GRANTED: July 1, 1993 GSBCA 12385-C(11672-COM) QUALITY DIESEL ENGINES, INC., Appellant, v. DEPARTMENT OF COMMERCE, Respondent. Kent Hanson, Boulder, CO, counsel for Appellant. Neil B. Moeller, Office of General Counsel, Department of Commerce, Seattle, WA, counsel for Respondent. Before Board Judges LaBELLA, PARKER, and WILLIAMS. LaBELLA, Board Judge. On April 15, 1993, Quality Diesel Engines (QDE) timely filed an application under the Equal Access to Justice Act (EAJA), 5 U.S.C. 504 (1988). QDE seeks to recover $9,227.92 in attorney fees and expenses incurred in prosecuting Quality Diesel Engines v. Department of Commerce, GSBCA 11672-COM (March 16, 1993), and this cost motion. The underlying dispute concerned breaches of a requirements contract for repair services on ship engines of certain vessels of the National Oceanic and Atmospheric Administration of the Department of Commerce (DOC or respondent). The Board awarded QDE $4,202.46, as a result of its various claims in that appeal. DOC opposes QDE's application for attorney fees and expenses, maintaining that the Government was "substantially justified" in its litigating position; it had offered to settle the case for $4,000, an amount roughly equivalent to the final award; and appellant's award was so far below its claim that the attorney fees should be prorated to the percentage of the claim actually recovered even if this Board finds entitlement to some quantum for attorney fees and expenses. 2 While it is true that QDE's ultimate award amounted to only a fraction of the $13,886.08 claimed, the predominate portion of this claim, $10,753.26, was attributable to a single issue: at what rate was QDE entitled to be compensated for the man hours for which breaches had occurred? Despite the relative magnitude of this claim, it did not consume the overwhelming majority of the legal work, oral or written. In the underlying appeal the Board addressed six issues of entitlement. QDE prevailed on three, one was conceded by DOC in its post hearing brief, and one issue was carried by DOC. The remaining issue, that of the appropriate rate at which to compensate QDE for man hours attributable to the various proven or admitted breaches, was not lost by QDE. QDE proposed two rates of compensation for this claim, DOC proposed one. While the Board rejected QDE's higher rate because it included a component for direct labor (immediately eliminating over $10,000 of the claim), we accepted its lower rate because it more accurately portrayed the costs associated with the breaches than did the rate proposed by DOC. The EAJA provides in pertinent part: an agency that conducts an adversary adjudication shall award, to a prevailing party other than the United States, fees and other expenses incurred by that party in connection with that proceeding, unless the adjudicative officer of the agency finds that the position of the agency was substantially justified or that special circumstances make an award unjust. Whether or not the position of the agency was substantially justified shall be determined on the basis of the administrative record, 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) (1988). To be a prevailing party, a claimant must have succeeded on any significant issue in the underlying litigation which achieved some of the benefit sought by bringing the appeal. Austin v. Department of Commerce, 742 F.2d 1417, 1419 (Fed. Cir. 1984). QDE prevailed on the majority of the entitlement issues brought before the Board, and is a prevailing party for the purposes of EAJA. To be eligible for award under EAJA, a corporate entity must have fewer than 500 employees, and have a net worth of less than $7,000,000. 5 U.S.C. 504 (b)(1)(B) (1988). QDE bears the burden of proof on this issue, and has provided the Board with appropriate documentation to show that it meets these criteria. Once the Board has determined that a claimant is a prevailing party eligible for award, the EAJA provides that award 3 shall be made unless the adjudicative officer finds that the agency position was substantially justified or some other special circumstances make an award unjust. "Substantially justified" has been defined as: "justified in substance or in the main"--that is, justified to a degree that could satisfy a reasonable person. That is no different from the "reasonable basis both in law or fact" formulation. . . . To be "substantially justified" means, of course, more than merely undeserving of sanctions for frivolousness. Atlas Construction Co. v. General Services Administration, GSBCA 11088-C(8653) et al., 92-2 BCA 24,944 at 124,329 (quoting INS v. Jean, 110 S.Ct. 2316, 2319 (1990)). While the Government has attempted to convince us that it was substantially justified in this litigation, it has done little more than reiterate its position at trial. The Government bears the burden of proving its position was substantially justified. While its arguments were not baseless, we cannot hold that they were substantially justified. This is because we found less than reasonable respondent's interpretation of certain contract requirements. Also, respondent's failure to acknowledge QDE's right to refuse to complete, on an expedited basis, a repair that already was half completed by another contractor was not justified in substance. We awarded appellant all but twenty- four of the man hours it requested in its claim. Appellant prevailed on four of the five issues concerning entitlement to man hours for the various breaches. The tremendous variance between the claim and the ultimate award is attributable primarily to the Board's rejection of appellant's contention that it was entitled to direct labor costs as part of the rate for the claimed hours. In fact, appellant's alternative rate calculation did prevail. As to respondent's contention that appellant's fee award should be reduced proportionally to the amount claimed but not awarded, the position is not supportable. As stated above the amount not awarded relates almost entirely to appellant's assertion that direct labor costs were recoverable as part of the man hour rate. The record does not reflect that a large portion of QDE's counsel's time was spent pursuing this facet of the appeal, and it would be impracticable to determine the portion of QDE's counsel's time which dealt specifically with the issue of direct labor costs rather than the superiority of QDE's alternative rate calculation to that of the DOC. Where, as here, the issues on which appellant did not prevail are not distinct and severable from issues on which it did prevail, no proportional reduction in fee award is mandated. 4 The DOC also suggests that QDE should be denied award because the DOC offered to settle this case for a sum substantially equivalent to the ultimate award. This "settlement offer," while attested to in an affidavit from respondent's counsel, is not evidenced in writing and the existence of an unconditional valid offer to settle for $4,000 is disputed by QDE. While we are assured by Government counsel that the $4,000 settlement offer conveyed to QDE was meant to be a valid, non- contingent offer, it is unclear that it was received as such. Here, the vagaries of negotiations leave too much leeway for confusion to allow competing recollections of oral negotiations between parties to determine an applicant's entitlement to EAJA fees. Given the fact that the status of this alleged offer is disputed, and that it was not reduced to writing, we decline to give it credence for the purpose of considering respondent's argument that the existence of the offer prevents recovery of some or all of the attorney fees and expenses requested. Decision The application for fees is GRANTED. QDE is awarded $9,227.92 in fees and expenses to be paid in accordance with the provisions of 5 U.S.C. 504(d) (1988). VINCENT A. LaBELLA Board Judge We concur: ROBERT W. PARKER Board Judge MARY ELLEN COSTER WILLIAMS Board Judge