CBCA 7857-C(5964)

GRANTED IN PART: March 29, 2024 CBCA 7857-C(5964) HUGHES GROUP LLC, Applicant, v. DEPARTMENT OF VETERANS AFFAIRS, Respondent. Robert A. Klimek, Jr. of Klimek & Casale, P.C., Upper Marlboro, MD, counsel for Applicant. David G. Fagan, Office of General Counsel, Department of Veterans Affairs, Bend, OR, counsel for Respondent. Before Board Judges SHERIDAN, SULLIVAN, and O’ROURKE. O’ROURKE, Board Judge. Applicant, Hughes Group LLC (Hughes), filed an application under the Equal Access to Justice Act (EAJA), 5 U.S.C. § 504 (2018), seeking $149,201.50 in attorney fees and $8532.12 in costs, for a total of $157,733.62. These expenses relate to Hughes’ appeal of the decision of respondent, Department of Veterans Affairs (VA or agency), to terminate Hughes’ contract for cause. Because we find that Hughes met the statutory qualifications for award and the agency’s position was not substantially justified, we grant Hughes’ application in the amount of $68,237.97. We deny the remainder of Hughes’ application because we find that Hughes unduly and unreasonably protracted final resolution of the dispute. CBCA 7857-C(5964) 2 Background The Board assumes familiarity with the facts of Hughes Group LLC v. Department of Veterans Affairs, CBCA 5964, 23-1 BCA ¶ 38,297, in which the Board granted Hughes’ appeal of the agency’s termination for cause and converted it to a termination for the convenience of the Government. Hughes timely filed an application for attorney fees and costs under EAJA. Submitted with Hughes’ application were exhibits detailing attorney fees and costs incurred by two law firms, Klimek & Casale, P.C. (K&C) and Edward Bentley, Esq. (Bentley), which Hughes retained to represent it in the litigation before the Board. The accompanying exhibits included an itemized report from K&C of attorney fees for Robert Klimek, Jr., at the EAJA rate of $125 per hour for a total of $64,787.50; an itemized list of appeal-related costs from K&C in the amount of $8532.12; and a record of payments to Bentley totaling $84,414 for invoiced work at Bentley’s rate of $120 per hour. Notwithstanding the Board’s decision on the merits, the VA objected to any EAJA award, arguing that the agency’s litigation position was substantially justified and Hughes’ refusal to engage in settlement discussions significantly prolonged the litigation. In addition, the agency pointed to Hughes’ poor performance during the life of the contract to support its position during the litigation. The agency also identified six instances where the VA invited Hughes to negotiate or pursue Board-assisted mediation, beginning as far back as December 2017, and occurring as late as January 29, 2021. In each instance, the VA said it was willing to convert the termination for cause into a termination for convenience, but Hughes declined to negotiate a settlement and even questioned the utility of mediating—a posture that resulted in protracted and costly litigation. This, the VA insists, amounted to a self-inflicted wound that warrants denial of the requested costs and fees. Hughes maintains that refusing to settle was a business decision and that a formal settlement offer was not presented by the VA until January 29, 2021. The offer itself, says Hughes, was unacceptable because the VA agreed to convert the termination “at no cost to the Government whatsoever for past or future, direct or indirect costs to include attorneys’ fees or any costs that could be sought under a termination for convenience cost proposal.” Hughes argues that accepting that offer would have precluded any termination settlement proposal, as well as attorney fees and any potential claims stemming from the Changes clause of the original contract. There is no evidence in the record that Hughes made a counteroffer to the VA’s formal settlement offer or submitted any requests to the Board pursuant to Rule 54, 48 CFR 6101.54 (2023) (alternative dispute resolution), to secure a more favorable settlement. During status conferences with the parties to address escalating discovery disputes, the Board raised concerns about the time and expense of litigation in light of the strong potential for a negotiated settlement agreement, especially since Hughes’ contract was terminated so close CBCA 7857-C(5964) 3 to its originally scheduled expiration date.