TITLE: B-296699.3, BAE Technical Services, Inc.--Costs, August 11, 2006
BNUMBER: B-296699.3
DATE: August 11, 2006
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B-296699.3, BAE Technical Services, Inc.--Costs, August 11, 2006

   Decision

   Matter of: BAE Technical Services, Inc.--Costs

   File: B-296699.3

   Date: August 11, 2006

   Kenneth M. Bruntel, Esq., and Amy E. Laderberg, Esq., Crowell & Moring,
   for the protester.

   Michael O'Farrell, Esq., Department of the Air Force, for the agency.

   David A. Ashen, Esq., and John M. Melody, Esq., Office of the General
   Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   1. GAO does not recommend reimbursement of costs incurred in filing and
   pursuing unsuccessful protest issues where issues are readily severable
   from successful issues, i.e., are based on different core facts and legal
   theory.

   2. Where information submitted to support claim for reimbursement of costs
   is not detailed enough to establish how much of the claimed amount was
   incurred in pursuit of successful, versus unsuccessful, protest issues,
   use of "page counting" method--estimate based on the number of pages in
   protester's submissions devoted to particular issues--is reasonable
   approach to determining costs to be reimbursed.

   DECISION

   BAE Technical Services, Inc. requests that we recommend reimbursement--in
   the amount of $488,988.40--of the costs of filing and pursuing its protest
   in BAE Tech. Servs., Inc., B-296699, Oct. 5, 2005, 2005 CPD para. 91. In
   that decision, we sustained BAE's protest of the Department of the Air
   Force's award of a contract to InDyne, Inc., under request for proposals
   (RFP) No. FA9200-05-R-0001, for operation and maintenance of the Eglin
   Test and Training Complex (ETTC) at Eglin Air Force Base, Florida.

   We recommend that the Air Force reimburse BAE in the amount of $463,902.58
   or the costs of filing and pursuing its protest.

   BACKGROUND

   In its protest, BAE challenged the selection of InDyne's proposal as the
   "best value" on the basis that the agency's conduct of discussions was
   improper and its evaluation of proposals under the four evaluation
   criteria (including mission capability, past performance, proposal risk at
   the mission capability subfactor level, and cost/price) was unreasonable.
   Specifically, BAE asserted that the Air Force had: (1) unreasonably failed
   to credit BAE with strengths under the mission capability evaluation
   factor; (2) unreasonably inflated InDyne's mission capability ratings;
   (3) unreasonably downgraded BAE's proposal on account of BAE's use of a
   business process reengineering program, the Activity Based Costing (ABC)
   modeling methodology, in developing and substantiating its proposed
   initiatives to reduce the number of full time equivalent (FTE) personnel
   and increase efficiency at ETTC, while at the same time unreasonably
   overlooking InDyne's failure to adequately substantiate its proposed FTE
   reductions; (4) improperly failed to evaluate the risk mitigation
   considerations associated with each proposal; (5) conducted unequal
   discussions by failing to conduct meaningful discussions with respect to
   BAE's ABC model and substantiation for FTE reductions, while at the same
   time affording InDyne detailed discussions concerning its proposed
   staffing; (6) unreasonably assigned BAE (the incumbent contractor) and
   InDyne equal ratings under the transition subfactor (under the mission
   capability factor); (7) performed a flawed past performance evaluation
   that improperly failed to account for InDyne's lack of relevant experience
   and unreasonably assigned both offerors the same past performance ratings;
   (8) improperly failed to conduct the required cost realism analysis of
   InDyne's proposal; (9) improperly made award to InDyne notwithstanding a
   deficient proposed staffing plan (with the intention of allowing InDyne to
   correct the deficiency during contract performance); (10) improperly
   failed to consider a potential organizational conflict of interest (OCI)
   on the part of InDyne; and (11) improperly failed to consider whether
   InDyne might have a potential unfair competitive advantage (through access
   to competitively useful inside information) due to its proposal to employ
   a former senior Eglin Air Force Base official.

   In our October 5 decision, we sustained BAE's protest on the bases that
   (1) the agency had applied a more exacting standard in determining that
   the substantiation for BAE's proposed initiatives to reduce staffing was
   inadequate, while InDyne's was sufficient, and (2) the record did not
   support the agency's further determination that BAE's staffing profile
   presented a greater risk to agility, that is, the ability to respond to
   changes in workload, than InDyne's. We recommended that the agency take
   corrective action and reimburse BAE the costs of filing and pursuing its
   protest.

   On December 2, BAE submitted to the agency a certified claim for costs in
   the amount of $491,415.98. The Air Force did not formally respond to BAE's
   claim, and on May 8, 2006 BAE filed this claim in our Office. The Air
   Force challenges payment of all but $77,963.77 of the claim. In response
   to the agency's objections to various aspects of its claim, BAE has
   reduced its claim to $488,988.40.

   ATTORNEYS' FEES

   BAE seeks reimbursement in the amount of $421,323.91 for legal services,
   representing 2,046.25 hours of attorney time and 179.75 hours of legal
   assistant time. The Air Force challenges reimbursement of all but 293.37
   of the claimed hours, arguing that (1) BAE should be permitted to recover
   only those costs associated with the issues on which we sustained the
   protest, and (2) the hours claimed are excessive.

   Severability of Protest Issues

   The agency challenges payment of costs identified in the time sheets or
   bills prepared by BAE's attorneys that are associated with issues upon
   which BAE did not prevail, and generally calculates the appropriate
   reimbursement amount by multiplying the ratio of sustained to total
   issues--2 sustained issues out of 13 raised--by the claimed fees.

   It is our view, generally, that a successful protester should recover the
   costs incurred with respect to all issues, not merely those upon which it
   prevailed. Sodexho Mgmt., Inc.--Costs, B-289605.3, Aug. 6, 2003, 2003 CPD
   para. 136 at 29. However, we nonetheless will recommend that a protester's
   recovery of protest costs be limited to the issues on which the protest
   was sustained where the unsuccessful issues are so clearly severable as to
   essentially constitute a separate protest. Id. Issues are severable where
   they do not share a common core of facts and are not based on related
   legal theories. Id.

   We find that the issues raised by BAE are largely intertwined parts of
   BAE's basic objection that the Air Force misevaluated the proposals and
   treated offerors unequally (including by conducting unequal discussions).
   Cf. AAR Aircraft Servs.--Costs, B-291670.6, May 12, 2003, 2003 CPD
   para. 100 at 9 (all issues are intertwined parts of protester's basic
   objection that agency misevaluated proposals). However, we find that two
   of the issues upon which BAE did not prevail are severable from--that is,
   largely unrelated factually and legally to--the sustained issues: (1)
   whether the agency improperly failed to consider a potential OCI on the
   part of InDyne, and (2) whether the agency improperly failed to consider
   whether InDyne might have a potential unfair competitive advantage due to
   its proposing to employ a former senior Eglin Air Force Base official.
   Neither of these issues concerned the reasonableness of the evaluation of
   the merits of the proposals, which was the factual and legal focus of our
   decision, and reimbursement of the cost of pursuing them therefore is not
   warranted.

   A protester seeking to recover its protest costs must submit evidence
   sufficient to support its claim that those costs were incurred, and are
   properly attributable to, filing and pursuing the protest. Stocker & Yale,
   Inc.--Claim for Costs, B-242568.3, May 18, 1993, 93-1 CPD para. 387 at 4.
   The amount claimed may be reimbursable to the extent that it is supported
   by adequate documentation and is shown to be reasonable; a claim is
   reasonable if, in its nature and amount, it is similar to that which would
   be incurred by a prudent person in pursuit of the protest. SKJ & Assocs.,
   Inc.--Costs, B-291533.3, July 24, 2003, 2003 CPD para. 130 at 2. In
   circumstances where information submitted to support a claim is not
   detailed enough to establish how much of the claimed amount was incurred
   in pursuit of the successful protest issues, we have recognized that using
   a "page count" method--that is, an estimate based on the number of pages
   in the protester's submissions to our Office that were devoted to a
   particular issue--is a reasonable means of determining this amount.
   Intercon Assocs., Inc.--Costs, B-296697.2, June 14, 2006, 2006 CPD para.
   95 at 4; ViON Corp.--Costs, B-256363.3, Apr. 25, 1995, 95-1 CPD para. 219
   at 3-6.

   Here, the contemporaneous records documenting the time spent on the
   protest by BAE's attorneys and other legal staff are not sufficiently
   detailed to permit an allocation of hours to the two severable issues. It
   thus is appropriate to use a page count to determine the amount of the
   claimed costs attributable to the issues. In this regard, BAE has
   estimated through use of a page count (which the agency has not shown to
   be inaccurate) that approximately 5.5 percent of the total number of pages
   in its submissions to our Office were devoted to the two severable issues.
   Accordingly, we recommend that BAE's claim of $421,323.91 for legal
   services (including both attorney and other legal staff time) be reduced
   by 5.5 percent, or $23,172.82, leaving the remaining amount of the claim
   at $398,151.09.

   Excessive Hours

   The Air Force generally asserts that, even allowing for the fact that a
   hearing was held in this matter, the legal time expended in pursuing the
   protest--2,046.25 hours of attorney time and 179.75 hours of legal
   assistant time--was excessive, and that any reimbursement should be
   reduced accordingly.

   Our Office generally accepts the number of attorney hours claimed, unless
   the agency identifies specific hours as excessive and articulates a
   reasoned analysis as to why payment for those hours should be disallowed.
   Data Based Decisions, Inc.--Claim for Costs, B-232663.3, Dec. 11, 1989,
   89-2 CPD para. 538 at 3. Simply concluding that the hours claimed are
   excessive or suggest duplication of effort is inadequate to justify
   denying a claim for protest costs. Princeton Gamma-Tech, Inc.--Claim for
   Costs, B-228052.5, Apr. 24, 1989, 89-1 CPD para. 401 at 4.

   Here, the Air Force in its response to BAE's claim has annotated each time
   charge by each BAE attorney for each day to indicate that the agency
   considers the hours claimed to be excessive, but the agency has not
   explained the basis for its assertions. As noted above, such unsupported
   claims that the hours are excessive are insufficient to justify denying or
   reducing a claim as it relates to attorney time. The Air Force does not
   question whether the attorneys actually worked the hours claimed, and we
   note the complexity of the procurement and protest led to lengthy briefs
   and the holding of a 3-day hearing. Since our own review of the claimed
   hours furnishes no basis for concluding that they exceeded, in nature or
   amount, what a prudent person would incur in pursuit of this protest, see
   Pulau Electronics Corp.--Costs, B-280048.11, July 31, 2000, 2000 CPD
   para. 122 at 6; Price Waterhouse--Claim for Costs, B-254492.3, July 20,
   1995, 95-2 CPD para. 38 at 5, we find no basis to question BAE's claim in
   this regard.

   Accordingly, we recommend reimbursement of $398,151.09 ($421,323.91
   claimed less $23,172.82 due to segregating the two unsuccessful protest
   issues) for legal services.

   CONSULTANTS AND WITNESSES

   BAE requests reimbursement of $32,981.57 for 231.6 claimed hours and
   travel expenses for two consultants who provided services related to the
   protest.

   The Air Force questions reimbursement of any amount for the costs
   associated with one of these consultants on the basis that he consulted
   with respect to BAE's cost evaluation challenge, not with respect to the
   issues on which we sustained the protest. The Air Force also questions any
   reimbursement of costs associated with the second consultant on the basis
   that, while he consulted with respect to BAE's use of ABC modeling in its
   proposal to substantiate its proposed initiatives to reduce staffing, his
   hearing testimony was not directly relevant to our finding that the agency
   applied different standards in evaluating the substantiation for BAE's and
   InDyne's proposed initiatives. As discussed above, however, we consider
   all of the issues raised by BAE, other than the two severable issues, to
   be interrelated such that the costs related to these issues are
   reimbursable. Thus, the fact that the consultants' involvement concerned
   the cost and ABC modeling aspects of the protest does not provide a basis
   for denying reimbursement of their claimed costs.

   However, we question the amount of the travel expenses
   claimed--$7,357.62--for one of the consultants to travel from Texas to the
   Washington, D.C. area (to attend the hearing). The costs of travel in
   connection with the pursuit of a bid protest are recoverable only to the
   extent that they are reasonable. See TRESP Assocs., Inc.--Costs,
   B-258322.8, Nov. 3, 1998, 98-2 CPD para. 108 at 4-5; Armour of Am.,
   Inc.--Claim for Costs, supra, at 9. One valid measure of what constitutes
   reasonable travel expenses, we think, is to look to the amount that could
   be recovered by a government contractor under a cost-reimbursement
   contract. In this regard, Federal Acquisition Regulation (FAR)
   sect. 31.205-46(a), Travel Costs, provides that the reasonable costs
   incurred by contractor personnel on official company business for
   transportation and "for lodging, meals, and incidental expenses" generally
   are allowable costs, subject to several limitations set forth in that
   section. One limitation, applicable in the absence of "special or unusual
   situations," states that

     costs incurred for lodging, meals, and incidental expenses . . . shall
     be considered to be reasonable and allowable only to the extent that
     they do not exceed on a daily basis the maximum per diem rates in effect
     at the time of travel as set forth in the (i) Federal Travel
     Regulations, prescribed by the General Services Administration, for
     travel in the contiguous United States . . .; (ii) Joint Travel
     Regulation, Volume 2, [Department of Defense] Civilian Personnel,
     Appendix A, prescribed by the Department of Defense, for travel in
     Alaska, Hawaii, and outlying areas of the United States; or (iii)
     Standardized Regulations (Government Civilians, Foreign Areas), Section
     925, `Maximum Travel Per Diem Allowances for Foreign Areas,' prescribed
     by the Department of State, for travel in areas not covered in (i) and
     (ii) of this paragraph.

   FAR sect. 31.205-46(a)(2).

   BAE calculates that applying this limitation would reduce the claimed
   $7,357.62 in consultant travel expenses by $1,392. Since the Air Force has
   advised our Office that it does not disagree with BAE's calculation, we
   accept it for purposes of our recommendation. Accordingly, we recommend
   that BAE be reimbursed $31,589.57 ($32,981.57 less $1,392) for consultant
   fees and travel expenses.

   BAE COMPANY OFFICIAL

   BAE seeks reimbursement of $3,024.48 for a BAE company official's expenses
   of traveling to Washington D.C. to testify at the hearing. The Air Force
   challenges any reimbursement in this regard on the basis that the company
   official's testimony at the hearing "was not relevant to the 2 protest
   issues upon which GAO sustained the protest." Air Force Comments, June 8,
   2006, at 15.

   The agency's objection is misplaced. The BAE official testified both as to
   BAE's proposed initiatives and ABC model, and as to the initiatives,
   efforts and conditions in place under BAE's incumbent ETTC contract. Even
   under the agency's narrow view of the issues upon which recovery could be
   made, the official's testimony was useful in reaching, and thus relevant
   to, our conclusions in sustaining the protest, and was cited in our
   decision. See BAE Tech. Servs., Inc., supra, at 10. In any case, we have
   previously found that reasonable travel costs associated with a client
   company's representative's (in addition to the party's attorney)
   attendance at a hearing is reimbursable. See TRESP Assocs., Inc.--Costs,
   supra, at 4-5.

   As with the claimed travel costs for BAE's consultants, however, we find
   that the claimed travel costs for the BAE official are unreasonable
   because they exceed the amount that could be recovered by a government
   contractor under a cost-reimbursement contract. BAE calculates that
   applying the FAR limitation (see above) reduces the $3,024.48 claimed by
   $566. Again, the Air Force does not disagree with BAE's calculation, and
   we therefore recommend that BAE be reimbursed $2,458.48 ($3,024.48 less
   $566) for the official's travel expenses.

   OTHER EXPENSES

   As reduced in response to Air Force objections, BAE requests reimbursement
   in the amount of $31,703.44 for additional expenses related to court
   reporting services, duplicating and binding, telephone calls, facsimile
   transmission, messenger and delivery services, supplies, local
   transportation, and administrative overtime. In its response to BAE's
   filing of its claim with our Office, the Air Force generally questioned
   several of these expenses as unnecessary, excessive or otherwise
   unsupported, including those related to computer research, administrative
   expenses, the delivery of documents by BAE to the other parties and to our
   Office, and local transportation. In its June 23 response to the Air
   Force's submission, BAE withdrew some of the challenged expenses and
   explained the basis for other claimed expenses in more detail. Although
   the agency subsequently submitted an additional filing to our Office
   rebutting various points in BAE's June 23 filing, it did not rebut BAE's
   more detailed explanation of the questioned expenses. We have reviewed
   BAE's documentation of its claimed expenses, including both that
   originally submitted to the agency and our Office, and the additional
   documentation furnished on June 23, and we find it adequate to establish
   that the expenses are of a type and in an amount such that reimbursement
   is warranted. In this regard, we note, for example, that, in appropriate
   circumstances, we consider administrative overtime expenses and local
   travel to be reimbursable. See Pulau Elec. Corp.--Costs, supra, at 10;
   TRESP Assocs., Inc.--Costs, supra, at 4-5.

   We therefore recommend that BAE be reimbursed $31,703.44 for additional
   expenses.

   COSTS OF PURSUING CLAIM

   BAE requests reimbursement of the costs of filing and pursuing its claim
   with our Office. BAE asserts that reimbursement is warranted due to the
   Air Force's delay in responding to BAE's certified claim submitted to the
   agency. BAE explains that, although it filed its claim with the
   contracting officer on December 2, 2005, and made several inquiries
   thereafter, the Air Force had not furnished a detailed, substantive
   response as of the time when BAE filed with our Office on May 8.

   The Air Force, in opposing BAE's request, asserts that it generally
   responded to the claim by orally advising BAE of its position that BAE was
   only entitled to reimbursement of the costs associated with the sustained
   issues. In addition, the agency maintains that it would have been
   inappropriate for it to pay BAE's claim during the pendency of a suit
   filed by InDyne in the U.S. Court of Federal Claims (COFC) on October 26,
   2005, challenging the agency's determination to implement corrective
   action in response to our decision. InDyne's lawsuit continued until the
   court granted the firm's motion for dismissal without prejudice on
   March 23, 2006, sometime after the agency had announced, on January 31,
   its determination again to select InDyne for award.[1]

   Our Regulations, 4 C.F.R. sect. 21.8(f)(2) (2006), provide that we may
   recommend reimbursement of the costs of pursuing a claim before our
   Office. This provision is intended to encourage the agency's expeditious
   and reasonable consideration of a protester's claim for costs. Pulau Elec.
   Corp., supra, at 11. The costs of pursuing a claim before our Office are
   recoverable if, by their nature and amount, they do not exceed that which
   would be incurred by a prudent person in a similar pursuit. Main Bldg.
   Maint., Inc.--Costs, B-260945.6, Dec. 15, 1997, 97-2 CPD para. 163 at 10.

   We find no basis for concluding that the agency unreasonably delayed
   consideration of BAE's claim such as to warrant reimbursement of BAE's
   costs of pursuing its claim before our Office. See Intercon Assocs.,
   Inc.--Costs. Since InDyne's suit in the COFC essentially challenged our
   finding that the original award to InDyne was unreasonable--the underlying
   basis for BAE's claim--we think the agency reasonably could await the
   results of that litigation before acting on BAE's claim. In addition,
   while the agency delayed providing a formal response to the claim, it did
   advise BAE of its position that there was a severability problem with the
   claim as filed; notwithstanding its admitted understanding of the agency's
   position in this regard, BAE made no attempt to respond to the agency's
   concern, either while its claim was pending at the agency, or in its
   initial filing with our Office. Furthermore, it is not apparent that BAE
   incurred any significant additional expense or effort on account of the
   agency's delay in furnishing a formal response to its claim; the positions
   of the two parties were sufficiently far apart that a settlement or other
   resolution of the matter without the intervention of our Office almost
   certainly was impossible, and an additional briefing by BAE in connection
   with pursuing its claim before our Office was inevitable. In these
   circumstances, we decline to recommend reimbursement of the costs of
   pursuing this claim with our Office.

   In light of the foregoing discussion, we recommend that BAE be reimbursed
   a total $463,902.58 in protest costs.

   Gary L. Kepplinger

   General Counsel

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

   [1] The Air Force also asserts that it orally requested BAE to segregate
   the costs associated with the sustained issues, but that the protester
   refused to do so. In response to the Air Force's claim, BAE agrees that it
   was aware of the agency's position that BAE was only entitled to
   reimbursement of the costs associated with the sustained issues, but
   denies that the agency requested it to segregate the costs accordingly.
   Given our discussion above, we need not resolve this dispute.