BNUMBER:  B-274081.7 
DATE:  March 30, 1998
TITLE: The Real Estate Center--Costs, B-274081.7, March 30, 1998
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Matter of:The Real Estate Center--Costs

File:     B-274081.7

Date:March 30, 1998

Lynn Hawkins Patton, Esq., Ott & Purdy, for the protester.
Jane S. Converse, Esq., Department of Veterans Affairs, 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

General Accounting Office recommends that protester be reimbursed the 
costs of filing and pursuing its protest where the agency unduly 
delayed taking corrective action in response to clearly meritorious 
protest.

DECISION

The Real Estate Center (REC) requests that our Office recommend that 
it be reimbursed the costs of filing and pursuing its protest 
challenging the evaluation of its application to become a designated 
management broker for the Department of Veterans Affairs (VA).  REC's 
application was submitted in response to a
November 7, 1996, letter invitation for the submission of 
applications.

We recommend that the agency reimburse REC its protest costs.

PROTEST BACKGROUND

On November 15, 1996, REC protested that the terms of VA's November 7 
letter soliciting applications for management broker services violated 
the requirements of the Competition in Contracting Act of 1984 (CICA) 
and the Federal Acquisition Regulation (FAR).  In denying that 
protest, our Office found that CICA and the FAR did not apply to VA's 
acquisition of management broker services, and that the appropriate 
standard of review for such acquisitions was whether or not the agency 
acted reasonably in conducting them; under that standard, we found 
that the terms of the letter solicitation were reasonable.  The Real 
Estate Ctr., B-274081.4, Feb. 24, 1997, 97-1 CPD  para.  85 at 2-4.  During 
the pendency of that protest, VA selected three brokers from the group 
of 12 that had submitted applications and, on January 31, 1997, REC 
was notified of the selections and informed that its application had 
not been approved.

REC protested the selection decision on February 10 and, following a 
debriefing, supplemented its protest on February 18.  The protest 
raised essentially five allegations:  (1) the selections were 
unreasonable because the VA had failed to adequately document its 
bases for the approval or disapproval of broker applications; (2) the 
rejection of REC's application was the result of unfair and biased 
treatment which represented retaliation for protests filed by REC and 
constituted its de facto debarment; (3) while the FAR might not 
technically apply to VA's acquisition of broker services, the 
principles of the FAR should serve as a guide to determine the 
fairness of the selection process; (4) the selection decisions were 
not based on the stated evaluation criteria insofar as the initially 
identified
per-property price schedule for management services was different from 
the price schedule actually established for the successful applicants; 
and (5) the limitation of approvals to three applicants was improper 
in light of VA's previously stated intention to include as many 
brokers as were determined qualified to meet the agency's 
requirements.

On March 3, the agency requested that we dismiss the protest and the 
protester responded by letter dated March 10.  We declined to dismiss 
the protest and the agency filed its report on the March 12 due date.  
With respect to the first allegation raised by REC, the report 
contained no narrative concerning the adequacy of the evaluation and 
selection documentation but did include portions of some existing 
documentation.  On March 14, REC objected to VA's alleged failure to 
produce or identify relevant documents and restated its earlier 
request for documentation related to the evaluation and selection 
processes.  In response, VA provided REC certain additional documents 
on March 21.

Our Office conducted a telephone conference on March 26 to settle 
remaining document request issues, at which time VA represented that 
it had provided REC with all documents relied upon by the agency to 
evaluate applications and make the selection decisions.  April 4 was 
established as the due date for the protester's comments.

REC filed comments on April 4, which, inter alia, reiterated the 
initial allegations that the evaluation of its proposal and the 
selection decision were not adequately documented.  The comments also 
pointed out that the evaluation documentation did not support the 
scores of the successful applicants.

On May 12, VA requested summary dismissal of the protest as academic 
because the agency planned to take corrective action by conducting a 
reevaluation of REC's application using individuals other than those 
who performed the original evaluation.[1]  While indicating that it 
did not believe that the protester had established agency bias or de 
facto debarment, VA stated that it took corrective action because "the 
record does not contain sufficient information for the Comptroller 
General to determine that VA's conduct was reasonable."  We dismissed 
the protest on May 14 because the agency's decision to have a 
different panel reevaluate the protester's application rendered the 
protest academic.

REQUEST FOR COSTS AND RESPONSE

On May 14, REC filed this request for costs, pointing out that the 
corrective action was proposed "one week before a decision on the 
merits [was] due" and arguing that "VA has delayed taking corrective 
action in response to a clearly meritorious protest thereby causing 
REC to incur significant expense."  The agency responded that 
reimbursement of costs was not warranted here because the protest was 
not clearly meritorious.  In addition, VA argues it did not unduly 
delay in taking corrective action because the commencement time for 
measuring whether such a delay occurred should be either April 4, when 
the record closed, or May 8, when the VA official taking corrective 
action learned of a new VA management broker "pilot" program.  In the 
latter regard, and notwithstanding the agency's first explanation as 
to why it took corrective action, VA later suggested that its 
corrective action was somehow linked to the pilot program.

ANALYSIS AND RECOMMENDATION

If an agency unduly delays in taking corrective action in the face of 
a clearly meritorious protest we may recommend that the protester be 
reimbursed for the reasonable costs of filing and pursuing its 
protest.  Bid Protest Regulations, 4 C.F.R.  sec.  21.8(e) (1997); Oklahoma 
Indian Corp.--Claim for Costs, 70 Comp. Gen. 558, 559 (1991), 91-1 CPD  para.  
558 at 2.

As a prerequisite to our recommending that costs be reimbursed where a 
protest has been settled by corrective action, not only must the 
protest have been meritorious, but it also must have been "clearly 
meritorious," i.e., not a close question.  J.F. Taylor, 
Inc.--Entitlement to Costs, B-266039.3, July 5, 1996, 96-2 CPD  para.  5 at 
3; Baxter Healthcare Corp.--Entitlement to Costs, B-259811.3, Oct. 16, 
1995, 95-2 CPD  para.  174 at 4-5.  A protest is "clearly meritorious" when 
a reasonable agency inquiry into the protester's allegations would 
show facts disclosing the absence of a defensible legal position.  
Department of the Army--Recon., B-270860.5, July 18, 1996, 96-2 CPD  para.  
23 at 3; Tucson Mobilephone, Inc.--Entitlement, 73 Comp. Gen. 71, 73 
(1994), 94-1 CPD  para.  12 at 4.

In our view, a reasonable agency inquiry would have disclosed the 
absence of a defensible legal position disputing REC's allegation that 
the evaluation record was devoid of reliable documentation supporting 
a decision to downgrade the protester (and consequently reject its 
application).  The clearest example of VA's failure to provide any 
reasonable basis for its evaluation of REC's proposal is in the area 
of past performance, under which the protester received a score of 
zero (out of 10) with no comments on the evaluation scoring sheet.  
The record otherwise indicates that, for more than 4 years prior to 
the evaluation, REC (and its predecessor-in-interest) had managed 
approximately 2,000 VA properties and, 6 months prior to the 
evaluation, was rated "excellent" by the agency.  On November 19--1 
month before the scoring--an evaluator for the protested procurement 
wrote to REC indicating that the protester "strives to be professional 
in their management efforts" and noting that any recent deficiencies 
reported (and disputed) in its performance were "exceptions" rather 
than the "norm."  In short, the assignment of a score of zero under 
past performance lacks any reasonable basis in the record.  Similarly, 
REC received a zero (out of 10) under a category designed to evaluate 
the broker's staff.  The only explanation in the record, standing in 
contrast to VA statements that REC's two principals had knowledge and 
experience, is the notation that the firm was "resistant to change."

These examples, and other contradictions in the record, as well as the 
lack of any comparative information concerning the relative 
differences between applicants, make clear that the record did not 
provide a sufficient basis for VA's determination not to select REC.  
In short, the agency's position regarding the adequacy of its 
evaluation and the selection of applicants was not legally defensible.  
Accordingly, the protest was clearly meritorious.

In considering whether the agency unduly delayed in taking corrective 
action, we review the record to determine whether the agency took 
appropriate and timely steps to investigate and resolve the 
impropriety.  David Weisberg--Entitlement of Costs, 71 Comp. Gen. 498, 
501 (1992), 92-2 CPD  para.  91 at 3-4.  Here, the issue of an insufficient 
evaluation record was raised in the protester's initial filings.  The 
agency's investigation should have begun at that point and a 
determination that the record was insufficient to support REC's 
evaluation should have been reached as soon as the evaluation 
documents were reviewed in assembling the agency report.  Instead, a 
report largely ignoring the issue was filed and the agency's 
corrective action was not taken until 2 months later--only 1 week 
before the statutory deadline for a decision.  Under these 
circumstances, the agency's delay was not justified and the corrective 
action was not promptly taken.  LB&M Assocs., Inc.--Entitlement to 
Costs, B-256053.4, Oct. 12, 1994, 94-2 CPD  para.  135 at 5.

The agency asserts that the timeliness of its corrective action should 
be measured from the time the record closed after REC's comments were 
filed on April 4 and claims that it "undertook corrective action 
because . . . VA was not permitted to submit additional information 
after that point."  However, a review of the record shows, and the 
agency does not dispute, that VA made no attempt to have the record 
reopened with respect to the issue of an adequately documented 
evaluation record.  More importantly, the agency represented on March 
26 that no further information bearing on the evaluation and selection 
existed and stated on May 12 that corrective action was taken because 
the record was insufficient for our Office to determine that the VA's 
conduct was reasonable.  Accordingly, we see no basis for the agency's 
argument that April 4 should be used to measure promptness.  Also, 
with respect to the argument that the promptness of the corrective 
action should be measured from the time in May that cognizant agency 
personnel learned of a new broker "pilot" program, there is nothing in 
the record to indicate that the pilot program is logically linked to 
VA's reevaluation of REC's application, the corrective action which VA 
agreed to take. 

For these reasons, we conclude that the agency's failure to take 
prompt corrective action was unreasonable and impeded the economic and 
expeditious resolution of this protest.  See LB&M Assocs., 
Inc,--Entitlement for Costs, supra, at 5.  Accordingly, we recommend 
that VA reimburse REC for its protest costs.[2]  REC should submit its 
claim for costs, detailing and certifying the time expended and costs 
incurred, directly to the agency within 60 days of receipt of this 
decision.  Bid Protest Regulations, 4 C.F.R.  sec.  21.8(f)(1).

Comptroller General
of the United States

1. On August 5, our Office was informed that the VA had approved REC's 
management broker application on July 30 as a result of the 
reevaluation effort.

2. In reaching our conclusion, we have focused on the protest ground 
alleging that the record was not sufficient to support the agency's 
selection determination, which we view as the gravamen of the protest.  
As a general rule, we consider a prevailing protester entitled to 
costs incurred with respect to all issues pursued, not merely those 
upon which it prevails.  Omni Analysis; Department of the 
Navy--Recon., 68 Comp. Gen 559, 562 (1989), 89-2 CPD  para.  73 at 3-4.  
Where a protester prevails on one of a number of related grounds of 
protest, the allocation of cost between winning and losing issues is 
generally unwarranted, and costs are not limited to the effort spent 
on the issue upon which the protester prevails.  See Data Based 
Decisions, Inc.--Claim for Cost, 69 Comp. Gen. 122, 125 (1989), 89-2 
CPD  para.  538 at 4.  Nevertheless, we will limit a successful protester's 
recovery of protest costs when a part of the costs is allocable to a 
losing protest issue that is so clearly severable as to constitute a 
separate protest.  Price Waterhouse--Claim for Costs, B-254492.3, July 
20, 1995, 95-2 CPD  para.  38 at 3.  Here, we conclude (and the parties have 
not argued otherwise) that the issues raised are intertwined parts of 
REC's basic objection that broker applications were misevaluated.  
Under these circumstances, and considering the agency's agreement to 
substitute new individuals as part of the reevaluation process, we see 
no reason why REC's recovery of protest costs should be limited to a 
particular issue.