GAO Green Lights Use of IGCE in Past Performance Evaluation

Internal Government Cost Estimates (IGCEs) are frequently used to gauge the reasonableness of contractor prices during proposal evaluation. But can these internal estimates also impact other evaluation factors? GAO was recently asked to resolve this question in the context of past performance evaluations, and the answer was essentially “you sure can!”

Alright, GAO wasn’t that enthusiastic, but it did condone the use of IGCEs when evaluating past performance.

Chenega Federal Systems, LLC, B-417037.2 (Comp. Gen. Sept. 6, 2019), involved an Air Force procurement for crew training and security services at various airfields in Alaska, Hawaii, South Korea, and Japan. The resulting contract would have a base performance period of 1 year, followed by a combination of option and incentive-option periods. Award was to be made on a firm-fixed price basis to the offer representing the best value to the government.

The solicitation broke proposal evaluation into 4 discrete factors, including past performance and price. Importantly, as 2 of the non-price evaluation factors were evaluated on a pass/fail basis, the best value trade-off was effectively between the past performance and price factors.

With respect to past performance, the Air Force anticipated evaluating both the relevance and quality of recent past performance. Relevance was evaluated by “considering the degree to which an offeror’s past performance reference contract involved similar scope, complexities, and magnitude of effort as compared to the [Statement of Work].” While the Solicitation provided a description of how “scope” and “complexity” would be evaluated, there was no such instruction as to how “magnitude” would be evaluated.

The Air Force received 5 offers in response to the Solicitation. Following its evaluation, the Air Force made an award to Delaware Resource Group of Oklahoma, LLC (DRG). Chenega timely protested the award. Among Chenega’s protest arguments was a challenge to the evaluation of past performance.

In response to the protest, the Air Force took corrective action. The corrective action focused on reevaluating the past performance examples. Among the most significant features of the reevaluation was the assessment of “magnitude” for each past performance example. To accomplish this, the Air Force used price data provided by offerors for each past performance example to arrive at annualized cost values, which resulted in “magnitude” values for each of the past performance examples. These annualized magnitude values were then compared to the IGCE.

Following the reevaluation, the Air Force concluded that DRG continued to represent the best value to the government, and it was named as the awardee.

Chenega again protested the award to DRG. Among Chenega’s numerous protest grounds was the allegation that the Air Force had erred by utilizing the IGCE during the evaluation of past performance to assess the “magnitude” of the effort associated with each past performance example. According to Chenega, “magnitude” referred to the similarity of the contract services provided, not a simple comparison of the contract values. Chenega further argued this application of the IGCE was not disclosed to offerors within the Solicitation and thus amounted to an unstated evaluation criterion.

GAO was unpersuaded by either line of Chenega’s argument. Relegated to a footnote, it’s evident GAO did not agree with Chenega that “magnitude of the effort” related to the types of services provided under the Solicitation. GAO bluntly dispatched with this argument:

Chenega’s assertion that “magnitude of effort” refers to the type of work involved, would essentially render the phrase synonymous with the terms “scope” and “complexity,” thereby making it superfluous. Accordingly, this argument is without merit.

Turning its attention to the remainder of Chenega’s argument, GAO explained that the term “magnitude” was generally synonymous with contract dollar value. It summarized this point as follows:

[T]he solicitation’s use of the phrase “magnitude of effort” reasonably refers to the size of an offeror’s past performance references, and reasonably encompasses the agency’s consideration of the dollar values of the contracts submitted by offerors as past performance references. The term magnitude is commonly understood to refer to size, and our decisions have repeatedly recognized that the dollar value of a past performance reference typically is probative of the contract’s magnitude.

Since the Solicitation did instruct offerors to provide the dollar value of past performance references, GAO concluded that the comparison the Air Force made between the IGCE and individual past performance examples was reasonably encompassed within the Solicitation’s instructions.

Finding no merit to Chenega’s challenge to the application of the IGCE to the past performance evaluation, GAO denied the protest ground.

On a surface level, GAO’s decision in Chenega stands for the proposition that agencies may compare the cost of past performance examples with an IGCE during a past performance evaluation. More generally, the case also serves as a reminder that an agency’s evaluation may touch on items beyond those expressly stated within a solicitation.