________________________________ GRANTED: June 15, 1993 ________________________________ GSBCA 11907-C(11745-P) WESTINGHOUSE ELECTRIC CORPORATION, Protester, v. DEPARTMENT OF TRANSPORTATION, and DEPARTMENT OF DEFENSE, Respondents. Rand L. Allen, Philip J. Davis, Paul F. Khoury, and Eric W. DeSilva of Wiley, Rein & Fielding, Washington, DC, counsel for Protester. Richard J. McCarthy, John R. McCaw, Jr., and Anthony L. Washington, Office of the Chief Counsel, Federal Aviation Administration, Washington, DC, counsel for Respondent Department of Transportation. Roger B. Sabin and Captain Richard B. Wingate, Office of General Counsel, Defense Information Systems Agency, Arlington, VA, and Clifton M. Hasegawa, Virginia Farrier, and Douglas G. White, Defense Commercial Communications Office, Defense Information Systems Agency, Scott Air Force Base, IL, counsel for Respondent Department of Defense. Before Board Judges NEILL, HYATT, and WILLIAMS. HYATT, Board Judge. Pursuant to Rule 35, protester, Westinghouse Electric Corporation (herein referred to as Westinghouse or WEC), has moved for the recovery of its costs of pursuing a successful protest. Respondent, the Federal Aviation Administration (FAA),[foot #] 1 initially opposed the award in part, challenging Westinghouse's entitlement to certain portions of the costs claimed. Following settlement efforts by the parties, including the conduct of alternative dispute resolution with the Board, the parties have reached an agreement on the amount of costs which should be awarded to Westinghouse. The joint settlement agreement was filed with the Board on June 10, 1993. Based on the settlement agreement and our independent review of the supporting documentation submitted by Westinghouse with its motion, we grant its motion for costs in the revised amount agreed upon by the parties, which is $730,323.78. Background On May 29, 1992, the Board granted the consolidated protests of Denro, Inc. and Westinghouse. These protests challenged the exclusion of these companies from the competitive range of an FAA procurement for voiceband switching boxes. In its decision on the merits of the protests, the Board held, inter alia, that the operational capability demonstrations (OCDs) involving Denro and Westinghouse were improperly conducted and that, thereafter, their proposals were unfairly evaluated as to the ability of their products to meet the Government's requirements. Denro, Inc. v. Department of Transportation, GSBCA 11736-P, et al., 93-1 BCA 25,315, 1992 BPD 196. Thereafter, Westinghouse timely filed its motion to recover its costs of pursuing the protest, and also sought to recover those portions of its bid and proposal preparation costs that it claimed were wasted as a result of the Government's violations of statute and regulation in the conduct of the OCDs, which contributed to the improper elimination of the Westinghouse proposal from the competitive range. In its initial motion, filed on June 29, 1992, Westinghouse itemized $331,339.59 in attorney fees and expenses incurred in pursuing the protest, $173,593.16 in attorney fees incurred in pursuing an initial protest involving similar issues that was settled, $124,909.81 for expert fees and in-house personnel costs, and $801,508.50 in proposal preparation costs. In appendices to its motion, Westinghouse supplied detailed documentation supporting the costs claimed. In supplemental motions updating its initial cost application, Westinghouse documented an additional $19,418.99 in attorney fees and disbursements. ----------- FOOTNOTE BEGINS --------- [foot #] 1 This procurement was conducted by the Defense Information Systems Agency, Defense Commercial Communications Office (DECCO), on behalf of the FAA, a component of the Department of Transportation. The FAA conducted all proceedings pertinent to this cost case, however, and signed the settlement agreement filed with the Board on June 10, 1993. ----------- FOOTNOTE ENDS ----------- Westinghouse and the FAA commenced negotiations to settle their disagreements concerning entitlement to the amounts claimed. After reaching an impasse, principally as to the extent to which Westinghouse should recover proposal preparation costs, the parties requested that the presiding judge participate in an alternative dispute resolution (ADR) process to assist them in reaching an agreement. This ADR session, which consisted primarily of presentation of argument by counsel, with feedback from the presiding judge, was conducted on February 11, 1993. After completing negotiations, on June 10, 1993, the parties filed a joint settlement agreement, which provided in pertinent part: 7. On June 29, 1992, WEC through counsel, made its application for the award of protest costs, including reasonable attorney's fees, and proposal preparation costs, and proposal preparation OCD costs. The application provided supporting documentation for each of these claimed costs. The parties have entered into negotiations to resolve amicably, and without further litigation, the amount of costs and fees to be provided to WEC by the Government. These negotiations have included an informal hearing before the Board, held on February 11, 1992. 7. WEC, through its attorney of record, has offered to settle this case in exchange for payment by the United States of $730,323.78 (seven hundred thirty thousand, three hundred twenty-three dollars and seventy-eight cents). ($409,839.59 of this amount is to reimburse WEC for its attorney's fees and costs pursuant to 40 U.S.C. 759(f)(5)(C); $321,484.19 of this amount represents proposal preparation/OCD costs.) The Government has reviewed the supporting documentation provided by WEC and believes that these costs reasonably reflect the amount to which WEC is entitled. Discussion As the prevailing party in its protest, Westinghouse may recover the costs of (i) filing and pursuing the protest, including reasonable attorney fees, and (ii) proposal preparation, as applicable. 40 U.S.C. 759 (f)(5)(C) (1988). The recovery of costs of pursuing the protest is limited by the full Board decision in Sterling Federal Systems, Inc. v. National Aeronautics and Space Administration, GSBCA 10000-C(9835-P), 92-3 BCA 25,118, 1992 BPD 141, which held that the Board is without authority to award the expenses of expert witness fees and in-house personnel in protest cases. The Board ordinarily does not award proposal preparation costs, however, "unless the Government has by violating statute or regulation caused the successful protester to incur such costs unnecessarily." Xerox Corp. v. Government Printing Office, GSBCA 12408-C(12322-P), slip op. at 5 (May 14, 1993) (quoting Recognition Equipment, Inc., GSBCA 9408-C(9363-P), 89-1 BCA 21,281, at 107,351, 1988 BPD 228, at 3). In Xerox, we explained that in addition to the requisite violation of regulation or statute, the Board must also find that the claimed proposal preparation costs were wasted or rendered unnecessary as a result of the violation, and that the claimed costs are accurate and reasonable. Id. The settlement agreement of the parties indicates that $409,839.59 of the agreed-to amount is attributable to attorney fees and expenses. A review of the Westinghouse application and supporting documentation establishes that this amount was incurred, is reasonable, and does not include recovery of any expenses, such as expert fees and in-house personnel costs, that the Board found could not be awarded in Sterling Federal. In addition, $321,484.19 is allocated to wasted proposal preparation costs. Westinghouse documented $801,508.50 in proposal preparation costs that it initially claimed were wasted.[foot #] 2 Given the need to conduct a second round of OCDs, the reduced amount of proposal preparation costs agreed to by the parties may reasonably be deemed to have been wasted by Westinghouse in having performed the first OCD. Decision Protester's motion, as amended by the settlement agreement of the parties, for the award of attorney fees and expenses and proposal preparation costs in the amount of $730,323.78 is GRANTED. 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). _____________________________ CATHERINE B. HYATT Board Judge ----------- FOOTNOTE BEGINS --------- [foot #] 2 The OCD was an extensive demonstration exercise, involving, inter alia, the assemblage of a roomful of interrelated equipment comprising the integrated communications switching system (ICSS). See Denro, 93-1 BCA at 126,128 n.16, ___ _____ 1992 BPD 196, at 34 n.16. Westinghouse has documented various costs associated with preparing for and performing the OCD, including planning, configuring the system, purchasing parts, setting up the system in the demonstration area, and conducting dry runs. ----------- FOOTNOTE ENDS ----------- We concur: ___________________________ _____________________________ EDWIN B. NEILL MARY ELLEN COSTER WILLIAMS Board Judge Board Judge