A contractor successfully challenged an adverse size determination that found affiliation under the newly organized concern rule, by establishing that its president and chief executive officer was not a former key employee of its supposed affiliate.
In a recent size appeal decision, the SBA Office of Hearings and Appeals clarified the definition of “key employee” under the newly organized concern rule, by noting that such a former employee’s title was not conclusive—instead, to be a key employee, that person had to have influence or control over the operations of the business as a whole.
It’s the day after you submitted an offer for a big government contract, when one of your key personnel walks into your office. “Thanks for everything you’ve done for me,” she says, “but I’ve decided to take an opportunity elsewhere.”
Employee turnover is a part of doing business. But for prospective government contractors, it can be a nightmare. As highlighted in a recent GAO bid protest, a offeror was excluded from the award simply because one of its proposed key personnel resigned after the proposal was submitted.
It’s a harsh result, but it highlights that contractors must not only attract key personnel—they must also retain them.
Ordinarily, whether an offeror’s proposed personnel actually perform under a contract is a non-protestable matter of contract administration. But GAO will consider the issue when an offeror proposes personnel that it did not have a reasonable basis to expect to provide during contract performance in order to obtain a more favorable evaluation. Such a “bait and switch” amounts to a material misrepresentation that undermines the integrity of the procurement and evaluation.
That’s exactly what happened in a recent protest, where the GAO disqualified the awardee from competition after determining that its proposal misrepresented the incumbent employees’ availability to continue working under the contract.
An offeror’s plan to relocate a significant number of employees after the first year of a task order may have posed a risk to the offeror’s ability to retain qualified staff.
In a recent bid protest decision, the GAO held that it was unreasonable for a procuring agency to fail to consider the potential risks of an offeror’s plan to move a portion of its workforce to a different geographical area in order to take advantage of the relatively lower wages of that area.
A contractor’s proposal to use an unavailable employee to fill a key personnel position caused the GAO to sustain a competitor’s protest.
In a recent bid protest decision, the GAO concluded that a offeror failed to satisfy a material solicitation requirement concerning key personnel where the employee included in the proposal left the offeror’s employment–and the agency knew that the employee was not available to perform the contract.
Newly organized concern affiliation under the SBA’s affiliation rules did not exist when the alleged former key employee of the affiliate did not exercise influence over the entire company.
In a recent decision, the SBA Office of Hearings and Appeals held that no matter the size of the alleged affiliate, a former “key employee” must have had the ability to influence the entire company in order for the newly organized concern affiliation rule to apply.
Avoiding affiliation under the SBA’s ostensible subcontractor rule can be difficult, especially since the ostensible subcontractor rule itself, 13 C.F.R. § 121.103(h)(4), does not provide many examples of the factors that may cause ostensible subcontractor affiliation.
A recent decision of the SBA Office of Hearings and Appeals, Size Appeal of InGenesis, Inc., SBA No. SIZ-5436 (2013), demonstrates that even when a proposed subcontractor will play a major role in the procurement, ostensible subcontractor affiliation may be avoided if the parties carefully structure their relationship.