PROTEST COSTS GRANTED IN PART: March 6, 1996 GSBCA 13316-C(13107-P) AT&T CORP., NETWORK SYSTEMS DIVISION, Applicant, v. DEPARTMENT OF THE AIR FORCE, Respondent. Francis J. O'Toole, David Lewis, Howard Stanislawski, and Joseph C. Port, Jr., of Sidley & Austin, Washington, DC; and Nathaniel Friends and Steven W. DeGeorge of AT&T, Silver Spring, MD, counsel for Applicant. Clarence D. Long, III, Office of General Counsel, Department of the Air Force, Washington, DC, counsel for Respondent. Before Board Judges DANIELS (Chairman), BORWICK, and GOODMAN. DANIELS, Board Judge. AT&T Corp., Network Systems Division (AT&T) has applied for an award of costs incurred in filing and pursuing a protest which was granted by the Board. AT&T seeks reimbursement of the following costs: -- Attorney fees $555,620.00 -- Paralegal costs 23,575.00 -- Expert witness fees and expenses 227,117.99 -- Other litigation-related disbursements 71,040.33 The total amount requested is $877,353.32. We find that this amount is excessive when compared to awards we have made in response to cost applications stemming from protests of similar breadth and complexity. We consequently award only a portion of the requested sum. In the protest underlying this cost application, the Board found, as AT&T alleged, that the Department of the Air Force's award of a contract for the supply of telecommunications systems to NORTEL Federal Systems, Inc., violated statute and regulation. The Air Force misevaluated aspects of the proposals submitted by each of the offerors. The agency's cost-technical tradeoff and consequent award decision were irrational because they were based on ratings which were insupportable in light of evidence possessed by the agency itself. We revised the General Services Administrator's delegation of authority to the Air Force to conduct this procurement by directing the Air Force to review the ratings as discussed in the opinion, weigh the evaluation criteria in a manner permitted by the solicitation, and make another award decision. AT&T Corp., Network Systems Div. v. Department of the Air Force, GSBCA 13107-P, 95-1 BCA 27,551, 1995 BPD 54. NORTEL appealed this decision to the Court of Appeals for the Federal Circuit. The Court found that the appeal was moot and dismissed it "without prejudice to AT&T's pending petition for reimbursement of protest costs." NORTEL Federal Systems, Inc. v. United States Air Force, No. 95-1213 (Fed. Cir. Nov. 13, 1995). Whenever the Board "determines that a challenged agency action violates a statute or regulation or the conditions of any delegation of procurement authority [regarding automatic data processing equipment]," it may "further declare an appropriate interested party to be entitled to the costs of filing and pursuing the protest, including reasonable attorney's fees." 40 U.S.C. 759(f)(5)(B), (C) (1988).[foot #] 1 AT&T is an appropriate interested party to recover its costs of filing and pursuing the underlying protest because it was the prevailing party in that case -- it succeeded on the significant issues it raised and achieved the benefit it sought in bringing the suit. See Stanley Computer Systems, Inc. v. Department of the Treasury, GSBCA 12781-C (12700-P), 94-3 BCA 27,168, at 135,376, 1994 BPD 183, at 2 (citing Bedford Computer Corp., GSBCA 9837-C(9742-P), 89-2 BCA 21,827, at 109,811, 1989 BPD 121, at 3). AT&T and the Air Force have filed what they term a "Settlement Agreement" in which they "stipulate that $800,000 is a reasonable amount for AT&T's costs and is fully supported by the documentation submitted with AT&T's petition." This filing does not dispose of the matter. Awarded sums are to be paid from the permanent indefinite judgment fund. 40 ----------- FOOTNOTE BEGINS --------- [foot #] 1 This statute has been amended by the Federal Acquisition Streamlining Act of 1994, Pub. L. No. 103-355, 108 Stat. 3243, 3293 (1994). The earlier version of the law applies in this case because the underlying protest was filed before May 5, 1995. 60 Fed. Reg. 17,023-24 (1995). ----------- FOOTNOTE ENDS ----------- U.S.C. 759(f)(5)(C) (referencing 31 U.S.C. 1304). Statute entrusts to the Board alone the responsibility to make determinations of parties' entitlement to costs; the parties' agreement as to these matters thus cannot bind us. Sterling Federal Systems, Inc. v. National Aeronautics & Space Administration, GSBCA 10000-C-REM (9835-P), 95-1 BCA 27,575, at 137,425, 1995 BPD 65, at 10-11; Centel Federal Systems, Inc. v. Department of the Army, GSBCA 11315-C(11238-P), 92-2 BCA 24,779, at 123,621, 1992 BPD 37, at 2 (citing ICF Severn, Inc. v. National Aeronautics & Space Administration, GSBCA 11552-C(11334-P), 92-1 BCA 24,736, 1992 BPD 21, reconsideration denied, 94-3 BCA 27,162, 1994 BPD 153; and Bedford Computer Corp.). In carrying out this responsibility -- [w]e take seriously . . . our charge to award reimbursement only for those costs incurred by a successful protester which are both reasonable and necessary for the pursuit of the case. We are mindful of the Court of Appeals' counsel that reimbursing a winning litigant for every expense it has seen fit to incur would not be just. Sterling Federal Systems, Inc. v. Goldin, 16 F.3d 1177, 1187 (Fed. Cir. 1994). First Image Management Co. v. Department of Justice, GSBCA 12896-C (12852-P), 95-2 BCA 27,634, at 137,777, 1995 BPD 84, at 3. We have on numerous occasions declined to award costs which appeared to us inordinately high, considering the breadth and complexity of the work involved; we have awarded instead only those costs which seemed appropriate. See, e.g., Octel Communications Corp. v. General Services Administration, GSBCA 13243-C(12976-P), 96-1 BCA 27,928, at 139,471, 1995 BPD 178, at 3; First Image Management Co., 95-2 BCA at 137,777, 1995 BPD 84, at 3; Science Applications International Corp. v. Department of the Navy, GSBCA 12923-C (12834-P), 95-1 BCA 27,603, at 137,532, 1995 BPD 77, at 2-3; Sterling Federal Systems, Inc., 95-1 BCA at 137,427-28, 1995 BPD 65, at 15-16; Government Technology Services, Inc. v. Department of the Air Force, GSBCA 12277-C(12041-P), 94-3 BCA 27,008, at 134,564, 1994 BPD 128, at 6-7; Government Technology Services, Inc. v. Department of the Navy, GSBCA 10610-C(10389-P), 94-2 BCA 26,685, at 132,734, 1994 BPD 3, at 5. A review of our decisions issued on protest cost applications during the past three years demonstrates that in this period, we have awarded as reasonable and necessary costs of filing and pursuing a protest only one sum which is greater than the amount AT&T seeks here. The underlying protest was extraordinary; it involved a twenty-three day hearing, most of it resulting from the agency's unfounded, last-minute assertions that the protester made misrepresentations to the Government during the procurement, and the protester's consequent, successful efforts to show the invalidity of the charges. We ultimately awarded $1,518,645.23 in protest costs in that case. Sterling Federal Systems, Inc. v. National Aeronautics & Space Administration, GSBCA 10601-C (10381-P), 94-3 BCA 27,267, 1994 BPD 233; 95-2 BCA 27,667, 1995 BPD 89; 95-2 BCA 27,828, 1995 BPD 135. In arriving at this amount, incidentally, we made reductions in some elements of the claimed costs, notwithstanding the agency's position that the higher figures requested were appropriate. No other cost application has resulted, during the three years in question, in an award close to the amount AT&T requests. The predecessor to the aforementioned Sterling protest resulted in the greatest reimbursement, $623,329.50. Sterling Federal Systems, Inc. v. National Aeronautics & Space Administration, GSBCA 10000-C (9835-P), 94-1 BCA 26,270, 1993 7 (1992); 95-1 BCA 27,575, 1995 BPD 65. That case was highly unusual as well. The litigation over the cost application took nearly six years (including a side trip to the Court of Appeals, costs of which were not sought here); considerable extra briefing was required to respond to both the Board's invitation to address the Court's directions on remand and the agency's repeated changes of position on elements of claimed costs. This caused the attorney fees for pursuit of the application to be much greater than they normally are. In only four other cases did we find protest costs of more than $400,000 to have been reasonable and necessary. Government Technology Services, Inc., 94-3 BCA 27,008, 1994 BPD 128; Government Technology Services, Inc., 94-2 BCA 26,685, 1994 BPD 3; Cordant, Inc. v. Department of the Navy, GSBCA 12226-C (12011-P), 94-1 BCA 26,275, 1993 BPD 210; Westinghouse Electric Corp. v. Department of Transportation, GSBCA 11907-C(11745-P), 93-3 BCA 26,203, 1993 BPD 167. In the second and third of these cases, we rejected claimed consultant and employee costs pursuant to a limitation the Board had imposed, but which the Court of Appeals has since overruled in Sterling Federal Systems, Inc. v. Goldin, 16 F.3d 1177 (Fed. Cir. 1994). Adding those claimed costs to the sums allowed would have resulted in each award being worth about $500,000. All four of the protests underlying the cost awards discussed in the preceding paragraph involved matters of law and fact which were commensurate in breadth and complexity with the ones involved in the protest underlying the instant application. Other protests of similar nature have been prosecuted at considerably less cost. For example, the Desktop IV cases, which culminated in a hearing nearly twice as long as the one in the AT&T protest (nine days instead of five) but were otherwise similar in that both they and this one involved extensive discovery efforts and complex issues, spawned awards averaging only $218,986.18 to four protesters. Apple Computer, Inc. v. Department of the Air Force, GSBCA 12273-C (12042-P), 94-3 BCA 27,011, 1994 BPD 125; CompuAdd Corp. v. Department of the Air Force, GSBCA 12275-C(12021-P), 94-3 BCA 27,010, 1994 BPD 126; Electronic Data Systems Corp. v. Department of the Air Force, GSBCA 12276-C(12028-P), 94-3 BCA 27,009, 1994 BPD 127; Government Technology Services, Inc., 94-3 BCA 27,008, 1994 BPD 128. The total amount awarded these four companies was less than what AT&T alone seeks in the instant case. We acknowledge that AT&T has provided us with documentation of virtually every nickel it requests. That documentation shows, however, that the company devoted what we regard as excessive resources to the case. AT&T's outside counsel spent 2,137 hours on the protest. They hired two consulting firms to assist them in understanding technical matters. One of the firms spent 619 hours on the case, and the other spent 366. In all, these lawyers and experts worked 3,122 hours on this protest! And this total does not count the time of paralegals (for which reimbursement is sought) and AT&T's in-house counsel (which was extensive, but for which reimbursement is not requested). AT&T was of course free to make a business decision to devote all these resources to the case. The protester's choice, however, does not impinge on our statutory duty to make an independent judgment as to the reasonableness and necessity of the costs incurred. This case does not appear to have been different from the others cited (excepting the Sterling misadventures) and similar cases in terms of the appropriateness of costs. It is not apparent, for example, that any benefit was derived from AT&T's having devoted 2,137 lawyer-hours to the protest, compared to the 1,260.5 hours spent by the attorneys in the also-complicated case of Grumman Data Systems Corp. v. Department of the Air Force, GSBCA 11799-C(11635-P), 93-2 BCA 25,773, 1993 BPD 16. Nor is it evident that any advantage was secured from AT&T's having spent $227,117.99 on consultants' fees and expenses, far more than the $50,000 to $100,000 each protester spent on similar goods and services in the comparable Grumman, Cordant, and Government Technology Services (GSBCA 10610-C(10389-P)) cases. Additionally, we note that AT&T's lawyers charged a "blended rate" of $260 per hour for each attorney, whether partner or associate, who worked on the case. We accept the lead attorney's statement that had the partners billed at a non-blended rate, their hourly charge would have been higher than $260. Given that 63 percent of the hours billed were worked by associates, however, we question whether the use of the blended rate resulted in total charges which actually represented the value of the services provided. We could, given our concerns, try to make adjustments here and there to AT&T's cost application, in an attempt to come up with a number that would represent the reasonable and necessary costs of filing and pursuing this protest. This method would generate specific numbers, and thus look precise, but it would not necessarily lead to a correct result. Approximations are inevitable in this sort of exercise, since we could never know with any degree of certainty what the "right" hours or rates really are. Nor would it make much sense to go through the expense vouchers one by one, because the total amounts disallowed would pale in comparison to the variations which could be achieved by shifting the "appropriate" numbers of hours or rates of the professionals who worked on the case. The Supreme Court has cautioned that "[a] request for attorney's fees should not result in a second major litigation." Hensley v. Eckerhart, 461 U.S. 424, 437 (1983). The suitable course of action here, it seems to us, is to take an all- encompassing approach. With the exception of the very occasional, extraordinary case like the ones involving Sterling Federal Systems, our experience has been that the filing and pursuit of even a broad, complex protest like the one underlying AT&T's cost application should not result in more than half a million dollars in costs. This case is not out of the ordinary. We hold AT&T's recovery to this limit. Decision We GRANT IN PART AT&T's application and award to this firm as the reasonable, necessary, and documented costs of pursuing its protest, $500,000. This sum shall 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). _________________________ STEPHEN M. DANIELS Board Judge We concur: _________________________ _________________________ ANTHONY S. BORWICK ALLAN H. GOODMAN Board Judge Board Judge