TITLE:   Aalco Forwarding, Inc., et al.--Costs, B-277241.30, July 30, 1999
BNUMBER:  B-277241.30
DATE:  July 30, 1999
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Aalco Forwarding, Inc., et al.--Costs, B-277241.30, July 30, 1999

Decision

Matter of: Aalco Forwarding, Inc., et al.--Costs

File: B-277241.30

Date: July 30, 1999

Alan F. Wohlstetter, Esq. and Stanley I. Goldman, Esq., Denning &
Wohlstetter, for the protesters.

Col. James F. Quinn and Ramon Morales, Esq., Department of the Army, for the
agency.

Adam Vodraska, Esq., and Christine S. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protesters' claim for costs is denied where the protesters failed to file a
legally sufficient claim with the contracting agency within the time
required and to diligently pursue the matter by responding to the agency's
subsequent request for additional information only after the agency denied
the claim 3 months after requesting the information.

DECISION

Aalco Forwarding, Inc. and 56 other firms request that we recommend the
amount they should be reimbursed by the Military Traffic Management Command
(MTMC), Department of the Army, for filing and pursuing their protests in
Aalco Forwarding, Inc., et al., B-277241.16, Mar. 11, 1998, 98-1 CPD para. 75.
[1] In that decision, we sustained the protests by these and other
protesters against the partial small business set-aside of request for
proposals (RFP) No. DAMT01-97-R-3001. [2]

We deny the claim.

The RFP is for a pilot program that reengineers the Department of Defense's
current interstate and international program for shipping and storing the
personal property of its military service members and civilian employees. As
amended, the solicitation sought proposals to service 53 designated traffic
channels (origin state-to-destination region), 27 of which were partially
set-aside for exclusive small business participation (amounting to 12
percent of the traffic volume).

The solicitation, as issued, was the subject of numerous protests by these
and other protesters, as were subsequent amendments to the RFP. Among the
protest allegations was the contention that the RFP's partial set-aside was
not an economic production run or reasonable lot, as required, and that the
solicitation was not properly divided into set-aside and non-set-aside
portions and was otherwise ambiguous in this regard.

On March 11, 1998, we sustained the protests of the RFP's partial set-aside.
We found that the partial set-aside did not ensure an economic production
run or reasonable lot of shipments for small business concerns, as required
by Federal Acquisition Regulation (FAR) sect. 19.502-3(b). Specifically, the
set-aside did not meaningfully consider the impact of the relatively small
number of shipments available on many of the set-aside channels or the
significant obligations, such as committed daily capacity, imposed on small
business contractors by the solicitation. We recommended that the agency
reexamine its partial set-aside under the criteria of FAR sect. 19.502-3, and
make the appropriate determinations and adjustments. In sustaining the
protests, we further recommended that the protesters be reimbursed the
reasonable costs of filing and pursuing their protests, including reasonable
attorneys' fees, allocable to the partial set-aside issue. [3]

On May 6, 1998, within 60 days of receipt of our decision, the protesters'
attorneys submitted a certified claim to MTMC seeking reimbursement of
$52,923.28 for the costs of filing and pursuing the protests, consisting of
$51,787.14 in attorneys' fees and $1,136.14 in attorneys' out-of-pocket
expenses (copies, postage, courier service, and faxes). The protesters'
attorneys allocated the amount of their fees to the sustained protest issue
on the basis of the percentage of pages of each submission (protests and
comments) devoted to the small business set-aside issue. Specifically, in
their letter, the attorneys identified the relevant pages from each
submission, calculated the resulting percentage of each submission devoted
to the small business set-aside issue, and applied that percentage to the
total attorneys' fees incurred in preparing each submission. [4] The
attorneys did not allocate their claimed out-of-pocket expenses to the
sustained protest issue. No other supporting information was provided.

MTMC responded to the protesters' claim on August 18 by requesting that the
protesters' attorneys furnish supporting information and explanations. Among
other things, the agency requested a detailed breakdown of the attorneys'
hours, as well as copies of billing statements and receipts for
out-of-pocket expenses. MTMC denied the protesters' cost claim on November
23, noting that the protesters had failed to respond to the agency's
August 18 request for additional substantiation of the claim.

In a December 2 letter to the contracting officer, the protesters' attorneys
objected to the denial of the protesters' claim. The protesters' attorneys
stated that MTMC had not established any deadline for a response and that
they delayed responding while they awaited our decision on their request for
reconsideration of their protests of the RFP's revised set-aside. As had
been earlier requested by the agency, the protesters' attorneys provided
additional substantiation of the protesters' claim, including a breakdown of
their legal fees, as well as copies of the bills for legal services and
receipts for out-of-pocket expenses.

On January 12, 1999, the contracting officer responded by reiterating the
agency's position that the protesters had failed to submit an adequately
detailed claim to the agency within 60 days of receipt of the decision, as
required by our Bid Protest Regulations, 4 C.F.R. sect. 21.8(f)(1) (1999). On
January 27, the protesters requested that our Office determine the amount
they should be reimbursed. The agency objects to the protesters' claim for
costs. The agency asserts that the protesters failed to file a timely and
adequately supported claim, as required, and failed to properly segregate
costs to the issue upon which we recommended reimbursement of the protest
costs.

Our Bid Protest Regulations, 4 C.F.R. sect. 21.8(f)(1), provide that when we
find that an agency should reimburse a protester for its appropriate costs:

[t]he protester shall file its claim for costs, detailing and certifying the
time expended and costs incurred, with the contracting agency within 60 days
after receipt of GAO's recommendation that the agency pay the protester its
costs. Failure to file the claim within that time may result in forfeiture
of the protester's right to recover its costs.

Consistent with the intent of our Regulations to have protest matters
resolved efficiently and quickly, the 60-day timeframe for filing claims
with the contracting agency was specifically designed to avoid the piecemeal
presentation of claims and to prevent unwarranted delays in resolving such
claims. HG Properties A, L.P.--Costs, B-277572.8, Sept. 9, 1998, 98-2 CPD para.
62 at 2. That timeframe affords protesters ample opportunity to submit
adequately substantiated certified claims. Test Sys. Assocs., Inc.--Claim
for Costs, B-244007.7, May 3, 1993, 93-1 CPD para. 351 at 4. Failure to
initially file an adequately supported claim in a timely manner results in
forfeiture of a protester's right to recover costs, irrespective of whether
the parties may have continued to negotiate after the 60-day period expired.
HG Properties A, L.P.--Costs, supra, at 2-3. The claim for reimbursement of
costs must, at a minimum, identify the amount claimed for each individual
expense, the purpose for which that expense was incurred, and how the
expense relates to the protest. W.S. Spotswood & Sons, Inc.--Claim for
Costs, B-236713.3, July 19, 1990, 90-2 CPD para. 50 at 3. Where, as here,
attorneys' fees are sought to be recovered, evidence from the attorneys
involved must be submitted, including, for instance, copies of bills from
the attorneys listing the dates the services were performed and the hours
billed to the protester. Custom Prod. Mfg., Inc.--Claim for Costs,
B-235431.7, May 9, 1995, 95-1 CPD para. 236 at 3, recon. denied, B-235431.8,
July 21, 1995, 95-2 CPD para. 40.

Here, the record shows that the protesters' initial claim submission
provided insufficient detail for the agency to adequately assess the
reasonableness of the claimed costs. Rather than submitting a complete,
detailed breakdown of the expenses incurred, the protesters' attorneys
simply claimed an amount based on the total number of attorney hours they
allocated to the sustained issue, plus the listed out-of-pocket expenses.
The letter from the protesters' law firm did not provide an itemized
accounting of these expenses, such as listing the specific services
performed by dates of performance and numbers of hours. The initial claim
also failed to include copies of any billing statements sent to clients for
attorneys' fees or out-of-pocket expenses or copies of any receipts.
Further, while, as a basis for allocating the attorneys' fees, the letter
identified certain pages of each submission as related to the small business
set-aside issue, that identification was inadequate, since the protest
involved various issues related to the small business set-aside, only one of
which was sustained. The letter also failed to allocate the claimed
out-of-pocket expenses to that issue. Accordingly, we find the claim
submitted on May 6, 1998 insufficient to support the protesters' claim for
attorneys' fees and costs. Because the protesters failed to file a legally
sufficient cost claim within the time required under 4 C.F.R. sect. 21.8(f)(1),
they forfeited their right to recover their costs. See HG Properties A,
L.P.--Costs, supra.

Moreover, despite MTMC's request, the protesters failed to supplement their
defective claim by providing the required claim information until December
1998, 9 months after we issued our decision on the protest. It was only
then--after their claim had been denied by the agency because of the
protesters' failure to provide the requested supporting information--that
the protesters provided a more itemized breakdown of their costs upon which
the agency could arguably begin to assess the reasonableness of their claim.
We recognize that the agency took 3 months to consider and then respond to
the initial claim by requesting additional information from the protesters.
Nonetheless, in requesting this information, the agency told the protesters
that "[s]ubject to your submission of additional information and supporting
documentation, we believe we should be able to reach a prompt settlement of
your request [for costs]." Letter from Mr. Morales to Mr. Wohlstetter (Aug.
18, 1998). Although the protesters state that "[w]e were encouraged by Mr.
Morales' indication that we should be able to reach a prompt settlement,"
they did not respond until more than 3 months later, and only after the
agency denied their claim because of their failure to properly support their
claim as requested. [5] Claim for Costs at 3.

It is incumbent on a protester to diligently pursue its claim if it wishes
to avail itself of a remedy from our Office. Custom Prod. Mfg.,
Inc.--Recon., supra, at 3. We view the protesters' failure to respond to the
agency's reasonable request for additional supporting information until
after the claim was denied as significantly contributing to the failure to
reach agreement with the agency on the amount of the claim within a
reasonable time and as a failure to diligently pursue the matter. Indeed,
but for the agency's denial of the claim 3 months after requesting the
additional supporting information from the protesters, the protesters
presumably would have waited even longer to respond, if at all. While the
agency did not establish a deadline for a response from the protesters, the
agency reasonably could have expected a prompt response in attempting to
agree on the amount of costs. Without so responding, the protesters
unnecessarily delayed the consideration of their claim and the possibility
of agreement with the agency on the amount within a reasonable time. Where,
as here, the protesters' actions deprived the agency of a meaningful
opportunity to review an adequately supported cost claim within a reasonable
time, we decline to recommend that the agency pay the claimed costs.

The claim is denied.

Comptroller General
of the United States

Notes

1. The names of the other firms are listed in our decision, Aalco
Forwarding, Inc., et al.--Recon., B-277241.26, Jan. 6, 1999, 99-1 CPD para. 1 at
1-2 n.1.

2. The other protesters also requested that we recommend the amount they
should be reimbursed for filing and pursuing their protests. Their cost
claim will be the subject of a forthcoming decision.

3. In response to our decision, the agency decided to eliminate the previous
partial set-aside and to designate 17 of the high volume channels as
100-percent small business set-asides. The protesters then challenged this
revised set-aside, contending that MTMC failed to establish that all of the
set-aside channels constituted economic production runs or reasonable lots,
and that the set-aside decision lacked a reasonable basis. In Aalco
Forwarding, Inc., et al., B-277241.20, B-277241.21, July 1, 1998, 98-2 CPD para.
1, we denied these protests of the RFP's revised set-aside, finding that the
new set-aside determination was not a partial set-aside of the entire
procurement under the applicable regulation but a total set-aside of each
restricted channel. We concluded that the set-aside had a reasonable basis
and was in accord with the applicable regulation governing total set-asides,
FAR sect. 19.502-2, which does not require a total set-aside to constitute an
economic production run or reasonable lot. Id. at 8-9. We later denied the
protesters' request for reconsideration in Aalco Forwarding, Inc., et
al.--Recon., supra.

4. The protesters' attorneys arrived at the total attorneys' fees for each
submission by multiplying the total number of hours incurred by each
attorney in preparing that submission by the attorney's hourly rate.

5. The protesters state that they delayed their response because they were
awaiting our decision on their pending request for reconsideration of our
subsequent (July 1, 1998) decision denying the protests of the revised
set-aside. Although that subsequent decision, and the ensuing
reconsideration request, involved the agency's implementation of our
recommendation from the March 11 decision, they did not relate to the costs
awarded in that decision which are at issue here. Had we, on
reconsideration, reversed our subsequent decision denying the protests of
the revised set-aside, we would have recommended a separate and additional
award of costs for filing and pursuing those protests. Accordingly, the
protesters' purported reliance on their then-pending request for
reconsideration does not provide a basis for their failure to respond to the
agency's request for additional support of their claim for costs.