TITLE:  Rice Services, Ltd.--Costs, B-284997.2, May 18, 2001
BNUMBER:  B-284997.2
DATE:  May 18, 2001
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Rice Services, Ltd.--Costs, B-284997.2, May 18, 2001

Decision

Matter of: Rice Services, Ltd.--Costs

File: B-284997.2

Date: May 18, 2001

David B. Dempsey, Esq., Piper, Marbury, Rudnick & Wolfe, for the protester.

Paul W. Knoth, Esq., Department of the Navy, for the agency.

Glenn G. Wolcott, Esq., and Michael R. Golden, Esq., Office of the General
Counsel, GAO participated in the preparation of the decision.

DIGEST

Request for recommendation that agency reimburse protester for the costs it
incurred in pursuing an administrative appeal of the agency's initial cost
comparison decision under Office of Management and Budget Circular No. A-76
is denied because GAO's authority to recommend reimbursement of protest
costs does not extend to costs incurred by a protester in litigating in
another forum.

DECISION

Rice Services, Ltd., requests that we recommend that the Department of the
Navy reimburse Rice for the costs Rice incurred in pursuing an
administrative appeal which sought the Navy's internal review of a
contracting officer's initial decision, pursuant to Office of Management and
Budget (OMB) Circular No. A-76, to perform food service activities in-house
at the United States Naval Academy rather than to contract with Rice for
those services.

We deny the request.

In January 1998, the Navy announced that it intended to perform a commercial
activities study, pursuant to OMB Circular A-76, to determine whether it
would be more economical to perform food service activities at the U.S.
Naval Academy in-house using government employees or under contract with a
private-sector firm.

Pursuant to the procedures established in OMB Circular No. A-76 and that
Circular's Supplemental Handbook, the agency created a performance work
statement (PWS) establishing a common basis for preparation of private
offerors' proposals and the government's Most Efficient
Organization/Management Study (MEO).

Following creation of the PWS, the agency conducted a competition between
private sector offerors and concluded that, as between the private sector
proposals, Rice's proposal offered the best value to the government. The
contracting officer then compared Rice's proposed price with the costs
reflected in the government's MEO and, after making certain adjustments,
made an initial determination that the costs incurred under the MEO would be
lower than Rice's proposed price and, therefore, that the services should be
performed in-house. Rice was notified of this initial determination and
filed an administrative appeal with the Navy's appeal authority, challenging
various aspects of the cost comparison. [1] The Navy's administrative appeal
authority ratified the contracting officer's initial cost comparison
decision.

Upon receiving the agency's final decision from the administrative appeal
authority, Rice filed a protest with our Office under the provisions of the
Competition in Contracting Act of 1984 (CICA), 31 U.S.C. sect.sect. 3551-56 (1994).
We sustained that protest on the basis that the agency had failed to
reasonably compare the level and quality of performance to be obtained under
the MEO with the level and quality of performance to be obtained under
Rice's proposal and recommended, among other things, that Rice be reimbursed
the reasonable costs of filing and pursuing its protest to our Office. Rice
Servs., Ltd., B-284997, June 29, 2000, 2000 CPD para. 113 at 10-11.

The agency subsequently implemented our recommendations.

As relevant here, the agency reimbursed Rice for costs Rice had incurred in
filing and pursuing its GAO protest. The agency, however, declined to
reimburse Rice for the costs it incurred in pursuing the administrative
appeal within the Navy. Rice now requests that we recommend reimbursement of
those costs. Specifically, Rice argues that, because GAO does not generally
consider protests alleging deficiencies in A-76 cost comparison decisions
until completion of the internal A-76 administrative appeal process, see
Trans-Regional Mfg. Inc., B-245399, Nov. 25, 1991, 91-2 CPD para. 492 at 2-3,
the costs Rice incurred in connection with its agency appeal should have
been reimbursed along with the costs Rice incurred in connection with its
GAO protest.

Our authority to recommend reimbursement of protest costs is based on the
statutory provisions of CICA. 31 U.S.C. sect. 3554(c)(1). Those provisions limit
our bid protest jurisdiction as well as our corresponding authority to
recommend the payment of costs to those incurred in filing and pursuing
protests filed with our Office. Id; Diverco, Inc.--Claim for Costs,
B-240639.5, May 21, 1992, 92-1 CPD para. 460.

We have consistently rejected assertions that our cost reimbursement
authority under CICA is properly applied to litigation costs incurred in
connection with matters brought in different forums, since we do not view
such costs as having been incurred in filing and pursuing a protest with our
Office. Test Systems Assocs., Inc., B-256813, Oct. 29, 1996, 96-2 CPD para. 161
at 4 (disallowance of costs associated with protest-related actions at U.S.
District Court and U.S. Small Business Administration); Diverco, Inc.--Claim
for Costs, supra (disallowance of costs associated with an agency-level
protest).

As noted above, the administrative appeal process established by the FAR and
OMB Circular No. A-76 is separate from GAO's bid protest process.
Accordingly, our statutory authority to recommend reimbursement of costs
does not extend to the costs associated with Rice's administrative appeal of
the initial A-76 cost comparison. While it is true that, here, Rice was
required to complete the administrative appeal process within the agency
prior to filing a protest with our Office, that requirement does not alter
the reach of our statutory authority.

The request is denied.

Anthony H. Gamboa

General Counsel

Notes

1. The Federal Acquisition Regulation (FAR) requires that "each agency shall
establish an appeals procedure for informal administrative review of the
initial [A-76] cost comparison result," and explains that the purpose of
this review is "to ensure that final agency determinations are fair,
equitable, and in accordance with established policy." FAR sect. 7.307(a).