BNUMBER:  B-259479.4
DATE:  July 25, 1996
TITLE:  KPMG Peat Marwick, LLP---Claim for Costs

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Matter of:KPMG Peat Marwick, LLP---Claim for Costs

File:     B-259479.4

Date:July 25, 1996

William A. Roberts III, Esq., and Lee Curtis, Esq., Howrey & Simon, 
for the protester.
Diane M. Sidebottom, Esq., Advanced Research Projects Agency, for the 
agency.
Behn Miller, Esq., and Christine S. Melody, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Attorneys' fees claimed by prevailing protester are reasonable, and 
thus allowable, where:  (1) the hourly rates are within bounds of 
rates charged by similarly situated attorneys; (2) the hours claimed 
are properly documented and do not appear to be excessive; and (3) 
legislation which currently places a $150 ceiling on hourly rates for 
attorneys' fees was not in effect at the time of the protest.

DECISION

KPMG Peat Marwick, LLP requests that our Office determine it entitled 
to recover $22,927.98 in attorneys' fees associated with filing and 
pursuing its bid protest in KPMG Peat Marwick, LLP, B-259479.2, May 9, 
1995, 95-2 CPD  para.  13, recon. denied, B-259479.3, July 18, 1995, 95-2 
CPD  para.  26.  Peat Marwick incurred $69,305 in attorneys' fees as a 
result of its protest and responding to the subsequent request for 
reconsideration filed by the contracting agency, the Advanced Research 
Projects Agency (ARPA).  ARPA has reimbursed Peat Marwick for $46,425 
of its incurred attorneys' fees; however, ARPA refuses to pay the 
remaining portion--$22,927.98--on the ground that this amount 
represents a portion of the protester's attorneys' fees which exceeds 
the current $150 hourly limit on attorneys' fees mandated by section 
1403(b)(2) of the Federal Acquisition Streamlining Act of 1994 (FASA), 
31 U.S.C.  sec.  3554(c)(2)(B) (1994).  We find that Peat Marwick is 
entitled to recover the disputed amount because the attorneys' fees 
ceiling provision of FASA was not in effect at the time of Peat 
Marwick's protest, and therefore is inapplicable.  

In KPMG Peat Marwick, LLP, supra, we sustained the protest based on 
our finding that ARPA had improperly failed to perform a cost realism 
analysis of the awardee's proposal and had otherwise improperly 
permitted the awardee to modify its technical proposal after award 
without giving other offerors the same opportunity.  As a result, we 
found that the protester was entitled to recover its costs of filing 
and pursuing the protest, including attorneys' fees, in accordance 
with our Bid Protest Regulations in effect at that time.  See 4 C.F.R.  sec.  
21.6(d)(1) (1995).  

Peat Marwick timely submitted its claim for costs to the agency, 
explaining that its attorneys had expended 16.5 senior partner hours, 
163.75 trial partner hours, and 123.25 associate hours in connection 
with its protest and the subsequent agency request for 
reconsideration.  ARPA reviewed the attorneys' fee claim and 
determined that the number of attorney hours worked--309.5--was 
reasonable; however, because of the recent enactment of FASA, ARPA 
determined that it would not reimburse the protester's attorneys for 
hourly fees that exceeded $150 per hour.  Consequently, ARPA 
reimbursed Peat Marwick for $46,425 of its expended $69,305 attorneys' 
fee amount--which represents 309.5 attorney hours at an hourly 
compensation rate of $150 per hour.[1]

When a claim for costs is presented to our Office for resolution, we 
review the elements of the claim to determine whether the amounts 
claimed are adequately documented, and are shown to be reasonable; to 
that end, a protester seeking to recover its costs must submit 
sufficient evidence to support its monetary claim.  Bay Tankers, 
Inc.--Claim for Bid Protest Costs, B-238162.4, May 31, 1991, 91-1 CPD  para.  
524.  A cost is reasonable if, in its nature and amount, it does not 
exceed that which would be incurred by a prudent person in the pursuit 
of its protest.  Patio Pools of Sierra Vista, Inc.--Claim for Costs, 
68 Comp. Gen. 383 (1989), 89-1 CPD  para.  374.

A breakdown of the hourly fees incurred by the three attorneys who 
represented Peat Marwick in the protest and the subsequent 
reconsideration request is as follows (a slight fee increase which was 
implemented by the attorneys' law firm in February 1995 resulted in 
the use of two hourly billing rates by each attorney):

     Senior Partner   8.5 hours at $285 per hour
                      8    hours at $295 per hour (after February 1, 
1995)

     Partner        38.5 hours at $248 per hour
                        125.25 hours at $256 per hour (after February 
1, 1995)

     Associate      37.25 hours at $171 per hour
                    86 hours at $177 per hour (after February 1, 1995)

As previously noted, the agency does not take issue with the number of 
attorney hours worked, nor does the record suggest that the 309.5 
hours of attorney services is unusual given the complexity of the 
issues in this case, as well as the fact that a lengthy hearing was 
held.  Instead, ARPA challenges the claimed attorneys' fees on the 
ground that each attorney's hourly billing rate conflicts with the 
current provision of FASA which provides that except in special 
circumstances, no party (other than a small business concern) may be 
paid, pursuant to a recommendation by this Office, "costs for 
attorneys' fees that exceed $150 per hour."  31 U.S.C.  sec.  
3554(c)(2)(B).

The attorneys' fees ceiling provision of FASA relied upon by the 
agency to deny Peat Marwick's claim for costs was not in effect at the 
time of the Peat Marwick protest.  Section 10001(a) of FASA provides 
that the Act and its amendments take effect on the date of enactment 
(October 13, 1994), except as otherwise provided.  In this regard, 
FASA also provides that each amendment made by the statute, except as 
otherwise expressly enumerated at section 10001(c) of the Act,[2] 
applies, "to the extent and in the manner prescribed in the final 
regulations promulgated pursuant to section 10002," to proceedings or 
actions that are ongoing as of the date specified in the final 
regulations, but no later than October 1, 1995.  FASA, section 
10001(b)(2)(C),  41 U.S.C.  sec.  251 note (1994).  Similarly, section 
10002, which sets forth guidelines for promulgating final regulations 
to implement the Act's amendments, provides that each amendment made 
by the Act applies as of October 1, 1995, or the date specified in the 
final regulations implementing a particular amendment of the Act, 
whichever is earlier.  FASA, section 10002(f)(3), 41 U.S.C.  sec.  251 
note.

On August 10, 1995, our Office published final bid protest regulations 
which implemented FASA--including the attorneys' fees provision--and 
which set October 1, 1995 as the effective date for each of the 
provisions.  60 Fed. Reg. 40,737 (1995).  Our amended regulations 
broadly implement the attorneys' fees provision of FASA by providing, 
in relevant part, that our Office "may, at the request of the 
protester, recommend the amount of costs the agency should pay in 
accordance with 31 U.S.C.  sec.  3554(c)."  See 4 C.F.R.  sec.  21.8(f)(2) 
(1996). 

With respect to the effective date, the preamble to our final rule 
states that "claims and requests for reconsideration filed on or after 
the effective date of this rule [October 1, 1995] which concern a 
protest which was considered under the previous rule" would be decided 
in accordance with that previous rule--or, stated another way, without 
regard to the amendments made by FASA.  60 Fed. Reg. 40,737.  Thus, in 
accordance with sections 10001 and 10002 of FASA, the attorneys' fees 
ceiling applies only to claims associated with protests filed on or 
after October 1, 1995; accordingly, the ceiling does not apply to Peat 
Marwick's claim here. 

As noted above, section 10001(b)(2) of the Act provides that an 
amendment made by the Act--such as the $150 hourly attorneys' fee 
limitation at issue in this case--shall apply to the extent and in the 
manner prescribed in the final regulations promulgated pursuant to 
section 10002 of the Act.  Section 10002 provides for the issuance of 
regulations "as may be necessary to implement th[e] Act."  In this 
case, ARPA argues that section 1403 of the Act--which sets forth the 
$150 hourly attorneys' fee limitation--is self-executing and 
consequently no regulations are necessary to implement this provision.  
Because section 1403 does not, in ARPA's view, require an implementing 
regulation, it became effective on the date of the enactment of the 
Act, October 13, 1994.

We do not agree with ARPA's position.  In our view, regulatory 
implementation of the $150 hourly attorneys' fee limitation was 
necessary to establish a common understanding of the applicability of 
this provision.  Section 10001(b)(2)(C) states that an amendment made 
by the Act shall apply "to the extent and in manner prescribed in the 
final regulations" not only to contracts in effect and offers under 
consideration on the date specified in the final regulations, but also 
to "any other proceeding or action that is ongoing on that date."  
Without regulatory implementation, there would have been uncertainty 
as to "the extent" and "manner" of the applicability of the FASA bid 
protest cost provisions, including the attorneys' fee limitation, to 
entitlement requests (4 C.F.R.  sec.  21.6(e) (1995)) and cost claims (4 
C.FR.  sec.  21.6(f) (1995)) that (1) were pending at this Office on the 
date of enactment, or (2) were not yet filed at this Office but (a) 
were related to protests pending here, (b) were related to protests 
recently decided or otherwise disposed of, or (c) were related to 
claims pending with the procuring agencies.  In short, without the 
regulatory implementation, procuring agencies, protesters, and this 
Office likely would not have had the same understanding of the 
applicability of these provisions, which in turn could have led to 
inconsisent results in the processing and resolution of protester cost 
claims.

Alternatively, ARPA argues that the clear intent in FASA to limit 
attorneys' fees to $150 per hour provides a sufficient basis--in the 
form of "clear Congressional guidance"--for the agency to deny 
reimbursing Peat Marwick for any hourly attorneys' fees which exceed 
this amount regardless of the actual effective date of the statutory 
cap.  We find this argument unpersuasive as ARPA is essentially 
arguing for a retroactive application of the statute.  

It is well established that in the absence of statutory direction, 
retroactivity is not favored by the law.  Bowen v. Georgetown Univ. 
Hosp., 488 U.S. 204 (1988); OAO Corp. v. Johnson, 49 F.3d 721 (Fed. 
Cir. 1995).  In this case, FASA expressly contemplates prospective 
application of each of its amendments; FASA specifically provides that 
"[e]xcept as otherwise provided in this Act, a law amended by this Act 
shall continue to be applied . . . as such law was in effect on the 
day before the date of the enactment of this Act" until:  (1) final 
regulations implementing the amendment are issued; or (2) in the event 
no regulations are promulgated, October 1, 1995.  FASA, section 
10002(f)(3), 41 U.S.C.  sec.  251 note.  Given this plain language, which 
by its terms operates to reserve for the promulgating agency 
discretion to determine the effective date for amendments not 
otherwise enumerated as immediately effective, we think it is clear 
that the $150 hourly billing rate limitation for attorneys' fees was 
intended to have only prospective effect, unless provided otherwise in 
the implementing regulations.  Since this Office has promulgated 
regulations rendering the $150 attorney fee provision applicable only 
to protests filed after October 1, 1995, there is no basis to apply 
the FASA ceiling to Peat Marwick's claim.

In determining the amount of allowable attorneys' fees, our Office has 
adopted the standard of review used in a case concerning a fee award 
under Title VII of the Civil Rights Act of 1964, 42 U.S.C.  sec.  
2000e-5(k) (1994), Johnson v. Georgia Highway Express, Inc., 488 F.2d 
714 (5th Cir. 1974), since both that statute and the Competition in 
Contracting Act of 1984 provide for the award of "reasonable 
attorneys' fees."  See Armour of Am., Inc.--Claim for Costs, 71 Comp. 
Gen. 293 (1992), 92-1 CPD  para.  257.  Consistent with the guidelines 
established by the court in Johnson v. Georgia Highway Express, Inc., 
supra, our consideration of whether an hourly attorney rate is 
reasonable includes consideration of the customary fee charged for 
similar work in the community by other attorneys, as well as the 
experience, reputation and ability of the attorneys--since most 
attorneys' fee scales reflect an experience differential, with more 
experienced attorneys receiving higher hourly compensation.  Armour of 
Am., Inc.--Claim for Costs, supra; Bay Tankers, Inc.--Claim for Bid 
Protest Costs, B-238162.4, May 31, 1991, 91-1 CPD  para.  524.  The 
reasonableness of an hourly billing fee also may be considered in 
light of attorneys' fees awards made in similar proceedings.  Id.

In this case, we think the charged hourly fees were reasonable.  The 
protester's senior counsel has certified that the hourly rates claimed 
are the normal and customary rates charged for such matters, and ARPA 
does not challenge this assertion.  We have recognized a wide variety 
of hourly rates charged by counsel who practice federal procurement 
law in the Washington area ranging from $165 to $400.  Bay Tankers, 
Inc.--Claim for Bid Protest Costs, supra.  In this regard, a recent 
award for fees in a similarly complex protest case involved 
reimbursing the protester for hourly fees of $350 per hour for senior 
counsel, and $210 per hour for associate attorneys.  See Price 
Waterhouse--Claim for Costs, B-254492.3, July 20, 1995, 74 Comp. Gen. 
____, 95-2 CPD  para.  38.  Although the attorneys' hourly rates were not 
disputed by the agency in that case, since the hourly fees charged by 
Peat Marwick's counsel are clearly within the range of this recent fee 
award--and in fact are lower--we see no basis on this record to 
conclude that Peat Marwick's hourly attorney rates are unreasonable.

Under these circumstances, since the agency has presented no argument 
for denying the protester's attorneys' fees claim other than a 
retroactive application of a statutory provision which was not in 
effect at the time of the protest, we find the protester entitled to 
reimbursement of the disputed $22,927.98 in attorneys' fees.  We also 
find the protester entitled to all attorneys' fees and costs incurred 
in pursuing this claim for costs.  4 C.F.R.  sec.  21.6(f)(2).  

Finally, we note that the Federal Acquisition Regulation (FAR) 
contains a provision which states that the $150 attorneys' fees cap 
set forth in FASA "applies to all recommended awards of costs which 
have not yet been paid."  FAR  sec.  33.104(h)(4).   This provision 
conflicts with our Regulations.  Although FAR  sec.  33.104 provides that 
our interpretation governs in the case of any conflicts between the 
FAR and this Office's Regulations, we are recommending that the FAR be 
revised to eliminate the inconsistency.

Comptroller General
of the United States

1. ARPA reimbursed Peat Marwick for its proposal preparation and 
protest costs, which were not in dispute.

2. Section 10001(c) enumerates specific provisions of the Act which 
apply immediately upon the date of enactment; section 1403(b)(2) is 
not one of the provisions listed.