BNUMBER:  B-274315.2
DATE:  October 18, 1996
TITLE:  El Paso Analytics, Inc.--Entitlement to Costs

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Matter of:El Paso Analytics, Inc.--Entitlement to Costs

File:     B-274315.2

Date:October 18, 1996

Thomas L. McGovern III, Esq., and S. Gregg Kunzi, Esq., Hogan & 
Hartson L.L.P, for the protester.
Jerold D. Cohen, Esq., Office of the General Counsel, GAO, 
participated in the preparation of the decision.

DIGEST

Contracting agency terminated delivery order issued under a small 
disadvantaged business's section 8(a) contract 3 weeks after another 
section 8(a) firm protested that the order was outside the contract's 
scope and denied the protester the chance to compete for the work.  
Protester is not entitled to protest costs notwithstanding its section 
8(a) status since the General Accounting Office's concern with respect 
to entitlement claims is whether the contracting agency reacted 
quickly in response to a protest filing to review its actions and 
correct an impropriety, and in this case corrective action was taken 
promptly, early in the protest process. 

DECISION

El Paso Analytics, Inc. requests that our Office recommend the payment 
of El Paso's costs of filing and pursuing its protest of the award of 
a delivery order to Innovative Logistics Techniques, Inc. (Innolog) 
under contract No. DAAB07-95-D-H004 with the Army's 
Communications-Electronics Command (CECOM).

We deny the request.

El Paso protested the delivery order, which was for warehousing, 
maintenance, and inventory services, as being outside the scope of 
Innolog's contract on August 23, 1996.  On September 12 the agency 
terminated the order and asked that we therefore dismiss the protest 
as academic, which we did on September 20. 

Our Bid Protest Regulations,  sec.  21.8(e), 61 Fed. Reg. 39039, 39046 
(1996) (to be codified at 4 C.F.R.  sec.  21.8(e)), provide that we may 
recommend that an agency pay protest costs, including attorneys' fees, 
where the agency decides to take corrective action in response to a 
protest.  El Paso argues that even though CECOM corrected its 
procurement error soon after El Paso protested, El Paso is entitled to 
costs both because the protest was clearly meritorious, and based on 
"special circumstances": 

     "This protest involved CECOM's improper manipulation and 
     avoidance of procurement regulations designed specifically to 
     benefit small disadvantaged businesses.  El Paso is a small 
     disadvantaged business
     . . . . There are compelling policy reasons why an agency should 
     be held to a stricter standard in assessing the timeliness of 
     corrective action where the procurement impropriety arises from 
     an improper attempt to avoid regulations aimed at assisting small 
     disadvantaged businesses. . . ."

A decision whether to award costs in a particular case is based 
primarily on where in the protest process the decision to take 
corrective action was made and communicated.  See Pulse Electronics, 
Inc.--Request for Declaration of Entitlement to Costs, B-243625.3, 
Aug. 30, 1991, 91-2 CPD  para.  222.  Our Regulations do not envision the 
payment of costs in every circumstance; rather, the provision was 
adopted to encourage agencies to take corrective action in a 
reasonably prompt fashion.  Thus, we will recommend payment of protest 
costs only where the agency unduly delayed taking corrective action in 
the face of a clearly meritorious protest.  See Diez Management Sys., 
Inc.--Entitlement to Costs, B-250831.3, Apr. 13, 1993, 93-1 CPD  para.  313.  

In its protest El Paso stated that the delivery order work added to 
Innolog's section  8(a)[1] contract--which El Paso termed an 
"'omnibus' indefinite delivery support contract" for technical 
services--had been the subject of El Paso's own expiring 8(a) contract 
with CECOM.  El Paso's protest basis was that the added work was 
outside the scope of Innolog's contract, and that CECOM's action 
improperly denied El Paso the opportunity to compete for it or to be 
considered for a sole-source 8(a) award to continue its performance.  
Notwithstanding El Paso's point that in determining protest cost 
entitlement an agency's procurement error should be viewed 
particularly critically where small disadvantaged businesses are 
involved, our concern with respect to entitlement claims is, as stated 
above, whether the contracting agency reacted quickly in response to a 
protest filing to review its actions and correct an impropriety.  
Here, the agency terminated the protested delivery order 3 weeks after 
the protest was filed.  Such corrective action, taken early in the 
protest process, is precisely the kind of prompt reaction to a protest 
that our Regulations are designed to encourage.  See Special Sys. 
Servs., Inc.--Entitlement to Costs, B-252210.2, June 8, 1993, 93-1 CPD  para.  
445. 

El Paso's request is denied.

Comptroller General 
of the United States

1. Section 8(a) of the Small Business Act, 15 U.S.C.  sec.  637(a) (1994), 
authorizes the Small Business Administration to enter into contracts 
with government agencies and arrange for the performance of the 
contracts by letting subcontracts to socially and economically 
disadvantaged small business concerns.