[00:00:00] Speaker 00:
Next case for argument is 23-1256 WSP USA Solutions versus the Secretary of the Army.

[00:00:10] Speaker 00:
Mr. Henry, are you ready?

[00:00:12] Speaker 00:
Please proceed.

[00:00:13] Speaker 01:
Good morning.

[00:00:13] Speaker 01:
Thank you.

[00:00:14] Speaker 01:
May it please the Court.

[00:00:15] Speaker 01:
Scott Arnold for the Appellant of the WSP USA Solutions.

[00:00:20] Speaker 01:
The question presented in this case is whether work performed during option year three

[00:00:26] Speaker 01:
is to be paid using fixed rates specified for option year three or rates specified for option year two.

[00:00:34] Speaker 01:
The government and the ASPCA below see that option year two rates should apply because the task orders were issued first during option year two.

[00:00:45] Speaker 03:
But this ignores... So the task order was issued during option year two and if the performance had been

[00:00:52] Speaker 03:
And the performance period for option year two, it would have been paid at option year two rates, right?

[00:00:58] Speaker 01:
That's correct.

[00:00:59] Speaker 01:
And there was no issue about that.

[00:01:02] Speaker 01:
Some of the work in these, a small amount of the work for these three task orders that were necessitated by the hurricanes was performed in the last few weeks of option year two.

[00:01:13] Speaker 01:
But a large majority of the work was performed afterwards.

[00:01:16] Speaker 00:
Let's say you didn't get option year three.

[00:01:20] Speaker 00:
What would your obligation have been with respect to completing the work orders that were issued under option year two?

[00:01:27] Speaker 01:
Had the government not exercised option year three, they would have been limited in what they could order.

[00:01:34] Speaker 01:
I know the government has argued, and the ASPCA noted below, that if option year three had not been exercised, we wouldn't even be having this discussion.

[00:01:44] Speaker 01:
But what the government would not have been able to do

[00:01:47] Speaker 01:
is order the vast majority of the services that they ordered.

[00:01:51] Speaker 00:
Well, OK.

[00:01:53] Speaker 00:
But the task orders that were issued while option two was still in effect, wouldn't the contractor have been obligated to complete that under option two rates, if not for option three being implemented?

[00:02:09] Speaker 01:
The contractor would have been obligated to complete

[00:02:12] Speaker 01:
the work, the services that were actually ordered during option year two, which is actually a very small amount of the... Wait, I'm getting... Can we... I want to make sure that we're being precise and clear.

[00:02:26] Speaker 03:
The task orders have larger amounts in them, right?

[00:02:31] Speaker 03:
And then you issue work orders to actually do specific projects under that task order, don't you?

[00:02:37] Speaker 01:
Actually, the task orders are structured so that when a task order is issued,

[00:02:42] Speaker 01:
there's a certain amount of funding, and there are services ordered for a specific period of performance.

[00:02:50] Speaker 01:
And when each of the three task orders at issue were issued in late September of 2017, the services ordered were for a relatively short period of time, anywhere from just a few days to about two weeks, all within option year two.

[00:03:10] Speaker 01:
Now there were many modifications to the task orders.

[00:03:14] Speaker 01:
No, no.

[00:03:15] Speaker 03:
Can we, before you move on to that, let's say there was still money left under the task order that was issued during option year two.

[00:03:24] Speaker 03:
Could you issue a work order under that task order after the time period for option year two had expired?

[00:03:33] Speaker 01:
The way the government

[00:03:36] Speaker 01:
administer the task orders was to issue modifications to the task orders to add funding, to add to the period of performance, essentially to order new services.

[00:03:48] Speaker 03:
Wait, wait.

[00:03:48] Speaker 03:
Don't say this.

[00:03:49] Speaker 03:
I mean, you may think it's essentially, but I want to get back to the modification issue, because doesn't the government have the right, under the changes clause that's inserted into this contract, to modify these task orders?

[00:04:03] Speaker 01:
The government has the right to modify the task orders, but they don't have the right to change the underlying contract rate pricing that was established when the contract was awarded.

[00:04:17] Speaker 03:
Do they have the right to change the period of performance for the task order?

[00:04:22] Speaker 01:
Yes.

[00:04:22] Speaker 03:
And isn't that what they did?

[00:04:23] Speaker 01:
They did and they were able to

[00:04:26] Speaker 03:
Why doesn't that mean that the period of performance for the task orders issued under Clean 2 no longer ended at the end of option year 2 but was extended through whatever the amendments were?

[00:04:42] Speaker 03:
Because the contract doesn't say that.

[00:04:44] Speaker 03:
The contract doesn't have to say that though, does it?

[00:04:48] Speaker 03:
If the government is allowed through the changes clause, which you know the record, the changes are in here, the modifications are in here, they were signed by a representative from your client.

[00:05:01] Speaker 03:
They extended the performance for the task orders issued under Clean2 to include later dates.

[00:05:09] Speaker 03:
So that means the performance period that was originally set for one year extended further.

[00:05:14] Speaker 03:
So why doesn't that mean that the pricing applicable to that performance year also extended throughout that period of performance?

[00:05:22] Speaker 01:
Because the task order

[00:05:24] Speaker 01:
does not govern over the contract.

[00:05:26] Speaker 01:
The task order does not actually establish the pricing.

[00:05:30] Speaker 01:
The pricing was established when the contract was awarded.

[00:05:35] Speaker 03:
But doesn't the contract establish that the pricing for the task order is the pricing for the client issued under, which in this case was Clintu, and

[00:05:48] Speaker 03:
That doesn't mean that you can't change the period of performance.

[00:05:53] Speaker 03:
I take it your view is that even if you can change the period of performance, that it automatically goes up to the higher rate.

[00:06:02] Speaker 03:
Yes, and that's because the contract... But I think that proves too much because if they hadn't exercised option three and they changed the period of performance, we would still be under clin two rates, right?

[00:06:14] Speaker 01:
If they hadn't exercised option three,

[00:06:18] Speaker 01:
They wouldn't have been able to order most of the services that they ended up ordering and that they needed to order because of the hurricanes.

[00:06:27] Speaker 01:
Why not?

[00:06:29] Speaker 01:
Because the contract, you can't order, they'd have no authorization.

[00:06:35] Speaker 01:
There would be no more funding.

[00:06:37] Speaker 01:
They'd be outside the ordering period.

[00:06:39] Speaker 01:
So they were fine ordering for work to be performed through the end of option year two.

[00:06:47] Speaker 01:
And they were also fine to continue ordering for services that were performed over another year, actually slightly more than a year.

[00:06:57] Speaker 04:
As a factual matter, were the modifications that are at issue here, did they all take place before October 22nd?

[00:07:10] Speaker 04:
or work later performed or were some of the modifications before October 22nd and some of them after?

[00:07:15] Speaker 01:
A large majority of them were after October 22nd, 2017.

[00:07:19] Speaker 01:
Okay.

[00:07:20] Speaker 04:
And if the, I guess I think I'm understanding this right, but the government's exercise of option year three was back in August before the hurricanes.

[00:07:31] Speaker 04:
So you were already, you already had an option year three extension of this contract in place when all of this

[00:07:39] Speaker 01:
started, right?

[00:07:41] Speaker 01:
Exactly.

[00:07:42] Speaker 01:
And the government, it was a good thing that the government exercised that option.

[00:07:48] Speaker 01:
At that time, nobody knew what was going to happen in September 2017.

[00:07:54] Speaker 01:
But we had these devastating hurricanes.

[00:07:57] Speaker 04:
Can I just pursue a little bit more what I think, at least, either the same or a variation of what Judge Hughes was asking?

[00:08:04] Speaker 04:
Let's assume there was

[00:08:06] Speaker 04:
no exercise of the option in August to extend this to year three.

[00:08:15] Speaker 04:
And there was a task order issued before October 22, so while the contract is still in effect.

[00:08:22] Speaker 04:
And that task order later needed, first of all, if it's just that task order and the work

[00:08:31] Speaker 04:
goes beyond what is now the end of the contract.

[00:08:35] Speaker 04:
At that point, this FAR provision kicks in.

[00:08:37] Speaker 04:
Is that right, the FAR 5221621, the requirements that says you have to continue the work?

[00:08:44] Speaker 01:
The requirements clause says you have to continue the work, but the requirements clause does not purport to address at what pay rate.

[00:08:52] Speaker 04:
Right.

[00:08:53] Speaker 04:
I didn't ask that yet.

[00:08:54] Speaker 04:
That was the next question.

[00:08:56] Speaker 04:
But that's what would require you to perform the task order even when the contract has ended.

[00:09:05] Speaker 04:
Now, what would be the rate for the work done after October 22 on the assumption, counterfactual, that option year three had not been exercised?

[00:09:17] Speaker 01:
If option year three had not been exercised,

[00:09:21] Speaker 01:
The government would have been entitled to obtain the services at option year two rates, but with severe limitations.

[00:09:31] Speaker 01:
The government doesn't get $600 million in funding at one time.

[00:09:40] Speaker 01:
That's not the way it works here.

[00:09:42] Speaker 01:
The modifications added $10 million, $20 million, $30 million, $40 million

[00:09:51] Speaker 01:
over the course of the overall period of performance, mostly in option year two.

[00:09:58] Speaker 01:
So the government doesn't only have a certain amount of funding available during option year two.

[00:10:08] Speaker 04:
So I guess I'm still trying to understand several counterfactual things.

[00:10:12] Speaker 04:
Let's assume there was no option year three exercise.

[00:10:15] Speaker 04:
And I guess I sort of have two questions.

[00:10:18] Speaker 04:
a task order issued before October 22nd, we're all talking hypothetical now, right, ends up requiring work done after October 22nd.

[00:10:29] Speaker 04:
Without more, what rate would govern the pay for that work?

[00:10:36] Speaker 01:
Option year two, but it could only go for six months, because if the government had two types of options that it could exercise in this contract,

[00:10:47] Speaker 01:
It exercised the option to extend the term of the contract to add an entire additional year.

[00:10:54] Speaker 04:
Okay, I think I got that point.

[00:10:56] Speaker 04:
Now the related question, then I'll stop.

[00:10:59] Speaker 04:
Task order issued, again I'm assuming no exercise of option year three, task order issued before October 22nd.

[00:11:08] Speaker 04:
Can the government on October 24th issue a change to the previously issued task order?

[00:11:17] Speaker 01:
If they may be able to, if they had exercised the option to extend services clause, but they didn't do that.

[00:11:28] Speaker 01:
That's the six month.

[00:11:30] Speaker 01:
That's the six month.

[00:11:30] Speaker 01:
And they didn't do that.

[00:11:31] Speaker 03:
It doesn't need to be the option to extend services clause.

[00:11:33] Speaker 03:
Why can't it be the changes clause that was in the contract, incorporated into the contract, that allows them to modify the period of performance for the task order?

[00:11:49] Speaker 03:
They have to have the funding.

[00:11:52] Speaker 03:
Well, these modifications not only changed superior performance, but they added the funding in too.

[00:11:58] Speaker 01:
But that's the problem.

[00:12:01] Speaker 01:
If they hadn't exercised option year three, they're not going to get additional funding.

[00:12:07] Speaker 01:
They needed to exercise the option so that there's a vehicle under which they could place new workers.

[00:12:13] Speaker 03:
How do we know that they weren't going to get up?

[00:12:17] Speaker 03:
I don't understand that argument.

[00:12:20] Speaker 03:
And maybe you can elaborate that.

[00:12:21] Speaker 03:
How do we know that they couldn't, in the modification, just added funding to option year two?

[00:12:30] Speaker 01:
There's an ordering clause in the contract, a FAR clause.

[00:12:38] Speaker 01:
Set appendix page 58.

[00:12:42] Speaker 01:
Paragraph A.

[00:12:44] Speaker 04:
This is 10,058.

[00:12:48] Speaker 01:
Yes.

[00:12:49] Speaker 01:
Paragraph A tells us that the government can issue orders from the date of contract award through the expiration date of the base year of the contract unless extended in accordance with FAR 52-279 option to extend the term of the contract.

[00:13:11] Speaker 01:
So

[00:13:13] Speaker 01:
When the government exercised option year three in August of 2017, it was giving itself the flexibility to continue placing orders from October 2017 through October 2018, right?

[00:13:30] Speaker 03:
And the contract?

[00:13:33] Speaker 03:
You can't talk over me.

[00:13:35] Speaker 03:
I'm missing the connection between why this

[00:13:38] Speaker 03:
where the clause prevents the government from adding in funds to CLIN 2, which is what it did in these modifications.

[00:13:50] Speaker 01:
Well, they can do that while CLIN 2 is in force, but after October 21, 2017, CLIN 2 ends

[00:13:59] Speaker 01:
the ordering period ends if the option year three has not been issued.

[00:14:03] Speaker 03:
They've already made the order under the task order.

[00:14:05] Speaker 03:
So what we're talking about is does this ordering limit, ordering clause limit the ability of the government to mod that task order, not issue a new one.

[00:14:17] Speaker 03:
I completely agree if they tried to issue a new task order after Clintuit

[00:14:22] Speaker 03:
issue, they couldn't do it under Clinton.

[00:14:24] Speaker 03:
They're not arguing that.

[00:14:25] Speaker 03:
They're arguing, I think, that they issued a proper task order and the mods were to a properly issued task order adding in both funding and changing the period of performance.

[00:14:36] Speaker 03:
What prohibits them from doing that?

[00:14:40] Speaker 01:
If the ordering period had ended by virtue of option year three not being exercised, there would be no authorization

[00:14:50] Speaker 01:
for them to issue new orders.

[00:14:52] Speaker 03:
They didn't issue a new order, though.

[00:14:54] Speaker 03:
That's the thing.

[00:14:55] Speaker 03:
Are you saying that even though it's termed a modification to the underlying task order, it's essentially a new order?

[00:15:01] Speaker 01:
I am, Your Honor.

[00:15:02] Speaker 03:
But then you have to challenge the legality of that modification.

[00:15:06] Speaker 03:
And one, you didn't do it in the 30 days you're usually supposed to.

[00:15:10] Speaker 03:
And two, you countersigned those mods.

[00:15:13] Speaker 01:
Your Honor, let me address that.

[00:15:20] Speaker 01:
The modifications did allocate funding for option year two.

[00:15:34] Speaker 01:
The modifications to the task orders did not change the pricing terms of the contract itself.

[00:15:41] Speaker 03:
I understand that, but the problem here,

[00:15:46] Speaker 03:
I hope that the government doesn't write contracts like this very often because it is really, really hard to understand, but I'm also aware that we have lots of these umbrella contracts with optioneers and clients and task orders and work orders, and I'm worried that the argument you're making is going to upset the way that business is normally done.

[00:16:06] Speaker 03:
I don't think they said we're carrying over option year two prices to option three orders.

[00:16:13] Speaker 03:
What they did was change the period of performance for a task order issued properly under CLEAN 2, which I still haven't heard an argument why they're not entitled to do that under the changes clause that was incorporated into this contract.

[00:16:30] Speaker 01:
The changes clause doesn't enable the government to change the pricing that was already established.

[00:16:36] Speaker 03:
But they don't change the pricing if... Their argument effectively does that.

[00:16:41] Speaker 03:
Well, it may effectively do it, but it may not legally do it.

[00:16:46] Speaker 03:
If they were allowed... Let me start over.

[00:16:49] Speaker 03:
I know you're beyond your time, so I'll just try this once more.

[00:16:53] Speaker 03:
Clin-2 task orders are governed by Clin-2 pricing, right?

[00:16:57] Speaker 03:
You agree with that?

[00:16:59] Speaker 03:
Normally, the period of performance for Clean2 would have ended that October.

[00:17:07] Speaker 01:
October 21st, 2017.

[00:17:09] Speaker 03:
Is that performance period unalterable?

[00:17:15] Speaker 01:
It's not unalterable.

[00:17:17] Speaker 01:
The government has flexibility to order more services.

[00:17:24] Speaker 01:
and they did that.

[00:17:25] Speaker 03:
So if you pay CLIN 2 prices for CLIN 2 period of performance and the government alters the period of performance for CLIN 2 from one date to another, why aren't CLIN 2 prices still applicable?

[00:17:39] Speaker 01:
Because the contract section B and contract section F links the rates to CLINs and links the CLINs to period of performance.

[00:17:50] Speaker 03:
But you're not answering my question, though, because under the changes clause,

[00:17:53] Speaker 03:
they're allowed to change that period of performance.

[00:17:56] Speaker 03:
So the period of performance in the contract for the option years can be changed for a specific task order, can it not?

[00:18:04] Speaker 01:
The government can extend the task orders through modifications.

[00:18:08] Speaker 01:
But when they do that, and they extend the period of performance into option year three, and they're getting new money to do it, they're essentially issuing new orders.

[00:18:20] Speaker 00:
That goes to, and I'm just trying to understand.

[00:18:24] Speaker 00:
I know this is what I think Judge Toronto is trying to get at.

[00:18:27] Speaker 00:
But if there was no option three, if there was no year three,

[00:18:33] Speaker 00:
What could they have done as a result of task orders in year two?

[00:18:39] Speaker 00:
What compliance could they have gotten?

[00:18:41] Speaker 00:
And could they have modified the task orders after the expiration of year two and gotten some performance?

[00:18:49] Speaker 00:
Was that when you answered you got six months?

[00:18:51] Speaker 00:
Was that the six-month answer?

[00:18:52] Speaker 01:
If they had exercised the option to extend services

[00:18:57] Speaker 01:
provision, they would have had flexibility for some limited extensions, but it would have been for six months, and significantly, it would not have covered the period of performance that was actually necessary to restore all the power on these islands, which took over a year.

[00:19:15] Speaker 00:
Well, there were like 20, between 20 and 30 modifications that took place during options.

[00:19:20] Speaker 01:
For the main task order 3031, the big one for Puerto Rico,

[00:19:25] Speaker 01:
there were 23 modifications, and over 95% of the funding was not even available until option year three.

[00:19:42] Speaker 01:
So the orders, if you will, for option year two, there's a small portion of this, the government has

[00:19:54] Speaker 03:
Wasn't all that funding that was available from option year three moved into option year two by the modifications?

[00:20:03] Speaker 01:
Yes, and some of it properly so for the work that was actually still performed during option year two.

[00:20:09] Speaker 01:
But then they started to move it back for the subsequent modifications as well.

[00:20:18] Speaker 01:
They did that unilaterally.

[00:20:20] Speaker 01:
Yes, WSP signed what were essentially unilateral modifications.

[00:20:26] Speaker 03:
But you had the right to

[00:20:29] Speaker 03:
challenge them and file an equitable adjustment showing that you had increased costs and you were entitled to more money because of that.

[00:20:36] Speaker 03:
You didn't do that right.

[00:20:38] Speaker 01:
Actually we had a right to file an equitable adjustment claim to be paid under the terms of the contract as it was awarded and that's what we did because our position is that when the government refused to pay

[00:20:56] Speaker 01:
option year three rates.

[00:20:58] Speaker 03:
Was the task order ever issued under option year three?

[00:21:03] Speaker 01:
No, but the task orders were modified with new funding added and new services ordered many times during option year three.

[00:21:13] Speaker 03:
I guess I'm concerned because you're, and I'm concerned about what the government did here too, don't get me wrong, but your argument seems to be that what the government effectively did was award task orders

[00:21:26] Speaker 03:
under option year three, even though on the legal documents we don't have any of that.

[00:21:33] Speaker 03:
And so I'm trying to figure out how

[00:21:37] Speaker 03:
the law requires us to interpret what was a task order issued under CLIN-2 and modified under the changes clause, which are allowed to do multiple times to change the period of performance, why legally, and government contracts is strained, I mean you obviously do it, so you know that there are really complicated rules with the FAR and stuff, why legally the government wasn't entitled to do what it did, even though

[00:22:01] Speaker 03:
it seems like the better course and what it should have been doing was issue a task order under option year three and give you the option year three rates.

[00:22:11] Speaker 01:
The answer why shouldn't the government have been able to do that is because the contract said otherwise.

[00:22:18] Speaker 03:
The contract... Again, the problem is the contract says one thing but the changes clause that's also incorporated in the contract says another thing and I don't see a conflict between those two.

[00:22:32] Speaker 01:
There's not a conflict between the changes clause and the pricing provisions in the contract.

[00:22:39] Speaker 01:
What the government is arguing is that we can issue task orders and we can modify them for over a year and it all relates back to what claims were available when the task order was originally issued.

[00:22:58] Speaker 01:
And there are two problems with that.

[00:23:00] Speaker 01:
One is the contract doesn't say that at all.

[00:23:02] Speaker 01:
It simply doesn't say that.

[00:23:04] Speaker 01:
The contract links clean applicability to the contractor's period of performance.

[00:23:11] Speaker 01:
And from a practical level, when the government issued these additional modifications, it was ordering new work.

[00:23:22] Speaker 01:
So if the logic is that

[00:23:26] Speaker 03:
It should all be based upon... Why didn't you come in when it did this and say, this isn't a modification, this is a new task order, it should be issued under claim three?

[00:23:36] Speaker 03:
You didn't do that for any of these modifications, did you?

[00:23:39] Speaker 01:
Your Honor, we didn't articulate the position that way and I would say that there was no need to.

[00:23:48] Speaker 01:
What we did argue was that the contract says

[00:23:51] Speaker 01:
regardless of when the task order is issued, it's based upon when the services are ultimately delivered.

[00:23:59] Speaker 01:
So for delivered services in option year two, option year two rates, services delivered in option year three, option year three rates.

[00:24:08] Speaker 01:
That's what the contract says.

[00:24:10] Speaker 03:
Doesn't it say period of performance, not actually delivered?

[00:24:15] Speaker 01:
It says period of performance in the context of deliverables in section F of the contract.

[00:24:23] Speaker 00:
We're far beyond our time.

[00:24:24] Speaker 00:
Will we start some rebuttal when we hear from the governor?

[00:24:27] Speaker 00:
Thank you.

[00:24:44] Speaker 02:
Good morning.

[00:24:45] Speaker 02:
Good morning, Your Honors, and may it please the court.

[00:24:48] Speaker 02:
Pricing is not a contract term that's left to chance.

[00:24:51] Speaker 00:
Before you get into your argument, can I ask you sort of a more global question or general question that Judge Hughes touched on in one of his questions, which is how expansive is what we're asked to decide here?

[00:25:06] Speaker 00:
Because it's surprising to me there's so few cases.

[00:25:08] Speaker 00:
There's one case from the Court of Claims or from the board that the board cites.

[00:25:13] Speaker 00:
Is this a one-off

[00:25:15] Speaker 00:
case or is this a practice that is followed by the government in a million instances where you've got option two and option three and you get task orders and various things and the numbers change and the government applies?

[00:25:29] Speaker 00:
Absolutely.

[00:25:30] Speaker 00:
If the task order or modification is issued in a year, the pricing with respect to that year continues.

[00:25:37] Speaker 00:
Is this a global issue?

[00:25:39] Speaker 00:
Does this happen all the time?

[00:25:40] Speaker 02:
So certainly, Your Honor, and we share your surprise that there weren't more cases directly on point.

[00:25:45] Speaker 02:
Perhaps that's explained by the fact that this is a generally understood principle of contract interpretation, that the pricing that's applied is the pricing of when the work was ordered.

[00:25:57] Speaker 00:
But where does that say that?

[00:25:59] Speaker 00:
Those words, I don't see anyone talking about those words.

[00:26:04] Speaker 02:
So we agree that in terms of the four corners of the contract, there are three sections that are largely discussed by the parties here.

[00:26:11] Speaker 02:
Sections B, F, and I. And there's really only one contract term

[00:26:16] Speaker 02:
that discusses the circumstances that we have here, where work is performed in one period but isn't finished in that period.

[00:26:24] Speaker 00:
Is this normal in terms of contracts?

[00:26:26] Speaker 00:
I mean, I was asking the more global question about how this applies.

[00:26:30] Speaker 00:
Do contracts normally take care of this more explicitly?

[00:26:33] Speaker 00:
I mean, if this contract were more explicit, we might not be here.

[00:26:37] Speaker 02:
I would agree with that last point.

[00:26:39] Speaker 02:
If it were more explicit, we wouldn't be here.

[00:26:43] Speaker 02:
But again, it's a general principle of contract interpretation that pricing is set at the time of the work.

[00:26:51] Speaker 04:
I think the other side would say it was set.

[00:26:55] Speaker 04:
And it was set not to be stable.

[00:26:58] Speaker 04:
It was set to change as the calendar

[00:27:01] Speaker 04:
moved from one year to the next expressly by the period of performance, not the period of order.

[00:27:08] Speaker 02:
So looking at that language in Section F, Your Honor, it does use the language of period performance, but a couple things.

[00:27:15] Speaker 02:
First, we have to remember this is a requirements clause.

[00:27:18] Speaker 02:
So the contract is on standby.

[00:27:21] Speaker 02:
There is no performance other than through the task order.

[00:27:25] Speaker 02:
The primacy of the task orders here

[00:27:28] Speaker 02:
tell us that the pricing is defined by when the task orders issued, not when the work is performed.

[00:27:35] Speaker 04:
You assert that, but I still don't see what basis you have for that, including in the opening sentence practically of the argument or the brief that's laying this out.

[00:27:46] Speaker 04:
You just call it the ordering periods with five ordering periods.

[00:27:55] Speaker 04:
that you just assigned that word to it.

[00:27:57] Speaker 04:
I don't see where that comes from.

[00:28:00] Speaker 02:
Well, remaining in section F, which appellant largely relies upon, while it doesn't use the language ordering period, if the rates were tied to the periods of performance, as appellant alleges, then they would be asking for option year four rates for the work performed in option year four.

[00:28:16] Speaker 02:
And there was some work performed in option year four.

[00:28:19] Speaker 02:
But of course they're arguing exclusively for option year three rates.

[00:28:24] Speaker 04:
And while it doesn't specifically... Is it possible they're just being a little bit conservative so as not to be a pain in the neck?

[00:28:33] Speaker 02:
Perhaps, Your Honor, but that may be a more generous interpretation than the government would propose.

[00:28:39] Speaker 03:
I mean, how could they get option year four rates when I don't think option year four was even exercised, was it?

[00:28:44] Speaker 02:
That's right, Your Honor, but the fact remains that

[00:28:48] Speaker 03:
Going to the colloquy between you and opposing counsel, if option year three had never been exercised, we would never... Okay, can I... I'm just going to stop you here, because here's where my concern is with what the government's saying here and the way it did this, is that where is the backstop to this?

[00:29:08] Speaker 03:
If they issue a task order under Clean 2,

[00:29:13] Speaker 03:
and they're allowed to continue to modify the task order and add new work and add new funds and change the period of performance.

[00:29:23] Speaker 03:
Can they do that indefinitely?

[00:29:26] Speaker 02:
Well, if there was a concern that the work was out of scope, they could bring a challenge that this work order is out of scope of the task order.

[00:29:35] Speaker 02:
If there's a concern that there's some gains in the ship, there could be an allegation of bad faith.

[00:29:39] Speaker 02:
But here, Your Honor, these task orders were specific to hurricane relief in the wake of Hurricane Maria.

[00:29:45] Speaker 02:
It was all about emergency power for Hurricane Maria.

[00:29:49] Speaker 03:
It was defined in that way.

[00:30:00] Speaker 03:
recovery efforts for a completely different hurricane.

[00:30:03] Speaker 02:
That's exactly right, Your Honor.

[00:30:05] Speaker 02:
What happened when they exercised option year three?

[00:30:08] Speaker 02:
When the agency exercised option year three, it gave them the ability to issue new task orders during that option year if, God forbid, there was a new hurricane that wreaked havoc in the region.

[00:30:21] Speaker 02:
Luckily, there weren't any hurricanes of the magnitude of Maria, so there were no new task orders issued during option year three.

[00:30:27] Speaker 02:
But the fact that the agency exercised option year three in no way impacts the rights and obligations of the parties flowing from the option year two task orders.

[00:30:38] Speaker 03:
Well, how true is that if they hadn't exercised option year three?

[00:30:42] Speaker 03:
How long could they have kept modding the task order for option year two to deal with Hurricane Maria in Puerto Rico?

[00:30:51] Speaker 02:
Well, indefinitely, but this is a contract.

[00:30:55] Speaker 03:
Not about that six month time period.

[00:30:59] Speaker 03:
I mean, if they didn't exercise the option for option year three, then the contract is expired, right?

[00:31:07] Speaker 02:
That's right, Your Honor.

[00:31:08] Speaker 02:
But under the changes clause, they could continue to extend the period of performance in order to address the discrete issue of hurricane relief in the wake of Hurricane Maria.

[00:31:18] Speaker 04:
Can I just double check something?

[00:31:19] Speaker 04:
I didn't see any reference in your brief to the changes clause.

[00:31:23] Speaker 04:
It doesn't seem to be cited.

[00:31:25] Speaker 04:
And does that matter?

[00:31:27] Speaker 04:
Since rather a lot of this discussion is kind of turning on that.

[00:31:31] Speaker 04:
And we don't, as far as I know, have it in front of us.

[00:31:34] Speaker 02:
I believe we did reference the changes clause insofar.

[00:31:37] Speaker 02:
The government never registered an objection to the changes that they could have done.

[00:31:42] Speaker 02:
A contractor.

[00:31:43] Speaker 02:
Oh, excuse me.

[00:31:43] Speaker 02:
Yes, the contractor could have registered an objection under the changes clause.

[00:31:48] Speaker 04:
I don't think you cited it or discussed it and said, here's why, in ordinary government contract law, look at this provision.

[00:31:55] Speaker 04:
It's in the FAR, and it was incorporated.

[00:31:58] Speaker 04:
And it is, of course, the

[00:32:01] Speaker 04:
far provision referenced in each of the modification documents, but I didn't see a legal argument about it.

[00:32:07] Speaker 02:
No, Your Honor.

[00:32:08] Speaker 02:
We didn't assert a specific legal argument about the changes clause.

[00:32:11] Speaker 02:
What we did reference is the fact that there were 30 plus modifications.

[00:32:15] Speaker 02:
Of course, they were done under the changes clause.

[00:32:18] Speaker 02:
Some of these modifications were bilateral modifications, including the $850 million that was

[00:32:25] Speaker 02:
transferred on to Clinton.

[00:32:26] Speaker 04:
Do I understand right that even if we were to conclude that the board's decision was wrong, there would be issues to remand for including a waiver issue by virtue of the signing of the repeated shifts from 3001 to 2001?

[00:32:49] Speaker 04:
Have you made those arguments?

[00:32:52] Speaker 04:
Are those?

[00:32:53] Speaker 02:
I'm sorry, are you asking if the waiver issue is before this court?

[00:32:57] Speaker 04:
No, I know it's not before us.

[00:32:59] Speaker 04:
Whether you made it to the board so that if we sent this case back, that issue would be before the board.

[00:33:09] Speaker 02:
I understand that the waiver issue was presented before the board, and the board declined to reach that decision because they found the contract to be unambiguous.

[00:33:17] Speaker 02:
Of course, if this court were to find that there is some ambiguity in the contract, of course, we would urge this court not to reach that decision.

[00:33:25] Speaker 02:
But if the court did reach that decision, it could be remanded back.

[00:33:27] Speaker 03:
I'm pretty sure that, well, I won't speak for him, but let me ask the question in a different way.

[00:33:32] Speaker 03:
If we find the contract is unambiguous, but the other way,

[00:33:38] Speaker 03:
is do they win or do you still have a waiver defense that they should have challenged these modifications throughout on the grounds that they were beyond the scope or something like that.

[00:33:54] Speaker 02:
Certainly, Your Honor.

[00:33:55] Speaker 02:
We would respectfully request that the board have the opportunity to address that issue in the first instance.

[00:34:00] Speaker 04:
I think in the last page of the board decision, there's a little heading saying, WSV's claim is not waived.

[00:34:07] Speaker 04:
That's the argument.

[00:34:08] Speaker 04:
And then it says, government makes this argument, but we don't need to reach it.

[00:34:11] Speaker 00:
Certainly.

[00:34:12] Speaker 00:
Yes, Your Honor, that's exactly right.

[00:34:13] Speaker 00:
I'm not clear exactly what the waiver was.

[00:34:16] Speaker 00:
What is the waiver argument?

[00:34:17] Speaker 00:
They should have challenged the modifications as being beyond the scope?

[00:34:21] Speaker 02:
No, Your Honor.

[00:34:22] Speaker 02:
As I understand it, the waiver argument, there was two sides.

[00:34:25] Speaker 02:
One is that they waived their right to challenge this under the changes clause.

[00:34:28] Speaker 02:
They never brought an objection under the changes clause.

[00:34:31] Speaker 02:
And that they never raised an objection under the order limitations clause, which gave the contract the ability to

[00:34:38] Speaker 02:
object to orders over a certain size, which these orders ended up doing.

[00:34:43] Speaker 02:
And because they never registered those objections, they would have waived their right to challenge them.

[00:34:48] Speaker 00:
They're not challenging whether they should have performed or you could have told them to perform the orders.

[00:34:55] Speaker 00:
They're challenging the rate at which you were paying them for performance.

[00:34:58] Speaker 00:
Isn't that a different question?

[00:35:02] Speaker 00:
I'm sorry, Your Honor, could you?

[00:35:04] Speaker 00:
What they're challenging is not that they agreed to the mods and they performed the work.

[00:35:11] Speaker 00:
Their challenge is exclusively to how much they should have gotten paid for the work that was performed.

[00:35:16] Speaker 00:
Isn't that a little different?

[00:35:20] Speaker 02:
Well, I'm hesitant, Your Honor, to answer that question, because I know the waiver issue is not before this court.

[00:35:31] Speaker 02:
And so I am hesitant to go down that when it's not properly before this Court, Your Honor.

[00:35:38] Speaker 02:
What is, of course, the issue here is whether or not the contract unambiguously provided for option year two pricing for the task orders issued were performed under the task orders issued during option year two.

[00:35:51] Speaker 02:
Again, the two sections that appellant focuses on, section B and section F,

[00:35:54] Speaker 02:
don't address that issue.

[00:35:56] Speaker 02:
There's only one section that really discusses what happens when work is issued in one period and spills over to the next period, and that's subsection F of the requirements clause.

[00:36:07] Speaker 02:
Because subsection F ties the rates to when the task orders

[00:36:14] Speaker 03:
were issued, we would respectfully... Why shouldn't we consider the modifications that were issued during option year three to be essentially new task orders?

[00:36:27] Speaker 02:
Because they plainly weren't new task orders, your honor.

[00:36:31] Speaker 02:
Task order 3031, 3033, 3001.

[00:36:34] Speaker 03:
It's a pretty formalistic view, though, isn't it?

[00:36:38] Speaker 03:
Because, I mean, these modifications aren't just minor modifications or things.

[00:36:44] Speaker 03:
basically change.

[00:36:45] Speaker 03:
They go from like allocating what something like 90 million to allocating something like almost a billion dollars.

[00:36:53] Speaker 02:
up to 850 million, Your Honor.

[00:36:56] Speaker 02:
But again, it was all within the very discreet operation of restoring emergency power in the wake of Hurricane Maria and Irma on two islands.

[00:37:07] Speaker 02:
It didn't go beyond that.

[00:37:08] Speaker 02:
If the work had gone beyond that, of course, it could be challenged as beyond the scope of the task orders.

[00:37:13] Speaker 02:
That's just not the situation we have here.

[00:37:15] Speaker 03:
What about your friend's argument, which I couldn't quite follow, but maybe you can help or maybe not, that somehow

[00:37:22] Speaker 03:
ordering clause limited the funding for option year two and that those modifications wouldn't have had sufficient funding without the exercise of option three.

[00:37:35] Speaker 03:
So what we're really talking about is option year three money.

[00:37:40] Speaker 02:
Well, as Your Honor knows, first of all, the money was transferred from option year three back to option year two.

[00:37:47] Speaker 02:
But more importantly, they could have done what they did here, which is submitted a request for a JNA and get more money and place the money onto option year two, which is exactly what they did.

[00:37:58] Speaker 02:
If there was no option year three, there's no reason to think that they wouldn't have done that anyway.

[00:38:02] Speaker 02:
So it's a great need.

[00:38:03] Speaker 02:
for emergency power in the wake of these hurricanes.

[00:38:06] Speaker 03:
So just because there were certain ordering limitations in the contract, it didn't prevent them from modding the contract if they got funding elsewhere.

[00:38:15] Speaker 02:
That's exactly right, Your Honor.

[00:38:18] Speaker 00:
No, I think right before that you were talking about Section F. Is that at 1051 and 1052?

[00:38:24] Speaker 00:
And you said that's really the nub of what gives us this authority to do that.

[00:38:29] Speaker 00:
Am I right?

[00:38:30] Speaker 00:
That's right, Your Honor.

[00:38:32] Speaker 00:
Well, that goes back to the point you were discussing with Judge Toronto earlier, which is

[00:38:36] Speaker 00:
this ordinary.

[00:38:37] Speaker 02:
I'm sorry your honor, a section, if you said section F then I mistakenly agreed with you.

[00:38:44] Speaker 02:
Okay, all right, so it's not section F. No your honor, section F is what appellant relies upon.

[00:38:49] Speaker 02:
We were going on paragraph F of the requirements, FAR provisions.

[00:38:53] Speaker 04:
That's right, subsection F. The difficulty I think at least the other side raises with that is that

[00:39:01] Speaker 04:
That applies only when the contract has ended, not when you shifted into a new option year on a still live contract.

[00:39:12] Speaker 02:
Well, if we look at subsection F, we understand that when it uses the language affected period of this contract, that needs to be understood in the context of modification number four, which extended

[00:39:26] Speaker 02:
the period through option year two.

[00:39:29] Speaker 02:
So at the time, the effective period of the contract was

[00:39:34] Speaker 02:
the period that would be through October 21, 2017, which is option year two.

[00:39:40] Speaker 02:
The work began during that period, but it wasn't finished during that period, so subsection F plainly ties the rights and obligations of the parties as if it was completed during that period, which is the option year two of the contract.

[00:39:56] Speaker 02:
Again, this is really the only piece of the contract

[00:40:00] Speaker 02:
that speaks to the issue we have here, work starting in one, but leading on to the other.

[00:40:04] Speaker 04:
Unless B and F, with their language of period of performance in both B and F and language of delivery in F, speak to it rather plainly.

[00:40:16] Speaker 04:
And this doesn't contradict it, because you're now wanting to read a provision whose language addresses only performance after the contract has expired.

[00:40:29] Speaker 04:
to by kind of analogy read it to apply to something it doesn't by terms cover, namely slopping over into a new option year of a still live contract, thereby producing a, in your view, override of the apparent meaning of the contract provisions B and F. That's a little

[00:40:50] Speaker 02:
That goes a little bit towards Appellant's argument of order of precedence, but we would submit that Section B and Section F are not read, cannot reasonably be read, in the way that Appellant argues.

[00:41:05] Speaker 02:
Again, the reference to period of performance, if we understand that in the context of this as a requirements clause with the contractors on standby, there really is no performance outside the context of a task order.

[00:41:19] Speaker 02:
the pricing based upon what we see in section I, subsection F of the requirements clause, the pricing is plainly established at the time that the task order is issued.

[00:41:32] Speaker 00:
Did you agree with what your friend said about if there were no option year three exercise in terms of the modifications that would be allowable or within the FAR

[00:41:45] Speaker 00:
If there's no option three, he's got the task orders issued.

[00:41:48] Speaker 00:
I mean, how long can that continue, working under option two with no option three being exercised?

[00:41:54] Speaker 02:
Well, the changes order allows the government to extend the period performance of the task orders, which is... Or, he said six months, right?

[00:42:06] Speaker 02:
He did say six months, Your Honor, and I'm not aware of the limitation in that way.

[00:42:13] Speaker 03:
But clearly, you know... Does that clause... I don't understand why you're talking about that clause, frankly, but does that clause apply to ordering new services rather than changing the services already ordered under the task order?

[00:42:30] Speaker 02:
Well, the discussion regarding the ordering clause was specifically about new task orders.

[00:42:36] Speaker 02:
We're extending the period of performance of existing task orders.

[00:42:41] Speaker 02:
Whether or not the six-month period involves new task orders, as Your Honor asks, I'm not sure.

[00:42:55] Speaker 03:
If that six month thing, so if we didn't have option year three and the six month things applied, even assuming they were allowed to mod the task order and extend the period of performance, they did it past the six months deadline here, didn't they?

[00:43:12] Speaker 02:
They did, Your Honor.

[00:43:14] Speaker 02:
In fact, work did go on to the fourth option year.

[00:43:17] Speaker 00:
But even if the fact that we're in option three is of significance and consequence in terms of what's going on, because if we didn't have option three, it wouldn't have continued, at least beyond six months.

[00:43:33] Speaker 02:
The impact of option year three was giving the government the ability to issue new task orders if there was a new... You're confusing me on this point.

[00:43:50] Speaker 03:
Let's just assume option year three is irrelevant, because I think that's what you're saying is your position that option year two was exercised, the task order was issued under option year two, and that you were allowed to continue modding it beyond the original expiration period for option year two.

[00:44:12] Speaker 03:
What is this six-month clause?

[00:44:15] Speaker 03:
have to do with that?

[00:44:16] Speaker 03:
Does it cut off the ability to modify the already issued task order, or does it simply prevent ordering new services under

[00:44:29] Speaker 00:
My understanding, Your Honor, of the changes clause in that six-month period is it prevents the government from issuing new task orders that address... But all of the modifications that were done here could have been done and would have been done even in the absence of the non-extension to option year three?

[00:44:47] Speaker 00:
Yes, Your Honor.

[00:44:48] Speaker 02:
That's my understanding, Your Honor.

[00:44:50] Speaker 02:
That's correct.

[00:44:51] Speaker 00:
Were there any new task orders issued in option year three?

[00:44:54] Speaker 02:
No, Your Honor.

[00:44:56] Speaker 02:
There were no new task orders.

[00:44:57] Speaker 00:
So essentially option year three had no consequences?

[00:45:01] Speaker 00:
I mean, unless there's some six-month deadline, which... That's right, Your Honor.

[00:45:05] Speaker 03:
Is your point simply...

[00:45:08] Speaker 03:
And maybe I'm wrong about this.

[00:45:10] Speaker 03:
The task order that was issued was, here's the task order for Hurricane Maria relief.

[00:45:17] Speaker 03:
It's occurring in option year two.

[00:45:18] Speaker 03:
We're going to order services under that.

[00:45:21] Speaker 03:
And you continue to mod it.

[00:45:22] Speaker 03:
And you were allowed to do that under the changes clause referenced in those mods.

[00:45:28] Speaker 03:
And that the existence of option year three and whether it was exercised or not was irrelevant.

[00:45:34] Speaker 03:
And this six-month

[00:45:36] Speaker 03:
this clause that has a six month provision, it is relevant too.

[00:45:41] Speaker 02:
Yes, Your Honor.

[00:45:42] Speaker 03:
I didn't understand that was the argument in your brief.

[00:45:47] Speaker 02:
And then going to the specifics contract interpretation issue in the brief is that there's nothing in the contract that unambiguously ties the rates of the work to the period it was performed.

[00:45:59] Speaker 03:
Rather, it's tied to the- I don't understand why you're making that argument, because it does tie the rates to the period of performance.

[00:46:06] Speaker 03:
But the period of performance was changed through these mods.

[00:46:10] Speaker 03:
Do you not agree with that?

[00:46:12] Speaker 02:
Well, I don't agree with the first point, Your Honor.

[00:46:15] Speaker 02:
If we look at Section F, it's not defining what rate is to be applied during that period of performance.

[00:46:22] Speaker 02:
For example, during this period we have to apply CLIN 3 or CLIN 4.

[00:46:27] Speaker 02:
What it's doing is defining the periods in which the government can issue new task orders to address whatever needs arise during that task order.

[00:46:37] Speaker 02:
And that's looking at section F of the contract here.

[00:46:42] Speaker 02:
Again, all these task orders were issued during option year two, which is why the government is asserting that there's an unambiguous claim to option year two rates to be applied to that work that was performed under this option year two task orders.

[00:47:03] Speaker 02:
I see I'm over time.

[00:47:04] Speaker 02:
If there are no further questions, we'd ask that the court affirm the decision of the board below.

[00:47:10] Speaker 02:
Thank you.

[00:47:14] Speaker 00:
Will we store two minutes at the bottom?

[00:47:18] Speaker 01:
Thank you, Your Honor.

[00:47:19] Speaker 01:
A couple of quick points.

[00:47:21] Speaker 01:
The Changes Clause does not authorize ordering new services.

[00:47:25] Speaker 01:
The Changes Clause appears in the Appendix 3, page 3 of the SBCA's decision.

[00:47:30] Speaker 01:
And it allows changes to how the already ordered work is performed.

[00:47:36] Speaker 01:
Changes to specifications.

[00:47:38] Speaker 00:
Where are you?

[00:47:39] Speaker 01:
Appendix three.

[00:47:41] Speaker 00:
Three?

[00:47:41] Speaker 01:
Three.

[00:47:42] Speaker 01:
Page three of the board decision.

[00:47:46] Speaker 03:
But we already ordered the services for Hurricane Maria.

[00:47:52] Speaker 03:
what they changed in the mod was the additional money to continue performing them in the period of performance.

[00:47:59] Speaker 01:
That's placing new orders, your honor.

[00:48:01] Speaker 01:
It's not a change within the meeting of the changes clause.

[00:48:05] Speaker 03:
This is my problem.

[00:48:06] Speaker 03:
In this case, I think it's just a big mess.

[00:48:09] Speaker 03:
Because if you're saying that these were new orders instead of just modifications under the changes clause, why didn't you tell the government that when they did it?

[00:48:21] Speaker 01:
We thought the contract was clear that clearly entitled us to WSP to be paid for option year three services at option year three rates.

[00:48:34] Speaker 03:
But conceptually... Only if the orders were issued under option year three and they clearly weren't.

[00:48:40] Speaker 03:
There's a disconnect here that there was one task order issued, right?

[00:48:46] Speaker 03:
I mean, there's multiple ones, but we can talk about the one representative one.

[00:48:51] Speaker 03:
And it was for these services.

[00:48:54] Speaker 03:
And there weren't new task orders issued.

[00:48:57] Speaker 03:
You think there are essentially new task orders.

[00:49:00] Speaker 03:
But if you thought that, why didn't you go to the government and say this is not a proper modification and challenge it?

[00:49:09] Speaker 01:
Your Honor,

[00:49:11] Speaker 01:
When you were questioning opposing counsel before, I think you made a valid point that the difference between a new task order and a new order is a little bit formalistic.

[00:49:21] Speaker 01:
And that's the right form.

[00:49:23] Speaker 03:
But you know, that's the way government contracts work.

[00:49:25] Speaker 03:
There's a bunch of very formalistic rules and regulations that apply.

[00:49:30] Speaker 03:
And if this was issued as a mod rather than a new task order, then unless that mod was illegal or unauthorized, we treat it as a mod.

[00:49:41] Speaker 01:
There's one rule that is not in government contracts.

[00:49:43] Speaker 01:
There's no government contract rule that says when a task order is issued in a certain period,

[00:49:51] Speaker 01:
The contractor is stuck with that pricing, regardless of whether the services continue into subsequent years of the contract.

[00:50:00] Speaker 00:
So was your answer the reason you didn't challenge this?

[00:50:02] Speaker 00:
Because you didn't think there was a distinction between whether it was the model or a new task order?

[00:50:06] Speaker 00:
Because you thought that under the contract and under the rules, you would be getting paid under year three rates?

[00:50:12] Speaker 01:
Your Honor, it wasn't challenged as such in that conceptual way, because we believe and still believe that the contract was clear.

[00:50:19] Speaker 01:
you just have to look to Section B and Section F, which expressly address clean applicability.

[00:50:26] Speaker 00:
So was it your view that your rights would be the same, whether it was a modification or whether it was a new task order?

[00:50:32] Speaker 00:
You would still be entitled to year three rates?

[00:50:34] Speaker 01:
Nothing in the contract said... Is the answer yes?

[00:50:37] Speaker 00:
Don't give me... I'm confused enough.

[00:50:39] Speaker 00:
Is the answer to my question yes or no?

[00:50:41] Speaker 01:
The answer is... I may have lost track of your question, Your Honor.

[00:50:47] Speaker 00:
The question was, was it your position, and is it your position, that irrespective of whether this was called a modified task order or a new task order, the requirements for the pay rate for year three would still inerve because it occurred during year three?

[00:51:05] Speaker 01:
Yes.

[00:51:07] Speaker 01:
That's correct, Your Honor.

[00:51:09] Speaker 01:
Anything further?

[00:51:12] Speaker 00:
Thank you.

[00:51:12] Speaker 00:
Thank you, Your Honor.

[00:51:13] Speaker 00:
We thank both sides, and the case is submitted.