in the united states court of federal claims bid protest information is redacted in the united...

PROTECTED INFORMATION IS REDACTED

In the United States Court of Federal Claims Bid Protest

) HYPERION, INC. ) 11480 Commerce Park Drive, Suite 120 ) Reston, Virginia 20191-1544 ) ) Plaintiff, ) ) v. ) No. 14- C ) Judge THE UNITED STATES, ) ) Defendant. )

)

CLAIM FOR BID PREPARATION AND PROPOSAL COSTS

Plaintiff, Hyperion, Inc., 11480 Commerce Park Drive, Suite 120, Reston, Virginia

20191-1544 (Hyperion), a Virginia for-profit Corporation and a qualifying Small

Business (http://www.hyperioninc.com/, last visited September 15th, 2014), files in ac-

cordance with RCFC 7(a)(1) this Claim for Bid Preparation and Proposal Costs

Case 1:14-cv-00870-CFL Document 2 Filed 09/18/14 of 25

PROTECTED INFORMATION IS REDACTED - 2 -

against the Defendant, the United States and its Agency, United States Army Con-

tracting Command—Aberdeen Proving Ground (Army); Hyperion alleges as follows:

INTRODUCTION

1. This is a Money Claim for Bid Preparation and Proposal Costs incurred in

connection with a Federal Agency Procurement, the Army’s Solicitation Number

W15P7T-13-R-D002 which was awarded on Monday, December 16th, 2013 to Tech-

nical Communications Solutions Corporation, 154 Aspen Road, Swampscott, Massa-

chusetts 01907-2156 (TCSC) by a Contracting Officer at the U.S. Army Contracting

Command—Aberdeen Proving Ground, 4401 Boothby Hill Avenue, Aberdeen Prov-

ing Ground, Maryland 21005-3013. Solicitation Number W15P7T-13-R-D002 was

conducted as a total Small Business Set-Aside, 15 U.S.C. § 644(a) and reserved for

competition among Small Businesses qualifying under North American Industrial

Classification System (NAICS) Code 238210. The Size Standard for NAICS Code



238210 was then, and is now, three-year averaged annual receipts less than

$15,000,000. 13 C.F.R. § 121.104(c)(1), e-CFR September 11th, 2014. The Require-

ment to be fulfilled with the firm fixed-price Contract proposed by Solicitation Num-

ber W15P7T-13-R-D002 was for overall system design and engineering, followed by

trenching, installation, and testing of one-hundred thirty-one miles of fiber-optic

long-haul and last-mile communications networks within the Royal Hashemite King-

dom of Jordan. These fiber-optic long-haul and last-mile communications networks

were to be designed and engineered, and trenches dug and the networks installed and

tested, within twelve months or less after Contract Award. Commercial warranties

for installed equipment (e.g., fiber, unplasticized polyvinyl chloride pipe, optical cable

splices, and optical distribution frames) were to transfer to the end-user and to be

valid for not less than twelve months after delivery and acceptance. This was a chal-



lenged Federal Agency Procurement, 10 U.S.C. § 2302(3)(A); 41 U.S.C. § 111, over

which this Court had jurisdiction under 28 U.S.C. § 1491(b)(1).

2. The Court has ordered Equitable Relief for Plaintiff Hyperion and on April 9th,

2014 set-aside the Contract earlier awarded to TCSC; the Court declined to provide

any more instruction to the Army. Hyperion, Inc. v. United States, 115 Fed. Cl. 541,

557 (2014). A Judgment setting-aside the Contract Award to TCSC was entered on

April 10th, 2014 (Hyperion, Inc. v. United States, Fed. Cl. No. 13-1012C, Judge

Charles F. Lettow, ECF Document Number 33, filed April 10th, 2014) and this

Judgment became final on June 9th, 2014, when no Appeal was taken to the United

States Court of Appeals for the Federal Circuit, 28 U.S.C. § 1295(a)(3)

3. This Civil Action is brought to obtain further Equitable Relief for Plaintiff Hy-

perion, a Declaration that the contested Solicitation was a sham Competition and a



Money Judgment for the Proposal Preparation Costs needlessly incurred by Plaintiff

Hyperion.

NATURE OF THE ACTION

4. The Court has jurisdiction over this Civil Action under 28 U.S.C. § 1491(a)(1)

and 28 U.S.C. § 1491(b)(2). Under 28 U.S.C. § 1491(b)(2) this Court has jurisdiction

to afford equitable relief, including monetary relief limited to bid preparation and

proposal costs. Under 28 U.S.C. § 1491(a)(1) this Court has jurisdiction to enter a

Money Judgment against the United States “founded . . . [on] any Act of Congress,”

and in this Civil Action that is 28 U.S.C. § 1491(b)(2).

5. This Claim for Bid Preparation and Proposal Costs is timely filed. The Army

has declined to provide to Plaintiff Hyperion the current status of Solicitation Num-

ber W15P7T-13-R-D002, and it is Plaintiff Hyperion’s information and belief that the

Army has once again awarded this Requirement to TCSC, this time on a sole-source



basis. Attachment 1. This Court may now revisit its previous Judgment to address

these subsequent events. Insight Systems Corp. v. United States, 115 Fed. Cl. 734, 738

(2014).

6. Plaintiff Hyperion is a proper party for purposes of the Equal Access to Justice

Act, 28 U.S.C. § 2412(d)(2)(B)(ii), i.e., Plaintiff Hyperion is a private party and a for-

profit Virginia Corporation which has not over 500 employees and whose Net Worth

did not exceed $7,000,000 averaged over the past three years. Given the $15,000,000

three-year averaged Size Standard for the contested Solicitation, and given that the

Solicitation generated a Competition in the very competitive marketplace for Fed-

eral services, none of the Offerors had a Net Worth over $7,000,000 or had over

500 employees. Annual receipts of $15,000,000 or less cannot result in a Net Worth

over $7,000,000 except at an unobtainable rate of Profit. Annual receipts of



$15,000,000 or less will support nowhere close to 500 employees, even though

those employees are all compensated at the minimum wage.

FACTUAL ALLEGATIONS

7. Plaintiff Hyperion has incurred $402,583.22 in Proposal Preparation Costs and

unreimbursed legal fees. These Proposal Preparation Costs comprise $131,354 incur-

red in preparing and submitting Plaintiff Hyperion’s Competitive Proposal,

$33,853.57 incurred by Plaintiff Hyperion in supporting the Civil Action which suc-

cessfully challenged the earlier Award to TCSC, $15,996.91 in travel, $182,382.51 in-

curred by Plaintiff Hyperion’s proposed Jordanian subcontractor in supporting

Plaintiff Hyperion’s Competitive Proposal, and $38,996.97 in legal fees for which

Plaintiff Hyperion is responsible yet may not be reimbursed to Plaintiff Hyperion un-

der 28 U.S.C. § 2412(d)(1). These Proposal Preparation Costs are further broken-

down in [ ]. [ ] is a summary compilation resulting from



a review of Plaintiff Hyperion’s books and records and itself sufficient documenta-

tion of Plaintiff Hyperion’s Claim for Proposal Preparation Costs. Geo-Seis Heli-

copters, Inc. v. United States, 79 Fed. Cl. 74, 80 (2007), citing Impresa Construzioni

Geom. Domenico Garufi v. United States, 61 Fed. Cl. 175, 183 (2004). Plaintiff Hy-

perion requests that the entirety of [ ] be filed under Seal because [

] contains confidential commercial information concerning Plaintiff

Hyperion’s personnel, costs, and rates whose public disclosure would advantage

Plaintiff Hyperion’s competitors.

8. Proposal Preparation Costs are recoverable only if three conditions are met:

(1) the Agency must have committed a prejudicial error in conducting the Solicita-

tion; (2) that error caused the Protester to unnecessarily incur Proposal Prepara-

tion Costs, and (3) the Proposal Preparation Costs claimed must be reasonable and

allocable, i.e., incurred specifically for the contested Solicitation. Insight Systems,



115 Fed. Cl., at 738-739 (2014). Proposal Preparation Costs are allocable if they are

incurred when preparing a Competitive Proposal for a particular Agency Require-

ment, as opposed to marketing and networking costs incurred in promoting supplies

and services to an Agency before a Requirement is initiated. Innovation Development

Enterprises of America, Inc. v. United States, 114 Fed. Cl. 213, 221 (2014).

9. The attached Declaration of Paul Milo, Jr., Plaintiff Hyperion’s President, ex-

plains this Agency Requirement is a part of an ongoing multi-phase project, and

that much preparation was required even before the contested Solicitation was is-

sued. Included in this preparation was travel to Germany and the United Kingdom

to meet with suppliers, Project personnel, and the Jordanian company which be-

came Plaintiff Hyperion’s proposed Subcontractor. Also required after the contest-

ed Solicitation was issued was travel to Jordan because the Army had omitted de-

sign details, including specific fiber-optic cable routes and subsurface conditions a-



long those routes. Yet the Contract proposed by the Army was firm fixed-price,

and the Army made it clear that there would be no changes in Price allowed for un-

anticipated subsurface conditions. Plaintiff Hyperion, together with its proposed

Jordanian Subcontractor, conducted in March 2013 an extensive site survey over

the entire intended route for each of six fiber-optic long-haul and seventeen fiber-

optic last-mile communications networks. This site survey became the basis for

Plaintiff Hyperion’s Competitive Proposal. This Declaration is [ ]. [

] likewise contains confidential commercial information concerning

Plaintiff Hyperion’s personnel, costs, and rates whose public disclosure would ad-

vantage Plaintiff Hyperion’s competitors. Plaintiff Hyperion requests that [

] be filed under Seal.

10. A second Declaration from Paul Milo, Jr., explains the schema used by Plain-

tiff Hyperion to cost-out the elements of its Claim for Proposal Preparation Costs.



The protocol used by Plaintiff Hyperion to establish hourly rates for its otherwise

salaried personnel is the preferred protocol for such calculations, and it includes no

allowance for anticipatory profit. J.C.N. Construction, Inc. v. United States, Fed.

Cl. No. 12-353C, February 15th, 2013, 2013 U.S. Claims LEXIS 77, *5-*6. This

second Declaration from Paul Milo, Jr. is Attachment 4.

11. Plaintiff Hyperion’s proposed Jordanian subcontractor likewise unnecessari-

ly incurred Proposal Preparation Costs, these including allocable costs of salaried

personnel, automobiles and fuel, telecommunications, and accommodations. These

Proposal Preparation Costs unnecessarily incurred by Plaintiff Hyperion’s pro-

posed Jordanian subcontractor are set out in [ ]. [ ] con-

tains confidential commercial information concerning Plaintiff Hyperion’s costs

and rates whose public disclosure would advantage Plaintiff Hyperion’s competi-

tors. Plaintiff Hyperion requests that [ ] be filed under Seal.



12. Still pending before the Court in Hyperion, Inc. v. United States, Fed. Cl. No.

13-1012C, Judge Charles F. Lettow, ECF Document Number 39, filed June 17th,

2014 is Plaintiff Hyperion’s Claim for Attorney’s Fees and Related Nontaxable Ex-

penses and Plaintiff Hyperion’s Bill of Costs, Hyperion, Inc. v. United States, Fed.

Cl. No. 13-1012C, Judge Charles F. Lettow, ECF Document Number 38, filed June

17th, 2014. Including the Attorney Fees incurred in filing these documents and the

Attorney Fees incurred in filing a Reply to the Army’s Response, Plaintiff Hyperion

seeks an Award under 28 U.S.C. § 2412(d)(1) for 173 hours which now have been

billed to Plaintiff Hyperion and for which Plaintiff Hyperion is responsible at an

agreed-on hourly rate. If Plaintiff Hyperion’s Claim for Attorney’s Fees and Related

Nontaxable Expenses is granted, Plaintiff Hyperion will be reimbursed at a lesser

rate calculated based on the cost-of-living adjustment contemplated by 28 U.S.C. §

2412(d)(2)(A)(ii). This calculated hourly rate with cost-of-living adjustment is



$188.49. The Carryover Legal Fees here claimed by Plaintiff Hyperion are the dif-

ference between the calculated hourly rate with cost-of-living adjustment and the

agreed-upon hourly rate for which Plaintiff Hyperion is still responsible.

13. [



].

14. The Army has refused to provide the status of the contested Solicitation or the

status of the Requirement which the Solicitation sought to be fulfilled . Attachment 1.

On information and belief, this refusal is the product of a sham Competition in which

the result was pre-ordained—the Army had decided before the Competition to make

an Award to TCSC’s proposed Subcontractor, doing so in the guise of an Award to

TCSC as the prime Contractor. [

]. This was a



prejudicial error committed by the Army, and it is the cause of Plaintiff Hyperion in-

curring unnecessarily the Bid Preparation and Proposal Costs which it seeks to recov-

er in this Civil Action. Reema Consulting Services, Inc. v. United States, 107 Fed. Cl.

519, 533 (2012).

PRAYER FOR RELIEF

WHEREFORE, premises considered, Plaintiff Hyperion respectfully requests

the Court to grant Judgment for Plaintiff Hyperion in this Civil Action, and to Or-

der the following relief:

1. a Declaration that the Army’s Solicitation Number W15P7T-13-R-D002 was

conducted as a sham Competition which could only result in the Award of this Re-

quirement to TCSC and its proposed Subcontractor; and

2. a Money Judgment for $402,583.96; and

3. such further and other relief as the Court may deem just and proper.


Cyru~-.a.>n

Virginia State Bar Number 03135

September 18th, 2014

ALBO & 0BLON, L.L.P.

Courthouse Plaza

2200 Clarendon Boulevard, Suite 1201

Arlington, Virginia 22201-3331

Telephone:

Facsimile:

Mobile:

(804) 776-0660

(703) 312-0415

(703) 819-5944

Electronic Mail: lawyer@procurement -lawyer.com

Attorney of record for Plaintiff, Hyperion, Inc.

PROTECTED INFORMATION IS REDACTED - 16-


ATTACHMENT 1


HYPERION 11480 Commerce Park Drive TEL (703) 848-8850

Suite 120 FAX (703) 848-1722

Reston, Virginia 20191

July 29, 2014

Memorandum for the Record:

On July 29, 2014, I called the Army Government Contracting Officer (Ms. Gloria Atkins)

related to Jordan Armed Forces Strategic Communications Fiber Optic Last Mile Project that had

previously been advertised under solicitation # W15P7T-13-R-D002. The purpose of my call

was to try and determine what action the Government was taking to fulfill this requirement

since the court had ruled in favor of Hyperion’s protest of the award. When Ms. Atkins

answered the phone, I told her that I was the Contracts Manager for Hyperion and that

Hyperion was one of the companies that had submitted a proposal against the subject

solicitation and asked if she could provide me the current status on the requirement. She

immediately became defensive and she would not provide me any information on the current

status of the requirement. I told her that Hyperion was aware that the court had struck down

the original award and that I was just trying to determine the current status. I told her that I

thought that the Government had decided to reopen dialog with all the companies that had

submitted bids. She said that I should contact my legal counsel because that was not what

the courts directed. She said I should contact my legal counsel for the actual ruling. I also

said that I had heard a rumor that the Government was in the process of processing a sole

source award for the effort and I asked if she would comment on that. She said she would

not comment on rumors. I asked her again, if she was the Contracting Officer for the work

and she acknowledged that she was but she said she would not provide me any information

concerning it. As I said previously, Ms. Atkins was very defensive and non-

cooperative. Because of her non-cooperativeness, it was a very short telephone conversation.

Tom Bryan

Hyperion Inc.

Senior Contracts Manager


ATTACHMENT 4


In the United States Court of Federal Claims

Bid Protest

HYPERION, INC. 11480 Commerce Park Drive, Suite 120

Reston, Virginia 20191-1544

)

)

)

) )

)

)

Plaintiff,

v.

THE UNITED STATES,

Defendant.

) No. 14+ ) Judge )

)

)

)

DECLARATION OF PAUL MILO. JR.

Pursuant to 28 U.S.C. § 1746, I, Paul Milo, Jr., make the following Declaration under penalty of perjury:

I am the President of Hyperion, Inc. (Hyperion), a Virginia domestic for-profit Corporation and I make this Declaration to explain the Rates used in our Claim for Proposal Preparation Costs.

OVERVIEW

Our Claim for recovery of Proposal Preparation costs has been done in compliance with the Federal Acquisition Regulation (FAR). In developing the Claim submitted to the Court, Hyper-


ion has captured all of the direct rates incurred in preparing its Proposal. To these direct costs we

applied indirect cost rates that have likewise been calculated in full compliance with the FAR.

DIRECT COSTS

In developing our direct costs we identified three categories of direct cost elements:

• Labor

• Costs incurred by our principle subcontractor Ardico

• Other Direct Costs (ODCs) (which include travel and other related costs)

For labor costs, we used the actual hourly pay rate for each of the personnel assigned to this project. As each of the people assigned to this Proposal preparation were salaried, their respective

hourly rate was calculated by dividing their annual salaries by 2,080 hours, the accepted standard work year.

Subcontractor Cost

Hyperion instructed Ardico to calculate its cost associated with the support they provided in

the site survey, the effort used to calculate, compile and document the quantitative data coUected

during the site survey and any effort they expended in supporting Hyperion's sourcing of mater· ial to be supplied within Jordan.

Other Direct Costs (00Cs)

Hyperion has restricted our inclusion of ODCs to just the travel and transportation costs di· rectly incurred in the development of this Proposal, including the site survey and meetings related to negotiating a sub-contract plan and recruiting the Project Manager for this effort.


INDIRECT COSTS

In accordance with the FAR regulations concerning cost recovery from Bid Protests, Hyper

ion has escalated our direct costs with allowable indirect costs as follows:

Direct Cost Element

Labor

Sub-Contractor

ODCs

Indirect Cost Rate Applied

Fringe Benefits Overhead

G&A

G&A

G&A

In accordance with the FAR, Hyperion applied no Fee to any of our Claim for recovery of Proposal development costs.

As attested to by our outside auditors, our accounting system is in full compliance with the instructions contained in the FAR and in accordance with the Defense Contract Audit Agency (DCAA). Our indirect cost rates have been specified as allowable expenses by DCAA. In the sec

tions below we detail the components of the indirect rates we used.

INDIRECT RATES

These costs are accumulated in our Sxxx series of accounts and represent the benefits contri

buted to the employee by the company and include vacation, insurance and our 401k plan. Those accounts and an account description appear in our schedule - see rows 130 through 149 of our

Excel schedule.

· 3 ·


Our fringe indirect rate is calculated by dividing the fringe pool of costs by all labor costs. Per our schedule, we have applied a fringe rate of in pricing the labor costs for this Proposal

preparation.

Overhead

These costs represent the management burden incurred for the benefit of two or more cost objectives (Contracts). Inclusive is the program management labor, allocated rent and office ex·

penditures that are specifically incurred in managing the company's contract base. Our overhead costs are represented in our schedule by the 6xxx series of cost elements.

Our overhead indirect rate is calculated by dividing the overhead pool of costs by direct labor and applied fringe costs. Per our schedule, we have applied a fringe rate of in pricing the labor costs for this Proposal.

These costs represent the management burden incurred for the benefit of the overall Corporation. Inclusive is the executive management labor, allocated rent, office expenditures and con· suiting costs that are specifically incurred in managing the personnel, bidding on new business

and supporting the workforce with a communication system, to name of few of the cost elements in this pool. Our G & A costs are represented in our schedule by the 7xxx series of cost elements. Refer to rows 150 through 183 for a list of those elements.

Our G & A indirect rate is calculated by dividing the G & A pool of costs by direct labor and applied fringe costs. Per our schedule, we have applied a fringe rate of in pricing the labor costs for this Proposal.

Attachment 1 is the chart of accounts that we use to accumulate the cost pools for Fringe Benefits, Overhead and G&A.


I declare, under penalty of perjury, that the foregoing is true and correct. Executed on Monday, September 8'h, 2014.

~ --:==-. -- =- < c::-Z:z.*d -c. •• I t- ......

Paul Milo, Tr. President Hyperion, Inc.

11480 Commerce Park Drive, Suite 120

Reston, Virginia 20191-1554

(703) 848-8850 x3025

· 5 ·


AITACHMENTl Hyperion Chart of Accounts fo r Indirect Cost Pools

DlnctCosls Direct Costs:40DD • Direct Labor Direct Costs:4D2D • Subcontractors Direct Costs:403D • Active Network Hardware Direct Costst405D · Passive Network Hardware Direct Costst4D&D • Installation Supplies Direct Costs:4D7D • Telephones Direct Costs:4D9D • Postage, Delivery & Ship Direct Costs:412D • Travel Out of Town Direct Costs:413D • Other Direct Costs DlrectCosts:4135 • Dlscount:Merchant Discount Fees Fringe Benefit&:5085 • LlC Insurance Fringe Benents:sooo • VacaUon Fringe Benents:5010 ·Holiday Fringe Benents:5030 •Admlnl11ratlve Fringe Beneftts:504D • Personal Fringe Beneftt&:5050 • Flea Expense Fringe Benents:5060 · Futa Expense Fringe Benents:5070 • Suta Expense Fringe Beneftts:Soao • Group Insurance Fringe Benents:5090 · Medical Insurance Fringe Benents:5095 ·Dental Insurance Fringe Baneftts:5100 ·Life Insurance Fringe Baneftts:5110 ·Disability Fringe Benefitst5120 ·Workers Comp Fringe Baneftts:5130 • Retirement Plan Fringe Baneftts!5130 ·Retirement Plan:5131 ·Retirement Plan Exp Fringe Benents:5130 ·Retirement Plan:5132 · ProfttShare contrlb1 Fringe Beneftts!5140 • Employee MonJe & Welfare Fringe Beneflts:BS&O • Payroll Expenses Fringe Benents:6561 • •Payroll Expenses General & Administrative General & Administrattw:7405-State Gross Receipts 'ntx General & AdmlnlstraUve:7000 • G&A Labor Applied Fringe General &Admlnlstra!lve:7010 ·Consultants General & AdmlnlstraUve:704D • Bonus General & Admlnlstratlve:7060 • Tr.ivel Expenses General &AdmlnlstraUve:70BO • omce Rsnt General & Admlnlstratlve:7090 • omce Expense General &Admlnlstratlve:7100 •Incentive Payments General & AdmlnlstraUve:7120 • Business License & 'lllxes General & AdmlnlstraUw:7140 • Trilnlng & Seminars General & Admlnlstratlve:71BO • Insurance Gsneral & Adminlstratlw:71SO · Dues & Subsclptlons General & Admlnlstratlve:7200 • Recruitment Expenses General & Admlnlstratlw:7220 • 'ntlephone Service General & Admlnlstratlw:7221 • Data Communications General & Admlnlstratlw:7240 • 'ntlephone Long Distance General & Admlnlstrative:725~ • Minor §clulpment General & Admlnlstratlw:7255 • Automobll Lease General & Admlnlstratlw:7256 ·Automobile exp. General & Admlnlstrattw:72BO .. Equipment Lease General & Admlnlstratlw:7270 • Computer HW & SW General & AdmlnlstraUve:7280 • omce SUpplies General & AdmlnlstraUve:730D • Postage, Delivery & Shipment General & AdmlnlstraUw:7310 ·Maintenance General & AdmlnlstraUve:7320 • Printing & Publications General & AdmlnlstraUw:7340 • Depredation Expense General & AdmlnlstraUw:7360 • Accounting & Auditing General & Admlnlstriltlw:738o • Legi.l Expense General & Admlnlstratlw:7400 ·State Income 'nix Expense General & AdmlnlstraUw:7415 • Personal Property lllxes General & AdmlnlstraUve:744D ·Miscellaneous EJCpensa General & AdmlnlstraUw:7450 ·Sales "nix Expanse owr haad:&ooo-:-owrhea d Labor~ - - ·-Applied Fringe Overhead:6060 • ~alnlng Labor


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