Claimant Rejected Government Settlement Offer that Would’ve Saved Litigation Expenses. Did the Rejection Affect Claimant’s Request for Fees Under the EAJA?

The Equal Access to Justice Act allows small contractors to recover fees when they prevails in claims against the government. In this case, the contractor had, for the most part, prevailed in an ASBCA appeal. But before the appeal was filed the government had offered to settle for the amount that was ultimately awarded. While the board found that a fee award was appropriate under the EAJA, it also reasoned that it had to account for the rejected settlement offer, which could have saved litigation expenses. To account for the rejected offer, the board discounted the contractor’s fee award by 20%.

Application Under the Equal Access to Justice Act of WECC, Inc., ASBCA No. 60949-EAJA

Background

WECC appealed a claim to the ASBCA alleging it had incurred costs due to delay and contract changes. The board, for the most part, granted the appeal, finding that WECC was entitled to over $300,000 in compensable delay. The board denied the appeal as to related claimed field office overhead. WECC requested that it be reimbursed $265,00 0 in attorneys fees under the Equal Access to Justice Act.

Legal Analysis

• Government’s Position Was Not Substantially Justified – A prevailing party is only entitled to fees under the EAJA if the government’s position was not substantially justified. The government attempted to argue that its position was justified because it had extended the contract for the majority of days of delay. The board found this argument misleading because the government had not paid WECC for those extensions. The government also argued its position was justified because the case turned on close factual questions. The board rejected this argument, noting that the government’s case had been mostly based on the unpersuasive, conclusory expert testimony.
• WECC Didn’t Prevail on All Its Claims – Work on an unsuccessful claim may not be compensable under the EAJA. WECC had not prevailed on its claim for home office overhead. While it was not clear how much work WECC attorneys had put into the unsuccessful claim, the board reasoned that it has discretion in determining a fee award so long as it accounts for the amount awarded and the results obtained. Here, the board opined that WECC has spent about 20% of its time on the unsuccessful claims and thus reduced the fee award by 20%.
• Rejected Settlement Offer – A rejected settlement offer may impact the reasonableness of a fee award under the EAJA. Here, WECC had rejected a government settlement offer that would have saved itself and the government litigation expenses. In light of this settlement rejection, the board further reduced WEEK’s fee award by another 20%.

WECC is represented by G. Scott Walters, Jacob W. Scott, and Brian S. Wood of Smith Currie & Hancock LLP. The government is represented by Scott N. Flesch, Major Joseph D. Levin, and Dana J. Chase of the Army.