While the federal government uses wage determinations for many occupations that contractors must abide by, things are different with professional occupations such as physicians, accountants, engineers, and (yours truly) attorneys. Contractors generally have more leeway with regard to how they pay their professional employees on a given contract. But it’s not unlimited. This is something that the National Oceanic and Atmospheric Administration (NOAA) didn’t address in its evaluation for a procurement, resulting in a successful GAO protest. In this post, we’ll look at the rules here and what went wrong.
FAR 52.222-46
It’ll be helpful to start off by discussing the FAR provision in question in this matter. FAR 22.1103 requires, for solicitations for procurements expected to be more than $750,000 and that’ll involve “meaningful numbers of professional employers,” that the contracting officer insert FAR 52.222-46 into said solicitation. FAR 52.222-46, Evaluation of Compensation for Professional Employees, requires that offerors submit a total compensation plan for the professional employees they plan to have work the contract. The reason for this is important: “Recompetition of service contracts may in some cases result in lowering the compensation (salaries and fringe benefits) paid or furnished professional employees. This lowering can be detrimental in obtaining the quality of professional services needed for adequate contract performance.” Basically, the government wants to be sure that if the proposed compensation, if its lower than the predecessor contract, is still realistic. With that, the plan “will be considered in terms of its impact upon recruiting and retention, its realism, and its consistency with a total plan for compensation.”
The Protest
In November 2023, NOAA issued a solicitation seeking cybersecurity support services. The award decision would be made on a best-value tradeoff approach considering price and non-price factors. The non-price factors were evaluated for prior experience, staffing plan, technical approach, management approach, and past performance. The procurement would be in two phases. Under the first phase, NOAA would evaluate demonstrated prior experience and the staffing plan. It would then let offerors know whether they were “a viable competitor.” Offerors could continue even if they were found not to be viable competitors. Then the agency would go to phase two and evaluate the remaining factors and price.
NOAA found IBSS Corporation to have a high confidence rating for demonstrated prior experience and a low confidence rating for its staffing plan. For Blue Glacier, it got high confidence ratings for both. IBSS proceeded to phase 2 despite being told they were not a viable candidate. For the remaining three non-price factors in Phase 2, IBSS and Blue Glacier received high confidence ratings across the board. IBSS Corporation’s proposed price was $52,562,766 and its overall rating was “Some Confidence.” Blue Glacier’s proposed price was $46,784,483 and its overall rating was “High Confidence.” NOAA made award to Blue Glacier, noting the difference in the staffing plan factor and price.
IBSS then brought its protest on a number of grounds. We will address only the one that succeeded here. IBSS protested that NOAA didn’t properly evaluate Blue Glacier’s total compensation plan under the staffing plan factor in phase 1. Either basing its reasoning off Blue Glacier’s price, or having access to Blue Glacier’s proposed compensation levels (the GAO decision doesn’t make it clear), IBSS argued that Blue Glacier’s proposed compensation for its professional employees was a severe pay cut compared to the predecessor contract. Under FAR 52.222-46, the agency had to address how such lower pay could affect staffing. However, the documentation NOAA provided apparently said that such an issue was not worthy of further consideration.
GAO noted that the purpose of FAR 52.222-46 is twofold:
an evaluation of an offeror’s total compensation for professional employees in two respects: (1) whether an offeror understands the contract requirements and has proposed a compensation plan appropriate for those requirements (in effect, a price realism evaluation based on proposed compensation); and (2) for recompetitions, a comparison of an offeror’s proposed compensation to the incumbent contractor’s compensation.
GAO also noted that where the compensation levels for a proposal were lower than the predecessor contract, it must evaluate it in greater depth. In this case, NOAA didn’t do any additional evaluation. It noted that the lower compensation decreased confidence but that it was a nominal difference, and that other ranges that exceeded the predecessor contract’s levels increased confidence. Beyond that, it simply stated that Blue Glacier’s compensation plan was acceptable.
This was not enough for GAO. Because there were salary ranges that were lower than the predecessor contract’s for a number of labor categories, “FAR provision 52.222-46(b) required the agency to evaluate the proposed compensation ‘on the basis of maintaining program continuity, uninterrupted high-quality work, and availability of required competent professional service employees.’” NOAA’s evaluation never addressed these issues. GAO explained that “[w]hile the agency’s evaluation recognized these pay cuts, there is no explanation in the contemporaneous record as to why the agency concluded that it had confidence in Blue Glacier’s proposed compensation levels.”
GAO then noted that the compensation plan evaluation could impact the staffing plan rating. That was the one area in which IBSS had a lower rating than Blue Glacier. As such, had NOAA properly evaluated Blue Glacier’s proposed compensation plan, this might have had an impact on its choice of preferred offeror. The agency planned to conduct exchanges with the preferred offeror. So, had it been IBSS, IBSS could have possibly fixed its own compensation plan issues. As such, GAO sustained the protest on these grounds.
Summary
GAO’s decision here is interesting in that the price difference probably still would have supported award to Blue Glacier, but all the same, it provides good guidance for contractors. If you provide professional services, your compensation plan should address maintaining program continuity, uninterrupted high-quality work, and availability of required competent professional service employees. It also is worth noting that just because the agency writes something down for the evaluation does not mean it has done its full duty on the same. A good case for contractors to think on going forward.
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