [00:13:18] Speaker 00: And we disagree with that. [00:13:20] Speaker 00: But the court said that the unequal access to information is not immittigable. [00:13:24] Speaker 00: And they didn't say that specifically, but they implied it, that the unequal access to information could have been mitigated. [00:13:30] Speaker 05: But if that had been mitigated, but the bias ground rules, again, whatever they were, were not mitigable, then the result would have been the same, right? [00:13:39] Speaker 00: I think that's right, Your Honor. [00:13:41] Speaker 00: Yeah. [00:13:41] Speaker 00: And that's another way in which the [00:13:43] Speaker 00: Court of Federal Claims opinion just doesn't make any sense. [00:13:46] Speaker 05: Can I ask you about the information stuff? [00:13:48] Speaker 05: Because that at least is a little clearer, so we can talk about it. [00:13:51] Speaker 05: They tried to mitigate it, and then there's also the arguments that one, it was stale information by 2022. [00:13:59] Speaker 05: Two, they did get it, although they said they got it only two weeks beforehand, which I guess they said was insufficient. [00:14:09] Speaker 05: I don't know who offered proof of. [00:14:12] Speaker 05: So what was the Court of Federal Claims conclusion of the inadequacy of those remedial actions? [00:14:22] Speaker 00: Well, I think that's where the Court of Federal Claims erred, is that they said that they disagreed with the agency's determination that the information was stale and not competitively useful. [00:14:33] Speaker 00: The agency made that determination on three separate occasions. [00:14:37] Speaker 00: It did three separate OCI reviews, one in connection [00:14:40] Speaker 00: with the 2022 solicitation being issued, one when the protesters protested, and then the SDRO, which is the appeal. [00:14:50] Speaker 00: And at all three places, the Postal Service found this information was stale, not useful. [00:14:57] Speaker 00: The court sort of disagrees with that, but doesn't really say why. [00:15:02] Speaker 03: What's the standard of review for the court to apply to the agency's conclusion on staleness? [00:15:09] Speaker 00: it's a highly differential rational review finding that that would be the the standard and it is it's unclear from the court's opinion of the records reports that and the trial court can't disagree with it that's correct your honor and so the the uh... the the trial court [00:15:33] Speaker 00: apparently thought that these documents might still create an unequal access to information. [00:15:39] Speaker 00: But I think what the trial court was really concerned with, they weren't so much thinking about whether these documents were stale or not. [00:15:46] Speaker 00: What the trial court was looking at, the main thing that seems to have motivated the trial court, is that MSA had a [00:15:57] Speaker 00: there was a taint from the 2022 solicitation that carried over, excuse me, in the 2020 solicitation, that carried over into the 2022 solicitation. [00:16:08] Speaker 00: And the court thought that postal needed to try to mitigate that taint. [00:16:16] Speaker 00: And that's really where the court of federal claims is coming from. [00:16:19] Speaker 00: And we think that's erroneous on a number of levels. [00:16:22] Speaker 00: I mean, number one, [00:16:24] Speaker 00: this taint concept is found nowhere in the case law. [00:16:29] Speaker 00: Number two, Postal did a lot to mitigate whatever incumbent advantages MSA may have had. [00:16:37] Speaker 00: And that's where the court made a really critical error, is that it thought, at least its opinion seems to suggest, that the only mitigation [00:16:47] Speaker 00: that Postol did was the mitigation ordered by the SDRO sort of at the end of the process. [00:16:53] Speaker 00: The SDRO ordered additional mitigation. [00:16:57] Speaker 00: But the Court of Federal Claims completely ignores all of the mitigation that Postol did before we got to the SDRO, including restructuring the entire evaluation scheme for the solicitation to give other offerors a better opportunity. [00:17:15] Speaker 00: So I see that I'm well over time. [00:17:17] Speaker 00: No, no, no. [00:17:18] Speaker 05: I think I've got more questions there if you don't throw that easy. [00:17:24] Speaker 05: In the court of federal claims opinions, there are numerous references to government concessions. [00:17:32] Speaker 05: But there was one that they attributed, the court judge attributed to you. [00:17:37] Speaker 05: And I'm trying to look back. [00:17:39] Speaker 05: On page 30 of the Court of Federal Claims opinion, they say the government does not articulate why MSA's past performance is still considered. [00:17:52] Speaker 05: Despite MSA's own admission, it would be reasonable to preclude evaluation of MSA's 2020 contract performance. [00:18:02] Speaker 00: Yes, Your Honor. [00:18:03] Speaker 00: I wouldn't call that an admission. [00:18:05] Speaker 00: I think what I said at the hearing [00:18:08] Speaker 00: was I said that there are different ways in which MSAs a sensible advantage could be mitigated short of disqualification. [00:18:21] Speaker 00: And I suggested one possibility, and by the way, as I recall, this was at a hearing [00:18:26] Speaker 00: well before, in time, before the ultimate hearing where the court reached these conclusions. [00:18:33] Speaker 00: But the point that I made is that there was a lot of opportunities for mitigation available short of disqualification [00:18:40] Speaker 00: One of those would have been to not allow MSA to use the past performance that it gained on the 2020 contract. [00:18:49] Speaker 00: So the suggestion was made that this was a possible mitigation strategy that Postal could have undertaken, and in fact ultimately did. [00:19:00] Speaker 00: Postal did undertake that mitigation strategy on the SDROs order. [00:19:06] Speaker 00: They didn't fully [00:19:07] Speaker 00: banned MSA from using all past performance references, but they did, you know, narrow the time period. [00:19:14] Speaker 05: And so that was the... And can you clarify, just moving on to another topic, which is the FAR, the applicability of FAR and the applicability of the SPEP and why that matters and what's going on. [00:19:28] Speaker 05: What was your understanding throughout the Court of Federal Claims? [00:19:33] Speaker 05: What was the government's position? [00:19:35] Speaker 05: FAR doesn't apply, SPMP apply, but that the exception in FAR should also be applicable to the Postal Service, because clearly we all know that the Postal Service is under looser standards? [00:19:47] Speaker 05: Is that the government's position? [00:19:51] Speaker 00: Basically, I mean, I think the government's position is the SPMP, and this is MSA's position too, the SPMPs are not blind. [00:19:58] Speaker 00: because they specifically say these SPMPs do not create any rights against the Postal Service procedural or substantive. [00:20:08] Speaker 00: And so the only thing that's binding on the Postal Service is [00:20:12] Speaker 00: that's relevant here is the Postal Reorganization Act and then 39 CFR Part 6.1. [00:20:17] Speaker 04: So I had understood that there is not in this case an argument that APA intervention is required on the ground of a violation of a statute or regulation. [00:20:35] Speaker 04: It's entirely [00:20:37] Speaker 04: about arbitrary and capriciousness so that if the postal service has a set of non-binding pronouncements and generally says we kind of follow these, then it is subject to reversal, call it that, if it acts irrationally [00:20:58] Speaker 04: in departing from it without a good explanation. [00:21:03] Speaker 04: So the non-binding nature feels to me like it's neither here nor there. [00:21:09] Speaker 04: Is that an incorrect description of what's at issue? [00:21:15] Speaker 00: A little bit incorrect. [00:21:17] Speaker 00: And I would say this, which is that if [00:21:20] Speaker 00: that the court can look to the non-binding SPMPs to determine whether the agency acted rationally. [00:21:33] Speaker 00: But I think that it should not take as much of an exacting or slavish approach to what they say, given that they're not binding. [00:21:47] Speaker 00: So, for example, if the Postal Service were to say, oh, well, we don't believe in OCIs. [00:21:56] Speaker 00: We don't care about OCIs. [00:21:57] Speaker 00: Well, that would likely be irrational, because the SPMPs [00:22:00] Speaker 00: You know, suggest that you should revert to... Right. [00:22:05] Speaker 00: But I think to really break down and parse the language of the SPMPs is maybe not what's supposed to be done, given their non-binding nature. [00:22:13] Speaker 00: But I think the more important point here is that even if the SPMPs were binding, they weren't violated. [00:22:20] Speaker 00: Because the SPMPs clearly give the agency discretion to disqualify. [00:22:27] Speaker 00: They say the agency may disqualify. [00:22:30] Speaker 00: And the court of federal claims came in and basically said that they had to disqualify in this case. [00:22:38] Speaker 00: I also think that it was perfectly rational for the agency to look to the FAR, even though the FAR doesn't apply to the Postal Service, but to look to the FAR as a more highly detailed and more developed body of law, to look to the FAR for some persuasive authority on how they should deal with OCIs. [00:23:02] Speaker 00: And ultimately, the agency thought that MSA qualified for the development and design exception in the FAR. [00:23:09] Speaker 05: Well, except I'm confused about that as well, because on APPX 46, the court says that the government twice conceded an oral argument that under FAR, MSA would be disqualified. [00:23:22] Speaker 05: And that was confusing me because I thought the government's argument was look to this exception and this exception should at least be applicable to SP&P and so there we are on design and development. [00:23:35] Speaker 05: Now I know the district court had other issues with design and development in the scope of that but [00:23:41] Speaker 05: game over, at least in terms of the government's position, if they say it would have been disqualified under FAR. [00:23:46] Speaker 05: I mean, you're right, we're under SPEP, but that was a concession, right? [00:23:51] Speaker 00: No, I think the trial court kind of misconstrued what the government was saying there. [00:23:56] Speaker 00: I think the government is saying that under the FAR, and I think the government actually went too far here. [00:24:01] Speaker 00: I think the government's a little bit incorrect. [00:24:02] Speaker 00: But under the FAR, there is a presumption of disqualification in the event that a contractor [00:24:11] Speaker 00: rights to specifications of the Statement of Work. [00:24:13] Speaker 00: There's a presumption, but it's not mandatory. [00:24:16] Speaker 00: And so the government was conceding that. [00:24:18] Speaker 00: The government was conceding that. [00:24:19] Speaker 05: Is it the same true of the SPEP? [00:24:23] Speaker 00: That there's a presumption of disqualification? [00:24:26] Speaker 00: No, the SPEPs don't say that. [00:24:28] Speaker 00: They say that in the event of an OCI, that the agency may disqualify. [00:24:38] Speaker 00: And it lists other mitigation measures that can be taken as well. [00:24:42] Speaker 00: And it just kind of gives them as options. [00:24:46] Speaker 00: But I think getting back to what the government said, so the government acknowledged that disqualification is a presumption in the event of biased ground rules. [00:24:56] Speaker 00: But then the government also said, but there's this development and design exception for which we qualify for. [00:25:01] Speaker 00: That's all the government was saying, was saying, yes, there's a presumption of disqualification in the bioscranials. [00:25:06] Speaker 00: But if you qualify for the design and development exception, then there's no disqualification. [00:25:12] Speaker 00: So I think that the trial court kind of selectively quoted the government's statement at the hearing. [00:25:18] Speaker 00: All right. [00:25:18] Speaker 05: We take your point. [00:25:19] Speaker 05: Anything else? [00:25:30] Speaker 05: OK, we're divided time. [00:25:38] Speaker 02: Yes. [00:25:39] Speaker 02: Good afternoon, Your Honors. [00:25:40] Speaker 02: And may it please the court. [00:25:42] Speaker 02: There's another piece of this case, and it's the only piece that we briefed. [00:25:45] Speaker 02: I heard him hear a word of that from Mr. Gradle. [00:25:48] Speaker 02: That has to do with the structure of the contract. [00:25:50] Speaker 02: This was the reduction of the look bacteria. [00:25:51] Speaker 05: I know, but since you're representing the government, can we ask you other questions we may have about this case? [00:25:57] Speaker 02: You can ask any question you like, and I would love to comment on the OCI, but I have nothing to say in rebuttal on that point, the only point that we briefed. [00:26:05] Speaker 05: What do you have to say about FAR and the SPEP? [00:26:09] Speaker 05: I mean do you agree with essentially what your friend was saying that the SPEP is non-mandatory and is allowed enormous flexibility much more so than the FAR and that at a minimum you can look to the FAR at the exception which even under FAR there's got an exception for development and whatever and that applies here as well. [00:26:31] Speaker 05: Do you agree with that? [00:26:33] Speaker 02: So generally, I agree with what Mr. Riedel said, absolutely, that these are guidelines. [00:26:38] Speaker 02: And I also agree with Judge Taranto's assessment of this, which is if this were a case where the protester were to say there's been a violation of law or regulation, and their regulation were the SPMPs, we'd say, ha, that's not a regulation. [00:26:53] Speaker 02: You can't go down that road. [00:26:55] Speaker 02: And if you had, you'd have to prove significant prejudice. [00:26:58] Speaker 02: What remains then is for them to say the contracting officer abused, there are many contracting officers here, abused his discretion and of course then they have a heavy burden. [00:27:10] Speaker 02: With regard to the design and development, it is something one of the contracting officers said, I think an STRO said in response to an administrative appeal, cited that and said, look, we can rely on that in the same way [00:27:22] Speaker 02: It makes sense for the FAR to have had it in there to begin with because of our flexibility. [00:27:27] Speaker 02: I don't know that our brief really pushed that so far. [00:27:29] Speaker 02: Of course, we haven't argued it here at all. [00:27:32] Speaker 02: I know. [00:27:32] Speaker 05: We'd quite care to share with us why you are not here defending the position. [00:27:40] Speaker 02: I wasn't part of the decision team, but I think basically it's rooted in the idea that the Postal Service just wanted to move on. [00:27:47] Speaker 02: They've been at this since 2019. [00:27:50] Speaker 02: litigation had ensued since 2020. [00:27:52] Speaker 05: And presumably if you just want to move on, and I appreciate and respect that, but [00:27:59] Speaker 05: We have to write an opinion that's going to potentially govern the rules of the game going forward. [00:28:07] Speaker 05: You can move on, but there are future. [00:28:12] Speaker 05: A lot of this could be prospective for the government and for the Postal Service. [00:28:16] Speaker 02: I am not going to disagree with your honor at all. [00:28:18] Speaker 02: It may have also been part and parcel of the decision whether to appeal. [00:28:21] Speaker 02: Of course, only solicitor general can authorize us to appeal. [00:28:24] Speaker 02: And I'm sure there was a robust discussion, as is consistent with the office's policies. [00:28:28] Speaker 02: as to whether to appeal or not, and for many reasons we decided not to appeal. [00:28:32] Speaker 02: Does that necessarily mean we could not have filed a brief in this case? [00:28:35] Speaker 02: No, I don't believe so. [00:28:36] Speaker 05: Let me ask you a more general question that I asked with your friend, and I should be embarrassed to ask it because it's so pedestrian, but I'll go ahead anyway. [00:28:44] Speaker 05: A lot of the stuff we're talking about here that happened early on, the pilot program, the sort of involvement in MSA, and then the question of how you mitigate that, how different is that from incumbency? [00:29:00] Speaker 05: If you've got an incumbent contractor and they're bidding on the new contract, [00:29:05] Speaker 05: Doesn't a lot of that stuff also apply? [00:29:08] Speaker 05: They're already set at the locations. [00:29:10] Speaker 05: They've already got the people hired and so forth. [00:29:13] Speaker 05: So explain to me the global rules with respect to bias and OCI and stuff. [00:29:18] Speaker 02: Well, you're preaching to the choir on this one, Your Honor. [00:29:21] Speaker 02: Yes, there's no trouble with incumbency per se. [00:29:24] Speaker 02: There is trouble with incumbency when, to turn to the ground rules here, not the ground rules [00:29:30] Speaker 02: turn to the SPPs themselves, they say, this is their definition, essence of an OCI, an OCI exists when the nature of the work to be performed under the contract may give an offeror or supplier an unfair competitive advantage. [00:29:43] Speaker 02: That's all that matters. [00:29:44] Speaker 02: And this court's case law, whether in bias ground rule cases or unequal access cases, say that the same thing. [00:29:50] Speaker 02: It always comes back to, I think, what AMK9, GK9 would call prejudice. [00:29:55] Speaker 02: It comes to that element of [00:29:57] Speaker 02: was a really unfair competitive advantage. [00:29:59] Speaker 02: And the big picture here is there were so many mitigating actions taken. [00:30:03] Speaker 02: There were so many changes between the 2019 pilot to the 2020 contract to the 2022 contract that there's basically no unfair competitive advantages left. [00:30:15] Speaker 03: Can you help us with the specifics of what the trial court or the protester argued was the unfair ground rules from the pilot program? [00:30:26] Speaker 03: I'm a little confused. [00:30:29] Speaker 02: I think it was sort of mushed together with the trial court. [00:30:32] Speaker 03: It really seems to me like it was just, well, they were on the pilot program, so they [00:30:39] Speaker 03: knew from the get-go, and they were involved in formulating some of the policies or whatever. [00:30:45] Speaker 03: Although I think your friend said they didn't write the statement of work. [00:30:48] Speaker 03: But why is it, if they have knowledge of how the program is going to work, per se a violation, as long as it's not going to lead to an unfair advantage? [00:30:59] Speaker 02: Well, that's our argument. [00:31:01] Speaker 03: Frankly, to what did Judge Holt find was the unfair advantage, just because they were involved? [00:31:09] Speaker 02: My assessment of it is that the judge, the opinion really focuses on, so at some point the judge remanded, I think in 2021, to the Postal Service saying, you need to look into this. [00:31:21] Speaker 05: I'm sorry, I didn't hear the word you used. [00:31:22] Speaker 05: Repented? [00:31:23] Speaker 02: Remanded to the Postal Service and said, you need to look into these obviously questions that are being raised. [00:31:30] Speaker 02: A guy named Franklin, he's a contracting officer, was appointed by the Postal Service to investigate. [00:31:36] Speaker 02: And the opinion comes back over and over and over again to Mr. Franklin's investigation. [00:31:42] Speaker 02: He looked at documents. [00:31:44] Speaker 02: He interviewed people at MSA, at TSA, within the Postal Service, trying to figure out what exactly is going on here. [00:31:50] Speaker 02: And he identified some things that had to be mitigated. [00:31:54] Speaker 02: Bias ground rules is when a contractor essentially, as a consultant usually, writes the specification. [00:32:01] Speaker 02: And of course, bias might mean that it writes the specification in its favor. [00:32:05] Speaker 02: So, for example, if MSA were writing a specification and it knew it was the only contractor of this sort that had both canine detection capabilities and alarm resolution capabilities, and they wrote a specification and said, this is the way to go, this is what you want, and the Postal Service did that and nobody else was capable of doing it, that's biased ground rules. [00:32:28] Speaker 02: An equal access is sort of a classic case where [00:32:32] Speaker 02: Somebody slipped somebody. [00:32:34] Speaker 04: I'm sorry. [00:32:34] Speaker 04: Just to be clear, even in that situation, the government, I hope, I guess, should be able to justify that combination. [00:32:44] Speaker 04: No? [00:32:45] Speaker 04: Right. [00:32:45] Speaker 04: Now, what it did here. [00:32:47] Speaker 04: So suppose it's the difference between planes blowing up and not, if there really was a good case for integrating those two functions. [00:32:56] Speaker 04: The fact that there was only one company that could do it, [00:33:03] Speaker 04: Oh right. [00:33:05] Speaker 02: Sure, there could be a justification or a decision made for a sole source procurement which might be protested and then of course we'd be in a different kind of case. [00:33:14] Speaker 03: Why would they have to go to a sole source procurement if it was determined that this was in the best interest of the government to structure a contract this way and it wasn't just simply an arbitrary choice by [00:33:29] Speaker 03: the pilot project participant to structure in a way that it made it clear that they were going to get the contract. [00:33:39] Speaker 03: Why couldn't the government still issue it as a competitive contract? [00:33:43] Speaker 03: Because they've determined, based upon all of this, that the best interests of the government are having these two functions performed together. [00:33:51] Speaker 02: I think it took away the problem by saying that it was first issued as a competitive solicitation, also by saying it wasn't arbitrary and capricious. [00:33:59] Speaker 02: That's what I mean. [00:34:00] Speaker 03: You troubled me when you suggested that they needed to go to a sole source procurement because those have different things and they have to justify them and they're challenged for different reasons. [00:34:10] Speaker 03: If they've done the pilot project, which they did, and throughout the pilot project [00:34:16] Speaker 03: the government had determined and directed them, or in consultation together, they said these two services need to be bundled, because if they're not, there'll be inefficiencies, safety problems, all that kind of stuff. [00:34:29] Speaker 03: The fact that they write it that way, even with the knowledge that there are only one that can do it, does that mean it's a biased ground rule, or is it a biased ground rule that's still justified? [00:34:40] Speaker 02: You could still judge that. [00:34:42] Speaker 02: By definition, I think that would be a biased ground rule case, I'm sure. [00:34:45] Speaker 02: And I probably went too far because I was probably thinking in a far world when I said that'd be a sole source justification. [00:34:49] Speaker 02: Nonetheless, if there was a sole source, you can imagine somebody would figure out a way to protest that. [00:34:55] Speaker 02: But I think what you're pointing to, Your Honor, both Judge Cerenzo and Judge Hughes, is the flexibility that is embedded in the SP&P. [00:35:03] Speaker 02: So for example, first of all, they're looking only to see whether there is an unfair competitive advantage. [00:35:07] Speaker 02: If they see that, [00:35:09] Speaker 02: Now the Postal Service guidelines the SPNPs and talk to some very broad measures that must be taken. [00:35:18] Speaker 02: So mitigation actions, for example, at SPNP 7-15.2 say mitigation actions may include, and for sure there is a possibility may, if it becomes apparent where proposals are received, [00:35:32] Speaker 02: and that participation by a particular offer could lead to an organizational conflict of interest, the offeror may be disqualified. [00:35:39] Speaker 02: But other options are the adoption of other measures to ensure as fair competition as possible. [00:35:45] Speaker 02: That's this case. [00:35:46] Speaker 02: Furthermore, even that loose guideline is tempered by the following. [00:35:51] Speaker 02: In the SPP, this is still at 715.2, the contracting officer may take actions necessary and in the interest of the postal service and the offerors to avoid, neutralize, or mitigate [00:36:02] Speaker 02: the potential or apparent conflict of interest and goes on to say that the contracting office has to write an analysis which would say, which would include, quote, a consideration of the potential benefits and detriments to the Postal Service, including consideration of the overall business and competitive interests of the Postal Service and how the appearance of an OCI may affect them. [00:36:23] Speaker 02: So yes, even if the Postal Service were to determine there was an OCI, [00:36:27] Speaker 02: it would first have to decide. [00:36:29] Speaker 05: But the hypothetical we started with is assuming that you get affirmed on the things that you're here for in terms of the contract split up. [00:36:38] Speaker 05: And even under those circumstances, am I right, the Court of Federal Claims still says these are OCIs that are not immidicable? [00:36:46] Speaker 05: Is that your understanding of where we are? [00:36:48] Speaker 02: Yes. [00:36:49] Speaker 02: And I think the court's error was it in effect conducted fact-lining. [00:36:52] Speaker 02: Its focus sort of stopped with C.O. [00:36:53] Speaker 02: Franklin's October 21, 2020 analysis. [00:36:56] Speaker 02: which sort of served up a problem to other contracting officers. [00:37:00] Speaker 02: In the meantime, further analyses were undertaken, further investigations were undertaken, further mitigation steps were taken. [00:37:08] Speaker 02: So what's missing then is the causation analysis, which is fact-finding between what was first served up by the remand and then further developed by CEO Franklin in 2021 and then acted upon. [00:37:22] Speaker 05: in a very responsible, very thorough way by at least... Well, some of the incentive to do... Some of what drove that, I think, is the look back to 2020 and to view this more as a continuous thing, and that a lot of the 2020 stuff hadn't been remedied, arguably, if one assumes there were problems there, and that led into the 2022 solicitation. [00:37:47] Speaker 05: Is that what you understand? [00:37:49] Speaker 02: That's right. [00:37:50] Speaker 02: So one of the first things C.O. [00:37:51] Speaker 02: Franklin said was, [00:37:52] Speaker 02: the twenty twenty awarded contract which is awarded i think in november twenty twenty uh... it had more years onto it but that's your franklin said this has to be ended after one year and a new solicitation has to be issued and further investigation of these allegations so there was really not what happens so we're not so we're looking at [00:38:15] Speaker 05: an acceptance by the Postal Service, at least, that there were not good things happening earlier. [00:38:21] Speaker 05: And then the question becomes whether, in addition to everything else, whether that taint of what had happened before bled into the 2022 solicitation. [00:38:31] Speaker 02: Right. [00:38:31] Speaker 02: And that takes causation analysis, and that's fact-finding. [00:38:35] Speaker 02: And that fact-finding was done by a contracting officer with respect to a business disagreement filed by American Canine, Global Canine, [00:38:45] Speaker 02: and MSA, each of those appealed, and then a higher ranking official, two total across these three, two total SBROs, supplier dispute resolution officials, then looked further at what the contracting officers had concluded, and then looked back at another analysis done by the contracting officer on the East, contracting officer Baker, who looked very specifically at these alleged advantages. [00:39:09] Speaker 02: and examined whether in each case they were stale, they gave an advantage, whether documents they had could be turned over. [00:39:15] Speaker 05: Let me go back to where we started, which is I appreciate your candor in telling us the Postal Service just thinks it's time to move on. [00:39:23] Speaker 05: They've got real work to do. [00:39:25] Speaker 05: What would happen if we were to remand this or change it? [00:39:28] Speaker 05: I mean, on the ground, in terms of the practicalness of the Postal Service getting this work done, which seems like it's pretty important stuff. [00:39:36] Speaker 02: Well, that's a twisted tale as well. [00:39:37] Speaker 02: Because although the Postal Service had hoped to move on, MSA eventually was disqualified by the judge's order, and we're up on appeal in this case right now. [00:39:48] Speaker 02: And ultimately, there was a competition for MSA's various contracts. [00:39:52] Speaker 02: There's several around the nation. [00:39:55] Speaker 02: And it was replaced by a company, I guess I can say their name, K2. [00:40:00] Speaker 02: K2 then took over the contracts. [00:40:03] Speaker 02: Since then, [00:40:06] Speaker 02: I think the order is public, as K2 knows about it. [00:40:09] Speaker 02: K2 was disqualified by the court. [00:40:13] Speaker 02: And at the same time, around the same time, shortly after that decision... By the court? [00:40:18] Speaker 02: The court issued an injunction saying that K2 couldn't, for different reasons, not having nothing to do with what's going on here, could not perform. [00:40:27] Speaker 04: Which court? [00:40:28] Speaker 02: The court of federal claims, same judge, Judge Holt. [00:40:30] Speaker 02: In the meantime, the Postal Service was filing periodic updates as ordered by the court [00:40:35] Speaker 02: asking, how's this thing with K2 going? [00:40:39] Speaker 02: Because now American and global were protesting K2's awards. [00:40:43] Speaker 02: At the end, the judge disqualified him. [00:40:46] Speaker 02: But about the same time, the Postal Service determined to terminate K2 for default, basically. [00:40:52] Speaker 03: So who's doing this contract? [00:40:55] Speaker 02: The Postal Service is. [00:40:56] Speaker 02: Oh, you're performing it? [00:40:57] Speaker 02: and i think if you have a look at the other sides this so many other contracts to be a different kinds of contracts so there's uh... alarm detection contracts which which and i say as they are far better than either contracts there's like nine or ten but i was a little bit of an injunction uh... so if there's a little light in the injunction is there a flexibility and i don't think it takes a while and just hope understood you just don't turn these things on off because of the national consequence of having letters go on planes it might [00:41:26] Speaker 02: have IEDs on them. [00:41:27] Speaker 05: So the split up is still in existence, right? [00:41:30] Speaker 02: The split up, yeah, that was what happened basically. [00:41:33] Speaker 02: But MSA certainly has some contracts. [00:41:35] Speaker 02: They were disqualified. [00:41:36] Speaker 02: K2 got some of those contracts. [00:41:38] Speaker 02: They were terminated. [00:41:39] Speaker 02: And so it takes a while to transition. [00:41:42] Speaker 02: So MSA, and Mr. Gradle can explain it a lot better than I can, has basically remained on the job. [00:41:48] Speaker 02: because it's difficult. [00:41:50] Speaker 02: You just don't stop one day and somebody else steps in the next day. [00:41:53] Speaker 03: For all of them or just for the portion that were split up? [00:41:56] Speaker 02: For the portions that they had. [00:41:58] Speaker 02: But who's doing the rest of it? [00:42:00] Speaker 02: Who's doing the canine stuff? [00:42:02] Speaker 05: The people that would just qualify. [00:42:04] Speaker 02: This is the attorney for American and this is the attorney for global. [00:42:07] Speaker 02: And they've got, in fact, the K2 contracts that took over from MSA, they've now been awarded to MSA and to global and American who can speak in far greater depth and expertise than I could about this. [00:42:21] Speaker 02: But through it all, MSA, from the result of this case, has had to stay on the job. [00:42:27] Speaker 05: And is that changed by an affirmance in our case? [00:42:31] Speaker 05: I mean, does that speed up? [00:42:32] Speaker 05: Or eventually, if we were to affirm Judge Holt's opinion, then you've got to go out for a new solicitation, right? [00:42:39] Speaker 05: You've got to do this again? [00:42:41] Speaker 02: It would depend. [00:42:42] Speaker 02: So if you affirm, NSA is still off the job and the transition activities that have been taking place would still continue. [00:42:50] Speaker 05: If you were to reverse... But if we affirm, you're obligated to go forward and do a new contract solicitation, right? [00:42:58] Speaker 05: What they're doing. [00:42:59] Speaker 05: What MSA is doing. [00:43:01] Speaker 02: They're on the contract only as a transition contractor to fill in until somebody else can get the work. [00:43:10] Speaker 05: Well, that's what I mean. [00:43:11] Speaker 05: So if we affirm, what's the next step? [00:43:14] Speaker 05: A new solicitation so that somebody else can get the work? [00:43:17] Speaker 02: I think that's already happened. [00:43:18] Speaker 02: Their work was already re-solicited. [00:43:20] Speaker 02: and was assigned to somebody else. [00:43:21] Speaker 02: That one somebody else has now since been terminated. [00:43:24] Speaker 02: No, I know. [00:43:24] Speaker 02: That's why we've got to do it over, I guess. [00:43:26] Speaker 02: OK. [00:43:26] Speaker 05: And what are you going to say if we reverse? [00:43:30] Speaker 02: If you reverse, then we'd have to go back for a remedy. [00:43:35] Speaker 02: One possibility is an injunction. [00:43:36] Speaker 02: And perhaps the Postal Service might argue an injunction is unwarranted. [00:43:41] Speaker 02: It's just too late for an injunction. [00:43:42] Speaker 02: As an equitable matter, it's too late. [00:43:44] Speaker 02: However, MSA is already on the job, so I'm not sure how that argument would go. [00:43:48] Speaker 05: Wait, if we reverse, they're back in business, right? [00:43:52] Speaker 02: Right. [00:43:52] Speaker 02: Well, there's two remedies in a bid protest. [00:43:55] Speaker 02: One is an injunction, which basically will put them back on the job. [00:44:00] Speaker 02: The other is a bid preparation clause. [00:44:02] Speaker 02: So if it's too late, as if it's a matter of equity, it's too much to restore them. [00:44:05] Speaker 03: Because the contracts have already been awarded to them, it's too late to give them back to them. [00:44:10] Speaker 02: It could be, I don't know if they've got their, they have a different kind of contract, the canines, right? [00:44:15] Speaker 03: But they used to have the canines, or they were originally... That's a big one, having one. [00:44:20] Speaker 02: They originally did, right? [00:44:22] Speaker 03: Yeah. [00:44:23] Speaker 03: I guess it sounds like there's going to be disruption no matter what we do. [00:44:30] Speaker 02: Perhaps our decision-making about whether to brief this case was naive in the service of thinking, let's just move on. [00:44:40] Speaker 02: If I can just say one more thing, and really, I'm sorry. [00:44:43] Speaker 03: The troubling part for me here, and I understand that, that at some point, even if you disagree, the government's going to move on. [00:44:51] Speaker 03: But does the government really want to live with the legal impact of the trial court's decision if we affirm it? [00:44:58] Speaker 03: Doesn't that give it some imprimatur of correctness that I assume you don't agree with? [00:45:06] Speaker 02: We don't agree with some of the things that my friends at this table, the appellees, are saying in defense of the claims court's decision. [00:45:15] Speaker 02: So it's one thing to have had a difference of opinion, to declare something arbitrary and capricious, which, of course, we disagree with. [00:45:22] Speaker 02: But we did an appeal. [00:45:23] Speaker 02: So I'm not really authorized to speak too much about that. [00:45:26] Speaker 02: The things I wanted to say today, however, have to do with the law in general. [00:45:29] Speaker 02: And I think that's what you're referring to, Jesse. [00:45:31] Speaker 02: And one is that the idea that prejudice can be presumed. [00:45:35] Speaker 02: When AMK9 says that, so for example at 41 of their brief, this is American K9, says the possibility of benefiting from biased ground rules is sufficient to establish prejudice because appearance of impropriety is enough, citing the Turner case. [00:45:52] Speaker 02: That just completely eliminates their burden. [00:45:55] Speaker 02: So there's two kinds of prejudice and I think they're being conflated. [00:45:58] Speaker 02: If we're talking about the prejudice that must be shown in the case of a violation of regulation or law, the protester must show significant prejudice, that never goes away. [00:46:06] Speaker 02: That's their burden. [00:46:07] Speaker 02: And there's nothing in this case that will change that one way or the other. [00:46:10] Speaker 02: If they're talking about the idea, and I think they are, that they don't have to establish what the postal rule calls an unfair competitive advantage, that's wrong. [00:46:19] Speaker 02: That is the heart. [00:46:20] Speaker 02: That is one of the elements of proving an OCI. [00:46:25] Speaker 02: not only that you had unequal access or there were bias ground rules, but that there is an unfair competitive advantage. [00:46:32] Speaker 02: And this court stressed this in a number of cases. [00:46:35] Speaker 02: Two, I just have in my notes here, one in the case of unequal access, PII Corporation. [00:46:42] Speaker 02: The court held there was no OCI when the protester failed to show [00:46:48] Speaker 02: the awardee gained a substantial and unfair competitive advantage through unequal access to information. [00:46:53] Speaker 02: That's a FAR case, same principle though. [00:46:56] Speaker 02: In a background rules case, the Turner case, this court affirmed the Court of Federal Claims for properly requiring hard facts for a failure of the protester to show that this is based on a GAO analysis, they were criticizing the GAO for failing to demonstrate by hard facts [00:47:15] Speaker 02: that the awardee there would have, or the award would have given Turner an unfair advantage. [00:47:21] Speaker 02: He went on to say that he congratulated the contracting officer by applying a proper standard and saying, in contrast, the court concluded the CO carefully assessed the information that AECOM, one of the companies there, may have had access to and determined that this information not only lacked competitive utility, it was also disclosed to all other officers. [00:47:42] Speaker 02: So in all kinds of cases, whether it's FAR-based or Postal Service-based, SP&P-based, they still have to prove that there has been an effect, that there has been an unfair competitive advantage. [00:47:53] Speaker 02: That's all that matters. [00:47:54] Speaker 02: So to the extent that American Canine is arguing they need not show prejudice, meaning they need not show an unfair competitive advantage, that's presumed they're wrong. [00:48:03] Speaker 02: What they're relying on [00:48:05] Speaker 02: are cases having to do with an appearance of a conflict of interest. [00:48:08] Speaker 02: That's not this case. [00:48:09] Speaker 02: Judge Holt didn't find there was an appearance of a conflict. [00:48:11] Speaker 02: He found a conflict. [00:48:13] Speaker 02: If that's the case, and hard facts show there is an appearance of a conflict of interest, then the unfair competitive advantage takes care of itself. [00:48:25] Speaker 02: Because the court says this is an apparent conflict of interest, meaning there is going to be an unfair competitive advantage. [00:48:32] Speaker 02: So to the extent the court is writing it all, whether to affirm or to deny, we would just ask that those ideas don't be conflated. [00:48:39] Speaker 02: The general idea of prejudice must be shown in the case of violations of regulations or rules. [00:48:46] Speaker 02: And the second part of every OCI case, which is a demonstration, you might call it prejudice, that there has been an unfair competitive advantage. [00:48:56] Speaker 02: And then the last thing, which Mr. Bradel handled perfectly, was to say that the court said, [00:49:01] Speaker 02: at page 38, the SPPs prescribe a specific remedy if it becomes apparent OCIs are probable, disqualification. [00:49:10] Speaker 02: It's not what the SPPs say. [00:49:11] Speaker 02: What they say at 7-15.2 is, if it becomes apparent when proposals are received that participation by a particular offeror could lead to an organizational conflict of interest and unfair competition, the offeror may be disqualified as proposal rejected. [00:49:29] Speaker 02: And earlier I read some of the other [00:49:31] Speaker 02: principles that sort of temper that decision or give contracting officers wide latitude, as this court's case law already provides the contracting officer. [00:49:43] Speaker 02: That's all I came to say. [00:49:44] Speaker 02: Any further questions? [00:49:46] Speaker 02: Thank you. [00:49:47] Speaker 02: Glass dismissed. [00:49:49] Speaker 02: Thank you. [00:49:52] Speaker 05: All right. [00:49:52] Speaker 05: Mr. Gilliam. [00:50:00] Speaker 05: I'm sorry. [00:50:00] Speaker 05: I'm sorry. [00:50:01] Speaker 05: I confused it. [00:50:02] Speaker 05: Mr. English. [00:50:05] Speaker 01: Thank you, Your Honor, and may it please the Court. [00:50:07] Speaker 01: I'm Brad English. [00:50:08] Speaker 01: I represent one of the appellees, Global Canine Protection Services. [00:50:13] Speaker 01: I want to pick up at a point where Mr. Gillingham left off, and he was talking about the SP&Ps and the direction for the contracting officer to look into these OCIs at the beginning of a procurement, when proposals are received. [00:50:26] Speaker 01: Well, the original 2020 solicitation required, of course, to identify OCIs. [00:50:31] Speaker 01: Some people in the Postal Service didn't know about this consulting agreement that was undocumented with MSA, but MSA knew about it and said nothing. [00:50:40] Speaker 01: And we litigated in front of Judge Holt for over a year about OCIs with MSA insisting that there was no problem at all and never revealing the fact that there was this secret undocumented consulting agreement where they helped set up the entire program. [00:50:54] Speaker 01: And I think that permeates the Judge Holt's analysis down below. [00:50:58] Speaker 01: And so when we look at the bias ground rules OCI, Judge Holt didn't make that up. [00:51:04] Speaker 01: And if I look at appendix 103-677, this is the contracting officer Franklin's decision from October of 2021 under subsection C. He's talking about the emails where he finally discovers this undocumented consulting agreement. [00:51:22] Speaker 01: He sees emails that reflect it. [00:51:24] Speaker 01: And he says, these emails reveal details that were not previously known and demonstrate that MSA appeared to have both unequal access to information and, by its ground rules, OCI. [00:51:35] Speaker 01: And he goes on and explains how MSA was fundamental or instrumental in setting up the entire 3PK9 program. [00:51:42] Speaker 01: We don't know all that they did, because it was never documented. [00:51:45] Speaker 01: And MSA tried to sit on that information. [00:51:48] Speaker 01: All we know about it is what CEO Franklin was able to dig out [00:51:52] Speaker 01: after a year or more of this litigation in October of 2020. [00:51:56] Speaker 01: And so the bias ground rules OCIs that CEO Franklin was focused on really related to these documents that MSA owned. [00:52:05] Speaker 01: They didn't just draft them, they owned them. [00:52:07] Speaker 01: We focused a lot on what we call the playbook, which was a set of instructions for how the canines were supposed to do their work that MSA created either before or after the pilot program. [00:52:21] Speaker 01: It was certainly part [00:52:23] Speaker 01: But we're not focused on the pilot itself as the root of the problem. [00:52:26] Speaker 01: It's what happened after. [00:52:28] Speaker 01: For months after the pilot program, MSAs continuing to work in this undocumented consulting role. [00:52:34] Speaker 01: And then they win the 2020 competition. [00:52:37] Speaker 01: And they get both the canine screening and the alarm resolution. [00:52:41] Speaker 01: There were two parts of it. [00:52:42] Speaker 01: They won both of them. [00:52:43] Speaker 01: They performed throughout this litigation. [00:52:46] Speaker 01: Can you just go back to? [00:52:49] Speaker 04: What was it about the 2020 solicitation? [00:52:53] Speaker 04: And by what was it, I mean very specific, like with page sites, clause sites, whatever, that was the result of the MSA involvement in the design of the specification or something. [00:53:13] Speaker 04: The one thing I can point to right now. [00:53:15] Speaker 04: Maybe you got this from me an hour ago or something. [00:53:20] Speaker 04: When I hear biased ground rules, the first thing I want to hear is, what is the ground rule? [00:53:23] Speaker 04: And to me, the ground rule has to be something in the solicitation, whether it's evaluation criteria, whether it's requirements, something. [00:53:33] Speaker 04: First identify them and then say, why were they biased? [00:53:38] Speaker 01: And so I'm not sure that the 2020 solicitation is in the appendix, but if you look at the playbook and you see the diagrams with the inverted V or I think they call it how these dogs are supposed to do their work, you'll see the same thing in the solicitation. [00:53:53] Speaker 01: And so even CEO Franklin says, even though they didn't write the sow, MSA did not, what they did impacted the sow. [00:54:01] Speaker 01: Again, we don't know all that they did because this contract they had to do the consulting was undocumented. [00:54:08] Speaker 01: And so it's really not the pilot, as I was saying, that we're troubled by. [00:54:13] Speaker 01: It's the undocumented continuing consulting role, where even CEO Franklin says they're instrumental in setting up the whole thing. [00:54:19] Speaker 01: And then they perform it for two years. [00:54:21] Speaker 01: And so Judge Holt starts with the 2021 remand decision, where the contracting officer says there's bias ground rules. [00:54:29] Speaker 01: and unequal access OCI. [00:54:32] Speaker 04: This may be quibbling, but I thought, at least MSA doesn't think that this is quibbling, that Franklin said something like unequal and or the possibility of. [00:54:43] Speaker 04: In one place. [00:54:44] Speaker 04: He wasn't quite definitive. [00:54:46] Speaker 04: Is that wrong? [00:54:46] Speaker 01: In one place, he said and or. [00:54:48] Speaker 01: But the site I just read, AR103677, is in his decision. [00:54:53] Speaker 01: And he says, MSA appeared to have both unequal access to information and biased ground rules OCI. [00:54:59] Speaker 01: And so the way he's written, and when he talks about the fundamental role that MSA played, I think it would be impossible for Judge Holt to conclude there wasn't a bias around rules OCI. [00:55:08] Speaker 01: When he got this case back at the pre-award stage in 2022, when we go back to a new solicitation. [00:55:14] Speaker 01: Because remember, the corrective action was to shorten the base period from, I think, three years to two. [00:55:19] Speaker 01: MSA continued to perform, and then they did a re-solicitation, and they redid. [00:55:23] Speaker 01: This whole time, MSA is performing. [00:55:25] Speaker 01: They are still performing on some of the clusters [00:55:28] Speaker 01: Because remember, the 2022 solicitation divided up the screening and the geographic clusters. [00:55:34] Speaker 01: They're still doing some of the work that K2 couldn't do. [00:55:37] Speaker 01: And the work has been awarded, to clear up one point, to AMK9, American K9, and to Global K9. [00:55:43] Speaker 01: We are working now. [00:55:44] Speaker 01: And they are phasing out, as I understand it, MSA. [00:55:47] Speaker 01: But Judge Holt said, I've got these conflicts of interest. [00:55:51] Speaker 01: How have they been addressed? [00:55:53] Speaker 01: And he pointed specifically to the taint of incumbency. [00:55:55] Speaker 01: And it's not the pilot program. [00:55:58] Speaker 01: it's the fact that they were already rolled out across the country because after the pilot program, while they had this consulting agreement no one knew about but them, they got the contract and they were operating at all these airports. [00:56:09] Speaker 01: And so when you look at the four factors in the solicitation... So it was all mushed up into one, right? [00:56:18] Speaker 05: It was. [00:56:18] Speaker 05: They got the 2020 and they shouldn't have had the 2020 and therefore all of this is pent up and not [00:56:27] Speaker 05: I guess, not walled off or not remedied by whatever the government did in terms of splitting stuff up and also the solicitation. [00:56:35] Speaker 01: Right. [00:56:35] Speaker 01: What should have happened, Your Honor, is MSA should have raised its hand when the 2020 competition came out, when it wasn't a sole source, and said, like the solicitation required, hey, we've got these OCI issues. [00:56:45] Speaker 01: We've got an undocumented consulting agreement that even the contracting people at the Postal Service didn't know about, except for the one person whose name we can't say. [00:56:54] Speaker 01: And they should have said that. [00:56:56] Speaker 01: Postal service could have swept in and done something, but nobody said anything. [00:57:00] Speaker 01: Postal because they didn't know, MSA because it was hoping nobody would find out, and this rocked forward for two and a half years. [00:57:06] Speaker 01: So when there's another competition in 2022, may I finish answering, Your Honor? [00:57:09] Speaker 01: Sure. [00:57:10] Speaker 01: When there's another competition in 2022, they've got built-in advantages beyond past performance. [00:57:15] Speaker 01: They don't have to transition because they're already everywhere. [00:57:18] Speaker 01: They don't have to get badges, which is [00:57:20] Speaker 01: become a problem for some people performing this contract because they've already got them. [00:57:25] Speaker 03: But wouldn't that be true if the 2020 had been properly awarded? [00:57:31] Speaker 03: I think... That's just an effect of incumbency. [00:57:34] Speaker 03: I guess what I'm really asking is, is it your view that let's assume 2020 did have an improper OCI and they shouldn't have gotten it? [00:57:46] Speaker 03: Once that happened, did that mean they could never bid on and get another one? [00:57:51] Speaker 01: I don't think never. [00:57:52] Speaker 01: But remember, the SDRO said that the SAL was not a major departure, so it's essentially the same contract. [00:57:57] Speaker 01: And so I do think for purposes of the recompete, which was corrective action once it was finally revealed that there were problems with the 2020 solicitation, I don't think they were eligible for that. [00:58:07] Speaker 01: Now, when this one's over, [00:58:09] Speaker 01: I think all of this can be addressed, but the fundamental problem is it starts with MSA's silence. [00:58:14] Speaker 01: They said nothing when they should have disclosed this OCI. [00:58:18] Speaker 01: They let postal service rock forward, and now we've got a mess on our hands, as your honors have been certain. [00:58:23] Speaker 04: You said several times that MSA should have revealed, even in the lead up to the 2020 solicitation with the bidding, what's the authority for that? [00:58:34] Speaker 01: Solicitation. [00:58:35] Speaker 01: I don't think I have a page site for you, Your Honor, because I'm not sure that page is in the record. [00:58:41] Speaker 01: But there's a portion of the 2020 solicitation that deals with OCIs. [00:58:44] Speaker 01: They require all bidders to reveal any OCIs they believe they may have. [00:58:49] Speaker 01: and MSA said nothing. [00:58:50] Speaker 05: Is there any obligation, because there were two parties to whatever happened. [00:58:55] Speaker 05: One was MSA and the other was the government. [00:58:58] Speaker 05: Is there any obligation on the government to disclose this? [00:59:01] Speaker 01: I think there would have been an obligation on the government to at least address it, but they didn't know. [00:59:07] Speaker 01: If you read CEO Franklin's report, he explains that CEO Baker [00:59:11] Speaker 01: didn't have access to the information he discovered. [00:59:14] Speaker 05: Well, somebody knew, right? [00:59:15] Speaker 05: There had to have been two to do this. [00:59:17] Speaker 05: If there was an OCI on their point of view, there was somebody on the other end of that OCI, right? [00:59:22] Speaker 01: And I think the person on the other end, Your Honor, that's correct, was the person whose name we can't say. [00:59:26] Speaker 01: He was the one working with the Postal Service, excuse me, with MSA to do all these things, who sent the documents that MSA had that they shouldn't have had in 2020. [00:59:36] Speaker 01: And he was excluded, or supposed to be excluded from the recompete, [00:59:39] Speaker 01: But then he participated in the Lessons Learn panel, which in fact informed the 2022 solicitation. [00:59:46] Speaker 01: And so I don't think it's fair, and certainly I don't want to speak for Mr. Gillingham, but I think he would say, [00:59:51] Speaker 01: given the lack of information, the fact that they didn't follow their processes. [00:59:54] Speaker 01: And Judge Holt said that multiple times. [00:59:56] Speaker 01: They didn't follow their processes in putting this consulting agreement in place. [00:59:59] Speaker 01: That's where the problems started. [01:00:01] Speaker 01: Because they could have addressed it then. [01:00:02] Speaker 05: Yes, but there's deference owed to the CO. [01:00:05] Speaker 05: And the CO knew all of that by the time we get to the 2022 and to the years after. [01:00:11] Speaker 05: They find that there were problems in 2020. [01:00:15] Speaker 05: And nonetheless, they found that those problems were mitigable. [01:00:20] Speaker 05: and they decided, and we have to decide whether that was irrational or arbitrary, right? [01:00:26] Speaker 01: That's right, Your Honor. [01:00:30] Speaker 01: So Judge Holt explained his analysis, I think, in pretty good detail there. [01:00:34] Speaker 01: He explained all the ways in which the past performance change that the SDR ordered [01:00:41] Speaker 01: didn't address all the tainted incumbent. [01:00:43] Speaker 05: No, I understand. [01:00:44] Speaker 05: Actually, let me ask you then. [01:00:45] Speaker 05: I asked your friend, did you read Judge Holt as saying this issue was immeasurable? [01:00:52] Speaker 05: Because I was confused. [01:00:53] Speaker 05: It seemed like he did say that. [01:00:56] Speaker 05: But he also preceded it by an analysis suggesting that there was [01:01:01] Speaker 05: it was the changes were insufficient and even maybe offering up other changes that could have or should have been made. [01:01:07] Speaker 05: So how do you meet that? [01:01:09] Speaker 01: I think he walked down the mitigation path because certainly the unequal access can be mitigated. [01:01:14] Speaker 01: There's no dispute about that. [01:01:15] Speaker 01: I think his finding was it wasn't mitigated because nobody tried to address the tainted incumbency, i.e. [01:01:21] Speaker 01: pass the pilot program [01:01:22] Speaker 01: the performance that's even ongoing. [01:01:24] Speaker 05: And therefore, he found the taintedness stuff made it immidicable? [01:01:30] Speaker 01: Right. [01:01:31] Speaker 01: And I think there's a clause at the end that he says, I'm not saying there's never a situation where you can mitigate it, but this one was immidicable because the salve for the 2022, that statement of work for the 2022 solicitation, by the government's own admission was not a major departure. [01:01:45] Speaker 01: And I think Mr. Gillingham's predecessor admitted in an oral argument it was 95% the same. [01:01:50] Speaker 01: So if they've got to bias ground rules, OCI, [01:01:53] Speaker 01: in 2020, which C.F. [01:01:54] Speaker 01: Franklin found, and that's where Judge Holt started, hasn't been addressed. [01:01:58] Speaker 01: And he walked through all the ways it hasn't been addressed. [01:02:00] Speaker 01: And I don't think that's improper fact finding. [01:02:02] Speaker 01: One of the grounds for arbitrary and capricious action is that the government doesn't confront something, an obvious part of the problem. [01:02:09] Speaker 01: And it's an obvious part of the problem that they're performing this work three years in, or two years in at that point in time, and all the benefits they're going to get from the incumbency they never should have had. [01:02:18] Speaker 01: And I think that permeates Judge Holt's decision. [01:02:22] Speaker 01: Thank you. [01:02:22] Speaker 01: Thank you, Your Honor. [01:02:26] Speaker 00: The agency did address detained incumbency. [01:02:38] Speaker 00: They restructured the solicitation. [01:02:41] Speaker 00: The whole evaluation started splitting it up into regions and clusters, splitting off the explosive detection canine work from the x-ray work. [01:02:53] Speaker 00: All of that [01:02:54] Speaker 00: was aimed at making it easier for other parties, other offerors to perform, to deal with MSAs. [01:03:01] Speaker 00: So Postal addressed the tainted incumbency. [01:03:06] Speaker 00: It's just that the Court of Federal Acclaims thought that they could do more, but never explains how the Postal Service's decision was irrational. [01:03:18] Speaker 00: And in fact, Postal [01:03:20] Speaker 00: says why they couldn't do more, because if they did more, if they did some of the things that Judge Holt suggests, it could have increased price, could have led to not having the best contractor available. [01:03:31] Speaker 00: So the bottom line is that [01:03:34] Speaker 00: Postal made a rational decision where they addressed tainted incumbency. [01:03:39] Speaker 00: They didn't go as far as maybe my friends might have liked, but that was a rational decision they're allowed to make. [01:03:45] Speaker 00: And nowhere does Judge Holt say where Postal was irrational in its determination that there was no longer any biased ground rules. [01:04:00] Speaker 00: Judge Holt's decision never says anything about [01:04:03] Speaker 00: what the bias was. [01:04:06] Speaker 00: My friend said a lot about this consulting contract, and his main point was, well, we don't know what might have happened. [01:04:17] Speaker 00: Well, first of all, we do know what happened. [01:04:19] Speaker 00: Those four documents came out. [01:04:21] Speaker 00: That's really the work that MSA did. [01:04:23] Speaker 00: It produced those four documents that Postal regionally found no longer provided them an advantage. [01:04:30] Speaker 00: That's what they did. [01:04:30] Speaker 00: Anything beyond that is innuendo. [01:04:33] Speaker 00: And as we know, an OCI cannot be based on innuendo. [01:04:39] Speaker 04: Do you agree that you had an obligation when the 2020 solicitation was being done to make it known to the government and maybe to other bidders, but to make it known that you had been engaged in this consultation work? [01:05:04] Speaker 00: You know, I think there's a bit of a factual dispute there. [01:05:06] Speaker 00: As I recall from that, we did make it known. [01:05:08] Speaker 00: We didn't make it known in all of the detail. [01:05:11] Speaker 00: But there was a form, as I recall, in the original solicitation where MSA suggested, I think they suggested, a moderate possibility of an OCI. [01:05:23] Speaker 00: And Postal evaluated that and said, there's no OCI. [01:05:27] Speaker 00: Right. [01:05:28] Speaker 05: Did you disclose the underlying facts of what you had done? [01:05:32] Speaker 00: We did not. [01:05:33] Speaker 00: That's where it was different. [01:05:38] Speaker 00: MSA filled out the form. [01:05:40] Speaker 00: I think the form didn't really ask about it. [01:05:44] Speaker 04: Somebody else at the Postal Service knew. [01:05:47] Speaker 04: Somebody else at the Postal Service knew. [01:05:50] Speaker 00: That's correct. [01:05:52] Speaker 00: It's not just one person. [01:05:53] Speaker 00: There were multiple people at Postal that were involved with this consulting contract. [01:05:57] Speaker 00: I just want to say one last thing on the remedy that we're asking for here, because that was subject to some discussion. [01:06:04] Speaker 00: But just to clarify, MSA is still performing. [01:06:08] Speaker 00: They will be off. [01:06:09] Speaker 00: They will be done performing within the next several months because of the transition. [01:06:16] Speaker 00: And so at this point, I understand that AMK9 and GK9 are performing. [01:06:21] Speaker 00: MSA is performing. [01:06:22] Speaker 00: There's been a lot of transition at the different sites. [01:06:25] Speaker 00: But it would certainly be possible, if Your Honors were to reverse the Court of Federal Claims, to stop the transition of MSA off. [01:06:33] Speaker 03: Who's set to take over yours? [01:06:36] Speaker 00: I'm sorry, Your Honor? [01:06:36] Speaker 03: Who's set to take over what you're performing? [01:06:40] Speaker 00: Different contractors. [01:06:41] Speaker 00: So when this contract was re-awarded, there were nine clusters. [01:06:46] Speaker 04: Is it any of them? [01:06:47] Speaker 00: It is, Your Honor. [01:06:49] Speaker 00: So when this contract was re-awarded, there were nine clusters. [01:06:52] Speaker 00: MSA got five, K2 got two, and AMK9 got two out of the nine clusters. [01:06:58] Speaker 00: K2 has now been kicked off. [01:07:00] Speaker 00: And we're in the midst of transitioning from MSA originally having everything been transitioning so that they all have it. [01:07:08] Speaker 00: And so it's in the middle of transitioning. [01:07:09] Speaker 05: I should know this. [01:07:10] Speaker 05: Are you disqualified if they re-solicit? [01:07:13] Speaker 05: these contracts? [01:07:14] Speaker 05: Are you precluded from rebidding? [01:07:19] Speaker 04: Under the order that's on review here? [01:07:24] Speaker 00: The order doesn't say. [01:07:26] Speaker 00: It's not specific as to that, but I think the point is that [01:07:30] Speaker 00: Each solicitation has to be evaluated on its own for, you know, is there an unfair competitive advantage? [01:07:36] Speaker 00: That's what the SP&P say. [01:07:38] Speaker 00: And that's what Postal did with 2022. [01:07:40] Speaker 00: They said, yeah, there was a problem with 2020, we acknowledge it, but we're in 2022. [01:07:48] Speaker 00: And everything that's happened since then with the information going stale, these documents not being relevant anymore, [01:07:55] Speaker 00: There's no longer a bias, and we have taken steps to mitigate the tainted incumbency. [01:08:02] Speaker 00: Thank you, John. [01:08:02] Speaker 05: Thank you. [01:08:02] Speaker 05: We thank all sides. [01:08:03] Speaker 05: Appreciate the input. [01:08:05] Speaker 05: Thank you. [01:08:05] Speaker 05: Case is submitted. [01:08:06] Speaker 05: That concludes our proceeding.