GAO: A Higher Past Performance Rating For One Offeror Does Not Mean a Competitor Was Penalized

It seems like it should go without saying, but, just because an offeror with better evaluation ratings is preferred over one with neutral ratings does not mean the latter offeror was penalized for having neutral ratings, or that the neutral rating was a penalty. Nonetheless, in a recent bid protest a company creatively argued that it was penalized for having neutral ratings, and GAO unsurprisingly rejected it.

Heartland Consulting, B-419228.4 (Comp. Gen. July 8, 2021) involved an award of an indefinite-delivery, indefinite-quantity contract for hospitality and concierge services at Walter Reed National Military Medical Center, among other locations, by the Department of Defense, Defense Health Agency (DHA). Evaluation was to be made on a “best-value” basis. The decision was made on four factors: price, past performance, compensation, and letter of credit. The solicitation stated that past performance was the most important factor. It further noted that offerors with no relevant past performance history would receive a neutral rating for that factor, with neither a favorable nor unfavorable evaluation.

Heartland Consulting (Heartland”), the protester, submitted an offer, as did RWD Consulting, L.L.C. (RWD). Heartland’s proposal was priced at roughly $32 million, but the company had no past performance history to speak of in its submission. As a result, the DHA assigned them a rating of “neutral confidence” for the factor of past performance. RWD submitted a proposal with a price of approximately $35 million, but did have some past performance history, which it included in its proposal. The DHA gave RWD’s proposal a rating of “satisfactory confidence” for the past performance factor, a superior rating to “neutral confidence.”

The DHA eventually decided that RWD’s proposal provided the best value to the government in light of its past performance record and awarded RWD the contract. Heartland filed a protest, arguing that the DHA treated Heartland unfavorably by assigning it a rating of “neutral confidence” for past performance because Heartland lacked a history of past performance. Heartland argued this violated FAR 15.305(a)(2)(iv), which states an offeror without a record of relevant past performance may not be evaluated favorably or unfavorably on past performance. By giving Heartland a “neutral” rating, the DHA necessarily evaluated Heartland’s lack of past performance unfavorably, considering RWD’s positive record was identified as the distinguishing feature between the two offers. At least, this was Heartland’s position.

GAO noted that “price/past performance tradeoffs are permitted when they are reasonable and consistent with the solicitation.” “Additionally, while an agency may not evaluate an offeror’s lack of past performance unfavorably, an agency may in its tradeoff analysis determine that highly rated past performance is more beneficial than a neutral past performance rating.”

Unsurprisingly, GAO denied the protest. The record showed that Heartland had not been evaluated unfavorably for lack of past performance, but that the DHA reasonably concluded RWD’s past performance history made RWD’s proposal preferable. GAO explained further that “our decisions explain that, in the context of a tradeoff analysis, an agency may reasonably give greater value to past performance ratings that are higher than neutral ratings.” Additionally, “the agency’s price/past performance tradeoff determination was consistent with the terms of the solicitation. The RFP provided that the past performance factor was more important than the price factor.” So the fact that Heartland’s proposal was priced lower than RWD doesn’t mean the DHA had to choose Heartland.

This decision is not surprising, but does serve a couple purposes: First, agencies can say that an offeror that has a superior rating on one factor to another makes the former preferable if the solicitation says that factor is the most important. Just because an offer is rated neutral does not mean the agency must ignore the difference between that and a better rating on the same factor. Furthermore, a neutral rating isn’t a “bad” rating on an objective scale. Naturally, a rating of “neutral” is preferable to a rating of “poor” or something equivalent. So, government contractors with no prior experience can still submit offers for solicitations that make past performance the most important factor. Yes, the proposal will receive a “neutral” rating, but that may be superior to all the others if your competitors have experience but didn’t do a good job on those past projects.

Need help with a government contracting legal matter? Email us or give us a call at 785-200-8919

Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook.