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.