BNUMBER:  B-270269.2
DATE:  April 2, 1996
TITLE:  LORS Medical Corporation--Entitlement to Costs

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Matter of:LORS Medical Corporation--Entitlement to Costs

File:     B-270269.2

Date:April 2, 1996

Jacob B. Pompan, Esq., and Gerald H. Werfel, Esq., Pompan, Ruffner & 
Werfel, for the protester.
Linda S. Lebowitz, Esq., and Michael R. Golden, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Request for entitlement to protest costs is denied where the agency 
promptly took corrective action in response to a protest by the due 
date for the agency report.  Protester's approach for determining the 
promptness of the agency's corrective action and whether the protester 
is entitled to recover its protest costs--by measuring the time period 
from the improper evaluation of its proposal and the elimination of 
its proposal from the competitive range to the time when the 
corrective action was taken--is not a viable approach since it could 
have the effect of discouraging such corrective action rather than 
encouraging it.

DECISION

LORS Medical Corporation requests that our Office recommend that the 
Department of Veterans Affairs (VA) pay LORS the reasonable costs of 
filing and pursuing its protest, including attorneys' fees.  On 
October 23, 1995, LORS protested the evaluation of its proposal, the 
elimination of its proposal from the competitive range, and the 
subsequent award by the VA to Red Ball Medical Supply, Inc. under 
request for proposals No. 667-21-96.  By letter dated November 27, the 
day the agency's administrative report responding to the protest 
allegations was due, the VA notified our Office that it was taking 
corrective action in response to its "review of the procurement 
[which] revealed flaws in the evaluation process of the proposals."  
Specifically, the VA directed the contracting officer to reevaluate 
proposals, to conduct discussions with all offerors, including LORS, 
whose proposals were either acceptable or capable of being made 
acceptable, and to request best and final offers from all competitive 
range offerors, including LORS.  The VA stated that if a firm other 
than Red Ball was in line for award, the contracting officer would 
terminate Red Ball's contract and make an award to the other firm.  In 
light of the corrective action, the VA requested that we dismiss LORS' 
protest as academic.  On December 5, since the VA was granting the 
relief requested by LORS, that is, placing its proposal in the 
competitive range for purposes of conducting discussions, we dismissed 
LORS' protest as academic.

Under section 21.8(e) of our Bid Protest Regulations, 60 Fed. Reg. 
40,737, 40,743 (Aug. 10, 1995) (to be codified at 4 C.F.R.  sec.  21.8(e)), 
if the contracting agency decides to take corrective action in 
response to a protest prior to our issuing a decision on the merits, 
we may recommend that the agency pay the protester its reasonable 
costs of filing and pursuing its protest, including attorneys' fees.  
However, we will make such a recommendation only where the agency 
unduly delayed taking corrective action in the face of a clearly 
meritorious protest.  CSL Birmingham Assocs.; IRS 
Partners--Birmingham--Entitlement to Costs, B-251931.4; 
B-251931.5, Aug. 29, 1994, 94-2 CPD  para.  82.  A protester is not entitled 
to protest costs where, under the facts and circumstances of a given 
case, the agency has taken reasonably prompt corrective action.  Id.

Here, although the VA, basically by its own admission, took corrective 
action in response to a clearly meritorious protest, in general, if an 
agency takes corrective action in response to a protest by the due 
date of its report on the protest, we consider such action to be 
prompt and decline to recommend reimbursement of protest costs.  See, 
e.g., PLX, Inc.--Request for Declaration of Entitlement to Costs, 
B-251575.2, Mar. 10, 1993, 93-1 CPD  para.  224.  The agency took corrective 
action on the due date for its report.  We further point out that even 
if LORS had filed an agency-level protest, the time spent in pursuing 
the agency-level protest would not be relevant to determining whether 
there was undue delay in taking corrective action.  See GS 
Elektro-Schewe GmbH, B-259103.2, Apr. 13, 1995, 95-1 CPD  para.  196.

Notwithstanding the promptness of the agency's corrective action from 
the date when the protest was filed, LORS requests that we recommend, 
in the exercise of our discretionary authority and given the 
circumstances of this case, its recovery of its protest costs because 
it was the improper actions of the contracting officer in the first 
instance during the procurement process itself which gave rise to the 
"protest process," leaving LORS no other choice but to incur the costs 
of filing a protest in order to vindicate its rights to a proper 
evaluation and a reasonable opportunity for award.  In other words, 
for purposes of determining whether corrective action was promptly 
taken, LORS believes that the "protest process" began when the 
contracting officer improperly evaluated its proposal and eliminated 
its proposal from the competitive range.  It is from this point that 
LORS maintains that the corrective action was not promptly taken, thus 
entitling it to the recovery of its costs.

LORS does not dispute that the purpose of section 21.8(e) is to 
encourage agencies to take corrective action in response to 
meritorious protests before protesters have expended additional 
unnecessary time and resources pursuing their protests.  Here, the VA 
satisfied this purpose in all respects.  The record shows that LORS 
did not incur costs other than those associated with its initial 
protest filing to convince the VA that the contracting officer 
unreasonably evaluated and eliminated its proposal from the 
competitive range; LORS did not incur the costs associated with filing 
comments on the agency report since the VA did not file an agency 
report defending the contracting officer's evaluation and competitive 
range determination; and, LORS did not incur the costs of any 
additional filings related to the merits of its protest. See Neal R. 
Gross & Co., Inc.--Entitlement to Costs, B-254033.4, Sept. 30, 1993, 
93-2 CPD  para.  199.

As described above, LORS' approach for determining that corrective 
action was not promptly taken by an agency, thus entitling a protester 
to the recovery of its protest costs, would result in a contracting 
agency's having to pay protest costs in a large number of cases, even 
though it took effective corrective action shortly after the protest 
was filed with our Office, simply because it responded positively to 
the protest.  This could have the effect of discouraging such 
corrective action rather than encouraging it.  This is not the intent 
of our Regulations.  Id.  For this reason, we conclude that the filing 
of an initial protest with our Office establishes the appropriate date 
for determining the promptness of an agency's corrective action.  CSL 
Birmingham Assocs.; IRS Partners--Birmingham--Entitlement to Costs, 
supra.

Since we therefore conclude that the agency acted promptly in this 
case, LORS is not entitled to recover its protest costs.

The request for costs is denied.

Comptroller General
of the United States