BNUMBER:  B-265809.2
DATE:  July 19, 1996
TITLE:  Veda Incorporated--Entitlement to Costs

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Matter of:Veda Incorporated--Entitlement to Costs

File:     B-265809.2

Date:July 19, 1996

Donald W. Fowler, Esq., William J. Cople III, Esq., and Robert J. 
Symon, Esq., Spriggs & Hollingsworth, for the protester.
Thomas T. Basil, Esq., Department of the Navy, for the agency.
Mary G. Curcio, Esq., David A. Ashen, Esq., and John M. Melody, Esq., 
Office of the General Counsel, GAO, participated in the preparation of 
the decision.

DIGEST

Request for entitlement to protest costs is denied where agency stated 
prior to the due date for the agency report that it would take 
corrective action--reopen discussions, request an additional round of 
best and final offers and reevaluate the award decision--and it acted 
without undue delay in its implementation of the proposed corrective 
action.

DECISION

Veda Incorporated requests that our Office find Veda entitled to 
reimbursement by the Department of the Navy for the reasonable costs 
of filing and pursuing its protest against the award of a contract to 
The Analytical Sciences Corporation (TASC) under request for proposals 
(RFP) No. N61339-94-R-0013, for system integration services.  

We deny the request.

The Navy awarded a cost-plus-fixed-fee contract to TASC after holding 
discussions and receiving best and final offers (BAFO).  On August 10, 
1995, at a debriefing following the award, Veda learned that because 
its proposed overhead rates--which were based on establishing a new 
cost center--had not been audited by the Defense Contract Audit Agency 
(DCAA), the Navy instead had used provisional billing rates to 
evaluate Veda's cost proposal and, as a result, had upwardly adjusted 
Veda's proposed cost.  On August 19, Veda protested the evaluation of 
its proposal        (B-265809), concluding that the cost/technical 
tradeoff was invalid, and also argued that the agency improperly had 
failed to conduct proper discussions with Veda.  On September 20, 
before the due date for the agency report on the matter, the Navy 
notified our Office that in response to the protest it would reopen 
discussions with respect to the cost proposals, request an additional 
round of BAFOs, and reevaluate the award decision.  As a result, we 
dismissed the protest on September 29.  

Under our Bid Protest Regulations, we may declare a protester entitled 
to recover the reasonable costs of filing and pursuing its protest, 
including attorneys' fees, where the contracting agency decides to 
take corrective action in response to a clearly meritorious protest.  
4 C.F.R.  sec.  21.6(e) (1995).  We will do so where the procuring agency 
unduly delayed taking corrective action in the face of a clearly 
meritorious protest.  Ferguson-Williams, Inc.--Entitlement to Costs, 
B-252947.5, Sept. 15, 1993, 93-2 CPD  para.  166.  Generally, we consider 
agency corrective action prompt where it is proposed before the 
agency's administrative report is due.  See Kertzman Contracting, 
Inc.; Centigrade, Inc.--Entitlement to Costs, B-259461.2; B-259461.3, 
May 3, 1995, 95-1 CPD  para.  226.  However, proposed corrective action also 
must be promptly implemented by the agency.  Commercial Energies, 
Inc.--Recon. and Declaration of Entitlement to Costs, 71 Comp. Gen. 97 
(1991), 91-2 CPD  para.  499.

The Navy informed our Office that it would take corrective action 
before the protest report was due.  (The agency subsequently reported 
that reopening discussions with respect to cost proposals was 
necessary because of its failure to raise certain cost issues during 
the initial discussions.)  Veda maintains its costs nevertheless 
should be reimbursed because the Navy did not promptly implement the 
proposed corrective action.    

We disagree.  The record indicates that the Navy submitted written 
discussion questions to Veda on November 9, conducted oral discussions 
with Veda on November 27, received Veda's written response to the 
discussion questions on December 11,  requested an audit by DCAA, 
submitted further written discussion questions on December 21, 
conducted additional oral discussions with Veda on January 4, 1996, 
received Veda's written response to the additional discussion 
questions on January 12, and received a second round of BAFOs on 
January 22.  Based upon its evaluation of the proposals, the agency 
affirmed its original award to TASC on February 19.  

While it may be that the agency could have completed the corrective 
action proposed on September 20--reopening negotiations, requesting a 
new round of BAFOs and reevaluating--in less than the 5 months 
required here, there is no basis for finding the period to be 
unusually lengthy in the context of negotiated procurements generally.  
Further, we note that much of the delay appears to have resulted from 
the agency's understandable concern with Veda's proposal of a new cost 
center with lower overhead rates; the agency sought to resolve its 
concerns through further negotiations and referral of the proposal to 
the DCAA.

In any case, the agency's delay did not prejudice Veda.  In this 
regard, while several task orders were issued to TASC under the 
protested contract during the delay, given the agency's affirmation of 
its original award to TASC (which Veda has not protested), the task 
orders awarded to TASC did not deprive Veda of any contract work.  

The request for costs is denied.

Comptroller General
of the United States