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GAO Says Attorney Fee Cap Applies to Former Small Business

August 7, 2020 | Posted in : Fee Cap / Fee Limits, Fees Paid by Gov't / Taxpayers, Hourly Rates

A recent Law 360 story by Alyssa Aquino, “GAO Says Protest Fee Cap Applies to Former Small Biz,” reports that a Virginia company can't recoup the full legal costs of protesting a $19 million information technology task order because the former small business is subject to a cap on large business protesters' reimbursable legal fees, a federal watchdog has said.

The U.S. Government Accountability Office refused to direct the government to foot Harmonia Holdings Group LLC's entire $73,000 legal bill, finding that though the software company held small business status when it bid on the contract, the company was certified as a large company when it protested the award, according to a decision publicly released.  The GAO said it must be "vigilant" in settling requests for reimbursement.

"In our view, vigilance in evaluating the reasonableness of these requests for public funds is not served by permitting an entity that has certified … that it is no longer small, to benefit from a statutory provision designed to aid small businesses in pursuing protests," the GAO concluded.  The decision ran counter to Harmonia's claims that it was free from the large business cap because it held small business certification when it bid on the contract.

According to GAO filings, the U.S. Department of Agriculture's Animal and Plant Health Inspection Service issued a small-business task order in November 2018 to support its software systems.  AttainX Inc. nabbed the award, but Harmonia protested the deal at the GAO and scored a victory when the office found issues in the evaluation process.

Harmonia and the agriculture agency then grappled over Harmonia's resulting legal fees.  Harmonia sought repayment for the entire bill, but the agency countered with $30,000, saying the company was bound to a $150-per-hour cap on attorney fees, the GAO said.

The cap on fees doesn't clarify how to evaluate protesters whose size status changes between a solicitation and a bid protest, the watchdog acknowledged.  But the GAO pointed out that federal contracting law refers to payments to a "party" when it describes the fee cap, suggesting that size status at the time the bid protest began was the deciding factor.

The approach also falls in line with how federal courts award fees under the Equal Access to Justice Act, the GAO said, referring to the bill allowing an entity with a net value of $7 million or less to recoup the legal costs of suing the government.  "While the language in [federal contracting law] is not identical, we think the approach taken by the federal courts provides a good guideline for addressing the issue," the GAO said.