PRE-AWARD: WEIGHTING
PAST PERFORMANCE
INFORMATION
“Past performance is one indicator of an offeror's ability to perform the contact successfully.” FAR[37]
This chapter provides guidance to the source selection authority in determining the usefulness of past performance information as an indicator of an offeror's ability to perform the prospective contract. Usefulness will depend on the answer to this question: “Is the past performance information from a contract that is similar to the solicitation requirement? “ If it is, then the weight that will be assigned to it will depend on the following considerations.
FAR CONSIDERATIONS
The FAR[38] specifies four areas that must be considered in determining whether the past performance information is useful in the instant acquisition:
Currency and relevance of past performance information
Source of past performance information
Context of the data
General trends in contractor performance.
Currency and Relevance of the Past Performance Information
Currency refers to the state or quality of being current, i.e., recent. The more recent the contract, the greater assurance that the offeror still has the same managerial, technical, and human resource capacity. Older contracts may have employed different managers, technology, or personnel. Unless the solicitation sets a specific time limit, contracts completed within the last three years are generally considered current.
But currency is not necessarily time-related. For example, one offeror has an excellent performance record on contracts for developing systems for database management, but all the systems were based on technology that is now obsolete. A second offeror also has excellent performance but has developed its systems for database management using innovative technology that is now considered the leading edge of current technology. The past performance information on the first offeror lacks currency because the technology used on the referenced contracts is no longer useful or acceptable. The information on the second offeror has currency because the technology it uses is still prevalent or still in use.
Relevance refers to the “same and similar effort.” If the past performance information relates to work of a different nature from that of the instant acquisition, the contracting officer should disregard it because it does not show how well the offeror might perform under the instant acquisition. For example, under a solicitation for base housing maintenance and repair services, including plumbing, electrical, mechanical, and structural work, a review of one offeror's past performance revealed that it had done only painting and painting-related work in the past. It had not performed any of the other required work. This offeror's past performance information is not as relevant as that of an offeror that has performed the full array of services noted in the solicitation. Less weight is given to the past performance information of the offeror that has done only painting and painting-related work.
If a connection cannot be made between the past effort and the prospective acquisition, the past performance information is not relevant. The RFP, however, may be more precise and specify that the referenced contracts are those that are similar with respect to size, scope, and complexity. Or, the RFP may even specify the type of contract, e.g., fixed price. The more relevant the contract, the more weight is given to it.
Source of the Past Performance Information
Some past performance information sources are better than others. Contractor performance reports carried out in compliance with FAR 42.15 are the best source. They contain input from the agency's acquisition team and ratings for the key performance elements. The contractor was given the opportunity to review and comment on the ratings before they were finalized. Information close at hand (i.e., information personally known to the contracting officer or evaluators) is an important source. The most common sources of past performance information are the responses to questionnaires sent to the contacts referenced in the proposal.
Information that is at variance with other information received should be verified with the responding agency. If the information is negative, consideration should also be given to permitting the offeror to rebut such information. Information from commercial sources should be handled with care because although the federal government is required to maintain past performance information in its files, commercial sources might or might not routinely retain such information in a useable form. Adverse past performance information from commercial sources must be in writing.
Context of the Data
Context relates to the circumstances in which an event occurs. For example, one contractor has had very successful past performance constructing roads in urban settings but has had no contracts for constructing highways. Under a solicitation for road construction throughout the state, this offeror's past performance might not be as good an indicator of the offeror's ability to perform the contract as that of another offeror that has had similar successful past performance in both urban and rural settings.
Past performance information should be examined to ensure that the narrative description of an offeror's past performance and the assigned ratings mesh. Past performance information may be considered in context when the narrative substantiates the ratings. It is out of context when there is no narrative or the narrative inadequately supports the rating assigned. Adjectival ratings, numerical scores, color codes, or other rating indicators are of little value without a supporting narrative or description of the offeror's past performance.
General Trend of Past Performance
When reviewing past performance, evaluators often focus on a single problem contract rather than looking at the general trend of the offeror's past performance. An offeror's past performance should not necessarily be downgraded because of a single problem contract, particularly if the trend of the offeror's past performance (over time or a number of other contracts) does not show such problems. Evaluation of past performance information is not a mathematical or mechanical exercise. Problem contracts should be examined and then balanced with the general trend of the offeror's past.
An offeror's performance should be evaluated on the preponderance of its past efforts to determine whether past performance deficiencies are usual or unusual in terms of the offeror's performance record. If the preponderance of an offeror's past efforts are deficient, this fact should be treated as an unacceptable risk factor and evaluated as such.
OTHER CONSIDERATIONS
The areas identified in the FAR are not the only areas that should be considered in determining the usefulness of past performance information. The following should also be considered when evaluating an offeror's past performance information:
Adverse past performance information
Extent of government's responsibility
New firms/firms with no past performance history
Performance of predecessor companies, key personnel, or subcontractors.
Adverse Past Performance Information
When evaluating an offeror's past performance, assess the extent to which the offeror's past performance is likely to affect its performance on the prospective contract. A demonstrable relationship should exist between the offeror's past performance and the prospective performance, particularly if there is adverse past performance information. For example, if past problems have been corrected and are not likely to recur, these problems should not be used to downgrade the offeror's proposal. Or, if the past poor performance occurred in a corporate division that will not be involved in the prospective contract, the past problems should not be counted against the offeror unless it can be demonstrated that the problems originated at the corporate level and thus, unless corrected, would be likely to affect the prospective effort adversely. On the other hand, poor past performance on an effort similar to the prospective contract, if not explained satisfactorily, is a good indicator that the performance on the prospective contract will also be poor.
When considering the impact of an offeror's past performance on prospective performance, the nature and severity of past problems and the effectiveness of any corrective action taken by the offeror in terms of the prospective performance should be assessed. If the past problems have not been corrected, are they likely to recur and will they adversely affect the chance of successful performance? If the past problems have been successfully corrected or are unlikely to recur, they are not germane to the prospective contract. An offeror can still receive a high rating for past performance as long as problems identified during performance were handled to the satisfaction of the client.
Performance problems are not necessarily poor performance, as can be seen from the GAO decision in The Communities Group, B-283147, October 12, 1999, summarized in Example 4.1.
Example 4.1-Performance problems are not necessarily adverse past performance.
Issue: The Communities Group (TCG) protested the award of a contract to Management Solutions of America, Inc., contending that Housing and Urban Development (HUD) had failed to conduct meaningful discussions and properly evaluate proposals. Specifically, in rating Management Solutions' past performance, HUD had failed to consider the negative past performance of the firm's subcontractor on a current HUD contract for similar services.
Resolution: TCG was correct that the subcontractor had problems with the contract. However, HUD did not consider the problems negative performance because the subcontractor had taken prompt and appropriate remedial action. The Comptroller General found that HUD's evaluation of the offeror's subcontractor was reasonable and consistent with the evaluation criteria specified in the proposal and denied the protest.
For an abridged version of the GAO decision in The Communities Group, see Appendix B, Example 4.1.
Note that at the time Management Solutions' past performance was evaluated, the problem with its subcontractor had not been investigated and, because the facts of the matter were not known, the problem could not be considered in the evaluation. By the time of the protest, however, it was found that MTB had taken appropriate corrective action and the problem was not likely to recur. Thus, an adverse past performance finding would be inappropriate because the problem would have no effect on the prospective performance.
GAO reached a similar decision in Dynacs Engineering Co., Inc., B-284234; B-284234.2; B-284234.3, March 17, 2000, which is summarized in Example 4.2.
Example 4.2-Clarifying adverse past performance information during discussion.
Issue: A NASA source evaluation board (SEB) learned that a contracting officer's representative (COR) administering another NASA contract intended to give Federal Data Corporation (FDC) a negative performance rating for its transition effort on that contract. This information was not used to downgrade FDC's past performance, and the other offeror protested that the past performance evaluation was unreasonable.
Resolution: The Comptroller General denied the protest, stating:
After learning of the COR's potential negative rating, NASA asked FDC to respond to this information. FDC did so, both explaining its position, and sending the SEB a copy of the response it had sent to the COR. According to FDC's response, the transition effort did not go well for reasons other than FDC's actions; FDC maintained that the follow-on contractor caused many of the problems. Since the COR had not actually assigned FDC a final negative rating, the SEB considered the issue unresolved and did not use it to downgrade FDC in the past performance evaluation… Since the COR had not provided a final rating by the time the SEB was completing its past performance evaluation, and FDC provided a response in which it denied that it was responsible for the difficult transition, it was reasonable not to automatically attribute the problems to FDC. We think the SEB therefore reasonably could conclude that the information available did not support a finding of deficient past performance, and thus did not warrant downgrading FDC.[39]
For an abridged version of the GAO decision in Dynacs Engineering Co., Inc., see Appendix B, Example 4.2.
As with Example 4.1, if a matter dealing with adverse past performance information is not officially resolved at the time of the evaluation, the evaluators are not required to consider it. However, if the evaluators are aware of a problem, they should allow the offeror to comment on the adverse information, and the offeror's response must be credible. If FDC had not responded with reasonable arguments, the matter might have been resolved differently.
Examples 4.1 and 4.2 involved acquisitions in which discussions were to be conducted and there was time to consider these matters before award. But what happens when award will be made without discussions and time is of the essence? The FAR[40] states that where award will be made without discussions, the agency may (but is not required to) give the offeror an opportunity to clarify adverse past performance information to which the offeror has not previously had an opportunity to respond. Example 4.3, taken from the GAO decision in A.G. Cullen Construction, Inc., B-284049.2, February 22, 2000, provides clarification on this point.
Example 4.3-Clarifying adverse past performance information where award will be made without discussions.
Issue: The solicitation provided for award, without discussion, to the offeror whose proposal represented the best value to the government based on price/ performance tradeoff, with past performance significantly more important than price. The award went to DiCicco. Its price was five percent higher than Cullen's, but it had an excellent past performance rating compared to Cullen's very good rating. One of Cullen's references had provided negative past performance information. Because the award was made without discussion, Cullen had no opportunity to address the negative information. Cullen protested.
Resolution: The Comptroller General explained:
With regard specifically to clarifications concerning adverse past performance information to which the offeror has not previously had an opportunity to respond, we think that, for the exercise of discretion to be reasonable, the contracting officer must give the offeror an opportunity to respond where there clearly is a reason to question the validity of the past performance information, for example, where there are obvious inconsistencies between a reference's narrative comments and the actual ratings the reference gives the offeror. In the absence of such a clear basis to question the past performance information, we think that, short of acting in bad faith, the contracting officer reasonably may decide not to ask for clarifications.
Applying this standard here, we think that the contracting officer reasonably exercised his discretion in deciding not to communicate with Cullen regarding the adverse past performance information received from one of Cullen's references. There is nothing on the face of the reference that would create concerns about its validity. Given the permissive language of FAR 15.306(a)(2), the fact that Cullen may wish to respond to the reference does not give rise to a requirement that the contracting officer give Cullen an opportunity to do so.
For an abridged version of the GAO decision in A.G. Cullen Construction, Inc., see Appendix B, Example 4.3.
Note that while the FAR is permissive about giving an offeror a chance to respond, the Comptroller General states that the offeror must be given an opportunity to respond if there is reason to question the validity of the adverse past performance information. The agency has the discretion to do so in all other cases.
Even if award is to be made without discussions, it is suggested that offerors be permitted to clarify adverse past performance information in all cases where the adverse information might be an important factor in the award decision (i.e., the offeror might otherwise be in line for award), regardless of any questions about the validity of the reference's information. Without the offeror's input, it would be difficult to assess the impact the problem might have on prospective performance. Although this might add a few days to the procurement process, a protest (even a losing one) will cause even greater disruption. It should be noted, however, that this suggestion applies only where the offeror's clarification will not result in any changes to the proposal. Proposal changes are not permitted when award will be made without discussions.
When discussions will be held, the FAR[41] states that communications must be held with offerors where adverse past performance information is a determining factor preventing them from being placed in the competitive range, and the offeror has not had a prior opportunity to respond to such information. Technically, this would not include adverse information about contracts the offeror has referenced because, theoretically, the offeror would know of any problems on these contracts and should comment on such problems in its proposal.
In reality, however, contractors are not always informed of government-perceived problems during contract performance, particularly on contracts that end satisfactorily. These problems, however, might be noted on responses to a query about past performance from another agency.
It would be good policy, therefore, to permit offerors to comment on any adverse past performance information before determining the competitive range or making an award without discussions if the adverse information might be a determining factor preventing the offeror from being included in the competitive range or considered for award. With offeror comments in hand, evaluators are better prepared to assess the impact of the problems on prospective performance. Permitting such comments might help avoid a protest.
If it is decided that an offeror is to be included in the competitive range despite some adverse past performance information, this information should be identified as a discussion question to be addressed during discussions.
In any event, if an offeror fails to provide information on past problems and the associated corrective action in its proposal, or fails to respond to questions about such problems, the government may determine that the problems have not been corrected and evaluate the offeror's past performance accordingly, as shown in Example 4.4 taken from the GAO decision in Smith of Galeton Gloves, Inc., B-271686, July 24, 1996.
Example 4.4-If an offeror fails to respond to questions about past problems, you may assume that the problems have not been corrected.
Issue: Smith of Galeton Gloves, Inc., protested the award to Nationwide Glove Company, stating that the agency had improperly downgraded its proposal under the past performance evaluation factor. Smith had listed two past contracts, both of which did not meet the RFP's currency requirement. The agency researched its own files and found two previous contracts with Smith. Based on timeliness deficiencies on the two contracts, the agency gave a marginally acceptable past performance rating. The agency sent a discussion letter asking Smith to address the delinquency problems. Smith failed to do so.
Resolution: The Comptroller General denied the protest, stating:
Given the agency's discussion letter, which clearly placed Smith on notice that the firm needed to furnish additional evidence to improve its past performance rating, and Smith's failure to respond-in any fashion-to the agency's past performance concerns, we think the agency reasonably found Smith's proposal marginally acceptable under the past performance factor.
For an abridged version of the GAO decision in Smith of Galeton Gloves, Inc., see Appendix B, Example 4.4.
While this case involved discussions after the competitive range was established, the ruling also would apply to an offeror that failed to respond adequately to a clarification request prior to an award without discussions or the establishment of the competitive range.
A contracting officer should be careful, however, about what is evaluated as poor past performance. A contractor's exercise of its rights during contract performance should not be evaluated as poor performance, as noted in Example 4.5, from the GAO decision in AmClyde Engineered Products Co., Inc., B-282271; B-282271.2, June 21, 1999.
Example 4.5-Filing of contract claims is not poor performance.
Issue: AmClyde Engineered Products Company, Inc., protested the award to Samsung Heavy Industries Company, LTD, for the design and manufacture of portal cranes. AmClyde argued that the Navy should not have downgraded its proposal for making claims because this is a mechanism that a contractor is entitled to pursue whenever there is a dispute on the contract, and many of AmClyde's claims were meritorious.
Resolution: The Comptroller General denied the protest, reasoning that:
[W]e find no basis to conclude that AmClyde would have been entitled to a materially better or an outstanding rating, even if it had been able to eliminate claims history as an area of concern, since the other aforementioned past performance problems still remain.
Although the protest was denied, GAO agreed with AmClyde's position that filing claims should not downgrade a contractor's performance. A footnote to the AmClyde decision explained the GAO position as follows:
While the claims apparently had no impact here, we agree with the protester that, absent some evidence of abuse of the process, agencies should not lower a firm's past performance evaluation based solely on its having filed claims. Contract claims, like bid protests, constitute remedies established by statute and regulation, and firms should not be prejudiced in competing for other contracts because of their reasonable pursuit of such remedies in the past.
For an abridged version of the GAO decision in AmClyde Engineered Products Company, Inc., see Appendix B, Example 4.5.
This decision encompasses more than the taking of formal contractual actions, such as claims, disputes, and appeals. Disagreements with the government about contract administration, such as contract interpretation, do not constitute poor past performance unless they are determined to be frivolous or deliberately misleading.
Extent of Government's Responsibility
One of the more difficult past performance evaluation areas is determining the extent to which government actions might have contributed to an offeror's deficient performance. Government actions, such as faulty specifications, late delivery of government-furnished property (GFP), delivery of faulty GFP, failure to provide timely testing or other approvals, and numerous contract changes, can contribute to cost overruns and late deliveries.
When faced with an allegation of deficient performance, the contractor often will blame the government, and the government usually will deny any responsibility. Resolving these issues is not easy; nevertheless, the extent of government involvement should be assessed before any decisions are made. It is not reasonable to penalize a contractor for problems resulting from, or significantly affected by, government actions.
For example, while discussing the background in a decision,[42] the Comptroller General noted that the contracting officer had asked an offeror about comments made by another agency indicating that the offeror's technical performance was considered inadequate. In response, the offeror produced a letter of commendation from the contracting agency's project manager on its performance under the contract in question, in which the project manager praised the offeror's performance as outstanding and tacitly admitted that the government was responsible for the alleged problems. Had the offeror been denied an opportunity to respond to the adverse comments, the record would have shown that the offeror had performed poorly on a contract when it actually had performed in an outstanding manner.
The validity of an offeror's contention that the fault lay with the government requires considering the arguments of both sides and deciding which side has the best argument. The evaluator should assess the government's allegations of poor performance against the offeror's other references. If the other references show high performance assessments, the matter should be investigated if a singular finding of poor performance would adversely affect the offeror's competitive position.
New Firms or Firms with No Past Performance History
The evaluation of past performance must provide for newly formed firms that lack a history of relevant past performance or firms for which there is no pertinent past performance information available (i.e., an established firm desiring to expand into new areas). The FAR[43] states that firms without a past performance record or for whom past performance information is not available may not be evaluated favorably or unfavorably on past performance. In effect, you are to give such a firm a neutral rating, which, in theory, does not affect its competitive position. The concept of “neutral” ratings is not new, as shown in Example 4.6 from the GAO decision in Excalibur Systems, Inc., B-272017, July 12, 1996.
Example 4.6-Evaluating offerors with no past performance history (#1).
Issue: In the Excalibur Systems, Inc., decision, the Comptroller General discussed the use of neutral ratings where both offerors had received a green/low risk past performance rating, so award was made to the lowest-priced offeror. The protester argued that the awardee's past performance should have been given an insufficient data (neutral) rating because the awardee had never produced the item before, and the protester should have received award because its higher past performance rating and less-than-one-percent difference in price made it the best value.
Resolution: The Comptroller General denied the protest, stating:
Here, however, the Navy explains that its evaluation scheme does not call for rewarding a vendor with good past performance over a vendor with no relevant past performance. Rather, the Navy further explains, its evaluation scheme is intended to differentiate between those with good past performance and those with differing degrees of less than good performance. In other words, the Navy's position is that under the RFP an offeror with a green rating is superior to an offeror with a red or yellow rating but not to an offeror with a neutral insufficient data rating.
We have no basis to disagree with the Navy. In fact, we have previously recognized that this very evaluation scheme contemplates that “a green rating [is] to be given greater weight in the evaluation only when compared to a red or a yellow rating,” and that an offeror's green rating is “not to be given greater weight in the evaluation when compared to an offero['s]… insufficient data rating,” so that in the circumstances here the agency is to compare the competing proposals “based on price.”[44]
Accordingly, we conclude that even if Condor's green rating is changed to an insufficient data rating, the award decision would not change.
The Comptroller General denied this protest because the RFP clearly stated that offerors receiving insufficient data classifications “shall be evaluated solely on the basis of price [and that] [p]ast performance shall not be a consideration in their evaluation.” This meant that a comparative assessment of past performance would be made only among those offerors with a past performance record, and then the offerors, including those with insufficient data ratings, would compete on the basis of price alone.
For an abridged version of the GAO decision in Excalibur Systems, Inc., see Appendix B, Example 4.6.
The RFP's explanation of how the past performance of new firms or those with no past performance history will be evaluated must be worded carefully to express clearly the purpose of the evaluation. In Example 4.6, the Navy was clear as to how neutral past performance would be evaluated. What happens when the award turns on a tradeoff between price and past performance, and the two lowest-priced offerors have no past performance history? This can make things difficult, as shown in the GAO decision in Phillips Industries, Inc., B-280645, September 17, 1998, which is summarized in Example 4.7.
Example 4.7-Evaluating offerors with no past performance history (#2).
Issue: The offerors were to be evaluated on the basis of price and past performance, and award was to be made on a best-value basis. Offerors with no past performance history with the agency were to be given a neutral past performance rating.
Two lowest-priced offerors had no performance history. The third lowest-priced offeror had an excellent past performance rating and a price that was within five percent of the two lower-priced offerors. The contracting officer found that the item was currently out of stock and that there were outstanding back orders. The contracting officer therefore concluded that the third lowest-priced offeror's price was worth the reduced risk of non-performance (as evidenced by its excellent past performance rating) in light of the high demand for items already in a back-ordered inventory position. The contracting officer awarded the contract to Amjay, the third lowest-priced offeror, as the best value.
Phillips Industries, the lowest-priced offeror, protested that it should have been awarded the contract under an evaluation scheme that provided for a neutral rating for an offeror with no performance history.
Resolution: The Comptroller General did not agree, noting:
The RFP listed certain factors, including delivery schedule/inventory status, which could affect the tradeoff determination. Here, the contracting officer decided, given the high demand and the backlog status for the item, that award to a slightly higher-priced firm which had an excellent performance history was justified to ensure timely delivery and represented the best value to the government. This was entirely consistent with the RFP evaluation scheme and the discretion afforded the contracting officer in making the tradeoff decision.[45]
The decision in this case turned on a bona fide need to ensure timely delivery because of the high demand and backlog status of the item being procured. This is what tradeoffs are all about-deciding, after the evaluations are completed and based on the circumstances of the instant procurement, which of the proposals offers the best value to the government.
For an abridged version of the GAO decision in Phillips Industries, Inc., see Appendix B, Example 4.7.
Note that while a best-value determination may favor a higher-priced offeror with a favorable past performance rating over a lower-priced offeror with a neutral past performance rating, the evaluation scoring cannot penalize an offeror for its neutral rating.
OFPP guidance[46] suggests that when scoring an offeror with no past performance history, the offeror should be given the middle rating in whatever rating system is used (e.g., 50 on a 100-point scale, 3 on a 5-point scale, a satisfactory rating on an adjectival scale, or the middle color on a color-rating scale). Although the OFPP guidance indicates that this should happen rarely, proposals from new firms or firms with no pertinent past performance history are not that unusual. Giving a middle rating ensures that the offeror is not penalized for its neutral rating and is probably better than not scoring past performance at all (by avoiding possible confusion)-unless, of course, a situation like that in Example 4.7 applies. Careful attention should be paid to the wording of the evaluation scheme with respect to offerors with no performance history to ensure that the rating scheme itself does not work to downgrade new firms or offerors with no performance history.
Performance of Other Companies, Key Personnel, or Subcontractors
The FAR provides that the evaluation should take into account past performance information regarding predecessor companies, certain key personnel, or subcontractors that will perform major or critical aspects of the requirement.[47] The application of this FAR provision, however, can be problematic if the RFP does not explain how this will be done and what documentation or explanations the offeror should provide in its proposal.
Generally, the need to evaluate the past performance of other companies, key personnel, and subcontractors comes into play with newly formed firms or firms with little or no relevant past performance history. This does not, however, change the need to explain clearly how the past performance will be evaluated in such instances.
Performance of Other Companies-The evaluation team may consider the past performance of other companies when they are team members, affiliates, or significant subcontractors, as shown in the GAO decision in Universal Building Maintenance, Inc., B-282456, July 15, 1999, which is summarized in Example 4.8.
Example 4.8-When should one company's past performance be attributed to another?
Issue: An agency improperly attributed the past performance of the parent company or its other subsidiaries to an awardee where the record did not establish that the parent company or subsidiaries would be involved in the performance of the protested contract.
Resolution: A protester argued that GSA had improperly evaluated the awardee's past performance by considering the contracts of the awardee's parent company. The record showed that the awardee, Service Star USA, Inc., had performed only one of its five referenced contracts. In fact, although not made clear by the awardee in its written proposal, four of the five contracts listed had been performed by two subsidiaries of Service Star's parent company, Service Star International, Inc.
The GSA responded that it had properly considered the parent company's and its other subsidiaries' contracts in its evaluation, citing FAR 15.305(a)(2)(iii) as the basis for its decision to consider these contracts. This FAR reference provides, in essence, that a past performance evaluation should consider information regarding predecessor companies, key personnel, or subcontractors that will perform major or critical aspects of the requirement when such information is relevant.
The Comptroller General did not agree with GSA's position.
We have stated that in determining whether one company's performance should be attributed to another, an agency must consider the nature and extent of the relationship between the two companies-in particular, whether the workforce, management, facilities, or other resources of one may affect contract performance of the other. In this regard, while it would be inappropriate to consider a company's performance record where that record does not bear on the likelihood of successful performance by the offeror, it would be appropriate to consider a company's performance record where it will be involved in the contract effort or where it shares management with the offeror. We conclude that the agency did not reasonably evaluate the relationship of the companies for purposes of attributing the past performance of the parent company or its other subsidiaries to Service Star USA, Inc., and therefore could not consider four of the five contracts referenced by Service Star USA, Inc. in evaluating its past performance.
Although a firm might not have a past performance history of its own, it still can have a performance history through other companies, as long as the other companies will be significantly involved in performing the prospective contract. In this case, however, GSA went beyond what was in the written proposal and either assumed performance by these other companies or simply ignored the fact that the proposal did not demonstrate the participation by these other companies. Therefore, the Comptroller General sustained the protest.
The point here is that while the performance of other companies may be used to demonstrate an offeror's past performance, this can be done only when the proposal clearly explains how these other companies will be significantly involved in the proposed contract. It might be beneficial to explain this in the RFP's description of how past performance will be evaluated. Otherwise, this information might not be provided in an offeror's proposal.
For an abridged version of the GAO decision in Universal Building Maintenance, Inc., see Appendix B, Example 4.8.
Performance of Key Personnel-The FAR permits the evaluation of past performance to be broadened to include the experience of a firm's key personnel. This can be important to new firms or firms with no past performance history. Note, however, that the evaluation of the experience of key personnel involves how well they performed under the referenced contract, not simply that they had worked under the particular contract.
This concept assumes that if the referenced contract was performed successfully, the success is imputed to the named key person for purposes of the evaluation of past performance. This may present problems, however, if the contract was not performed successfully or if the reference's response was otherwise negative.
Downgrading an offeror under the past performance factor solely because some of its proposed key personnel were involved with a past problem contract might be difficult to justify without some evidence that the subject personnel were responsible for the problems. To presume that particular individuals are responsible for past problems requires definitive evidence. There are many reasons why a contract has problems that may be beyond the control of the responsible contractor personnel. Note, however, that the presence of such individuals, if they were deemed responsible for the problems on the referenced contract, could be determined to be a performance risk and evaluated as such.
Offerors should be advised to establish clearly a proposed key person's contribution to the success of the referenced contract when relying on that person's prior experience under the past performance evaluation factor. A failure to establish this relationship could result in a finding of insufficient information and a neutral past performance rating.
Evaluating the past performance of key personnel can become complicated, as shown in the GAO decision in SWR Inc., B-286044.2; B-286044.3, November 1, 2000, which is summarized in Example 4.9.
Example 4.9-Evaluating the past performance of key personnel.
Issue: Past performance evaluation is unobjectionable where it was conducted in accordance with stated evaluation criteria and is supported by the record. The protester's proposal was reasonably rated neutral under the past performance factor where it showed no relevant prior performance by the offeror. The protester argued that the relevant experience of its proposed project manager should have been attributed to the protester. The agency declined to do so where the individual was not currently employed by the protester. Furthermore, the proposal did not contain a firm commitment by the individual to work for the protester.
Resolution: The protestor, SWR, submitted seven past performance references, all of which rated its performance as exceptional or very good under each past performance subfactor. The agency, however, found that the referenced contracts were not similar in nature and scope to the RFP requirements and therefore were not relevant. SWR's proposal thus was rated neutral overall for past performance.
SWR protested the award on the basis that its neutral past performance rating was not proper. SWR argued that the agency was required-under the terms of the RFP and the FAR-to consider the experience of its proposed project manager, a key employee who had worked in the same capacity for the incumbent contractor for three years. SWR concluded that had the agency considered the project manager's past performance, SWR would have received a higher rating and, based on its lower price, its proposal would have been determined to be the best value to the government.
The Comptroller General denied the protest, but not because the proposed project manager did not have the requisite experience, stating:
SWR's proposal indicated that the individual it was proposing as project manager was not a current SWR employee, but was employed as the project manager for the incumbent contractor. The possibility that, due to unforeseen circumstances, a proposed key individual may not be hired by the offeror, is an appropriate consideration for an agency in deciding whether the individual's experience should be imputed to the offeror for evaluation purposes.11 The letter included in SWR's proposal established no commitment on the part of the proposed individual to work for SWR and, indeed, did not even refer to SWR, and there was nothing else in the proposal indicating that SWR and the individual had even discussed specific employment terms. We think the agency reasonably could decline to impute the proposed individual's experience to SWR based on the absence of stronger evidence of an employment commitment, or other evidence that the individual would in fact be employed by SWR.
For an abridged version of the GAO decision in SWR Inc., see Appendix B, Example 4.9.
Example 4.9 contains lessons for both government and contractor personnel. For the government it shows that an RFP should always require firm letters of commitment from key personnel who are not currently employed by an offeror. The RFP also should explain that, at a minimum, the letter should be signed by the individual concerned and should show a firm commitment to be employed by the firm. Requiring valid letters of commitment can help avoid protests such as the one in Example 4.9.
Contractor personnel also should be aware of the need for a valid letter of commitment from proposed key personnel not currently employed by an offeror. Contractor personnel should recheck the validity of the letters of commitment when there is a significant period of time between the submission of the proposal and the time set for the submission of the final proposal revisions. It is the offeror's responsibility to ensure that the key personnel proposed will be available for contract performance.
Performance of Subcontractors-The past performance of proposed subcontractors may be evaluated if the subcontractors will perform major or critical aspects of the requirement and if the past performance is relevant to the current requirement. The GAO decision in Battelle Memorial Institute, B-278673, February 27, 1998, deals specifically with evaluating the past performance of subcontractors. It is summarized in Example 4.10.
Example 4.10-Evaluating the past performance of subcontractors.
Issue: Can subcontractors be listed as past performance references?
Resolution: Here is what the Comptroller General said:
With regard to its claims regarding Porton's work on two of the contracts, Battelle is essentially arguing that the only entity that may properly list a prior contract for purposes of past performance evaluation is the concern which actually performed the work relevant to that covered in the solicitation. We disagree. The general rule is that the prime contractor under a government contract is responsible for the performance of its subcontractors.[48] Further, subcontractors and joint venturers perform various portions of contracts and accordingly may obtain experience useful in predicting success in future contract performance. Where an offeror was involved as a subcontractor or joint venture in performing work under a prior contract similar to work to be included under the instant contract, such experience may properly be considered in assessing that offeror's past performance.[49]
For an abridged version of the GAO decision in Battelle Memorial Institute, see Appendix B, Example 4.10.
The key to evaluating a subcontractor's past performance is relevance. The government must look for it, and the offeror must clearly demonstrate it in the proposal. Keep in mind, however, that what is to be evaluated is how well the subcontractor performed the referenced contracts, not simply that it performed similar work.