Waterfront Technologies, Inc. – Costs, B-401948.19, March 19, 2012

Link: GAO Decision

Protestor: Waterfront Technologies, Inc.

Agency: Department of Labor

Disposition: Request for costs denied.

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GAO Digest:

1. Reimbursement of a successful protester’s costs for the work performed by its employees in pursuing the protest is denied where the protester’s supporting information regarding those costs shows that the obligation to pay the employees for their efforts in pursuit of the protest is subject to a contingency arrangement such that the employees would only be paid if the protest costs are actually recovered from the government, and where the protester has not paid its employees.
2. Reimbursement of a successful protester’s costs, including legal fees, is denied where the protester expressly refuses to segregate its costs between the meritorious and non-meritorious protest issues, as required by the prior GAO recommendation, despite requests by the procuring agency and GAO to provide this information.

Waterfront Technologies, Inc. sought reimbursement of costs for its protest of the award to 21^st Century Technologies, Inc. of a contract for Enterprise Information Technology Services to support the Office of Foreign Labor Certification. The GAO had previously recommended that the agency reimburse Waterfront for the costs of pursuing one aspect of its protest which had resulted in corrective action by the agency. This protest arose when Waterfront and the agency could not agree on the amount of reimbursement.

The GAO first noted that costs are reimbursable where adequately documented and reasonable, such that it does not exceed that which would be incurred by a prudent person in pursuit of a protest. The GAO determined that none of the costs in this case were reimbursable because the protestor had not demonstrated that they were actual expenses incurred by Waterfront. The GAO differentiated between contingency fee arrangements where the protestor is obligated to pay upon a successful protest, and an arrangement where the protestor is only obligated to pay after reimbursement from the government. The GAO additionally denied Waterfront’s claims because Waterfront refused to segregate its costs between meritorious and non-meritorious issues. Finally, the GAO found the claimed number of hours by Waterfront employees to be excessive. It noted that Waterfront’s outside counsel worked 15.5 hours, yet two Waterfront employees, who could not access much of the material due to the protective hour, worked 170 hours over 12 calendar days.

Although contingency fee arrangements are permissible when preparing a protest to the GAO, protestors must make sure the arrangement provides for payment upon a successful protest, regardless of whether the government reimburses costs or not. Protestors should also maintain detailed records regarding hours worked, distinguishing which issue worked on for what length of time. Should the GAO sustain only a portion of a protest, costs may be reimbursable, but only where the protestor can adequately demonstrate the costs specifically associated with the meritorious arguments.