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.