The Equal Access to Justice Act - Essential Requirements

The Equal Access to Justice Act (EAJA) was enacted back in 1980 to allow individuals and companies to obtain representation in cases against the Government in the event they are successful. This applies to appeals by contractors to the ASBCA (Armed Services Board of Contract Appeals) and other boards and courts.

To be eligible, individuals must show that their net worth is less than $2 million and businesses must demonstrate that their net worth does not exceed $7 million and employed fewer than 500. That part is simple to demonstrate. Not so with another requirement - the "not substantially justified" requirement. Contractors must demonstrate that the Government's position in the dispute was not substantially justified.

Once that bar is crossed, contractors are limited to "reasonable" costs including attorney fees. However, attorney fees are statutorily limited to $125 per hour. Interestingly, the hourly rates for other "experts" involved in the appeals are not statutorily capped. Such costs only be deemed reasonable and reasonableness is determined, in cases before the ASBCA, by the Judge.

Not only are the costs incurred in prosecuting the appeal reimbursable under EAJA provisions, but also costs incurred in preparing the application for EAJA reimbursements. Again, the preparation costs must be reasonable and commensurate with the amounts requested.

Sometimes the Judge will make the determination as to what is reasonable. Other times, the Judge will request an audit of the claimed costs - particularly where the amounts are significant or where assurance is needed as to the propriety of amounts claimed.

Contractors that prevail in an ASBCA case should consider whether some of the costs of pursuing the case can be recovered under EAJA provisions.

See "The Equal Access to Justice Act (Briefly)" and "Contractor Asks For $706 Thousand EAJA Reimbursement - Receives $412 Thousand" for more background and illustration on how EAJA provisions are applied.

The Equal Access to Justice Act (Briefly)

The Equal Access to Justice Act (EAJA) awards attorney's fees and litigation expenses to eligible individuals who are parties to litigation against the Government. An eligible party may receive an award when it does not exceed the size limits set by the Act (net worth of $2 million or less or net worth of $7 million or less with 500 employees) and can show it is a "prevailing party"

The EAJA is a statutory exception to the standard American practice in which prevailing litigants bear the burden of paying their own attorneys' fees. Congress enacted EAJA as a fee-shifting statute to let private litigants recover certain costs associated with litigation against the Government.

The EAJA addresses the concerns of Congress over access to the courts for individuals. Congress's intent in promulgating EAJA was to provide a means to prevent individuals, as well as small business concerns, from being deterred by potential costs of litigation from seeking redress for allegedly unreasonable government action.

Eligibility under EAJA is only the first step in successful application for costs and attorney fees. Under EAJA, an eligible party must also meet certain threshold requirements before a court will order reimbursement of their litigation costs.

What are these threshold requirements? The EAJA provides that attorneys' fees and certain costs associated with litigation, incurred by a prevailing party in either an agency (e.g. ASBCA) or court adjudication against the Government, may be recovered unless the position of the Government is "substantially justified" or unless special circumstances make the award unjust.

What does "substantially justified" mean? The term "substantially justified" means justified to a degree that could satisfy a reasonable person. Even though a position taken is not correct, it can still be substantially justified if a reasonable person could think it correct, that is, if it has a reasonable basis in law and fact. In this case, the Government bears the burden of proving that its position was substantially justified.

The EAJA is a significant benefit to Government contractors who, for lack of resources, might have a valid and legitimate basis for raising a claim against the Government.