Link: GAO Opinion
Agency: Federal Communications Commission
Disposition: Claim for costs denied.
Keywords: Bid and Proposal Costs
General Counsel P.C. Highlight: Recovery of bid and proposal costs is dependent upon the protester providing adequate documentation that identifies and supports the amounts claimed for each individual expense (including cost data to support the calculation of claimed hourly rates for employees), the purpose for which each expense was incurred, and how the expense relates to the claim.
The Federal Communications Commission issued a solicitation for walk-in centers to provide consumer assistance related to the transition to digital television. DTV Transition Group, Inc. (DTG) protested the award under this solicitation, claiming that the FCC failed to comply with the small business set-aside provisions in the solicitation and made awards that would not meet the agency’s needs. Although FAR required the agency to suspend performance of the contract pending resolution of the protest, the agency was allowed to, by regulation, and did in this case issue a determination and finding allowing performance to continue during the protest. Contract performance was largely completed during the pendency of the protest. Eventually, the FCC took corrective action by offering to pay the protester’s bid and proposal costs, which was the only remedy available to the protester because the contract was largely completed. GAO then dismissed the protest, but cautioned
DTG that bid and proposal costs claimed by a protestor may be recovered only to the extent that they are adequately documented and shown to be reasonable, and that claims for reimbursement must identify and support the amounts claimed, the purpose for which the expense was incurred, and how the expense relates to the claim.
Subsequently, DTG submitted a claim for costs to the FCC in the amount of $118,500, supported by a short affidavit from its managing director that explained the costs were related to services provided by SinoPowell Capital and Yelverton Law Firm. The affidavit explained that the firms were engaged for flat fees related to the amount of the award by the FCC, with a minimum fee due to the two firms of $118, 500. The FCC responded to DTG’s request, claiming that the amount requested was not adequately documented to allow the FCC to determine what costs were actually incurred, the correlation between those costs and the preparation of the proposal, and the reasonableness of the costs. As such, the FCC requested that DTG submit additional information supporting its claim for costs. DTG responded, but did not provide any of the requested documentation, instead it explained that it believed that in good faith that it would receive at least some part of the overall awards and thus negotiated with the professionals needed to assemble a proposal and agreed to pay them a percentage of the fees awarded.
The FCC denied DTG’s claim in full, concluding that DTG’s response indicated that DTG had not actually incurred proposal preparation costs for any services provided by the identified firms and that, in any event, DTG had not provided adequate documentation of any proposal preparation costs. DTG then filed a claim for costs with GAO.
GAO’s review of the record supported the conclusion reached by the FCC – DTG failed to provide sufficient support for its claim for costs, even after the FCC specifically requested the necessary documents from DTG. Additionally, GAO pointed to the fact that DTG’s statements raised doubts as to whether any amounts due to SinoPowell and Yelverton were incurred for the preparation of the proposal. Based on this determination, GAO denied DTG’s claim for costs.