GRANTED IN PART: September 14, 1992 GSBCA 11399-C(11250-P) ASPECT TELECOMMUNICATIONS, Protester, v. DEPARTMENT OF THE TREASURY, Respondent. David M. Nadler and C. Patteson Cardwell, IV, of Dickstein, Shapiro & Morin, Vienna, VA, counsel for Protester. Donald M. Suica, Dennis M. Ferrara, and Terrence P. Dermott, Office of Chief Counsel, Internal Revenue Service, Department of the Treasury, Washington, DC, counsel for Respondent. Before Board Judges LaBELLA, Acting Chief Judge, NEILL, and HYATT. NEILL, Board Judge. Pursuant to Rule 35 and 40 U.S.C. 759(f)(5)(C) (1988), Aspect Telecommunications (Aspect) has timely filed a motion for the costs of filing and pursuing its protest of a procurement by the Internal Revenue Service (IRS or respondent). The procurement was for automatic call distributor systems for various taxpayer assistance calling sites. The Board granted Aspect's protest on all counts. Aspect Telecommunications, GSBCA 11250-P, 91-3 BCA 24,199, 1991 BPD 161. Aspect seeks $138,690.02 as the costs of filing and pursuing its protest, including the costs incurred in preparing and defending this cost motion. This includes charges by its outside counsel and costs incurred by Aspect itself. The billings from Aspect's outside counsel include charges for attorney time, photocopying, secretarial overtime, facsimile transmission, local transportation, messenger service, computer research, meals, postage, and Federal Express delivery. These costs were incurred by counsel and separately billed to Aspect. Aspect also incurred costs for employee time, travel, lodging, meals, and miscellaneous costs. The total request consists of the following: Attorney fees Attorney time $112,748.75 Attorney disbursements 12,753.33 Employee costs Non-attorney employee costs 9,971.06 Disbursements 3,216.88 $138,690.02 Respondent does not contest Aspect's status as a prevailing party; respondent contests only the amount Aspect should recover. In three separate submissions, respondent disputes $36,089.60 of the amount requested on various legal and factual grounds. Aspect maintains that it is entitled to the entire amount requested less $776.57[foot #] 1 of overhead that was added to computer research charges which Aspect has, however, withdrawn in the face of respondent's objections. The term "attorney fees" is recognized to include more than the work personally performed by a member of the bar. "Rather, the term must refer to a reasonable fee for the work product of an attorney. Thus, the fee must take into account the work not only of attorneys, but also of secretaries, messengers, librarians, janitors, and others whose labor contributes to the work product for which an attorney bills her client; and it must also take account of other expenses and profit." Missouri v. ----------- FOOTNOTE BEGINS --------- [foot #] 1 In its initial motion, protester sought $776.57 for overhead added by counsel to the cost of computerized legal research. The alleged reason for this overhead charge was that it reflected additional costs incurred in maintaining on-site facilities for these services. Protester's Motion, Exhibit B, Attachment 13. Respondent objected on the ground that this charge is part of the incidental cost of doing business and should not be separately assessed. Respondent's Response to Protester's Motion for Costs at 2. Protester has not denied this fact. Instead, in its reply to respondent's first objection, Aspect withdrew its request for the $776.57. In supplements to its original claim, however, Aspect added the same type of charge, this time in the amount of $220.05, to the claimed cost of additional computerized legal research. Respondent has objected to the additional amount for the same reason given with regard to $776.57 in the original claim. Respondent's Answer to Protester's Supplement II to Its Motion for Costs at 6; Respondent's Answer to Protester's Supplement III to its Motion for Costs at 4. Aspect has not commented on respondent's renewed objection. In view of Aspect's withdrawal of the $776.57 originally sought and its reticence to address respondent's renewed objection, we sustain respondent's objection to the additional charges and deny the $220.05 sought by protester in its supplemental claim. ----------- FOOTNOTE ENDS ----------- Jenkins, 491 U.S. 274, 285 (1989); accord West Virginia University Hospitals, Inc. v. Casey, 111 S. Ct. 1138, 1147 (1991); Sterling Federal Systems, Inc. v. National Aeronautics & Space Administration, GSBCA 10000-C(9835-P), 1992 BPD 141 (May 22, 1992) (full Board). In addition, an award of attorney fees encompasses those reasonable and necessary out-of-pocket expenses of providing a lawyer's services that are not covered by the hourly rate because they cannot always be anticipated with any certainty in a given case. Bennett v. Department of Navy, 699 F.2d 1140, 1145 (Fed. Cir. 1983). The billings from Aspect's outside counsel are properly considered attorney fees pursuant to the standard enunciated in Jenkins, Bennett, and Sterling. These costs include charges for attorney time, secretarial overtime, facsimile transmission, local transportation, messenger service, computer research, copying, meals, postage, and Federal Express delivery. These costs were incurred by counsel and separately billed to Aspect; they were not included in the attorney's hourly rate. We find that the attorney billings and hourly rates are reasonable and commensurate with other firms practicing before the Board. We discuss below only those costs to which respondent objects. Secretarial Overtime Aspect seeks reimbursement for secretarial overtime incurred by its retained counsel during the prosecution of the underlying protest, preparation of its initial cost motion, and one of its three supplements to the cost motion. Respondent objects to $154 of these overtime charges incurred while preparing a supplement to the cost motion. Respondent contends that while overtime is appropriate when the parties are laboring under the time demands accompanying protest litigation, it is inappropriate for work on the cost motion supplement which did not have a filing deadline. Respondent also asserts that secretarial services are customarily considered part of overhead and factored into an attorney's hourly rate. Respondent is correct in that secretarial expenses of outside counsel are considered overhead expenses and included in Aspect's attorney's hourly wage. See React Corp., GSBCA 9530- C(9456-P), 88-3 BCA 21,026, at 106,210, 1988 BPD 161, at 4 (attorney's hourly rate said to include secretarial expenses and the usual overhead expenses of running a law firm); Bennett v. Department of Navy, 699 F.2d 1140, 1145 n. 5 (Fed. Cir. 1983) ("Examples of expenses that would be covered by the hourly rate include fixed overhead such as utilities, rent and secretarial expenses.") Aspect is not, however, seeking reimbursement for the normal secretarial costs incurred by its outside counsel, only the overtime costs for which it was billed in addition to its attorney's hourly rate. It is reasonable that these costs be excluded from an attorney's hourly rate because such costs cannot be anticipated with certainty in any given case. Cf. Bennett, 699 F.2d at 1145. We are untroubled by the fact that the overtime objected to was incurred preparing a supplement to the cost motion. The costs were billed to Aspect in accordance with its counsel's billing practice. Therefore, we see no reason to delve into outside counsel's time management, in this instance, when such costs were actually billed to Aspect and the amount is reasonable. Aspect's request for secretarial overtime costs incurred by its outside counsel is granted. Inter-library Loan Aspect seeks reimbursement for the expense of borrowing four volumes of legislative history from three different area law firms that participate, along with Aspect's counsel, in an inter- library loan program. Aspect's counsel, through a firm librarian, made four separate requests for the legislative history pertaining to three different public laws. The librarian spent one half-hour processing each request for a total of two hours. Respondent objects to one and one-half hours on the basis that the librarian should have been able to process all four request at the same time thus reducing the total time by three- fourths. It was necessary, however, to borrow the material from three different firms. Therefore, respondent's suggestion that only one request was necessary is unsupported. We find the librarian's hourly rate and time spent reasonable and grant these costs. Facsimile Costs Aspect is seeking reimbursement for facsimile charges at the rate which it was billed by its outside counsel -- $1.50 per page. Respondent objects to these costs citing HSQ Technology, Inc., GSBCA 10054-C(9985-P), 89-3 BCA 22,047, at 110,926, 1989 BPD 185, at 3, for the proposition that compensation for the use of office equipment, such as facsimile machines, is inappropriate. Respondent continues that facsimile transmissions are reimbursable only to the extent that they involve the additional expense of a long distance phone charge and the decision to use facsimile was reasonable. Respondent further points out that Aspect makes a separate request for long distance phone service and, therefore, should not be allowed an additional recovery. The Board awards reasonable facsimile costs as "attorney fees" if such costs are not included in the attorney's hourly rate. See Sterling Federal, 1992 BPD 141, at 4-5, 11 (facsimile transmission costs awarded). This practice is consistent with the guidance provided by the Supreme Court in Jenkins and our appellate authority in Bennett. Respondent's reliance on HSQ Technology in the present case is misplaced. In HSQ Technology, we denied a request for facsimile costs at a flat rate of $3 per page "because such charges are based upon a flat or uniform rate irrespective of the actual cost of transmission." In the final analysis, that decision stands for the proposition that where a law firm bills a client for items other than attorneys' time by imposing a high fee that bears no relation to the commercial charges the firm paid for the items, we will not award reimbursement for those items. In this case, the per page rate is half that sought in HSQ Technology. In addition, the record tends to confirm that included in this rate of $1.50 per page is the actual telecommunication cost.[foot #] 2 While it is not altogether clear how the figure of $1.50 has been arrived at, we nonetheless find it is based, at least in part, on actual costs and, even more importantly, within the commercial range for such services. See SMS Data Products Group, Inc. v. Department of the Treasury, GSBCA 10783-C(10644-P), slip op. at 9 (Sept. 10, 1992). Aspect's request for facsimile costs is, therefore, granted. Redacting Cost Motion Aspect's initial cost motion was submitted in its entirety as protected material. In the order docketing this cost case, the Board noted that cost motions are normally not accorded protective status and, therefore, ordered Aspect to show cause why its motion and supporting documentation should be treated as protected. Aspect responded, stating that the cost motion itself need not be protected, but that portions of the supporting documentation that are proprietary in nature should remain subject to the protective order. Aspect submitted a redacted copy of this documentation with specific comment as to why it should remain protected.[foot #] 3 ----------- FOOTNOTE BEGINS --------- [foot #] 2 This is apparent from comparing the time of a facsimile transmission noted in the documents supporting such charges with the log of telephone charges which also indicates the time of each phone call. A sampling of these charges reveals that there are no corresponding phone charges at the same time of day as a facsimile transmission. From this comparison, we conclude that the facsimile charge includes the cost of phone service for each transmission. [foot #] 3 Protester also designated portions of supporting documents in its supplemental costs motions -- motions I-III -- as protected material consistent with the rationale utilized in the redacted version of its initial cost motion. ----------- FOOTNOTE ENDS ----------- Aspect seeks $2,508.75 in attorney fees as the cost of redacting portions of its initial cost motion.[foot #] 4 Respondent cites Rocky Mountain Trading Co., GSBCA 10047-C(10027-P), 91-2 BCA 23,796, 1991 BPD 40, for the proposition that Aspect should not recover costs associated with correcting what could have been done correctly in the first instance. We agree with respondent. Our decisions establish that the costs of pursuing a protest are generally not the sort of information considered subject to a protective order unless a party offers a specific and detailed justification for each and every item restricted. Federal Computer Corp., GSBCA 11218-C(11053-P), 91-3 BCA 24,154, at 120,866, 1991 BPD 151, at 2. See also Digital Equipment Corp., GSBCA 9285-C(9131-P), 88-2 BCA 20,775, at 104,973, 1988 BPD 88, at 3; Wang Laboratories, Inc., GSBCA 9288-C(9131-P), 88-2 BCA 20,774, at 104,971, 1988 BPD 89, at 2; ICF Severn, Inc., 91-3 BCA 24,058, at 120,445, 1991 BPD 120, at 2. Aspect cites Computer Consoles, Inc., GSBCA 8450-C(8134- P), 87-1 BCA 19,440, 1986 BPD 183, as support for these costs. This case is inapposite. In Computer Consoles, 91-2 BCA at 98,256, 1986 BPD at 7, the Board awarded a protester the costs of participating in a conference concerning an alleged violation of the protective order by another litigant because such an effort was part and parcel of the total effort necessary to prevail. In this case, however, submitting a protected cost motion was unnecessary and unrelated to the successful resolution of the protest or the cost motion. Board precedent clearly establishes that cost motions are generally not covered by protective orders unless a protester makes a specific and detailed justification for each item restricted. Aspect failed to provide any rationale for restricting its initial submission.[foot #] 5 Thus, under the circumstances, we find these costs unreasonable and deny them in their entirety. ----------- FOOTNOTE BEGINS --------- [foot #] 4 In Respondent's Answer to Protester's Supplement II to Its Motion for Costs, Respondent objects to only $1,723.75 in attorney fees relating to the redaction of the initial cost motion. However, respondent appears to have overlooked an additional $785 in attorney fees which Aspect claims to have incurred in conjunction with the redaction of its cost motion. The additional attorney fees are recorded in Aspect's Supplement I to the Cost Motion (i.e. 2.75 hours at $190 per hour incurred from August 26 to August 30, 1991, and 2.50 hours at $105 per hour incurred from August 26 to August 31, 1991.) [foot #] 5 We note that Aspect's three supplements to its cost motion were redacted when first submitted and that the costs associated with these redactions -- presumably included in the request for costs incurred preparing each motion -- are awarded in full. ----------- FOOTNOTE ENDS ----------- Suspension of Cost Motion After the Board granted Aspect's protest, respondent requested the Department of Justice to appeal the decision to the United States Court of Appeals for the Federal Circuit (the Federal Circuit). While this request was pending, respondent moved for a suspension of the cost case. Aspect opposed this motion. The Board granted respondent's motion suspending the cost case given the unique nature of the issue under consideration for appeal and the uncertainty as to how this issue would affect Aspect's status as a prevailing party. Aspect seeks $1,880 in attorney fees as the costs of replying to respondent's motion to suspend proceedings. Respondent objects to these costs contending that Aspect's response to the motion to suspend was unjustified and did not further Aspect's interests. Respondent continues that it was obligated to notify the Board of the possible appeal and request a suspension in order to avoid needless litigation. Respondent also notes that the motion to suspend was granted and, therefore, Aspect should not be reimbursed for costs incurred on this ancillary issue on which it did not prevail. We find Aspect's response to the motion to suspend justified. The Board authorized Aspect's response. While Aspect was not successful in opposing the motion, we do not consider the motion to suspend to be a significant issue readily severable from Aspect's effort to recover its costs of protest. Cf. Rocky Mountain Trading Co., Systems Division, GSBCA 9750-C(9569-P), 90- 3 BCA 23,040, at 115,675, 1990 BPD 147, at 2 (costs incurred in the unsuccessful pursuit of both a significant and a readily severable issue may be denied). Aspect's response was justified given the unusual procedural nature of this cost case. The motion to suspend was filed before the Department of Justice had determined whether or not to appeal the Board's decision to the Federal Circuit. Generally, parties notify the Board of an appeal after the appeal is actually filed; at that point the Board dismisses the cost motion without prejudice pending resolution of the appeal. Planning Research Corp., GSBCA 10387- C-R(10100-P), 91-2 BCA 23,966, at 119,971, 1991 BPD 97, at 2- 3. Board procedures are such that respondent was not obligated to file its motion to suspend before the appeal was actually filed. The early filing of a motion to suspend precluded the normal dismissal without prejudice and prompted Aspect to file an opposition which we consider justified in such a situation. We therefore grant these costs as reasonably and necessarily incurred in pursuing this cost motion. Appeal Costs Aspect requests $4,867.16 in costs for preparing a letter trying to dissuade the Department of Justice from appealing the protest decision. The Department of Justice ultimately appealed the protest to the Federal Circuit. Aspect also seeks $545 in attorney fees as the cost of filing a certificate of interest at the Federal Circuit. Additional costs were not incurred because the Department of Justice voluntarily withdrew the appeal. Addressing the costs incurred on appeal, we note that the full Board recently held that such costs are not recoverable. Sysorex Information Systems, Inc. v. Department of the Treasury, 10781-C(10642-P)-REIN (Sept. 8, 1992) (full Board). Therefore, Aspect's request for $545 in attorney fees for filing a certificate of interest with the Federal Circuit is denied. We likewise deny Aspect's request for costs incurred writing the letter to the Department of Justice. In Sysorex, we stated that since our statute does not expressly authorize an award for fees incurred in a judicial action we could not award fees incurred on appeal to the Federal Circuit. Following Sysorex, we concluded that our statute does not authorize payment for fees incurred that are unrelated to the resolution of a protest before the Board. Sysorex, slip op. at 7. Aspect's letter to the Department of Justice is clearly unrelated to Board proceedings. If anything, the letter relates more to the appeal before the Federal Circuit. Aspect's request for $4,867.16 to draft a letter to the Department of Justice is, therefore, denied. Expense of Cost Motion As a final objection, respondent contests the reasonableness of the number of hours expended preparing Aspect's cost motion, especially since Aspect's status as a prevailing party was not contested. Respondent contends that Aspect is entitled to the costs of providing sufficient documentation, preparing a certification, and the costs of all disbursements but is not entitled to the full amount requested for legal research and preparing the motion. Aspect maintains that it had the burden to establish both entitlement to and the amount of the requested costs and, therefore, the level of effort expended and costs incurred were reasonable. Aspect continues, citing Berkshire Computer Products, GSBCA 10452-C(10338-P), 90-2 BCA 22,734, at 114,124, 1990 BPD 45, at 2, for the proposition that this burden must be met even if its cost motion is uncontested because it is the Board, not the parties, that determines if a cost award is appropriate. It is well established that an appropriate prevailing party may recoup the expenses incurred in preparing, filing, and defending a cost motion before the Board. Aspect is also correct that it has the burden to establish its status as a prevailing party and the amount of costs incurred even if its motion is uncontested. However, it is also well established that a fee request should exclude "hours that are excessive, redundant, or otherwise unnecessary," Hensley v. Eckerhart, 461 U.S. 424, 434 (1983), and that the Board has discretion to reduce a fee request. See Crumbaker v. Merit Systems Protection Board, 781 F.2d 191, 195 (Fed. Cir. 1986) (case remanded to the Merit Systems Protection Board for a "concise but clear explanation" of the reasons supporting the reduced award). We find a portion of the hours claimed for preparation of the cost motion excessive and redundant and, therefore, reduce the award as explained below. In this cost proceeding, Aspect filed a cost motion and three supplements to the motion.[foot #] 6 Aspect requests $36,855.36[foot #] 7 as costs incurred solely in pursuing this cost motion.[foot #] 8 Under the circumstances, we find this amount unreasonable. Aspect filed a twenty-one page cost motion accompanied by a separate binder with supporting cost documentation. Aspect is requesting a total of 157.75 hours of attorney time to prepare i t s i n i t i a l m o t i o n a n d s u p p o r t i n g documentation.[foot #] 9 One attorney spent 100 hours preparing the motion. This includes 34.75 hours performing legal research and an additional 34.75 hours drafting, reviewing, and revising the motion. His remaining time was spent on such ----------- FOOTNOTE BEGINS --------- [foot #] 6 Aspect also filed comments to respondent's first opposition to the cost motion and other responses relating to the processing of this case. [foot #] 7 In the third supplement to its cost motion, Aspect contends that the total cost request for filing this motion is $36,905.61. This amount is overstated by $50.25. Erroneously included in this amount is $50.25 for disbursements incurred in processing the underlying protest. See Supplement II ___ to Motion of Protester Aspect Telecommunications for Award of Protest Costs, Attachment 4. [foot #] 8 Aspect incurred $83,234.56 in attorney fees and attorney disbursements pursuing the underlying protest. The amount of fees and disbursements incurred preparing this cost motion is approximately forty-four percent of the total amount incurred filing and pursuing the underlying protest. [foot #] 9 This time is in addition to charges for attorney and support staff/paralegal time spent preparing the three supplements to the cost motion and staff charges for preparing the initial cost motion. We have reviewed the costs incurred in preparing each of the three supplements and all the charges for support staff and find these costs reasonable. ----------- FOOTNOTE ENDS ----------- pursuits as compiling cost documentation. A more senior attorney is said to have spent 44.75 hours reviewing, revising, and editing the cost motion and checking calculations. Included in this time were two hours spent reviewing sample cost motions and conferring with other members of the firm regarding cost motion procedures. We find 157.75 hours of attorney time to prepare the initial cost motion excessive. This is especially true given the experience of counsel's firm with cost motions before this Board and counsel's access to sample motions. As to the 34.75 hours spent on legal research before the motion was drafted, normally, based on our experience with applications for protest costs, we would expect the time required to be considerably less. In this particular case, however, given its complexity and protester's expectation of objections from respondent, we are prepared to recognize a maximum of 20 hours of research as reasonable under the circumstances. We reduce, therefore, the hours requested for legal research by 14.75 hours. The billing rate for the attorney in question was $105 per hour. The reduction, therefore, amounts to $1,548.75. We also find excessive and redundant the hours spent by two attorneys drafting and revising the motion and checking cost calculations. One attorney spent 34.75 hours and a second attorney spent 44.75 hours for a total of 79.5 hours performing these tasks. This amount does not include the legal research discussed above or additional attorney time and support staff time incurred compiling the cost documentation supporting the motion.[foot #] 10 We conclude that 40 hours is a reasonable amount of time to draft the document which was submitted and to review the relevant cost documentation.[foot #] 11 We therefore reduce the hours requested by 39.5 hours. Since two attorneys performed these tasks, we reduce the time requested for each attorney by 19.75 hours, half of 39.5 hours. Therefore, we deduct 19.75 hours at $105 per hour and 19.75 hours at $190 per hour for a total reduction of $5,826.25. ----------- FOOTNOTE BEGINS --------- [foot #] 10 One attorney spent 19.5 hours assembling cost documentation exhibits. An additional 32.75 hours was spent by staff/paralegals preparing supporting cost documentation. Respondent does not contest the number of hours incurred preparing cost documentation. We find these hours reasonable. [foot #] 11 We note that approximately one third of Aspect's submission was devoted to a discussion of the claimant's status as a prevailing party. While Aspect did have the burden of proof on this issue, we find this level of effort unreasonable and unnecessary for this case. The Board's decision on the underlying merits established that "protester has clearly prevailed on all counts" of its protest. Aspect ______ Telecommunications, 91-3 BCA at 121,036, 1991 BPD at 20. __________________ ----------- FOOTNOTE ENDS ----------- Employee Costs and Disbursements Aspect seeks $9,971.06 for the costs of its employees' time spent pursuing the protest and filing this cost motion. The explanation of each employee's duties reveals that none of the employees are attorneys. These costs are not taxable costs under 28 U.S.C. 1920, attorney's fees, or bid and proposal preparation costs and are, therefore, denied pursuant to Sterling Federal, 1992 BPD 141, at 9-10. Aspect also seeks $3,216.88 in disbursements for employee travel, lodging, meals, and miscellaneous costs. These costs are also not taxable costs as defined in 28 U.S.C. 1920. They are not witness costs as no witness testimony was offered in the underlying protest. See 28 U.S.C. 1920(3) (fees and disbursements for witnesses are taxable costs as limited by 28 U.S.C. 1821 (1988); Sterling Federal, 1992 BPD 141, at 11 (protester entitled to witness fees together with per diem allowances for travel as provided by statute.) These costs are likewise denied. Id. at 9-10. Decision For the reasons stated, Aspect's motion is GRANTED IN PART. We deny Aspect's request for the following costs: Overhead on computer research $ 220.05 Redacting Cost Motion 2,508.75 Appeal costs 5,412.16 Expense of Cost Motion 7,375.00 Employee costs Non-attorney employee costs 9,971.06 Disbursements 3,216.88 Total Costs Denied $28,703.90 Aspect is entitled to an award of the remaining costs less the $776.57 in overhead charges for computer research which was withdrawn. We hold that Aspect is entitled to an award in the amount of $109,209.55. This award is to be paid, without interest, from the permanent in definite judgment fund, 31 U.S.C. 1304 (1988). 40 U.S.C. 759(f)(5)(C) (1988). ____________________ EDWIN B. NEILL Board Judge We concur: _______________________ VINCENT A. LaBELLA Acting Chief Board Judge _______________________ CATHERINE B. HYATT Board Judge