percent have to be achieved prospectively or post back with another words do we evaluate whether or not they have substantially complied with the far with the code of federal regulations as to doing their fifteen percent when the contract is does or can we look at it as a snapshot on the front end and say it appears that they will not make their fifteen percent the contractors would have an issue your honor we don't have any on this point frankly i have worked in this area of law for a while and i would have thought that this argument would have been heard before the federal circuit given its exclusive jurisdiction over our service or the civilian board the court of federal  binding but i think it's persuasive the government accounting office says report that we've referenced in our brief wherein they say that compliance is evaluated at the end of performance we think that that is consistent with the language of the regulation in that a small service to s t v o s b a law was get that wrong has to kill it will is basically prohibited from paying more than eighty five percent of the contract price to a non similarly situated contractor in other words to a non s b s d v o s b however there are exclusions one of those is the material cost don't count and  out to the language of the stat you paid you can't pay you can't pay to that subcontractor more then eighty five percent of what you were paid paid is a past tense it isn't saying what you will be paid what you  anticipate to be paid what you should be pay it's what you are paid with some exclusion such as for materials which makes perfect sense and in the construction world because as soon as a contract is issued there's probably going to be a change or in a contract like work was subcontract was a large part of was it all the work it was the sub contract was for a scope of work in excess of eighty five percent but didn't it also say all the work we don't know how the works going to be portioned out over the job and whether the land up to eighty five percent might not be knowable at the beginning but if one hundred percent of the work is going to be done by  outed your honor maybe it's different with what he's saying that i don't think so because well for two or three reasons all in conjunction one the proof by the affidavit which was properly submitted in response to the most for summary judgment it was the intention of dunbar to completed its fifteen percent and of course the work in a government contract is not necessarily the using of the shufflers other elements of the work which had dunbar had been on or was already obviously self performing inspections quality control representative these things in other words there are management type work that is qualified for the fifteen percent that is not running the dragline in the of mr dunbar was we were doing this to learn this business we were already a government contractor this was another area of construction we wanted to get into and so we found someone who they could teach us to do this part of the business and they were going to help us figure out our fifteen percent what we needed to do to be compliant we have this section twelve of the sub contract which allows us to make that amendment as necessary your honor do i wish that it hadn't that the wording used isn't the wording that w thanks my life harder but i don't believe that it is prohibitive under these circumstances because i don't think no matter what that sort of contract says i think what matters is where we are at the end of the day when the sub contractor been because it allocates too much to a subcontractor on the front end that's not what the government accounting office is doing it's not what paid manes paid is a past tense bar you have to look at this we don't want to be involved in people anymore take the people and go that's one option which is they have any remedy that at the end of the line if you are they out at that probably played to their panels on that they would then they would be they would be  really forced another option they had under their bond is they could undertake to self perform the work they hand over take over the work with another contractor or with their principal harding who i don't think anyone would really want back on the job over have gone out and gotten another sub contractor who was qualified if they were that concerned about this eighty five percent fifteen percent split if they didn't believe that dunbar was going to step in and do their fifteen percent as would have been done by a qualified candidate they had options they had options which did not subject them to continuing to do something which they claim to have felt was inappropriate or legal they took the easiest option of which is just to deny it and but they had office by which they could be completely compliant with all federal laws regulation counsel i'm interested in the language in the regulation that says the cost of materials are excluded in our are not considered to be subcontracted and i can't i couldn't find where that anybody really discussed that whether that's relevant will of an act also couldn't find where there was really any description as to exactly what this was what this work involved in other words was it strictly dart work where there were no included under the sub contract and what happens then when we subtract the cost of materials does that there's that impact the i think the district court said there were this ended up being like eighty seven point six percent if we subtract materials does that affect that and would that make the subcontract compliant you're out of the truth i breakdown as to what those were or would have been that wasn't know that how that actual math would have broken out at that moment in time it was not presented to the district court again i don't believe we can do that math until the end we can't especially this isn't a math problem that can be addressed on the front end regardless it's a math problem we have to address in the back but it's summary judgment doesn't somebody have to come forward with a with some kind of presentation of fact that  are materials significant amount of materials that are involved in this we mentioned the materials we did not raise that if all the facts are facts that were a lot of what was the intention of dunbar's actually performed its fifteen percent  may please the court dunbar and hard to take improper advantage of a program designed to enable services able veterans to star in grow construction businesses and in doing that  well the prime contract is hand in glove with the subcontract and that they're entered into on the same day and that shortly thereafter not only do you have this hand in glove relationship where literally furie the two documents all of the work is subcontracted then dunbar hires great harding the owner and other the sole owner of party enterprises to manage the project under separate employment agreement so essentially here you have a great hearty either directly or through his company doing the project alone but the make what's wrong with that because in violation of the the regulation is just as a matter of construction business practices which what's wrong with that oh there's nothing wrong with then terms of getting the work done what's wrong with it is this project was set aside by the government for service disabled veterans and because it went to dunbar some other service able veteran who actually intended to do the work themselves at least enough of it to qualify under the regulations didn't get that opportunity the point that opposing counsel spent his time on is is his conception that this sort of analysis as to whether or not this project complied with  regulations can't be done until the project is done that's the basic position seven problems with that argument the st he admitted is there's no authority for it that this issue of people he's not a problem with and that just means because the future tense is the tense of promises which is what this regulation is doing is same when you get the contract you're the promises you make the word paid in the sentence is not a verb the word paid in the sentence is a participle serving as an adjective that is describing the money we're talking about the money you can't pay more than two dollars other people are not situated adjective can't have a verb it can't have a tense a sentence can have more than two tenses so the grammatical it's thirteen c f r one hundred and twenty five point six right b b three in the case of a contract for general construction it will not pay more than a five percent of the amount paid by the government to it two firms are not similarly situated so that will not pay do you think it doesn't read something like the contract contract shall not provide for payment of more than eighty five percent because i think of trying to serve two purposes one is an initial evaluation of the relationship between the sub contract in the contract because the contracting officers and the  this expressively should evaluate that issue but also it has to comp encapsulate the performance of the contract you might have a contract and sub contract that say well we're going to do this work five thousand and fifty but in fact that doesn't occur so it can't be limited to two the contract the argument that opposing counsel is making would require this sentence to be in the future perfect and require the word paid to be changed to the amount that has been paid or to have been paid by the government you need a future perfect sentence here for councils are going to make sense so now are you quoting the two thousand and sixteen regular and i'm quoting here the version of the regulation prior to the change revision did not change this provision which is important to talk about a short run but was there another change after the version that was in effect december rd thing i thought there was another effect at the time the contract now they rely on denver lies in this g a o report and what the court is is the g a o and i recommend everyone to read it if you think reading surety bonds this thrilling a g a o report is a white knuckled nonstop thrill ride with  is doing was contracting officers instead of side projects like this one are tasked with monitoring compliance with regulations like the fifteen percent we're talking about and the g a o is studying how good contracting officers are doing that and so they had to make that study they sampled ten government projects and the quote that counsels relying on is a partial quote from one sentence from the top of page three of that report where in the g a o is simply describing their sampling technique they're saying here's the reason we checked we picked jobs there were already done for our report that's all it is is not any broader discussion of how these regulations are interpreted or enforced or evaluated and if we read the report its entirety we find that the opposite is true if you look i commend you look at table two on page eight which is entitled partnership responsibilities it's a listing of what these contracting officers are supposed to do when they're evaluating these reports and one of the bullet points that the contracting officers are being graded on in this study is whether they documented and i will work dunbar could comply with sub contracting limitations before awarding contract ok and then if you look further at page eight and they found by the way only four of the ten contractors did this the upshot of this report is that contract officers aren't very good at enforcing these regulations and mind sharing them and you also get page eight they found two contracting officers they lot they lauded for providing requiring the regular updates from the general contractor of the subcontractor and how much work is being done and whether these things are being enforced so if you read the report as a whole it's a story of how grading contracting officers for these regulations and the better you get a better grade if you do a couple things one you're supposed to at the beginning do an assessment of this general contractor who is seeking the bid in the term do they have the ability to do the work and do they have contracts  up and you should read the subcontractors determine if they're going to perform an off of the work had that been done in this case that they would have found that the hand in glove subcontract prime contract didn't satisfy this requirement the contract never been would have percent of the cost of contract performance incurred for person now on the concerns employees or the employees of other s t v yo s p c you familiar with that regulation yes your i believe  future that in order for them to get the contract they have to promise to do these things and in order to validate that promise the contracting officers can look do and should do according to the g a o an assessment at the beginning of the project and require regular updates throughout the project and there's nothing the g a o report on the language they require them to wait until the very end that waiting that this idea that we wait until the end is also inconsistent with the fa framework with a system in which we don't evaluate violations until the end of the project it couldn't at the same time be true that every application is a violation for months and months and months every pain level of what would be the  allows you to spend the fifteen percent of the last year while your i think that that would be maybe saying the same thing because it's we can evaluate whether or not we're going to perform fifty percent at the front end based on the contract that you know construction especially public construction is built on schedule and is built on predictions where we have where you're saying if the contract provided for spending fifteen percent at the  could truthfully submit earlier that you're in compliance even though you weren't spending fifty percent during that earlier period exactly and the kind of his argument that our contract allows for changes and we could substitute out for harding later so for sure that our human is a kansas same why bent i've been accused of hiring a hitman but my contract allows me to modify to have him fix my toilet instead of the fact that this contract like virtually every contract especially reconstruction contract says it can be changed by mutual agreement of the parties would be in and out for anyone in these circumstances and it's simply not the case here if i venture into a contract that says am subcontracted all of my work away which by the way is the exact problem this g a o study was commissioned to address they can't claim they can do ninety nine percent of the project and be immune from scrutiny merely by claiming one of the last  and i think you can absolutely do that into account that in construction and in the construction industry very seldom is the contract price the actual amount of money that changes hands at the end of day you could certainly take that approach but in that approach once again the decided to be the reason that the regulation talks in terms of will not if i think i answered earlier that is part of the that and where you start with the contract where i have subcontracted out one hundred percent of the work to someone who is not qualified as s t v o s b merely to say in the future we might maybe we could have the right to dollars and says that trying to be paid you know prices so as the work goes up and down the prime contract hardens money goes up and down in the sub contract and again the scope of the work doesn't change in the scope of the work is all work so if the government says hey there's some more dredging has to be done we found some rock here that has to be taken care of and that's going to change or unit price that change passes right through pursuant to the hand in glove subcontract to harding and changes harding's price and changes harding scope of work did that work involve so all the work which was subcontracted but those did the work has contracted involve the providing of and then bring it into compliance dunbar would have had to put some of the evidence forward at the trucker level having the record before the court and they argue that we can do until the end is is disingenuous because again they did bid this job so they have some idea what is going to cost to do what they could have put those estimates into the record they were in the middle performing the job so if he said they'd already paid for supplies materials they could have put that have an assessment into the record he set them in the middle of the job they had a forecast for or a schedule for future work they could have put that into the job beginning that the record is is completely devoid of any evidence about any cost of any materials this court should not upset the summary judgment based on having or wanting to gas about what materials might cost and how that might affect the percentages thank you of law but it does give some illustration of a few things which are supportive of our position certainly not contrary to not only the evaluation of the in which we've pointed out but also the ability of a contracting officer on the front end or throughout to evaluate compliance to make sure that the there would be compliance they have the ability to do that whether they choose to do so or not it's not a requirement they have the ability to run their own contracts the fact of the matter is this is how the contract was run clearly it wasn't a scheme put forth to hide this from the government if the contracting officer as everyone knows has the ability on the front end to say you know i want to see your subcontract i want to see and really it's not as if the subcontract was secret or hidden or a backdoor memorandum or a handshake agreement in a hallway this was all of a little documentation to the government it wasn't a scheme to defraud any of the facts of the matter is within the value of the contract the money of it can change regardless of the work itself it was worth the digging of the did is not the whole value of the contract or the amount to be paid there are inspectors there are quality control persons there is management that can be calculated into that and therefore if the units go down if there's an underwriting then harding would in fact have been paid less and their percentage would have gone down if there had been an under run of units it's not just about her senate compared to what who's getting units go down the fixed amount of the fixed amount that would already go to dunbar sit and the percentages change but we can't know that until we find out what it happens on an indefinite quantities contract i would also point out that i had a point that i thought was just we have forty five seconds to think of it i know contract it gives dunbar the sole authority to unilaterally modify change or limit made the scope of hard work which is consistent with dunbar supportive affidavit which says that we're going to do we were going to a lot harder to figure out how to get our compliance fifteen percent and we had the authority in our specifics of contract to do just that and thank you thank you thank