GRANTED IN PART: May 11, 1994 GSBCA 12696-C(12600-P) SCIENCE APPLICATIONS INTERNATIONAL CORPORATION, Protester, v. NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, Respondent. James J. McCullough, Joel R. Feidelman, Deneen J. Melander, and James S. Kennell of Fried, Frank, Harris, Shriver & Jacobson, Washington, DC, counsel for Protester. Sumara M. Thompson-King, Office of General Counsel, National Aeronautics and Space Administration, Washington, DC; and Rosamond M. French, Office of the Chief Counsel, Ames Research Center, Moffett Field, CA, counsel for Respondent. Before Board Judges PARKER, BORWICK, and NEILL. PARKER, Board Judge. Science Applications International Corporation (SAIC) has filed for protest costs and bid and proposal preparation costs incurred pursuing its protest of the proposed award of a contract by the National Aeronautics and Space Administration's (NASA's) Ames Research Center to Engineering Design Group, Inc. (EDG) pursuant to 40 U.S.C. 759(f)(5)(C)(1988). The Government objects to SAIC's status as an appropriate interested party entitled to recover its protest costs. The Government also contends that if the Board decides that SAIC is an appropriate interested party, SAIC should only receive the attorney fees and costs related to the first count of its protest. Furthermore, the Government avers that SAIC cannot recover bid and proposal preparation costs. SAIC seeks a total award of $413,015.48. This figure is composed of $91,191.50 in attorney fees for handling the protest and original cost motion, $20,442.50 in attorney fees for preparing the amended cost motion, $3,531.99 in disbursements for postage, photocopying, facsimile transmission, and telephone expenses, and $297,849.49 in bid and proposal preparation costs. We grant in part SAIC's Motion for Protest Costs in the amount of $112,823.49. Background The protesters in the underlying protest, SAIC and HSQ Technology, Inc. (HSQ), raised numerous issues concerning the Government's actions during the course of the procurement process. On October 6, 1993, the Board stayed consideration of all issues except the allegation contained in Count I -- that NASA failed to obtain a valid delegation of procurement authority (DPA) from the General Services Administration (GSA), and therefore had no power to proceed with this procurement for automatic data processing equipment (ADPE). The Board granted the protesters' Cross-Motion for Summary Relief on Count I on November 3, 1993, and directed the Government to obtain a DPA and to proceed with the procurement in accordance with statute and regulation. The events leading up to our decision that the Government is required to obtain a DPA are articulated in the Board's decision in Science Applications International Corp. v. National Aeronautics and Space Administration, GSBCA 12600-P, et al., 1993 BPD 328 (Nov. 3, 1993). We briefly summarize those events below. The Government issued Solicitation No. RFP2-35117(BEJ) for the delivery and installation of a Facility Automation Control System for the Unitary Plan Wind Tunnels Complex at Ames Research Center. The automation project required the selected offeror to demolish existing tunnel and auxiliary equipment, motor control centers, and concrete foundations. The selected offeror would then rebuild the facilities and include several automation systems during the course of the construction. The Government subsequently informed the protesters that EDG was the intended contract awardee. Following their debriefing sessions, the protesters filed their protests alleging in part that the Government failed to obtain a DPA for the procurement. The Government filed a Motion to Dismiss for lack of jurisdiction and untimeliness and each protester filed a Cross-Motion for Summary Relief. The Government advanced three arguments in support of its position that the protests should be dismissed: (1) the embedded exception contained in the Federal Information Resources Management Regulation (FIRMR) applied to remove the procurement from Brooks Act coverage and from Board jurisdiction; (2) even if the embedded exception did not apply, the regulatory or blanket DPA contained in the FIRMR applied and that NASA proceeded with a valid DPA; and (3) even if the embedded exception and regulatory DPA did not apply, there was still time for the General Services Administration (GSA) to ratify the unauthorized procurement process because the contract had not yet been awarded. The Government also contended that the protesters' allegations that it failed to obtain a DPA were untimely. The Board ruled that the embedded exception did not apply to the procurement because the Government was procuring ADPE -- an interconnected system of equipment, the principal functions of which were the "automatic acquisition, storage, manipulation, management, movement, control, display, switching, interchange, transmission, or reception of data or information." The Board also found that the regulatory DPA did not apply because the value of the federal information processing equipment to be procured by the Government exceeded the threshold of $2,500,000 contained in GSA's regulatory DPA. Furthermore, the Board ruled that following the Federal Circuit's decision in CACI, Inc. v. Stone, 990 F.2d 1233 (Fed. Cir. 1993), the Board could not ratify a procurement or contract that the agency lacked authority to create. The Board left open the question whether GSA could ratify NASA's unauthorized actions during the course of the procurement. Finally, the Board decided the protesters' allegations that the Government failed to obtain a DPA were timely. The Board stated that before it could address allegations concerning the agency's actions during the procurement process, it first must determine whether it had subject matter jurisdiction to hear the protest. The Board found that it had subject matter jurisdiction to hear the protest and that the Government needed to obtain a DPA before it could proceed with the procurement. Discussion Prevailing party status The Board may award an appropriate interested party the costs of filing and pursuing the protest and bid and proposal preparation when the Board determines the agency has violated a statute, regulation, or the conditions of a delegation of procurement authority. 40 U.S.C. 759(f)(5)(B), (C) (1988). The Board has interpreted the term "appropriate interested party" to mean a prevailing party, i.e., "one that has succeeded on any significant issue in the litigation that achieves some of the benefit it sought in bringing suit." Bedford Computer Corp., GSBCA 9837-C(9742-P), 89-2 BCA 21,827, at 109,811, 1989 BPD 131, at 3. A protester crosses the threshold of prevailing party status if it can point to a resolution of the dispute which materially alters the parties' legal relationship in a manner which Congress sought to promote in the fee statute. Id. The Government argues that SAIC did not succeed on a significant issue which achieved some of the benefit it sought in bringing the protest. The Government contends that SAIC only prevailed on the "limited issue" that the Board had jurisdiction and that NASA needed to obtain a DPA for the procurement. According to the Government, prevailing on this issue did nothing more than give SAIC the possibility of prevailing on other counts. The Government relies on the Board's decision in Computervision Corp., GSBCA 8838-C(8709-P), 87-2 BCA 19,818, 1987 BPD 70. The protester in that case raised two issues. The first was whether the agency had improperly failed to obtain a DPA. The second was whether the failure to obtain a DPA voided the procurement. Protester prevailed on the first issue, but not on the second. After prevailing on the first issue, protester sought recovery of its protest costs. In denying the motion for protest costs in that case, the Board stated that the "mere violation of either statute or regulation is not in itself sufficient basis for award of protest costs." Id. at 100,276, 1987 BPD 70, at 4. While protester succeeded on the first issue, the Board found that the second issue was the significant issue for purposes of a cost award. Thus, if protester had prevailed on the second issue, "there is no doubt that it would have qualified for the relief requested." Id. As a result of the Federal Circuit's decision in CACI, the Board's holding in the Computervision protest is no longer valid. In CACI, the Federal Circuit stated that the lack of a DPA is no longer a remediable deficiency as had been assumed by the Board, and that a "government procurement or contract" for ADPE may not proceed without a valid DPA. 990 F.2d at 1236. Thus, the determination that the Government conducted its procurement without a valid DPA is a significant threshold issue which must be resolved before the Board can address any other allegations concerning the Government's actions during the course of the procurement process. Because of the importance of this issue, the focus of the protest could quickly shift from alleged improprieties by the agency during the course of the procurement process to whether the agency was conducting an unauthorized procurement due to the lack of a valid DPA. This was exactly what occurred in this protest. In this protest SAIC has effectively prevailed on what was recognized in Computervision as the critical issue. NASA failed to obtain a valid DPA and, therefore, the solicitation and all actions taken pursuant are void. In Computervision, the Board expressly stated that prevailing on this second issue could support an award of protest costs. Thus, the Government's argument is without support. SAIC prevailed on a significant issue in its protest. Furthermore, SAIC obtained at least some of the benefit it sought in filing the protest. In the underlying decision, we stated that the Board was unable to ratify a procurement or contract the agency lacked authority to create and that GSA would have to decide for itself whether to ratify the actions NASA had already taken during the course of this procurement. We went on to hold that the Government must obtain a DPA and proceed with the procurement in accordance with statute and regulation. The Government appears to believe that because the Board ordered the Government to obtain a DPA rather than directing an award to SAIC, SAIC was precluded from obtaining the relief it sought -- the award of the contract or the cancellation of the procurement. At this point, we have no knowledge of what action NASA and GSA propose. However, if GSA does ratify NASA's actions, that decision may itself be protestable. Furthermore, if NASA's actions are not ratified, NASA will have to obtain a proper DPA and completely redo the procurement. As we stated in Telos Field Engineering, GSBCA 9887-C(9735-P), et al., 90-3 BCA 23,184, 1990 BPD 194, [T]he Board fashioned its relief so as to restore the procurement to the point at which the violation occurred. . . . Thus, the decision left open the possibility that [SAIC] would have a further opportunity to obtain the award. As such, [SAIC], having achieved at least some of the benefit sought in bringing suit, is an appropriate prevailing party, eligible for an award of costs. 90-3 BCA at 116,380, 1990 BPD 194, at 4-5. Objections to attorney fees The Government raises numerous objections to the amount of attorney fees requested. The Government contends that the hours spent by SAIC on protest counts which were not decided by the Board and on the preparation of the amended protests should be excluded from consideration. It argues that since SAIC did not allocate the time charged among the issues in the protest, the entire request for costs must be denied. NASA also objects to individual cost entries articulated by SAIC. It avers that the hourly rates billed by SAIC's counsel are unreasonably high. It compares the rates charged by SAIC's counsel to the rates charged by HSQ's counsel and the rates charged by counsel in an unrelated protest which occurred in 1992. The Government also contends that costs incurred prior to SAIC's September 27, 1993, debriefing should not be allowed. The Government argues further that there was a duplication of efforts in prosecuting the protest. NASA also contests time SAIC's counsel spent preparing discovery requests and redacting documents filed with Board. Finally, the Government avers that SAIC's counsel spent an "extraordinary" amount of time preparing its response to NASA's Motion to Dismiss and its Cross-Motion for Summary Relief. In response to the Government's objections, SAIC contends that the Government has misinterpreted the law with respect to the severability of a prevailing party's cost claim. It argues that because Count I of the protest was sustained, it was unnecessary for the Board to address the remaining counts of the protest. It also avers that the only costs it incurred for its alternate grounds of protest were preparatory costs. It argues that if it had not incurred these costs, it would have lost the right to assert the additional grounds of protest pursuant to Board Rule 5(b)(3)[foot #] 1. SAIC avers that its hourly rates are reasonable when the Board examines the skill of counsel, the complexity of the protest, and the hourly rates charged by comparable firms in the Washington, D.C. area. SAIC contends that it should receive costs incurred prior to its debriefing because these costs were preparatory costs necessary to file its protest. SAIC states that it did not duplicate its efforts during the course of the protest. It avers that due to the short time frame for the protest process, it was necessary for multiple attorneys to work on the case. Finally, SAIC argues that the time spent preparing discovery requests and its response to NASA's Motion to Dismiss and its Cross-Motion for Summary Relief was reasonable. Our review of SAIC's submissions persuades us that the time spent on the protest following the Board's stay order pertained to the DPA issue contained in Count I. The work performed and the time spent by counsel was reasonable. Thus, we reject the Government's argument to reduce or deny the fee award on this ground. Moreover, we agree with SAIC's argument that the costs it incurred pursuing alternate counts for protest are reimbursable preparatory costs. See RMTC Systems, Inc. v. Nuclear Regulatory Commission, GSBCA 11893-C(11734-P), 93-3 BCA 26,147, at 129,985, 1993 BPD 216, at 4 (it is appropriate to allow costs relating to general preparatory matters). As a result of discovery on the DPA issue, SAIC received information which led it to allege additional grounds of protest. Pursuant to Rule 5(b)(3), a protester must file its grounds for protest within ten working days after the basis for each ground of protest is known or should have been known. If SAIC had not filed its amended protest when it did, it would have lost the right to assert those allegations. The Government's argument that SAIC should not be reimbursed for the time preparing the amended protest is rejected. NASA argues that the hourly rates billed by SAIC's counsel are unreasonably high when compared to the rates charged by HSQ's counsel and by counsel in an unrelated protest. Beyond its mere conjecture that the rates are excessive, NASA does not offer any reasons to support its contention that the rates should be reduced by at least twenty-five percent. "[T]he reasonableness of an attorney's billing rate is not subject to an arbitrary cap; it is determined by the Board, taking into consideration rates prevailing in the relevant community, the complexity of the case, and the skill the lawyer ----------- FOOTNOTE BEGINS --------- [foot #] 1 58 Fed. Reg. 69,246, 69,254 (Dec. 30, 1993) (to be codified at 48 CFR 6101.5(b)(3)). ----------- FOOTNOTE ENDS ----------- brought to the litigation." SMS Data Products Group, Inc. v. Department of the Treasury, GSBCA 10783-C(10644-P)-REIN, 93-1 BCA 25,427, at 126,645, 1992 BPD 238, at 3. Our review of the billing rates charged by SAIC's counsel persuades us that, although high, the rates are reasonable. The rates charged fall within the range of rates charged by major Washington, D.C. law firms. See, e.g., Judy Sarasohn, "Holding the Line," Legal Times (Washington, D.C.), Dec. 14, 1992, at 20 (hourly rates for major Washington, D.C. law firms in 1991 and 1992 ranged from $95 to $450). Furthermore, counsel brought considerable skill to the protest considering the complexity of the technical and legal issues surrounding the procurement. Moreover, the Government's argument completely ignores this Board's precedent that we examine rates prevailing in the relevant community. Rates charged by counsel in another state or in an unrelated procurement are irrelevant to our analysis. Thus, we reject the Government's argument that we reduce the rates by twenty-five percent. The Government contends that costs incurred prior to September 27, 1993, should be denied. It argues that SAIC only prevailed on the DPA issue and that legal work preparing Count I could not have occurred until after the debriefing. In the past, we have awarded costs incurred when the protester begins preparing to file its complaint with the Board. Laptops Falls Church, Inc. v. Department of Justice, GSBCA 12229-C(12117-P), 93-2 BCA 25,857, at 128,659, 1993 BPD 56, at 2. In order to prepare its protest, SAIC would have to determine the issues to be raised in the protest and the legal basis for each. As stated above, if SAIC did not include all known grounds of protest at that time, it risked losing the right to raise those issues later. The fact that the DPA issue later became dominant is irrelevant. After reviewing SAIC's submission, we conclude that the time was spent preparing for the protest and that the time incurred was reasonable. The Government argues that SAIC's counsel duplicated its efforts by having multiple attorneys work on the protest. NASA objects to status discussions between counsel, the review of documents by more than one attorney, and attendance at conferences with the Board by more than one attorney. SAIC contends that it is not unusual for multiple attorneys to work on protests because of the short time frame involved and that discussions were required to coordinate the efforts of counsel. After reviewing both the Government's and SAIC's arguments on this issue, we are persuaded by SAIC's position. It was reasonable for SAIC to divide the work involved in this protest given the short deadlines imposed following the Board's stay order. Our review of SAIC's time sheets convinces us that the time spent by SAIC's counsel was not unreasonably duplicative. Moreover, the Board observes that NASA counsel used the same teaming technique. NASA contends that SAIC spent twenty-five hours preparing and reviewing discovery requests served on NASA. It argues that the amount of time was out of proportion to the length and complexity of the interrogatories served. SAIC states that the time was reasonable. It argues that counsel was required to review pertinent documents such as the solicitation, applicable regulations, and relevant case law when drafting the discovery requests, and that counsel performed other tasks during the time frame at issue. Our review of the entries persuades us that the time spent was reasonable. When drafting discovery requests, it is imperative that counsel review pertinent documents to ensure that relevant interrogatories are served on the opposing party. Furthermore, SAIC's counsel performed several tasks other than preparing and reviewing document requests during the twenty-five hours at issue. We reject the Government's request to reduce the award on this ground. NASA contests the time spent by SAIC's counsel in redacting documents filed with the Board. NASA contends that redacted versions of documents were not necessary for the Board, but were merely an accommodation to the client. The Government's argument ignores the terms of the Board's protective order of October 6, 1993. Pursuant to the terms of the protective order, any party entering protected material into the record must submit a redacted version along with the original version. Board's Protective Order of October 6, 1993, at 2. SAIC's efforts redacting documents were required for compliance with the Board's order. Our review of the SAIC's submissions persuades us that the time spent on the effort was reasonable and will be allowed. NASA argues that SAIC spent an "extraordinary" amount of time preparing its response to NASA's Motion to Dismiss and its Cross-Motion for Summary Relief. NASA states that it only had two attorneys, with virtually no secretarial support, working for three days on its Motion to Dismiss. It contends that it is "more than equitable and reasonable" that SAIC only be allowed fifty-two hours for three attorneys to work on its response and cross-motion instead of the 115.2 hours requested. SAIC avers that there is no basis for NASA's objection on this ground. It argues that counsel had to review discovery responses and the solicitation as well as research various legal issues raised by NASA in order to adequately prepare its response to the Motion to Dismiss and the Cross-Motion for Summary Relief. Our review of the SAIC's entries persuades us that the time spent by SAIC in preparing its briefs was reasonable. The technical and legal issues involved in the protest were complex. Furthermore, because of the short time frame the Board imposed following the stay order, SAIC's counsel was justified in making an intensive effort to develop and prepare its response to the Motion to Dismiss and the Cross-Motion for Summary Relief. Thus, we refuse to reduce the award on this ground. Finally, the Government objects to time spent by SAIC discussing whether to file a Motion for Reconsideration with the Board. SAIC never filed a Motion for Reconsideration. It is unreasonable for SAIC to be reimbursed for the time spent discussing the issue. The timesheets provided by counsel reveal that Mr. McCullough spent 0.20 hours discussing the Motion for Reconsideration and the cost claim. It is our best estimate based on the information provided that Mr. McCullough spent half of that time discussing the Motion for Reconsideration. Thus, we reduce the award by $37 to account for the time spent on the motion. Objections to disbursements The Government objects to SAIC counsel's use of Federal Express delivery and facsimile transmission of documents to SAIC headquarters. The Government also contends that "some deduction" must be made to the charges incurred for duplicating and for computer-aided research because only Count I was decided by the Board. It further argues that charges for secretarial overtime and overtime meals should not be allowed. Finally, the Government avers that telephone calls made by SAIC's outside counsel to SAIC should not be allowable unless they were specifically made to obtain information related to preparing briefs discussing Count I. SAIC argues that it was reasonable for counsel to apprise its client of developments in the protest as quickly as possible so that the client could make informed decisions on how to proceed. We find that SAIC's actions in using Federal Express delivery, facsimile transmission, and long-distance calls to accomplish this goal was reasonable. NASA's implicit suggestion that the client should not receive information regarding the protest as quickly as possible ignores the attorney-client relationship and places counsel at risk of violating its ethical obligation to keep the client fully informed. Furthermore, NASA's argument that charges for secretarial overtime and overtime meals should not be allowed ignores established Board precedent. The Board has expressly stated that secretarial overtime and overtime meals are reimbursable protest costs. See Grumman Data Systems Corp. v. Department of the Air Force, GSBCA 11799-C (11635-P), 93-2 BCA 25,773, at 128,244, 1993 BPD 16, at 7-8 (discussing secretarial overtime and overtime meals); Old Stone Leasing Corp. v. Department of the Army, GSBCA 10747-C(10613-P), 93-2 BCA 25,607, at 127,469-70, 1992 BPD 331, at 5 (discussing overtime meals); Aspect Telecommunications, Inc. v. Department of the Treasury, GSBCA 11399-C(11250-P), 93-1 BCA 25,423, at 126,630-31, 1992 BPD 245, at 3-4 (discussing secretarial overtime). Finally, we reject the Government's mere conjecture that "some deduction" should be made for duplicating and for computer- aided research. Our review of the duplicating and research charges persuades us that the disbursements were incurred for Count I and that they were reasonable. Moreover, we are persuaded that the remaining disbursements were reasonable and adequately supported. Bid and proposal preparation costs The Government argues that SAIC should not be awarded proposal preparation costs. The Government avers that there is no basis to surmise that any revisions to the solicitation might be issued which will create a solicitation dramatically different than the existing solicitation. It contends that SAIC has not demonstrated that its efforts in preparing a proposal could not be utilized in a new or amended solicitation. SAIC contends that its proposal efforts were clearly wasted. It argues that NASA induced SAIC to prepare proposals and compete for the procurement even though NASA lacked the legal authority to conduct the procurement. In the alternative, SAIC requests that the Board defer its decision concerning the proposal preparation costs until NASA decides how it will conduct the procurement. It states that until NASA informs the Board as to its intentions, the degree of change between the existing solicitation and any new solicitation is uncertain. In order to receive an award of proposal preparation costs, protester must show that, as a result of the Government's violation of statute or regulation, it incurred these costs unnecessarily and its efforts have been essentially wasted. SMS Data Products Group, Inc., GSBCA 10570-C(10060-P), 92-1 BCA 24,531, at 122,408, 1991 BPD 276, at 6. At this point, we have no knowledge of what action NASA proposes. Our decision restored the procurement to a pre-award status, making SAIC again eligible to compete for award. Because the Board does not know whether GSA will ratify NASA's actions or whether NASA will completely redo the procurement, it is premature for us to decide that SAIC incurred its proposal preparation costs unnecessarily and that its efforts were essentially wasted. It is also premature for the Board to award attorney fees associated with the claim for proposal preparation costs. Our review of SAIC's submissions reveal that 11.4 hours were wholly or partially spent preparing the proposal preparation claim. It is difficult to determine exactly how much of this time was spent on the claim because more than one task was performed during the time frames at issue. Based on our best estimate of the time spent on this claim as revealed by the timesheets provided by counsel, we deduct $2305.50 to account for the 11.4 hours wholly or partially spent preparing the proposal preparation claim. Decision The Motion for Protest Costs is GRANTED IN PART in the amount of $112,823.49. This award may be paid, without interest, from the permanent indefinite judgment fund, 31 U.S.C. 1304 (1988). 40 U.S.C. 759(f)(5)(C)(1988). It is the Board's understanding that NASA issued an amended solicitation on or about February 11, 1994. SAIC may file a motion to recover its proposal preparation costs and any attorney fees associated with that claim no later than thirty days after issuance of this decision. ___________________________ ROBERT W. PARKER Board Judge We concur: ______________________________ ___________________________ ANTHONY S. BORWICK EDWIN B. NEILL Board Judge Board Judge