of his fourth amended complaint and the quick him action brought under the false claims act because the district court below while rightly identifying the standard of review for determining whether the complaint pleaded a plausible cause of action under the false claims act did not correctly apply that standard in the circumstances of this case what happened here as explained by this court in starr vs baca the rollator pleaded specific non substantially funded they also pleaded he also pleaded that the honeywell software was not a commercial item was never sold commercially never least commercially so about the stuff that matters i mean this is a court have specific reasons for finding the complaint this official why should speak to those facts well honeywell is a sophisticated government contractor knows full well could be it was charging a license fee for g q or version three through six which a nother honeywell document shows were substantially funded by the government that honeywell tendered facts were here on twelve b six this isn't probably right so we're looking only at the complaint in terms of whether the allegations are sufficient or well yes and the and the complaint itself  alleged specifically that honeywell was charging a license for the district judge concludes that this is the most a contract dispute and it may well be  consistent with the complaint and consistent with the view of the district court that honeywell was overcharged what the district court found lacking was delegation under rule mine of knowing  fraud in a contract dispute is different and even overcharging and wrongful behavior under in a contract dispute is different from fraud so how do you get this from a contract dispute in which honeywell has acted wrongfully which for the moment i'll concede is probably alleged how do you get from there to knowing fraud based on what you've alleged well we specifically allege that honeywell was charging a license fee for no i got them ok but that's consistent with a disagreement over what the contract time i am or consistent with mistake i respectfully disagree with your your honor because this is a sophisticated government contractor knows honor but but but the standard here in rule nine is we gave we certainly the purpose of rule nine is to give notice to honeywell of of the allegations in the complaint and th honeywell alleged that they were that the g core was a commercial item specifically allege that we said it was not a commercial item based appellee honeywell your honour's this is not a complicated case there is no in disha or plausible inference of fraud of the knowing submission of a false claim just as the district court found after giving the relator multiple opportunities in fact ultimately six different attempts to state a sufficient claim under the false claims act essentially as the district court found claim in the absence of any allegations that any well at honeywell engaged in any knowing submission of a false claim that their complaint essentially boiled down to that this charging had to be so obviously wrong that honeywell had to know again as a sophisticated defense contractor in the district and as your defense it well they may look sophisticated but in fact they're kind of stupid absolutely not your honor honeywell is of course a sophisticated contractor as is the united states government which then why isn't it and if we can establish if the if the complaint sufficiently alleges that this is an overcharge why isn't it enough to say a sophisticated overcharge or i don't need to tell you much more than them well as the district court found there is a fundamental difference between a contract dispute if for the moment you accept the allegations of a contract dispute whether there is a proper charge and a claim for fraud under the false claims act which requires more is this court has recognized repeatedly of a dispute over contract terms government regulations fact there might be some basis for the relator to establish i think the government made a mistake here in accepting this and i think it's important and we went to some length to the district court to lay the foundation as to why that allegation that this is so obviously wrong that it has to be a knowing submission of a false claim was incorrect in in the relator own brief to this court that page two he admits and i quote the h seven six four e g i system include software delivered by honeywell the m six developed by honeywell for use on commercial and civilian aircraft so he admits and he admitted below that this very sophisticated software that navigates multiple platforms contains software that was originally developed by honeywell for commercial purposes the united states government the contracting officer in this appears at page three sixty four of the excerpts of records made in express to terminations that the license fee at issue here was a commercial item because it was of a kind sold in the commercial marketplace and he relied upon statements made by honeywell in its proposal and he made reference to fact finding that the government conducted in making the determination that this was a commercial item and again that is set forth that page three sixty four the record that is a document that the relator presented before the district court as part of his revised six complaint essentially and there is nothing in the complaint that went on to establish or even alleged and i understand bush but even to set forth a plausible basis that when honeywell submitted its proposal information to the government when the government conducted its fact finding on commercial item that there was any misrepresentation any false statement any plausible attempt to deceive the government in the basis for that commercial item determination which is ultimately what the government rested upon and finding that this license fee was appropriate because it was consistent with the license fee that honeywell also was charging in the commercial marketplace for the elp the components of the software that were basically of a kind the same components that exist in the commercial aircraft as exist in the military aircraft the relator construct is based entirely on one document that he set forth before the district court and repeatedly argued the so called honeywell technology roadmap it also appears in the record and he contended that based on his interpretation of arrows that show that there were various enhanced ments to the core software that honeywell developed in that those enhancement showed that the government had funded  changes to the core software the license agreement it issued is not over the entire report g course software it identifies specifically fourteen functions and capabilities that honeywell developed at private expense the relat in a declaration that he filed in the district court that he didn't even know there was a license agreement in this case he had no idea what elements of the software was license this is a classic case of a person who's not an insider who has no idea  not a software engineer he's a contract administrator he has no idea what that software is what it consists of what portions of the software are licensed which can knock files a complaint because he disagrees with what his company disagreed allegations of fraud are massive litigation of the skies of this type can be very expensive and ultimately if the claim is found to be meritless it's the united states government it's the taxpayers who bear the bulk of the social economic cost you know i was listening to all the way until you start telling me that to keep him stacked it cost the government money well there really seem to have to actually designed to prove recover money wrongfully extracted from the government of course it does of course it does in the there clearly are cases both where the united states bring claims under the false claims act and some cases were related have brought claims into the false claims act and again the gate is real nine b but the point is where claims are prosecuted and expensive litigation results and those claims are not found to be meritorious under the far the provisions of the far the contractor is allowed to include the litigation costs up to eighty percent eighty percent those costs in its allowable costs and so alternately if a case is not meritorious the bulk eighty percent of the litigation costs are allowable costs under the far and so that is why basically their overhead costs so it's not that we would send a bill to the government for our costs although so the next time the next time you have a contract with the government you can build it in the overhead cost it would affect the company's rates essentially the overhead rates and those rates yes do tend to apply to you and started you would go back to charge back for for the contractor who was of issue here but as well i just cracked the charges at issue here the license fee that the government open negotiations accepted as a reasonable commercial cost because it was consistent with cost honeywell were charging to commercial customers consistent with cost other contractors were charging to the government that's it again three sixty four of the record those costs would be appropriate and would would remain then honeywell in its cost proposals its overhead pools would be allowed to include eighty percent  it would be it would be a pile allowable cost that would affect the company's cost rates going forward yes and in my point simply is that i misunderstood your argument and i thought you were telling me that you would recover eighty percent of this is part of the contract with has recognized in blimey income faso in several other cases is that there is an important gate post and that is a gate post to protect parties from expensive and burdensome litigation unless there is in fact an appropriate allegation of the knowing submission of a false claim and the point is that litigation even if it goes on for years and all to me is unsuccessful it is not just a cost of doing business there is a real cost to society and in this case to the government in those c the government looked at this these allegations it did not intervene to prosecute them to just not prevent the relator if he makes an adequate showing from going forward here that just record gave the relator six different opportunities specifically directed i dismiss the question is in this complaint has he adequately alleged enough to get over the real nine the gate post and i think the answer is the district court after a very extended period the answer is clearly no the email and as the district court found and it's apparent from that document which again appears in the record and that's it e r thirty three the darby deal in email in two thousand and seven made a determination that i unit which consists of hardware accelerometers ring laser gyroscopes computer software all of that is the navigation system for the b one b bomber for apache helicopters for numerous platforms she found the entire system was not equivalent to the ladies ref navigation system that's used on commercial aircraft that was in two thousand and seven and two thousand and eleven contracting officer kirshner made a different finding that the software license fee a component of the g i system was a commercial item and as a result in the contract negotiations for the renewal of the contract for the  system the component of the price associated with the software license fee could be set aside and accepted as a commercially reasonable price without needing further support in the contract negotiations that was just one component which is the only component at issue here but there's nothing in the darby deal an email in two thousand and seven finding the entire system not to be a commercial item that's inconsistent with contracting officer kirshner's determination  two thousand and eleven again that just record gave the relator the opportunity that was brought forth heavily on a motion for reconsideration after the district court had dismissed the complaint and again they just recorded looked at that assessed does this allegation based on this two thousand and seven e mail allow that the relator has now pleaded that honeywell knowingly submitted a foss claim new in the answer is clearly no in two thousand and seven another contracting officer found the license fee appropriate there's no allegation that honeywell made a false statement in that knew that there was a fraud in connection with that determination and and that is what is the essence of a false claims at case that's what differentiates a foss claims a case from a contract dispute conduct that we're alleging honeywell itself tendered the so called license agreement which the district court expressly found was open to honeywell charging licensed or anything the the the question of funding that was a honeywell document itself saying that remember that is a non conclusory allegation in fact it may turn out you rather that discovery will show that this is not true but we're dealing with pleading plausible non in fact a commercial item then honeywell could charge no question about it honeywell could charge the government what it charges all its commercial customers with respect to that software and hardware well honeywell of thank you thank you