Agencies May Evaluate Contractor Responsibility under FSS Orders, Says GAO

Contractor responsibility is to be considered before every federal contract award, but what about task orders issued under an FSS contract? Are contractors still subject to responsibility inquiries when competing for orders?

According to GAO, the answer is, “yes.”

Dehler Manufacturing Company, Inc., B-416819 et al. (Comp. Gen. Dec. 19, 2018), involved a procurement by the Army to provide furnishings for barracks at Fort Jackson in South Carolina. The Solicitation, which contemplated the award of a task order, required prospective contractors to hold FSS contacts that included furnishings. Award was to be made on a low-price technically-acceptable basis. Proposals were to be evaluated on a number of factors, including past performance.

Dehler timely submitted a response to the solicitation. During the Army’s evaluation of past performance, it obtained information from the Past Performance Information Retrieval System. Of the five PPIRS reports the Army obtained for Dehler, four categorized Dehler’s performance as either “Marginal” or “Unsatisfactory.” Consequently, the Army concluded Dehler’s past performance was unacceptable and eliminated it from consideration.

Given that the Army’s evaluation and elimination of Dehler was equivalent to a finding of non-responsibility, the Army forwarded Dehler (a small business) to the SBA for a Certificate of Competency investigation. Shortly thereafter, the SBA declined to issue a Certificate of Competency. As such, the Army moved forward with awarding to another offeror.

Dehler protested the elimination of its proposal before GAO. Dehler argued, in part, “that it was improper for the agency to consider Dehler’s responsibility as part of the source selection process, since ‘this procurement was conducted under [FAR subpart] 8.4, which does not require the contracting officer to make a responsibility determination.’”

GAO was unconvinced by Dehler’s line of argument. As GAO explained, “[w]hile an agency is not required to make a new responsibility determination when awarding a task order to an FSS contractor (as opposed to the required determination at the time the FSS contract is awarded), an agency is not precluded from doing so.”

Turing to the specifics of Dehler’s case, GAO noted the solicitation instructed offerors that past performance would be subject to evaluation by the Army, and that award would only be made to offerors evaluated as “acceptable” under the non-price factors, which included past performance. As such, GAO found “nothing unreasonable or improper in the agency’s consideration of matters associated with Dehler’s responsibility—including its negative past performance assessments, nor in the agency’s referral of that matter to the SBA.” Thus GAO denied this basis of Dehler’s protest.

GAOs’ decision in Dehler severs as a reminder that past performance and responsibility are considerations an evaluating agency may reach when issuing task orders under a FSS procurement. As Dehler discovered, such an investigation can be a significant hurdle for some offerors, even those deemed responsible with respect to their underlying FSS contracts.