Fifty Ways to Lose Your Federal Contract Award – Part 1: Failing to Secure Your Key Person Supply Chain

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With apologies to Paul Simon, this is Part 1 of a series of articles on the many ways contractors can lose awards on federal contracts. These cautionary tales should inform anyone in a contractor organization with responsibility for authorizing, preparing, or negotiating competitive federal proposals.

Like a prize-winning recipe, the ingredients for losing an award are well known: one part carelessness, a pinch of greed, and some lack of attention to detail. Throw in a dash of procrastination, a late proposal revision, and then garnish it with an 11th-hour e-mailing of your proposal. Voila—you have cooked up a complete waste of proposal resources! 

We kick off this series with a story of an incumbent contractor who lost a billion-dollar follow-on contract by failing to contractually secure the services of a key person designated in the proposal.

The Government Accountability Office’s (“GAO”) recent protest decision in PAE Applied Technologies, LLC, B-No. 419133 (November 4, 2020), shows a typical trap for the unwary. There, the incumbent contractor submitted a proposal for a follow-on Navy Technical Support Services contract. The contractor’s proposal designated a subcontractor employee as a key person on the team.

While the government was evaluating the proposal, the employee resigned from the subcontractor’s employment to take a new job with another company—which apparently was not involved in the procurement. As it was required to do, the contractor notified the Contracting Officer of the individual’s departure.

Realizing its exposure, the contractor then tried to rehire the person. The contractor did get the employee back, but not before the proposal evaluation team downgraded its proposal to technically unacceptable due to this missing person.

The government rejected the proposal, and the contractor protested. GAO found that the agency properly downgraded the proposal to technically unacceptable because the person was not employed at the time proposals were evaluated. The late rehire did not save the proposal.

In this case, if the contractor had contractually secured the relationship with its key employee for the period between proposal submission and award, it might have won the billion-dollar contract.

There are valuable takeaways from this GAO decision:

    1. While it may not always be a simple matter to prevent employees, who happen to be “key personnel” in a proposal, from deciding to leave their jobs, contractors should make every effort to decrease the risk where they can.
    2. While proposals are in evaluation, Offerors should audit the sufficiency of their current contractual agreements with any key personnel named in the solicitation or similarly situated subcontractors.
    3. Key questions that must be asked include:
      • Are all proposed key personnel and subcontractors still ready, willing, and able to perform?
      • What Plan B is in place if a key person or subcontractor becomes unavailable while the proposal is in evaluation?

The PAE case makes clear that asking and answering these questions is not optional while proposals are being evaluated. Don’t lose your contract award because you failed to prepare for these contingencies. 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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