GAO Clarifies Rules Regarding the Use of Key Personnel Past Performance

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In March 2015, GAO issued a decision in Recogniti, LLP, B-410658 (January 21, 2015), whereby it upheld the agency’s reliance upon individual past performance references for the owner of a small and relatively new company. GAO noted that the FAR allows agencies to credit a company for the past performance of an owner if that owner is proposed as a key employee for the work to be performed. As a follow-up to a blog article we wrote on this topic last year, we felt it necessary to point out another recent decision that went the other way, while still recognizing that agency’s discretion to take into account the past performance of individual key employees, the FAR does not require agencies to do so.

In the latest case, Logistics Management International, Inc., B-412837 (June 6, 2016), GAO ruled again in favor of the government, but in so doing stated that the government was not required to take into account the past performance or experience of an offeror’s key employees and that a solicitation which expressly prohibits taking into account such experience does not violate the FAR.

Here again, the protester was a small and relatively new business. As such, it lacked the past performance and corporate experience necessary to get anything other than a mere “neutral” past performance rating. When the protester learned of the agency’s refusal to take into account the past performance of key personnel—the only means the company had to secure higher-level past performance ratings—it attempted to get the agency to change the solicitation without a formal protest.

The agency denied the request, so the protester was forced to go to GAO. In making its ruling, GAO noted that, while the FAR does state agencies “should” take into account the past performance of key personnel, nothing in the FAR actually requires it to do so. Therefore, whether or not to take into account the past performance of key personnel is a matter purely within agency discretion. If an agency decides to take it into account, that is perfectly acceptable. On the other hand, if the agency refuses to allow companies to rely upon key personnel past performance, that too is unobjectionable.

It is important for small businesses—especially those that are within their first few years of life—to fully understand there is very little they can do to force an agency to take the owner’s or other key personnel’s past performance into account. Without some act of Congress or change coming from the FAR Council, it seems that small businesses need to start with some subcontracting or other forms of corporate past performance before trying to win a prime contract. Otherwise, such companies could get stuck with a mere “neutral” rating for past performance despite having an owner with 30 or more years of extremely relevant experience under his or her belt.

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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