BNUMBER: B-256813.6
DATE: October 29, 1996
TITLE: Test Systems Associates, Inc.--Claim for Costs
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Matter of:Test Systems Associates, Inc.--Claim for Costs
File: B-256813.6
Date:October 29, 1996
Joseph G. Lee, Esq., Carpenter, Bennett & Morrissey, for the
protester.
Karen Gearreald, Esq., Department of the Navy, for the agency.
Andrew T. Pogany, Esq., and Michael R. Golden, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Claim for costs of reasonable attorneys' fees for filing and
pursuing a successful protest is allowed for portion of fees related
to prosecution of the bid protest at the General Accounting Office;
fees related to other forums are not recoverable.
2. Costs for attorneys fees incurred for defending against Freedom of
Information Act (FOIA) request by a competitor to the contracting
agency for protester's proprietary information are not recoverable as
costs of filing and pursuing successful bid protest where they are not
related to prosecution of the protest.
3. Protester forfeited its right to recover the costs of corporate
labor allegedly incurred as a result of filing and pursuing its
protest at the General Accounting Office where the protester failed to
file a proper claim concerning its corporate labor costs with the
contracting agency detailing and certifying the time expended and
costs incurred in connection with the protest within 60 days after
receipt of the decision sustaining its protest.
DECISION
Test Systems Associates, Inc. (TSAI) requests that our Office
determine the amount it is entitled to recover from the Department of
the Navy for the costs of filing and pursuing its bid protest which we
sustained in our decision Test Sys. Assocs., Inc., B-256813.5, Oct.
14, 1994, 94-2 CPD para. 153. TSAI has filed initial and supplemental
claims for a total of $143,728; the agency has offered to pay the firm
$19,971. We determine that TSAI is entitled to recover $9,762.
FACTUAL AND PROCEDURAL BACKGROUND
On October 27, 1993, the agency issued request for proposals (RFP) No.
N00189-93-R-0378, a total small business set-aside, for operational
test program sets (automatic test equipment) for Navy aircraft. After
receipt of initial proposals, discussions, and receipt of best and
final offers (BAFO), the Navy awarded the contract to TSAI on March
15, 1994 as the "greatest value" offeror.[1] On March 23, Dixon filed
a protest with our Office against the award. On April 4, Dixon also
filed suit in the U.S. District Court for the District of Columbia
requesting declaratory and injunctive relief. Basically, Dixon
alleged that TSAI was ineligible for award because the firm had
checked the box in the RFP's Small Business Concern Representation
(SBCR) clause that "not all supplies" would be manufactured or
produced by a small business concern. On April 22, the Navy, on its
own initiative, took "corrective action" and terminated TSAI's
contract for the convenience of the government because of TSAI's
miscertification in the SBCR clause; the agency notified TSAI of its
intention to award the contract to Dixon on April 26. On April 29,
TSAI filed its first protest (B-256813.3) with our Office alleging
that the SBCR clause was fatally ambiguous and did not provide the
agency with a basis for terminating its contract and rejecting its
offer. In the meantime, Dixon chose not to withdraw the civil action
in the U.S. District Court; TSAI, despite being advised by our Office
to consider doing so, did not intervene in Dixon's court suit.
On June 3, our Office, after again notifying TSAI's counsel concerning
the pendency of the District Court suit, dismissed TSAI's protest
because the dispositive issue--which firm was entitled to award--was
before the District Court, which had not requested an advisory opinion
from our Office. On June 6, the contracting officer awarded the
contract to Dixon. On June 16, TSAI filed suit in the same District
Court which then had before it both suits concerning entitlement to
award under the same procurement. On that same day, TSAI again filed
a protest with our Office (B-256813.5--the basis for the present
claim) in which it again contended that the Navy's SBCR clause was
fatally defective and had misled the firm into miscertifying its
intention of furnishing items manufactured by small business. The
Navy issued a stop-work order to Dixon, and the District Court then
requested our Office to furnish an advisory opinion on the matter.
By decision of October 14, 1994, our Office sustained TSAI's protest
because we found that the Navy had used an outdated and defective SBCR
clause which had been in general use prior to 1985, and which our
Office had previously found ambiguous. See Mountaineer Leathers,
Inc., B-218453, May 6, 1985, 85-1 CPD para. 505. In response to our
decision, Federal Acquisition Circular 84-16, May 30, 1986, clarified
the SBCR clause to provide that the representation of the SBCR
regarding the source of manufactured supplies referred to "end items"
being acquired rather than the materials and supplies that became part
of the end item--as TSAI had been misled to believe. Because the
protest record contained allegations by Dixon and the agency that TSAI
had proposed excessive large business effort in its technical
proposal, we recommended in our decision that the agency refer the
issue of TSAI's size status (including its technical proposal) to the
SBA for a definitive determination of whether TSAI was legitimately a
small business concern. We also recommended that following this
determination by the SBA, the agency proceed with the award consistent
with SBA's determination and award the contract to TSAI if it were
found to be small. We also determined the firm to be entitled to the
costs of filing and pursuing its protest, including reasonable
attorneys' fees. See 4 C.F.R. sec. 21.6(d)(1) (1995).
The contracting officer then referred the question of TSAI's size
status to the SBA regional office. By decision dated December 14,
1994, the regional office determined that TSAI was a small business.
Dixon appealed this determination to the SBA's Office of Hearings and
Appeals (OHA). While the appeal was pending, the agency terminated
Dixon's contract for the convenience of the government on January 17,
1995. By decision dated June 6, 1995, OHA denied Dixon's appeal and
upheld the small business status of TSAI. On June 16, the District
Court dismissed both suits as "moot" because both awards had been
terminated and an award to TSAI had not yet been made. The contract
was ultimately awarded to TSAI in December 1995, and the firm is
currently performing the contract.
In the meantime, TSAI filed its first claim for costs with the agency
on December 1, 1994, and its supplemental claim by letters dated April
11 and 21, 1995. Subsequent negotiations to settle the matter were
unsuccessful. TSAI, without the benefit of counsel, filed its first
claim for costs with our Office on June 21, 1995. We requested a
report from the agency, which was received on September 5. TSAI filed
a supplemental claim with our Office on October 11, 1995, and its
attorneys filed comments on the agency report during that same month.
TSAI's claims consist almost entirely of a listing of hours and rates
for attorneys and costs incurred by corporate personnel for various
time and effort allegedly expended in this matter and for which TSAI
claims reimbursement of costs.
ATTORNEYS' FEES
TSAI included claims for attorneys' fees for the period of April 1,
1994 to September 30, 1995, a period encompassing the Dixon protest,
the Dixon court suit, the TSAI court suit, the bid protest, a Freedom
of Information Act (FOIA) matter, the SBA proceedings both at the
regional office and at OHA, preparation of the claim for costs and
other matters. The hours of services billed are listed by the
attorneys together with a brief explanation of the subject matter.
Since our review shows that these legal services performed can easily
be categorized and grouped, we will first make a determination of the
allowability of each category of services and then determine the costs
that are allowable and payable.
District Court Litigation
The claim consists in large part of billable hours charged by the
attorneys in defending against Dixon's suit and prosecuting TSAI's own
suit. We give three examples of the attorneys' summaries:
June 9, 1994 "Draft and revise Complaint and Memorandum in support of
request for temporary restraining order and preliminary injunction and
supporting papers; research case law on irreparable harm and
injunctions issued for procurement regulation violations as here." [5
hours]
June 20, 1994 "Travel to Washington for hearing before Court on TRO
application; attend hearing on TRO application; telephone conference
[and] further review of motion papers, complaint and file materials on
TRO application." [8 hours]
June 24, 1994 "Telephone conference with U.S. Attorney's office, F.
Haynes, regarding court's order on TRO application and other relief;
review court's order; telephone conference with TSAI, A. Affa,
regarding same." [.50 hours]
The agency disallowed all hours pertaining to the court litigation
because our Office's authority to order reimbursement of costs is
limited to costs of pursuing a bid protest, and does not extend to the
costs of court litigation. We agree. Costs incurred in seeking
relief from another forum are not reimbursable as protest costs under
the Competition in Contracting Act of 1984 (CICA), which limits our
bid protest jurisdiction, as well as our corresponding authority to
recommend the payment of costs, to protests filed with our Office. 31
U.S.C. sec. 3554(c)(1)(A) (1988); Diverco, Inc.--Claim for Costs,
B-240639.5, May 21, 1992, 92-1 CPD para. 460. We therefore disallow
these costs.[2]
FOIA Costs
Dixon filed a FOIA request on May 3, 1994 to the Navy to obtain the
statement and table of corporate experience which TSAI had submitted
as part of its technical proposal. TSAI vigorously opposed this
request and the controversy continued for 3 months, independent of
protest filings. The matter subsequently became moot in August when
TSAI's technical proposal was released to Dixon's counsel under a
protective order issued by our Office. As the agency states, this
FOIA request was made 6 weeks before TSAI filed its protest
(B-256813.5). We see no connection between defending against a FOIA
request from a competitor and the subsequent General Accounting Office
proceedings. In short, defending against Dixon's FOIA request was not
necessary or reasonably incurred for the filing and pursuit of the
protest. See Tripp, Scott, Conklin & Smith--Claim for Costs, 72 Comp.
Gen. 232 (1993), 93-1 CPD para. 414. This claim is denied in its
entirety.
Claimed Reimbursement for Earlier Protests
TSAI seeks reimbursement for its attorneys' fees incurred in
connection with its protest that was dismissed and the earlier Dixon
protests. The short answer is that our Office sustained the bid
protest filed by TSAI and docketed as B-256813.5 and the firm is
entitled to be reimbursed for the cost of filing and pursuing this
protest only--not for the costs incurred in connection with previously
dismissed protests. We therefore find no merit to this claim for
costs.[3]
Calculation of Costs Allowable for Attorneys' Fees
The agency has identified, listed, and provided to TSAI all directly
allocable hours that the agency determined were spent in connection
with TSAI's successful bid protest. The agency then applied the
hourly rate claimed by the partner ($190) and the associate ($145) and
arrived at a total of $10,544.50. TSAI has not rebutted these
specific findings of allocable hours. Instead, in its comments,
counsel for TSAI continues to argue that its claims for court
litigation costs, costs for previously filed protests, and
FOIA-related costs should be allowed. Based on this record, we see no
persuasive reason to disturb the agency's basic determination that
TSAI is only entitled to be reimbursed for attorneys' fees in the
amount of $10,544.50. However, we do make a minor adjustment to the
agency's determination. The record shows that these costs allowed by
the agency include 5.5 hours of attorneys' time (totaling $782.50) for
the costs of preparing and pursuing TSAI's claim with the agency after
our decision was issued. Under our Regulations, where a protester and
a contracting agency cannot reach agreement concerning a claim for
costs, our Office may determine the amount and declare the protester
to be entitled to the costs of pursuing the claim for costs before our
Office. See 4 C.F.R. sec. 21.6(f)(2) (1995). We have no authority to
recommend recovery of expenses incurred for pursuing the claim for
costs at the agency level.[4] After disallowing these costs, we
determine that TSAI is entitled to be reimbursed for $9,762 for
reasonable attorneys' fees for the filing and pursuing of its
successful protest.
CORPORATE LABOR
TSAI's initial claim for its internal corporate labor costs (corporate
executive staff) amounted to $63,744 for 1,039 labor hours for three
individuals. The labor hours in the claim are presented on a weekly
basis in a lump-sum total labor hours not identified with any
individual. Additionally, the Navy states that the hours claimed are
excessive and are not adequately supported. We agree. We give the
following examples:
"6/26-7/2/94 GAO to Lee [TSAI's attorney] acknowledgment of
protest. Lee requests GAO to provide TSAI all Dixon
documents. [Corporate hours claimed: 27 hours]
"8/14-8/20/94 Research compromise settlement prior to GAO
decision. [Corporate hours claimed: 20 hours]
"8/28-9/3/94 8/29 fax from Navy of GAC/TSAI's prop. Lee fax
of TSAI's supplementary comments (requested by GAO).
supplementary comments (requested by GAO). [Corporate hours
claimed: 46 hours]"
We find that not only are these claimed expenses excessive on their
face but they are also unsupported and lack any reasonable detail.[5]
The Navy agreed to pay a very small portion of these corporate
in-house labor rates based on its "guesstimate" of reasonable hours
despite the absence of any breakdown by individuals of the hours
worked or any detailed explanation of item-by-item charges. We do not
recommend that the Navy do so.
At the time of our decision and TSAI's filing of its claim with the
agency, our Bid Protest Regulations provided that when we found that
an agency should reimburse a protester for its costs of filing and
pursuing its protest:
"[t]he protester shall file its claim for costs, detailing and
certifying the time expended and costs incurred, with the
contracting agency within 60 days after receipt of the
decision on the protest or the declaration of entitlement to
costs. Failure to file the claim within such time shall
result in forfeiture of the protester's right to recover its
costs . . . ." 4 C.F.R. sec. 21.6(f)(1) (1995).
Claims for the reimbursement of expenses, at a minimum, must identify
the amounts claimed for each individual expense, the purpose for which
that expense was incurred, and how the expense relates to the protest.
Diverco, Inc.--Claim for Costs, supra. In our view, TSAI's claim
submission, with its bare general statements, without further
explanations, breakdowns, or supporting documentation, provided
completely insufficient detail for the agency to adequately assess the
reasonableness of the claimed costs.
The Regulations are clear--a protester that fails to comply with the
claim filing requirement "shall" forfeit its right to be reimbursed
its costs. TSAI fail to properly file a claim "detailing and
certifying" its costs with the contracting agency concerning its
corporate labor hours within 60 days after receipt of the decision
sustaining its protest. See Test Sys. Assocs., Inc.--Claim for Costs,
72 Comp. Gen. 169 (1993), 93-1 CPD para. 351. Accordingly, TSAI forfeited
its right to recover these costs, which, in any event, are completely
unsupported. Accordingly, the claim for corporate labor hours is
denied.
CONCLUSION
TSAI is entitled to recover $9,762 for the costs of reasonable
attorneys' fees related and allocable to the prosecution of its
successful bid protest.
Comptroller General
of the United States
1. D.K. Dixon & Company, Inc., another offeror, had proposed the
lowest price of $2.4 million; however, the agency found TSAI to have
submitted the technically superior proposal at a price of $2.7
million. The contracting officer, pursuant to a price/technical
tradeoff decision, selected TSAI for award.
2. The agency also disallowed all expenses incurred for attorneys'
services for the lengthy size appeal proceedings before the SBA
following the issuance of our decision on October 14, 1994. In its
comments on the report, counsel for TSAI argues that the SBA costs
should be reimbursed because "SBA review was a natural and necessary
consequence of the GAO decision [recommending that the agency refer
the question of TSAI's size status to the SBA]." However, the
question of a firm's size is solely within the jurisdiction of the
SBA, not our Office, see 4 C.F.R. sec. 21.3(m)(2) (1995), and, as stated
above, we will not reimburse a firm's legal expenses incurred in
connection with a matter in a different independent forum. We
therefore disallow these costs. The agency also disallowed the cost
of TSAI's counsel's employment of a legal "expert in the field of
government contracts [who] was required for specific interpretation"
of the SBCR clause. The charge by the legal expert is for 16 hours of
telephone consultations. The consultant's charge does not itemize the
amount of time or the subject matter of the conversations. We
disallow this cost item for the same reasons as discussed below
concerning corporate labor costs claimed by the protester.
3. TSAI's attorneys also billed a lump-sum item entitled
"disbursements" (in TSAI's initial claim this item amounted to
$7,004). The agency states that without any explanation, it is unable
to begin to determine how much of these "disbursements" are allocable
to an allowable charge since the great majority of attorney charges
were disallowed. We have reviewed the record and have confirmed that
this record contains no breakdown or evidence of any amount of these
disbursements allocable to TSAI's successful bid protest.
Accordingly, for the reasons discussed below with respect to corporate
labor (lack of documentary support), we also disallow these costs.
4. In this regard, the protester claims expenses (attorney and
corporate labor costs) for pursuing this claim in our Office. The
purpose of our Regulations allowing protesters such recovery is to
encourage agencies to expeditiously reach agreement with successful
protesters on the quantum of recoverable costs. See American Imaging
Servs., Inc.--Request for Declaration of Entitlement to Costs,
B-246124.4, Dec. 30, 1992, 92-2 CPD para. 449. Where the agency's
position in a cost dispute is reasonable, as we find it to be here,
the protester is not entitled to the costs of challenging that
position. See Stocker & Yale, Inc.--Claim for Costs, 72 Comp. Gen.
193 (1993), 93-1 CPD para. 387.
5. Many of the hours claimed by TSAI for corporate labor concern the
defense of Dixon's FOIA request and SBA matters. These are disallowed
for reasons already explained.