TITLE:	Galen Medical Associates, Inc.--Costs
BNUMBER:	   B-288661.6
DATE:		   July 22, 2002
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Galen Medical Associates, Inc.--Costs, B-288661.6, July 22, 2002

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Decision


Matter of:   Galen Medical Associates, Inc.--Costs

File:            B-288661.6

Date:              July 22, 2002

Terry Wallace, Esq., for the protester.
Merilee D. Rosenberg, Esq., Philip Kauffman, Esq., and Phillipa L. Anderson,
Esq., Department of Veterans Affairs, for the agency.
Scott H. Riback, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Where claim for bid protest costs includes amounts for time spent by
company personnel, outside counsel and consultant that far exceed the amount
of time that a prudent person would spend pursuing the protest and,
moreover, documentation presented in support of claim is inadequate in
numerous respects, the entire amount claimed for this time is disallowed.

2.  Protester may be reimbursed out-of-pocket expenses to the extent that
they are adequately supported by documentation reflecting the actual costs
incurred.

DECISION

Galen Medical Associates, Inc. requests that we recommend that the
Department of Veterans Affairs (VA) reimburse the firm $159,195.20,
representing its claimed costs of filing and pursuing its protest under
request for proposals No. 586-44-01, for primary and preventive medical care
and continuity of care services at a clinic affiliated with the G.V. (Sonny)
Montgomery VA Medical Center in Jackson, Mississippi.

We disallow the claim in principal part and recommend that Galen be
reimbursed in the amount of $110.65.

This claim arises from a protest originally filed in our Office on August
24, 2001, in which Galen alleged that VA had improperly awarded the subject
contract to Deborah Downing, M.D., PLLC.  After submission of the agency
report and the filing of comments by the protester, the agency advised our
Office that it would take corrective action in response to the protest; we
dismissed Galen's initial protest on October 29 (B-288661) based on the
agency's representations.  Thereafter, the agency acknowledged that Galen
was entitled to reimbursement of the costs associated with filing and
pursuing its protest.[1]

By letter dated March 19, 2002, Galen submitted a certified claim to VA in
the amount of $159,195.20.  After consideration of the matter, VA rejected
the claim by letter dated May 1, in which VA stated that it was rejecting
the claim because Galen had not submitted adequate supporting documentation,
and requested that Galen provide such documentation by May 10.  Rather than
pursue the matter further with the agency, Galen filed this claim in our
Office on May 10.  The claim is comprised of $157,397.50 in labor costs and
$1,797.70 in miscellaneous cost items such as copying and postal expenses,
for a total of $159,195.20.

DISCUSSION

Excessive Hours

A protester seeking to recover the costs 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,
the costs do not exceed those that would be incurred by a prudent person in
pursuit of a protest.  Chant Eng'g Co., Inc.--Costs, B-274871.4, April 28,
1999, 99-1 CPD ï¿½ 79 at 2.  A claim is excessive where the time expended
exceeds what a prudent person familiar with the issues in the case and some
knowledge of the federal procurement system should have reasonably needed to
identify and research the applicable law and regulations in order to
adequately respond to the agency's arguments.  Id. at 3.

We find that the hours claimed by Galen are excessive.  Galen's claim
includes a request that it be reimbursed for a total of 938.5 hours for
various individuals at various hourly rates:  346.25 hours for an outside
attorney, 220 hours for a consultant and 363 hours for Galen's president.
Galen's Claim Letter, May 10, 2002, exhs. II, III, IV.  These claimed hours
are far beyond what should have been necessary to reasonably pursue the
protest.  Our file in this case was only open for approximately 9 weeks
(from August 24 to October 29, 2001), and yet these hours amount to 8.6
full-time (40-hour) work weeks for the attorney, 9 full-time work weeks for
Galen's president and 5.5 full-time work weeks for Galen's consultant.  The
issues were relatively limited and straightforward in nature--the primary
bases for protest were that the agency misevaluated proposals and engaged in
activities that amounted to procurement integrity violations--there was no
hearing in the matter and the documents involved were not voluminous.
(Indeed, the entire agency report was comprised of only seven substantive
exhibits.  The core exhibit for purposes of the allegations--the evaluation
materials, including all of the individual evaluator worksheets for the
protester, the awardee, and a third offeror whose evaluation the protester
did not challenge--amounted to only 39 pre-printed evaluation form pages
with little or no additional narrative material included; 13 of those pages
related to the third offeror).  Moreover, the protester's submissions to our
Office amounted to only 22 pages.  The hours claimed equate to approximately
42 hours per page, and the cost amounts to approximately $7,154 per page.
In our view, this amount is excessive and goes well beyond what a prudent
person would have expended in pursuit of this protest. [2]

The number of hours claimed is particularly questionable in light of the
dearth of evidence that Galen's outside attorney and consultant, in fact,
participated significantly in pursuing the protest.  Neither the attorney
nor the consultant filed a notice of appearance in our Office during the
protest, and all protest filings were signed (and by all appearances
prepared) solely by Galen's president; neither the consultant nor the
outside attorney was even indicated as a recipient of copies of the
submissions.  Galen's Letters of Aug. 24, Sept. 7, Sept. 20, and Oct. 1,
2001.  The sole exception is Galen's final two-page submission, which states
that its outside attorney, its consultant and a third attorney (apparently
Galen's corporate counsel) participated in preparation of that document.
Galen Letter, Oct. 24, 2001.

Finally, the claim is replete with hours billed at times during which there
was no apparent reason to expend effort on the protest.  For example, the
protester's comments were filed on October 3, and nothing occurred--no
submissions were due or requested from either party--from that date until
the agency submitted its letter of October 16 advising our Office that it
intended to take corrective action.  Nonetheless, the protester's claim
inexplicably includes 52 hours during this interval.  Galen's Claim, May 10,
2002, exh. II, at 5; exh. III, at 7; exh. IV, at 4.

Inadequate Supporting Materials

As noted, a protester seeking to recover the costs of pursuing its protest
must submit sufficient documentation  to support its monetary claim.
Although we recognize that the requirement for such documentation may
sometimes entail certain practical difficulties, we do not consider it
unreasonable to require a protester to document in some detail the amount
and purposes of activities associated with the claimed effort and establish
that the claimed hourly rates reflect the concerned individuals' actual
rates of compensation.  Ervin & Assocs.---Costs, B-278850.2, Aug. 1, 1999,
99-2 CPD ï¿½ 23 at 4.

Hourly Rates

Galen's documentation in support of its claimed hourly rates is inadequate.
Galen claims a particular hourly rate for its president, Galen's Claim, May
10, 2002 , exh. II, at 6, but has provided no documentation to substantiate
that this is his actual rate of compensation.  In this regard, a protester
may only recover its actual direct labor costs, and may not recover profit
on its own employees' time.  Wylie Mech., B?228695.5, Dec. 18, 1990, 90-2
CPD ï¿½ 496 at 3.  In order to substantiate an employee's actual rate of
compensation, a protester must submit objective evidence of the rate, such
as corporate payroll records, W-2 forms or tax records.  Id. at 4.  Galen
has submitted no documentation to support its president's claimed hourly
rate.

Galen claims a particular hourly rate for its outside counsel, as well as
another rate for another individual working with Galen's outside
counsel.[3]  Galen's Claim, May 10, 2002, exh. II, at 1.  Both of these
individuals are otherwise employed on a full-time basis, the outside counsel
as an attorney for the city of Jackson, Mississippi, and the other
individual as a clerk for the Mississippi Court of Appeals.  Galen has not
adequately supported the claimed hourly rates of compensation, such as
submiting evidence to demonstrate that these individuals are ordinarily
engaged in providing legal services, outside of their regular employment, at
the claimed hourly rates of compensation.  Galen has also submitted no
evidence showing that the claimed hourly rates are the customary rates for
similar work performed by attorneys and legal assistants in their
community.  Armour of Am. Inc.?-Costs, B-237690.2, Mar. 4, 1992, 92-1 CPD ï¿½
257 at 7.  In the absence of such evidence, Galen has failed to support its
claim for reimbursement of costs incurred at the claimed rates.[4]

For its consultant, as well, Galen claims a particular hourly rate.  Galen's
Claim, May 10, 2002, exh. IV, at 1.  As with the other claimed hourly rates,
the protester has submitted no evidence to demonstrate that the consultant
customarily charges this rate for consulting services related to the filing
of a bid protest or any other support for the claimed rate.

Nature of Galen's Obligations

The record does not establish that Galen has a firm obligation to pay for
the services of its outside counsel (and his assistant) and consultant.  In
this regard, in order for a protester to recover such costs, there must be
evidence to show that it has an obligation to pay the costs regardless of
whether they are recovered from the government; an obligation to pay costs
that is contingent upon recovery from the government may not properly be
reimbursed.  Boines Constr. & Equip. Co., Inc.--Costs, B-279575.4, Apr. 5,
2000, 2000 CPD ï¿½ 56 at 4-5.

In the course of addressing the claim at the agency level, VA requested that
Galen provide evidence to show that the outstanding bills from the
consultant and outside counsel had been paid.  With respect to the
consultant, the record shows that he presented what appears to be an invoice
to Galen dated December 2001, for $29,700.  Galen's Claim, May 10, 2002
,exh. IV, at 1.  On the face of the invoice is a place for the recipient to
affix a signature next to the words ?Approved for payment by,? and Galen's
president's signature appears in the appropriate place and is dated
March 18, 2002.  Id.  This invoice notwithstanding, there is no evidence in
the record to show that payment was actually made, despite the passage of
approximately 4 months since the invoice was approved.

Galen has provided copies of numerous canceled checks, but none of them
appears to be payment to the consultant for services in connection with
Galen's protest to our Office.  While there is one check made out to the
consultant in his individual capacity,[5] that check is for only $6,000 and
is dated August 14, 2001, that is, prior to the date Galen filed its protest
with GAO.  Galen's Claim, May 10, 2002, exh. 4, at 31.  The consultant's
detailed listing of his hours and activities identifies services performed
for Galen on August 3, 4, 5 and 6, 2001, id. at 2, but those services, by
the consultant's own description, related solely to Galen's agency-level
protest; agency?level protest costs may not properly be included in a
protester's claim for costs generated in connection with a protest to our
Office.  Techniarts Eng'g--Costs, B-234434.2, Aug. 24, 1990, 90-2 CPD ï¿½ 152
at 4.  On this record, then, there is no basis to conclude that Galen has an
obligation to pay the claimed consultant's costs.

As for the costs relating to Galen's outside counsel and his assistant, the
record includes an undated cover letter from the attorney to Galen
transmitting what are described as his invoices for the protest.[6]  Galen's
Claim, May 10, 2002, exh. III.  Following the cover letter are listings for
activities performed from July 31 through October 29, 2001.  As with the
consultant, the agency requested that Galen provide information showing that
the costs had been paid.  No such evidence was ever produced.  Moreover, it
is apparent from one of the attorney's own filings in connection with this
claim that he has not been paid.  That filing states as follows:

Furthermore, it is certainly understandable that [the outside counsel], who
is fully aware of Galen's predicament, would be willing to await payment
from VA.  Likewise, since [the outside counsel] is related to [Galen's
president], then certainly they can engage in business affairs with a degree
of trust that payment will be made for service provided.
Galen Letter to GAO, July 7, 2002, at 4.  In view of the fact that Galen's
outside counsel has not been paid in the approximately 9 months since we
dismissed Galen's initial protest, as well as the attorney's stated
willingness ?to await payment by the VA,? there is no basis for finding that
this is a firm obligation on the part of Galen to make payment irrespective
of Galen's recovery from the VA.

In sum, we conclude that Galen's claim for the costs associated with the
activities of its president, outside counsel, his assistant and Galen's
consultant are excessive, given the nature and complexity of the issues
involved in the protest.  Additionally, to the extent that the hours at
issue are not excessive, the documentation presented by Galen is wholly
inadequate to support its claim.  In these circumstances, we disallow these
costs--which, according to Galen's documentation, amount to $157,397.50--in
their entirety.  While we realize that Galen no doubt incurred some hourly
costs in connection with filing and pursuing its protest, such costs may not
be recovered where they are based on excessive hours, Chant Eng'g Co.,
Inc.--Costs, supra, at 2, or are not adequately documented.  Custom Prod.
Mfg., Inc.--Costs, B?235431.7, May 9, 1995, 95-1 CPD ï¿½ 236.

Miscellaneous Costs

Galen's claim includes $1,797.70 in miscellaneous costs.  That amount
includes $1,000 for secretarial work.  Galen's Claim, May 10, 2002, exh II,
at 6.  We disallow this amount in its entirety.  Galen has proffered no
evidence to document its actual cost for secretarial work (such as rates and
hours worked), and thus no evidence that it actually incurred this $1,000
(which appears to be high to prepare the short submissions to our Office).
We therefore do not recommend that this item be paid.

Galen's claim includes $347.70 for telephone calls.  Galen's Claim, May 10,
2002, exh. II, at 6, exh. III, at 2.  As discussed above, we find the number
of hours spent by the various individuals in question to be excessive, and
also find that Galen has not submitted documentation adequate to support its
claim for the time in question.  The record shows that a large number of
those hours were spent in telephone conversations that presumably are
reflected in Galen's claim for its telephone costs.  Because we find the
hours claimed excessive and inadequately documented, we also disallow
Galen's claim for its telephone costs; Galen may not recover its telephone
costs where the underlying hours spent making the calls are not supported.

Galen's claim includes $250 for copying, which Galen's detailed cost listing
shows is based on a rate of 50 cents a copy.  Galen's Claim, May 10, 2002 ,
exh. II, at 6.  Receipts furnished by Galen, however, reflect a rate of only
5.5 cents a copy.  Galen's Claim, May 10, 2002, exh. IV, at 17.
Accordingly, we recommend reimbursement of $27.50 for copying.[7]

Galen's claim includes $100 for postal and express mail costs.  Galen's
Claim, May 10, 2002 , exh. II, at 6.  However, Galen has presented receipts
for such costs totaling only $83.15.  Galen's Claim, May 10, 2002, exh. IV,
at 19-21.  We recommend payment for postal and express mail costs in the
amount of $83.15.

Galen's claim includes $100 for office supplies.  Galen's Claim, May 10,
2002, exh. II, at 6.  Galen has presented credit card bills that include
numerous charges for office supplies in excess of the claimed amount.
Galen's Claim, May 10, 2002, exh. IV, at 13?15, 18.  Galen does not identify
which of the several charges include the office supplies used in connection
with filing and pursuing its protest.  In the absence of more precise
evidence, we disallow this amount.  McNeil Tech., Inc.--Costs, B?254909.3,
Apr. 20, 1995, 95-1 CPD ï¿½ 207 at 7.

Finally, Galen claims $1,440 as costs associated with its pursuit of this
cost claim.  Galen's Claim, May 10, 2002, at 2.  Such costs are unallowable
unless the protester shows that the agency unreasonably delayed
consideration of the claim or otherwise failed to give the claim reasonable
consideration.  JAFIT Enterprises, Inc.--Costs, B?266326.2, B-266327.2, Mar.
31, 1997, 97-1 CPD ï¿½ 125 at 4.  No such showing has been made here.  The
agency responded to Galen's claim for costs within approximately 5-6 weeks,
asking the firm to provide additional documentation.  After receiving the
agency's request, Galen stopped pursuing the matter with the agency and
filed this claim in our Office.  A 6-week delay is not unreasonable on its
face and, given our conclusion that Galen's claim is inadequately
documented, the VA's request for additional supporting information clearly
is not a basis for a finding of unreasonable delay.

In view of the foregoing, we recommend that VA reimburse Galen in the amount
of $110.65.[8]

Anthony H. Gamboa
General Counsel

-------------------------

[1] In subsequent filings, Galen requested reconsideration of our initial
dismissal of its protest, and also requested that it be declared entitled to
the costs of filing and pursuing its protest.  During our consideration of
these requests, VA submitted a letter dated February 7, 2002, acknowledging
Galen's entitlement to its protest costs.  (B-288661.2, B-288661.3,
dismissed Feb. 8, 2002).
[2] We note that these claimed hours allegedly were spent during a period
when the protester's president and outside attorney were engaged in
full-time employment; the protester's president was operating a private
clinic and the outside attorney was employed as a city attorney for the city
of Jackson, Mississippi.
[3] Galen describes this second individual as someone ?who has earned her
Juris Doctorate degree.?  Galen Letter to GAO, July 7, at 4.
[4] We note as well that, as to the outside counsel's hourly rate, the
materials submitted by Galen cast further doubt on the claim that he will be
paid at the hourly rate claimed because the materials submitted in support
of the attorney's costs bear two different hourly rates.  The materials
relating to the months of July and August calculate the attorney's
compensation by summing the claimed hours and multiplying those hours by the
claimed rate.  Galen's Claim, May 10, 2002, exh. III, at 4.  For the months
of September and October, however, the hours are summed and them multiplied
by two different hourly rates, the rate claimed, and then a second, lower,
hourly rate.  Id. at 6, 8.  The record contains no explanation of these
different calculations, and there is no basis for us to assume that one
rather than the other is applicable.
[5] The invoice includes a legend that provides ?make all checks payable
to:  Vision 2000 services.?  Accordingly, we would expect Galen to have
issued a check payable to that company, rather than directly to the
consultant.
[6] Unlike the consultant's invoice, these invoices are not presented on a
regular billing form and do not otherwise reflect a regularized billing
system used by the attorney in his claimed private practice of law.
[7] We arrive at this figure by dividing $250 by 50 cents to arrive at 500
copies; we multiplied this number by 5.5 cents to arrive at a total cost of
$27.50.
[8] In an unrelated matter, Galen asserts that our Office engaged in
improper ex parte communications with VA in the course of Galen's protests.
In support of its assertion, Galen references three different
communications:  a facsimile transmission from one VA official to another
(dated December 6, 2001), VA's agency report in a subsequent protest (dated
December 21), and a letter from VA (dated February 7, 2002) to our Office
acknowledging that Galen was entitled to its protest costs in connection
with its original protest.  None of these communications reflects an
improper ex parte communication.  The first two communications include
references to conversations between VA and our Office, but those
conversations related solely to our procedural disposition of subsequent
filings on Galen's part.  The third communication was simply VA's letter to
our Office in which it acknowledged Galen's entitlement to its bid protest
costs; VA's apparent failure to copy Galen with this letter does not render
it an improper ex parte communication.