BNUMBER:  B-258655.2 
DATE:  July 16, 1997
TITLE: Innovative Refrigeration Concepts--Claim for Costs, B-
258655.2, July 16, 1997
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Matter of:Innovative Refrigeration Concepts--Claim for Costs

File:     B-258655.2

Date:July 16, 1997

Richard D. Lieberman, Esq., Sullivan & Worcester, for the protester.
Gregory H. Petkoff, Esq., Department of the Air Force, for the agency.
Adam Vodraska, Esq., and James A. Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Where a protester, seeking the recovery of its bid preparation and 
protest costs incurred by its employees, fails to adequately document 
its claim to show that the hourly rates, upon which its claim is 
based, reflect its employees' actual rates of compensation plus 
reasonable overhead and fringe benefits, but not profit, the costs 
cannot be recovered.

2.  Attorneys' fees and costs incurred by the protester after the 
agency offered to settle the protest of the award of the fully 
performed contract by reimbursing the protester's bid preparation and 
protest costs were essentially unnecessary and should not be 
reimbursed where under the circumstances the rejected settlement offer 
provided all the relief that could have been obtained through the 
protest process.

DECISION

Innovative Refrigeration Concepts (IRC) requests that our Office 
determine the amount it is entitled to recover from the Department of 
the Air Force for its costs of preparing its bid under invitation for 
bids (IFB) No. F28609-94-B-0030 and for filing and pursuing its 
protest in Innovative Refrigeration Concepts, B-258655, Feb. 10, 1995, 
95-1 CPD  para.  61.

The IFB, issued as a total small business set-aside, sought bids for a 
chiller on a brand name or equal basis.  Although the IFB identified 
the make and model of a large business for the brand name, the IFB 
required that the small business bidders offer only products 
manufactured by a small business.  We sustained IRC's protest that the 
awardee's bid was nonresponsive because the awardee proposed to 
furnish the product of a large business in violation of the small 
business set-aside provisions of the IFB.  As the chiller had been 
delivered and installed soon after award,[1] corrective action was not 
feasible, and we instead awarded IRC its costs of bid preparation and 
of filing and pursuing the protest, including reasonable attorneys' 
fees.

IRC, as directed by our decision, submitted its claim for costs to the 
agency, supported by an itemized accounting of the claimed costs of 
IRC's employees as well as those for its attorney.  The parties were 
unable to reach an agreement concerning the amount IRC is entitled to 
be reimbursed for its costs, and IRC has requested that we determine 
the amount of its entitlement pursuant to the then-applicable 
provisions of our Bid Protest Regulations, 4 C.F.R.  sec.  21.6(f)(2) 
(1995).

For the costs incurred by its employees, IRC listed the services 
performed, dates of performance, hours performed, and hourly rate for 
each employment position.  IRC claimed that its employees incurred 
costs of $5,367 for 47 hours of bid preparation and incurred costs of 
$3,707.50 for 32 hours of pursuing its protest.  The Air Force objects 
to the reimbursement of any of IRC's costs claimed for its employees, 
because, despite the Air Force's request, IRC did not provide any 
information to establish that its employees' claimed hourly rates 
reflect actual rates of compensation.

A protester seeking to recover the cost of pursuing its protest must 
submit sufficient evidence to support its monetary claim.  McNeil 
Techs., Inc.--Claim for Costs, B-254909.3, Apr. 20, 1995, 95-1 CPD  para.  
207 at 5.  The amount claimed may be recovered to the extent that it 
is adequately documented and shown to be reasonable.  Id.  Although we 
recognize that the requirement for documentation may sometimes entail 
certain difficulties, we do not consider it unreasonable to require a 
protester to document in some manner the amount and purposes of its 
employees' claimed efforts and to establish that the claimed hourly 
rates reflect the employees' actual rates of compensation plus 
reasonable overhead and fringe benefits.  W.S. Spotswood & Sons, 
Inc.--Claim for Costs, 69 Comp. Gen. 622, 623 (1990), 90-2 CPD  para.  50 at 
3.

Here, despite the agency's request, the documentation submitted by IRC 
does not demonstrate how IRC's hourly rates were calculated or that 
the claimed rates reflect actual rates of compensation.  Rather, the 
record reflects that for one of the employees, namely IRC's president 
and chief engineer, the claimed rate represents a "market rate" as a 
professional consulting engineer, which presumably includes profit as 
an element.  Moreover, given the high hourly rates claimed for the 
remaining employment positions ($65 to $85 per hour), it appears 
likely that the other claimed rates also represent "market rates" that 
may well include profit as an element.

A protester may not recover profit on its own employee's time in 
filing and pursuing its protest or preparing its bid, and therefore 
claimed rates must be based upon actual rates of compensation, plus 
reasonable overhead and fringe benefits, and not market rates.  See 
John Peeples--Claim for Costs, 70 Comp. Gen. 661, 663 (1991), 91-2 CPD  para.  
125 at 3.  Since the protester has not provided evidence, either to 
our Office or the Air Force, to show how the hourly rates claimed for 
each of IRC's employees were calculated and how the rates relate to 
the employees' actual rates of compensation plus reasonable overhead 
and fringe benefits, but not profit, the  costs IRC claims its 
employees incurred for bid preparation and pursuing the protest cannot 
be recovered.[2]  W.S. Spotswood & Sons, Inc.--Claim for Costs, supra,
69 Comp. Gen. at 624, 90-2 CPD  para.  50 at 4.

IRC also requests reimbursement of $4,466.07 for fees and costs it 
claims were incurred by its attorney in filing and pursuing the 
protest.

The Air Force does not object to $1,542.94 of the attorneys' fees and 
costs IRC claims it incurred prior to November 1, 1994, which was the 
date on which the Air Force offered to settle the protest by 
reimbursing IRC its bid preparation and protest costs.  However, the 
Air Force argues that it should not have to reimburse IRC the 
remaining $2,923.13 of attorneys' fees and costs the protester claims 
it incurred after the date of the settlement offer because IRC was 
aware at the time of the settlement offer that no corrective action 
was feasible--the contract had been fully performed--and that it could 
receive no relief other than reimbursement of the types of costs 
offered by the Air Force.

Where, as here, our Office determined that the award of a contract did 
not comply with a statute or regulation, the Competition in 
Contracting Act of 1984 (CICA), 31 U.S.C.  sec.  3554(c)(1)(A) (1988), 
provided, at the time of our decision on this protest, that our Office 
"may declare an appropriate interested party to be entitled to the 
costs of filing and pursuing its protest, including reasonable 
attorneys' fees."  (Emphasis supplied.)  Given the discretion thus 
vested in our Office, we may, in appropriate circumstances, disallow 
claimed protest costs, even where they were incurred by the protester.  
See Sterling Fed. Sys., Inc. v. Goldin, 16 F.3d 1177, 1182, 1186-1187 
(Fed. Cir. 1994) (CICA is a permissive fee-shifting statute which 
allows the administrative forum deciding protests the discretion to 
allow or disallow, where appropriate, claimed protest costs).  In 
deciding whether to recommend that protest costs be reimbursed, we, 
consistent with the approach of the Court of Appeals for the Federal 
Circuit, will balance "the competing policies of encouraging 
litigation of procurement conflicts" and controlling "litigation 
costs."  Id. at 1187.  For example, we will recommend that protesters 
recover costs attributable to hours spent in pursuit of a protest only 
if those costs were reasonably necessary to the protest effort.  See 
JAFIT Enters., Inc.--Claim for Costs, B-266326.2; B-266327.2, Mar. 31, 
1997, 97-1 CPD  para.  125 at 2-4; Fritz Cos., Inc.--Claim for Costs, 
B-246736.7, Aug. 4, 1994, 94-2 CPD  para.  58 at 4 (claims for protest costs 
disallowed to the extent the hours were deemed excessive).

On balance, we agree with the Air Force that the attorneys' fees and 
costs incurred by IRC after the Air Force's settlement offer were 
essentially unnecessary and should not be reimbursed.  When it 
realized that IRC's protest may have merit, the Air Force made a good 
faith offer to settle this protest by reimbursing IRC's costs.[3]  
This was the only possible relief available to the protester, inasmuch 
as the contract had been fully performed when the settlement offer was 
made.  IRC rejected the offer and requested a decision on the merits 
by this Office, notwithstanding its knowledge that this was the 
maximum relief that our Office could provide in issuing a decision.  
Under such circumstances, while the protester was entitled to request 
and receive a decision on the merits, we do not believe the public 
should pay for IRC's intransigence in failing to settle a protest that 
could yield it no other  relief than the offered reimbursement of 
costs.[4]  

In conclusion, we find that IRC is entitled to reimbursement of the 
$1,542.94 in attorneys' fees and costs it incurred in filing and 
pursuing its protest prior to the date of the Air Force's November 1, 
1994, settlement offer.[5]  

Comptroller General
of the United States

1. The Air Force did not suspend performance of the contract because 
IRC's protest was not filed at our Office within 10 calendar days of 
award.

2. While IRC complains that the Air Force should have had its claimed 
rates audited by the Defense Contract Audit Agency, we agree with the 
Air Force that it was not obligated to conduct such an audit and that 
it was the protester's obligation to explain and substantiate its 
claimed rates, as requested by the Air Force.

3. This offer exceeded the amount we recommend be reimbursed in this 
decision.

4. We note that a contrary view would provide little incentive for 
agencies to reasonably settle protests of fully performed contracts.  
See generally Tidewater Marine, Inc.--Request for Costs, B-270602.3, 
Aug. 21, 1996, 96-2 CPD  para.  81 at 4-6.

5. Regarding the Air Force's question as to whether, in making 
payment, the Air Force should honor the assignment by IRC of its claim 
to its attorney, we direct the Air Force's attention to the provisions 
of the Assignment of Claims Act, 31 U.S.C.  sec.  3727 (1994).