TITLE: B-299307.3; B-299308.3, Panacea Consulting, Inc.--Costs, July 24, 2007
BNUMBER: B-299307.3; B-299308.3
DATE: July 24, 2007
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B-299307.3; B-299308.3, Panacea Consulting, Inc.--Costs, July 24, 2007

   Decision

   Matter of: Panacea Consulting, Inc.--Costs

   File: B-299307.3; B-299308.3

   Date: July 24, 2007

   Lars E. Anderson, Esq., J. Scott Hommer, III, Esq., Peter A. Riesen, Esq.,
   and Keir X. Bancroft, Esq., Venable LLP, for the protester.

   Herman J. Narcho, Esq., and Dennis Adelson, Esq., Department of Labor, 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. Request for recommendation that protester be reimbursed costs of filing
   and pursuing protest is granted, in part, where agency took corrective
   action in response to outcome prediction alternative dispute resolution
   conducted by GAO attorney.

   2. Recovery of protest costs is limited to those issues upon which
   protester prevailed, where those issues were based on distinct core of
   facts and legal theories unrelated to facts and legal theories underlying
   unsuccessful arguments.

   DECISION

   Panacea Consulting, Inc. requests that we recommend that it be reimbursed
   the costs of filing and pursuing its protest against the issuance of
   delivery orders to Systems Integration and Development, Inc. (SID) under
   solicitation Nos. FY07FA1-64079E446-0001 and FY07FA3-64079E448-0001,
   issued by the Department of Labor for, respectively, project management
   and support services and core research and development support services.

   We recommend that Panacea be reimbursed its protest costs to the extent
   discussed below.

   In its protest, Panacea initially asserted that the agency unreasonably
   evaluated SID's submissions because it identified numerous key personnel
   who were Panacea employees. According to the protester, it was
   unreasonable for the agency to give SID credit for these employees because
   they were bound by "non-compete" agreements with Panacea, and thus would
   not be available to work for SID. In a related assertion, Panacea argued
   that these key employees violated the procurement integrity provisions, 41
   U.S.C. sect. 423 (2000), by allegedly sharing Panacea's proprietary
   information with SID. After the agency submitted its report in response to
   the protest, Panacea raised two additional protest grounds--the agency
   improperly gave disproportionate weight to price versus technical
   considerations in the source selections, and failed to document the basis
   for the numeric scores assigned to the submissions during its evaluation
   and source selection. The agency responded to these allegations and the
   protester filed supplemental comments.

   The cognizant GAO attorney subsequently conducted an outcome prediction
   alternative dispute resolution (ADR) conference.[1] He advised the agency
   that Panacea's protest appeared to be meritorious insofar as the record
   showed that the agency had, in fact, improperly weighted the price and
   technical considerations in the evaluations and source selection
   decisions, and that the record was lacking in support for the evaluation
   scores assigned to the competing submissions. Accordingly, the GAO
   attorney advised the agency that it could address these concerns by
   reevaluating submissions in a manner consistent with the terms of the
   solicitations, and preparing narrative materials to explain the basis for
   the point scores assigned and the source selection decisions made. The GAO
   attorney also advised the parties that Panacea's remaining assertions
   appeared to be without merit.

   In response to the ADR, the agency advised our Office that it intended to
   take corrective action by reevaluating the submissions in a manner
   consistent with the terms of the solicitations, and that it also intended
   to prepare narrative materials in support of its evaluation. In view of
   these representations, we dismissed Panacea's protest as academic
   (B-299307 et al., Mar. 28, 2007).

   Shortly after we dismissed the protest, Panacea filed this request. In
   response, the agency argues that reimbursement of costs is not warranted
   because it did not agree to pay Panacea's protest costs during the ADR
   procedure discussed above; had the GAO attorney indicated that
   reimbursement was recommended, the agency would have declined to take
   corrective action and instead elected to await our decision. The agency
   asserts that reimbursement is not appropriate in any case, because the
   protest was not clearly meritorious. The agency notes, in this regard,
   that the GAO attorney indicated that Panacea's initial protest allegations
   appeared to be without merit, and that the price/technical evaluation
   weighting challenged in the supplemental protest concerned an evaluation
   methodology that had long been used by the agency, so it was not clear
   that this methodology was erroneous. The agency also maintains that, in
   any event, it has now performed the reevaluation and determined, once
   again, that SID is the successful offeror under both acquisitions.
   Accordingly, the agency maintains, Panacea should not be reimbursed its
   costs as a result of any earlier misevaluation of submissions.

   When a procuring agency takes corrective action in response to a protest,
   we may recommend that the agency reimburse the protester its protest costs
   where, based on the circumstances of the case, we determine that the
   agency unduly delayed taking corrective action in the face of a clearly
   meritorious protest, thereby causing protesters to expend unnecessary time
   and resources to make further use of the protest process in order to
   obtain relief. Bid Protest Regulations, 4 C.F.R. sect. 21.8(e) (2007);
   Pemco Aeroplex, Inc.--Recon. and Costs, B-275587.5, Oct. 14, 1997, 97-2
   CPD para. 102 at 5. A protest is clearly meritorious when a reasonable
   agency inquiry into the protest allegations would show facts disclosing
   the absence of a defensible legal position. The Real Estate Ctr.-Costs,
   B-274081.7, Mar. 30, 1998, 98-1 CPD para. 105 at 3. A GAO attorney will
   inform the parties through outcome prediction that a protest is likely to
   be sustained only if he or she has a high degree of confidence regarding
   the outcome; it follows that the attorney's willingness to do so is
   generally an indication that the protest satisfies the "clearly
   meritorious" requirement for purposes of recommending reimbursement of
   protest costs. National Opinion Research Ctr.--Costs, B-289044.3, Mar. 6,
   2002, 2002 CPD para. 55 at 3; Inter-Con Sec. Sys., Inc.; CASS, a Joint
   Venture--Costs, B-284534.7, B-284534.8, Mar. 14, 2001, 2001 CPD para. 54
   at 3.

   Here, aside from the GAO attorney's indication during ADR that the two
   protest grounds in question likely would be sustained--which, as noted
   above, indicates that the protest grounds are considered to be clearly
   meritorious--we think a reasonable agency inquiry would have shown that
   there was no legally defensible agency position with regard to these
   arguments. As noted during the ADR, the record showed that the agency had
   weighted the evaluation criteria differently during the evaluations than
   the manner stated in the solicitations. It likewise should have been
   apparent to the agency that the evaluation records were legally inadequate
   for proper source selection decisions, since the record contained no
   information explaining the basis for the scoring of the submissions or the
   source selection decisions. Blue Rock Structures, Inc., B-293134, Feb. 6,
   2004, 2004 CPD para. 63 at 5 (where agency fails to adequately document
   the basis for its source selection decision, it runs the risk that GAO may
   be unable to determine that the agency's decision is reasonable). We
   conclude that the protest grounds in question were clearly meritorious.

   The agency's assertion that reimbursement is not warranted because the
   reevaluation resulted in the same source selection decision is without
   merit. Again, where an agency has taken corrective action, the
   determinative considerations for us in deciding whether costs should be
   reimbursed are whether the corrective action was unduly delayed (here, the
   agency does not argue that it was prompt, and we generally consider action
   to be unduly delayed where, as here, it is taken after the agency report
   due date), and whether the arguments raised were clearly meritorious. The
   fact that a reevaluation as part of corrective action resulted in the same
   source selection decision has no bearing on our assessment. Based on these
   considerations, as discussed, reimbursement is warranted here.

   We will recommend that a protester's recovery of protest costs be limited
   to the issues on which the protest was sustained where those issues are so
   clearly severable from the unsuccessful issues as to essentially
   constitute a separate protest. Sodexho Mgmt., Inc.--Costs, B-289605.3,
   Aug. 6, 2003, 2003 CPD para. 136 at 29. Issues are severable where they do
   not share a common core of facts and are not based upon related legal
   theories. Id. Here, Panacea's initial bases for protest (which, as our
   Office's attorney advised the parties, appeared to be without merit) are
   clearly severable from its two supplemental protest grounds (which, as our
   attorney indicated, appeared to be meritorious). The initial and
   subsequent arguments were based on entirely distinct core sets of facts
   and legal theories. Thus, Panacea's recovery here should be limited to the
   costs incurred in connection with its supplemental protest grounds.
   Panacea should submit its certified claim, detailing the time spent and
   the costs incurred, directly to the agency within 60 days of its receipt
   of this decision. 4 C.F.R. sect. 21.8(f).

   The request is granted.

   Gary L. Kepplinger
   General Counsel

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

   [1] For a description of the outcome prediction ADR process, see Alaska
   Structures, Inc.--Costs, B-298575.4, Jan 22, 2007, 2007 CPD para.17 at 4
   n. 4.