__________________________________ GRANTED IN PART: May 31, 1994 __________________________________ GSBCA 12423-C(11523-P) CACI, INC., Protester, v. DEPARTMENT OF THE ARMY, Respondent. Peter M. Kilcullen and Ronald E. Gilbertson of Kilcullen, Wilson & Kilcullen, Washington, DC, counsel for Protester. Craig E. Hodge and Major William R. Medsger, Army Materiel Command, Department of the Army, Alexandria, VA, counsel for Respondent. Before Board Judges NEILL, HYATT, and WILLIAMS.[foot #] 1 HYATT, Board Judge. Pursuant to Rule 35 of the Board's Rules of Procedure, CACI, Inc. has moved to recover its costs of pursuing the underlying protest and its costs of preparing and submitting a proposal in response to the solicitation. The amount claimed in attorney fees and expenses is $95,216.08 and the amount claimed for proposal preparation costs is $59,515.71. Background The underlying protest, challenging an award by the Department of the Army of a contract to VSE Corporation, was ----------- FOOTNOTE BEGINS --------- [foot #] 1 Board Judge Vincent A. LaBella, who was on the panel in this case, died on April 11, 1994. A random selection from the remaining judges resulted in his replacement by Board Judge Williams. ----------- FOOTNOTE ENDS ----------- filed by CACI on October 15, 1991. CACI's protest as filed raised four counts: (I) the Army failed to obtain the requisite delegation of procurement authority (DPA); (II) the Army failed to conduct adequate discussions; (III) VSE was afforded an improper competitive advantage in the procurement; and (IV) the Army's manual evaluation of the mandatory hypothetical task was improper. Protester's motion for summary relief on count I, alleging failure to obtain the requisite delegation of procurement authority, was granted prior to the hearing on the merits of the protest. CACI, Inc. - Federal, GSBCA 11523-P, 92-1 BCA 24,590, 1991 BPD 309. Count III was voluntarily withdrawn prior to the hearing and, after holding a hearing, the Board denied the remaining two counts. CACI, Inc. - Federal, GSBCA 11523-P, 92-1 BCA 24,702, 1992 BPD 4 (1991). The Board's decision, granting in part CACI's motion for summary relief, held that the agency had violated statute and regulation in failing to obtain a delegation of procurement authority from the Administrator of the General Services Administration. Following its established precedent, the Board granted the protest on this ground, but also concluded that the agency could cure this matter administratively by seeking a DPA from GSA forthwith, which it ordered the Army to do. In its motion, CACI did not argue that the procurement was void as a consequence of the agency's failure to obtain the requisite DPA, but, rather, merely sought to obtain a suspension of the procurement pending issuance of a DPA.[foot #] 2 The Board declined to impose the suspension requested by CACI for two reasons: 1) the Army promised to seek a DPA promptly, and 2) the Army demonstrated that suspension of contract performance would be disruptive and detrimental to the agency's mission. 92-1 BCA at 122,691, 1991 BPD 309, at 4-5. The Board's decision on the merits denied the remaining counts of the protest and affirmed its position on the DPA matter. Thus, although the Board granted this count of the protest, it provided no substantive relief because it declined to suspend performance until the DPA was obtained. CACI appealed the Board's decisions. In its decision, the United States Court of Appeals for the Federal Circuit held that the Board had improperly permitted the agency to proceed in spite of the admitted failure to obtain a DPA. The failure to obtain a DPA was a fatal defect; the Army lacked the authority to award the contract and this was a deviation from regulation that the Board had no power to ratify or otherwise cure. The decision addressed only this issue -- the Board's findings and legal conclusions as to the independent counts of protest involving improprieties in the evaluation process and conduct of discussions were not discussed. CACI, Inc. v. Stone, 990 F.2d ----------- FOOTNOTE BEGINS --------- [foot #] 2 CACI had not protested sufficiently early to be eligible to seek a suspension of the procurement pursuant to 40 U.S.C. 759(f)(3) (1988). ----------- FOOTNOTE ENDS ----------- 1233 (Fed. Cir. 1993). Following issuance of this decision, CACI filed a motion to recover its costs of pursuing the protest. CACI's motion documents a total of $95,216.08 in attorney fees and expenses. This amount includes all of the attorney time and out-of-pocket expenses associated with the pursuit of this protest, including some $13,739.50 in legal fees incurred in pursuing the appeal to the Federal Circuit and $9,309 in legal fees attributable to preparation and support of the cost motion.[foot #] 3 In addition, CACI seeks to recover $59,515.71 in proposal preparation costs. Discussion When an agency has violated statute, regulation, or the conditions of a delegation of procurement authority, the Board may award an "appropriate interested party" the costs of "filing and pursuing the protest, including reasonable attorney's fees, and . . . bid and proposal preparation." 40 U.S.C. 759(f)(5)(C) (1988). An "appropriate interested party" has been defined as a "prevailing party" or "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 121, at 3; see also Julie Research Laboratories, Inc., GSBCA 9693-C(9474-P), 91-1 BCA 23,389, 1990 BPD 345. Attorney Fees and Out-of-Pocket Expenses CACI, as a result of its appeal, has fully succeeded with respect to the count that challenged the agency's failure to obtain a DPA. In opposing CACI's motion, the Army, however, objects that CACI should not be permitted to recover even the costs expressly attributable to this count. Respondent maintains that its concession to the Board that a specific DPA was required was in fact a "mistake of law" because both the Army and GSA ultimately determined that the requested DPA was not mandated under then-applicable regulations. Although the Federal Circuit chose not to consider this point, respondent contends that CACI's request for costs reopens the record at the Board and permits us to rule on this issue in the context of an application for costs. The Board cannot reconsider this issue, however. As the Army recognizes, the Federal Circuit expressly declined to entertain this argument, stating that it lacked the factual predicate necessary to rule on the issue of law raised. The case was not remanded to the Board with instructions to reopen the ----------- FOOTNOTE BEGINS --------- [foot #] 3 CACI did not segregate its costs by category; it was possible, however, to derive the amounts attributable to pursuit of the appeal and filing of the cost motion by reviewing the dates and descriptions for services rendered. ----------- FOOTNOTE ENDS ----------- record and make factual determinations; rather, the Board's decision was reversed outright with respect to the DPA issue. This is dispositive; the matter cannot be relitigated or otherwise reviewed in the context of this cost proceeding. In light of the Federal Circuit's decision, we conclude that CACI is an appropriate interested party eligible to recover costs incurred in pursuing the protest at least as to the issue concerning the agency's failure to procure a DPA. This brings us to the next point -- CACI did not prevail on the other counts raised in the protest, nor were the Board's rulings on these issues reversed on appeal. Thus, we must decide whether CACI's recovery of its costs should be limited to those attributable solely to the DPA issue or should include all costs incurred in the proceeding. CACI argues that it is entitled to recover all costs associated with its protest because the intent of the Competition in Contracting Act's (CICA's) cost-shifting provision is to make the prevailing protester "whole." United States v. Compusearch Software Systems, 936 F.2d 564, 566 (Fed. Cir. 1991). CACI additionally points out that it was fully successful and "obtained excellent results," see Hensley v. Eckerhart, 461 U.S. 424, 435 (1983), including the termination of VSE's contract. Moreover, according to CACI, had the Board "initially granted the relief finally recognized by the Federal Circuit, the secondary issues raised in the protest would have been rendered moot and the costs relating to them unnecessary." Protester's Reply to the Army's Response to the Motion for Award of Protest Costs and Proposal Preparation Costs at 4 n.1. As to this latter point, had CACI ever sought from the Board the relief it obtained from the Circuit, nullification of the contract awarded to its competitor, this argument might have more persuasive effect. In fact, in its motion for summary relief with respect to the DPA count, CACI never argued that the award was void nor did it seek the relief ultimately granted by the Federal Circuit. CACI requested only that the Board suspend performance under the new contract until such time as the Army had obtained a DPA. The Board declined to suspend performance of the contract because the Army made a convincing showing that such a suspension would be unduly disruptive of its mission. Even had the Board fully granted the relief actually requested by CACI at that time, CACI would have incurred the costs of pursuing the unsuccessful counts. In a recent decision, our appellate authority addressed the "make whole" policy underlying CICA's cost-shifting provision in the context of the need to balance the competing goals of encouraging vindication of legal rights while confining costs to those appropriately incurred by the litigant in order to prevail. Sterling Federal Systems, Inc. v. Goldin, 16 F.3d 1177, 1187 (Fed. Cir. 1994). In Sterling Federal, the Court recognized that CICA places considerable discretion in the Board to determine the parameters of costs to be awarded to successful protesters. Where the Board has initiated a particular practice in this area, the Board should not depart from that practice without justifying a change or demonstrating that the departure is appropriate because of distinguishing circumstances. Id. at 1188. We recognize that partial award of costs may not be warranted where prevailing parties only succeed on some of the contentions raised in pursuit of interrelated claims and legal theories arising from a common core of factual matters. See Grumman Data Systems Corp. v. Department of the Air Force, GSBCA 11799-C(11635-P), 93-2 BCA 75,773, 1993 BPD 16. At the same time, "[w]here . . . claims are based on different facts and legal theories, and the [applicant] has prevailed on only some of those claims, . . . 'these unrelated claims [should] be treated as if they had been raised in separate lawsuits, and therefore no fee may be awarded for services on the unsuccessful claim.'" Texas State Teachers Ass'n v. Garland Independent School District, 489 U.S. 782, 789 (1989) (quoting Hensley v. Eckerhart, 461 U.S. at 435.) Relying on this rationale, the Board has, in deciding cost applications, recognized that where there are claims that are "distinct in all respects from [the] successful claims, the hours spent on [the] unsuccessful claim[s] should be excluded in considering the amount of a reasonable fee." RMTC Systems, Inc. v. Nuclear Regulatory Commission, GSBCA 11893-C(11734-P), 93-3 BCA 26,147, 1993 BPD 216, modified on reconsideration, 94-2 BCA 26,670, 1994 BPD 13 (quoting Hensley v. Eckerhart, 461 U.S. at 440); accord Storage Technology Corp., GSBCA 9939-C(9793-P), 91-3 BCA 23,041, 1990 BPD 150; Digital Equipment Corp., GSBCA 9285- C(9131-P), 89-3 BCA 22,181, 1989 BPD 248. In this case, the non-DPA issues were significant and completely distinct in all respects from the count on which CACI prevailed. The evidence needed to prove the DPA count in the summary relief motion was completely independent and unrelated to evidence presented at the subsequent hearing with respect to discussions and evaluations of proposals. Thus, we do not believe it would be appropriate to award the costs associated with the pursuit of these issues. Since CACI's motion does not explicitly segregate the time spent on the DPA count from time devoted to matters for which CACI is not an appropriate prevailing party, we have reviewed its supporting documentation and derived what we consider to be a fair approximation of the amounts that were incurred in pursuing the DPA count before the Board.[foot #] 4 The fee award attempts to incorporate as well costs that may have been incurred in activities that "traverse both winning and losing issues." Digital Equipment Corp., 89-3 BCA at 111,614, 1989 BPD 248, at 3. ----------- FOOTNOTE BEGINS --------- [foot #] 4 Since the DPA issue was largely resolved in the early stages of the litigation, on a motion for summary relief, it is relatively straightforward, from a chronological standpoint, to derive an appropriate estimate of the fees that should be awarded. ----------- FOOTNOTE ENDS ----------- CACI had two attorneys assigned to the protest. The more senior attorney on the case expended considerably fewer hours. The rates charged by these attorneys are within the range considered appropriate for this area. See SMS Data Products Group, Inc. v. Department of the Treasury, GSBCA 10783-C(10644- P)-REIN, 93-1 BCA 25,427, 1992 BPD 238. Based on our review of the documentation supplied by CACI in its application, we conclude that 15.5 hours billed by the more senior attorney and 81 hours billed by the other attorney, together with two and one- half hours of law clerk and paralegal time should be recoverable under the rationale explained above. This results in a total award of outside attorney fees in the amount of $16,085. Similarly, the documented costs of in-house counsel are also partially recoverable. Applying the same approach, we award the total sum of $9,432.50[foot #] 5, attributable to efforts of in-house counsel that may reasonably be deemed to have been devoted specifically to the summary relief motion or to general protest matters. Out-of-pocket disbursements totalling $3,203.23, for such items as photocopying, legal database research, transcripts, and courier services, were incurred in connection with the protest. Again, we cannot conclude, from reviewing the documentation received, that all or most of these expenses "traverse" the winning and losing issues. Thus, we deem it appropriate to award some part, but not all, of the amounts claimed. Since it is not clear how costs were divided, we award twenty-six percent, or $833, which approximates the percentage of outside attorney fees awarded out of the overall amount claimed for pursuing the protest at the Board. We award in full the amounts expended in pursuing the cost motion. As we have previously recognized, an appropriate prevailing party is entitled to recover the expenses incurred in preparing, filing, and defending a cost motion before the Board. Grumman Data Systems Corp. v. Department of the Air Force, GSBCA 11799-C(11635-P), 93-2 BCA 75,773, 1993 BPD 16. The Board does not automatically reduce the amount of expenses awarded solely because protester did not recover a full award of fees in connection with the underlying protest. See RMTC Systems, Inc. v. Nuclear Regulatory Commission, GSBCA 11893-C-R(11734-P), 94-2 BCA 26,670, 1994 BPD 13; International Data Products Corp. v. Department of Justice, GSBCA 10403-C(10302-P), 93-2 BCA 25,606, 1992 BPD 328; Digital Equipment Corp., GSBCA 9285-C(9131-P), 89-3 BCA 22,181, 1989 BPD 248. Rather, the test is whether the hours expended by protester are reasonable and not redundant, excessive, or otherwise unnecessary. See Aspect Telecommunications v. Department of the Treasury, GSBCA 11399- C(11250-P), 93-1 BCA 25,423, 1992 BPD 245. The fees and ----------- FOOTNOTE BEGINS --------- [foot #] 5 This includes recovery of a total of 50 hours expended by one of the in-house attorneys, and 15 hours expended by the other. ----------- FOOTNOTE ENDS ----------- expenses charged by protester in preparing the cost motion and responding to the Government's arguments amount to $9,309. This amount is reasonable, and we do not detect any redundant or excessive charges. Protester is entitled to recover the entire amount. The Army also objects to a Board award to CACI of the legal fees incurred in pursuing the appeal at the Federal Circuit. The Army points out that in Sysorex Information Systems v. Department of the Treasury, GSBCA 10781-C(10642-P-REIN), 93-1 BCA 25,428, 1992 BPD 235, the Board reversed its prior practice of awarding costs incurred in appellate litigation of protests, stating that "[w]e no longer consider the quoted statutory provision [40 U.S.C. 759(f)(5)(C)] to be sufficient authority for us to award costs for pursuing a protest beyond the Board level." 93-1 BCA at 126,653, 1992 BPD 235, at 7. The Board reached this conclusion after reviewing the rationale of two recent decisions issued by the Federal Circuit -- Grubka v. Department of the Treasury, 924 F.2d 1039 (Fed. Cir. 1991) and Phillips v. General Services Administration, 924 F.2d 1577 (Fed. Cir. 1991). Those cases, construing a statute that, like CICA, empowered the Merit Systems Protection Board (MSPB), an administrative tribunal, to award attorney fees to a successful litigant, held that the MSPB was not authorized to award fees for legal services rendered in connection with judicial review of that tribunal's decision. CACI argues that Sysorex is distinguishable, noting that in Sysorex, the protester had succeeded at the Board and thus incurred costs at the appellate level in defending its protest victory rather than continuing to pursue its protest. In contrast, CACI was forced to appeal in order to achieve success. This distinction is not decisive on this point. The Grubka and Phillips decisions do not in any way suggest that administrative tribunals are permitted to include fees for appellate legal services when such fees are incurred to overturn the tribunal's decision rather than to defend it. The cases, rather, seem to suggest that absent express authorization to award appellate level legal fees, an administrative tribunal may not do so.[foot #] 6 The Board lacks authority to award these fees to CACI. ----------- FOOTNOTE BEGINS --------- [foot #] 6 CACI cites us to Perkins v. Standard Oil Co. of ______________________________ California, 399 U.S. 222 (1970), as support for its contention __________ that the fees incurred at the Federal Circuit should be recoverable here. In that case, the Supreme Court found that the United States District Court, which had held that it was not authorized to award fees for appellate stages of litigation under the Clayton Act, was in error. There, however, the litigation and fee award involved private parties. As the Board pointed out in Sysorex, it is constrained by the fact that CICA, in _______ permitting cost awards to be assessed against the Government, constitutes a waiver of sovereign immunity and as such must be construed strictly. ----------- FOOTNOTE ENDS ----------- Proposal Preparation Costs Finally, CACI claims $59,515.71, for costs of preparing the proposal submitted to the Army in connection with this procurement. The Board ordinarily does not award proposal preparation costs "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), 93-3 BCA 26,227, at 130,513, 1993 BPD 221, at 5 (quoting Recognition Equipment Inc., GSBCA 9408-C(9363-P), 89-1 BCA 21,281, at 107,351, 1988 BPD 228, at 3); Bedford Computer Corp., GSBCA 9837-C(9742-P), 89-2 BCA 21,827, at 109,814, 1989 BPD 121, at 8. We agree, based on the Federal Circuit's decision that the solicitation was not authorized by statute and thus the contract award to VSE was void, that CACI incurred proposal preparation costs unnecessarily as a consequence of the agency's violation of statute. Although what remains of the requirement presumably will be recompeted, given the passage of time involved in pursuing the appeal and the partial performance of the contract for which CACI had competed, this will not constitute a "meaningful opportunity to compete further for the contract at issue." 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. Xerox, 93-3 BCA at 130,513, 1993 BPD 221, at 5. Upon review of the documentation submitted by CACI, we find these costs to be properly supported and reasonable. CACI is entitled to recover this amount. Decision For the reasons stated above, protester's motion is GRANTED IN PART. Protester is awarded $35,659.50 in attorney fees and expenses and $59,515.71 in proposal preparation costs. 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 We concur: _________________________ ___________________________ EDWIN B. NEILL MARY ELLEN COSTER WILLIAMS Board Judge Board Judge