THIS OPINION WAS INITIALLY ISSUED UNDER PROTECTIVE ORDER AND IS BEING RELEASED TO THE PUBLIC IN REDACTED FORM ON AUGUST 12, 1996 ________________________________ GRANTED IN PART: July 31, 1996 ________________________________ GSBCA 13393-C(13306-P) ZENITH DATA SYSTEMS CORPORATION, Applicant, v. DEPARTMENT OF THE TREASURY, Respondent. Laura K. Kennedy of Seyfarth, Shaw, Fairweather & Geraldson, Washington, DC, counsel for Applicant. Donald M. Suica and Corlyss M. Drinkard, Office of Chief Counsel, Internal Revenue Service, Department of the Treasury, Washington, DC, counsel for Respondent. Before Board Judges DANIELS (Chairman), BORWICK, AND WILLIAMS. WILLIAMS, Board Judge. Background On June 15, 1995, Zenith Data Systems (ZDS) filed a protest challenging the Department of the Treasury's (Treasury's) award of a contract for standard, off-the-shelf Federal Information Processing (FIP) resources, including microcomputers, notebook computers, and peripherals, to Electronic Data Systems Corporation (EDS). On June 19, 1995, WIN Laboratories, Ltd. (WIN) intervened in ZDS' protest, supporting all grounds of protest, and filed its own protest, docketed as GSBCA 13307-P. On June 20, 1995, Government Technology Systems, Inc. (GTSI) timely intervened in the ZDS and WIN protests, and on June 23, 1995, timely filed its own protest, docketed as GSBCA 13334-P. In Count I of its protest, ZDS alleged that offerors were not advised in the solicitation that a second-year warranty was preferred by Treasury or would be considered to be of value in Treasury's best value analysis. WIN filed an amended complaint claiming that EDS' monitor did not meet mandatory solicitation requirements. Each of the protesters sought the termination of the EDS contract, the amendment of the request for proposals to reflect all significant evaluation criteria, and the solicitation of another round of best and final offers (BAFOs) followed by a new evaluation and award. ZDS and GTSI, joined by WIN, sought summary relief based upon Treasury's improper evaluation of EDS' second-year warranty. Zenith Data Systems Corp. v. Department of the Treasury, GSBCA 13306-P, et al., 95-2 BCA 27,863, 1995 BPD 160. The Board granted the motion for summary relief. 95-2 BCA at 183,934, 1995 BPD 160, at 22. As a result of the protesters' successful motions for summary relief with respect to Count I of ZDS' protest, Treasury agreed to settle the remaining grounds of the protests, and the protesters agreed to dismiss their protests. As reflected in the Board's July 31, 1995, order of dismissal, Treasury admitted violations of the statutory requirement that agencies evaluate proposals based solely upon the factors set forth in the solicitation. According to the terms of the settlement agreement, each of the protesters was deemed a "prevailing party," having obtained a substantial benefit in the form of relief sought. The settlement agreement provided in pertinent part: Whereas, on June 15, 1995, Zenith filed a protest with the General Services Administration Board of Contract Appeals (GSBCA) No. 13306-P, alleging that, among other things, the procurement conducted under solicitation no. IRS-93-0007 (the procurement) leading to the award of contract no. Tir-95-0016 (the contract) to EDS violated 41 U.S.C. 253b(a) because the Government had improperly and prejudicially considered in the evaluation of offers EDS' offer of a second-year warranty on all hardware items; WHEREAS, EDS, WIN, and GTSI intervened in the Zenith protest; WHEREAS, WIN later protested, among other things, that the monitor proposed by EDS under the solicitation does not meet the mandatory requirements of the solicitation; WHEREAS, GTSI later protested, among other things, that the Government had engaged in improper negotiations and auctioning in connection with discussions that culminated in the third round of BAFOs requested in connection with the solicitation; WHEREAS, the GSBCA, ruling on the Government's, protesters', and intervenors' cross-motions for summary relief on Count I of the Zenith protest, granted the protesters' and intervenors' motions and determined that the Government had considered an undisclosed evaluation factor in its evaluation of offerors under M.6.1.4 and under M.4.1 and M.4.2 under the solicitation, to wit, EDS's second-year warranty and the value thereof; WHEREAS, the parties have agreed to resolve amicably the appropriate remedy for the violation of law that has occurred and the appropriate action to take with regard to remaining allegations against the Government, the parties agree as follows: A. The Government: 1. Shall terminate for convenience its award of the contract to EDS; 2. Shall appoint a new Source Selection Authority, who will be an individual with no prior involvement with this procurement, to issue a new SSA Decision Document; 3. Shall appoint a new Source Selection Advisory Council, comprised of different individuals who have had no prior involvement with this procurement, to issue a new SSAC Report and Award Recommendation; 4. Shall rescore the EDS offer under M.6.1.4 of the solicitation so as to remove any consideration of the second-year warranty in accordance with the GSBCA's ruling granting Count I, and make any further adjustments also required by the GSBCA's rulings, and make no other adjustments; 5. Shall, consistent with the Board's order granting Count I, not consider, in any part of the evaluation or source selection, the length of an offered warranty beyond the one year required by the solicitation; 6. Shall not permit any offeror to revise its proposal in making the new source selection decision; and 7. Agrees that Zenith Data Systems Corporation, WIN Laboratories, Ltd., and Government Technology Services, Inc. are all prevailing parties and have obtained a substantial benefit in the form of relief sought. The Government further agrees that [each of] the aforementioned three parties can submit an application for protest costs under GSBCA Rule 35 and that the Government will not oppose those motions, except on the ground of unreasonable costs, if any. The Government further represents that it will prepare and file any documentation required by 1436 of the Federal Acquisition Streamlining Act. Any such documentation will take the position that the contract award was unlawful for the reasons expressed in Count I of the protest and granted by the Board. B. Zenith, Win and GTSI shall withdraw their several protests with prejudice . . . . Zenith Data Systems Corp. v. Department of the Treasury, GSBCA 13306-P, et al., 1995 BPD 155 (July 31, 1995). On August 30, 1995, Zenith filed a motion for award of protest costs in the amount of $184,013.31. The motion for costs included claims for attorney fees, disbursements, consultant and expert fees, secretarial and support staff overtime, court reporter fees, in-house personnel costs, and expenses for photocopying, long distance telephone calls and faxes, courier service, computer research, and other costs associated with filing and pursuing the protest. Protester's Motion for the Award of Protest Costs. Treasury objected only to claims for attorney fees and expert witness fees in excess of the statutory cap. Respondent's Response to Protester's Motion for Award of Protest Costs. While all attorney fees, expert consultant fees, and out-of- pocket disbursements related to the filing and pursuit of this protest were reasonably and properly incurred, the circumstances surrounding this case do not warrant a "special factor" exception to the cap of $150 per hour on attorney fees. Furthermore, protester did not sufficiently document its in-house personnel costs so as to allow the Board to evaluate the reasonableness of the incurred costs. The Board thus grants in part the application, awarding $134,922.43 and denying the remainder. Discussion Under Rule 35, an appropriate prevailing party in a protest before the Board may apply for an award of costs, including reasonable attorney fees under the Brooks Automatic Data Processing Act (Brooks Act), 40 U.S.C. 759(f)(5)(C) (1994). Rule 35(a) (48 CFR 6101.35(a) (1995)). A "prevailing party" is a party which has demonstrated that a challenged action of a federal agency violates a statute or regulation or the conditions of a delegation of procurement authority. 40 U.S.C. 759(f)(9)(C) (1994); Rule 1(b)(12). For the purposes of Rule 35, a "decision" includes orders of dismissal resulting from settlement agreements that bring to an end the proceedings before the Board. Rule 35(a). Under Board rules, an application for costs shall [b]e accompanied by an exhibit fully documenting any fees or expenses being sought . . . . The date and a description of all services rendered or costs incurred shall be submitted by each professional firm or individual whose services are covered by the application, showing the hours spent in connection with the proceeding by each individual, a description of the particular services performed by specific date, the rate at which each fee has been computed, any expenses for which reimbursement is sought, and the total amount paid or payable by the applicant on account of the sought-after costs. . . . The Board may require the applicant to provide vouchers, receipts or other substantiation for any costs claimed. Rule 35(c)(3). Attorney Fees ZDS' application for costs includes an exhibit detailing the daily activities of its attorneys during the pursuit of this protest. Protester's Motion for the Award of Protest Costs, Exhibit A. The exhibit also establishes the rate for each attorney's services. Id. ZDS' motion sufficiently allows the Board to determine that, subject to the limitation below, ZDS reasonably and necessarily incurred these costs in filing and pursuing this protest. Section 1435 of the Federal Acquisition Streamlining Act (FASA), as an amendment to the Brooks Act, 40 U.S.C. 759, denies the recovery of a prevailing party's attorney fees in excess of $150 per hour, unless the party is a small business concern or explains why a "special factor" or an increase in the cost of living adjustment would justify a higher fee. 40 U.S.C. 759(f)(5)(C) (1994). Rule 35, quoting the FASA provision, provides, in pertinent part: If the application requests reimbursement of attorney fees that exceed the statutory rate, explain why an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys for the proceedings involved, justifies such fees. Rule 35(c)(6). In a recent decision, protester Advanced Technology Systems, Inc. (ATSI), applied for the "special factor" exception to the cap on attorney fees, citing its "major commitment of attorney resources . . . on short notice" and the "numerous, complex and novel" issues of fact and law involved in the protest. Advanced Technology Systems, Inc. v. General Services Administration, GSBCA 13398-C(13312-P), slip op. at 5 (June 28, 1996). The Board refused to reimburse fees in excess of the statutory cap of $150 per hour, stating: The applicant has not suggested, and there is no reason to believe, that Congress was unaware either of the short time frame to develop the record in a protest, with the immediate need for staffing, or that many protesters retain counsel from the Washington, D.C., area, or of the prevailing rates of retained counsel in protest proceedings. . . . The issues of fact and law were focused, straightforward and routine, not "numerous, complex and novel." This protest was a typical challenge to an agency determination not to place the protester in the competitive range. . . . To permit recovery of an hourly rate in excess of $150 in this case would circumvent the express limitation established in the statute. Id. In its motion for costs, ZDS states that "this protest demanded instant familiarity with the legal and factual bases of the procurement and did not permit attorneys an extended time to 'get up to speed' on the case." Protester's Motion for Award of Protest Costs at 17. ZDS also claims that its attorneys were uniquely qualified to represent ZDS because they specialize in GSBCA bid protests. Id. Furthermore, ZDS claims that it was precluded from hiring other law firms based on conflicts of interest because the awardee in the protest, EDS, hires many of the "top government contracts law firms." Id. at 18. ZDS' claims do not qualify as special factor exceptions to the $150 per hour cap on attorney fees imposed by FASA. As in ATSI, the short preparation time typical to all protests does not justify the award of attorney fees in excess of the cap. Counsel also failed to demonstrate how their unique qualifications to represent ZDS warrant the award of attorney fees in excess of the cap. While ZDS counsel are obviously skillful, well-experienced government contract litigators, ZDS did not demonstrate how its attorneys applied "specialized" skills to the instant protest. The parties settled the protest based on Treasury's admitted violation after the Board granted ZDS' motion to dismiss. As in ATSI, the issues were "focused, straightforward and routine." ZDS failed to demonstrate how any aspect of this protest required application of unique and special skills. We consequently reduce ZDS' award of costs by eliminating all costs attributable to attorney fees in excess of $150 per hour. Employee Costs In its application for costs, ZDS submitted an exhibit for the time spent by its employees in support of its protest. The exhibit lists employees by name, with a number of hours and dollar figure attributable to each. The total number of hours is ***** and the total dollar figure is $*********. Protester's Motion for Award of Protest Costs, Exhibit F. The exhibit also included an affidavit by Joel A. Lipkin, Vice President, certifying that the amounts are true and correct. Id. Mr. Lipkin's affidavit stated that: Employees performed a variety of necessary tasks in support of the Protest, including; gathering documents for counsel; preparing documents and charts; preparing for depositions; being deposed; and helping to answer interrogatories and document production requests. Id. The affidavit did not attribute activities to individual employees. Id. The affidavit also stated that written documentation of ZDS' employee hours expended in the protest would be "available on request." Id. The Board requested further written documentation on July 17, 1996, but ZDS was unable to furnish supporting documents within the allotted time. As this Board has emphasized, we will reject claims for in- house costs when the submitted documentation does not provide a sufficient basis to ascertain whether the purpose and amount of the expenses are reasonable. Sytel, Inc. v. Department of Health and Human Services, GSBCA 12901-C(12827-P), 96-1 BCA 28,124, at 140,396, 1995 BPD 224, at 3 (citing Materials, Communication & Computers, Inc. v. Defense Logistics Agency, GSBCA 13084-C(12930-P), et al., 95-2 BCA 27,867, at 138,953, 1995 BPD 161, at 5). The applicable Board Rule states that "[a]n application for costs shall be accompanied by an exhibit fully documenting any fees or expenses being sought." Rule 35(c)(3) (emphasis added). The applicant has the burden to supply the Board with the requisite information. The information submitted by ZDS does not meet the requirement set forth in the rules. The application does not show the "particular services performed [by each employee] by specific date [or] the rate at which each fee has been computed." Rule 35(c)(3). The application merely describes the aggregate number of hours spent by each employee on the protest without specifying the basis for any hourly wage or the number of hours spent by each individual on a specific activity. A certification by the applicant's officer that the costs claimed were actually incurred is insufficient to overcome the absence of documentation. Sterling Federal Systems, Inc. v. National Aeronautics and Space Administration, GSBCA 10000-C-REM(9835-P), 95-1 BCA 27,575, at 137,428, 1995 BPD 65, at 15. Other Costs Incurred in Filing and Pursuing the Protest In its application for costs, ZDS submitted the following expenses incurred by its outside attorney in the filing and pursuit of this protest: Duplicating Expenses In-House $2,290.80 Outside 1,755.82 Sub-total $4,046.62 Long Distance Phone Calls and Facsimile Transmissions 1,652.00 Courier Service 148.27 Computer Research 901.00 Secretarial and Support Staff Overtime 671.42 Miscellaneous Expenses -- Food, Cab Fares, Car Rental, Parking 186.58 Court Reporter Services 19,385.00 TOTAL 26,985.89 Protester's Motion for the Award of Protest Costs, Exhibit C. In support of these costs, ZDS submitted detailed invoices, receipts, and printouts documenting each cost and, where necessary, explanations for the rate upon which each cost was based. Id., Exhibit D. We find that the above costs were necessarily incurred in the protest, and that the amounts incurred are reasonable. Therefore, we award $26,985.89 to ZDS for the disbursements made by its attorneys in the filing and pursuit of this protest. Expert Consultant Fees In its application for costs, ZDS also submitted a claim for expert consultant fees. During the protest ZDS retained Jimmy J. Jackson to assist its attorneys on matters related to the procurement. ZDS submitted invoices from Mr. Jackson in support of its claim for costs. Protester's Motion for the Award of Protest Costs, Exhibit D6. The invoices totaled $******** and broke down as follows: Professional Fees **** hrs @ $***/hr = $******** Expenses Travel $293.25 Meals 33.05 Lodging 163.74 Communication/Fax 87.75 577.79 TOTAL $******** Id. The invoices also gave a detailed account of how Mr. Jackson allocated his time while involved with this protest. Id. The test for awarding expert consultant fees is whether the expert's assistance was necessary for protester to pursue the protest. Grumman Data Systems Corp. v. Department of the Air Force, GSBCA 11799-C-REM(11635-P), 1996 BPD 47 (Mar. 20, 1996). As in Grumman, the protester's employees could not gain access to proprietary information of other offerors due to the Board's protective order. As a result, ZDS necessarily employed an outside consultant to assist its attorneys in the pursuit of its case. Although the Government does not contest the award of expert consultant fees, the Government asks the Board to limit the amount of the award. Under the GSBCA Rules of Procedure, "[i]f the respondent contends that any fees for consultants or expert witnesses for which reimbursement is sought in the application exceed the highest rate of compensation for expert witnesses paid . . . by the Federal Government, the respondent shall include in the answer evidence of such highest rate." Rule 35(d)(1). Treasury cites FASA 1435 as a cap on the amount that the Government may reimburse the protester for protester's expert witnesses. Treasury claims that "[t]he limit is the highest rate of compensation for expert witnesses paid by the Federal Government, i.e., a daily rate based on the rate of pay of a GS 15, step 10," or approximately $338.58 per day. Respondent's Response to Protester's Motion for the Award of Protest Costs at 3 (citing 5 CFR 304.105; 48 CFR 33.105). ZDS responds that the amendments cited to by Treasury were enacted after the commencement of this protest, and therefore do not apply. Protester's Supplement to Its Motion for the Award of Protest Costs (Oct. 4, 1995) at 3. We agree with ZDS' position. The version of FAR 33.105 referenced by Treasury was to become effective under the following terms: Effective Date: October 1, 1995 Where this rule repeats a GSBCA rule that went into effect earlier, the date of the GSBCA rule and its applicability provision prevails; otherwise, this rule is applicable to protests or claims filed on or after the effective date of this rule. 60 Fed. Reg. 48,229 (1995). The amendment to this regulation clearly limits successful protesters seeking to recover expert witness fees to the new Government-wide restriction on expert compensation. The amendment clearly does not repeat a GSBCA rule, and must only apply to protests filed on or after October 1, 1995. This protest commenced well before October 1, 1995, and as a result, the regulation's cap on expert fees does not apply. Because the Government relies entirely on this regulation in its attempt to limit the expert's fees, and the regulation is inapplicable, we find that the Government has not met its burden on showing why the expert's rate of compensation should be reduced. Accordingly, we award the full amount sought by protester as reimbursement for its expert consultant fees.[foot #] 1 Decision ZDS' application is GRANTED IN PART. ZDS is entitled to $134,922.43 as necessarily and reasonably incurred in filing and pursuing the protest. The award is composed of $99,491.25 in attorney fees, $29,985.89 in disbursements related to the filing and pursuit of the protest, and $5,445.29 in expert consultant fees and related expenses. This sum shall be paid, without interest, from the permanent indefinite judgment fund, 31 U.S.C. 1304 (1994). 40 U.S.C. 759(f)(5)(C) (1994). __________________________ MARY ELLEN COSTER WILLIAMS Board Judge We concur: ___________________________ __________________________ STEPHEN M. DANIELS ANTHONY S. BORWICK Board Judge Board Judge ----------- FOOTNOTE BEGINS --------- [foot #] 1 We do not decide here whether the Government actually pays some of its experts more than a daily rate based on the pay of a GS-15, Step 10.