An award of attorneys' fees and costs
under the Equal Access to Justice Act was reversed
by the Court of Appeals for the Federal Circuit
because the government's actions and litigation
position supporting compliance with the Small
Business Administration's parity regulations were
substantially justified. After holding the
government violated the Small Business Act by not
giving priority to historically underutilized
business zone small business concerns (
54 CCF ¶79,397), the Court of Federal Claims
ruled the government's position in the bid protest
was not substantially justified (
55 CCF ¶79,534).
Genuine Dispute
However, the government's actions at
the agency level were substantially justified. The
SBA's parity regulations were binding unless
declared invalid by a court of competent
jurisdiction. In addition, Department of Justice,
Office of Management and Budget, and Department of
Defense memoranda obligated the government to comply
with the regulations and place HUBZone and 8(a)
programs on an equal footing despite contrary
positions of the Government Accountability Office
and the CFC. The government's litigation position in
the bid protest consisted of its merits-based
argument and a jurisdictional argument. The
merits-based argument was substantially justified
because there was a genuine dispute among all three
branches of government as to whether the HUBZone
program was entitled to priority. Moreover, before
Congress amended the Small Business Act to clarify
the HUBZone program did not take priority (PL
111-240), the Senate noted the DOJ's memorandum
and affirmed the SBA's parity regulations. The
government's jurisdictional argument—that the
protester waived its right to bring a protest in the
CFC despite prior agency level and GAO protests—was
less defensible. Nevertheless, viewing the
government's conduct in the case in its entirety,
the CFC abused its discretion when it concluded the
government's position was not substantially
justified. ( DGR Associates,
Inc. v. U.S., et al., CA-FC,
56 CCF ¶79,865) |