Affiliates’ Past Performance: Solicitation Terms Control

Although an agency may consider the past performance of an offeror’s affiliates under certain circumstances, the extent of the agency’s past performance review is governed by the terms of the solicitation.

In a recent bid protest decision, the GAO held that an agency properly refused to consider the past performance of the offeror’s parent company because the solicitation restricted the scope of the agency’s past performance review.

The GAO’s decision in Ma-Chis Kawv V, LLC, B-409344 (Mar. 20, 2014) involved an Army 8(a) set-aside contract for the construction of an elementary school at Fort Campbell, Kentucky.  The solicitation stated that award would be made on a best value basis, considering past performance, technical merit, and price.

The solicitation called for each offeror to submit up to five relevant projects performed by the prime contractor.  The solicitation stated that “[p]rojects performed by other contractors than the offeror, such as teaming partners or subcontractors, will not be evaluated as prime contractor experience or prime contractor past performance, unless those other contractors are part of a joint venture offeror as demonstrated by a signed joint venture agreement.”

Nine offerors submitted proposals, including Ma-Chis Kawv V, LLC.  Ma-Chis was an 8(a) mentor-protege joint venture consisting of Ma-Chis Lower Creek Indian Tribe Enterprises, Inc. and Vanguard Contractors, LLC.

In evaluating Ma-Chis’ proposal, the Army determined that none of the past performance projects the joint venture had submitted had been performed by the joint venture’s members.  Instead, all five projects were performed by Vanguard’s parent company, Absher Construction Company.  Based on the terms of the solicitation, the Army did not consider Absher’s projects.  The Army awarded the contract to a competitor, notwithstanding Ma-Chis higher technical score and lower price.

Ma-Chis filed a GAO bid protest challenging the evaluation of its past performance.  Ma-Chis argues that the solicitation’s restriction did not apply to parent companies, and alternatively, that the solicitation was ambiguous as to whether the past performance of parent companies would be considered.

The GAO wrote that “is well-settled that an agency may consider the experience or past performance of an offeror’s parent or affiliated company under certain circumstances.”  However, “our Office has consistently recognized that reliance on a third party’s experience, even if otherwise permissible, is contingent upon the absence of any solicitation provision precluding such consideration.”

In this case, the solicitation “unambiguously informed offerors that the agency would consider the past performance and experience of the identified prime contractor and, where the prime contractor was a joint venture, the past performance and experience of the joint venturers where a signed joint venture agreement was provided.”  Thus, “[b]ecause Absher Construction is not an offeror, or a member of the joint venture that submitted the offer, the agency properly did not consider the past performance and experience attributable to that firm.”  The GAO denied Ma-Chis’ protest.

Some government contractors routinely rely upon the past performance of parents or other affiliates, and often, such past performance is considered by procuring agencies.  But as the Ma-Chis Kawv V bid protest demonstrates, if a solicitation prohibits the consideration of affiliates’ past performance, the agency will not consider it.

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