United States Court of Appeals
      for the Federal Circuit
                 ______________________

            STARRY ASSOCIATES, INC.,
                 Plaintiff-Appellee

                            v.

                  UNITED STATES,
                  Defendant-Appellant

                 INTELLIZANT, LLC,
                       Defendant
                 ______________________

                       2017-2148
                 ______________________

    Appeal from the United States Court of Federal
Claims in No. 1:16-cv-00044-EGB, Senior Judge Eric G.
Bruggink.
                ______________________

                 Decided: June 22, 2018
                 ______________________

    LARS ERIC ANDERSON, Odin, Feldman & Pittleman,
PC, Reston, VA, argued for plaintiff-appellee. Also repre-
sented by SHIVA S. HAMIDINIA; JAMES Y. BOLAND, Venable
LLP, Tysons Corner, VA.

    ALEXIS J. ECHOLS, Commercial Litigation Branch,
Civil Division, United States Department of Justice,
Washington, DC, argued for defendant-appellant. Also
2                   STARRY ASSOCIATES, INC.   v. UNITED STATES



represented by CHAD A. READLER, ROBERT E. KIRSCHMAN,
JR., DOUGLAS K. MICKLE.
                ______________________

    Before O’MALLEY, LINN, and HUGHES, Circuit Judges.
O’MALLEY, Circuit Judge.
    The sole issue in this appeal is the meaning of the
term “special factor” in 28 U.S.C. § 2412(d)(2)(A), a sub-
section of the Equal Access to Justice Act (“EAJA”). When
a trial court finds that a “special factor” exists, it is au-
thorized to increase the statutory attorney fee rate in
certain cases brought by or against the government.
    In this case, the United States Court of Federal
Claims (“Claims Court”) entered judgment in favor of
Plaintiff-Appellee Starry Associates, Inc. (“Starry”) on its
bid protest claim, concluding that the Department of
Health and Human Services (“HHS”) acted arbitrarily
and capriciously in cancelling its solicitation seeking to
procure certain business operations services. Starry
Assocs., Inc. v. United States (Merits Decision), 127 Fed.
Cl. 539 (2016). The Claims Court thereafter awarded
Starry attorney fees at the rates actually billed to Starry
by its counsel, finding that the “extreme measures that
[Starry] was forced to pursue to vindicate its right to a
rational and lawful federal procurement process, com-
bined with the shocking disregard of the truth by” HHS,
constituted a “special factor” justifying an award of fees
above the EAJA’s “default rate” of $125 per hour. Starry
Assocs., Inc. v. United States (Fees Decision), 131 Fed. Cl.
208, 215 (2017).
    We hold that the Claims Court erred as a matter of
law in holding that an agency’s improper or dilatory
conduct during the administrative process that gave rise
to the litigation between the parties can constitute a
“special factor” under § 2412(d)(2)(A). Accordingly, we
STARRY ASSOCIATES, INC.   v. UNITED STATES              3



vacate the Claims Court’s fee award and remand for
further proceedings.
                     I. BACKGROUND
                   A. The Bid Protests
    None of the material facts are in dispute. On Novem-
ber 13, 2014, HHS’s Program Support Center (“PSC”)
issued a Request for Quotations (“solicitation” or “RFQ”),
seeking to procure business operations services that
would support PSC’s implementation of HHS’s Unified
Financial Management System (“UFMS”). Merits Deci-
sion, 127 Fed. Cl. at 540. The RFQ was set aside for small
businesses and was to be awarded to the lowest priced,
technically acceptable offeror. Id. Starry was the incum-
bent provider of on-site operational support for UFMS.
Id.
    Because UFMS is built on Oracle software, the RFQ
required key personnel to have experience with that
software, as well as with UFMS. Id. HHS was also
looking for expertise regarding several of its other sys-
tems that worked in coordination with UFMS: the Man-
aging Accounting and Credit Card System (“MACCS”), a
system for accounting purchases made by government
credit card holders, and GovNet–NG, a reporting system
used to distribute operational reports. Id. Both are
proprietary systems developed by Starry. Id. at 540–41.
     Three companies timely submitted quotations, with
Defendant Intellizant, LLC (“Intellizant”) offering the
low-priced bid. Id. at 541. It was therefore evaluated for
technical acceptability along with past performance and
certain statutory compliance. Id. HHS thereafter con-
vened a three-person Technical Evaluation Panel (“TEP”)
which, after reviewing Intellizant’s proposal for only two
or three days, reached a mixed evaluation. Id. at 541–42.
Two of the three members found Intellizant acceptable for
all factors, while the third rated the company technically
4                   STARRY ASSOCIATES, INC.   v. UNITED STATES



unacceptable. Id. at 542. Of the two members who found
the proposal acceptable, one noted that several pieces of
information were missing, while the other “found no
problems with Intellizant’s proposal” and expressly relied
on “[p]revious experience with the contractor” in making
her determination. Id. The Contracting Officer (“CO”)
then evaluated the proposal and determined that Intelli-
zant was technically acceptable. Id.
     Starry, which submitted a more expensive proposal
that was not evaluated, was notified of the award, and
filed its first protest at the Government Accountability
Office (“GAO”). Id. at 544. It alleged that HHS’s evalua-
tion of Intellizant was unreasonable because of the com-
pany’s lack of experience with the contract requirements
and lack of qualified key personnel. HHS thereafter
informed GAO and Starry of its intent to take corrective
action, explaining that it did “not intend to reevaluate the
requirement or solicit new proposals.” Id. Instead, it
intended to thoroughly review the file and ensure the
evaluation was complete and accurate. Id. GAO dis-
missed Starry’s protest as academic, and Starry, believing
the scope of this corrective action was insufficient, sent a
letter to the clerk of court for the Claims Court, stating it
intended to file a bid protest. Id. In response, the CO
sent Starry a letter indicating that HHS would reevaluate
proposals and make a new award decision. Id. Starry
subsequently withdrew its notice of intent to protest. Id.
    Although the TEP’s second evaluation lasted months
and culminated in the issuance of a new report, virtually
no contemporaneous documentation of the panel’s deci-
sion-making process exists. Id. The panel was again
unable to reach a consensus, with the same member again
rating Intellizant as technically unacceptable. Id. The
other panel member who initially listed concerns with the
proposal did not have any reservations this go around. Id.
And, again, the CO agreed with the majority’s evaluation
STARRY ASSOCIATES, INC.   v. UNITED STATES                5



and found Intellizant to be technically acceptable, and
notified the relevant parties of that result. Id.
     Starry filed a second protest at the GAO, reasserting
its prior challenges and further claiming that John Davis,
who served as Accounting Services Division Manager at
PSC, was biased in favor of Intellizant due to his em-
ployment with the company immediately prior to joining
HHS, and tainted the procurement by exerting undue
influence over the TEP. Id. GAO held a hearing, took
testimony from Davis and the CO, and sustained the
protest in part and denied it in part, finding that the CO
failed to evaluate either whether Intellizant’s personnel
could perform the relevant tasks or whether Intellizant
could provide the necessary personnel to meet the solicita-
tion’s requirements. Id. at 545–46. GAO found that
Starry’s allegations of bias were “without merit” based on
Davis’s sworn testimony that he had recused himself from
the procurement process. Id. at 546. It recommended
reevaluation of the proposal and provided that, if HHS
found Intellizant to be lacking, it must terminate the
award and evaluate the next-in-line offeror. Id.
    Patrick Joy, the interim head of contracting activity
at PSC, later testified that he was notified by HHS coun-
sel after the hearing that the agency was likely to lose the
protest, and that Davis “raised the possibility of revising
the RFQ to drop from the solicitation the awardee’s need
to support GovNet and MACCS,” the areas in which
Intellizant had been marked as deficient. Id. According
to this testimony, Joy instructed Davis not to take any
action with regard to the solicitation prior to a GAO
decision. Id. After GAO issued its decision, counsel for
HHS sent an email to Joy, the CO, and others, stating
that GAO’s recommendations were not mandatory and
that alternatives included “canceling the solicitation and
competing under a new vehicle [or] amending the [request
for production] and soliciting new [offers] under the
current vehicle.” Id. Email records and deposition testi-
6                  STARRY ASSOCIATES, INC.   v. UNITED STATES



mony revealed that Davis was involved in the decision-
making process, and that Joy left Davis the power to
decide whether to cancel the solicitation. Id. Davis later
emailed Joy with his decision to cancel the RFQ, stating
that he had instructed his staff to “review and revise,
where needed, a few of our support contracts” for UFMS.
Id. at 546–47. Throughout this process, Davis provided
conflicting accounts as to why he believed that an RFQ
calling for compatibility with GovNet and MACCS was
not required. Id. 1
    Six days after Davis emailed Joy with his decision to
cancel the RFQ, counsel for HHS informed GAO and
Starry that it intended to cancel the solicitation rather



    1   The CO Representative testified that he prepared
the Performance Work Statement for the current RFQ,
and that Davis “highly recommended” that the repre-
sentative “recuse himself from the TEP due to his in-
volvement with the incumbent [Starry] contract.” Id. at
541. The witness also testified that, after Starry’s first
protest, he offered once again to be part of the TEP, but
that Davis told him that it “would not look good.” Id.
According to this witness, the TEP was made up of indi-
viduals selected by Davis. Id. He also testified that
Davis, on several occasions, asked him to give Starry
negative feedback and instructed him to prepare for a
change in vendor. Id. Moreover, Davis stated that he
should be replaced on the TEP by the member who previ-
ously worked with Intellizant and rated its proposal as
“exceptional” in every category. Id. at 541–42. This TEP
member was cleared by the CO after being questioned by
the member who gave Intellizant’s proposal a negative
review. Id. at 542. She forwarded the CO’s approval to
Davis with the following encapsulation: “FYI—no more
concerns,” followed by a smiley face emoticon. Id. Davis
replied asking her to call him on his cell phone. Id.
STARRY ASSOCIATES, INC.   v. UNITED STATES                  7



than reevaluate Intellizant, stating “it has been deter-
mined that two of the three systems proposed to be sup-
ported under the instant procurement were included in
the solicitation by error.” Id. at 548. Starry then filed its
third bid protest, arguing that HHS’s decision to cancel
the solicitation was merely a pretext so that Davis could
secure future work for Intellizant. Id. It claimed that
Davis decided to eliminate the requirements of the solici-
tation as to which Intellizant was unqualified and later to
re-solicit the remaining work in order to avoid GAO’s
earlier recommendation to reevaluate, which Starry
believed would have resulted in it winning the original
procurement. Id. GAO denied the protest by written
decision, finding that the agency’s proffered rational for
cancellation was reasonable—even crediting the allega-
tions of bias, the result was not affected, in GAO’s view,
because the “cancellation was otherwise reasonably
justified.” Id.
          B. The Claims Court’s Merits Decision
     Starry filed suit against the government in the Claims
Court on January 11, 2016. On July 15, 2016, the Claims
Court issued a decision granting Starry’s motion for
judgment on the administrative record. See generally id.
at 539. It concluded that HHS acted irrationally in its
decision to cancel the award based on its purported revi-
sion of its needs vis-à-vis MACCS and GovNet support, as
it did not provide sufficient support for its decision. Id. at
548–49. The Claims Court did not reach the issue of
whether the procurement was prejudicially tainted by
bias. Id. at 548.
    The Claims Court did, however, express dissatisfac-
tion with the conduct of HHS and certain of its employees,
including statements such as (1) “[a]nother instance of a
cavalier disregard for the truth of representations made
to the GAO was Mr. Davis’ assurance that he was recused
from the procurement process,” id. at 549; (2) “Mr. Joy
8                  STARRY ASSOCIATES, INC.   v. UNITED STATES



and his colleagues accepted [Davis’s] representation at
face value in short order and conducted no independent
analysis of the agency’s needs,” id.; and (3) Davis’s “depo-
sition leaves no question, however, that the rationale was
completely illusory,” id. The Claims Court determined
that injunctive relief was appropriate under this court’s
decision in PGBA, LLC v. United States, 389 F.3d 1219,
1228–39 (Fed. Cir. 2008), set aside the cancellation of the
RFQ, and required HHS to reevaluate Intellizant’s offer
without any involvement from Davis, the CO, or the TEP
member who twice found no problems with Intellizant’s
proposal. Merits Decision, 127 Fed. Cl. at 550.
          C. The Claims Court’s Fees Decision
     Starry thereafter moved for an award of attorney fees
and other costs pursuant to § 2412(d) of the EAJA. Fee
Order, 131 Fed. Cl. 208. The Claims Court held that,
because the government was not substantially justified in
its conduct throughout the procurement process, includ-
ing its defense of that conduct in this lawsuit, Starry was
entitled to an award of fees and costs. Id. at 212–13. It
also held that, given the “egregious” nature of HHS’s
failures throughout the procurement process and the time
and resources necessary for Starry to vindicate its rights,
Starry was entitled to an upward adjustment of the
statutorily-set hourly rate under § 2412(d)(2)(A)’s “special
factor” exception. Id. at 213–15. In so holding, the
Claims Court rejected the government’s argument that
egregious agency misconduct does not constitute a “spe-
cial factor.”
   The government appeals. We have jurisdiction under
28 U.S.C. § 1295(a)(3).
                      II. DISCUSSION
    “Congress enacted EAJA . . . in 1980 ‘to eliminate the
barriers that prohibit small businesses and individuals
from securing vindication of their rights in civil actions
STARRY ASSOCIATES, INC.   v. UNITED STATES                9



and administrative proceedings brought by or against the
Federal Government.’” Scarborough v. Principi, 541 U.S.
401, 406 (2004) (quoting H.R. Rep. No. 96–1005, at 9
(1980)). “Among other reforms, EAJA amended 28 U.S.C.
§ 2412, which previously had authorized courts to award
costs, but not attorney’s fees and expenses, to prevailing
parties in civil litigation against the United States.” Id.
“EAJA added two new prescriptions to § 2412 that ex-
pressly authorize attorney’s fee awards against the Fed-
eral Government.” Id. “First, § 2412(b) made the United
States liable for attorney’s fees and expenses ‘to the same
extent that any other party would be liable under the
common law or under the terms of any statute which
specifically provides for such an award.’” Id. “Second,
§ 2412(d) rendered the Government liable for a prevailing
private party’s attorney’s fees and expenses in cases in
which suit would lie only against the United States or an
agency of the United States.” Id. at 406–07. Because
Starry made its fee request solely under the second of
these provisions—§ 2412(d)—and not under § 2412(b), it
is that provision we consider in this appeal. More particu-
larly, we consider whether the Claims Court erred as a
matter of law in concluding that egregious misconduct by
HHS constitutes a “special factor” under § 2412(d)(2)(A).
See Haggart v. Woodley, 809 F.3d 1336, 1354 (Fed. Cir.
2016) (explaining that, although we review determina-
tions of reasonable attorney fees for abuse of discretion,
“errors of law in the award of attorney fees are corrected
without deference” (citations omitted)).
    For the reasons explained below, we conclude that
egregious agency misconduct is not a “special factor”
under § 2412(d)(2)(A). This conclusion finds support in
the plain language of the provision when considered in
light of the statutory structure as a whole, its purpose and
legislative history, and decisions from other circuits.
10                   STARRY ASSOCIATES, INC.   v. UNITED STATES



              A. Plain Language and Context
     “As in any case of statutory construction, our analysis
begins with the language of the statute.” Hughes Aircraft
Co. v. Jacobson, 525 U.S. 432, 438 (1999) (internal quota-
tion marks and citation omitted). “The first step ‘is to
determine whether the language at issue has a plain and
unambiguous meaning with regard to the particular
dispute in the case.’” Barnhart v. Sigmon Coal Co., Inc.,
534 U.S. 438, 450 (2002) (quoting Robinson v. Shell Oil
Co., 519 U.S. 337, 340 (1997)); see also Gross v. FBL Fin.
Servs., Inc., 557 U.S. 167, 175 (2009) (“Statutory construc-
tion must begin with the language employed by Congress
and the assumption that the ordinary meaning of that
language accurately expresses the legislative purpose.”
(citation omitted)). We also “must read the words ‘in their
context and with a view to their place in the overall
statutory scheme.’” King v. Burwell, –– U.S. ––, 135 S.
Ct. 2480, 2489 (2015) (quoting FDA v. Brown & William-
son Tobacco Corp., 529 U.S. 120, 133 (2000)). This is
because statutory “[a]mbiguity is a creature not [just] of
definitional possibilities but [also] of statutory context.”
Brown v. Gardner, 513 U.S. 115, 118 (1994).
     Section 2412(d) provides, in relevant part:
     (1)(A) Except as otherwise specifically provided by
     statute, a court shall award to a prevailing party
     other than the United States fees and other ex-
     penses, in addition to any costs awarded pursuant
     to subsection (a), incurred by that party in any
     civil action (other than cases sounding in tort), in-
     cluding proceedings for judicial review of agency
     action, brought by or against the United States in
     any court having jurisdiction of that action, unless
     the court finds that the position of the United
     States was substantially justified or that special
     circumstances make an award unjust.
     ....
STARRY ASSOCIATES, INC.   v. UNITED STATES               11



   (2) For the purposes of this subsection—
       (A) ‘‘fees and other expenses’’ includes . . .
       reasonable attorney fees (The amount of
       fees awarded under this subsection shall
       be based upon prevailing market rates for
       the kind and quality of the services fur-
       nished, except that . . . attorney fees shall
       not be awarded in excess of $125 per hour
       unless the court determines that an in-
       crease in the cost of living or a special fac-
       tor, such as the limited availability of
       qualified attorneys for the proceedings in-
       volved, justifies a higher fee.) . . . .
28 U.S.C. § 2412(d) (emphases added).
    According to the plain language of § 2412(d), plaintiffs
who prevail in cases brought against the government are
entitled to “fees and other expenses,” in addition to costs,
“unless the court finds that the position of the United
States was substantially justified or that special circum-
stances make an award unjust.” Id. § 2412(d)(1)(A). In
other words, plaintiffs can receive attorney fees under
§ 2412(d) only if the government advances a position that
is not “substantially justified.” Here, the government
does not contest the Claims Court’s finding that its posi-
tion was not substantially justified—indeed, there is no
dispute that Starry is entitled to attorney fees under
§ 2412(d)(1)(A).
     Rather, the parties contest the amount of fees Starry
can be awarded under § 2412(d)(2)(A). This provision
explains what “fees and other expenses” can be recovered
“[f]or the purposes of this subsection.” According to this
subsection, “fees and other expenses” include both “rea-
sonable expenses” and “reasonable attorney fees.” Id.
§ 2412(d)(2)(A). The subsection also contains a parenthe-
tical mandating that “[t]he amount of fees awarded under
this subsection shall be based upon prevailing market
12                  STARRY ASSOCIATES, INC.   v. UNITED STATES



rates for the kind and quality of the services furnished,”
subject to two exceptions. Id. (emphases added). The
first of these exceptions concerns the compensation of
expert witnesses, which is not relevant to this case. Id.
§ 2412(d)(2)(A)(i). The second exception commands that
“attorney fees shall not be awarded in excess of $125 per
hour unless the court determines that an increase in the
cost of living or a special factor, such as the limited avail-
ability of qualified attorneys for the proceedings involved,
justifies a higher fee.” Id. § 2412(d)(2)(A)(ii) (emphases
added).
    The plain language of § 2412(d)(2)(A) does not author-
ize trial courts to award fees at a rate exceeding $125 per
hour based on government misconduct during the admin-
istrative process that gave rise to the litigation; indeed,
the text of the provision does not contain any reference to
prelitigation activities. Instead, the text of the subsection
authorizes an upward departure from the statutory rate
in one of the two defined circumstances: where an in-
creased cost of living or a “special factor” justifies a higher
fee. Because it is undisputed that Starry is entitled to a
cost-of-living adjustment in this case, the question we
must answer is whether egregious government miscon-
duct prior to the litigation or defense of that conduct once
in litigation constitutes a “special factor” within the
meaning of the EAJA.
    The Supreme Court examined the meaning of
§ 2412(d)(2)(A)’s “special factor” exception in Pierce v.
Underwood, 487 U.S. 552 (1988), paying particular atten-
tion to the single example of such a factor recited in the
statute: the “limited availability of qualified attorneys for
the proceedings involved.” Id. at 571–74. The Court
began by recognizing that, “[i]f ‘the limited availability of
qualified attorneys for the proceedings involved’ meant
merely that lawyers skilled and experienced enough to try
the case are in short supply, it would effectively elimi-
nate” the $125 per hour cap, “since the ‘prevailing market
STARRY ASSOCIATES, INC.   v. UNITED STATES                  13



rates for the kind and quality of the services furnished’
are obviously determined by the relative supply of that
kind and quality of services.” Id. at 571 (footnote omit-
ted). It then stated that “‘[l]imited availability’ so inter-
preted would not be a ‘special factor,’ but a factor virtually
always present when services with a market rate of more
than $[12]5 have been provided.” Id. at 571–72. 2 Accord-
ing to the Court, “the ‘special factor’ formulation suggests
Congress thought that $[12]5 an hour was generally quite
enough public reimbursement for lawyers’ fees, whatever
the local or national market might be.” Id. at 572. And
“[i]f that is to be so, the exception for ‘limited availability
of qualified attorneys for the proceedings involved’ must
refer to attorneys ‘qualified for the proceedings’ in some
specialized sense, rather than just in their general legal
competence.” Id. Thus, the Court stated that the exam-
ple “refers to attorneys having some distinctive knowledge
or specialized skill needful for the litigation in question—
as opposed to an extraordinary level of the general law-
yerly knowledge and ability useful in all litigation.” Id.
The Court then provided two examples of the former: “an
identifiable practice specialty such as patent law, or
knowledge of foreign law or language.” Id.



    2    Congress raised EAJA’s hourly rate cap from $75
per hour to $125 per hour in the Small Business Regula-
tory Enforcement Fairness Act of 1996, Pub L. No. 104-
121, § 231(b)(1), 110 Stat. 847, at 863 (1996), in order to
bring EAJA awards “more closely in line with current
hourly rates charged by attorneys.” 141 Cong. Rec.
S3895, S3896 (daily ed. Mar. 14, 1995) (statement of Sen.
Feingold). That the $125 per hour cap appears signifi-
cantly outdated in 2018 cannot be a basis for redefining
the “special factor” language in the statute. Congress
may address any current inconsistency with the realities
of legal practice by raising the statutory cap.
14                  STARRY ASSOCIATES, INC.   v. UNITED STATES



    The Court then shifted from the “limited availability”
example to the broader “special factor” category, writing
that, “[f]or the same reason of the need to preserve the
intended effectiveness of the $75 [now $125] cap, we think
the other ‘special factors’ envisioned by the exception
must be such as are not of broad and general application.”
Id. at 573. The Court did “not specify what they might
be,” but noted that the factors on which the district court
relied—the “novelty and difficulty of issues”; the “unde-
sirability of the case”; the “work and ability of counsel”;
and “the results obtained”—“are factors applicable to a
broad spectrum of litigation; they are little more than
routine reasons why market rates are what they are.” Id.
Finally, it rejected the district court’s reliance on “the
contingent nature of the fee,” finding it to be “too general-
ly applicable to be regarded as a ‘special’ reason for ex-
ceeding the statutory cap” because it is untethered to
real-world expectations. The Court concluded by stating,
“we do not think it was Congress’ purpose, in providing
for reimbursement in a very small category of cases, to
subsidize all contingent-fee litigation with the United
States.” Id.
     The parties dispute the extent to which the structure
and purpose of the EAJA and Pierce’s interpretation of
the statute limit the universe of potential “special fac-
tors.” The government submits that the overall structure
of § 2412(d), the listed example of a permissible “special
factor,” and Pierce’s observation that “Congress thought
that $75 [now $125] an hour was generally quite enough
public reimbursement for lawyers’ fees, whatever the local
or national market might be,” 487 U.S. at 572, reveal that
“special factors” are limited to those factors that “specifi-
cally ‘justif[y]’ a[n] hourly rate higher than the statute’s
maximum hourly-rate cap.” Appellant Br. 14. Govern-
ment misconduct in the agency process—in this case, the
procurement process—in the government’s view “does not
fit that bill.” Id. at 15.
STARRY ASSOCIATES, INC.   v. UNITED STATES              15



    Starry, unsurprisingly, disagrees. It submits that the
statutory rate of $125 per hour “is merely a default rate,”
and that Congress “plainly entrusts to the trial court’s
discretion whether the circumstances of a particular case
justify a deviation from” that rate “based on the party’s
conduct.” Appellee Br. 28–29. It also contends that,
under Pierce, a “special factor” is “any factor that is
unique and not applicable to a broad spectrum of litiga-
tion, and of a nature such that a higher fee award is right
and reasonable under the circumstances.” Id. at 30.
    We agree with the government that the text, struc-
ture, purpose, and legislative history of the EAJA, and
Pierce’s analysis thereof, require that “special factors”
involve circumstances in which something atypical direct-
ly impacts the hourly rate necessary for the litigation in
question. To begin, “as a waiver of sovereign immunity,
the EAJA must be strictly construed in favor of the sover-
eign.” Fanning, Phillips, Molnar v. West, 160 F.3d 717,
721 (Fed. Cir. 1998) (citing Levernier Constr., Inc. v.
United States, 947 F.2d 497, 502 (Fed. Cir. 1991)). The
EAJA “‘lifts the bar of sovereign immunity for award of
fees in suits brought by litigants qualifying under the
statute, [but] does so only to the extent explicitly and
unequivocally provided.’” Levernier, 947 F.2d at 502
(quoting Fidelity Constr. Co. v. United States, 700 F.2d
1379, 1386 (Fed. Cir. 1983)); see also United States v.
Nordic Village Inc., 503 U.S. 30, 33–34 (1992) (“Waivers
of the Government’s sovereign immunity, to be effective,
must be ‘unequivocally expressed.’” (citations omitted));
Ardestani v. I.N.S., 502 U.S. 129, 137 (1991) (explaining
that, when the United States is liable for attorney fees it
otherwise would not be liable for, it has partially waived
its sovereign immunity and such waiver must be con-
strued in favor of the United States).
    Here, the phrase “special factor, such as the limited
availability of qualified attorneys for the proceedings
involved” does not “explicitly and unequivocally” include
16                  STARRY ASSOCIATES, INC.   v. UNITED STATES



egregious prelitigation government misconduct. Though
the term “special factor,” standing alone, is ambiguous,
Congress’s decision to include an example of a qualifying
“special factor” cabins the contextual meaning of the term.
Yates v. United States, 135 S. Ct. 1074, 1085 (2015) (ex-
plaining that “the principle of noscitur a sociis—a word is
known by the company it keeps—[helps] ‘avoid ascribing
to one word a meaning so broad that it is inconsistent
with its accompanying words, thus giving unintended
breadth to the Acts of Congress” (quoting Gustafson v.
Alloyd Co., 513 U.S. 561, 575 (1995))). Congress’s inclu-
sion of the “qualified attorneys” example in
§ 2412(d)(2)(A) suggests that it intended for other “special
factors” likewise to involve circumstances in which some-
thing atypical—i.e., “special”—justifies increasing the
litigating attorney’s hourly rate beyond the rate Congress
generally found to be appropriate. Because “[a]n excep-
tion to a ‘general statement of policy’ is ‘usually read . . .
narrowly in order to preserve the primary operation of the
provision,’” we decline Starry’s invitation to construe the
“special factor” exception to “operate to the farthest reach
of [its] linguistic possibilities” in a manner that “contra-
vene[s] the statutory design.” Maracich v. Spears, 133 S.
Ct. 2191, 2200 (2013) (citations omitted).
    The broader structure of § 2412(d)(2)(A) lends further
support to the understanding that “special factors” must
directly impact the hourly rate necessary for the litigation
in question. The parenthetical in this subsection explains
that “[t]he amount of fees awarded under [§ 2412(d)] shall
be based upon the prevailing market rates for the kind
and quality of the services furnished,” with the caveat
that “attorney fees shall not be awarded in excess of $125
per hour” unless the court finds either the cost-of-living
adjustment or the “special factor” exception applicable.
28 U.S.C. § 2412(d)(2)(A). The plain language permits the
trial court to award fees below $125 per hour if it finds
the market rate for the services furnished to be less than
STARRY ASSOCIATES, INC.   v. UNITED STATES               17



this rate, but only permits the court to award fees above
$125 per hour if one of the two statutorily defined excep-
tions justifying an upward departure exist. The first
exception arises where an increased cost of living in the
relevant geographic market renders $125 per hour insuf-
ficient compensation for the services provided to counter-
act “the deterrent effect” of having to litigate against the
government and its “greater resources and expertise.”
EAJA, Pub. L. No. 96-481, §§ 202(b), (c)(1), 94 Stat. 2321
(1980).    The second—“special factors”—must likewise
have a nexus to the hourly rate necessary to combat this
deterrent effect.
     Agency misconduct, even if egregious, does not bear
any nexus to the reasonable hourly rate an attorney
might charge in litigation, and, thus, cannot “justify”
awarding fees at a rate above $125 per hour. Unlike the
examples discussed in Pierce—a specialty in patent law or
foreign language skills—there is nothing about litigating
a bid protest case, even when the agency engaged in
“egregious” misconduct, that requires “some distinctive
knowledge or skill” that is both “needful for the litigation
in question” and “can be obtained only at rates in excess
of the [$125 per hour] cap.” 487 U.S. at 572. Nor have
the Claims Court or Starry identified anything of the sort.
Additional effort might be required to vindicate one’s
rights where the agency engaged in misconduct during
the procurement process—efforts reflected in the reason-
able number of hours spent to do so—but no “distinctive
knowledge or skill” was “needful” to prevail in such a
litigation.
    Starry also points to § 2412(d)(1)(C), arguing that the
provision evinces an intent to “entrust to the trial court’s
discretion whether the circumstances of a particular case
justify a deviation from the default recovery rate, an
increase or decrease in the rate, or no recovery at all
based on the party’s conduct.” Appellee Br. 28–29. Sec-
tion 2412(d)(1)(C), however, only authorizes courts to
18                  STARRY ASSOCIATES, INC.   v. UNITED STATES



“reduce the amount to be awarded pursuant to this sub-
section, or deny an award, to the extent that the prevail-
ing party during the course of the proceedings engaged in
conduct which unduly and unreasonably protracted the
final resolution of the matter in controversy.” 28 U.S.C.
§ 2412(d)(1)(C) (emphases added).          While the EAJA
confers significant discretion on trial courts to award fees
at a rate below $125 per hour, it only permits an upward
departure from this rate if the court finds that one of the
two statutory exceptions exists. Said a different way,
§ 2412(d)(2)(A) limits trial courts’ discretion to award fees
above the rate Congress determined “was generally quite
enough public reimbursement for lawyers’ fees, whatever
the local or national market might be.” Pierce, 487 U.S. at
572. Nothing in § 2412(d)(1)(C) changes that fact. To be
sure, § 2412(d)(2)(A)’s “such as” language implies that
Congress left open the possibility that something other
than the availability of specialized counsel might qualify
as a “special factor.” Whatever else might be encom-
passed within the “special factor” exception, we do not
believe the language is so broad as to confer unfettered
discretion to increase the hourly rate by which a fee
award is calculated.
    This is not to say that the EAJA does not take gov-
ernment misconduct into account. First, it is likely that
additional effort on the part of the private party’s attor-
neys that is necessitated by agency misconduct would be
reflected in an increase in the reasonable number of hours
for the purpose of a lodestar calculation. Because the
lodestar, “the guiding light of [the Supreme Court’s] fee
shifting jurisprudence,” Murphy, 138 S. Ct. at 789 (cita-
tion omitted), is “the product of reasonable hours times a
reasonable rate,” id. (citation omitted), a prevailing party
can recover an increased fee award through an increase in
the reasonable number of hours, not just through a corre-
sponding increase in the reasonable fee rate. Cf. Blum v.
Stenson, 465 U.S. 886, 898 (1984) (explaining, in the
STARRY ASSOCIATES, INC.   v. UNITED STATES                19



context of an award under The Civil Rights Attorney’s
Fees Awards Act of 1976, 90 Stat. 2641, 42 U.S.C. § 1988
(1976 ed., Supp. V), that “[t]he novelty and complexity of
the issues presumably were fully reflected in the number
of billable hours recorded by counsel, and thus do not
warrant an upward adjustment in a fee based on the
number of billable hours times reasonable hourly rates”).
    Second, when the government litigates in “bad faith”
or exhibits other egregious misconduct, the prevailing
party can seek a fee award under § 2412(b), which pro-
vides that “[t]he United States shall be liable for such fees
and expenses to the same extent that any other party
would be liable under the common law or under the terms
of any statute which specifically provides for such an
award.” In relevant part, the common law permits courts
to “assess attorney’s fees when a party has ‘acted in bad
faith, vexatiously, wantonly, or for oppressive reasons.’”
Chambers v. NASCO, Inc., 501 U.S. 32, 45–46 (1991)
(quoting Alyeska Pipeline Serv. Co. v. Wilderness Soc’y,
421 U.S. 240, 258–59 (1975)); see also Goodyear Tire &
Rubber Co v. Haeger, 137 S. Ct. 1178, 1186 (2017) (“[O]ne
permissible sanction is an ‘assessment of attorney’s
fees’—an order, like the one issued here, instructing a
party that has acted in bad faith to reimburse legal fees
and costs incurred by the other side.” (citation omitted)).
Congress’s decision to waive sovereign immunity and
authorize an additional attorney fee award when the
government acts in bad faith strongly implies that it did
not intend for § 2412(d)(2)(A)’s “special factor” exception
to encompass egregious misconduct. 3



    3   As noted, Starry did not seek fees under § 2412(b),
notwithstanding its belief—with which the Claims Court
agreed—that HHS engaged in egregious misconduct. At
oral argument, counsel for Starry submitted that its client
could not have moved for fees under both § 2412(b) and
20                  STARRY ASSOCIATES, INC.   v. UNITED STATES



    We note, moreover, that the unreasonableness of the
government’s substantive decisions at both the agency
and litigation stage is factored into the threshold question
of whether to award fees in the first instance under
§ 2412(d)(1)(A). The Supreme Court held in Pierce that
fees can only be awarded under § 2412(d)(1)(A) where the
government’s litigation position is not “substantially
justified”—that is, “justified to a degree that could satisfy
a reasonable person.” 487 U.S. at 565. Thus, a prevailing
party is only entitled to fees under § 2412(d) in the “very
small category of cases” in which “the Government’s
position will be deemed so unreasonable as to produce an
EAJA award.” Id. at 574. The fact that Congress tasked
trial courts with evaluating the substance of the govern-
ment’s position under § 2412(d)(1)(A), prior to determin-
ing what hourly rate to apply under § 2412(d)(2)(A),
suggests § 2412(d)(2)(A)’s “special factor” analysis does
not permit courts to later reconsider the propriety of the
agency’s actions when calculating the amount of the
award.
    The Second Circuit reached an analogous conclusion
in Cassuto v. Commissioner, 936 F.2d 736 (2d Cir. 1991).
In that case, two taxpayers filed petitions in the United
States Tax Court challenging three Notices of Deficiency



§ 2412(d), but was unable to point to language in the
EAJA or any other law that would have prohibited it from
doing so.      Oral Arg. at 22:35–23:20, available at
http://oralarguments.cafc.uscourts.gov/default.aspx?fl=20
17-2148.mp3. We likewise find nothing in the EAJA that
prohibits a prevailing party from seeking fees under both
§ 2412(b) and § 2412(d), and note that prevailing parties
in other cases have successfully moved for fees under both
provisions. See, e.g., Lauritzen v. Lehman, 736 F.2d 550
(9th Cir. 1984) (sanctioning the district court’s authority
to award fees under either provision).
STARRY ASSOCIATES, INC.   v. UNITED STATES                  21



issued by the Commissioner of Internal Revenue, and
“substantially prevailed” with respect to certain of their
challenges. Id. at 738–39. They then moved for an award
of reasonable litigation costs under 26 U.S.C. § 7430.
That statute, like § 2412(d), authorizes an award of
attorney fees except where “the position of the United
States in the proceeding was substantially justified,” 26
U.S.C. § 7430(c)(4)(B)(i), and caps fees at a particular
hourly rate “unless the court determines that a special
factor, such as the limited availability of qualified attor-
neys for such proceeding, the difficulty of the issues
presented in the case, or the local availability of tax
expertise, justifies a higher rate,” id. § 7430(c)(1)(B)(iii).
The taxpayers argued, among other things, that “the
Commissioner’s improper behavior in issuing [one] Notice
of Deficiency, which ‘forced’ the[m] to settle the case for
an amount which includes the tax deficiency for 1980, a
time-barred year, constitutes a ‘special factor.’” Cassuto,
936 F.2d at 743–44. The Second Circuit disagreed, writ-
ing:
    the Commissioner’s conduct has already been tak-
    en into account by the Tax Court’s determination
    that his positions in the 1980 and 1982 Notices
    was [sic] “not substantially justified.” The justifi-
    cation, or lack thereof, for the Commissioner’s po-
    sition is a threshold question that must be first
    examined to determine whether a litigant even
    has a case for fees under § 7430. To also qualify
    this query as a “special factor” in the calculation
    of the amount of the fee award is inappropriate;
    otherwise a “special factors” analysis would
    amount to a vehicle for assessing punitive damag-
    es—a notion that receives no support in the struc-
    ture or language of the statute.
Id. at 744 (emphases added). This reasoning is persua-
sive, and Starry’s efforts to distinguish Cassuto are not.
22                 STARRY ASSOCIATES, INC.   v. UNITED STATES



           B. Purpose and Legislative History
    Congress’s stated purposes in enacting the EAJA and
the Act’s legislative history underscore the understanding
that the phrase “special factor” in § 2412(d)(2)(A) does not
encompass egregious agency misconduct. The EAJA was
enacted for two express purposes: (1) “to diminish the
deterrent effect of seeking review of, or defending against,
governmental action by providing in specified situations
an award of attorney fees, expert witness fees, and other
costs against the United States”; and (2) “to insure the
applicability in actions by or against the United States of
the common law and statutory exceptions to the ‘Ameri-
can rule’ respecting the award of attorney fees.” EAJA
§ 202(c).
     The EAJA incorporates the common law and statutory
fee-shifting exceptions in § 2412(b), and effectuates the
first of these purposes—combating the “deterrent effect”
of litigating against the government—through § 2412(d).
The Supreme Court added additional gloss to the reasons
for which Congress enacted the EAJA, stating that “[t]he
Committee Reports of both the House and the Senate
reflect the dual concerns of access for individuals and
improvement of Government policies,” with the House of
Representatives stating that “[t]he exception created by
[the EAJA] focuses primarily on those individuals for
whom cost may be a deterrent to vindicating their rights.”
Comm’r, I.N.S. v. Jean, 496 U.S. 154, 164 n.14 (1990)
(quoting H.R. Rep. No. 96–1418, at 12 (1980)).
    Providing adequate compensation for attorneys and
punishing governmental misconduct—both of which are
common justifications for departing from the “American
rule” that litigants are typically responsible for their own
attorney fees—are not among the reasons that Congress
enacted § 2412(d). Instead, it found that a rate of $125
per hour was “generally quite enough public reimburse-
ment for lawyers’ fees” to advance § 2412(d)’s dual aims of
STARRY ASSOCIATES, INC.   v. UNITED STATES                 23



increasing access to the courts for individuals and small
businesses and improving government policies, Pierce,
487 U.S. at 572, and authorized such fees under this
subsection. Only where something “justifies” increasing
the statutorily prescribed rate to advance these aims can
the trial court award fees in excess of this rate. There is
nothing “special” about combating agency misconduct that
fits the bill.
             C. Decisions from Other Circuits
    Finally, we observe that our interpretation is in line
with the majority of decisions from other federal courts of
appeal that have considered § 2412(d) and related stat-
utes. The Second Circuit, in addition to deciding Cassuto,
interpreted § 2412(d) the same way we do here in Kerin v.
U.S. Postal Service, 218 F.3d 185 (2d Cir. 2000). There,
the court held that § 2412(d) “provides for fee awards
above the statutory ceiling only in certain limited circum-
stances, not including bad faith,” and observed that
“enhancing a fee award under § 2412(d) for bad faith”
would be “erroneous[].” Id. at 191. The Second Circuit
observed that the district court “may have conflated
§§ 2412(b) and (d)” in awarding such an enhancement,
explaining that the district court cited cases that “explicit-
ly rely on § 2412(b), which is the sole permissible basis for
any award of bad faith fees under the EAJA, entirely
separate from § 2412(d).” Id. Starry argues that Kerin
did not “hold that outrageous agency conduct of the type
seen here cannot form the basis of a special factor en-
hancement.” Appellee Br. 48. We disagree—the Second
Circuit’s express disagreement with the district court’s
decision to award fees above the statutory rate based on
its findings that the U.S. Postal Service exhibited “bad
faith,” acted with “unfairness and arrogance,” litigated a
counterclaim that was “excessive,” “unreasonable,” and
“retaliatory,” and acted improperly by using its superior
resources to “cavalierly brush [ ] aside” Kerin’s claims by
“deploy[ing] expert after expert to crush [Kerin] whichev-
24                 STARRY ASSOCIATES, INC.   v. UNITED STATES



er way he turned,” Kerin, 218 F.3d at 188, are precisely
the type of “outrageous” or “egregious” misconduct with
which the Claims Court took issue here.
    The Fifth Circuit in Estate of Cervin v. Commissioner,
200 F.3d 351 (5th Cir. 2000), similarly determined that, in
the § 7430 context, “improper behavior” by the Govern-
ment and “untenable” Government “litigating positions”
cannot qualify as a “special factor” justifying an increase
in the statute’s maximum hourly rate. Cervin, 200 F.3d
at 357–58. According to the court, “in light of the Com-
missioner’s superior construction of § 7430 and of the
punitive nature of the remedy suggested by petitioners,
we conclude that the government’s litigation position
cannot be a “special factor” warranting an increase above
the statutorily allowed $75 per hour. This is so regardless
of how ‘untenable’ that position might be.” Id. at 358.
Again, Starry’s effort to distinguish Cervin based on a
purported distinction between the “specific litigation
positions” in that case and “the type of outrageous agency
conduct seen” in this case, falls short.
    The cases cited by Starry do not alter our view. The
discussion of § 2412(d)(2)(A) in Jean v. Nelson, 863 F.2d
759 (11th Cir. 1988), affirmed on other grounds, Commis-
sioner v. Jean, 496 U.S. 154 (1990), while seeming to read
Pierce more broadly than we do here, was dicta. See id. at
776. That discussion, moreover, focused on litigation
misconduct, not agency behavior predating litigation or on
the mere fact that the government chose to defend that
behavior in court.
    Pollgreen v. Morris, 911 F.2d 527 (11th Cir. 1990), is
similar. While the Eleventh Circuit opined that govern-
ment delay in litigating a case could constitute a “special
factor” if “the government’s litigation delay was the result
of bad faith or the length of the delay was excessive,
regardless of the merits of the position litigated,” it did
not find that such circumstances existed in the case before
STARRY ASSOCIATES, INC.   v. UNITED STATES                 25



it. Id. at 537–38. Again, that discussion was dicta. And
the court said nothing about agency misconduct before the
litigation commenced. Perhaps more importantly, the
cases the Eleventh Circuit cited for the proposition that
bad faith delay may constitute a “special factor” all pre-
date Pierce. We already have concluded that decisions
“permitting adjustment to the fee rate for delay in receipt
of fees as a ‘special factor’” were “expressly discredited” by
Pierce. Chiu v. United States 948 F.2d 711, 721 (Fed. Cir.
1991). We find no reason to reconsider that determina-
tion.
                      III. CONCLUSION
    While, like the Claims Court, we find HHS’s miscon-
duct in connection with this procurement inappropriate—
even egregiously so—we do not believe that § 2412(d)
provides a vehicle for addressing that fact, other than via
a recognition that additional hours of attorney effort
might be factored into the lodestar calculation. Accord-
ingly, the Claims Court’s decision awarding Starry attor-
ney fees and costs under § 2412(d) of the EAJA is
                VACATED AND REMANDED
                            COSTS
    No costs.