(Editor’s Note.  Though it is often desirable to pay an outside professional only if you are successful in a claim or protest, the following demonstrates some pitfalls to recovering otherwise allowable costs when the arrangement is not properly made.)

TRS Research successfully pursued and won a protest.  When it submitted a $17,425 claim for attorneys’ fees the contracting officer denied the claim because TRS (1) did not show its claimed $425 hourly rate was customary for similar services performed in the attorney’s locale and (2) failed to prove that TRS was obliged to pay the fees regardless of whether they were recovered from the government. Though TRS submitted “certification” from the attorney stating TRS was “billed” for the services and that TRS was expected to pay the invoiced amount as well as contending the $425 hourly fee was customary in its locale, there was no documents showing the fees were actually billed to TRS or that TRS had either paid or agreed to pay the fees and no survey allegedly performed by the attorney’s firm was produced verifying the contention.

The GAO rejected TRS’s claim noting that contingent fees (i.e. fees that are paid only if recovered from the government) “may not properly be reimbursed” by the government.  A successful protester must prove it is obliged to pay the fees regardless of whether the fees are recovered.  The GAO also rejected the claim because there was no evidence the $425 hourly fee was reasonable or customary in the locale.  It stated even higher fees may be reasonable but there still must be proof that similar fees are customarily charged for that type of work and that necessary evidence might include a survey of local law firm rates or the alleged market analysis that was performed by the law firm before rates were set (TRS Research-Costs, Comp. Gen. Dec. B-290644).

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