Bid Protest Weekly Newsletter by Bryan R. King, Attorney, General Counsel PC
Date: Thursday, March 6, 2014, 7:00pm EST
Wolf Creek Federal Services, Inc., B-409187, -.2, -.3, February 6, 2014
Affiliation can be a significant concern for a company wishing to compete for government contracts as a small business. Companies are generally considered to be affiliated with each other when one company has the ability to control another company. The Small Business Administration is the ultimate decision maker as to whether affiliation exists between companies, and there are a number of factors that go into the determination.
Generally, as long as a company falls under the size standard set for a specific procurement, it can submit a proposal as a small business. However, when affiliation is found, the resources for both companies are combined when determining whether the applicable size standard has been met—i.e., whether the company is eligible to compete on the procurement as a small business. Thus, while a company by itself may meet the size standard on a specific procurement to compete as a small business, it is possible that adding the size of its affiliates will push it over the small business size threshold.
Affiliation can certainly negatively affect a company’s ability to compete as a small business on a procurement. But, it may also provide the company with additional resources and experience that may make its proposal more attractive to the procuring agency. One such area in which an offeror on a federal government procurement may rely upon its affiliates is past performance. To what extent the offeror may rely upon the past performance of its affiliates was a question recently addressed by GAO.
In Wolf Creek Federal Services, Inc., the protester challenged an award decision made by NASA for facilities operations and maintenance support services. Specifically, the protester challenged NASA’s evaluation of its past performance proposal. In its proposal, the protester did not identify any past performance for itself, but rather included past performance information for its affiliates. NASA did not credit the protester with the past performance of its affiliates, and instead rated its past performance as neutral. The protester argued that the agency’s evaluation was improper, maintaining that the agency should have considered the significant accomplishments of its affiliates.
In response to the protest, NASA argued that while the protester did include the past performance of its affiliates in its proposal, the proposal failed to establish what role, if any, the affiliates would perform on the contract. Instead, NASA found that the protester’s proposal only described general consultation and advisory roles for its affiliates. According to NASA, this did not denote a meaningful involvement in the performance of the solicitation requirements. As a result, the past performance of the protester’s affiliates was not considered.
GAO stated that it is proper for an agency to consider the experience or past performance of an offeror’s affiliates. However, this is true only in the case where the offeror’s proposal demonstrates that the resources of the affiliates—workforce, management, facilities, or other resources—will actually have an impact on the offeror’s performance of the requirements. Unless the record demonstrates such meaningful involvement on behalf of the affiliates, it is improper for an agency to consider an affiliate’s experience or past performance.
Ultimately, GAO agreed with NASA that the protester’s proposal failed to show that any of its affiliates would contribute to its performance of the solicitation requirements. GAO found that the protester’s general statements of general consultation and advisory roles for its affiliates did not provide a firm commitment to provide support. Thus, GAO denied the protest.
In its decision, GAO made the point to state that it is up to the offeror to submit a proposal establishing its capabilities and the merits of its proposed approach. Here, the protester failed to do so because it was non-committal as to the role its affiliates would play in performance. Had the protester provided more specifics as to what resources its affiliates would bring to bear on the contract performance, it may have had a sustainable protest. Or, better yet, with a higher past performance score, it could have been selected as the awardee.