Link: GAO Opinion
Agency: Department of Homeland Security
Disposition: Request granted.
- Government Accountability Office has jurisdiction to hear protest of the award of a no-cost contract for provision of phone services to detainees in the custody of the Bureau of Immigration and Customs Enforcement because the contract concerns a procurement for services by a federal agency and results in a benefit to the government.
- Protest challenging the evaluation of offerors’ prices is sustained where the solicitation required offerors to propose eight international calling rates, but the agency evaluated only one rate as a surrogate for the others without a reasonable basis to do so.
- Protest challenging the evaluation of protester’s technical proposal is sustained where the agency’s identification of technical deficiencies was not reasonable because certain features viewed as missing from protester’s proposal were not required by the solicitation, and because the record shows that the offerors were not evaluated equally.
- Protest alleging that awardee made material misrepresentations concerning its proposal and in connection with a Small Business Administration size status protest is denied where the record does not show that misrepresentations were
General Counsel P.C. Highlight:
Generally, the Bid Protest Regulations provide that, in the event that GAO sustains a protest, GAO may recommend that the agency pay the successful protester the costs of filing and pursuing the protest, including attorneys’ fees and counsel and expert witness fees. A protester seeking to recover its protest costs must submit sufficient evidence to support its monetary claim; GAO will base its decision for a cost claim upon the facts and circumstances of that claim. The amount claimed may be recovered to the extent that the claim is adequately documented, and is shown to be reasonable. GAO will determine the reasonableness of hourly rates for legal fees by considering the customary fee for similar work in the community, as well as the experience, reputation and ability of the practitioner.
ICE’s general contentions–which could have been raised against any small business protester seeking reimbursement for attorneys’ fees–are that: (1) the statutory cap on hourly rates for attorneys’ fees that can be reimbursed for large business protesters should be used as a limiting factor for determining the reasonableness of the hourly rates for attorneys’ fees when reimbursing small business protesters; and, (2) since, in ICE’s view, the legal industry is incentivized to maximize the number of hours it can bill to a client, PCS should have agreed to an across-the-board reduction in the number of hours billed to address the issue. With respect to the specific fees at issue here, ICE contends that: (1) the hourly rates are unreasonable because they exceed those GAO has approved in prior decisions; (2) the fees are unreasonable because this was not a complex protest; (3) the hourly rates are not supported by the industry survey data submitted; and (4) one entry of 3.75 hours for an associate is unreasonable because it involves a review of PCS’s proposal well after the protest had been filed.
The Competition in Contracting Act of 1984 (CICA) authorized GAO to recommend that agencies reimburse successful protesters the costs of filing and pursuing a protest, including reasonable attorney fees. From the passage of the CICA until 1994, no cap on hourly rates applied to the reimbursement of attorneys’ fees for successful protesters; however, such fees could only be reimbursed to the extent they were reasonable. In 1994, Congress enacted the Federal Acquisition Streamlining Act (FASA), which amended certain parts of CICA, including, as relevant here, the provisions concerning reimbursement of protest costs. Since the enactment of FASA, CICA imposes a cap on legal fees for large businesses of $150 per hour; the cap, however, does not apply to small businesses. During consideration of FASA, the bill as reported to the Senate floor imposed a cap on the reimbursement of attorneys’ fees for any successful protester at GAO–including small businesses–at the then-current rate established by the Equal Access to Justice Act (EAJA). The amendment was agreed to, by voice vote, and FASA passed the Senate including the Wellstone provision, which expressly excluded small business protesters from the bill’s cap on reimbursable attorneys’ fees. Thus, ICE argues that the legislative history of FASA indicates that Congress intended for the $150 cap to be a benchmark in deciding whether attorneys’ fees for successful small business protesters are reasonable, and supports the agency’s view that all of the hourly rates at issue here–especially the $705 per hour rate of the senior partner–are unreasonable per se.
While GAO has previously addressed the benchmark language in FAR sect. 33.104(h)(5), it has not addressed the legislative history of FASA–where this language first appears. GAO concludes that the legislative history does not, as ICE argues, bar reimbursement of legal fees at the rates charged by PCS’s outside counsel. Here, GAO recognizes that the FASA conference committee reiterated GAO’s responsibility, imposed in 1984 by CICA, to ensure that attorneys’ fees sought for reimbursement are reasonable. GAO sees no conflict between FASA’s exemption of small businesses from a cap on attorneys’ fees, and the conference committee’s view that the cap placed on attorneys’ fees for businesses other than small business constitutes a benchmark as to what constitutes a ‘reasonable’ level for attorneys’ fees for small businesses. In this regard, GAO thinks that the conference committee report language concerning a benchmark provides guidance as to the evaluation of the reasonableness of attorneys’ fees. However, GAO does not view the benchmark language as imposing an additional limitation (i.e., a cap) on attorneys’ fees that are otherwise reasonable. Such an interpretation would be inconsistent with the plain statutory language of FASA which exempts small businesses from the specific cap imposed on large businesses–and we see no evidence that the Congress intended such a result.
GAO finds the benchmark language is appropriately viewed as one of a number of factors to be considered in determining whether attorneys’ fees are reasonable. Among these factors are: the legal context–CICA’s creation of a fee-shifting mechanism that provides for the reimbursement of a successful protester’s costs of pursuing a protest and FASA’s exemption of small businesses from the $150 per hour cap on attorney fees that applies to large businesses; the passage of time–13 years–and the concomitant changes in the cost of living and the level of fees since the enactment of FASA; the customary fees charged for similar legal work in the community where outside counsel practices; the experience, reputation and ability of the outside counsel; the specialized nature of government contracts law; and the complexity of the issues in the particular protest at issue.
In summary, GAO has considered the difference between the rates charged by PCS’s outside counsel and the $150 per hour cap that applies to large businesses, particularly in light of the conference committee’s views, and the relevant FAR provision, concerning the cap as a benchmark for reasonableness. GAO nonetheless finds that, on balance, the rates charged by PCS’s outside counsel are reasonable. Specifically, GAO finds that the number of hours billed is reasonable, and that the rates charged by PCS’s outside counsel are consistent with those customarily charged by comparable firms in the Washington, DC area with similar levels of government contracts experience.
In its second general challenge, ICE argues that the numbers of hours billed by protesters’ outside counsel are grossly excessive, and therefore not reasonable. However, GAO finds no merit in this argument as regarding the issue before us. Specifically, GAO does not accept the agency’s view that attorneys’ fees charged by private law firms to their clients should be viewed as inherently untrustworthy, padded, or unreasonable. ICE’s argument requires, in essence, that GAO assume that private law firms routinely act unethically by overbilling their clients. GAO will not make this assumption. In addition, ICE’s arguments fall short of meeting the legal standard for challenging the reasonableness of legal fees. Generally, GAO will examine the reasonableness of the attorney hours claimed to determine whether they exceed, in nature and amount, what a prudent person would incur in pursuit of a protest. Unless an agency identifies specific hours as excessive and articulates a reasoned analysis as to why payment of those hours should be disallowed, GAO will generally accept the number of attorney hours claimed.
Turning to those specifically tied to the billings here, GAO considers first ICE’s contention that the hourly rates charged by PCS’s outside counsel for attorneys and staff are unreasonable because they exceed the levels previously found by GAO as reasonable. GAO has held that one way to determine the reasonableness of hourly rates for legal fees is by considering the customary fee charged for similar work in the community, as well as the experience, reputation and ability of the practitioner. In doing so, where relevant and appropriate, GAO will consider the fee rates found allowable by GAO in similarly complex proceedings.
ICE points out that the highest hourly rate for an attorney previously approved by GAO was $475 per hour. While GAO considers rates previously approved by GAO as part of its evaluation of the reasonableness of attorneys’ fees, GAO does not think the $475 hour rate can serve as an inflexible ceiling. In this regard, the hourly rates approved in that case were billed in 2002. While GAO also discuss below the relationship of the hourly rates requested here with those identified in legal surveys, it notes that the surveys provided in the previous case might also have supported the rates requested here, since the rates sought here were within the range of partner billings identified in the January 2003 publication.
PCS’s protest challenged the agency’s price and technical evaluations, and required extensive briefings by the parties. In addition, the agency argued in its report, and its supplemental report, that GAO lacked jurisdiction to hear the protest–arguments the protester was required to answer. The filings prepared by PCS’s counsel included the protest, a supplemental protest, comments on the agency report, comments on the supplemental agency report, and responses to questions from GAO concerning the price evaluation issue. The protester’s filings consisted of extensive legal briefing and more than a dozen original exhibits and cost calculations. GAO’s decision resolving this protest was 24 pages long, which it also viewed as indicative of a reasonably high level of complexity for the protest issues and arguments advanced by the parties. In sum, GAO concludes that the billing rates charged by protester’s outside counsel are reasonable in light of the relative complexity of the protest issues.
During consideration of this request for a recommendation for reimbursement of PCS’s protest costs, PCS submitted data on attorney billing rates, and legal assistant billing rates, charged by certain Washington, D.C. firms. With respect to attorney billings, ICE argues that the survey rates are not relevant because they pertain only to large firms, and do not specifically indicate the rates for attorneys who specialize in government contracts litigation.
In support of the hourly rates charged by its attorneys, PCS provides a 2008 National Law Journal survey of billing rates for Washington, D.C. firms, and identifies seven firms of similar size whose primary practice is in the Washington, DC area. The hourly rates charged for the three Crowell & Moring partners here were $505, $525, and $705; the hourly rate charged for a firm counsel was $485; and the hourly rates charged for associates of the firm were $360 and $390. The agency correctly points out that this survey does not specifically address the rates charged by government contracts attorneys. However, GAO has accepted similar billing surveys as a reasonable indicator for billing rates of comparable firms. The protester represents, and the agency does not dispute, that the Washington, D.C.-based firms shown in the survey are generally comparable to Crowell & Moring in terms of overall size and reputation, and are comparable in the size and reputation of their government contracts practices. Since the hourly rates charged here are within the range of the other firms in the survey, and GAO finds that the survey supports a conclusion that these hourly rates are reasonable.
GAO turns next to the only specific challenge to a billing entry raised by ICE, i.e. an entry of 3.75 hours for an associate, which ICE contends was unreasonable because it involved a review of PCS’s proposal well after the protest had been filed. Specifically, the entry shows that, in addition to reviewing PCS’s proposal, the attorney prepared notes, conferred with another attorney regarding past performance research, and reviewed the agency report and contracting officer’s statement. GAO thinks the billing entry sufficiently details a reasonable expenditure of effort. In addition, GAO notes that it is often necessary to review proposals to compare them with solicitation requirements, or to compare them with the agency’s evaluation findings. On this record, GAO finds no merit to the agency’s challenge to this billing entry, nor does it see any independent basis for concluding that the charge was excessive, inappropriate, or otherwise unreasonable. The request for reimbursement is, therefore, granted.