A procuring agency unreasonably assigned an awardee an “Outstanding” score for its proposal to retain a large portion of the incumbent workforce, even though the awardee intended to offer the incumbent employees significantly lower salaries than the employees were earning on the incumbent contract.

In a recent bid protest decision, the GAO held that it was unreasonable for the agency to fail to consider whether the differences in compensation would affect the awardee’s ability to recruit and retain the incumbent workforce.

The GAO’s decision in Alutiiq Pacific LLC, B-409584, B-409584.2 (June 18, 2014) involved an Army solicitation for commercial information technology services.  The services in question were being performed by Alutiiq Pacific LLC under an incumbent contract.

The solicitation, which was an 8(a) set aside, stated that award would be made on a best value basis, considering technical, past performance, and price.  The technical factor included two subfactors: technical experience and management approach.

In its evaluation of competitive proposals, the agency assigned Bowhead Professional Services, LLC “Outstanding” scores for its technical experience and management approach, and a “Substantial Confidence” score for its past performance.  AP’s proposal was assigned the same adjectival scores on the non-price factors.  The Army awarded the contract to BPS, apparently on the basis of its slightly lower price.

AP filed a bid protest with GAO.  AP pointed out, in part, that the Army had assigned BPS an “Outstanding” score for its management approach based in large part on BPS’s proposal to retain a large percent of AP’s incumbent workforce.  AP argued that the “Outstanding” score was unreasonable because BPS intended to offer a majority of those employees compensation that was significantly below what AP was paying under the incumbent contract.

The GAO agreed.  It noted that BPS had “proposed loaded labor rates significantly below those offered by AP” for many of the solicitation’s labor categories.  The GAO wrote that the agency’s assessment of an “Outstanding” was “unreasonable in light of the fact that the agency evaluators gave no consideration to BPS’s proposed compensation.”  The GAO concluded, “[t]here is no indication in the record that the technical evaluators were aware of this different in the offerors’ proposed compensation, or how that difference could affect BPS’s ability to attract to retain the incumbent workforce in light of its significantly lower proposed compensation.”  The GAO sustained AP’s protest.

As the Alutiiq Pacific case demonstrates an agency may be required to do more than merely take an offeror at its word that it will retain a large percent of the incumbent staff.  Where, as in this case, an offeror proposes to retain large numbers of incumbents, but proposes to pay many of those incumbents significantly lower compensation than they previously earned, an agency should take the proposed compensation into account when evaluating the likelihood that the offeror’s proposed incumbent retention plan will be successful.