TITLE:  CourtSmart Digital Systems, Inc.--Costs, B-292995.7, March 18, 2005
BNUMBER:  B-292995.7
DATE:  March 18, 2005
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   Decision

   Matter of:   CourtSmart Digital Systems, Inc.--Costs

   File:            B-292995.7

   Date:              March 18, 2005

   James H. Roberts, III, Esq., Van Scoyoc Kelly, for the protester.

   Seth Binstock, Esq., Social Security Administration, for the agency.

   Henry J. Gorczycki, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Where the contracting agency challenges the reasonableness of hourly rates
claimed for outside legal services for both attorney and legal assistant
fees, GAO will recommend reimbursement of actual costs claimed to the
extent relevant evidence establishes that the actual costs reflect
customary rates charges for similar services; to the extent customary
rates for costs claimed are not established, GAO will recommend
reimbursement of a portion of the costs by applying rates that the record
establishes as customary rates charged for similar services.

   DECISION

   CourtSmart Digital Systems, Inc. requests that our Office recommend that
the Social Security Administration (SSA) reimburse CourtSmart $189,748.50
in costs incurred pursuing its protest in CourtSmart Digital Sys., Inc.,
B292995.2, B292995.3, Feb. 13, 2004, 2004 CPD P 79.

   We recommend that the agency reimburse CourtSmart $187,108.50 in protest
costs.

   We sustained CourtSmart's protest because the agency's evaluation of
quotations and the source selection decision were improper under the
regulations for orders under the Federal Supply Schedule, and were
otherwise unreasonable under the terms of the solicitation.  We
recommended that the agency cancel the order that was issued and conduct a
new source selection process.  We also recommended that the protester be
reimbursed its costs of filing and pursuing the protest, including
reasonable attorneys' fees. 

   On April 8, 2004, CourtSmart filed a documented and certified claim with
SSA seeking $213,434 as reimbursement of total costs of pursuing its
protest.[1]  On July 1, after receiving no response from SSA, CourtSmart
filed this request in our Office.  SSA responded to the claim for the
first time on September 3 in a report to our Office, in which the agency
took the position that CourtSmart was entitled to recover only $70,717. 
CourtSmart responded by accepting reductions for costs not related to
pursuing the protest as identified by SSA on September 3, and by reducing
the claimed hourly rate for reimbursement of costs attributed to legal
assistant fees.  The parties now agree that the following portions of
CourtSmart's claim should be reimbursed:  (1)A internal costs in the
amount of $13,937.25; and (2) outside counsel costs for 324.15 hours of
attorney services and 243 hours of legal assistant services.  The only
remaining disputes that we consider here concern the reasonableness of the
hourly rates billed by outside counsel for the attorney and legal
assistant, and CourtSmart's recovery of costs of pursuing this claim. 

   A protester seeking to recover its protest costs must submit sufficient
evidence to support its monetary claim; our Office will base our decision
for a cost claim upon the facts and circumstances of that claim.  Armour
of Am.--Costs, B-237690.2, Mar. 4, 1992, 92a**1A CPD P 257 at 5.  The
amount claimed may be recovered to the extent that the claim is adequately
documented, and is shown to be reasonable.  Id.  We will determine the
reasonableness of hourly rates for legal fees by considering the customary
fee charged for similar work in the community, as well as the experience,
reputation and ability of the practitioner.  Id. at 7; KPMG Peat Marwick,
LLP--Costs, B-259479.4, July 25, 1996, 96a**2A CPD PA 43 at 5 (attorneys'
fees); E&R, Inc.--Costs, Ba**255868.2, May 30, 1996, 96a**1A CPD P 264 at
5-6 (non-lawyer representative fees).  In doing so, where relevant and
appropriate, we will consider the fee rates found allowable by our Office
in similarly complex proceedings.  See KPMG Peat Marwick, LLP--Costs,
supra; Bay Tankers, Inc.--Costs, Ba**238162.4, MayA 31, 1991, 91a**1A CPD
P 524 at 3.

   Attorney's Fees

   CourtSmart incurred $153,971.25 for its attorney's services at an hourly
rate of $475.  SSA generally alleges that the rate is above the reasonable
rate charged for these services.[2]  In response, CourtSmart submitted
information from a 2002 national billing rate survey.  Specifically,
CourtSmart identified the ranges of hourly billing rates for partners and
for associates from 19A firms in the Washington, D.C. area, as published
in the January 2003 edition of Legal Times.  The hourly rates for partners
reported by these firms ranged from $185 to $750.  CourtSmart Submission
(Oct. 1, 2004) at 2, encl. 4.  The highest rates for partners for all but
two of these firms were in excess of $500.  CourtSmart states that a
breakdown of billing rates by specific practice area was not available. 
CourtSmart's attorney states that he has 30 years of experience in federal
procurement law in the Washington, D.C. area, and has the expertise,
reputation and ability commensurate with partners at the high end of the
billing rate range.  CourtSmart asserts that, since the $475 rate billed
by its attorney is within the range billed by firms in the community, the
hourly rate is reasonable. 

   SSA has not challenged the applicability of the survey for the purpose of
determining the reasonableness of the attorney's hourly rate billed here. 
SSA has also not challenged the asserted expertise, reputation and ability
of the attorney.

   Here, the work was performed by the attorney from November 2003 through
February 2004, which is within approximately 1 year of the billing rate
survey.  Although the survey does not provide hourly rate information for
attorneys practicing in federal procurement law or related areas of
practice, SSA does not challenge the relevance of the information
submitted.  On this record, we find the attorney's billed hourly rate of
$475 was reasonable.  See KPMG Peat Marwick, LLP--Costs, supra, at 5-6;
Bay Tankers, Inc.--Costs, supra.  Therefore, we find $153,971.25 (i.e.,
324.15 hours x $475 per hour) that CourtSmart claims for attorney's fees
is reasonable and recoverable.

   Legal Assistant's Fees

   CourtSmart incurred $38,970 for services performed by outside counsel's
legal assistant at hourly rates of $100 for a portion of the protest
period and $200 for the remainder of that period.  SSA asserts that these
rates are unreasonably high.  SSA contends that a reasonable rate is
reflected in the corresponding rate for services performed by SSA's
paralegals, which are compensated on the General Schedule (GS) at the
GS-11 rates.  SSA states that a reasonable rate for these services would
be the GS-11, step 5 hourly rate of $27.47,[3] which it has increased by
22.2 percent to reflect overhead costs,[4] for a total hourly rate of
$33.57.  Agency Response to Cost Claim atA 3.  Our Office requested that
the parties provide relevant recent billing rate surveys to support or
refute the hourly rates claimed.  In response, SSA provided no further
evidence and CourtSmart reduced its claimed hourly rate for the legal
assistant to $91 for a total claimed amount of $21,840 ($91 x 240
hours).[5]  While CourtSmart asserts that $100/$200 were its customary and
actually paid billing rates for the legal assistant, who was going to law
school, it did not provide the requested rate survey information. 
Instead, CourtSmart referenced our decision in Pulau Elec. Corp--Costs,
Ba**280048.11, July 31, 2000, 2000 CPD PA 122 at 9-10, where we found the
protester was entitled to recover costs at an $80 hourly rate for a
paralegal employed by a major Washington, D.C. law firm representing the
protester in the protest, to which figure CourtSmart applied the markup
indicated by the Consumer Price Index and Inflation Calculator, to arrive
at its revised $91 hourly rate.  SSA has offered no response to
CourtSmart's revised claim.

   While we would have preferred production of recent billing rate surveys in
support of this claim, as indicated above, we have and will consider, in
determining the reasonableness of claimed fees for protests, the rates
charged in similar proceedings.  See KPMG Peat Marwick, LLP--Costs, supra,
at 5-6; Bay Tankers, Inc.--Costs, supra; E&R, Inc.--Costs, supra.  Thus,
we think that the $80 rate allowed in Pulau for paralegal services by a
Washington, D.C. law firm, with expertise in public contracts law, in
support of a similarly complex protest, is relevant in determining the
reasonableness of the paralegal rates being charged here.  In fact, we
find this evidence to be more relevant than the $33.57 rate referenced by
SSA for paralegals employed by SSA in that the SSA rates only include the
employees' actual salaries and an unexplained 22.2 percent overhead rate,
which may not fully reflect the salaries, profit and other markups
included in a law firm's billing rates.  Cf. Sodexho Mgmt., Inc.--Costs,
Ba**289605.3, Aug. 6, 2003, 2003 CPD P 136 at 39 n.30 (comparison of
government attorneys salaries to private law firm billing rate is "apples
to oranges"). 

   CourtSmart would rely on our decision in Sodexho as a basis to increase
the $80 rate used in Pulau to account for intervening cost-of-living
increases by applying an inflation rate using the Consumer Price Index. 
We find CourtSmart's argument unpersuasive.  Our decision in Sodexho was
based on a specific statutory provision under FASA for adjusting the $150
per hour cap on attorneys' fees incurred by other-than-small-business
protesters to reflect factors such as increases in the cost of living. 
Id. at 37-38.  That cap does not apply either to CourtSmart or to legal
assistant fees, and we find that the FASA provision concerning
cost-of-living adjustments to the attorneys' fee cap is not relevant
here.  CourtSmart has not shown that the $80 paralegal rate used in the
Pulau decision is no longer within the range of customary rates, such that
upward adjustment would be appropriate here, nor otherwise shown that any
of its claimed rates for the legal assistant were appropriate for
reimbursement purposes.  Furthermore, applying a cost-of-living adjustment
here would provide protesters with an unintended opportunity to "shop" for
the better of actual current customary rates, or relevant rates from prior
decisions adjusted for inflation, where a protester has not otherwise
shown that its claimed rates are appropriate for reimbursement purposes.

   We thus find CourtSmart is entitled to recover $19,200 (i.e., $80/hour x
240 hours) in legal assistant costs.

   Costs of Pursuing Claim for Costs

   CourtSmart also requests that our Office recommend that SSA pay
CourtSmart's costs of pursuing this claim for costs.  Our Bid Protest
Regulations, 4 C.F.R. SA 21.8(f)(2) (2004), provide that we may declare a
protester entitled to reimbursement of the costs of pursuing its claim at
our Office.  This provision is designed to encourage expeditious agreement
between a successful protester and the contracting agency as to the
quantum of recoverable costs.  SKJ & Assocs., Inc.--Costs, B-291533.3,
July 24, 2003, 2003 CPD P 130 at 4.  Given that SSA did not consider or
substantively respond to CourtSmart's documented and certified claim until
5 months after it was submitted and only after our Office requested a
report on the matter, and given that we have found the bulk of the
disputed claimed costs recoverable, we recommend that CourtSmart be
reimbursed the costs of pursuing its claim at our Office.

   In conclusion, we recommend that SSA reimburse protest costs of $13,937.25
for CourtSmart's internal costs, $153,971.25 for its attorney's fees, and
$19,200 for the legal assistant's fees, for a total reimbursable cost of
$187,108.50.  In addition, we recommend that CourtSmart be reimbursed the
costs of pursuing its claim at our Office.

   Anthony H. Gamboa

   General Counsel

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

   [1] CourtSmart's certified claim for costs included detailed records
identifying the internal costs incurred by CourtSmart, as well as the
specific hours billed and corresponding services performed for outside
legal services throughout the protest period, which included a hearing
conducted at our Office.  CourtSmart states that it has paid all of the
costs incurred.

   [2] In its September 3 filing, the agency objected to this rate on the
basis that it exceeded the $150 per hour cap imposed by the Competition in
Contracting Act of 1984 (CICA), 31A U.S.C. SA 3554(c)(2)(B) (2000), as
amended by the Federal Acquisition Streamlining Act of 1994 (FASA).  See
KPMG Peat Marwick, LLP--Costs, supra, at 3-5.  In response, CourtSmart
asserted and provided evidence that it was a small business concern. 
Under CICA, the cap does not apply to small business concerns within the
meaning of section 3(a) of the Small Business Act.  31A U.S.C.
SA 3554(c)(2).  The agency no longer questions CourtSmart's small business
status.  Accordingly, the record provides no basis to apply the fee cap to
the protester's legal costs.

   [3] This rate is from the Office of Personnel Management (OPM), General
Schedule of hourly rates that was in effect for the calendar year 2004
with locality pay adjustment for the Washington-Baltimore area.  See OPM
webpage, www.opm.gov/oca/04tables/html/dcb_leo_h.asp.

   [4] SSA does not explain how it arrived at this overhead rate.

   [5] CourtSmart reduced its claimed hours for the legal assistant from 243
to 240 in its final revised claim.