fortuitously the supreme court recently resolved the primary issue on this appeal and that issue is whether or not it's also talking about escobar i am thank you and that issue that we spent a great amount of time briefing  on both sides here is whether or not a false claim liability can attach for a violation of a contractual provision that did not itself expressly condition payment on compliance our district court judge premised his entire summary judgment on the following statement of the law he said under a theory of them plied false certification it is only possible for a claimant to implicitly certify compliance with the law rule or regulation if there is a relevant rule statute rule regulation or contract in place that conditions payment on the claim of compliance with the underlying wild with a registration this is the problem i have  with your implied certification is that it incorporated the and the seven forty eight standard right and the problem is that the statement of work expressively approved the use of excel spreadsheets and therefore excuse serco from complying and the provision in the contract says that if there was a conflict it was the provision in the statement of work that controlled in the district court thought that was fatal to your claim and i'm wondering why the district court wasn't right in reaching their conclusion there's really two elements here that i'd like to address first this claim is it in about a contractual provision to provide earned value management on this government contract earned value management has a definition within the government and that is set forth in the standard called ansi seven forty eight the focus that the district court  adopted at the urging of defendants is whether or not seven ansi seven forty eight was expressly part of the contract but but my question is even if it was and under the contract they were excused by the contracting officer from complying with that provision then why doesn't that excuse them as a matter of law from having to submit reports that are and the compliant when they use the manual excel spreadsheet ern value management is more than the use of an excel spreadsheet versus an automated billing within within their monthly report and i try it this way this is how i'm thinking of and i want you to correct me if i'm wrong if you would please i fully appreciate which judge thomas talking about in your i'm not i don't use it too much of your time so we know about the statement of work we know about the c d r als and where the conflict arises and what not but it seems to me that  councils best argument is that that microsoft office was permitted and i think of that is that spreadsheet as a format and that we need to distinguish between what format spadaro would accept versus the content of the information to be captured to allow the project management to go forward in the way the government contracted for is that your argument that is because the seadrill is the format to use the output it says when the report needs to be made it's monthly what format can it be and it says vendors or contractors choice on that and it can be used in microsoft excel spreadsheet those are format nowhere nowhere did the government allow serco to stop doing earn value management or to do it in a way that would produce false numbers well i think that i i think you have a argument that certainly gets my attention  terms of whether or not that's true under the statement of work in the c d r l's and you know as we were just talking about but what about the fact that and you still have to prove materiality after escobar right and so what about the deposition testimony that they have submitted  between mitchell and ellison where they indicate that even though it was eventually i think two years after the fact that the department of homeland security said that's ok you're off the hook and it reads to me and i can tell you i'm looking  just that let him off the hook content wise what about that i disagree with that interpretation there is no content allowance or so the two steps in the process here serco requested repeatedly to be relieved even duty and it was repeatedly denied by d h s it was a material part of this contract they had to perform even but the issue that the deposition testimony talks about is one small segment and that is a complaint from serco that said if we are going to itemize into our automatic or automated accounting system thousands of line items so that our employees can bill to each of the thousands this is going to cost us extra money right let one discussion to say no longer does circle need to collect time and cost into various categories that it's going to report to on a monthly basis it just says it doesn't have to use its automated i  away with with the reports altogether because they were not cost beneficial that was the request for serco for a two and a half to three year period we don't want to do but isn't that true that that ultimately was the result of they looked at what it was costing to produce the reports and they said this information is not helping us with managing the project and of course we also have the problem of v h s constantly changing the scope of the work that spa war was supposed to be engaging i think what the evidence shows is that in the end of two thousand and twelve they changed the reporting of the e v f they said no longer do you have to do three year project to link satellite links between eighty towers at the end of that two and a half to three year period one tower link had been established would not be the first time in the history of government contracting council but the point of having earned value management is so that the program management office in washington d c can see that there's not compliance the contracts behind it's overpriced it's not getting done and they should be able to see that as it's happening on a monthly basis well and they think that's the problem i have counsel and looking at page seventy two where i wish i had the record cite is exhibit b page seventy two mitchell deposition were you satisfied that this was a workable solution for you answer yes met the requirement that we were trying to do for evie m and we and d h s had no problem with that if and then it goes on to the next page and it sounds to me like that the against an imitation for you to correct me but it sounds to me like d s was never informed that that circle was not collecting timely hours spent and cost into these categories that it was reporting that ok i've collected it so it's about to me how you think you've met the escobar standard what evidence is there before us that circle knowingly violated a requirement that certain new to be material listed for and with what you think is your most compelling item of evidence and go downhill from there thank you we submitted the list in the briefing from our expert witness who went through the various elements of what a proper earned value management program is applying and the seven forty eight standards right it is one in the same that's correct number one you have to assign charge codes to various groupings of tasks so that those house can be budgeted and then measured on a monthly basis we're back to the two thousand billing codes are we not in a client that was constantly changing the requirements of the contract which in part explains why at the end of three and a half years there was only one tower constructed i think we understand that by collapsing two thousand which seems totally unworkable but anyway two thousand building codes to one building code that the purpose of this  defeated right that's your argument it's entirely defeat that's the first half of the argument but the second half of the argument that's what i'm trying to get for when you report that to d h s on a monthly basis that one set of numbers that one charge code now miraculously is allocated into thousands of line items serco is presenting on a monthly basis a breakdown of all these charges per task to the h s the h s has and you know what we're made up then and you think they're made up that is what the evidence is showing ok and so it seems to me that if you if we accept this and the mitchell ellison testimony is as indicating that the government didn't seem to think this is material i don't know if i'm going to do that or not by the way but at best i doesn't come two years into the contract the one about the first two years were based things were being presented isn't that your argument for so you know being presented and accepted that that's correct that's correct at some point they said we want to do this on an excel spreadsheet that was accepted by the government not by d h s but but arguably that was it sets it at the outset from the c d r elf m s n office is excepted i would i would on these documents it sure looks to me like that was the game plan going in but again nowhere was it accepted that they would but that's how format not content that's crap but the content there is no change in the in the requirement for the content the content had to be a budgeted list of tasks compared on a monthly basis to actual work done and it falls apart from the very beginning if you don't collect the actual work done by those budgeted tasks but but if mitchell had talked to landry at the h s and told him what they were doing and the government paid the claims in full knowing that they were non compliant with what had been the original intent doesn't escobar tell us there's no false claim well escobar would tell us that is ways into the issue of materiality is about that's what we're going to dancing around having heard what we need to hear in materiality if you want to get to where you want to get thank you well for let me address first of all this question here ok we have we have first of all no evidence that d h us was aware that they were collecting time on a spreadsheet versus an automated system but nowhere is there any other dance that the h s or spade or knew that they were only collecting time under one charge code and then in a meeting setting it into these different tasks so it wasn't being reported out on the receiving end as one charge but it was on fans back out into that's correct so the first thing d h ses is on a monthly basis a thousands of tasks matching the what they approved as the budget and saying oh ok we're on track or we're not on track not the middle part they have no idea that's completely out until two years out where they told two years out or is it your position that landry never knew i have seen no evidence that landry knew that time was being collected in a single charge code so what do you think what is it you think counsel that land mr landry those were done internally between serco and spay or produced into a c p r report and that's what was shown to be did he also approve ok ok ok good don't have to use the two thousand code that's too many or at least the warri did that's a stretch of the discussion in the testimony i don't think any i don't well if i am the reason andrew was not a part of that conversation different if i read the testimony that way between ellison and codes doesn't make a whole lot of difference but again no discussion is about the use of one charge serco did not approach and say we want to collect time under one charge code and then we'll allocate it somehow into this  create the monthly report the spreadsheet was prepared and that spreadsheet had had time allocated out to different tasks but that's not the way time was collected thrown away so as your is your read of this record that this is you develop what's called the work breakdown structure that was part of the task and they just supplied a sample and then sperry waar and serco working together flesh that out into the two thousand and it was only when they had the two thousand that miss ellen said ellison said look this thing's been changed already several times it's changing some more i'm going to have to charge you after every time i have to reprogram the computer to take account of all these pass codes and that's when he yes or no did they ever report out collect more than one yes ok yes let me explain in a daily basis then to their time into one test code and that is what produced the claims that went to the d in ohio on a weekly basis the hours for every employee were given to the space where managers and then again on a monthly basis and they testified and the judge found that that's what they relied upon to manage this team that they didn't find the task was to be useful because remember this is a seven person administrative team and mr mitchell said i was with them every day i knew what they were doing all i needed know is roughly how much time and it was spending and that's how i was managing w so that's how we got to where we got to in addition to what the panel has been asking mr m b about in terms of the c d o and by the way the weekly hours reporters the siegel that's the first one i think and the monthly hours report is also a siegel that's i think the second civil so the spare where managers said that's what we needed to marriages we were over there every day they're both in san diego they're meeting constantly and what when you said that's what we needed mean do you think the record shows that what they talking apples and oranges and i'm talking about as the hours report which was intraday early so one charge codes yes then that are as report was broken down by workers right and now i want that process of breaking down his argument as i understand is that that was made up those were made up there is no artifice allocated what he's talking about is the task building numbers and those were certainly not made up there is testimony in the record that we cited to the court and i can help clarify this with the question so originally what would have been contemplated was rather than having a single charge code saying i build eight hours today to this particular project with the two thousand billing codes that those eight hours would have had to be subdivided into i spent half an hour on this tower and i spent another half hour on a different tower that's what we're talking as opposed to doing and be doing the the i m s the microsoft project that details how this is going to be accomplished and every time they had to redo it they had to go back and figure out where are these towers what seasons going to be worked on and all that sort of thing to sort of developing work plans for different aspects of the project so the reason that the that mr mitchell said i didn't care about these very towns was i had seven people they were doing administrative things i knew what they were doing because they were giving me work product when they wrote a project management plan they gave it to him he had to sign off on it and give it to the h s and get it back again and he does change management plan and they developed the microsoft project those conversations take place two years and it took place in two thousand and ten which i believe was after the first task order but before the second as i recall c forty seven forty eight requirement didn't apply as a matter of law to serco and then he went on to hold that the departure which our government contracting officers are instructed to use when they want to impose and see seven forty eight were not included in the contract so he specifically found that the e v f seven forty eight requirement was not incorporated by reference into the contract so it didn't apply as a matter of law and that is fatal to their claim and if you make that mining based upon the provision that says a thing if there is a conflict then you go with the statement of work no he didn't he didn't sit on that he based on the fact that the the far regulations say to a government contracting officer if you want to impose a n c seven forty eight here is the language that you put into a contract but i thought there was a schedule attached to the contract that has a long list of specific provisions which includes an see seven forty i thought it was an applicable document section that's correct write an applicable document was out enough to incorporate by reference not compliance or it's not and he specifically looked at th cited and i understand it's a federal circuit opinion but the federal circuit is going to have some expertise in government contracts they specifically in the north of robin case hold that if you want to incorporate by reference you have to use that language we are incorporating this by reference and that that was critical to judge hayes as finding that n c seven forty eight was not incorporated by reference as a matter of law and you can review his analysis and i think you'll find it to be a very sound  claim in this circuit was not overturned in any way by asking bar so it's in the government has filed a couple of statements of interest in the circuit in which it is said the bid finding has was not overturned by escobar so it's both under the bed and under escobar because escobar clearly says there has to be an applicable legal requirement either by law regulation or contract and so that in itself is fail you've gone on to say and i think  given the rigorous rigorous materiality standard set forth in escobar that the conversation that were my client brought up to the government said if you want to do this you have to pay us for one thing we don't want to do it just say here's the level what were the kind of require and he said no we brought it up it's not like we hid it from them and so that destroys materiality in addition scienter this circuit is made clear on several that that destroys science are under the false claims act so the disc of the conversation between ellison and mitchell is fatal on both materiality and say enter  court relied on police pretty heavily to reach its findings so when you contrast this case to the essay see case in f f a i see the d c circuit specifically found that was a nuclear contract and there was a general conflict of interest actually in the d c circuit expressly found that the evidence had shown that that statute was specifically incorporated by reference into the contract and that the witnesses all agreed that it was material and that three n r c employees testified that if a they had known that there was a conflict of interest that they never would have approved the payments so that stands in stark contrast to our case where there was an explicit conversation that was approved and the the claims for payment were the public voters which came directly out of the circle accounting system which consisted of the daily time entries and planets of never alleged that there was anything inaccurate or improper about the public vo give you the remainder of mr burke's time for rebuttal here first i'd like to address in a statement made by my posting counsel here she suggested that the contract performance reports that were produced to d h asked on a monthly basis showed on me that circle performed administrative document review type work what was presented in the evidence and i want seven people by those seven people and it's correct there are seven people on reported in a different manner and that's not part of our case but the these guys were just sort of the planners and project directors that maybe i'm going to use well that's that's where we get a little bit misleading here our expert demonstrated that serco as time was billed to tasks involving the towers testimony as they went to is indirectly related is it not i mean it's essentially telling them you know work on mt ball the you know not during the summer months or it's too hot right that's what they're doing in this specific task that we're build would include site inspection and had to review to see if there is enough structure available or space on the towers to put on the microwave power so personnel were going out to the site they were evaluating they're doing structural rip analyses they were ordering supplies all of that was run through circle they didn't actually put hammer to nail right somebody else eventually installed the hardware that's correct but they go out and decide when the why does that matter because that's what circle was billing and showing d h s on a monthly basis that they were doing all these separate tasks out on all of these towers and that's what our expert looked at and said now wait a minute they budgeted four hundred thirty two dollars ninety nine cents which includes you know budgeting overhead and look what happens on the actual reported numbers it's a democrat and that is impossible to do when you're reporting true numbers and that's why i'm