Government Contracting: Beware Offerors - Past Performance By Your Proposed Subcontractors and Key Personnel May Not Count

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A recent GAO decision, HK Consulting, Inc., B-408443 (Comp. Gen. Sept. 18, 2013), provides an important reminder that government agencies are not required to consider the past performance of an offeror’s proposed subcontractors or key personnel when awarding Federal contracts. GAO’s decision is significant to many offerors because of the extent to which they may rely upon the experience of proposed subcontractors and key personnel to demonstrate their ability to perform certain work called for in a solicitation or request for proposals (RFP).

This reliance reflects reality, as an offeror may not self-perform all work called for in an RFP. This reliance also conforms with Federal Acquisition Regulation (FAR) 15.305(a)(2)(iii), which provides that an agency’s “evaluation should take into account past performance information regarding predecessor companies, key personnel who have relevant experience, or subcontractors that will perform major or critical aspects of the requirement when such information is relevant to the instant acquisition.” Thus, an offeror may propose subcontracting certain scopes of work and/or hiring, partnering with, or relying upon key personnel who may have gained relevant experience from prior jobs while not employed by the offeror. Agencies, in turn, should take this past performance information into account when evaluating the offeror’s proposal.

The terms of an RFP, however, may alter this practice, requiring an agency to assess a principal offeror’s performance confidence (i.e., ability to perform the solicited work) based solely on the principal offeror’s own past performance, without giving any consideration to the past performance or experience of proposed subcontractors and key personnel. While a principal offeror would not be penalized with an unfavorable performance confidence rating if it does not have any relevant past experience, it nevertheless would be limited to receiving only a neutral rating in this category.

HK Consulting, Inc. (HK) recently protested an RFP with such terms issued by the Department of the Air Force for services to support the United States Pacific Command’s military exercises. HK alleged that the RFP was unreasonable, unduly restrictive of competition, and essentially prevented all but the incumbent from receiving the highest performance confidence rating of substantial confidence.

GAO denied HK’s protest, finding that the RFP’s past performance limitations were unobjectionable and not restrictive of competition. GAO based its decision on three grounds, which likely would apply to future protests regarding this issue.

(1) Agencies have a legitimate interest in evaluating performance risk by assessing only the experience and past performance of entities with which they will have contractual privity, meaning principal offerors and not their proposed subcontractors or key personnel.

(2) Agencies are not legally required to attribute employee experience to an offeror when evaluating corporate experience and past performance; thus, while not directly stated in the decision, agencies may disregard relevant experience gained by key personnel, especially if that experience was not obtained while the key personnel were employed by an offeror.

(3) If the RFP provides that an offeror lacking relevant past performance history will be assessed a neutral performance confidence rating (not favorable or unfavorable), it does not preclude an offeror from submitting a proposal or receiving an award.

GAO’s decision in HK Consulting, Inc. provides at least two reminders. First, while FAR 15.305(a)(2)(iii) allows agencies to take into account the past performance information of an offeror’s proposed subcontractors or key personnel, agencies are not required to do so (the regulation says “should” and not “shall”). Second, agencies may be prohibited from taking past performance information into account under the express terms of an RFP. Thus, always be sure to read the terms of an RFP closely. And beware that the relevant experience of your proposed subcontractors and key personnel – no matter how impressive – may not count.