BNUMBER: B-265649.4
DATE: September 9, 1997
TITLE: Tri Tool, Inc.--Entitlement to Costs, B-265649.4, September
9, 1997
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Matter of:Tri Tool, Inc.--Entitlement to Costs
File: B-265649.4
Date:September 9, 1997
Paul C. Bingaman for the protester.
Granette Trent, Esq., Department of Justice, for the agency.
Robert C. Arsenoff, Esq., and Paul I. Lieberman, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Reasonable bid preparation costs incurred prior to issuance of
solicitation may be recovered where record shows that they were
incurred directly in anticipation of competing for the specific
contract eventually awarded under the solicitation.
DECISION
This Office has been requested by the parties to recommend the amount
that the Department of Justice should pay Tri Tool, Inc. for the costs
of preparing its bid under invitation for bids (IFB) No. 1PI-B-1498-95
and for the cost of filing and pursuing its sustained protest, Tri
Tool, Inc., B-265649.2, Jan. 22, 1996, 96-1 CPD para. 14. The IFB covered
the acquisition of pipe cutting components to be assembled by Federal
Prison Industries, Inc., Department of Justice, for the Department of
the Army.
BACKGROUND
Our Office sustained Tri Tool's protest against the award of a
contract to E.H. Wachs Company because the protester's low bid was
rejected for failure to meet salient characteristics which were not
set forth in the IFB. Based on status advice provided by the agency,
our decision recommended termination of Wachs's contract,
resolicitation of the requirements under revised specifications, and
reimbursement of Tri Tool's costs of filing and pursuing its protest.
Because we were later informed by the agency that its earlier advice
was in error and that performance had, in fact, been completed prior
to the issuance of our initial decision, we modified the recommended
remedy to include bid preparation costs. Tri Tool, Inc.--Modification
of Remedy, B-265649.3, Oct. 9, 1996, 96-2 CPD para. 139 at 2.
The parties have exchanged correspondence concerning Tri Tool's claim
and report that they are unable to reach an agreement regarding the
amount to which the protester is entitled. Tri Tool claims a total of
$44,176, broken down as follows: legal fees of $679; lost anticipated
profits of $21,890; bid preparation costs of $17,495; and bid protest
costs of $4,112. The agency has accepted without question the claimed
$679 for legal fees and has completely disallowed the claim for
anticipated profits. Further, the agency has adjusted the claimed
costs for bid preparation and filing and pursuing the protest downward
from $17,495 to $6,186 and $4,112 to $2,357, respectively. As a
result of its analysis, the Department of Justice reports that it is
prepared to pay Tri Tool $9,222. As discussed below, we recommend
that Justice reimburse Tri Tool a total of $14,233.
LEGAL FEES AND ANTICIPATED PROFITS
In light of the agreement between the parties regarding the
protester's documented legal fees, we need not discuss that aspect of
the claim further. With respect to the $21,890 claim for anticipated
profits, the agency correctly disallowed it entirely because lost
anticipated profits may not be recovered as part of protest costs,
even in the presence of wrongful agency action. Gulf Elec. Constr.
Co., Inc.--Claim for Costs, B-235635.2, Jan. 5, 1990, 90-1 CPD para. 19 at
2.
BID PREPARATION COSTS
With respect to bid preparation costs, Tri Tool claimed 186.0 burdened
labor hours for eight individuals in engineering, sales and management
capacities (with the amount claimed for each position reflecting
undisputed burdened rates), as follows:
Position Hours Claimed Total Amount Claimed
Engineer 1 43.0 $ 2,566
Engineer 2 13.5 $ 1,258
Engineer 3 5.5 $ 307 (not in dispute)
Sales 1 86.0 $10,728
Sales 2 10.0 $ 524 (not in dispute)
Manager 1 20.0 $ 1,169
Manager 2 6.0 $ 735
Manager 3 2.0 $ 208
Total 186.0 $17,495
In support of the number of hours claimed, the protester submitted a
"Chronology of Events," indicating the date various tasks were
performed, the nature of the tasks, and the number of hours spent
performing the tasks for each employee position.
A protester seeking recovery of its bid preparation costs must submit
sufficient evidence to support its claim that those costs were
incurred and are properly attributable to bid preparation. The amount
claimed may be recovered to the extent it is adequately documented and
reasonable. See Stocker & Yale, Inc.--Claim for Costs, 72 Comp. Gen.
193, 196 (1993), 93-1 CPD para. 387 at 4.
With respect to Engineer 1, the agency reduced the number of hours
claimed from 43.0 to 29.0 because the chronology showed that 14 hours
represented activities performed prior to the issuance of the
solicitation. We have never adopted a "bright line" test which
necessarily renders all costs incurred prior to the issuance of a
solicitation unrecoverable. Rather, we look to see whether, under the
circumstances of an individual procurement, the claimed costs were
incurred in anticipation of competing for the specific contract at
issue. See Stocker & Yale, Inc.--Claim for Costs, supra, at 4-5 (QPL
qualification costs, although necessary for competing on the contract
at issue, were not allowed as proposal preparation costs because the
record did not show that they were incurred solely for the purpose of
competing for the contract).
Here, the record supports the protester's position that the disputed
costs were incurred after it learned of the upcoming procurement and
that they were principally related to traveling to an Army facility in
Virginia to obtain specifications for the items eventually purchased
under the IFB and to study existing equipment and accessories in order
to understand how to design equipment that would meet the Army's
needs. Accordingly, the 14 hours disallowed by the Department of
Justice are properly attributable to bid preparation for the protested
procurement, and we therefore recommend that Tri Tool be reimbursed
an additional $828 for the full $2,566 claimed for Engineer 1.
With respect to Engineer 2, the agency denied recovery for all 13.5
hours claimed, stating that the documentation did not support the
conclusion that the individual's activities were related to bid
preparation. We disagree. The chronology submitted by Tri Tool
includes handwritten footnotes regarding the activities of the
engineer detailing 9 hours spent prior to the submission of the bid
performing design and bid review functions. Accordingly, we recommend
that Tri Tool be reimbursed $839 reflecting 9 of the hours disallowed
by the agency for Engineer 2. With respect to the remaining 4.5 hours
the agency disallowed, although it appears that this engineer
performed some of them following the submission of the bid, there is
nothing in the record reflecting his participation in the bid
preparation process.
With respect to the 86 hours claimed for Salesperson 1, the agency
allowed 29 hours, but denied recovery for 26 hours incurred prior to
the issuance of the solicitation and 31 hours of costs incurred after
the bid was submitted. The 26 pre-issuance hours are appropriately
recoverable because the record shows they were incurred for
principally the same activities as those discussed above relating to
Engineer 1. Thus, we recommend that Tri Tool be reimbursed for 55
hours (i.e., $5,861, $2244 more than the amount allowed by the agency)
for Salesperson 1. The remaining 31 hours are not appropriately
recoverable as bid preparation costs because they were incurred after
the submission of the bid.
With respect to Manager 1 (the Engineering Manager) the agency denied
recovery for all 20 hours claimed, stating that the record did not
support the conclusion that the individual's activities were related
to bid preparation. On the contrary, the record shows that Manager 1
spent 18 hours prior to the submission of the bid reviewing design
parameters needed to comply with the Army's needs and working on the
bid package. These 18 hours amount to $1,052 for Manager 1. With
respect to the 2 hours disallowed by the agency, the record reflects
that these were incurred following the submission of the bid and are
therefore not recoverable as bid preparation costs.
With respect to Managers 2 and 3, the agency disallowed the entire
amount claimed on the basis that the chronology does not adequately
support that their activities were related to bid preparation. The
chronology does not list any hours for Manager 2 prior to the
submission of the bid. The description of the 2 hours claimed for
Manager 3--the Chief Financial Officer--is confusing insofar as the
chronology indicates that these hours involved the Engineering and
Sales departments (rather than the Chief Financial Officer) working on
the bid package. Accordingly, we agree with the agency regarding the
costs claim for these individuals, since it is unclear that they are
related to preparing Tri Tool's bid.
The amounts discussed above, when added to the amounts not in dispute,
total $11,149, for Tri Tool's recoverable costs for its bid
preparation expenses.
PROTEST COSTS
With respect to protest costs, Tri Tool claimed 42.5 burdened hours as
follows:
Position Hours Claimed Total Amount Claimed
Engineer 1 1 .0 $ 59
Engineer 2 .5 $ 47
Engineer 3 .5 $ 28
Sales 1 19.0 $ 2,370
Sales 2 1.0 $ 52Manager 1 2.0 $
117
Manager 2 2.0 $ 245
Manager 3 2.0 $ 208
Manager 4 14.5 $ 986 (not in dispute)
Total 42.5 $ 4,112
The amount claimed for the costs of filing and pursuing a protest may
be recovered to the extent that the claim is adequately documented and
is shown to be reasonable. At a minimum, claims for reimbursement of
expenses must identify and support the amounts claimed for each
expense, the purpose for which the expense was incurred and how the
expense relates to the protest filed with this Office. Aztec Dev.
Co.--Claim for Costs, B-270275.2, Feb. 13, 1997, 97-1 CPD para. 73 at 2.
Costs incurred filing and pursuing agency-level protests are not
allowable, Diverco, Inc.--Claim for Costs, B-240639.5, May 21, 1992,
92-1 CPD para. 460 at 4-5, and the costs of pursuing claims before this
Office are not allowable where, as here, the agency has expeditiously
attempted to resolve the claim. See Manekin Corp.--Claim for Costs,
B-249040.2, Dec. 12, 1994, 94-2 CPD para. 237 at 6-7.
With the exception of Manager 4, the agency has fully or partially
disallowed the hours claimed for each individual, stating that the
record does not support a conclusion that they related to
participation in the General Accounting Office protest process. We
have carefully examined the chronology submitted by the protester and
generally agree with the agency. Except as discussed below, the
chronology does not show that the activities for which costs are
claimed related to the protest process here. (As explained above, to
the extent that the claimed costs may arguably relate to Tri Tool's
agency-level protest or its claim here, they are not allowable.)
We disagree with the agency with respect to Engineer 2 and restore the
$47 claimed because the record supports his participation in the
drafting of the protest. With respect to Salesperson 1, the agency
disallowed 8 hours of the 19 claimed, stating that the record only
supported the conclusion that 11 hours were related to the protest
before this Office. We agree.[1] These amounts, when added to the
$986 not in dispute for Manager 4, total $2,405 for Tri Tool's
reimbursable protest costs.
SUMMARY
We recommend that Tri-Tool's claim be paid in the amount of $679 for
legal fees, $11,149 for bid preparation expenses and $2,405 for
protest costs for a total of $14,233.
Comptroller General
of the United States
1. We note, however, that the agency apparently erred in calculating
the protester's entitlement for this individual to be $1,371, instead
of $1,372.