In Vet4U, LLC v. Department of Veterans Affairs, the Civilian Board of Contract Appeals awarded costs and attorney fees to the small business contractor that won its appeal pursuant to the Equal Access to Justice Act (EAJA), 5 U.S.C. § 504, after finding the government’s position was not substantially justified. The EAJA is a useful tool for small contractors who prevail against the government and were subjected to particularly difficult contracting circumstances.
As a reminder, the EAJA has five basic requirements that the applicant must meet in order to recover: (1) have been a prevailing party in a proceeding against the United States; (2) if a corporation, have had not more than $7,000,000 in net worth and five hundred employees at the time the adversary adjudication was initiated; (3) submit its application within thirty days of final disposition in the adjudication; (4) state the amount sought and include an itemized statement of costs and attorney fees; and (5) allege that the position of the agency was not substantially justified. See 5 U.S.C. § 504(a)(1), (b)(1)(B); Vet4U, LLC v. Department of Veteran Affairs, CBCA 6612-C(5387)
In Vet4U, the contractor was awarded a firm, fixed-price contract to transform the crawl space under a sixty-year old, multi-level VA hospital into a fully functional hospital floor. The contract required a number of construction services including asbestos abatement, dirt and rock excavation, engineering services, and electrical, plumbing, and concrete work. The contractor received approximately $4.1 million for the work and completed it one year prior to the required deadline, but eighteen months after the construction timeline in its contract bid.
The contractor filed a claim for $296,853 in additional costs, which the VA flatly denied. The CBCA granted the contractor’s appeal in the amount of $46,052. Following the successful appeal, the contractor submitted its application under the EAJA for attorney fees (at market rates) of $47,212.50 and expenses totaling $930.11. The sole issue at dispute in the EAJA application was whether the government’s position was substantially justified. Notably, once a prevailing party is established, the burden then shifts to the government, not the contractor, to “show that its litigating position was ‘substantially justified.'” See Ramcor Services Group, Inc. v. United States, 185 F.3d 1286, 1288 (Fed. Cir. 1999).
Despite the government successfully defending the majority of the twenty-three separate claims comprising the contractor’s overall claim, the CBCA noted that it must look to the “entirety of the government’s conduct” when making an EAJA determination. The CBCA ultimately found that the “record brim[med]” with evidence of conduct supporting its finding that the government’s position had not been substantially justified, including: forcing the contractor to bear the costs of renting a crane to a move a chemical shed and dumpster (beyond the contract scope) simply because the VA had no money in its budget to move it; failing to promptly address a gushing water pipe in the crawl space that burst because it was rotted and refusing to reimburse the contractor for the emergency repair; ignoring the contractor’s urgent requests for assistance in securing cooperation from another contractor onsite impeding its excavation work; and leaving the contractor in limbo for fourteen weeks on a costly excavation change order because of understaffing issues.
While navigating the claims and appeals process can be a tough and expensive proposition for small businesses, the EAJA is a useful mechanism where the contractor has the wherewithal to prevail if the government’s litigation position is not justified.