Link: GAO Opinion
Agency: Department of Defense
Disposition: Request granted in part, denied in part.
Keywords: Award of Protest Costs and Attorney’s Fees
General Counsel P.C. Highlight: In appropriate cases, GAO will limit its recommendation for the award of protest costs and attorney’s fees where a part of those costs is allocable to an unsuccessful protest issue that is so clearly severable from the successful issues as to essentially constitute a separate protest.
KGL Food Services, WLL, and Intermarkets Global (IMG) request that GAO recommend that they be reimbursed the costs of filing and pursuing their initial and supplemental protests challenging the Department of Defense, Defense Logistics Agency’s (DLA) award of a contract under a request for proposals (RFP) for the supply of a full service food line in Kuwait, Iraq, and Jordan.
KGL and IMG filed several protests challenging DLA’s award of the food services contract on numerous grounds. In its initial protest, IMG asserted that the agency failed to perform a price realism evaluation; unreasonably evaluated technical proposals (focusing primarily on IMG’s own evaluation); failed to conduct a risk assessment; and made an unreasonable best value determination. KGL protested various aspects of the awardee’s technical evaluation; its own past performance evaluation; flaws in the risk evaluation; the lack of a price realism analysis; and the tradeoff analysis. After reviewing the agency report, both IMG and KGL submitted comments and filed supplemental protests. In its supplemental protest, IMG asserted flaws in the evaluation of the awardee’s responsibility; a lack of meaningful discussions; flaws in the awardee’s technical evaluation; and flaws in its own technical and past performance evaluations. In its supplemental protest, KGL challenged DLA’s evaluation of the awardee’s responsibility, past performance, and aspects of the awardee’s technical proposal. After receipt of the supplemental agency report and the protesters’ comments, GAO convened a hearing to further develop the issues of flaws in the price realism and technical evaluations.
GAO subsequently conducted an outcome prediction alternative dispute resolution (ADR) conference in which the GAO attorney indicated that GAO likely would sustain the protests on the basis that the agency’s price realism determination was unreasonable. The GAO attorney also raised concerns about several aspects of the solicitation requirements and related technical evaluation–including the force protection requirements and evaluation of warehouse capacity–but indicated that these concerns would not serve as additional bases for sustaining the protests. Based on DLA’s determination to take corrective action–reopening limited discussions, requesting revised proposals, and making a new source selection decision–GAO dismissed the protests as academic. KGL and IMG then filed requests for reimbursement of their protest costs.
GAO recommends that a successful protester be reimbursed its incurred costs with respect to all issues pursued, not merely those upon which it prevails. Limiting recovery of protest costs in all cases to only those issues on which the protester prevailed would be inconsistent with the broad, remedial congressional purpose behind the protest cost reimbursement provisions of the Competition in Contracting Act of 1984. Nevertheless, failing to limit the recovery of protest costs in all instances of partial or limited success by a protester may also result in an unjust cost recovery. Accordingly, in appropriate cases, GAO has limited its recommendation for the award of protest costs where a part of those costs is allocable to an unsuccessful protest issue that is so clearly severable from the successful issues as to essentially constitute a separate protest. In determining whether protest issues are so clearly severable as to essentially constitute separate protests, GAO will consider, among other things, the extent to which the issues are interrelated or intertwined–i.e., the extent to which successful and unsuccessful arguments share a common core set of facts, are based on related legal theories, or are otherwise not readily severable.
While DLA concedes that both protesters should be reimbursed their costs of pursuing the price realism issue identified by GAO as clearly meritorious during the ADR session, DLA asserts that the remaining issues were not clearly meritorious and are severable from the price realism issue. KGL and IMG maintain that their remaining issues were intertwined with the price realism issue and thus, should not be severed. Even though our outcome prediction ADR was based on the likely sustain of the price realism issue, in GAO’s view, the challenges to the awardee’s technical proposal evaluation were intertwined with and based on a related legal theory to the price realism issue. In this regard, where, as here, a solicitation expressly provides for evaluation of an offeror’s understanding of the requirements, based on the realism of proposed prices, the agency is obliged to conduct a price realism analysis. Typically, this analysis consists of an individualized approach to analyzing each proposal, including a review of each offeror’s cost elements and technical proposal. While price realism and technical issues are not always intertwined, here, the price realism and technical issues are interrelated and not readily severable. Thus, KGL’s and IMG’s protest costs related to these issues (including the risk evaluation) are reimbursable.
GAO reaches the opposite conclusion with regard to KGL’s and IMG’s protests of DLA’s evaluation of the awardee’s responsibility and past performance; the protesters’ own past performance and technical evaluations; the conduct of discussions; and the best value determination. These issues are neither clearly meritorious, nor are they clearly intertwined with the price realism/ technical evaluation issues. Rather, whether the agency’s evaluations in these areas were reasonable are based on different legal theories and underlying facts than were relevant to the successful price realism challenge. Thus, GAO does not recommend payment of protest costs associated with these issues. GAO recommends that KGL and IMG be reimbursed the costs associated with filing and pursuing their protests on the price realism and related issues as discussed above, including reasonable attorneys’ fees. KGL and IMG should submit their certified claims, detailing the time spent and costs incurred, directly to the agency within 60 days of its receipt of this decision. The request is granted.