In the United States Court of Federal Claims

No. 17-1407C

(Filed under seal January 24, 2023)

(Reissued February 1, 2023)†

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ARXIUM, INC., *

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Plaintiff, *

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v. *

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THE UNITED STATES, *

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Defendant, *

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and *

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INNOVATION *

ASSOCIATES, INC., *

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Defendant-Intervenor. *

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Fernand A. Lavallee, Jones Day, Washington, D.C., for plaintiff. 

Michael D. Austin, Trial Attorney, Commercial Litigation Branch, Civil 

Division, Department of Justice, Washington, D.C., for defendant. 

David Y. Yang, K&L Gates, LLP, Washington D.C., for defendant-intervenor

Innovation Associates, Inc.

ORDER

WOLSKI, Senior Judge.

In this post-award bid protest, the Court had previously found that plaintiff 

ARxIUM, the initial awardee, was arbitrarily excluded from the competitive range 

† This order was initially filed under seal so that the parties could request 

redactions. None having done so, the order is now reissued for publication.
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when agency corrective action reinterpreted two latently ambiguous requirements 

without issuing clarifying amendments and giving plaintiff the opportunity to 

revise its proposal. ARxIUM, Inc. v. United States (ARxIUM I), 136 Fed. Cl. 188, 

198–208 (2018). After the subsequent award was enjoined, see id. at 210–11, the 

Defense Logistics Agency (DLA) amended the solicitation regarding one of the 

requirements in a manner that precluded ARxIUM from competing for the award 

without the assistance of incumbent intervenor Innovation Associates---which 

denied plaintiff’s requests. ARxIUM, Inc. v. United States (ARxIUM II), 139 Fed. 

Cl. 85, 87 (2018). Consequently, the Court concluded that ARxIUM was entitled to 

an award of bid preparation and proposal costs, as plaintiff “was unfairly induced to 

enter a competition that could not be won without the aid of a competitor.” Id. 

(citing ARxIUM I, 136 Fed. Cl. at 200–01 (citing Centech Grp., Inc. v. United States, 

79 Fed. Cl. 562, 564, 577 (2007); Concept Automation, Inc. v. United States, 41 Fed. 

Cl. 361, 369–70 (1998)); see also Guzar Mirbachakot Transp. v. United States, 104 

Fed. Cl. 53, 68 (2012) (holding that unnecessary bid proposal costs that were 

arbitrarily induced may be recovered, in addition to injunctive relief).

Entry of judgment was deferred by the Court until the quantum of awarded 

costs could be determined. ARxIUM II, 139 Fed. Cl. at 88. Plaintiff was ordered to 

submit to the government a detailed reckoning of its bid preparation and proposal 

costs. Id. If those two parties could not agree to a stipulated amount of costs, each 

was ordered to file a paper detailing its position. Id. Since agreement proved 

elusive, ARxIUM and the government each filed their separate papers. See Pl.’s 

Position on Bid Prep. & Proposal Costs (Pl.’s Br.), ECF No. 66; Def.’s Opp’n to Pl.’s 

Cost Subm’n (Def.’s Br.), ECF No. 65. The proper size of the award of bid 

preparation and proposal costs is the matter presently before the Court. 

In support of plaintiff’s brief, plaintiff has attached multiple exhibits 

detailing the cost breakdown for its proposal. Pl.’s Br. Exs. 1–8. Plaintiff has 

provided declarations as to the accuracy of the submitted costs by Christine Ross, 

the Director of Compliance & Contracting, and by Cathy Gregg, the Director of 

Human Resources. Pl.’s Br. Ex. 1, ECF No 66-1 at 4–5 (Gregg Decl.), 9–12 (Ross 

Decl.). Attached to the Gregg declaration were two tables calculating and depicting 

the fully burdened hourly rate for each of the ARxIUM employees who worked on 

plaintiff’s proposal. Id., ECF No. 66-1 at 7–8. Attached to the Ross declaration are 

five attachments labeled Exhibits A–E. Id., ECF No. 66-1 at 13–57. The first 

exhibit includes descriptions of the time spent by ARxIUM employees in preparing 

the proposal, such as entering data, drafting documents, reviewing messages, and 

attending meetings. Id., ECF No. 66-1 at 15–30. It also includes time records for 

outside counsel relating to analysis of the final solicitation amendments. Id., ECF 

No. 66-1 at 31–33. Exhibits B and C to the Ross declaration contain documents 

evincing some of the work performed in preparing the ARxIUM proposal. Id., ECF 

No. 66-1 at 34–42. Exhibit D relates to a meeting held to discuss a response to the 

final solicitation amendments. Id., ECF No. 66-1 at 44. Exhibit E contains 
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correspondence between plaintiff and plaintiff’s counsel detailing legal costs, with 

most of the information redacted. Id., ECF No. 66-1 at 46–57.

Finally, plaintiff’s Exhibits 2 to 8 contain correspondence between the 

plaintiff and the government, encompassing their disagreements over various line 

items and showing how ARxIUM reached the final cost figure submitted for award. 

Pl.’s Br. Exs. 2–8. Plaintiff requests an award of $80,164.48 for bid preparation 

costs broken down into the categories of costs for employee time and labor 

($22,987.15), legal advice and counsel ($11,100.00), and opportunity costs 

($46,077.33). Pl.’s Br. at 1, 6–9; Ex. 5 to id., ECF No. 66-5 at 10. The government 

opposes the latter two categories of costs in their entirety and disputes $2,564.72 of 

the costs associated with ARxIUM’s employee time and labor. Def.’s Br. at 1. 

Under the Tucker Act, 28 U.S.C. § 1491, as amended by the Administrative 

Dispute Resolution Act of 1996 (ADRA), Pub. L. No. 104-320, 110 Stat. 3870 (1996), 

in a bid protest our court “may award any relief that the court considers proper, 

including declaratory and injunctive relief except that any monetary relief shall be 

limited to bid preparation and proposal costs.” 28 U.S.C. § 1491(b)(2). While bid 

preparation and proposal costs are not statutorily defined, our court has turned to 

the language in the Federal Acquisition Regulations (FAR), which interprets these

costs to include “costs incurred in preparing, submitting, and supporting bids and 

proposals (whether or not solicited) on potential government or non-government 

contracts.” Geo-Seis Helicopters, Inc. v. U.S., 79 Fed. Cl. 74, 80 (2007) (quoting 48 

C.F.R. § 31.205-18(a)) (cleaned up); see also Beta Analytics Int’l, Inc. v. United 

States, 75 Fed. Cl. 155, 160 (2007) (holding FAR provisions concerning bid 

preparation and proposal costs were “useful guidance” but “not authoritative”).

The bid preparation and proposal costs associated with the employee hours of 

plaintiff are for the most part well-explained, documented, and justified. Although 

ARxIUM understandably did not keep time records like a law firm, records in this 

form are not necessary to support a small business’s request for proposal costs. 

Beta Analytics, 75 Fed. Cl. at 163. In her declaration, Ms. Ross, the manager of 

ARxIUM’s proposal, explained her personal knowledge of the work performed and 

the reasonable methodology she adopted to estimate the time taken to perform the 

various tasks involved. See Ross Decl. ¶¶ 1, 3–9.

The government agrees with nearly ninety percent of the employee costs that 

ARxIUM attributes to its proposal, objecting to just $2,564.72 of this portion of the 

request. Def.’s Br. at 1. The bulk of these challenged costs concern work performed 

after DLA amended the solicitation in response to the Court’s ruling on ARxIUM’s 

protest. See id. at 10. As this work did not result in a revised proposal submission, 

the government maintains that it cannot contribute to bid preparation and proposal 

costs. Id. (citing Innovation Dev. Enters. Am., Inc. v. United States (IDEA), 600 F. 

App’x 743, 746 (Fed. Cir. 2015)). Plaintiff argues that once the solicitation was 
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amended, the proposal it previously submitted effectively became a draft proposal, 

and that its efforts to comply with the amendments amounted to further work on 

that draft proposal. Pl.’s Br. at 11–14. It relies on a string of cases stating that 

awardable bid preparation costs include costs incurred in “preparing draft and 

actual bids.” Id. at 12 (citing Lion Raisins, Inc. v. United States, 52 Fed. Cl. 629, 

631 (2002); Couture Hotel Corp. v. United States, 138 Fed. Cl. 333, 341 (2018); Q 

Integrated Cos., LLC v. United States, 133 Fed. Cl. 479, 487 (2017)); see also 

Naplesyacht.com, Inc. v. United States, No. 04-252C, 2005 WL 6112642, at *1 (Fed. 

Cl. March 31, 2005) (citing Lion Raisins, 52 Fed. Cl. at 631).

None of these cases cited by ARxIUM concerned drafting work that did not 

ultimately result in a submitted proposal. One case, Couture Hotel, 138 Fed. Cl. at 

341–42, involved neither a proposal nor any drafting work, but instead building 

purchase and renovation costs that are clearly not awardable as bid preparation 

and proposal costs. The others concerned work culminating in submitted proposals. 

But, as plaintiff notes, see Pl.’s Br. at 13, in the non-precedential case relied upon by 

the government, the Federal Circuit affirmed a decision of our court denying bid 

preparation and proposal costs when a protester “did not submit or prepare a bid 

proposal,” IDEA, 600 F. App’x at 746 (emphasis added), suggesting that mere 

preparation of a bid or proposal might be enough.

But even if a prospective offeror might be able to recover preparation costs for 

an unsubmitted proposal, plaintiff does not even allege that its employees’ efforts 

following the Court’s injunctive relief resulted in a revised proposal. Rather, Ms. 

Ross described this work as “its attempt to prepare a bid responsive to the final 

revised RFQ at issue in this matter.” Ross Decl. ¶ 2 (emphasis added); see also Pl.’s 

Br. at 14 (admitting that “completion and submission of a revised, final proposal” 

was not accomplished) (emphasis added). There cannot be bid or proposal costs if 

there is no bid or proposal. Nor can the post-injunction efforts be construed as 

“supporting” the proposal that had previously been submitted, see 48 C.F.R. § 

31.205-18(a), as the solicitation amendments necessitated a new submission. See 

Pl.’s Mot. Entry J. Ex. 1, ECF No. 55-1 at 3, 7; cf. Coflexip & Servs., Inc. v. United 

States, 961 F.2d 951, 954 (Fed. Cir. 1992) (pre-ADRA opinion finding “postsubmission costs pursuant to ongoing negotiations” concerning an existing proposal 

may be proposal preparation costs).

1

1 Moreover, the basis for the award of proposal costs was DLA’s decision to retain 

its interpretation of a requirement that restricted the competition to offerors who 

can access data from intervenor’s proprietary software. ARxIUM II, 139 Fed. Cl. at 

87. Were ARxIUM to have expended resources on a revised proposal despite the 

issuance of this patent disqualifier, it would have to challenge successfully the 

legality of the amendment in order to receive an award of revised proposal costs.
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Accordingly, ARxIUM’s post-injunction employee costs may not properly be 

considered awardable bid preparation and proposal costs. The government 

maintains that $2,446.71 of claimed costs fall in this category. Def.’s Br. at 10 & 

Ex. 4. After a line-by-line review of these entries, the Court concludes that twenty 

minutes of Ms. Ross’s time were erroneously characterized by the government as 

falling into this category.2 At her hourly rate of $60.92, see Pl.’s Br. Ex. 5, ECF No. 

66-5 at 10, this totals $20.31. Thus, $2,426.40 in claimed costs are not awardable 

for this reason. 

The government also objects to a small amount of costs ($92.63) associated 

with work performed by ARxIUM employees after the initial award of the contract 

to plaintiff. This work concerned such things as the award document and stop work 

orders. Def.’s Br. at 11; Ex. 4 to id., ECF No. 65-1 at 131–32. The Court agrees that 

these costs concern contract administration and not the proposal, and thus cannot 

be included in an award of proposal costs. Similarly, a few entries of Ms. Ross’s 

time were identified by the government as falling within the time period of the 

protest, see Def.’s Br. at 11; Ex. 4 to id., ECF No. 65-1 at 132, and thus do not 

concern the creation of the proposal. Thus, these $25.38 in costs may not be 

included in the award.

Plaintiff requests an award of certain legal fees, which it characterizes as 

“legal advice and counsel provided during proposal preparation.” Pl.’s Br. at 15.3 In 

opposing this portion of the request, the government argues categorically that legal 

fees are only recoverable under the Equal Access to Justice Act, 28 U.S.C. § 2412,

relying on two cases that pre-date the ADRA and concern solely bid protest 

litigation fees. Def.’s Br. at 8 (citing Coflexip & Servs., Inc. v. United States, 20 Cl. 

Ct. 412, 415–16 (1990); AT & T Techs., Inc. v. United States, 18 Cl. Ct. 315, 325 

(1989)). The Court is not persuaded that, under otherwise proper circumstances, 

costs that an offeror demonstrates to have been incurred in the preparation of a 

proposal could not be awarded merely because the employee or agent happened to 

be an attorney. Nothing in 28 U.S.C. § 1491(b)(2) excludes such costs. But these 

circumstances are not presented here, as the legal work in question was performed 

after ARxIUM obtained its injunctive relief in this case. See Ross Decl. Ex. E, ECF 

No. 66-1 at 49, 54. Thus, as explained above, it was not performed during the time 

2 These twenty minutes were split between an entry described as “DLA answers to 

our questions-for discussion on our call,” relating to clarification questions dated 

January 20, 2017, and another entry entitled “FW DLA Air Force Bid-Bid Team 

Meeting.” See Def.’s Br. Ex. 4, ECF No. 65-1 at 132.

3 Curiously, ARxIUM includes assistance in compiling its reckoning of proposal 

costs, see Pl.’s Br. at 5, 14, which would clearly be litigation expenses and not bid 

preparation and proposal costs.
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period when ARxIUM’s actual proposal was prepared, submitted, and supported. 

Plaintiff is not entitled to the $11,100.00 it claims for legal costs.

Finally, plaintiff includes among its requested bid preparation costs an 

amount representing the revenues ARxIUM allegedly would have generated had its 

employees utilized their time consulting for plaintiff’s clients instead of working on 

the proposal. Pl.’s Br. at 15–16; Ex. 5 to id., ECF No. 66-5 at 10. Plaintiff’s theory 

is that economic and accounting literature recognize such “opportunity costs” as 

relevant to business decisions. But just because the word “costs” is involved does 

not make a concept a subset of bid preparation and proposal costs, any more than 

“reputational costs” or “emotional costs” would be. Even if a rational business 

would consider such opportunity costs in deciding whether to use its employees to 

draft a proposal, such foregone revenues are by no means “costs incurred” in the 

process, see 48 C.F.R. § 31.205-18(a)---less money coming in is not the same thing as 

liabilities assumed in the creation of a proposal.4 And since ARxIUM is being

reimbursed for the cost of the time these employees spent on the proposal, the 

opportunity to put them to work earning consulting fees is restored by the award. A

separate payment representing opportunity costs would thus result in a double

recovery. In any event, Congress has excluded lost, anticipated profits under the 

contract at issue from the monetary relief available in bid protests. See 28 U.S.C. 

§ 1491(b)(2). The Court does not see how this would allow an award for the lost 

profits from other, unrelated contracts.5 Plaintiff is not entitled to the $46,077.33 of 

claimed opportunity costs. 

For the foregoing reasons, the Court has determined that plaintiff has proven 

and is entitled to bid preparation and proposal costs totaling $20,442.74. The Clerk 

of the Court shall enter judgment for plaintiff on its application for bid preparation 

and proposal costs in the amount of $20,442.74.6

4 Moreover, as a factor in a choice between competing uses of resources, opportunity 

cost is “purely subjective.” See JAMES M. BUCHANAN, COST AND CHOICE 41–42 

(Liberty Fund, Inc. 1999) (1969). 

5 The Court notes that ARxIUM’s inability to obtain lost profits was the basis for 

the finding of irreparable injury sufficient for injunctive relief. See ARxIUM I, 136 

Fed. Cl. at 208 (citing MORI Assocs., Inc. v. United States, 102 Fed. Cl. 503, 552 

(2011)). An award of a portion of lost profits owing to opportunity costs would be 

inconsistent with this prior ruling.

6 Intervenor’s motion to withdraw from the case, ECF No. 69, is DENIED as moot.
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IT IS SO ORDERED.

s/ Victor J. Wolski

VICTOR J. WOLSKI

Senior Judge