GAO: Evaluation of Affiliate’s Past Performance is Optional

In its past performance evaluation, an agency typically can consider the past performance of an offeror’s affiliate, so long as the offeror’s proposal demonstrates that the resources of the affiliate will affect contract performance.

But, as demonstrated in a recent GAO decision involving an Alaska Native Corporation subsidiary, ordinarily there is no requirement that an agency consider an affiliate’s past performance.  In other words, unless the solicitation speaks to the issue, the agency’s consideration of an affiliate’s past performance is optional.

The GAO’s decision in Eagle Eye Electric, LLC, B-415562, B-415562.3 (Jan. 18, 2018) involved a Social Security Administration solicitation for support services at the National Records Center.  The SSA issued the solicitation as a competitive set-aside for participants in the 8(a) Program.

The solicitation called for a best-value tradeoff considering three factors: experience, past performance, and price.  With respect to experience, offerors were to provide a description of up to three contracts that demonstrated relevant experience.  Under the past performance factor, offerors were to have references complete and submit questionnaires for each reference cited in the experience section of the proposal.  The solicitation did not state whether the SSA would consider the experience of an offeror’s corporate affiliates.

Eagle Eye Electric, LLC submitted a proposal.  Eagle Eye is a subsidiary of Bering Straits Native Corporation, an ANC.

In its proposal, Eagle Eye submitted information for three contracts.  Eagle Eye was not involved in the performance of any of the three.  Instead, these contracts had been performed by Eagle Eye’s parent company, Bering Straits, and other subsidiaries of Bering Straits.  Eagle Eye wrote that these companies were “committed to provide contract performance advice, assistance and resources” in the performance of the SSA contract.

The SSA did not consider the past performance of Eagle Eye’s parent and subsidiary companies.  The agency assigned Eagle Eye a “not similar” rating for its experience and “neutral” for past performance.  The SSA awarded the contract to a competitor, which was rated “very similar” for experience and “very good” for past performance, but proposed a price more than $6 million more than Eagle Eye’s.

Eagle Eye filed a GAO bid protest.  Eagle Eye argued that it was improper for the agency to fail to consider the experience and past performance of its affiliates.  Eagle Eye pointed out that it had submitted statements from each affiliate, stating that the affiliate was committed to assisting Eagle Eye perform the contract.  According to Eagle Eye, the agency therefore was required to evaluate the experience and past performance of each affiliate.

The GAO wrote that “[a]n agency may consider the experience or past performance of an offeror’s parent or affiliated company where, among other things, the proposal demonstrates that the resources of the parent or affiliate will affect contract performance, and there is no solicitation provision precluding such consideration.”  But “[t]here is, however, no requirement that they do so.”

In this case, “the solicitation did not require the agency to consider the experience and past performance of Eagle Eye’s affiliate concerns and therefore, the agency was under no obligation to do so.”

The GAO denied Eagle Eye’s protest.

For many government contractors (including those owned by ANCs, Indian Tribes, and NHOs), the use of affiliated companies’ past performance is commonplace.  And in many cases, agencies accept such experience and past performance, provided that the affiliated companies’ resources will affect contract performance.

But as the Eagle Eye Electrical protest demonstrates, unless the solicitation says otherwise, an agency is not required to consider the past performance or experience of an offeror’s affiliates.  Where, as here, a solicitation is silent about how such past performance and experience will be evaluated, offerors would be wise to pose a question, if possible, during a pre-proposal Q&A, rather than assuming that the agency’s silence means that such past performance and experience will be considered.

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