Bid Protest Weekly Newsletter by Bryan R. King, Attorney, General Counsel PC
Date: Friday, October 18, 2013, 6:40pm EST
Harbor Services, Inc., B-408325, August 23, 2013
Often in the evaluation of proposals in a negotiated procurement, the corporate experience of the offerors will be a factor under consideration. Generally, offerors that are new entities and therefore have no previous experience will be rated neutrally. However, what about a “new” entity that is actually the successor to a government contractor that actually has past experience? How is an agency to evaluate the new company given its lack of experience under the new name, but with performance history through its predecessor?
These questions were addressed by GAO recently in Harbor Services, Inc. In Harbor Services, the Department of Veterans Affairs issued a solicitation for design/build construction services at the Ralph H. Johnson VA Medical Center in Charleston, SC. The procurement was restricted to service-disabled veteran-owned small businesses, and an award was to be made to the proposal offering the best value to the government. Three offerors were considered for award, including the protester and MedPro Systems, Inc. Proposals were evaluated according to technical proposals—with both the protester and MedPro receiving ratings of “outstanding”—and price. MedPro’s price was lower than the protester’s, and thus MedPro was determined to be the best value to the government.
Harbor Services protested the VA’s evaluation of MedPro’s proposal, arguing that the VA should have assigned a weakness to MedPro’s proposal due to the fact that as a new entity, MedPro had no corporate experience. The record showed that MedPro was actually the successor to another company that had previous corporate experience. In fact, both MedPro and the predecessor company were owned by the same person. The MedPro owner, an engineer, had significant experience on VA projects with the predecessor company, and was proposed as the overall project manager for the current project. The record also indicated that in addition to the companies’ owner, MedPro was proposing several key personnel that had gained experience on numerous VA projects with the predecessor company.
GAO noted that unless a solicitation specifically states otherwise, federal agencies may properly consider the relevant experience and past performance of predecessor companies, as well as key individuals. The idea is that this experience may be useful for an agency to predict the offeror’s success in future contract performance. GAO found the predecessor company’s experience to indeed be relevant to MedPro, as the record showed the personnel and assets of the predecessor company were either transferred or otherwise available to MedPro providing a continuity of operations between the two firms. As a result, GAO found the VA’s evaluation of MedPro’s experience to be reasonable, and denied the protest.
This case illustrates the benefit of including in a proposal the experience and past performance of predecessor companies, as well as that of key personnel (which is probably more relevant to most contractors). As long as the solicitation does not explicitly state that the experience and/or past performance of key personnel will not be considered, it may be beneficial for contractors to include such information in their proposals. The agency may not have to consider this information, which also depends on the language of the solicitation. However, absent language to the contrary, it is within the agency’s discretion to take into account outstanding experience or past performance of key personnel when assigning evaluation ratings. As shown by this case, such a consideration can make a big difference in who is selected for award.