Link: GAO Decision
Protestor: A1 Procurement, JVG
Agency: Department of Veterans Affairs
Where GAO has recommended the reimbursement of protest costs, the appropriate rate for reimbursement of time incurred pursuing the protest by the protester’s chief executive officer (CEO), who is also an attorney, should be based upon the CEO’s salary and not a billing rate for outside legal counsel.
General Counsel PC Highlight:
A1 Procurement, JVG requested that the GAO determine the rate at which A1 can be reimbursed for the time incurred by A1’s CEO, Mr. Storms, who is also an attorney, in pursuing the protest. Mr. Storms, in his capacity as CEO, filed the initial protest on behalf of A1. He later submitted comments to the agency report in which he identified himself as an attorney with the law firm of Storms and Associates, P.A. The GAO sustained the protested and recommended that A1 be reimbursed for its costs; A1 and the agency then disagreed as to the appropriate rate to be applied to Mr. Storms’ time.
The GAO first noted that reimbursement of protest costs is intended to relieve protestors with valid complaints of the burden of vindicating the public interest, and therefore protestors should not be recovering a profit on its own employees’ time in filing and pursing the protest. The GAO agreed with the agency that A1 should be reimbursed for Mr. Storms’ time at a rate based on his salary as an employee of A1. The GAO pointed out that the “retainer agreement” signed by Mr. Storms as both CEO and as legal counsel demonstrates that the relationship between A1 and Mr. Storms was not an arms-length, agency relationship.
Protestors must remember that the bid protest process is not intended to result in any sort of financial award to successful protestors; rather, it is intended to correct defects in the procurement process. Successful protestors may seek reimbursement for reasonable costs incurred in pursuing the protest, but cannot seek reimbursement for the work of its own employees at rates higher than their standard salaries. Thus, protestors should avoid setting up any sort of arrangement with employees designed to give the appearance of an outside counsel or consultant relationship in an effort to seek reimbursement at higher rates.