TITLE: B-296783.4; B-296783.5, Department of the Army; ITT Federal Services International Corporation--Costs, April 26, 2006
BNUMBER: B-296783.4; B-296783.5
DATE: April 26, 2006
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B-296783.4; B-296783.5, Department of the Army; ITT Federal Services International Corporation--Costs, April 26, 2006

   Decision

   Matter of: Department of the Army; ITT Federal Services International
   Corporation--Costs

   File: B-296783.4; B-296783.5

   Date: April 26, 2006

   Kevin P. Connelly, Esq., Seyfarth Shaw, for the protester.

   Nancy J. Williams, Esq., U.S. Army Corps of Engineers, 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 successful protester's claim for attorneys' fees includes request
   for reimbursement at hourly rate above generally applicable $150 statutory
   limit based on increase in cost of living, higher rate paid should be
   based on the consumer price index for all items rather than the index for
   legal services.

   2. Reimbursement of protest costs associated with use of consultant is
   limited to highest rate of pay for a federal employee (GS-15, step 10),
   even where consultant billed at higher rate.

   DECISION

   The Department of the Army and ITT Federal Services International
   Corporation request our recommendation concerning ITT's claim for protest
   costs, filed in connection with our decision sustaining ITT's protest
   against the award of a contract to Kellogg, Brown & Root Services, Inc.
   for logistics support services. ITT Fed. Servs. Int'l Corp., B-296783,
   B-296783.3, Oct. 11, 2005, 2006 CPD para. __.[1] In addition to corrective
   action, we recommended that the Army reimburse ITT its costs of filing and
   pursuing the protest, including reasonable attorneys' fees. The Army
   objects to the amounts claimed for ITT's attorneys and consultant.

   ATTORNEYS' FEES

   Under the Competition in Contracting Act of 1984 (CICA), as amended, 31
   U.S.C. sect. 3554(c)(2)(B) (2000), successful protesters that are not
   small businesses are limited in their recovery of attorneys' fees to $150
   per hour, except to the extent that the agency determines, based on a
   recommendation from our Office on a case-by-case basis, that "an increase
   in the cost of living" or other special factors justify a higher hourly
   rate.

   In its protest cost claim filed with the agency, ITT requests that it be
   reimbursed its attorneys' fees at a rate of $238 per hour, to account for
   an increase in the cost of living. ITT calculated this upward adjustment
   using the Department of Labor's (DOL) Consumer Price Index for All Urban
   Consumers, U.S. City Average for Legal Services (CPI-L). The agency
   concedes that ITT is entitled to some cost of living adjustment, but
   argues that the increase should be calculated based on DOL's Consumer
   Price Index for All Urban Consumers, U.S. City Average for All Items
   (CPI-U); according to the agency's calculations, this would result in a
   rate of $192.12 per hour.

   In Sodexho Mgmt., Inc.--Costs, B-289605.3, Aug. 6, 2003, 2003 CPD para.
   136 at 37-43, we discussed for the first time the section 3554 ceiling on
   attorneys' fees and the cost of living adjustment. We found that the
   statute contemplates an increase in the specified $150 per hour rate in
   order to offset any decrease in the value of the rate due to inflation,
   Sodexho Mgmt., Inc.--Costs, supra, at 41, and that the appropriate cost of
   living increase should be determined with reference to DOL's CPI. While we
   did not require application of a particular CPI--stating "[w]e decline to
   impose a requirement that a claimant do more than request an adjustment
   and present a basis upon which the adjustment should be calculated,"
   id.--we applied the CPI-U in determining the appropriate adjustment. In
   doing so, we noted that this approach was consistent with that used by the
   courts in calculating cost of living increases in attorneys' fees claimed
   under an identical reimbursement provision in the Equal Access to Justice
   Act (EAJA), 28 U.S.C. sect. 2412(d)(2)(A). Sodexho Mgmt., Inc.--Costs,
   supra, at 43 n.33.

   The Army cites Sodexho in asserting that the CPI-U, rather than the CPI-L,
   should be used here, because it is a measure of the increase in the cost
   of living overall, as opposed to the cost of obtaining legal
   representation. ITT, on the other hand, maintains that, because Sodexho
   does not specifically require that the CPI-U be used, and because we
   accepted use of a different measure in another case (in Department of
   State--Costs, B-295352.5, Aug 18, 2005, 2005 CPD para. 145, we accepted
   use of a regional--as opposed to a national--CPI rate for all items), we
   should accept use of the CPI-L here, since it provides a more accurate
   measurement of the increase in the actual costs being reimbursed.

   We agree with the agency that the CPI-U, rather than the CPI-L, should be
   applied here, since it is consistent with the plain language of the
   statute. As noted above, the statute provides for upward adjustment of the
   rate of compensation for attorneys to account for "an increase in the cost
   of living," as opposed to an increase in the cost of obtaining legal
   representation. As noted above, this conclusion is consistent with the
   practice and rationale of courts applying the identical cost of living
   adjustment provision in EAJA; they have consistently used the CPI-U in
   calculating upward adjustments of claimed attorneys' fees. See, e.g.,
   Dewalt v. Sullivan, 963 F.2d 27, 29-30 (3^rd Cir. 1992); Sullivan v.
   Sullivan, 958 F.2d 574, 576-78 (4^th Cir. 1992).

   ITT's suggestion that our permitting use of a measure other than the CPI-U
   in Department of State--Costs is a basis for permitting use of the CPI-L
   here is without merit. Our decision in Department of State--Costs did not
   concern the question presented here--whether the CPI-U is the appropriate
   measure for cost of living adjustments versus the CPI-L (although we point
   out that in both cases we applied a CPI that measured increases in the
   cost of living, as opposed to the cost of obtaining legal representation).
   As discussed above, we find that the CPI-U is the appropriate measure
   because it is consistent with the language of the statute.

   CONSULTANT FEES

   In its claim filed with the agency, ITT also has requested reimbursement
   of consultant fees at the rate charged by the consultant--$360 per hour (a
   total of $81,744.15). The agency maintains that this amount is not
   warranted--that applicable statutes and regulations call for reimbursement
   of no more than $446.64 per day.

   CICA provides as follows:

     No party (other than a small business concern) . . . may be paid,
     pursuant to a recommendation made under the authority of paragraph
     (1)--(A) costs for consultant and expert witness fees that exceed the
     highest rate of compensation for expert witnesses paid by the Federal
     Government.

   31 U.S.C. sect. 3554(c)(2)(A).

   ITT asserts that the proper measure of the "highest rate of compensation
   for expert witnesses paid by the Federal Government" is the rate that has
   been paid by any federal agency for any expert witness or consultant in
   any forum at any time. In support of its claimed amount, ITT has tendered
   evidence showing that the federal government has paid more than $360 per
   hour for expert witnesses in other litigation in various federal forums.

   The agency, on the other hand, asserts that Federal Acquisition Regulation
   (FAR) sect. 33.104 is dispositive of the question. That section states
   that agencies shall not pay consultant and expert witness fees "that
   exceed the highest rate of compensation for expert witnesses paid by the
   Government pursuant to 5 U.S.C. 3109 and Expert and Consultant
   Appointments, 60 FR 45649, September 1, 1995 (5 CFR 304.105)."
   FAR sect. 33.104(h)(3)(i). The referenced provisions--5 U.S.C. sect. 3109
   and 5 C.F.R. sect. 304.105--list federal pay rates, the highest of which
   is general schedule (GS) grade 15, step 10, which the agency calculates is
   equal to no more than $446.64 per day. The agency maintains that ITT's
   consultant fees therefore should be reimbursed at a daily rate no greater
   than this amount. ITT asserts that there is no basis in section 3554 for
   this fee limitation.

   We have not previously addressed the consultant and expert witness fee
   provision in section 3554. Based on our review, we agree with the agency
   that the appropriate rate of reimbursement for ITT's consultant is $446.64
   per day, consistent with FAR sect. 33.104.

   While ITT maintains that the fee limitation is inconsistent with section
   3554, there is nothing in the statute itself that explains the "highest
   rate of compensation" language, and the minimal legislative history
   relating to section 3554 relates to attorneys' fees rather than to
   consultant and expert witness fees; indeed, the legislative history does
   little more than restate, without elaboration, the terms of the statute
   itself as it relates to consultant and expert witness fees. See H.R. Conf.
   Rep. No. 103-712 at 191-192 (1994), reprinted in 1994 U.S.C.C.A.N. 2607,
   2621-22. On the other hand, at the time the FAR guidance was issued, our
   Office specifically concluded that it was consistent with the statute,
   stating as follows:

     Concerning the consultant and expert witness fee limitation, FASA [the
     Federal Acquisition Streamlining Act] limits the payment of these fees
     to `the highest rate of compensation . . . paid by the Federal
     Government.' While there is some difference of opinion among the
     commentators [submitting comments in response to our then-proposed Bid
     Protest Regulations] on whether Congress intended to cap the fees at the
     highest rate fixed by the Classification Act Schedules, see 5 U.S.C.
     3109, we believe the proposed FAR implementation, which limits
     consultant and expert witness fees to the highest rate fixed by 5 U.S.C.
     3109, is appropriate and consistent with the statutory language. We are
     unaware of any legislative history which suggests that this
     implementation is contrary to congressional intent.

   60 Fed. Reg. 40739 (Aug. 10, 1995).

   We also have looked to court rulings for guidance in this matter. Although
   the courts have not addressed the matter of consultant fee reimbursement
   under section 3554, we again have reviewed the courts' prevailing practice
   in applying the similar provisions in EAJA (the language of section 3554
   is identical to the expert witness provision in EAJA). That review shows
   that the courts routinely have based reimbursement for a successful
   litigant's expert witnesses not on the highest rate paid by the government
   in any litigation, but on the rate paid by the government for its own
   expert witnesses in the same litigation. See United States v. 104 Acres
   More or Less, Situated in Keeler Township, VanBuren Co., MI; and
   Dukesherer Farms, Inc, No. K83-468, 1988 WL 29772, at 5 (W.D. Mich. Nov.
   30, 1988) (defendant awarded expert witness fees at the rate paid by the
   government in the action); see also United States v. Adkinson, et al., 256
   F. Supp. 1297, 1322 n.23 (N.D. Fla. 2003) (awarded expert witness fees did
   not exceed the highest rate of compensation for expert witnesses paid by
   the government); United States v. Aisenberg, 247 F. Supp. 2d 1272, 1295-96
   (M.D. Fla. 2003) (expert witness fees claimed were reimbursed where
   expert's rate was lower than that of government's expert witness in the
   litigation). This approach could lead to a result harsher than the FAR's
   approach. [2] In view of our previously expressed view that the FAR
   guidance is consistent with the statute, and considering that the courts
   have not adopted ITT's proposed approach in EAJA cases, we conclude that
   the FAR guidance applies.

   We recommend that the Army limit reimbursement of ITT's consultant costs
   to the rate of compensation for a GS-15, step 10 federal employee.[3]

   Anthony H. Gamboa

   General Counsel

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

   [1] The decision was subject to a protective order and no redacted version
   has been released to date pending the outcome of the agency's corrective
   action taken in response to our recommendation for corrective action.

   [2] At least one court has suggested that, in cases where a prevailing
   party is seeking expert witness fees and the government has not presented
   an expert witness--and the government thus has paid nothing for an expert
   witness during the litigation--EAJA may require that the prevailing party
   be reimbursed nothing for its expert witness. Olympic Marine Servs., Inc.
   v. U.S., 792 F.Supp. 461, 471 (E.D. Va. 1992); cf. Celeste v. Sullivan 734
   F.Supp. 1009, 1011-12 (in the absence of expert witnesses for the
   government, court applied statutorily-mandated per diem rate for federal
   witnesses).

   [3] The parties have not indicated during our consideration of this cost
   claim that there is disagreement regarding the reasonableness of the
   number of hours billed by the consultant. Thus, we offer no opinion here
   regarding that question and provide only guidance regarding the rate of
   compensation.