Legally Correct or Practically Wrong? Protest Ruling Finds New Contractor Can be Rejected for Lack of Experience
I been in the right place
But it must have been the wrong time
I'd have said the right thing
But I must have used the wrong line
— Dr. John
Every so often, I’ll hear about a case in which the outcome just seems wrong no matter how legally correct it might be. A recent bid protest decision struck that nerve when an offeror was downgraded because it lacked experience even though the RFP stated (as it should) that an offeror that lacks relevant past performance will receive a neutral rating. See AnderCorp, LLC, B-419984 (Oct. 14, 2021).
AnderCorp, a newly-formed company, submitted a proposal to provide construction services for the Department of Labor (“DOL”) for a “redevelopment project at [its] Gulfport Job Corps Center.” As a new company, it had no prior experience, period. However, AnderCorps stated that its leadership had considerable construction experience—notably including the company’s organizer who was, himself, the former CEO of the awardee. So, from their perspective, they had plenty of experience.
However, the fact that the company had plenty of individual experience ultimately proved to be irrelevant. That’s because the RFP had two separate criteria with respect to the submission of evidence of past work. One evaluation criterion to which offerors were to respond was denominated “project experience” and required the submission of three “examples of relevant projects . . . within the past five years [that] demonstrate the Offeror’s technical capabilities to perform the Project.” The other criterion was “past performance” to which offerors were “to submit information about projects they have previously performed so the agency could evaluate the offeror’s past performance.” The RFP, however, stated that “[a]n offeror who has no record of past performance . . . will receive a neutral rating for this factor.”
As stated above, the company, itself, did not have any “relevant projects” during the preceding five years; therefore, it could not identify any projects responsive to either the “experience” or “past performance” criteria. Given that this was a low price/technically acceptable procurement, a neutral rating was equivalent to an acceptable rating. Hence, if the past performance rating could be neutral (i.e., acceptable) given that the company lacked past performance information, one could argue (as did AnderCorp) that the experience criterion also should be rated as neutral in just the same manner as past performance. Had that been the case, AnderCorp likely could have received the award because its price was lower than the awardee’s and was acceptable on all criteria except for experience. But that’s not what happened. DOL deemed AnderCorp’s experience unacceptable due to the lack of any projects. Based on that, DOL declared AnderCorp’s proposal unacceptable overall and awarded the contract to its competitor.
AnderCorp protested and made the just-described argument—it was improper for DOL to downgrade the company simply because it lacked any projects that it could list in response to the experience criterion; rather, it should have deemed AnderCorp’s proposal acceptable and awarded the project to it as the lowest priced technically acceptable offeror. Essentially, AnderCorps argued that the evaluation of experience should be handled in the exact same manner as that applicable to the consideration of past performance.
GAO rejected this argument and stated that AnderCorp’s argument relied on a flawed “understanding of the law.” While an offeror may not, under the FAR, be evaluated favorably or unfavorably on past performance” where there is no past performance information, the FAR makes no such pronouncement with respect to the evaluation of experience. The GAO has long recognized that the evaluation of experience differs from that applicable to past performance. Experience looks at whether the offeror has done the work required under the contract before; whereas, past performance considers the quality of the offeror’s work on relevant projects where past performance information is available. Because they look at two different things, the rule that the lack of past performance cannot be held against a new contractor that lacks past performance data just cannot be extended to the experience factor in the absence of some express FAR provision.
Like I said at the outset—this result is technically correct, but does it lead to a good outcome? In this case, maybe. But maybe not. Obviously, a new company could never have the experience required by the RFP under this procurement. Therefore, no newly organized entities ever could obtain an acceptable rating. It seems to me that this is the exact circumstance that the past performance rule is intended to prevent so that new companies may receive contracts if they can otherwise demonstrate they are worthy of the award.
If a contracting agency wants a company to have done similar work before and will not award a contract to any entity that cannot proffer evidence of experience, so be it. This case supports that choice. Indeed, if DOL had done what AnderCorp wanted, I suspect that would have not been proper under the RFP as written. And there’s the key—DOL potentially could have written its RFP differently to permit its source selection team to select a contractor that could demonstrate that its people had the necessary experience even if the company was newly formed.
Looking ahead, a newly formed company needs to consider whether an RFP will permit an award to it, which may or may not be obvious (we can help with that). If not, then perhaps the company should pass on that procurement and look for the next one. Or, it could submit questions in the Q&A process that might prompt a contracting officer to revisit how the solicitation is worded. Regardless, the goal of any procurement should be to select a good contractor. Nuance can help.