Link: GAO Opinion
Agency: Department of the Army
Disposition: Protest denied.
Keywords: Experience; past performance; price realism analysis
General Counsel P.C. Highlight: There is nothing unreasonable with establishing different experience evaluation criteria for the prime and sub, and price realism analysis is within the sound exercise of the agency’s discretion.
Y&K Maintenance, Inc. (Y&K) protests the terms of a request for proposals (RFP), issued by the Department of the Army, for operation and maintenance (O&M) of Medical Command-Korea (MEDDAC-K) facilities in the Republic of Korea.
Y&K complained that requirements under the two experience subfactors are inconsistent, given that proposed key personnel are required to have experience at the Joint Commission (TJC) accredited facilities, while the prime contractor can rely on experience at unaccredited facilities. The protester also contends that the explicit solicitation statement that prime contractors need not show experience at TJC accredited facilities is inconsistent with a number of performance work statement (PWS) requirements. GAO states that a contracting agency has the discretion to determine its needs and the best method to accommodate them. However, those needs must be specified in a manner designed to achieve full and open competition. A protester’s mere disagreement with the agency’s judgment concerning the agency’s needs and how to accommodate them does not show that the agency’s judgment is unreasonable. The fact that a requirement may be burdensome or even impossible for a particular firm to meet does not make it objectionable if the requirement properly reflects the agency’s needs.
GAO finds nothing improper about the agency’s decision to establish different requirements for the prime contractor and key personnel subfactors under the experience evaluation factor. The PWS requires the contractor to provide certain personnel with experience at TJC accredited facilities and to perform the contract work in accordance with TJC standards. The agency reasonably concluded that it could address these requirements with key personnel, while not requiring that the contractor itself have TJC experience.
Y&K next complains that the RFP unreasonably provides for assigning an acceptable past performance rating to an offeror having no relevant record of past performance in violation of FAR sect. 15.305(a)(2)(iv), which provides that under such circumstances an offeror may not be evaluated favorably or unfavorably. GAO states that FAR sect. 15.305(a)(2)(iv) provides that, “In the case of an offeror without a record of relevant past performance or for whom information on past performance is not available, the offeror may not be evaluated favorably or unfavorably on past performance.” This provision embodies the principle that an offeror neither be punished nor rewarded for the lack of relevant past performance. Thus, GAO has found, consistent with this provision, that an evaluation scheme that penalizes an offeror for neutral past performance ratings is improper. Likewise, an offeror should not have its competitive position improved because of a lack of relevant past performance.
Therefore, where award will be made on a lowest-price, technically acceptable basis, assigning an acceptable past performance rating to offerors without relevant past performance will be, effectively, no different than assigning a neutral rating to that offeror’s past performance. Accordingly, GAO finds no basis to object to the RFP’s stated methodology for evaluating past performance.
Finally Y&K complains that the RFP’s warning that certain contract line items (CLINs or subCLINs) may be terminated for the convenience of the government places undue risk upon the contractor. Y&K also complains that the solicitation improperly requires offerors to provide detailed cost information, including their indirect costs, for each CLIN or subCLIN, because offerors cannot predict their indirect costs for each CLIN since “indirect costs do not relate to specific work items.” GAO states that under a fixed-price contract, as contemplated here, the risks associated with performance and cost escalation are borne by the contractor. There is also a unique requirement that the government act in the interest of the society it serves, and so it retains a special power to terminate its contract obligations when such action serves the public interest.
The RFP advises that after two years the agency may in-source certain functional areas, and therefore those CLINs or subCLINs may be subject to termination for convenience. The RFP incorporates the standard FAR “Contract Terms and Conditions–Commercial Items” clause, which reserves the government’s right to terminate the contract, or any part thereof, for the convenience of the government and describes the contractor’s rights under such circumstances. The RFP here requests that offerors propose fixed prices for a number of functional areas (each of which was included as a CLIN or subCLIN) and, in this respect, requires offerors to provide detailed cost information, such as their direct and indirect costs for CLINs, subCLINS, and ELINS, to allow the agency to perform a price realism analysis. An agency may provide for the use of a price realism analysis in a solicitation for the award of a fixed-price contract for the limited purpose of measuring an offeror’s understanding of the requirements or to avoid the risk of poor performance from a contractor who is forced to provide services at little or no profit. The depth of an agency’s price realism analysis is a matter within the sound exercise of the agency’s discretion. The protest is denied.