One of the questions we most often get is whether a protester can recover its attorneys’ fees if it wins a Government Accountability Office bid protest. The answer is yes; in fact, that’s the default.
So, win and you get paid, right? (Insert Scrooge McDuck gif.) Afraid not. It’s often far more complicated than that.
First, a caveat: This post is about when a protester succeeds on the merits of a protest that goes all the way to a written decision. There are other ways to “win” a protest, but we’re not going to get in to them today. Importantly, in those instances, a protester may not be entitled to recover its fees.
GAO’s Rule Presumes a Winning Protest Equals Attorneys’ Fees
Let’s start with the rule. GAO’s bid protest regulations state that when it “determines that a solicitation, proposed award, or award does not comply with statute or regulation, it may recommend that the agency pay the protester the costs of . . . [f]iling and pursuing the protest, including attorneys’ fees”. 4 C.F.R. § 21.8(d)(1).
In other words, GAO will usually recommend that the agency pay the protester’s fees if the protester wins its protest. (The reason for the use of the word “recommend” is probably a topic for another time, but just so you know, agencies almost always follow GAO recommendations.) The purpose of recommending the agency pay the protester’s fees is not to reward the protester, nor to punish the agency. Rather, it is to recognize the role the protester played in advocating for the public interest that taxpayer money be spent appropriately.
GAO’s rule and its presumption toward paying the fees of the prevailing protester is unusual in the American legal system. The American Rule—and, yes, it’s called the American Rule—is that the individual parties pay their own way. This deviation, is, naturally, great news for protesters who win.
More good news: The general rule is that the protester should be reimbursed for all the protest grounds it pursued, not just the grounds sustained. But the process is a lengthy one and at almost every stage, there are opportunities for agencies to carve off costs.
Work With the Agency to Agree on a Fee Amount
When GAO recommends an agency pay fees, the protester’s attorneys and the agency must work together to reach an agreement on the amount. The protester has to file a certified claim with the agency within 60 days of GAO’s recommendation. The agency then has to give a decision “as soon as practicable”. Id. § 21.8(f)(2). Obviously, if the agency agrees to the amount claimed, it will write a check and everyone will go their separate ways. If not, that’s when things get interesting.
The parties may disagree over the amount of time spent and/or the rates charged. Indeed, GAO caps legal fees at $150/hour in most cases (unless, a protester is a small business). That may sound like a decent chunk of change, but in comparison to what most large law firm’s charge, it’s pretty low. According to this article, partners at the 50 largest law firms charged an average of $575/hour. The good news for small businesses is that they aren’t capped at that $150/hour. But the burden is still on them to show that the costs are reimbursable and reasonable.
Coming to an agreement may take time, but the general rule is that the protester cannot be reimbursed for the time it spent pursuing its costs. This puts the protester (and its attorneys) in a tough position: if they spend too much time negotiating they could rack up new legal bills that will put a dent in their client’s recovery costs. At some point, continuing to negotiate for additional fees ends up throwing good money after bad.
That being said, it is not inconceivable that an attorney could spend more time working on recovery of costs than he or she did working on the protest—especially if the agency is uncooperative. If the parties can’t agree then the protester will have to ask GAO to rule.
Asking GAO to Weigh In
Its in both parties interests to agree to costs without bringing GAO back to the table. That’s because GAO might recommend that the agency pay the costs associated with pursuing the claim, or it might carve off some of the costs associated with pursuing the protest.
Though GAO generally assumes that the total time spent by the attorneys working on the protest was reasonable, if the agency makes an argument that specific hours should be shaved off either because they were unnecessary or duplicative, it will listen. Likewise, if the agency argues that the fee rate is unreasonable, the attorneys may have to demonstrate that their rates are commensurate with rates usually charged by attorneys with that experience and ability for those services.
Similarly, though the general rule is that GAO will recommend paying the fees associated with all the protest grounds pursued, GAO has long said also that when an issue is “clearly severable” from those that resulted in the sustain, the protester should not be reimbursed. If that sounds murky, it’s because it is.
But there is risk on the other side too. GAO’s rules provide that it can recommend an agency pay a protester’s costs associated with seeking costs. If GAO thinks the agency has taken an indefensible position or unduly delayed providing a response to a protester’s claim it may recommend that the agency pay all the protester’s costs, not only those associated with the protest.
In short, does a GAO protest win equal fees? Yes, sometimes.
Is there more? Absolutely. Fee recovery when the agency takes voluntary corrective action has its own wrinkles. The same is true when alternative dispute resolution (ADR) is used. Those are matters for another blog post.
If you have any questions about this post, please contact us at 913-354-2630.