GRANTED: January 17, 1996 GSBCA 11863-C-REM(11498-P) NETWORK SOLUTIONS, INC., Applicant, v. DEPARTMENT OF THE AIR FORCE, Respondent. Richard J. Conway of Dickstein, Shapiro & Morin, Washington, DC, counsel for Applicant. Clarence D. Long, III, Office of the General Counsel, Department of the Air Force, Washington, DC, counsel for Respondent. Before Board Judges HYATT, WILLIAMS, and DeGRAFF. WILLIAMS, Board Judge. Background Network Solutions, Inc. (NSI) and PRC Inc. (PRC) protested on multiple grounds the Department of the Air Force's (Air Force's) award of the local area networks for systems engineering installation and integration (LAN SEII) contract to Electronic Data Systems Corporation (EDS).[foot #] 1 Network Solutions, Inc. v. Department of the Air Force, GSBCA 11498-P, et al., 92-3 BCA 25,083, 1992 BPD 131, vacated sub nom. Electronic Data Systems Corp. v. Rice, 988 F.2d 128 (Fed. Cir. 1992) (table), 1992 WL 436547 (text). ----------- FOOTNOTE BEGINS --------- [foot #] 1 NSI and PRC filed their protests on October 7 and October 18, 1991, respectively. NSI intervened in PRC's protest, and EDS intervened in both protests. By order dated October 23, 1991, the Board consolidated the protests. ----------- FOOTNOTE ENDS ----------- The Board granted both protests, concluding that the procurement was flawed in several respects. We determined that the Air Force performed an erroneous cost-technical tradeoff analysis. In addition, we found that the Air Force did not adequately mitigate a potential conflict of interest which arose when vendors under pre-existing contracts were permitted to compete and offer products from those contracts to satisfy the instant requirements. Specifically, the Air Force devised a "sample task" for evaluation purposes which was based on and similar to an actual local area network which the awardee had installed previously. Thus, EDS possessed information which other offerors did not and through no fault of its own enjoyed an unfair competitive advantage. Because of what the Board characterized as a litany of problems, the Board revised the Air Force's delegation of procurement authority (DPA), directing the agency to terminate EDS' contract and resolicit. The Board expressly authorized the Air Force in the alternative to acquire the services at issue "in any manner consistent with statute, regulation, and its DPA." On May 29, 1992, NSI filed a motion for reimbursement of costs incurred in protesting the LAN SEII procurement. On August 17, 1992, NSI entered into a joint stipulation with the Air Force under which the parties agreed that the United States would "pay the Protester $460,000.00 from the permanent indefinite judgment fund in full and final satisfaction of Protester's costs of filing and pursuing the Protest . . . ." Joint Stipulation of NSI and Air Force 8. The parties had not reached an agreement over an additional $243,583.84 NSI sought for proposal costs, and they jointly requested a stay of all proceedings in connection with those costs. Id. 7. The stipulation further stated: Protester substantially prevailed in Network Solutions, Inc. and PRC, Inc. v. Department of the Air Force, GSBCA Nos. 11498-P, 11532-P (May 11, 1992). The Board's Decision materially altered the parties' legal relationship in a manner which Congress sought to promote in enacting the fee statute. 40 U.S.C. 759(f)(5)(C). Id. 1. The parties agreed that they would not seek reconsideration of, or appeal from, the Board's decision of the protest. Id. 9. On August 28, 1992, EDS appealed the Board's decision granting the protests of NSI and PRC to the United States Court of Appeals for the Federal Circuit (Federal Circuit). PRC intervened in the appeal. The Board informed the parties that it could not act on the cost motion while the appeal was pending. On September 14, 1992, the Air Force canceled the LAN SEII procurement by announcement in the Commerce Business Daily (CBD). The CBD announcement indicated that the project had been "redefined and incorporated into the ULANA [Unified Local Area Network Architecture] II acquisition" which had "been delayed due to a rebaselining of requirements and specifications." NSI Brief ("Vacatur of the Board's Protest Decision Does Not Preclude Network Solutions from Recovering its Protest and Bid and Proposal Preparation Costs") at 8. On October 16, 1992, PRC, an intervenor in the appeal, moved to dismiss EDS' appeal as moot, arguing that, due to the cancellation, neither EDS nor any other offeror would receive award of the LAN SEII contract. PRC further argued that while the appeal was moot, the NSI and PRC cost cases remained "alive" before this Board. The Federal Circuit found that the appeal was moot, and ruled in an unpublished order on December 2, 1992, that "[u]nder [United States v.] Munsingwear[, Inc.], 340 U.S. [36] at 39 [(1950)], the proper disposition of this appeal is vacatur of the Board's decision and remand with a direction to dismiss [PRC's] complaint."[foot #] 2 Electronic Data Systems Corp. v. Rice, No. 92-1151, 1992 WL 436547 (Fed. Cir. Dec. 2, 1992). The order further stated: (1) PRC's motion to dismiss is denied. (2) [PRC's] motion for leave to file a reply is granted. (3) The GSBCA's April 30, 1992 decision in GSBCA Nos. 11498-P and 11523-P is vacated. The case is remanded to the GSBCA with directions to dismiss [PRC's] complaint. (4) Each side shall bear its own costs. Id. On December 28, 1992, PRC filed a "Petition for Rehearing to Clarify the Court's December 2, 1992 Order, and Suggestion of Rehearing en Banc." Specifically, PRC requested that the appellate court clarify its December 2, 1992, order by adding the following footnote: "This Order is not to be taken as affecting the right of Protesters PRC Inc. and Network Solutions, Inc. to recover protest and proposal costs as prevailing parties under the Brooks Act, 40 U.S.C. 759." PRC pointed out that EDS' appeal did not address PRC's or NSI's entitlement to recover legal fees or proposal costs. By order dated January 21, 1993, the Court of Appeals summarily denied PRC's petition for rehearing to clarify the order. Electronic Data Systems Corp. v. Rice, No. 92-1511 (Fed. Cir. Jan. 21, 1993). On February 2, 1993, the Federal Circuit ----------- FOOTNOTE BEGINS --------- [foot #] 2 This order directed the Board to dismiss "EDS' complaint," but by order dated December 15, 1992, the Court corrected this clerical error and directed dismissal of "PRC's complaint." ----------- FOOTNOTE ENDS ----------- denied PRC's suggestion for rehearing en banc. Electronic Data Systems v. Rice, No. 92-1511 (Fed. Cir. Feb. 2, 1993). Upon remand, we dismissed the protests of PRC and NSI. Network Solutions, Inc. v. Department of the Air Force, GSBCA 11498-P-REM, et al., 1993 BPD 45 (Feb. 10, 1993). On July 27, 1994, the Board dismissed NSI's cost case for lack of jurisdiction, the majority reasoning: Because we may award costs only after we find a violation of law, regulation, or a delegation of procurement authority, and the Circuit's vacatur rendered our finding of such violation in this protest a nullity, we conclude that we lack a necessary predicate for awarding costs. Network Solutions, Inc. v. Department of the Air Force, GSBCA 11863-C(11498-P), 94-3 BCA 27,160, at 135,344, 1994 BPD 168, at 5. On August 26, 1994, NSI appealed the Board's decision dismissing its cost motion for lack of jurisdiction. On August 23, 1995, the United States Court of Appeals for the Federal Circuit reversed the Board's decision and remanded the case with instructions to reinstate NSI's motion for costs. Network Solutions, Inc. v. Widnall, No. 94-1480 (Fed. Cir. Aug. 23, 1995). On October 25, 1995, NSI and the Air Force filed a supplemental joint stipulation and motion for final order requesting that the Board issue an order adopting their joint stipulation to settle NSI's cost claim, stating in pertinent part: 1. On August 17, 1992 the parties entered into a Joint Stipulation . . . which is incorporated herein by reference. 2. Network Solutions substantially prevailed in Network Solutions, Inc. and PRC Inc. v. Department of the Air Force, GSBCA Nos. 11498-P, 11532-P, 92-3 BCA 25,083, vacated sub. nom., Electronic Data Systems Corp. v. Rice, 988 F.2d 128 (Fed. Cir. 1992) (table), Network Solutions, Inc. v. Sheila E. Widnall, Secretary of the Air Force, 94-1480 (Fed. Cir. August 23, 1995). The Federal Circuit reversed the Board's prior decision, ruling that the Board had jurisdiction to award Network Solutions its costs. In so ruling, the Federal Circuit cited its decision in the related case, PRC, Inc. v. Sheila E. Widnall, Secretary of the Air Force, 94-1481 (August 17, 1995), which held: "Our vacatur order should not be interpreted so as to alter the historical fact of the Board's underlying protest decision for purposes of PRC's claim for costs. Thus, there exists a 'determination' on which PRC can base a claim for protest and proposal costs. 40 U.S.C. 759(f)(5)(C)." Simply put, Network Solutions secured the benefit it sought in filing the protest. The Board's decision materially altered the parties' legal relationship in a manner which Congress sought to promote in enacting the fee statute. 40 U.S.C. 759(f)(5)(C). Further, Network Solutions' LAN SEII proposal preparation costs were rendered wasted because of the Air Force's actions described in the Board's May 11, 1992 decision and the Air Force's subsequent cancellation of the LAN SEII procurement. 3. In the Joint Stipulation, the United States agreed to pay Network Solutions $460,000.00 in full and final satisfaction of Network Solutions' claim for protest costs. The parties did not then reach an agreement in connection with the $243,583.84 Network Solutions sought for bid and proposal preparation costs. 4. Subsequent to the decision in Network Solutions, Inc. v. Department of the Air Force, No. 94-1480 (Fed. Cir. August 23, 1995), the parties have undertaken settlement discussions regarding the bid and proposal preparation costs. The United States hereby agrees that $219,225.46 of the costs claimed by Network Solutions for bid and proposal preparation costs are reasonable and should be paid to the Protester. As such, the United States hereby agrees to pay Protester $219,225.46 for bid and proposal preparation costs, as well as $460,000.00 for costs associated with filing and pursuing the protest. The United States agrees that these costs are reasonable and should be paid to Protester. 5. In summary, the United States hereby agrees to pay to the Protester $679,225.46 from the permanent indefinite judgment fund in full and final satisfaction of Network Solutions' costs of filing and pursuing its protest and bid and proposal preparation costs. 6. Given the delay of over three (3) years since the filing of Network Solutions' cost motion, because of circumstances beyond the control of the Board and the parties, the parties respectfully request that the Board expedite the issuance of a final order incorporating the joint stipulations and the issuance of certificates of finality to the parties. During a telephonic conference on November 2, 1995, the Board requested supplemental information supporting the parties' contention that NSI's proposal preparation costs had been wasted. On December 13, 1995, NSI filed the declaration of Edward J. Kusbel in support of its claim. In this declaration, Mr. Kusbel explained that NSI did not submit a proposal as a prime contractor for ULANA II but rather was a subcontractor to EDS for systems engineering support. Mr. Kusbel further testified in his declaration: 8. The LAN SEII and ULANA II solicitations, including the statements of work and contract line item numbers, were radically different. The LAN SEII procurement focused upon local area network ("LAN") services. The ULANA II procurement, on the other hand, focused upon network architecture products, including hardware and software products, as well as services. 9. The LAN SEII procurement included a sample task, the proposed solution to which gave rise to the majority of the Company's proposal efforts. The ULANA II procurement did not include a sample task, and the LAN SEII sample task effort was otherwise not transferable to the ULANA II proposal effort. Because the ULANA II procurement did not include a sample task, Network Solutions' proposal efforts for the same task were completely wasted. 10. The technical efforts for the procurements were also different because of substantial changes in local area network and wide area network ("WAN") technology. Networking components and technologies had substantially evolved during the nearly 4-year period between the dates the solicitations were issued. For example, during that time period, asynchronous transfer mode technologies and 100 Mbps copper media had emerged. These technologies permitted the focus of LANs and WANs to change from being data oriented to supporting full multi-media applications. In addition, new network software operating systems had also been developed. For example, when the LAN SEII solicitation was issued, Novell Network, Windows NT, and Banyon Vines software solutions were either not available or were not compliant with the LAN SEII solicitation's specifications. These changes in technologies radically changed the engineering focus required to respond to the ULANA II solicitation. 11. Simply put, Network Solutions could not use its three year old LAN SEII proposal in preparing its input to the ULANA II proposal. The LAN SEII proposal efforts were wasted. Declaration of Edward J. Kusbel, Director of Field Operations, Netcom Solutions International, Inc. (formerly NSI's Project Manager) (Dec. 13, 1995) 8-11. Decision We have reviewed the documentation submitted by NSI in support of its claimed protest costs and find the agreed upon amount to be reasonable and reimbursable, given the nature of the allegations, the complexity of the issues, and the length of the proceedings. In order to award proposal preparation costs, this Board must find that a violation of statute, regulation, or a delegation of procurement authority occurred, that protester's proposal preparation costs were wasted or rendered unnecessary by virtue of the violation, and that the costs claimed are accurate and reasonable. Recognition Equipment Inc., GSBCA 9408-C(9363-P), 89-1 BCA 21,281, at 107,351, 1988 BPD 228, at 3. In the instant case, these requirements have been met as evidenced by the declaration of Mr. Kusbel. Applicant's motion for costs is GRANTED. NSI is entitled to recover its costs of pursuing the protest in the amount of $679,225.46. This award is to 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). MARY ELLEN COSTER WILLIAMS Board Judge We concur: ____________________________ _____________________________ CATHERINE B. HYATT MARTHA H. DeGRAFF Board Judge Board Judge