The Equal Access to Justice Act (“EAJA”) allows the recovery of attorney’s and expert witness fees provided that the applicant submits a timely application “which shows that the party is a prevailing party and is eligible to receive an award under this section. . . .”  The applicant “shall also allege that the position of the agency was not substantially justified.”  5 U.S.C. 504(a)(2).

In a recently decided case by the Armed Services Board of Contract Appeals, Environmental Safety Consultants, Inc., ASBCA Nos. 47498 and 53485, the United States Naval Facilities Engineering Command (NAVFAC) awarded Environmental Safety Consultants a contract in the not to exceed amount of $299,125 for sludge removal, disposal and cleaning services in lagoon #1 and lagoon #2 at the Naval Air Development Center, Warminster, Pennsylvania.  Environmental Safety Consultants applied for EAJA fees and other expenses in the amount of $119,067. The Board had earlier held that the appellant was entitled to an equitable adjustment for certain additional costs, in the amount of $93,989, incurred in performance of the contract.  In other words, the Appellant was a “prevailing party.”  However, as this decision demonstrates, just because a government contractor is a prevailing party does not necessarily mean that the company is entitled to recover EAJA fees.

In considering the EAJA application, the Board turned to the question of whether the position of the government was substantially justified.  EAJA provides in relevant part:

An agency that conducts an adversary adjudication shall award . . . fees and other expenses . . . unless the adjudicative officer of the agency finds that the position of the agency was substantially justified . . . . Whether or not the position of the agency was substantially justified shall be determined on the basis of the administrative records, as a whole, which is made in the adversary adjudication for which fees and other expenses are sought. 5 U.S.C. 504(a)(1).

The Supreme Court has ruled that “a position can be justified even though it is not correct, and we believe it can be substantially (i.e., for the most part) justified if a reasonable person could think it correct, that is, if it has a reasonable basis in law and fact.”   The Board found that the final decision represented a good faith effort to analyze the issues as they were known to the government at the time, not an unjustifiable agency action-forcing litigation. Accordingly, the EAJA application was denied.