Michael Jackson famously bought the publishing rights to most of the Beatles’ songs, but purchasing the Beatles’ music didn’t mean that Jackson could claim to have appeared on the Ed Sullivan Show in 1964.
As the GAO recently held, a similar principle applies in government contracting: simply buying another company’s government contract does not necessarily entitle the new contractor to lay claim to the other company’s experience.
The GAO’s decision in Sevatec, Inc., B-406784 (Aug. 23, 2012), involved a Defense Security Services solicitation for information technology support services. The solicitation informed offerors that the DSS was consolidating requirements that had previously been performed under two separate contracts, including a contract held by Nova Datacom, Inc., or NDC. The solicitation called for proposals to be evaluated on three factors: experience, past performance, and price.
Two days after the solicitation was issued, the U.S. Small Business Administration placed NDC on the excluded parties list and proposed the firm for debarment from government contracting. Following this action, NDC and Sevatec, Inc. agreed that Sevatec would buy NDC’s ongoing contract.
The DSS subsequently approved the novation of the contract from NDC to Sevatec. The novation agreement stated, in relevant part, that Sevatec was “entitled to all rights, titles, and interests of [NDC] in and to the contract as if [Sevatec] were the original party to the contract.”
The DSS received 16 offers, including Sevatec’s. In its evaluation, the DSS assigned Sevatec a “marginal” score on the experience factor. The DSS concluded that Sevatec lacked experience with Department of Defense information technology services and with services of the size and scope of the contract contemplated by the solicitation. The DSS eliminated Sevatec from the competition.
After the DSS denied Sevatec’s agency-level protest, Sevatec filed a GAO bid protest. Sevatec primarily complained that it should have been credited with NDC’s experience because Sevatec had assumed all rights and responsibilities for NDC’s contract under the novation agreement. Sevatec also pointed out that it had hired a “majority” of NDC’s incumbent employees following the novation.
The GAO disagreed with Sevatec’s position. It wrote, “Neither the express terms of the [novation] agreement, nor any other authority of which we are aware, provides for the legal fiction that Sevatec was entitled to claim as its own the experience of another unrelated entity.”
In addition, the GAO noted that the solicitation called for an evaluation of corporate experience, meaning that Sevatec could not meet the experience requirement simply by hiring NDC’s incumbent personnel. The GAO denied Sevatec’s bid protest.
The GAO’s decision in Sevatec demonstrates that while a company may be able to buy a government contract, experience must be earned. Beatles fans would probably agree.