Every government contractor that begins performance on a new engagement has the same basic goal – superior performance that bolsters the company’s bottom line and garners excellent past performance ratings from the agency.

But, when the contract ends, will your company’s status as a successful incumbent contractor increase the odds of winning future follow-on work from the agency?  While it never hurts to have exemplary past performance, GAO recently cautioned that nothing is guaranteed.

The protest in question (filed by the incumbent contractor) challenged the agency’s best value award decision on a contract to provide security services at a nuclear facility.  Specifically, the contractor argued that the agency’s evaluation of its technical proposal and staffing approach were unreasonable (and, in fact, “inconceivable”).

The agency rated these factors as merely “Good.”  However, based on its past performance as the incumbent, the contractor maintained it deserved “Excellent” ratings.  GAO disagreed, holding that the contractor’s protest lacked merit and was based on a selective reading of the RFP and the agency’s evaluation record.

GAO’s decision provides incumbent contractors with a clear path forward when approaching a proposal for follow-on work.  In a nutshell, highlight your outstanding past performance, but don’t rest on your laurels.  The agency will approach evaluations for the new award with a clean slate, and so should your business.

This lesson learned is particularly significant with respect to a best value competition.  As I’ve discussed previously, contractors approaching a best value procurements have to strike a balance between technical superiority and price.  Here, the contractor appears to have hung its hat too much on the technical side (and, even more narrowly, on its past performance as the incumbent) and, as a result, lost out on the contract.

Join me on Friday, November 10, 2017 to discuss the impact of the Small Business Administration’s All Small Mentor Protégé Program on the Design-Build Community.  My program is part of the Design-Build Institute of America’s Conference & Expo (Philadelphia, PA).

The impact of design-build in the public sector is well documented.  Federal agencies are increasingly employing integrated delivery services on government construction projects.

Now, the rise of design-build is coupled with the new opportunities (and challenges) presented by the Small Business Administration’s “All Small” Mentor-Protégé Program.  The Program opens the door to allow any small business to partner with a large contractor-mentor.  Together, the mentor-protégé team can chase contracts previously reserved for performance by only small businesses.  In a nutshell, contractors have unprecedented access to contracts of increasing size, scope, and complexity.

The presentation will cover best practices for forming winning designer-contractor teams.  We will walk through the Federal regulations that govern teaming arrangements and take an intensive look at the All Small Program and all of its implications.

The session will also cover the risks and rewards of teaming arrangements for contractors.  For example, we will explore the proper way for teaming partners to deal with potentially tricky issues of compensation and risk allocation.  How should teaming partners divide the cost savings on a successful project?  What about how to shoulder losses if the project fails to meet the team’s expectations?

Finally, the program will cover the special considerations of small business teams – from both the small and large business perspective. The U.S. Small Business Administration provides special rules and regulations that apply only to teams involving small businesses.  Failure to follow these rules can lead to major compliance problems and even False Claims Act liability.

If you are unable to attend the conference in person, please feel free to contact me to discuss any questions.

The most common basis to establish timeliness for a Government Accountability Office (GAO) bid protest is found in Section 21.2 of the GAO’s regulations.  Under the regulation, the protester must file the protest “not later than 10 days after the basis of protest is known or should have been known”.

Important Disclaimer:  There are plenty of other events that can trigger the running of a GAO bid protest filing deadline.  Please feel free to reach out to me directly if you need guidance in this area.

In a recent decision, GAO placed a hard emphasis on the “should have known” element of the regulation.  The case involved a protest over the Department of Veterans Affairs’ award of a contract for construction services.  Among other things, the protest alleged that the agency improperly relied on a Small Business Administration (SBA) Certificate of Competency (COC) finding the awardee responsible for the procurement.

On review, GAO dismissed the entire protest as untimely.  Specifically, GAO determined that the clock on the protest started to run when the protester received a letter from the agency stating its award decision (and also indicating reliance on the SBA’s COC).  Because the filing was not made within 10 days of that “should have known date,” the window to protest closed.

Of note, GAO specifically rejected the protester’s argument that its time to file a protest should be expanded based on its lack of knowledge concerning the COC program.  According to the protester, it did not understand the purpose/process of the program and sought clarification from the agency.  Ultimately, it took until several weeks after the agency’s award letter for the protester to gain a sufficient comfort level to file the protest.

The protester’s delay argument failed because the SBA’s COC program is detailed in both the Federal Acquisition Regulation and the SBA’s own regulations – i.e., publicly available sources.  Accordingly, GAO found that there was no basis to extend the applicable 10-day deadline for filing.

For federal contractors contemplating a bid protest at GAO – this case demonstrates that the time for contemplation is very short.  Any information giving rise to knowledge of a potential protest basis must be treated as potential triggering event.  If a stay of award or performance is needed, the time to file could be even shorter (as little as 4 calendar days).

The only option to preserve the important rights vested in the GAO bid protest process is to act fast and stay out in front of these deadlines.

For federal contractors, it is not an exaggeration to say that performance evaluations are the lifeblood of the business.  A less-than-satisfactory evaluation in the Contractor Performance Assessment Reporting System (CPARS) affects far more than just the agency’s assessment of performance on a particular project.  A negative evaluation follows a contractor around – impacting the ability to obtain future contracts due to the specter negative past performance ratings.

The good news for contractors is that the ability to challenge and – if successful – reverse negative CPARS evaluations is a quickly developing area of government contracting law.

The first step in any successful CPARS challenge involves meaningful participation in the evaluation process.  The Federal Acquisition Regulation (FAR) Part 42.15 entitles contractors to submit comments and receive an agency review of a disputed performance evaluation.  Specifically, contractors are entitled to submit comments, rebuttal statements, and/or other information in response to the agency’s evaluation.  The agency must then review those comments at a level above the contracting officer and update the evaluation, if necessary.

If the review and comment process is unsuccessful in resolving the issues, both the U.S. Court of Federal Claims and Boards of Contract Appeals recognize that contractors may bring a lawsuit to address performance evaluation disputes.  Generally speaking, in order to advance a performance evaluation dispute to the next level, the contractor must be prepared to prove that the agency’s evaluation is arbitrary, capricious, and contrary to law.

Although litigation over a performance evaluation dispute is a relatively new development – the law is now clear that a condition precedent to litigating the issue before a Court or Board is a certified claim.  That is – just like a claim for damages based on (for example) delay or a differing site condition – the contractor must file a written claim in accordance with the Contract Disputes Act (CDA) and receive a denial or “deemed denial” of that claim in order to move forward.

In a recent decision, the Court of Federal Claims reinforced the notion that there is no substitute for a CDA claim.  The case originated with a complaint filed by a contractor concerning an allegedly unreasonable negative performance evaluation issued by the United States Transportation Command.  The contractor sought a declaratory judgment vacating the evaluation.

Before the contractor could even begin to prove its case, the government filed a motion to dismiss, arguing that the contractor did not submit a CDA claim to the contracting officer.  Without a claim (the government argued), the Court lacks jurisdiction to hear the case.  In response, the contractor asserted that it engaged in a series of communications with the agency regarding the CPARS evaluation, but the agency would not change its allegedly improper position.

On review, the Court sided with the government and dismissed the contractor’s complaint.  In this instance – far from proving a legitimate dispute that could substitute for a CDA claim – the Court relied on the contractor’s communications with the government as evidence its the lack of jurisdiction.  The Court held that the on-going nature of the parties’ negotiations showed that the contracting officer had no notice that the contractor sought a “final decision” of any kind.

The takeaway for contractors is very simple – engage in the process and follow the required steps when disputing a CPARS evaluation.  The contractor must participate in the review and comment procedure articulated in FAR 42.15 – but if that fails, the next logical step is to proceed with a CDA claim (or, perhaps as an intermediate step, a request for equitable adjustment).  Before a performance evaluation dispute can escalate to litigation, the contractor must be armed with a denial or deemed denial of that claim.

 

 

Today, we take a look at the culmination of a long fight over the size status of a joint venture competing for a Federal contract.  After losing battles at the Small Business Administration (SBA) Area Office and Office of Hearings and Appeals (OHA) – the joint venture finally won the war when the Court of Federal Claims (COFC) declared that SBA incorrectly applied the economic dependence test.

quick refresher on SBA economic dependence:  In a nutshell, the SBA will find two firms affiliated through economic dependence when a small business is dependent on another company for a disproportionate amount of its revenue.  Without a steady flow of business from its counterpart, the small business would be unable to survive (let alone thrive).  When one business is economically dependent on another, there is a presumption of affiliation.

That was precisely SBA’s finding with respect to the joint venture that teamed up to bid on a Department of Defense Missile Defense Agency support contract.  The SBA Area Office found the joint venture was “other than small” for purposes of the contract (and, therefore, ineligible for award).  OHA agreed, confirming that one of the joint venture partners was affiliated with a third entity (and therefore had to include that entity’s average annual receipts in its size calculation).  As a result of this affiliation, the joint venture partner was deemed to be a large business under the relevant size standard, thus disqualifying the joint venture.

Specifically, SBA found the two firms affiliated because the purported small business received more than 70% of its revenue from the third firm, thus creating an “identity of interest due to economic dependency.”  According to OHA’s decision, “as a matter of law, a firm that derives 70 percent or more of its revenue from another firm is economically dependent on that firm.”

On appeal to COFC, the joint venture argued that SBA misapplied the presumption of economic independence as a bright line rule – as opposed to a rebuttable presumption.  Here, the mitigating factors weighing against affiliation included the fact that the small firm had only been operating a short time and held a small number of contracts (which distorted the 70% figure relied on by OHA).  The joint venture also presented evidence of the firm’s attempts to diversify and expand to other sources of revenue.

The COFC was persuaded by these arguments and remanded size determination back to the Area Office for a new review.  In its decision, the court affirmed that the 70% standard  is highly indicative of economic dependence – but still not an absolute rule.  COFC determined that OHA failed to consider properly the mitigating factors presented.

This is a fascinating case study and a great example of a firm forcing SBA to faithfully apply its own regulations.  But – importantly – it also needs to be taken with a grain of salt and viewed as the exception to the rule.

The fact remains that there is a rock solid basis to support the SBA’s use of the 70% threshold as a standard for finding affiliation based on economic dependence – both in the regulations and in the case law.  If your business receives even close to 70% of its receipts from one business – there is a definite cause for concern.  This case confirms that your business has the ability to try and rebut the presumption of affiliation – but that can be a steep mountain to climb.

If you are concerned about your firm losing its size standard due to economic dependence – now is the time to think about proactive strategies for diversifying.  Relying on a winning rebuttal argument with the SBA is betting against the house.

In a recent post, I discussed new legislation that could signal an uptick in Best Value procurements for complex service-based contracts.  In the view of many (including me), more Best Value RFPs is a win/win for both contractors and the government.

As a quick refresher, Best Value procurements utilize a Best Value Tradeoff Analysis, which gives the agency the ability to weigh proposal costs and benefits and award the contract to the offeror that will provide the “best value” to government – even if that comes at a higher price than another acceptable offer.  By contrast, Lowest-Price Technically-Acceptable (LPTA) awards can be challenging on complex service-based contracts, where skilled performance is often not suited to a lean or even shoestring budget.

Contractors bidding on Best Value procurements need to think strategically and be mindful of both price and technical excellence.  Having the lower price or exceeding the RFP requirements – independently or even in tandem – may not be enough.  A recent GAO decision highlights how mastering the interplay of these two factor is the key to sustained Best Value success.

The protest concerns the Department of the Interior’s decision to award an FSS task order to a higher-priced offeror on a Best Value basis.  GAO denied the protest, finding that the agency reasonably documented the relative strengths of the proposals and weighed them against the quoted prices.

Digging deeper into the protest, the protester argued that the agency did not reasonably take into account the qualifications and experience of its proposed personnel – noting that its proposal exceeded the RFP requirements in a variety of ways.  In response, the agency noted that it did, in fact, give the protester credit for its solid experience, including assigning a “high confidence” rating to its past performance proposal.

However, for a Best Value award – meeting or (in this case) even vastly exceeding the RFP requirements in one area is often not enough.  The agency performed a detailed review of the offerors’ strengths and compared them in the context of their respective prices.  Based on this proper tradeoff analysis (according to GAO), the agency found the higher priced offer provided better value to the government and made the award.

GAO’s decision offers an important lesson to government contractors competing Best Value procurements – don’t get complacent!  Unlike LPTA procurements (where the RFP sets the bar), RFP requirements should not be viewed as anything other than the baseline.  Contractors should parse those requirements for areas where it can add value and then highlight all of those betterments in its proposal.

A short reminder to join me on Thursday, August 24, 2017 for lunch (11:30 am to 1:30 pm) and learn about the Small Business Administration’s All Small Mentor Protégé Program. The event is sponsored by Design-Build Institute of America Mid-Atlantic and will be held at Maggiano’s in Tysons Corner.

For months, we poured over the proposed and final rules – speculating about how the Program would look and operate.  Now it is here.  With the SBA accepting and processing applications at a healthy clip, there is no better time than the present to get up to speed.

During the event, we will walk through the basics of the All-Small Program, including the application and approval process.  We will also talk about big picture issues, including the Program’s general shield against affiliation and the most important questions for contractors (both large and small) considering taking the leap.

The event will also offer insights for contractors that have already investigated the Program.  For example, we will discuss the newly published requirements for mentor-protégé agreements and joint venture agreements formed between Program participants.  Careful consideration of the issues captured in these agreements can make the difference between a successful partnership . . . and the undesirable alternatives.

I hope that you can join us on the 24th.  I am happy to chat after the presentation about any specific questions facing your business.  If you can’t make the event, you can always contact me here to discuss your questions.

For government contractors frustrated by Federal agencies’ use of Lowest-Price Technically-Acceptable solicitations on complex services contracts – help may be on the way.

As I’ve discussed before, LPTA procurements can have a chilling effect on contractors that are able to provide increased technical benefits to the government – but at an increased price.  LPTA solicitations encourage contractors to get as lean as possible – focusing on price and only minimum technical competency.

A Bill currently before the U.S. House of Representatives proposes to limit the use of LPTA and leave it to the agency to weigh the “benefits of cost and technical tradeoffs in the source selection process.”  In other words, a Best Value Tradeoff approach.

If passed into law, the Bill would appear to been a boon for highly-skilled contractors capable of providing Federal agencies with great value at an increased (but still reasonable) price.  The Bill specifically earmarks certain industries where Best Value solicitations would take precedence over LPTA contracting:

  • Information technology services, cybersecurity services, systems engineering and technical assistance services, advanced electronic testing, audit or audit readiness services, or other knowledge-based professional services;
  • Personal protective equipment; and
  • Knowledge-based training or logistics services in contingency operations or other operations outside the United States, including in Afghanistan or Iraq.

I will continue to track the progress of this Bill as makes it way towards becoming law.  It should certainly be on the radar for Department of Defense contractors providing any of the broad range of services outlined above.

Government contractors usually find themselves appearing before the Government Accountability Office (GAO) on a bid protest for one of two reasons:  (1) you believe that the government erroneously did not award a contract to your business or (2) your business holds a contract award that is challenged by a disappointed offeror.  Either way, there is a contract on the line that likely means a great deal to you (and your business).

In the past, we’ve discussed strategies for filing protests – which includes considering the important question of whether the GAO is the proper venue for the protest.  We’ve also offered practical advice on winning bid protest arguments.

But, should you find yourself on the losing end of a bid protest decision (and at extreme risk of losing that important contract for good), the GAO offers a last resort – the Request for Reconsideration.

GAO Reconsideration is a bit of a misnomer, so it is helpful to first discuss it in terms of what it is not, before turning to what Reconsideration actually entails.

First, Reconsideration is not an appeal.  In fact, there is no true “appeal” at GAO.  While disappointed protesters still have the option of turning to litigation at the Court of Federal Claims, that is a separate and distinct process – a clean slate.

Reconsideration also is not a “do over” or second bite at the apple with the GAO.  Contractors should never hold back an argument at the GAO because it is an extremely streamlined process (100 days from protest to decision).  Arguments that are not well stated the first time cannot be revisited.

So, what is Reconsideration, exactly?

In a nutshell, GAO provides for Reconsideration where the protester can identify specific legal or factual errors in the decision denying the protest.  Repeating or restating the same arguments (and hoping for a different result) will not get it done.  Needless to say, it is a high standard – making for a low probability for success.

In a recent bid protest decision, GAO narrowed the opening for what protesters can argue on Reconsideration even further.

In connection with a Defense Logistics Agency diesel fuel services contract, the protester challenged the agency’s failure to set the procurement aside for performance by service-disabled veteran-owned small businesses.  GAO disagreed and dismissed the protest, concluding that the contracting officer performed reasonable market research.

The contractor sought Reconsideration, but was again denied.  GAO’s decision primarily relies on the most common rationale – the protester did not raise issues of fact or errors of law in the underlying opinion.  Thus, GAO classified the Request for Reconsideration as “mere disagreement” with the protest decision.

Importantly, GAO also rejected the protester’s argument that the agency failed to produce key documents needed to prosecute the protest.  There was, indeed, a dispute during the protest concerning whether certain key documents were protected source selection documents (and therefore not subject to disclosure) – but GAO classified that dispute as a protest matter, not a separate ground for Reconsideration of the decision on the merits.

While this is a post about Requests for Reconsideration at GAO – the takeaway for contractors should be focused more on bid protest procedure.  Reconsideration of an adverse protest decision is possible – but rare.

Contractors should focus on strategy in advance and think about how to frame the best argument (leaving nothing in reserve).  Moreover, if there is a dispute (like the battle for responsive documents in this case), contractors should take affirmative steps to protect their interests before a decision is handed down.  By the time Reconsideration rolls around, its likely too late.

Join me on Thursday, August 24, 2017 for lunch (11:30 am to 1:30 pm) and learn about the Small Business Administration’s All Small Mentor Protégé Program. The event is sponsored by Design-Build Institute of American Mid-Atlantic and will be held at Maggiano’s in Tysons Corner.

For months, we poured over the proposed and final rules – speculating about how the Program would look and operate.  Now it is here.  With the SBA accepting and processing applications at a healthy clip, there is no better time than the present to get up to speed.

During the event, we will walk through the basics of the All-Small Program, including the application and approval process.  We will also talk about big picture issues, including the Program’s general shield against affiliation and the most important questions for contractors (both large and small) considering taking the leap.

The event will also offer insights for contractors that have already investigated the Program.  For example, we will discuss the newly published requirements for mentor-protégé agreements and joint venture agreements formed between Program participants.  Careful consideration of the issues captured in these agreements can make the difference between a successful partnership . . . and the undesirable alternatives.

I hope that you can join us on the 24th.  I am happy to chat after the presentation about any specific questions facing your business.  If you can’t make the event, you can always contact me here to discuss your questions.