is that when the parties have expressed their mutual agreement in a written and integrated contract that contract is their agreement the district court got this case wrong and its ruling threatens  administrative expenses or other costs in the text of the sub contract and that's it j five ninety eight within the four corners of the parties written an undisputable agreement floor clearly wins it's a cost reimbursement contract it allows reimbursement for all direct and indirect costs under the far provisions and within the scope of the contract so how did we get here is this  i mean this is this is unique to this contract or a great many government contract we're not going to contract a contract between general and so contractors drafted in this manner your honor it's a general problem in the sense that as a overarching matter you typically get your reimbursement as the far provides for your direct and indirect costs of which there's no dispute in you that you want to presuming that norm and there aren't have this isn't a firm fixed price contract but if you have a firm fixed price contract you're not going to ultimately fill for your cost because the government is just paying for the prime contractors just paying that berm fixed price but what i'm saying and i think i think all sides agree on this and this was the evidence at trial that under a cost reimbursement contract which is what we have here there is reimbursement for cost unless the parties agreed to a specific cap and you can agree obviously this is contracts possession and yet this key term that they claim they secured in these negotiations is indisputable nowhere found in the four corners of this contract it would be so easy to have sat after if they are right that there was mutual because in the contract there's this table in a one of the contract and the table has estimated cost and estimated i would submit to you is the exact opposite of that start out but estimate cost and then a not to exceed contract value column and that we agree is a limit on the full amount of our recovery and we know where seek to exceed that through this litigation and so be quite odd if the parties clearly knowing how to express in that table and they won a limit on the amount that floor could secure under this contract had also intended another limit and yet never expressed that and given that he has refused to pay anything above two point three percent cap since two thousand and four why wait until two thousand and sixteen to bring suit yes your explain to me why that you think you care client kept on being limited by the two point three percent cap but let me answer that in two parts part of it why it's not a problem that this dispute didn't arise for some years this is a key part of government contracting there's two concepts here there's the provisional rate that you bill your costs out including something like g and a cost and then there's the actual audited rate and the provisional rate when you're doing this for floor you're performing under a given year you don't know what your ultimate costs are going to be at the end of that year and so you bill at a provisional rate all understanding this is all laid out in the far visions that are incorporated in the contract but understanding that ultimately later the government will audit your costs and tell you what your actual rates were and then again unless the parties agree to a cap you get those actual costs and so what was happening for these many years as you identif that we were building in a provisional right now as we perform what's strange and i'm not particularly in the government contracting space myself i didn't handle the load but what i've learned is that the government takes a long time to conduct these ought it's not so you re three percent cap for all those years there was an ongoing dispute we built provisionally at a higher rate actually but all that a ultimately paid was two point three percent for years this is an on going to spend if you didn't did you when you only got the three point yes your honor and this is really every single year we there is multiple times when the parties and this is laid out and this is all post contractual but the party set an ongoing dispute i don't think anybody would disagree about this rate there were meetings about it and the way it alternately got resolved essentially was we ended up continuing to for visually bill at a higher rate they would only paid at the lower rate but of course we're expecting  come to a contract i mean you say that there was no contract with these two point three percent cap but that's what you did but you have the other side says they're billing pursuant to that contract but we're certainly billing pursuant to the contract but we weren't locked in any kind of two point three percent rate that's all you are receiving provisionally but this claim and this it gets back to edgemont so i want to answer your point about statue of limitations as we lay out in the brief i don't really think that's before this court ultimately was never decided by the  let me attempt to clear them with the court what was the agreement the written integrated contract does not contain any limit on g n a the district court went beyond that and reviewed parole evidence but as we described in our brief that critical for all evidence that relied on was double hearsay this inadmissible internal e mail that it relied on to find that we had agreed to a two point three percent cap and a point judge king made earlier bench trial sometimes an application maybe the rules back in this i think really ties it up with the statute of limitations is that there are two obligations p a had under this contract to pay our provisional rates that we've held and to pay our actual  audited by the government and it was those actual rates for years two thousand and four to two thousand and twelve that were determined by the government in two thousand and fifteen and we brought this to well within the statue after they refused we did when we got our actual rates we said pay us it's a quarter of that lyn's into what the district court it went made factual findings about and it found that in fact this contract was unclear in had been amended by parole evidence that it relied on you say that parole evidence some of it anyway is hearsay i'm not sure why it's not a statement against interest by your client where your honor and  good morning your honors may it please the court mark mosher on behalf of ph d i'd like to start with where judge wilkinson started this argument and this is the question of how common is this sort of cap to do parties or ella regularly cap  the g n a t costs and in two thousand floor said to the government it said to the government this is at j eight hundred seventy six that all of the floors contracts essentially have ceilings on g n a t application and our actual far exceeds those ceilings so this is very standard practice in the industry and here what we have is a contract a sub contract that expressly references a proposal again that's common within government contracting in a contract between a prime minister when you had a proposal process when you then sit down and reduce those terms to an enforceable contract to incorporate by reference the proposal and so the judge here he looked at the term proposal and he said i can't tell based on the four corners of the contracts which proposed which proposals being incorporated because there are multiple versions and so then he looked to the parole evidence and he determined the what the parties were incorporating was a proposal that included a two point three percent cap and there was discussion of this april email earlier and i'm happy to address that but first i'd like to turn the court's attention to the contract negotiations that occurred in september third in september two thousand and ten these are the negotiations of the sub contract and what i think is one of the critical documents is it ajay a six seventy six this is floors president bob jarvis he sits down a spreadsheet of what he calculates is going to be the projected costs for the life of the contract and for every year he calculated floors cost using a fixed two point three percent he says this chart to p a t l what he did his cover e mail said that he calculated these costs based on the prices previously agreed to including the reference why don't you say well this is the practice and everything but why was there any impediment to the parties just sitting down and negotiating out two point three per cent tell word of method everything much simpler and but the but the point is it's not in the contract that set the two point three percent out it's an integrated contract and things we want to and i think virginia law wants is to be clear and here we have an incorporation by reference argument and we're having to type parole evidence on what exactly is incorporated and what exactly the proposal most incorporation by reference three percent why not just say let me start and work backwards first on this point that it's at he was the draft of the contract but the evidence shows that both parties draft of the contract one of the key provisions of the contract is that of cos and subsection a one that was drafted by floor and so you know this that argument is only raised in a brief know what i would say it's not properly before the court that this construe against the drafter but even stepping back farther we would take the position that the intended to incorporate there's dispute today fifteen years after the fact and hope to get to the statue of limitations issue i would say there wasn't this you at the time the the contract was being negotiated this is a situation where the the chart  costs was drafted by floor he agreed to it and put it into the contract so the parties understood that simon this this really is also to the ascertain ability point your honor made earlier the key difference between ambiguity and ascertain ability for purposes of incorporation by reference is that ambiguity is a term based on the four corners of the contract but they were ginia cases in the law makes clear that when you're trying to determine whether  a document is incorporated by reference you can look to the negotiation history the parties discussion the cases the two cases the parties both rely on the herds case in the central telephone case in both cases the parties looked to negotiation of the contract to the parties discussions and i believe was in the central telephone even to the parties host contract conduct to reflect their understanding of what the agreement is percent out the yeah the chart that's in subsection a one the evidence shows that is a chart that was drafted by floor and the evidence shows how that was drafted the column the estimated cost is the estimate of the combined labor costs and the g n a t rate the cost is estimated because the labor had to be estimated but the chart is clear is what florida did was to estimate how much they thought they would spend on labor obviously that has to be a be an estimate as they don't know how many employees or what rates reno are projecting fifteen years so they estimate labor and for every year they then multiply that by two point three percent use that number as the g n a t rate added them together to put in the contract  what their projection of their actual costs were were seven percent so if they find out that the contracts entitle them to their actual g and a they would use seven percent there do they have direct to two point three percent so they began contract on six seventy seven and it's the chart on six seventy seven for first of all who put this together that was drafted by floors president bob jarvis ok now does this can you help me understand what this is it is if you calculate them all out that's two point three percent that each year point two percent of the first that the first write directly over is estimated g n a is strictly mathematical calculation call made direct times two point three percent that gives us r g n a total cost then is direct labor plus g and a this then call the total cost is what we see in the sub contract as the estimated costs and that was the number prepared by floor there's testimony from the employee at ph d who worked on the contract and she said when she received the spread she she looked at it went down to cat and calculated ensures that the g n a t was at two point three percent that showed her that  floor understood they were getting two point three percent and because he agreed that these were the right numbers they put this directly in the contract so i don't minimum this also goes back to the ascertain ability point it's we don't know of any case and it's hard to imagine a situation where there is an act you know a proposal or an agreement outside the contract where the parties could sit down and create a summary document and they could agree that this is a summary that accurately reflect reflects the proposal if they could reach that sort of agreement but yet at the same time they didn't have sufficient clarity to incorporate it into the document it seemed specially you know all the way we think the  the ascertain ability issue would you know become a question of fact which the the district court i mean at a minimum we could say to me the finding of this wasn't really you know i've addressed on the merits but was it an argument really that that was made below that no proposal was incorporated into into the contract they floor presented at trial a different proposal a proposal that still had their seven point zero percent that that they wanted to deal with we think that's a very different argument than saying and  just so i'm clear beatrice here and luckily i don't have to do too many times with kinds of contracts but it it puts it out for fifteen years is that what the yes and the time is on the left jarvis right so you've got the proposal that was submitted in april you had the original proposal that came from floor which is what they put forward to the judge as the version that was incorporated into the agreement what the judge found as a factual matter is it was that document but it had been modified and who the two point three percent that was the proposal this is a document that arose in september thirtieth two thousand and two in the context of contract negotiations so in some contract was originally  reasoning whether there was any reason that you cannot put a cap on what you have a two point three percent of direct cost cal on what you were to any reason you could make it clear to me certainly it would be better for our client's perspective if the contract with unambiguous really clear in our favor but that doesn't mean that what the district judge seemed to me that that it would have been in your interest to have what a straightforward limitation on june a reimbursement seem to me that it would have been greatly and your interest to just have that little provision but it's not in there and as a result referred to go through this sides have some hard questions and that is the question and i think that's right this contract isn't crystal clear and you can you not maintaining i don't think before us there was this to court didn't find it was in any event and so i think you said just a few minutes ago that floors one of floors higher ups the president or somebody said well we agreed to the two point three but we were not happy with it now or something like that or are there statements  part ok so certainly there were statements it by year two of the agreement when they wanted to renegotiate and the parties did negotiate i mean so there's no allegation and you know part of the agreement early on was we'll take the reduce cap if you if we can try to work something out right parties did set down try to work something out there was a an agreement it wasn't everything that floor wanted but there was an agreement but to get back to your specific question one of the arguments that they ma during negotiations on the sub contract is they said because we've taken a lower g and a we want to hire potential award feet so that this is beef because we took the two point three standard go back and forth in contract negotiation and they had the opportunity to say well we're not signing in so you put it in and they didn't they signed the agreement as written but then you know a dish will dispute started arising in your two and i see a minute left i do want to touch briefly on the statute of limitations we do think the court can reach it obviously the court wouldn't have to it's the discretion but i think the arguments this morning show that the real dispute here comes down to a question of the law and its interpretation of the  federal regulation fifty two to sixteen seven and what sort of obligation or rose after the audit and what the federal regulations say is that when you bill at the time of performance you're building your final anticipated rate so at that time they needed to bill the amount they thought they were owed and that's why this dispute arose in two thousand and four because if they were right on their interpretation of the contracts they should have been receiving their actual rights back in two thousand four the only post audit obligation it could even potentially arise is that it is an obligation to make an adjustment and that could actually go either way if the audit shows that they were overpaid then p a b without a claim against florida get the extra the audit shows it reduces it it works the other way if the audit doesn't change the amounts no one has any cause of action or anything and so that's why you say that this breach if it occurred occurred in two thousand and four the facts on that are in dispute really because they are disputed they submitted a payment they submitted an invoice for payment above two point three percent in two thousand we refused it on the ground that the contract contained a cap they waited twelve years to bring a suit based on that many bugs what's that may years would be knocked out on a special invitation it's a five year statute of limitations that you say i'm accepting this lower payment most of so many years why weren't you protesting why weren't you seeking some found a recourse earlier why are you agreeing to summary tables that could be construed as imposing a two point three percent cap in other words there's a long period here where your client just seems to be asleep if if you really feel like you've been injured now what explains this covert ops period  hence your question judge well consent of course the contract we agreed to did not include that right and that's so critical because all that pretty contractual negotiation is easily explained as my fellow counsel said we had conditional offers and counter offers and none and that didn't get agreed to as to the rate and you know that because it didn't show up in the contract now let me take it after the contract and your question about whether we were asleep at the whale it j forty five this issue came up  the base year was at two point three percent we worked under that for the base year and i misspoke excuse me i said sixteen years earlier thirteen years before me let me correct that but the base year there was not much dispute but then the parties to again disputing this at fifty three to fifty four has additional j a sites that are going to show that continuing dispute between the parties we continue to build that mr bowser is point about what they had developed what they expected we built at a higher rate they didn't pay it but we did bill at the higher rate and ultimately we got our rates audited and they were higher and the last thing i would say on this is that at j ninety four footnote three this is the district court's memorandum of opinion after trial actual rates once the government does the audit i know it's strange that it takes years to do it later but that's just how they got here where you're saying that you should move to one piece of our own level that's correct your honor there is no there reference to the proposal in the contract which occurs twice and a one and b two are references to the type of services and labor that would be provided not an issue in this case and this is a clean contract did not call for reaching the proposal as to any kind of cost cap there is that table in the contracts that has a total value which were not exceeding and has estimated costs the proposal isn't referenced for value that is a limit on the recovery we know or seek to exceed that in this litigation that is a limit of parties expressed that they express none of this other stuff because they didn't agree to it in their integrated contract even if you try