[00:00:00] Speaker 04:
We have three argued cases this morning. The first is number 251140, Island Creek Associates versus United States. Ms. Potroff.

[00:00:10] Speaker 01:
May you please the court?

[00:00:14] Speaker 01:
Good morning. Excuse me.

[00:00:19] Speaker 01:
We're here today to talk about a subject that has been covered many times, but the facts here are brand new. This is about standing, and it is about an area of standing that there is a very concerning and massively impactful loophole in the current jurisprudence.

[00:00:44] Speaker 01:
What we're dealing with is a situation where once an offeror gets awarded an IDIQ contract, the question then is, you know, when would they have standing to challenge various violations? And the violations here are of the utmost importance. We're talking…

[00:01:13] Speaker 04:
It sort of dooms your case, doesn't it?

[00:01:16] Speaker 01:
I actually don't think it does at all. Percipient is about subcontractor standing, and that's just dramatically different. And, of course, if percipient had been decided the way the initial court had decided it, I would be relying on it. It was a very, very wide net. It would encompass a lot of different situations, including some of prime contractors, some of subcontractors. But I don't disagree with the en banc decision in Percipient. I think that it's a very different question when we're talking about impacts to a contract on a removed subcontractor.

[00:01:52] Speaker 01:
Here we are talking about a contract awardee, an actual offeror. and one that identified a very, very troublesome OCI, has brought it to the court's attention, has alleged violation of multiple regulations, both SBA, the FAR, and has pointed to specific agency actions in changing the contract terms after the initial awards were made. So it's really far more akin to a, pre-award scenario.

[00:02:27] Speaker 03:
Counselor, explain to me why this isn't a case involving mutinous. It seems to me that four counts of your complaint were addressing and seeking, your prayer for relief was corrective action, right, on behalf of the government, and you got that. The Navy amended its regulation, and it seems to me that the basis for your where your complaint just disappeared. It's moot.

[00:02:58] Speaker 01:
Your Honor, I disagree. I feel that there is a very intense possible harm in determining something like this to be moot because we still have a contract that is active until... But you're asking me to speculate. Oh, not at all. We have a contract that is active until 2029, January of 2029.

[00:03:22] Speaker 01:
And we have tons of awardees. We still have a scenario where a corrective action was taken on paper. And as you can see from our brief, we do not feel that that corrective action made right the wrongs here.

[00:03:35] Speaker 04:
How did it not make right the wrong?

[00:03:38] Speaker 01:
Well, there's still been awards made since that time based on the improper definition of affiliate. And I guess it's a proper definition, actually, under SBA's rules.

[00:03:48] Speaker 04:
Is that in the record?

[00:03:51] Speaker 01:
I mean, it's in our briefs. We've alleged that there have been awards made since that time.

[00:03:55] Speaker 04:
Oh, but there's no support for that in the record, right?

[00:04:01] Speaker 01:
I could find it for you if you'd like me to.

[00:04:05] Speaker 04:
I'd be interested if you could show me where in the records there's support for that.

[00:04:10] Speaker 01:
Sure, sure. And, I mean, I just would like to add to that that we are also still dealing with a situation where I mean, the OCI should not just be ignored.

[00:04:21] Speaker 01:
The OCI has significant impact on competition here. And writing that wrong, there is a whole lot of gray area in between having absolutely nothing that we can do here, it's moot, it's over with, and, you know, going back and changing years and years of contract awards. We're still dealing with a situation where, I mean, Seaport has been the literal wild, wild west, where the agency has made...

[00:04:46] Speaker 01:
Changes to the solicitation to the contract underlying IDIQ that just wouldn't stand anywhere else. Awards have been made to non-contract holders. I absolutely have.

[00:04:56] Speaker 03:
But let's divide this conversation into two. Sure. The one that I'm interested in you addressing has to deal with the OCI. You no longer have a case. There's no longer a case or controversy involving your OCI accounts. Am I correct? Yes.

[00:05:13] Speaker 01:
I mean, so, again, Your Honor, we have alleged in our briefs and have seen plenty of involvement beyond the point in time that the OCI was allegedly corrected.

[00:05:27] Speaker 01:
My client had direct interaction on small business roundtables and all kinds of things, which is in our briefs.

[00:05:34] Speaker 03:
The modification that you complained about has been canceled. Is that right?

[00:05:39] Speaker 01:
It was changed in part on paper, but it was not entirely changed.

[00:05:43] Speaker 03:
So if it was changed and it no longer exists, the problem that you were complaining about, that's been modified to where it no longer exists, then would you say that the counts related to OCI are moot?

[00:05:58] Speaker 01:
I wouldn't. We still allege that those modifications were made in favoring the OCI. We have an interesting timeline here as well where The change is made to allow awards to non-contract holders, large businesses, basically anybody if they fell under SBA's affiliation definition, which it was SBA's definition, although they neglected to apply the fact that it would make the awardees ineligible. That was made at the same time that this alleged OCI, that this precise company became large.

[00:06:30] Speaker 02:
Can you focus for a moment on the relief you're seeking and tell us what part of the relief, in your view, is not moot?

[00:06:36] Speaker 01:
So there are still terms of the contract that we do not think were fixed. We do not think that the corrective action fixed at all. The, again, just general definition of affiliate, the fact that they are still making awards to these affiliates, it is our position that although they removed some of the language that just outright allowed.

[00:06:56] Speaker 02:
What is the relief that you're still seeking that a court could grant?

[00:07:01] Speaker 01:
Right. So we believe there needs to be an investigation of the OCI. There has yet to be a thorough investigation of the OCI. Multiple awards, lots of money was given to a company under that OCI.

[00:07:13] Speaker 02:
Awards. I think you mean task orders? Task order awards, yes. And isn't there a separate statutory bar for you challenging task orders?

[00:07:22] Speaker 01:
Right, and we're not challenging any individual one. Again, we are alleging that the underlying IDIQ was modified to make multiple task orders okay. So I'm not challenging the task orders. It was the actual modification of the IDIQ that allowed those awards. That is what the issue is.

[00:07:40] Speaker 01:
And, Your Honor, I understand—

[00:07:48] Speaker 04:
under the improper, in your view, OCI standard, then the case is moot.

[00:07:59] Speaker 01:
No, I don't think it is moot, Your Honor.

[00:08:00] Speaker 04:
Even if they're not making awards?

[00:08:03] Speaker 01:
I still don't think it is, Your Honor.

[00:08:05] Speaker 04:
I don't understand that.

[00:08:08] Speaker 04:
What's the theory?

[00:08:09] Speaker 01:
Yeah, I mean, I don't think that anything has officially and actually been corrected here. I don't think that allowing an agency to say, oh, you've identified a really, really severe OCI here. Somebody is no longer officially under that title. Well, again, we know that person is still very much involved in this procurement, without a doubt. And I don't think that there's – it would establish a very dangerous precedent to say that removing that person from that position on paper makes everything fine.

[00:08:43] Speaker 01:
I'm not challenging those awards. I'm not saying we can go back and undo who performed them or anything like that. There has yet to be an investigation. I would still say that this company should not be allowed to be on this IDIQ. And that might be bold here, but we're talking about a company that received millions of dollars in awards improperly.

[00:09:04] Speaker 02:
You started off by saying there's some massive loophole. What's the loophole you're referring to?

[00:09:09] Speaker 01:
Yeah, and the massive loophole to me right now is one that I think the initial decision in Percipient was trying to reach and I think maybe overstepped a bit. It's the fact that once you are on an IDIQ contract currently, If you got that award, there are multiple courts that have held that's it. You are no longer an actual offeror once you've received award of an IDIQ.

[00:09:37] Speaker 02:
It's not pre-award at that point. You've been awarded absolutely what you applied for, correct? Your Honor, but when we're talking about— But still, I interrupted you. What's the loophole? Is that it, just that you're no longer considered an offeror once you become an awardee?

[00:09:52] Speaker 01:
Well, the loophole to me is the very concerning fact that You could be an awardee on an IDIQ, and you could never make a dollar. In fact, Weeks Marine, which is— That's not a loophole.

[00:10:04] Speaker 02:
That's how procurement works, right?

[00:10:07] Speaker 01:
I'm just—I'm sorry. I'm trying to get there. To me, it's the fact that you could never be awarded a dollar. You could be seeing an unfair competition unfold in front of your eyes. You could be watching an OCI exist, watch awards being handed from a husband to a wife, and yet not be able to have this court's review of that. And based on standing, based on prejudice, economic harm, yet all of those things... I mean, there are thousands of these IDIQ contracts, right?

[00:10:33] Speaker 04:
Well, yes, Your Honor. In fact, we're moving toward more and more every... So how could one additional contract do a cognizable injury to your client?

[00:10:45] Speaker 01:
I'm sorry, can you... I'm not sure what you mean.

[00:10:46] Speaker 04:
How could the grant of one additional IDIQ contract injure your client?

[00:10:52] Speaker 01:
I'm not talking about the grant of an additional contract here. I'm talking about... I'm sorry, what?

[00:10:59] Speaker 04:
What's the injury then?

[00:11:00] Speaker 01:
The injury is the fact that we are dealing with an unfair competition. We have increased likelihood of a person's literal spouse's company getting awards under a massive Navy contract. And again, if you look at Weeks Marine, those facts are very similar to this. And in Weeks Marine, you were even guaranteed a minimum of... There is no minimum here. You can be on Seaport as a small business, as many, many small businesses are, and never see a dollar because those dollars are unfairly being awarded under an OCI.

[00:11:33] Speaker 01:
And as soon as that OCI is identified, we just modify the solicitation, the contract. If the agency is allowed to go back and make modifications to an IDIQ contract, that to me is, that is akin to making solicitation changes. You're affecting the impact of competition.

[00:11:50] Speaker 03:
I have a question regarding count four. Sure.

[00:11:54] Speaker 03:
Wouldn't you say that count four involves the FASA, F-A-S-A, and that there is no judicial review authority for this court for those particular type of orders?

[00:12:13] Speaker 01:
Your Honor, we have not once called out and attacked a specific task order award here. And again, I think if the agency had made one task order award... Count four relates to task orders, correct? It relates to the idea that... It's your count.

[00:12:31] Speaker 03:
It's your complaint. Yes, it relates to the idea that... Does it relate to task orders?

[00:12:38] Speaker 01:
To me, it all relates back to the IDIQ. I mean, that is what the agency is tampered with. That is where the unfair competition lies. So naturally, it's an IDIQ. There are task orders awarded under it. We've not attacked a single one of those. And again, I don't have an issue with the legality of that if you're not considering the massive underlying IDIQ modifications that were improper and the fact that there's an underlying OCI. The OCI has nothing to do with one task order. There's been a lot of awards. And there's a lot of potential future awards.

[00:13:09] Speaker 03:
What does count for, in your view, deal with?

[00:13:14] Speaker 01:
To me, it deals with the fact that the competition has been unfairly skewed.

[00:13:20] Speaker 01:
To me, that is exactly what it points to.

[00:13:23] Speaker 04:
Competition for task orders?

[00:13:25] Speaker 01:
For all future task orders, which is, yes, the nature of an IDIQ. You can't talk about an IDIQ and not mention the word task order. But I don't think it's ever been any jurisdictional intent for somebody to say, because the word task order is mentioned naturally in the context of an IDIQ, that automatically FASA bars it. I don't think that's ever been anyone's intent.

[00:13:48] Speaker 04:
You're into your rebuttal time. Do you want to save it?

[00:13:50] Speaker 01:
Please. Thank you, Your Honor.

[00:13:56] Speaker 04:
Mr. Engelhoff?

[00:14:06] Speaker 00:
Good morning, Your Honors, and may it please the Court. The focus of Island Creek's protest is a change in the procurement rules instituted by a January 2024 mass modification. But that modification has been permanently suspended.

[00:14:22] Speaker 04:
They're saying that awards are still being made under the modification. Is there anything in the record to establish that?

[00:14:28] Speaker 00:
No, Your Honor. I don't believe that's the case. The modification modified the original rule of one firm gets one prime contract, and they made an exception for joint ventures with the mentor-protege agreement. And as we see in the reply at page 24, Island Creek's reply, that expanded eligibility for other companies to hold IDIQ contracts, which is the basis of their complaint here. But that modification has been suspended, and there's no reasonable expectation that that modification will recur.

[00:15:02] Speaker 00:
And certainly with the rescission of that modification, the alleged ills that flow from that have also been permanently eradicated. So under binding Supreme Court precedent, this case is moot, and this court should affirm the dismissal on mootness grounds. Is it moot in full, including count four? So count four brings up a separate can of worms, as it were, and that is the issue of the task order bar. Count four involves an organizational conflict of interest, but the way that Island Creek alleges that OCI manifests itself is through the allegedly unlawful award of task orders.

[00:15:44] Speaker 00:
And because it is in connection with task orders, it's clearly barred by FAFSA. Indeed, Island Creek, this is not in the record because it happened after the close of briefing, but Island Creek has brought a FAFSA claim in GAO based upon an organizational conflict of interest. And in December 2025, the GAO dismissed that claim on the merits, finding that there was no OCI that tampered with the award of task orders.

[00:16:13] Speaker 03:
Does that mean we have no jurisdiction over count four?

[00:16:17] Speaker 00:
There's no jurisdiction over any of these counts, including count four, because it's undeniably in connection with the award of task orders. There's no way for Island Creek to complain about an organizational conflict of interest without complaining that it's interfering with their ability to win task orders. In fact, council essentially conceded as much just a moment ago. This count...

[00:16:43] Speaker 00:
undeniably is in connection with task orders and falls very comfortably within the task order bar.

[00:16:50] Speaker 02:
If we agree with you, would you have us affirm on the alternative grounds that everything is moot, or would you have us affirm, I think, the trial court dismissed for lack of standing?

[00:17:06] Speaker 00:
Well, Your Honor, certainly perhaps it may be helpful for the trial court to have clarity that definitively awardees are not disappointed bidders under the standing rules. That may provide some clarity at the trial court.

[00:17:22] Speaker 00:
I won't, you know, tell this court which route to choose. The important part is that we are, you know, we're evaluating a trial court judgment and all roads here lead to affirming that judgment, whether it's for standing mootness or lack of jurisdiction.

[00:17:41] Speaker 02:
Could you address the loophole argument, which if I understand it seems to be, hey, if I'm a, I am an actual offeror for an IDIQ. I am becoming an awardee. I get what I ask for.

[00:17:56] Speaker 02:
But subsequently, there's an OCI, a real conflict of interest, that skews the entire competition for task orders. I can't bring a pre-award protest, but apparently I can't bring a post-award protest either, and there's the task order FASA bar.

[00:18:15] Speaker 02:
that seems like a massive loophole. What is someone in their position supposed to do, or do you just concede that loophole exists?

[00:18:25] Speaker 00:
No, Your Honor, we wouldn't concede that loophole exists. Before we even get to why not, if there is a loophole, that's really for Congress to close. It wouldn't be for this court to close. 1431, the statute's clear.

[00:18:39] Speaker 00:
The FAFSA bar, the statute's clear. So if there are loopholes involved, it would be for Congress to close. But even if there were a loophole, I should say there is no loophole because someone in Island Creek can do exactly what they've already done. They note in their brief that they brought a CDA claim based upon the administration of their own contract.

[00:18:57] Speaker 00:
We also see that they've brought a task order. They've challenged a task order in GAO. There is no loophole because someone in Island Creek's position has alternative avenues to relief, and indeed has pursued those alternative avenues for relief. But at the end of the day, an awardee, Island Creek got what they wanted here. They bid for a seaport IDIQ contract, and that's what they received. So there's really no loophole for them insofar as, oh, I didn't get what I wanted.

[00:19:29] Speaker 00:
That's just not the case. They bid on a seaport IDIQ contract, and that's exactly what they received in January 2019.

[00:19:38] Speaker 00:
And so based upon the fact that they got exactly what they wanted, there really is no loophole that is causing some sort of unmitigated harm to them with no avenue for relief.

[00:19:51] Speaker 00:
Because Island Creek is an awardee, they are not an actual or prospective offeror. They are not disappointed bidders, which is how Percipient in his en banc decision framed the standing analysis in the context of disappointed bidders. So even if this court finds that this case is not moot and that there's jurisdiction, there's still the very difficult challenge that Island Creek cannot overcome on the issue of standing. Island Creek simply is not an interested party. They are an awardee. And so for this reason, this court could also affirm... FASA applicable here under Count 4?

[00:20:28] Speaker 00:
The FASA bar is clearly implicated here in Count 4 because there's no way for Island Creek to challenge an OCI without directly challenging the task orders. We know that the case, because of what they alleged in their complaint, which is OCI is manifesting itself through the award of task orders. They specifically mentioned two task orders, PMA 209 and PMA...

[00:20:51] Speaker 00:
263. And then it basically mirrors the exact allegations they bring in the GAO complaint or GAO petition. And in that GAO petition, Island Creek is very specific that we're bringing this under the FAFSA statute. They basically did the same thing in the trial court. They just omitted the fact that they're bringing it under the FAFSA statute. But of course, it's clear that these implicate the task orders. These are in connection with the task orders to use the language in the FAFSA statute. And for that reason, this court has no jurisdiction, or the trial court has no jurisdiction and this court should affirm.

[00:21:24] Speaker 00:
So again, there's multiple avenues that this court can take to affirm the decision of the trial court.

[00:21:30] Speaker 00:
Nearly all counts of this complaint are moot because the modification that's at the heart of their claim has been suspended.

[00:21:38] Speaker 03:
So to be clear, back to count four, and you're saying that there's no jurisdiction, you mean there's no subject matter jurisdiction? Yes.

[00:21:48] Speaker 00:
That's right, Your Honor. I do believe that the FAFSA statute is a subject matter stripping statute because these are in connection with the award of task orders. There's no jurisdiction for the trial court to hear those claims. Island Creek should do what it's already done, which is go to GAO and protest these awards of task orders down.

[00:22:10] Speaker 04:
So what do you understand Count Ford to be saying? I I had read count four as saying this organizational conflict of interest led to the modification to the eligibility standard.

[00:22:23] Speaker 00:
So there are, as I read count four, they allege that Navy did not take the appropriate steps to mitigate an organizational conflict of interest, and we see that through the illegal model.

[00:22:36] Speaker 04:
But what's the consequence of the organizational conflict of interest? Was this amendment to the It's qualification standards.

[00:22:44] Speaker 00:
Exactly right. As I read it, there are two kind of outgrowths of that failure. One is the modification, which we've established has been rescinded. And the other is that, oh, no, now Alley and Creek is going to lose task orders because of this OCI. It's going to go to other task orders. And they specifically mentioned PMA 209 and PMA 263.

[00:23:02] Speaker 00:
And so that latter part of count four is just clearly in connection with the award of task orders. I mean, at this point, Island Creek's an awardee. The only way that an organizational conflict of interest could impact Island Creek was a contract holder, would be through task orders. I mean, that's their only way that an OCI, which of course we would argue doesn't exist, but the only way that OCI could impact Island Creek would be for them to say, I'm not getting the task orders I should get because of the OCI.

[00:23:32] Speaker 00:
And in fact, that's exactly what they said at GAO. They were just perhaps... a little bit more careful in the trial court to avoid that language. But at the end of the day, the OCI relates directly to the award or the non-award of task orders. So again, that all comes back to the court not having jurisdiction under FAFSA for count four.

[00:23:56] Speaker 02:
Part of the relief they're asking for is an investigation into the conflict. Does that have anything to do with mootness or standing?

[00:24:05] Speaker 00:
Well, an investigation into the conflict in order for them to more fairly compete for task orders.

[00:24:11] Speaker 00:
I think no matter how we cut count four, it's all about an ability to more fairly compete for task orders down the road. And I believe one of the Other reliefs that they're seeking for is for this husband to recuse himself. We see this at Appendix 361.

[00:24:33] Speaker 00:
They're requesting that the husband, who's at the center of this OCI, recuse himself from the award of future task order procurements. So they're asking this individual to please step down from the award of other task orders because of an OCI.

[00:24:48] Speaker 04:
The award of task orders to whom?

[00:24:51] Speaker 04:
I'm just trying to understand how the organizational conflict of interest affects the award of task orders now that the qualifications have been revised. What's the theory?

[00:25:03] Speaker 00:
Well, because an individual at the heart of this OCI allegedly will still take steps to award the task orders to the folks that he wants to get preferential treatment to that still are contract holders under the old rules.

[00:25:23] Speaker 00:
Who became qualified under the old rule?

[00:25:26] Speaker 04:
Is that the idea?

[00:25:27] Speaker 00:
That's right. There was an opportunity in which the protege of this company was going to slip into the IDIQ contract under the exception to the one company, one contract rule. That company is no longer able to do so because of rescission of the rule. But that company that this gentleman is going to give preferential treatment to, they're still a prime contract holder, even though their protege can no longer slip in through the exception with the modification.

[00:25:59] Speaker 00:
By the way, Your Honor, this modification was issued years after the wife of this gentleman left that company. And not to mention the fact this gentleman has himself retired from the Navy. So Count Foer is also moot for separate reasons that are not in the record. Again, all this to show that there are just three or four or five different ways we can affirm the trial court's decision. At the end of the day, Your Honor, though, there's no jurisdiction clearly for count four, mootness for one, two, three, and five.

[00:26:30] Speaker 00:
But as for all counts, Eileen Creek is not an interested party, and for that reason, this court should affirm the decision of the trial court.

[00:26:39] Speaker 00:
Thank you, Your Honor. Thank you.

[00:26:49] Speaker 04:
Ms. Patra?

[00:27:02] Speaker 01:
So, Your Honors, I want to address a couple things that Council said, one of which, right off the bat, that Island Creek got what it wanted. Island Creek bid and was awarded, went through the entire process, expensive, all these small businesses did so, got on this contract, and what it bid was a fair and equal competition. What it bid was a contract, as Council himself said, with one contract per company. What it bid was the terms as they were written. What it bid was a competition that was not going to be skewed by someone's spousal relationship.

[00:27:38] Speaker 01:
Island Creek did not get what it wanted here. And by counsel's very definition here, I don't see any situation if we accept this standard the way counsel has.

[00:27:49] Speaker 04:
What's the evidence in the record that your client is competing with Precise for task orders?

[00:27:57] Speaker 01:
There have been task orders that my client has competed with.

[00:27:59] Speaker 04:
What does the record say about that?

[00:28:03] Speaker 04:
Is that an allegation and a complaint that you're competing with them for task orders?

[00:28:08] Speaker 01:
Well, Your Honor, as we've discussed, we have to be so delicate here not to address specific task orders, yet we're being penalized in the same breath that we can't.

[00:28:21] Speaker 04:
Your theory is that you're injured because there's an organizational conflict of interest which adversely affects the award of task orders. And I'm just asking you, is there any evidence that you're competing with PRECISE for task orders?

[00:28:36] Speaker 01:
Yes, Your Honor. There is evidence in the record. We give examples of task orders that were awarded. We did, as counsel brought up, we went to GAO. And yes, we brought a CDA claim. We went to GAO.

[00:28:49] Speaker 04:
That's my job is to... Just tell me where. Where do I find that you're competing for task orders with Precise?

[00:28:57] Speaker 01:
I mean, it is in the record, Your Honor. I don't know exactly how to... You're supposed to know the record. I know the record. I know that our client has bid against Precise.

[00:29:07] Speaker 04:
You can't show us where.

[00:29:09] Speaker 01:
I mean, I would be happy to do so with some time to find it. I'm sorry.

[00:29:16] Speaker 01:
My client and... We're out of time.

[00:29:20] Speaker 04:
Thank you.