TITLE:  Parmatic Filter Corporation--Costs, B-285288.5, August 27, 2001
BNUMBER:  B-285288.5
DATE:  August 27, 2001
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Parmatic Filter Corporation--Costs, B-285288.5, August 27, 2001

Decision

Matter of: Parmatic Filter Corporation--Costs

File: B-285288.5

Date: August 27, 2001

Claude P. Goddard, Jr., Esq., Wickwire Gavin, for the protester.

Vera Meza, Esq., Department of the Army, for the agency.

Guy R. Pietrovito, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

General Accounting Office (GAO) will not recommend the protester's recovery
of the costs of filing and pursuing its protest in excess of the amount that
the procuring agency found reasonable, where the protester failed to provide
sufficient information establishing that the costs claimed related to the
issues upon which Parmatic prevailed in its protest, where GAO in its
protest decision recommended the recovery of only those protest costs
related to the issues upon which the protester prevailed, and where the
protester failed to establish that the hours claimed should otherwise be
recovered.

DECISION

Parmatic Filter Corporation requests that our Office recommend the amount it
should recover from the Department of the Army for the costs of filing and
pursuing its protest in Parmatic Filter Corp., B-285288, B-285288.2, Aug.
14, 2000, 2000 CPD
para. 185.

In our August 2000 decision, we sustained in part and denied in part
Parmatic's challenge to the Army's award to Hunter Manufacturing, Inc. for
filters and filter canisters. Specifically, we found that the agency
unreasonably and unequally evaluated the two firms' proposals under the
solicitation's quality factor and sustained Parmatic's protest on this
basis. We specifically denied, however, the majority of Parmatic's protest
grounds, including Parmatic's objections to the agency's evaluations under
the technical, small business participation, and past performance evaluation
factors. We recommended that the agency reevaluate proposals, conduct
discussions if appropriate, and make a new source selection decision. We
also recommended "that the agency reimburse the protester its reasonable
costs of filing and pursuing the protest bases that were sustained,
including attorneys' fees." Parmatic Filter Corp., supra, at 19-20.

On October 12, 2000, Parmatic submitted a claim for $103,331.10 to the Army
for its protest costs, which consisted of attorneys' fees of Parmatic's
outside counsel, costs incurred by in-house personnel, and out-of-pocket
expenses incurred by outside counsel and in-house personnel. Documentation
supporting the claim was also provided. This documentation, however, showed
that Parmatic was requesting reimbursement for all of its protest costs
including those associated with issues that we denied, notwithstanding our
recommendation in the protest decision.

The Army requested that Parmatic identify, in accordance with our protest
decision, the costs incurred pursuing the protest issues that we sustained.
Parmatic refused to segregate its claimed costs between those incurred for
the issues which were sustained and those incurred pursuing the issues that
were denied, stating to the Army that the issues were not severable. On
March 23, 2001, in the face of Parmatic's refusal to provide the requested
breakdown, the Army decided that Parmatic was entitled to be reimbursed
$28,739.82 for its protest costs. This reflected the agency's judgment as to
amount of time and expenses Parmatic's counsel and personnel should have
reasonably incurred pursuing the protest issues that were sustained. [1]

Parmatic requested that our Office recommend the amount of protest costs
that the firm should recover, asking that we find it entitled to
$103,331.10, the entire amount of costs and expenses the firm states it
incurred pursuing all of the protest grounds. After obtaining a response
from the Army, we conducted an alternative dispute resolution conference in
an effort to settle this claim. During this conference, we confirmed that,
as stated in our protest decision, Parmatic's cost reimbursement should be
limited to those costs incurred pursuing the sustained protest issues. We
informed the protester that the record before our Office did not
sufficiently establish the costs related to the successful protest issues.
The parties stated that they would reopen negotiations concerning Parmatic's
cost entitlement, and Parmatic agreed to provide further information
identifying the costs and expenses it asserted were incurred pursuing the
protest issues on which we sustained its protest.

On May 29, Parmatic submitted to the agency "a proposal for settling the
referenced cost claim based on a segregation of costs associated with [the
firm's] successful and unsuccessful grounds of protest." Letter from
Parmatic to Army (May 29, 2001) at 1. In this letter, Parmatic sought
reimbursement of $88,625.08 for its protest costs. The letter included a
breakdown of counsel and in-house personnel time by date and included for
each date a general description of the tasks performed. (For example, for
June 14, Parmatic claimed a total of 12 hours for four in-house personnel
for "analysis of government documents; draft response comments. Brief
counsel so he has sufficient information to effectively pursue Parmatic's
case," id. at 4, which could be compared to Parmatic's original claim for 16
hours on that date for these individuals.) [2] Parmatic and the Army were
unable to agree on the amount Parmatic should be reimbursed for its protest
costs.

Under the Competition in Contracting Act of 1984, as amended, 31 U.S.C.
sect. 3554(c)(1) (1994), our Office may recommend that the protester be
reimbursed the costs of filing and pursuing the protest, including
reasonable attorneys' fees, where we find that a solicitation or the award
of a contract does not comply with statute or regulation. This is to relieve
parties with valid claims of the burden of vindicating the public interests
that Congress seeks to promote. Hydro Research Science, Inc.-- Costs,
B-228501.3, June 19, 1989, 89-1 CPD para. 572 at 3. A protester seeking to
recover the cost of pursuing its protest must submit sufficient evidence to
support its monetary claim. The amount claimed may be recovered to the
extent that the claim is adequately documented and is shown to be
reasonable; a claim is reasonable, if, in its nature and amount, it does not
exceed that which would be incurred by a prudent person in pursuit of the
protest. Berkshire Computer Prods., Inc.--Costs, B-240327.3, Dec. 30, 1994,
95-1 CPD para. 6 at 2.

Parmatic believes that it is entitled to be reimbursed for its costs of
pursuing all its protest grounds. However, as the Army noted, we expressly
limited Parmatic's reimbursement of protest costs to the protest grounds
that were sustained. Much of what Parmatic argued during the course of the
protest concerned issues that we specifically denied in our decision. To the
extent that Parmatic believes that its reimbursement of protest costs should
not be limited to the issues upon which it prevailed, this is an untimely
request for modification of our decision and will not be considered now.
Accordingly, as stated in our decision on the protest, Parmatic should only
be reimbursed the reasonable costs that relate to the issues upon which it
prevailed.

Parmatic nevertheless argues that it is entitled to be reimbursed the bulk
of its total incurred protest costs because "there were many tasks that had
to be accomplished regardless of whether any protest ground proved to be
successful." Letter from Parmatic to Army (May 29, 2001) at 1. Although this
may be true, it was Parmatic's obligation here to segregate the costs
relating to issues upon which it prevailed, and to identify and establish
the reasonableness of costs that are common to both the sustained and denied
issues. Parmatic failed to do that here.

From our review of the record, including Parmatic's May 29 claim settlement
proposal, we find that Parmatic still has not submitted sufficient evidence
establishing the reasonableness of the amount ($88,625.08), which the firm
now claims for its costs of pursuing its successful protest grounds. That
is, this document does not establish that the time claimed either relates
only to the issues upon which the firm was successful or are reasonable
costs that Parmatic would have been forced to incur regardless of the issue
or issues pursued. Rather, the document only generally describes tasks
performed on a particular date and simply lists, without explanation, the
number of hours Parmatic had originally claimed for each entry, the number
of hours in its "revised proposal," and the size of the adjustment. This
does not provide the Army or our Office any basis to judge the
reasonableness of Parmatic's revised claim.

Moreover, the amount of hours claimed in the May 29 proposal appear to be
unreasonable when compared to the gross hours originally claimed for
pursuing all of the protest grounds. That is, of the 307.9 hours Parmatic
originally claimed were incurred by its in-house personnel pursuing all of
the protest grounds, Parmatic asserts in its May 29 proposal that 254.7
hours of in-house personnel time are related only to the issues upon which
it was successful or are reasonable common costs; in other words, it claims
that only 53.2 hours relate to the protest grounds that were denied.
Similarly, Parmatic's counsel originally claimed 206 hours of time pursuing
all of the protest grounds, and claimed in the May 29 proposal that 175.65
hours were incurred pursuing only the issues sustained or were common costs.
Given that most of Parmatic's protest arguments and pleadings related to the
protest issues that we denied, we would not have expected Parmatic to claim
that only approximately 20 percent of the total hours claimed related to the
denied issues. Parmatic's claimed hours in its May 29 proposal do not on
their face appear reasonable.

Given Parmatic's failure to provide sufficient information to allow us or
the Army to segregate its claimed protest cost to the issues upon which
Parmatic prevailed in its protest, we find no basis to question the
reasonableness of the Army's determination that Parmatic should receive
$28,739.82 for its protest costs. [3] Accordingly, we recommend that the
protester recover $28,739.82 for its protest costs and expenses.

Anthony H. Gamboa

General Counsel

Notes

1. The Army did not question the reasonableness of the attorneys' hourly
billing rates or Parmatic's personnel's claimed salaries, but questioned the
application of a high manufacturing overhead rate in the cost claim to
Parmatic's personnel (the protester's president, contracts manager,
contracts administrator, and program manager), who were not involved in
manufacturing and whose salaries were included in Parmatic's general and
administrative cost pool. In determining what amount should be reimbursed,
the Army, using the analysis of the Defense Contract Audit Agency of
Parmatic's indirect costs, computed and applied a substantially lower
overhead and fringe rate to these employees' costs. Parmatic complains,
citing a number of our decisions, that it is entitled to recover the
burdened salary associated with its in-house personnel. This argument,
however, does not recognize that the Army did apply an indirect rate to
Parmatic's claimed salary costs, albeit a significantly lower indirect cost
rate than that claimed by Parmatic. While Parmatic asserts that only its
claimed indirect rates can be used to resolve the cost claim, we note that
Parmatic's documentation does not show that the firm recalculated its
claimed indirect rates to remove the salaries of the personnel at issue from
the indirect cost pool, so as to prevent the double recovery of these costs.

2. On June 16, Parmatic filed a 22-page supplemental protest, the majority
of which dealt with issues that we denied in our protest decision. On June
23, Parmatic filed its comments on the agency's report; Parmatic's comments
also primarily dealt with issues that we ultimately denied in our decision.

3. We question, as did the Army, Parmatic's request for reimbursement of the
more than 50 in-house personnel hours related to preparing for, traveling
to, and "attending" the 1-day protest hearing that we conducted. Prior to
the hearing, we had notified Parmatic's counsel that the in-house personnel
could not attend the hearing, which was conducted under a protective order,
and that we did not contemplate receiving (and did not receive) their
testimony. Although Parmatic argues that the personnel were needed to be
available for consultation by Parmatic's counsel, we agree with the agency
that incurring the cost of those personnel's time and travel was not
reasonable; if any consultation with them had been needed, it could have
been accomplished by telephone. In any event, Parmatic has not provided
information for the in-house personnel detailing the amount of time that
Parmatic's counsel and in-house personnel consulted during the hearing
concerning issues relating to the sustained portion of the protest. Parmatic
also questions the agency's failure to allow the total claimed hours of
counsel for the hearing and the preparation therefor. However, contrary to
Parmatic's assertion, the hearing also encompassed issues that were denied.
Given Parmatic's failure to appropriately break out its costs for the
sustained issues we have no basis to question the Army's determination in
this regard or its overall determination as to the amount of attorneys'
hours that were allocable to the sustained portion of Parmatic's protest.
Similarly, while Parmatic challenges the Army's cost determination insofar
as it disallows a portion of 1 day's claimed in-house costs, noting that
these hours were "indisputably" associated with the sustained issues, the
record shows that these particular costs were actually mixed in with other
in-house costs that were related to denied issues; thus, this provides no
basis to object to the agency's determination.