TITLE:  Department of the Navy--Modification of Remedy, B-284080.3, May 24, 2000
BNUMBER:  B-284080.3
DATE:  May 24, 2000
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Department of the Navy--Modification of Remedy, B-284080.3, May 24, 2000

Decision

Matter of: Department of the Navy--Modification of Remedy

File: B-284080.3

Date: May 24, 2000

Kevin P. Connelly, Esq., Ronald L. Sigworth, Esq., John C. Lavorato, Esq.,
and Donald G. Featherstun, Esq., Seyfarth, Shaw, Fairweather & Geraldson,
for the protester.

Stephen A. Elliott, Esq., Department of the Navy, for the protester.

Ralph O. White, Esq., and Christine S. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Agency request that General Accounting Office modify a prior sustained
decision by deleting recommendation that the protester be reimbursed the
cost of pursuing its protest, including reasonable attorneys' fees, because
the agency acted in good faith reliance upon information given it by another
agency is denied, as recommendation for reimbursement of protest costs bears
no relationship to whether agency acted in good faith, and is not intended
to penalize the agency, but instead exists to relieve protesters of the
financial burden of vindicating the public interests which Congress was
seeking to promote when it passed the Competition in Contracting Act of
1984.

DECISION

The Department of the Navy requests that our Office modify the
recommendation in our decision DRS Precision Echo, Inc., B-284080,
B-284080.2, Feb. 14, 2000, 2000 CPD para. 26, in which we sustained DRS's
protest of the issuance of a purchase order by the Navy to TEAC America,
Inc. for 238 cockpit video recorder systems for use on F/A-18 aircraft.
Since TEAC's Federal Supply Schedule (FSS) contract with the General
Services Administration (GSA) was not in effect at the time the Navy ordered
the recorder systems, we held that the order was an improper sole-source
award.

The Navy does not ask that our Office reconsider the decision to sustain the
protest, but requests that we delete the recommendation that DRS be
reimbursed the cost of pursuing its protest, including attorneys' fees.
Alternatively, the Navy asks that we limit any reimbursement of protest
costs to those incurred prior to January 7, 2000, when GSA apparently
offered to reimburse DRS for the attorneys' fees incurred in pursuing its
protest up to that date.

We deny the request.

As set forth in our prior decision, the Navy purchase order (No.
N00383-99-F-6019) to TEAC for 238 recorder systems was issued on September
23, 1999, for a total price of $2,021,096. In an October 4 agency-level
protest, and in a subsequent protest to our Office, DRS argued that GSA's
FSS contract with TEAC had expired and was not available for use by the
Navy. The Navy denied the agency-level protest and defended its actions in
the protest here. On January 19, 2000, in response to a request for
information from our Office, GSA conceded that when the Navy placed its
order, TEAC's contract had expired, and that no contract with TEAC was in
place until GSA's contracting officer made a subsequent award [1] on
December 2, 1999. On February 1, the Navy also conceded that the GSA
schedule contract had expired at the time the order was placed, but urged
our Office not to recommend payment of DRS's protest costs because the Navy
proceeded in good faith and was misled by GSA representatives who indicated
that TEAC's FSS contract remained in place. DRS Precision Echo, Inc., supra,
at 2-3.

On February 14, our Office sustained DRS's protest and recommended that the
company be reimbursed its protest costs. Our decision acknowledged that the
Navy had apparently acted in good faith when it placed its purchase order in
September, but suggested that there was evidence that should have led the
Navy to suspect that GSA had not extended TEAC's schedule contract before it
expired. Thus, we concluded that the Navy's actions had contributed to
prolonging the dispute and increasing the cost to the protester, and we
recommended that the Navy, not DRS, bear the cost of filing and pursuing the
protest. Id. at 3-4.

In requesting that our Office revise the recommendation that the agency pay
protest costs, the Navy disputes our conclusion that it had a basis for
suspecting that GSA had not extended TEAC's contract before it expired. The
Navy disputes our conclusion out of an apparent belief that our award of
protest costs was intended to punish the agency. Specifically, the Navy
points out that GSA's representatives continued to assure representatives of
the Navy that the contract was still valid, and argues that the Navy
reasonably relied upon those assurances. The Navy's request raises two
issues: first, whether DRS should be reimbursed its costs at all; and
second, whether the Navy should be required to reimburse DRS's protest
costs.

The authority of the General Accounting Office (GAO) to recommend
reimbursement of the costs of filing and pursuing protests, including
reasonable attorneys' fees, was established in the Competition in
Contracting Act of 1984 (CICA), 31 U.S.C. sect. 3554(c)(1)(A) (1994). The
underlying purpose of CICA's provisions relating to bid protest costs is to
relieve protesters of the financial burden of vindicating the public
interest which Congress seeks to promote. E&R, Inc.--Claim for Costs,
B-255868.2, May 30, 1996, 96-1 CPD para.  264 at 2. In this regard, the bid
protest process, as mandated by CICA, "was meant to compel greater use of
fair, competitive bidding procedures ‘by shining the light of
publicity on the procurement process, and by creating mechanisms by which
Congress can remain informed of the way current legislation is (or is not)
operating.'" Lear Siegler, Inc., Energy Prods. Div. v. Lehman, 842 F.2d
1102, 1104 (9th Cir. 1988), quoting Ameron v. U.S. Army Corps of Eng'rs, 809
F.2d 979, 984 (3rd Cir. 1986).

In our view, DRS's protest served precisely the purpose anticipated by CICA.
Specifically, DRS highlighted a failure by GSA to properly maintain the FSS
program, and showed that absent appropriate maintenance of the program, the
Navy's order of cockpit video recorders was made without the benefits of
competition, and was, in essence, an improper sole-source award. As between
DRS and the government, we think CICA clearly anticipates that the
government should reimburse DRS for acting as a private attorney general in
shining the light of publicity here. Thus, we conclude that DRS should be
reimbursed for the cost of pursuing this protest. See Agency for Int'l Dev.;
Development Alternatives, Inc.--Recon., B-251902.4, B-251902.5, Mar. 17,
1994, 94-1 CPD para. 201 at 8-9.

We next turn to the Navy's contention that it should not be required to
reimburse DRS for its protest costs because the agency acted in good faith
in relying on GSA's representations. As we stated in our prior decision, we
have no basis to conclude, nor do we think, that the Navy acted in less than
complete good faith in placing this order. DRS Precision Echo, Inc., supra,
at 3. In addition, our prior decision did not intend to suggest that the
Navy acted in bad faith in defending DRS's protest. Instead, the decision
reflected only a limited concern about the continued defense of this
purchase given GSA's inability over a period of several months to produce
any evidence that a contract slated to expire had not done so. Id.
Nonetheless, despite the Navy's claims of good faith, and despite any
concern by our Office that the Navy may have unnecessarily prolonged the
dispute, the decision whether to recommend an award of costs bears no
relationship to whether the agency acted in good faith; rather, as stated
above, costs are awarded to relieve protesters of the financial burden of
the public service they perform. General Servs. Admin.--Recon.,
B-239569.2, Feb.13, 1991, 91-1 CPD para. 163 at 3.

Alternatively, the Navy urges our Office to limit DRS's protest costs to
those incurred prior to January 7, 2000, when GSA--prior to advising our
Office that it had not extended TEAC's FSS contract before it
expired--apparently offered to reimburse the protester for its attorneys'
fees. In the Navy's view, since all of the recording systems ordered had
been delivered to the Navy and were being installed, DRS had no reasonable
expectation of any remedy beyond payment of its protest costs, and thus
should not be reimbursed for extending the process further.

We disagree. While we share the Navy's concern about conserving resources
when there appears to be little likelihood of any remaining meaningful
relief, we cannot agree that DRS's recovery of protest costs should now be
limited because the company chose not to accept GSA's settlement offer. In
our view, while a protester might elect to accept the type of settlement
offer made here, there is no requirement that a protester relinquish its
right to a decision by our Office on the propriety of an agency action in
return for only the agency's offer to pay its protest costs.

After making its settlement offer, GSA produced a report to our Office on
January 19, and acknowledged that TEAC's FSS contract had been allowed to
expire. We asked both DRS and the Navy to address any remaining issues in
light of GSA's admission, and both elected to do so. In our view, these
costs incurred shortly before our Office sustained the protest on February
14, as well as those incurred here--i.e., defending against the Navy's
request for modification of remedy--should be included among the protest
costs reimbursed by the Navy. Pacific Northwest Bell Tel. Co., Mountain
States Bell Tel. Co.--Claim for Costs, B-227850.3, June 6, 1988, 88-1 CPD
para. 527 at 2.

The request for modification of remedy is denied.

Comptroller General
of the United States

Notes

1. For the record, we note that GSA "awarded" to TEAC by modifying TEAC's
FSS contract approximately 4 months after its expiration. This modification,
signed by GSA's contracting officer on December 2, 1999, exercised an option
that extended the performance period in the earlier contract from August 1,
1999 through July 31, 2004. GSA Report, Jan. 19, 2000, at 2.