THIS OPINION WAS INITIALLY ISSUED UNDER PROTECTIVE ORDER AND IS BEING RELEASED TO THE PUBLIC IN ITS ENTIRETY ON AUGUST 9, 1994 DENIED: July 27, 1994 GSBCA 12680-C(12605-P) INFORMATION & TELECOMMUNICATIONS STRATEGIES JOINT VENTURE, Protester, v. DEPARTMENT OF THE NAVY, Respondent. Kenneth S. Kramer, Douglas W. Baruch, and Pamela A. Roth of Fried, Frank, Harris, Shriver & Jacobson, Washington, DC, counsel for Protester. Ellen D. Washington and M. Elizabeth Hancock, Information Technology Acquisition Center, Department of the Navy, Washington, DC, counsel for Respondent. Before Board Judges HENDLEY, VERGILIO, and GOODMAN. GOODMAN, Board Judge. Background This protest was filed by Information & Telecommunications Strategies Joint Venture (ITS or protester) on September 30, 1993, alleging that respondent, the Department of the Navy (Navy or respondent), improperly awarded a contract to intervenor Computer Data Systems, Inc. (CDSI). On October 27, 1993, ITS and the Navy filed a Joint Motion to Dismiss which read, in relevant part: 3. The Navy has reviewed all filings related to the issue of the standing of Protester, ITS, and the substantive issues raised. The Navy now stipulates that protester is a "prevailing party" for purposes of an award of costs pursuant to 40 U.S.C. 759 and Rules 35-36 of the Rules of the Board. The Navy further stipulates that there were irregularities in the Navy's evaluation of ITS' proposal, as alleged in Count One [of the protest complaint] and that these irregularities resulted in a materially prejudicial error in the evaluation of ITS' proposal. The Navy also concedes that ITS had validly extended its proposal, as alleged in Count Six. The Navy concedes no other Counts in the protest. 4. In recognition thereof, the Navy, CDSI, and ITS have agreed to certain remedial action which has been and will be effected pursuant to an agreement between ITS and Computer Data Systems, Inc. . . . and the Navy's concurrence where required. 5. Upon implementation of the remedial action noted in paragraph 4 above, and in consideration of its recovery of the costs noted in paragraph 3 above, ITS agrees that its protest should be dismissed without prejudice, subject to reinstatement upon failure of the Navy to provide necessary concurrences within 10 days of the signing of this settlement. The Navy agrees that it will not challenge or oppose ITS' claim for costs incurred in pursuing this protest provided only that those costs are of the type allowable in Board decisions. The Board will determine the reasonableness of the costs. Subject to the foregoing, this dismissal is transformed into a dismissal with prejudice upon the Navy's signing of said concurrences and the submission of Navy responses to cost motions under Rule 35, that date being the date of the latest of these two events. Joint Motion to Dismiss at 1-2. No details of the remedial action were offered to the Board. The Board dismissed the protest without prejudice, noting that the parties had agreed to remedial action, and stated further that the dismissal would convert to a dismissal with prejudice 120 days from the date of the order unless reinstated by a party. Information & Telecommunications Strategies Joint Venture v. Department of the Navy, GSBCA 12605-P, 1993 BPD 315 (Oct. 29, 1993). On November 22, 1993, protester filed its motion for payment of protest costs pursuant to Rule 35 in the amount of $87,444.93. This amount represents $83,627 for outside attorney fees (including fees for the services of a paralegal), and $3,817.93 for "ancillary services" (including courier service, document reproduction, telecopier, secretarial overtime, postage, and computerized legal research). By letter dated December 9, 1993, respondent advised the Board: Upon review and analysis of the motion for recovery of costs submitted in the above-referenced protest action, the Navy hereby advises the Board that it does not oppose ITS' cost application. By order dated May 19, 1994, the Board reopened the record of this case and directed the parties as follows: The parties' joint motion to dismiss the protest dated October 27, 1993, refers to "remedial action" agreed to by respondent, protester, and intervenor. The parties are directed to supplement the record . . . with evidence sufficient for the Board to determine the terms and conditions of the remedial action, and any other evidence which would support 1) the parties' stipulation that protester is a "prevailing party" for purposes of award of costs pursuant to 40 U.S.C. 759 and the rules of this Board, and 2) that protester has derived some benefit as a result of the protest. See, e.g., Bedford Computer Corp., GSBCA 9837-C(9742-P), 1989 BPD 121. Protester and respondent filed a joint stipulation in response to the Board's order. The stipulation stated, in pertinent part: The "remedial action" referred to in paragraph 4 of the parties' October 27, 1993 "Joint Motion to Dismiss" took the form of an agreement between ITS and intervenor Computer Data Systems, Inc. (CDSI) pursuant to which ITS received a substantial subcontract under the contract awarded by the Navy to CDSI. The Navy concurred with and consented to that agreement and the resultant subcontract. It was the intent and belief of the Navy and ITS that said agreement and the resultant subcontract are a substantial benefit that accrued to ITS as a result of the protest; and hence the parties renew their stipulation that ITS is a "prevailing party." Joint Stipulation at 1-2. Discussion Under Board Rule 35[foot #] 1 and 40 U.S.C. 759(f)(5)(C) (1988), the Board may award protest costs, including reasonable attorney fees, to an "appropriate interested party" when an agency has violated a statute, regulation, or the conditions of a delegation of procurement authority. Under the statute, it is the Board which is authorized to award costs and exercise discretion to determine both if a party is "appropriate" and entitled to payment of costs from the judgment fund and if the amount requested is "reasonable." An "appropriate interested party" is 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. Protester crosses the threshold to a fee award of some kind if it satisfies the "significant issue" or "some benefit" standard. Under that standard, the litigant "must be able to 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." Bedford Computer Corp., GSBCA 9837-C(9742-P), 89-2 BCA 21,827, 1989 BPD 121. Apparently attempting to show that protester has prevailed on "significant issues," respondent has stipulated that protester was a "prevailing party," and "that there were irregularities in the Navy's evaluation of ITS' proposal as alleged in Count One" of the protest complaint which respondent contends "resulted in a materially prejudicial error in the evaluation of ITS' proposal."[foot #] 2 Respondent has also conceded that ITS had validly extended its proposal, as alleged in Count Six.[foot #] 3 While characterizing these irregularities as resulting in material prejudicial error, respondent offers no assessment of the outcome of the procurement had these errors not occurred, nor has it taken action to remedy these errors. We cannot determine what affect these irregularities or resulting errors had upon the competition in the procurement. ----------- FOOTNOTE BEGINS --------- [foot #] 1 58 Fed. Reg. 69,246 (1993) (to be codified at 48 CFR 6101.35). [foot #] 2 Count One of the protest complaint alleged that the Navy improperly eliminated three of the five corporate experience summaries submitted by protester in its proposal, resulting in a severe downgrading of ITS' evaluated score on the most important and third most technical factor. [foot #] 3 The protest complaint alleges that the Navy had eliminated ITS from the competitive range because ITS had failed to extend its technical proposal along with its cost proposal. ----------- FOOTNOTE ENDS ----------- After submission of protester's motion for costs, and respondent's response thereto, the Board reopened the record allowing the parties the opportunity to submit additional evidence to support the parties' stipulation that protester is a "prevailing party" and that protester had derived some benefit as a result of the protest. Protester and respondent then filed a joint stipulation, in which they informed the Board that: The "remedial action" referred to [in the motion to dismiss is an] agreement between [the protester] and Intervenor . . . pursuant to which ITS received a substantial subcontract under the contract awarded by the Navy to CDSI. It was and is the intent and belief of the Navy and ITS that said agreement and the resultant subcontract are a substantial benefit that accrued to ITS as a result of the protest; and hence the parties renew their stipulation that ITS is a "prevailing party." Joint Stipulation at 1-2. Respondent did not alter its position to provide protester some competitive benefit providing for full and open competition as a result of the protest, nor has respondent altered its actions under the challenged procurement. While respondent has admitted to "irregularities," the award to intervenor remains in place. Respondent has consented to the protester's subcontract with the awardee, agreed not to oppose protester's motion for costs, allowed the procurement to continue, and is willing for protester to be paid its costs from the indefinite judgment fund rather than its own funds. In a cost proceeding, a party bears the burden of demonstrating its entitlement to recovery. Despite the parties' "intent and belief" that the subcontract between the awardee and the protester is a "substantial benefit that accrued to ITS as a result of the protest," the parties offer no explanation justifying the continued propriety of the protested award in light of the "irregularities" which the parties contend resulted in materially prejudicial error in the evaluation of protester's proposal. The record does not demonstrate that protester has prevailed on significant issues, or that protester has received from respondent a substantial benefit which materially alters the protester's competitive position. Based upon the record, we cannot conclude that ITS is an appropriate prevailing party for purposes of an award of costs pursuant to 40 U.S.C. 759 and Board Rules 35-36. Decision Protester's motion for costs is DENIED. __________________________ ALLAN H. GOODMAN Board Judge We concur: __________________________ __________________________ JAMES W. HENDLEY JOSEPH A. VERGILIO Board Judge Board Judge