GAO: Incumbent Contractor Not Entitled To Highest Past Performance Rating

An incumbent contractor was not entitled to “extra credit” for its status as the incumbent, nor was the incumbent entitled to the highest-possible past performance rating.

In a recent bid protest decision, the GAO confirmed that the mere fact that an offeror is the incumbent contractor does not require the procuring agency to assign the offeror a particular past performance score, so long as the agency’s past performance evaluation is reasonable.

The GAO’s decision in National Government Services, Inc., B-412142 (Dec. 30, 2015) involved a HHS solicitation for a Durable Medical Equipment Medicare Administrative Contractor.  The solicitation stated that award would be made on the basis of a best value tradeoff, considering three evaluation factors: past performance, technical approach, and cost.

National Government Services, Inc., the incumbent contractor, submitted a proposal.  In its evaluation, HHS assigned NGS an adjectival score of “Good” for its past performance.  HHS assigned the same adjectival score, “Good,” to the past performance of a competitor, CGS Administrators, Inc.  NGS received an “Excellent” technical score, compared to “Good” for CGS.  However, NGS’s evaluated costs were $47 million higher than CGS’s.  HHS awarded the contract to CGS, concluding that the technical advantages of NGS’s higher-rated proposal did not justify the large price premium.

NGS filed a GAO bid protest challenging the award to CGS.  Among its allegations, NGS contended that, as the incumbent contractor, its proposal deserved the highest past performance ratings and the greatest number of assessed strengths.  NGS contended that it was irrational for HHS to assign both offerors “Good” past performance ratings, in light of NGS’s successful performance of the incumbent contract.

The GAO disagreed.  It wrote that “NGS’s belief that its incumbency status entitles it to higher ratings or additional assessed strengths does not provide a basis for finding [HHS’s] past performance evaluations unreasonable.”  The GAO explained, “[t]here is no requirement that an incumbent be given extra credit for its status as an incumbent, or that the agency assign or reserve the highest rating for the incumbent offeror.”  Rather, an agency’s past performance evaluation is “a matter of discretion” which the GAO will not disturb “unless the agency’s assessments are unreasonable or inconsistent with the solicitation criteria.”

In this case, after reviewing the record, the GAO concluded that HHS “conducted a methodical, well-documented, and qualitative assessment of both offerors’ past performance considering numerous sources of available information . . ..”  The GAO held that HHS’s “Good” rating was reasonable.  The GAO denied NGS’s protest.

It isn’t uncommon for a successful incumbent to believe that its incumbent performance entitles it to the highest-possible past performance rating in a re-compete.  But as the National Government Services case demonstrates, incumbency alone need not automatically result in a high past performance rating.

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