PROTEST COSTS GRANTED IN PART: October 25, 1995 GSBCA 13325-C(13240-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 Protester. Clarence D. Long, III, Office of General Counsel, Department of the Air Force, McLean, VA; Roger Willmeth, Office of General Counsel, Department of the Air Force, Washington, DC; and Major Mark R. Land and George W. Holliday, McClellan Air Force Base, CA, counsel for Respondent. Before Board Judges DANIELS (Chairman), DEVINE, and BORWICK. DANIELS, Board Judge. AT&T Corp., Network Systems Division (AT&T), protested the award of a contract by the Department of the Air Force to NORTEL Federal Systems, Inc. (NORTEL), to supply telecommunications systems. The contract was to replace outdated telephone switching systems at Air Force and other Department of Defense installations with the latest commercially available digital integrated voice, data, image, and video information switching systems. AT&T maintained that the award was in violation of statute and regulation, and asked that the contract be terminated. While the protest was pending, the Air Force terminated its contract with NORTEL for the convenience of the Government. The agency then filed a declaration of its program manager, explaining that the Government's requirements for telecommunications switching systems had changed from the ones estimated in the solicitation, and that the agency was uncertain as to the accuracy of its current projections. The Air Force said that it would reevaluate its needs further and then take appropriate action with regard to the procurement. Since the challenged contract award no longer existed, the Board dismissed the protest without ruling on its merits. AT&T Corp., Network Systems Div. v. Department of the Air Force, GSBCA 13240-P, 95-2 BCA 27,731, 1995 BPD 99. AT&T has filed an application for reimbursement of costs it incurred in filing and pursuing the protest. The company asked the Board to authorize reimbursement of $242,825.42 -- $177,710 in attorney fees, $2,948.75 in paralegal costs; $54,850 in expert witness fees and expenses; and $7,316.67 in disbursements made by counsel for duplication and transmission of documents, computerized legal research, secretarial overtime services, and other litigation-related items. The parties have filed a "settlement agreement" which contains the following statements: [I]n direct response to the allegations in AT&T's protest, the Air Force undertook to reassess its conduct of the []evaluation and []award decision and the Air Force's actual needs in the procurement[.] . . . [B]ased on its above reassessment and AT&T's allegations, the Air Force determined to terminate the award to NORTEL[.] . . . During the evaluation phase of the procurement, the requirements for the small (Type II) switches began to erode. . . . When issued, the [request for proposals in question] represented the true, bona fide requirements of the Air Force. The march of time change[d] these requirements so significantly that by the end of the process, much of what had earlier transpired had been rendered irrelevant. That re-evaluation is taking place at this moment. At some point after it became clear that the data base for the procurement had changed, the Air Force should have issued a notice to the vendors and called for new Best and Final offers. It did not do so until after [the protest was filed]. . . . . . . . [T]he Air Force's termination of the NORTEL contract addresses the changes in its actual needs[.] . . . [T]he termination of the NORTEL contract accorded AT&T the principal relief it sought in bringing the protest[.] . . . . THEREFORE, the parties agree as follows: 1. The Air Force agrees to pay $175,000 in settlement of AT&T's [application] for reimbursement of the $242,825.42 in protest costs incurred by AT&T in [this protest]; 2. The Air Force stipulates [that] AT&T has obtained all of the relief it could obtain from the litigation of the protest on the merits; 3. The Air Force stipulates that $175,000 is a reasonable amount for AT&T's costs and is fully supported by the documentation submitted with AT&T's petition; 4. The Air Force agrees to support a joint motion to the GSBCA that AT&T's [application] be granted, in the agreed-upon amount of $175,000, out of the Permanent Indefinite Judgment Fund pursuant to 31 U.S.C. 1304. Discussion 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 Awarded sums are to be paid from the permanent indefinite judgment fund. Id. 759(f)(5)(C) (referencing 31 U.S.C. 1304). Statute entrusts to the Board alone the responsibility to make determinations of violations of law and declarations of parties' entitlement to costs; the parties' agreement as to these matters thus cannot bind us. 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., GSBCA 9837-C(9742-P), 89-2 BCA 21,827, 1989 BPD 121). ----------- 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. 17023-24 (1995). ----------- FOOTNOTE ENDS ----------- On many occasions, a protest has been dismissed pursuant to a settlement agreement in which the agency acknowledges a violation of statute or regulation and gives the protester substantially the same relief it sought in its protest. In these instances, we have held that a determination of the violation and a finding that the protester was a prevailing party, entitled to recovery of costs, can be made through reliance on representations made in the settlement agreement. E.g., Compgraph, Inc. v. Department of the Treasury, GSBCA 13065-C (12981-P), 1995 BPD 134 (June 27, 1995) (citing Applied Technology Associates, Inc. v. Department of Justice, GSBCA 12898-C (12840-P), 95-2 BCA 27,624, 1995 BPD 83; and IMS Services, Inc. v. Department of the Navy, GSBCA 12922-C(12830-P), 94-3 BCA 27,271, 1994 BPD 204). In the protest underlying this cost application, the protest was not dismissed pursuant to a settlement agreement. Indeed, the dismissal was contested and the agency admitted to no violation of law in asking us to consider the case no further. In the context of this cost application, however, the parties have submitted a settlement agreement which makes plain the following: (1) The Air Force admits to a violation of law. By continuing the procurement without ascertaining that it really needed the goods and services it was soliciting, the agency failed to use advance procurement planning, in violation of 10 U.S.C. 2305(a)(1)(A)(ii) (1988); failed to conduct a requirements analysis for its need for the items in question, in violation of 41 CFR 21.201-20.1 (1994); and failed to amend the solicitation and request revised offers although requirements changed considerably, in violation of 48 CFR 15.606(a) (1994). (2) The agency admits that but for the protest, it would not have discovered, and would not have been able to admit to, the violation of law. See HSQ Technology, Inc., GSBCA 10875-C(10802-P), 91-1 BCA 23,326, 1990 BPD 408. Based on the Air Force's admissions, we are able to determine that the filing and pursuit of the underlying protest fostered the Air Force's reexamination of its requirements, which in turn resulted in the demonstration of an agency violation of law. The fact that the admissions are contained in what is in effect a joint stipulation agreed to during the pendency of a cost application, rather than a settlement agreement which formed the basis for a dismissal of a protest, is immaterial. We find that the violation of law occurred. We also agree with the Air Force's conclusion that it is appropriate in this circumstance to declare AT&T, which brought the case and through it received all the relief it could have gotten from a grant of the protest, an appropriate interested party entitled to its costs of filing and pursuing the case. Further, we conclude, from an independent review of the material submitted by AT&T in support of its application, that (a) the costs incurred and now claimed, $175,000, were reasonable (considering the extent and complexity of the work involved) and (b) more than $175,000 of costs are properly documented. These conclusions are true as to the attorney fees and disbursements alone, even if considered separately from other costs claimed. Decision We GRANT IN PART AT&T's application and award to this firm the reasonable and documented costs of pursuing its protest, $175,000. 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: _________________________ _________________________ DONALD W. DEVINE ANTHONY S. BORWICK Board Judge Board Judge