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.