TITLE:   Boines Construction & Equipment Co., Inc.--Costs, B-279575.4, April 5, 2000
BNUMBER:  B-279575.4
DATE:  April 5, 2000
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Boines Construction & Equipment Co., Inc.--Costs, B-279575.4, April 5, 2000

Decision

Matter of: Boines Construction & Equipment Co., Inc.--Costs

File: B-279575.4

Date: April 5, 2000

John I. Hulse IV, Esq., Hulse & Wanek, for the protester.

Jud E. McNatt, Esq., Department of Housing and Urban Development, for the
agency.

Jennifer D. Westfall-McGrail, Esq., and Christine S. Melody, Esq., Office of
the General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1. General Accounting Office (GAO) does not recommend reimbursement of bid
preparation costs incurred by protester's subcontractor where protester
fails to establish that it has paid or has committed to pay the
subcontractor's costs.

2. Where protester fails to demonstrate that hourly rates claimed for its
employees are based upon actual rates of compensation plus overhead and
fringe benefits, its claim for reimbursement of the time spent by its
employees in preparing its bid is denied.

3. GAO recommends reimbursement of protester's legal expenses associated
with pursuit of its protest where it demonstrates that it is ultimately
responsible for payment of the attorneys' fees.

DECISION

Boines Construction & Equipment Company, Inc. requests that we recommend
that it recover $15,246.78 from the Department of Housing and Urban
Development (HUD) for bid preparation costs under invitation for bids (IFB)
No.
B-FTW-00041, and for the costs of filing and pursuing its protest in Boines
Constr. & Equip. Co., Inc., B-279575, June 29, 1998, 98-1 CPD para. 175, recon.
den., Department of Hous. and Urban Dev.--Recon., B-279575.2, Nov. 4, 1998,
98-2 CPD para. 105. We recommend that Boines recover $4,404.12.

In Boines Constr. & Equip. Co., Inc., we sustained Boines' protest of the
award of a contract to Pierce Foundations, Inc. for the demolition of vacant
buildings and related site work at the Hillcrest Home Apartments public
housing project in Larose, Raceland, and Thibodaux, Louisiana. We found that
Pierce's low bid was late and thus should not have been considered. We
recommended that HUD terminate its contract with Pierce, if feasible, and
award to Boines as the next low bidder, if Boines' bid was otherwise
responsive and Boines was found responsible; in the event that termination
of the contract with Pierce was not feasible due to the extent of contract
performance, we recommended that HUD instead pay Boines its bid preparation
costs. We also recommended that HUD pay Boines the costs of filing and
pursuing its protest, including reasonable attorneys' fees.

On July 10, HUD requested reconsideration of our decision. By letter dated
August 27, Boines requested that we modify our recommendation to include
payment of lost profits. By letter dated August 28, the agency notified us
that it had suspended action on our recommendation until its request for
reconsideration had been decided, and that due to the status of performance
(the demolition work by Pierce being approximately 90 percent complete), the
only possible corrective action in the event its request for reconsideration
were denied (and our decision sustaining Boines' protest affirmed) would be
payment of the protester's bid preparation and protest costs. By separate
decisions dated November 4, Department of Hous. and Urban Dev.--Recon.,
supra, and Boines Constr. & Equip. Co., Inc.--Recon., B-279575.3, Nov. 4,
1998, we denied HUD's request for reconsideration and Boines' request for
modification of our recommendation.

Boines submitted a certified claim for costs to the agency on January 4,
1999. Boines claimed bid preparation costs totaling $11,369.55 ($10,085.00
for 217 hours of labor by five employees, $221.27 for miscellaneous expenses
such as blueprints and copying, and $1,063.28 for travel) and attorney's
fees of $3,828.35. Boines supported its bid preparation cost claim with
schedules summarizing by date and employee name, the number of hours worked,
the tasks performed, and the hourly rate of compensation. Three of the five
individuals listed in the schedule (for whom a total of 105 hours of labor
were claimed) were employees of Hamp's Construction, Boines' intended
subcontractor, rather than Boines itself. In an affidavit accompanying the
claim, the presidents of Boines and Hamp's explained that the two companies
had collaborated in preparing the bid. [1] The presidents of Boines and
Hamp's further attested that the hourly rates that they were claiming for
their employees were "the usual and customary rates utilized by them in this
area, and [were] commensurate with the rates utilized by these companies in
bidding upon and performing Section 8-A work in this area." Id. at para. 6.

By letter dated January 26, HUD asked Boines to furnish it with evidence
that the hours listed for each of the individuals on its claim were actually
expended on this project. Boines responded by letter dated February 25,
noting that since no job was ongoing at the time the bid was prepared, no
project logs or daily logs or daily reports had been kept in the course of
preparing the bid. Boines argued that its compilation of hours worked ought
to be accepted despite the fact that it could not be supported with
contemporaneous documentation because it was prepared "by the actual persons
involved in the bid preparation, the persons making the site visits, and
incurring the individual expenses." Letter from Protester's Attorney to GAO
and HUD at 1 (Feb. 25, 1999).

By letter dated March 8, Boines submitted additional documentation
supporting its claim, including a number of "Daily Worksheets" for one of
the Hamp's employees and "Daily Time Slips" for the two Boines employees.

On July 1, HUD notified Boines that it was unwilling to pay a significant
portion of its claim. HUD refused to pay the bid preparation costs incurred
by Hamp's since Hamp's was not the successful protester and no
contemporaneous evidence had been furnished demonstrating that Boines
intended to reimburse Hamp's for its bid preparation costs and was thus
liable for these costs. Letter from HUD to Protester's Attorney at 2 (July
1, 1999). HUD also refused to pay the attorney's fees claimed by the
protester since they had been billed to Hamp's rather than Boines, leading
the agency to conclude that the attorney had been retained by Hamp's rather
than Boines.

Further, the agency refused to pay Boines for the full number of hours that
it claimed for its own employees. The agency opined that the 100-plus hours
reflected as spent by Boines' employees seemed excessive, "especially in
view of the fact that Hamp's was apparently going to do the demolition
portion of the job and had provided two individuals [who claimed to have
worked 100-plus hours themselves] to furnish the cost estimating for this,
the primary part of the effort." Id. at 4 Moreover, according to HUD, other
bidders for the job had reported that it took them 40-50 hours to prepare
their cost estimates and complete their bids for the job. HUD also noted
that the documentation submitted by the protester did not adequately support
its claimed hours. The agency observed, in this regard, that Boines had
produced "Daily Time Slips" for its employees after reporting to the agency
that no project or daily logs or daily reports had been kept in the course
of preparing the bid, leading the agency to surmise that these documents had
been created after the fact in response to its request. [2] Id. at 5. In
sum, the agency concluded that Boines' inability to support its claimed
hours was a deficiency that it could not overlook in view of the fact that
the total hours claimed considerably exceeded what it considered reasonable
for the effort. The agency did recognize that some amount of time had been
expended in preparation of Boines' bid, however, and offered, "in the spirit
of compromise," to reimburse Boines for 50 hours of its employees' time. Id.

A final major problem with Boines' claim noted by the agency was that Boines
had not established that the hourly rates at which it was seeking
reimbursement for its employees' time were based upon their actual rates of
compensation, plus reasonable overhead and fringe benefits, as opposed to
what the agency referred to as "market rates." The agency indicated that it
would not reimburse Boines for the 50 hours offered above until the hourly
rates had been substantiated.

By letter dated July 9, Boines expressed its disagreement with the agency's
findings and asked that we declare it entitled to the full amount of its
claim.

BID PREPARATION COSTS

As previously noted, Boines seeks to recover $11,369.55 in bid preparation
expenses: $10,085.00 for labor (by employees of both Boines and Hamp's),
$221.27 for miscellaneous expenses, and $1,063.28 for travel.

Bid Preparation Costs Incurred By Hamp's

We have allowed a protester to recover the bid preparation costs incurred by
its potential subcontractor in only one limited circumstance--where the
costs were incurred by the subcontractor as part of a joint effort with the
protester, participating fully in the bid preparation process, and not
limiting its role to merely providing a quotation for certain work under the
solicitation. TMC, Inc.--Claim for Costs, B-230078.2, B-230079.2, Jan. 26,
1990, 90-1 CPD para. 111 at 2-3. See also The Pevar Co.--Claim for Costs,
B-242353.3, Sept. 1, 1992, 92-2 CPD para. 144 at 7. Consistent with the
Competition in Contracting Act of 1984, before recommending that the
protester recover bid preparation costs incurred by its potential
subcontractor from the contracting agency, we will require evidence of an
obligation by the protester to repay such costs regardless of whether or not
they are recovered from the government. In this regard, under 31 U.S.C.
3554(c)(1) (1994), we are authorized to recommend that the contracting
agency pay bid preparation costs to an "appropriate interested party." In
our view, it is implicit in this provision that the costs to be recovered be
the costs of the "interested party." See A-1 Movers of Am., Inc., et
al.--Costs, B-277241.31, Aug. 2, 1999, 99-2 CPD para. 24. As defined in 31
U.S.C. 3551(2), an "interested party" is an "actual or prospective bidder or
offeror." Under this definition, the interested party is the protester, not
its potential subcontractor even if it participates in preparing the
protester's bid. Accordingly, only if there is evidence of an obligation by
the protester to repay the subcontractor for its bid preparation costs
regardless of whether the protester ultimately recovers those costs from the
government can we conclude that the costs are those of an interested party,
as required by CICA. [3]

Here, Boines represents that it will reimburse Hamp's only to the extent
that it--Boines--recovers costs from the government. Specifically, Boines
states that it and Hamp's have agreed that

as to any amounts recovered on the appeal to the General Accounting Office .
. . Boines will reimburse itself for the labor and costs which it expended
through its own forces, and will reimburse Hamp's for the labor and costs
which Hamp's employees expended in the course of preparing the bid, going to
the site visits, traveling, etc.

Letter from Protester's Attorney to GAO at 1 (Oct. 1, 1999). [4] Such a
contingent obligation is not sufficient to warrant recovery by Boines of bid
preparation costs incurred by Hamp's. See Systemhouse Fed. Sys., Inc., GSBCA
9446-C, 89-2 BCA para. 21,773. As a consequence, we do not recommend that Boines
recover those costs.

Boines' Bid Preparation Costs

A protester seeking to recover the costs of preparing a proposal or bid must
submit sufficient evidence to support its monetary claim. John
Peeples--Claim for Costs, B-233167.2, Aug. 5, 1991, 91-2 CPD para. 125 at 3. The
amount claimed may be recovered to the extent that it is adequately
documented and shown to be reasonable. Maintenance and Repair--Claim for
Costs, B-251223.4, June 24, 1994, 94-1 CPD para. 381 at 3-4. Although we
recognize that the requirement for documentation may sometimes entail
certain difficulties, we do not consider it unreasonable to require a
protester to document in some manner the amount and purposes of its
employees' claimed efforts and to establish that the claimed hourly rates
reflect the employees' actual rates of compensation plus reasonable overhead
and fringe benefits. W.S. Spotswood & Sons, Inc.--Claim for Costs,
B-236713.3, July 19, 1990, 90-2 CPD para. 50 at 3.

Despite requests by both the agency and our Office for documentation
substantiating that the rates of compensation claimed by Boines for its
employees reflect the employees' actual rates of compensation, plus
reasonable overhead and fringe benefits, Boines has not documented the
claimed rates. The only evidence in the record concerning rates of employee
compensation is the attestation by Boines' president, cited above, that the
rates claimed are "the usual and customary rates utilized by them in this
area, and are commensurate with the rates utilized by these companies in
bidding upon and performing Section 8-A work in this area." This statement
does not establish that the claimed rates reflect the employees' actual
rates of compensation, plus reasonable overhead and fringe benefits; it does
not exclude the possibility that the rates include profit. A protester may
not recover profit on its employees' time in preparing a bid. Id. at 3-4;
John Peeples, supra, at 3. Since Boines has not submitted evidence
demonstrating that the hourly rates claimed for its employees are based upon
actual rates of compensation plus overhead and fringe benefits, its claim
for reimbursement of the time spent by its employees in preparing its bid is
denied.

With regard to the other bid preparation expenses claimed by Boines, we
recommend that it be reimbursed $200 for four copies of blueprints and
$21.27 in copying expenses. We also find that it is entitled to $554.50 for
the travel expenses (i.e., automobile mileage, meals, airfare, and taxicab
fare) incurred by its employees in preparing and delivering its bid. [5]

ATTORNEY'S FEES

Boines seeks reimbursement of $3,828.35 for time spent and expenses incurred
by its attorney in pursuing its protest. In support of its claim for
attorney's fees, the protester has submitted itemized statements from the
attorney detailing the dates that he worked on the matter, the particular
task performed, and the number of hours worked.

HUD objects to payment of the attorney's fees on the grounds that bills from
the law firm representing the protester were addressed to Hamp's rather than
Boines, leading agency representatives to surmise that the legal expenses
were incurred by the former rather than the latter. The agency argues that
if the legal fees were paid by the subcontractor, they are not reimbursable.

The president of Boines explains that while the legal bills for work
performed with regard to the protest were "carried on the law firm account
under ‘Hamp's Construction,' [which had an ongoing relationship with
the firm], a separate file designation was entered as ‘Boines/HUD
Appeal/Hillcrest Homes' and Boines knew and understood that all such bills,
time and costs entered on that account were chargeable to Boines, and would
be the full responsibility of Boines, even if no monies were recovered by
way of the HUD appeal." Affidavit of Michael Boines, Aug. 27, 1999, at 1-2.

We think that Mr. Boines' sworn statement adequately addresses the objection
raised by the agency and demonstrates that payment of the attorney's fees is
ultimately the responsibility of Boines. Under such circumstances, we
recommend that the protester recover these costs. See Research Dynamics,
Inc. v. Department of the Air Force, GSBCA 13455-P, 13598-C, 96-2 BCA
para. 28448. Moreover, the amount of time spent by the attorney in pursuing the
protest and his rate of compensation ($125/hour) both appear reasonable.
Accordingly, we recommend that Boines recover its attorney's fees in the
amount of $3,628.35. [6]

CONCLUSION

We recommend that Boines recover a total of $4,404.12, consisting of $775.77
in bid preparation expenses and $3,628.35 in protest costs (i.e., attorney's
fees).

Comptroller General
of the United States

Notes

1. The presidents of the two companies explained the arrangement between
them as follows: "In analysis of the bid plans and specifications, visits to
the three (3) sites in question, attendance at pre-bid meetings, performance
of quantity takeoffs and estimating prices[,] obtaining of subcontractor
prices, and calculating final bid prices, Boines had entered into a verbal
subcontract with Hamp's Construction, L.L.C. (Hamp's) whereby Boines, as
general contractor, was to perform job cost estimating and bid preparation
in conjunction with Hamp's, over all job supervision, inspection, asbestos
removal, trucking, and furnishing of machines for demolition. Hamp's was to
provide personnel to assist in job cost estimating and bid preparation,
performance of demolition and hauling." Certification of Status of Parties
and Bid Preparation Process, Jan. 4, 1999, para. 2.

2. In subsequent correspondence, the protester never disputed the agency's
assertion that these documents had been generated after the fact, leading us
to conclude that the agency was correct in so surmising.

3. To the extent that our decision in TMC, Inc.--Claim for Costs, supra, is
inconsistent with this conclusion, it will no longer be followed.

4. Boines furnished this statement in response to the following request for
clarification from our Office dated September 29:

Has Boines agreed to reimburse Hamp's for its bid preparation costs? If so,
please describe the terms of the agreement.

5. We find that the claimant is entitled to recover the following travel
expenses:

$73.50 for the 210 miles driven by Boines' president to visit the job site
on January 19 (the agency having stated on page 3 of its letter to the
protester dated December 10, 1998 that it accepted the rate of 35 cents per
mile used by the protester in calculating the expense of travel in personal
vehicles); $7.50 for lunch and $15 for dinner for Boines' president and
another Boines' employee visiting the site on January 19; $49 for the 140
miles driven by a Boines employee to attend the pre-bid conference on
January 20, and $7.50 for the employee's lunch that day; $56 for the 160
miles traveled by a Boines employee to visit the site on January 26; $59.50
for the same employee to drive round-trip to the same site on February 5;
$222 for a plane trip from New Orleans to Dallas for a Boines employee to
deliver the bid and attend the bid opening; $28 for cab fares for this
employee; and $14 for two meals consumed by the employee while traveling.
See Armour of Am., Inc.--Claim for Costs, B-237690.2, Mar. 4, 1992, 92-1 CPD
para. 257 at 9 (airfare, meals, and taxicab fare are recoverable travel
expenses); The Pevar Co.--Claim for Costs, supra, at 9 (automobile mileage
is recoverable).

We deny recovery of any of the other travel expenses claimed since they were
incurred by employees of Hamp's.

6. From the amount claimed by the protester, we have excluded $200 for 1.6
hours of the attorney's time spent preparing Boines' claim for costs to the
agency since the costs of filing and pursuing a bid protest at the General
Accounting Office do not include costs associated with pursuing a claim for
those costs with the contracting agency. Aztec Dev. Co.--Claim for Costs,
B-270275.2, Feb. 13, 1997, 97-1 CPD para. 73 at 4.