Bid Protest Weekly Newsletter by Bryan R. King, Attorney, General Counsel PC
Date: Wednesday, March 27, 2013, 10:00am EST
Miracle Systems LLC, B-407324.7, -.8, -.10, March 5, 2013
There is Cajun word used in Louisiana—“lagniappe”—which comes to mind when reading the recent GAO decision in Miracle Systems LLC. Basically, “lagniappe” means a little something extra thrown in with a purchase. The extra item may cost the vendor very little, but the gift’s ultimate value is really determined by the customer. Government contractors including an incumbent as part of its team might do well to think of that incumbency as a little something extra, with indeterminate value to the customer.
There is no question that it can be an advantage to be an incumbent contractor in a federal procurement. After all, when an agency is looking for a contractor that has performed similar work to that required in a current solicitation, being the one that just performed those same requirements is a nice leg up. The previous experience can no doubt help in the preparation of a proposal, as well. Given this, it is no surprise that where a procurement that was previously performed by a large business is now being offered as a small business set-aside, small business offerors seek to team up with the incumbent large business to bolster their proposals.
This was likely the case in Miracle Systems LLC, which involved a solicitation issued as an 8(a) small business set-aside for IT support services by the Department of Transportation, Federal Highway Administration. The protester, Miracle Systems—who proposed the incumbent contractor as its subcontractor—challenged the award decision on the grounds that the agency improperly evaluated its proposal under the past performance evaluation factor. The agency gave both the awardee and Miracle Systems identical scores of Medium under the past performance factor. Miracle Systems argued that it deserved a High rating (the highest possible score) under past performance, by virtue of the fact that its proposed subcontractor, the incumbent, was highly rated on the previous contract. This argument was rejected by GAO, and the protest was denied.
Unfortunately for Miracle Systems, while incumbent status can be an advantage, it is not some magical elixir that automatically results in the best possible evaluation score. Here, GAO found that the record showed the agency considered subcontractor past performance in its evaluation, but made the decision to place the greater emphasis on the past performance of the prime contractors. Because the prime contractor was required to perform at least 51% of the work (as is the case in all 8(a) set-aside contracts), and would bear ultimate responsibility for overall performance of the contract, GAO found no basis to question the agency’s rationale in focusing on the minimal experience of the prime contractors in its evaluation of past performance.
Small business prime contractors proposing to team with an incumbent contractor are in an interesting position in that they are usually subject to the whim of the procuring agency. Unless the solicitation specifies the amount of weight that must be given to subcontractor’s past performance, GAO will generally defer to the agency’s discretion. Whether the agency decides to give the prime contractor’s proposal extra credit for having the incumbent on its team, or chooses to give the incumbent’s presence on the team little weight, GAO will likely not question the agency’s decision. Thus, in most cases offerors must be prepared for its experience to stand on its own, and consider the incumbent subcontractor’s experience as merely “lagniappe.”