TITLE: B-293134.2, Blue Rock Structures, Inc.--Costs, October 26, 2005
BNUMBER: B-293134.2
DATE: October 26, 2005
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B-293134.2, Blue Rock Structures, Inc.--Costs, October 26, 2005

   Decision

   Matter of: Blue Rock Structures, Inc.--Costs

   File: B-293134.2

   Date: October 26, 2005

   Brent Hartness for the protester.

   Richard G. Welsh, Esq., and Kenneth G. Wilson, Esq., Naval Facilities
   Engineering Command, for the agency.

   Jennifer D. Westfall-McGrail, Esq., and Christine S. Melody, Esq., Office
   of the General Counsel, GAO, participated in the preparation of the
   decision.

   DIGEST

   1. Attorney's fees need not be allocated between sustained and denied
   protest issues where issues were interconnected and based on common
   factual underpinnings.

   2. Hourly fee for attorney for small business protester that exceeds
   benchmark set forth in Federal Acquisition Regulation sect. 33.104(h)(5)
   is nonetheless reasonable where fee is consistent with customary rates for
   similar work by attorneys of similar experience in the community in which
   the attorney practices.

   3. Protester is not entitled to reimbursement for time spent discussing
   settlement since settlement discussions are not in pursuit of the protest.

   4. Protester is not entitled to recover the costs associated with
   preparing for and attending a debriefing since time spent by a potential
   protester in ascertaining whether it has a basis for protest is not time
   spent in pursuit of the protest.

   5. Protester is not entitled to recover profit on its employees' time.

   DECISION

   Blue Rock Structures, Inc. requests that our Office recommend the amount
   that the Department of the Navy should reimburse it for the costs of
   filing and pursuing its protest in Blue Rock Structures, Inc., B-293134,
   Feb. 6, 2004, 2004 CPD para. 63. In that decision, we sustained Blue
   Rock's protest of the award of contracts to six other offerors under
   request for proposals (RFP) No. N62470-03-R-0839, for construction
   services at the Marine Corps Air Station, Cherry Point, North Carolina.

   We recommend that the Navy reimburse Blue Rock $19,728.52 for the costs of
   filing and pursuing its protest.

   In our decision on the protest, we found that the source selection
   authority had failed to furnish an adequate rationale for his
   determination that lower technically rated, lower-priced proposals
   represented a better value to the government than the protester's higher
   technically rated, higher-priced one. We recommended, among other things,
   that the protester be reimbursed for the costs of filing and pursuing its
   protest. We noted that the protester's certified claim for such costs,
   detailing the time expended and the costs incurred, was to be submitted
   directly to the agency within 60 days of receipt of our decision.

   Blue Rock submitted a certified claim for costs totaling $28,774 to the
   agency on April 5, 2004. Later the same day, the protester supplemented
   its claim with a breakdown of the tax, insurance, and fringe benefit rates
   and the hourly wage rates for the company employees for whose time it
   sought reimbursement. On August 23, Blue Rock further supplemented its
   claim with a copy of its weekly payroll report for the week ending on
   April 4, 2004.

   Beginning in December, the parties engaged in several exchanges of
   correspondence regarding various aspects of the claim, including whether
   activities such as attendance at the debriefing were undertaken in pursuit
   of the protest, the severability of the issues on which the protester
   prevailed from those on which it did not, the reasonableness of the hourly
   rate of the protester's attorney, and the reasonableness of the number of
   hours that corporate officers of the protester claimed to have worked on
   the protest. By letter dated March 15, 2005, the protester informed the
   agency that if the two sides were unable to reach an expedited agreement
   on the reimbursable costs associated with its protest, it intended to
   submit the matter to our Office. Approximately a week later, the agency
   responded that since it still did not agree with the protester as to the
   amount Blue Rock should recover, the protester was free to pursue the
   matter with our Office. On August 3, the protester asked our Office to
   recommend the amount that the agency should reimburse it for the costs of
   pursuing its protest.

   Blue Rock seeks reimbursement for time expended by its own employees and
   corporate officers in pursuit of the protest, as well as attorney's fees.
   The protester also seeks reimbursement of the costs that it has incurred
   in pursuing its claim for costs before our Office and interest on the
   claim.

   As a threshold matter, the Navy contends that Blue Rock's claim should be
   denied in its entirety because it is untimely. The agency maintains in
   this regard that the protester failed to submit an adequately documented
   claim within the 60-day period provided for in our Bid Protest
   Regulations, 4 C.F.R. sect. 21.8(f)(1) (2005).

   While we have rejected a claim as untimely where the submissions made
   during the 60-day filing period were so riddled with errors and gaps as to
   be essentially worthless, REEP, Inc.--Costs, B-290665.2, July 29, 2003,
   2003 CPD para. 131, we do not believe that the documentation timely
   submitted by Blue Rock in support of its claim to the agency here may
   reasonably be so characterized. To the contrary and as explained in detail
   below, we think that the bulk of Blue Rock's claimed costs were adequately
   documented and should be reimbursed by the agency.

   Attorney's Fees

   Blue Rock seeks reimbursement in the amount of $11,133.87 for attorney's
   fees, which sum represents 31.81 hours of its attorney's time at a rate of
   $350/hour (plus $.37 postage). In support of its claim, the protester has
   submitted a copy of a billing statement from the attorney's law firm,
   which identifies the dates on which services were rendered and furnishes a
   brief summary of the work performed on each date.

   To the extent that the agency maintains that the protester is entitled to
   reimbursement of its attorney's fees for only those issues on which it
   prevailed, we disagree. As a general rule, we consider a successful
   protester entitled to costs incurred with respect to all issues pursued,
   not merely those upon which it prevails. CNA Indust. Eng'g, Inc.--Costs,
   B-271034.2, Nov. 20, 1997, 97-2 CPD para. 149 at 3. While we have
   recognized that an exception to the above rule exists in circumstances
   where a losing protest issue is so clearly severable from the other issues
   as to constitute a separate protest, Sodexho Mgmt., Inc.--Costs,
   B-289605.3, Aug. 6, 2003, 2003 CPD para. 136 at 29, we do not think that
   in this case the arguments on which the protester failed to prevail are
   clearly severable from those on which it succeeded. All of Blue Rock's
   arguments pertained to the reasonableness of the agency's evaluation of
   proposals and source selection determination; given that the protester's
   arguments were interconnected and based on common factual underpinnings,
   we do not think that the arguments may reasonably be viewed as a series of
   discrete claims. See TRESP Assocs., Inc.--Costs, B-258322.8, Nov. 3, 1998,
   98-2 CPD para. 108 at 3; Main Bldg. Maint., Inc.--Costs, B-260945.6, Dec.
   15, 1997, 97-2 CPD para. 163 at 5. Accordingly, we do not think that Blue
   Rock's claim should be severed.

   Further, to the extent that the agency contends that the protester's
   attorney's hourly rate of $350 is unreasonable, we note that while the
   protester has offered no evidence to support the reasonableness of its
   attorney's rate (other than to assert that "[t]he amount paid to the
   attorney representing our firm for this protest is reasonable for firms
   that specialize in government contract law," Letter from Blue Rock to
   NAVFAC Office of General Counsel, Feb. 3, 2004, at 1), neither has the
   agency offered evidence establishing the unreasonableness of the rate,
   other than to observe that the rate charged is in excess of the benchmark
   referred to in Federal Acquisition Regulation (FAR) sect. 33.104(h)(5).
   While that section of the FAR instructs that the cap placed on attorneys'
   fees for businesses other than small businesses constitutes a benchmark as
   to a "reasonable" level of attorneys' fees for small businesses such as
   Blue Rock,[1] we have found hourly rates significantly in excess of the
   benchmark to be reasonable where the rates were consistent with the
   customary rates charged for similar work by attorneys of similar
   experience in the community in which the attorney practices. See, e.g.,
   CourtSmart Digital Sys., Inc.--Costs, B-292995.7, Mar. 18, 2005, 2005 CPD
   para. 47 at 3. In determining whether the rates charged are consistent
   with customary rates for similar work, we will consider the fee rates
   found allowable by our Office in similarly complex proceedings. Id. at 2.

   In CourtSmart Digital Sys., Inc.--Costs, supra, we found an hourly rate of
   $475 reasonable for an attorney experienced in government procurement law
   who was a partner in a Washington, D.C. firm. We noted in that decision
   that according to an article published in the January 2003 edition of
   Legal Times, the hourly rates for partners from 19 Washington, D.C. area
   law firms surveyed ranged from $185 to $750. Given our approval of $475 as
   a reasonable hourly rate for a partner in a Washington firm in CourtSmart,
   we see no basis to object to the lower rate billed by Blue Rock's
   attorney, who is also a partner in a Washington firm.

   With regard to the number of hours billed by the attorney, the agency
   disputes only one entry, i.e., the 2.2 hours that the attorney devoted to
   various activities, including a telephone conference with Blue Rock
   corporate officers regarding settlement and the "Camp Lejeune" project, on
   December 11, 2003. The agency contends that the "Camp LeJeune project"
   does not appear to be related to Blue Rock's protest.

   While we think that the discussion of the "Camp Lejeune project" arguably
   was related to the protest (since the "Camp Lejeune project" was the
   subject of a prior decision by our Office cited by the protester in its
   pleadings, i.e., C Constr. Co., Inc., B-291792 et al., Mar. 17, 2003, 2003
   CPD para. 73), time spent discussing settlement is not time spent in
   pursuit of the protest and thus is not reimbursable. Main Bldg. Maint.,
   Inc.--Costs, supra, at 7; Price Waterhouse--Claim for Costs, B-254492.3,
   July 20, 1995, 95-2 CPD para. 38 at 8. Further, where, as here, a
   protester has aggregated allowable and unallowable costs in a single
   claim, such that we cannot tell from the record before us what portion is
   unallowable, the entire amount must be disallowed even though some portion
   of the claim may be properly payable. TRESP Assocs., Inc.--Costs, supra,
   at 4. Thus, because it is unclear from the attorney's billing statement
   how he allocated the 2.2 hours that he worked on Blue Rock's protest on
   December 11 among the various activities that he performed, and at least
   one of those activities (settlement discussions) is not allowable, we
   disallow the claimed cost for 2.2 hours. Accordingly, we reduce by 2.2 the
   number of hours of its attorney's time for which the protester should be
   entitled to reimbursement. As a result, we recommend that the agency pay
   Blue Rock $10,363.87 for attorney's fees and expenses (29.61 hours x
   $350/hr., plus $.37 for postage).

   Employee Time

   Blue Rock also seeks reimbursement for the time spent by its own employees
   in pursuing the protest, plus fringe benefits, overhead, and profit on its
   employees' time.

   A protester seeking reimbursement for its employees' time must document in
   some manner the amount and purposes of its employees' claimed efforts. In
   addition, it must establish that the claimed hourly rates reflect the
   employees' actual rates of compensation, plus reasonable overhead and
   fringe benefits. SKJ Assocs., Inc.--Costs, B-291533.3, July 24, 2003, 2003
   CPD para. 130 at 2-3.

   In support of its claim, the protester submitted to the agency a summary
   of the dates on which its employees pursued protest-related activities, a
   brief summary of those activities (e.g., "debriefing" and "review of
   agency report"), the number of hours worked by each employee, and the
   employee's hourly rate of compensation. As previously noted, the protester
   supported its claimed hourly rates with a copy of its payroll report; in
   addition, it furnished a breakdown of its tax, insurance, and fringe
   benefit rates, which showed that they represented approximately 30 percent
   of its direct labor costs. Blue Rock also submitted a worksheet which
   showed that it was seeking "field overhead" of 10 percent and "home office
   overhead" of 3 percent on its employees' direct labor, "prime overhead" of
   5 percent on its attorney's work, and profit of 8 percent.

   The agency argues that the protester is not entitled to reimbursement for
   several of the hours of employee labor claimed. In particular, the agency
   objects to hours claimed by the protester to prepare for and attend the
   debriefing and to review our decision.

   We agree with the agency that the protester is not entitled to recover the
   costs associated with preparing for and attending the debriefing, since
   time spent by a potential protester in ascertaining whether it has a basis
   for protest is not time spent in pursuit of the protest. See SKJ Assocs.,
   Inc.--Costs, supra, at 3; CNA Indust. Eng'g, Inc.--Costs, supra, at 5.
   Accordingly, we deduct from Blue Rock's claim the hours for "review and
   discussion of award" on October 1, 2003; the hours for compiling the
   request for debriefing on October 2; and the hours for attending the
   debriefing and discussing the debriefing notes on October 29.

   We do not agree with the agency that time spent by the protester's
   officers in reviewing our decision should be totally non-reimbursable,
   however. We have previously recognized that pursuit of a protest includes
   time spent by an attorney in analyzing the ultimate decision and
   explaining it to the client. Price Waterhouse--Claim for Costs, supra, at
   9. Given that pursuit of a protest encompasses time spent by an attorney
   in analyzing the decision, we see no reason that pursuit of a protest
   should not also encompass time spent by the protester's officers in
   reviewing and analyzing the decision themselves.

   That said, we think that the protester should be entitled to reimbursement
   for time spent reviewing and analyzing our decision only to the extent
   that the time spent was reasonable. We think that the time claimed by Blue
   Rock for review of the decision here (5 hours by each of 2 corporate
   officers) is not reasonable. Given that our decision was neither
   particularly lengthy nor particularly complicated, we think that a
   reasonable amount of time for review of it would have been 1 hour per
   corporate officer. Accordingly, we recommend that the protester be
   reimbursed for only 2 of the 10 hours spent by its corporate officers in
   reviewing our decision on March 5.

   We also deduct the hours claimed by the protester for telephone
   conferences with its attorney and internal discussions on November 6 and
   17 because the protester has furnished no detail regarding the content of
   these conversations and their bearing on the protest, and the dates on
   which the telephone conferences/internal discussions occurred (after
   filing of the protest on November 3, but prior to receipt of the agency
   report on December 2) are not dates on which the protester would routinely
   have been expected to engage in activities in pursuit of the protest. We
   also note that the attorney's billing statement does not mention a
   telephone conference with the client on November 6 and notes a
   conversation of .25 hours only on November 17.

   Regarding the fringe benefit, overhead, and profit rates to be added to
   the employees' actual rates of compensation, the agency has not
   challenged--and we see no basis upon which to question--the reasonableness
   of Blue Rock's fringe benefit rate of 30 percent. We do question the
   reasonableness of the addition of a field overhead rate of 10 percent to
   the cost of the employees' labor, however, given that none of the work in
   pursuit of the protest was performed in the field, and that the protester
   has separately sought reimbursement for home office overhead. In addition,
   we see no basis for the protester's addition of "prime overhead" to its
   attorney's fees. We also find that Blue Rock is not entitled to profit on
   its employees' time. SKJ Assocs., Inc.--Costs, supra, at 3; Galen Med.
   Assocs., Inc.--Costs, B-288661.6, July 22, 2002, 2002 CPD para. 114 at
   4.[2]

   In summary, we find that Blue Rock is entitled to reimbursement of
   $6,993.76 for its employees' direct labor in pursuing the protest, plus a
   fringe benefit rate of 30 percent and an overhead rate of 3 percent on
   that labor, for a total of $9,364.65.

   Costs of Pursuing Claim

   Next, Blue Rock seeks $1,187.50 for the cost of pursuing its claim to our
   Office.

   Pursuant to our Bid Protest Regulations, 4 C.F.R. sect. 21.8(f)(2), we may
   recommend that the contracting agency pay the protester the costs of
   pursuing its claim for costs to our Office. We will recommend payment of
   such costs only if it is shown that the agency unreasonably delayed
   consideration of the protester's claim or otherwise failed to give the
   claim reasonable consideration. Galen Med. Assocs., Inc.--Costs, supra, at
   7-8.

   Here, while there was some delay on the part of the agency in responding
   to Blue Rock's initial claim, it appears to have been attributable, at
   least in part, to reasonable agency concerns regarding various aspects of
   Blue Rock's claim. Moreover, there is no evidence in the record that the
   protester took steps to encourage a speedy resolution of its claim, such
   as contacting the agency to check on its status, at any point between
   August 23 and December 22. We also note that Blue Rock itself was
   responsible for significant delay in its pursuit of its claim, waiting
   more than 4 months after receipt of the agency's March 23 letter
   acknowledging the inability of the parties to reach agreement regarding
   the amount of Blue Rock's protest costs before pursuing the matter to our
   Office. Given these circumstances, we do not think that recovery of the
   protester's costs of pursuing its claim to our Office is appropriate.

   Interest

   Finally, Blue Rock seeks interest on its claim accruing from the date of
   its initial filing with the agency. Such payment is not authorized by any
   statute and is not recoverable. Palau Elec. Corp.--Costs, B-280048.11,
   July 31, 2000, 2000 CPD para. 122 at 11.

   CONCLUSION

   We recommend that the Navy reimburse Blue Rock $10,363.87 for attorney's
   fees and $9,364.65 for time spent by Blue Rock's corporate officers and
   employees in pursuing the protest. In sum, we recommend that the Navy
   reimburse Blue Rock a total of $19,728.52.

   Anthony H. Gamboa

   General Counsel

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

   [1] FAR sect. 33.104(h)(5) provides as follows (emphasis added):

   No agency shall pay a party, other than a small business concern within
   the meaning of section 3(a) of the Small Business Act ( . . . ), costs
   under paragraph (h)(2) of this section--

   . . .

   (ii) For attorneys' fees that exceed $150 an hour, unless the agency
   determines, based on the recommendation of the Comptroller General on a
   case-by-case basis, that an increase in the cost of living or a special
   factor, such as the limited availability of qualified attorneys for the
   proceedings involved, justifies a higher fee. The cap placed on attorneys'
   fees for businesses, other than small businesses, constitutes a benchmark
   as to a "reasonable" level of attorneys' fees for small businesses.

   [2] With regard to the protester's claim for $24.62, plus sales tax, for
   "direct materials," which we assume means out-of-pocket expenses, such
   expenses are reimbursable only to the extent that they are documented,
   Komatsu Dresser Co.--Claim for Costs, B-246121.2, Aug. 23, 1993, 93-2 CPD
   para. 112 at 8, and the protester has furnished no explanation or
   documentation concerning these expenses. Thus, this portion of Blue Rock's
   claim should be disallowed.