A large business was appropriately awarded a “Marginal” score for small business participation based on the large business’s history of failing to meet its small business subcontracting goals.

In a recent bid protest decision, the GAO held that the procuring agency properly assigned the large business a low score based on the large business’s history of unmet subcontracting goals, even though the large business apparently pledged to subcontract a significant amount of work to small businesses under the solicitation in question.

The GAO’s decision in Cajun Constructors, Inc., B-409685 (July 15, 2014) involved an Army Corps of Engineers solicitation for the construction of a concrete-covered canal in Louisiana.  The solicitation was issued in an unrestricted basis.  Award was to be made to the offeror presenting the best value to the government, considering price and four non-price factors: past performance, technical approach, key personnel and project management plan, and small business participation plan.

With respect to the small business participation plan factor, the solicitation stated that offerors would be evaluated “on the level of small business commitment that they propose . . . and the Offeror’s prior level of commitment to the participation of small businesses in the performance of prior contracts.”  Offerors were required to submit small business participant plans identifying the extent to which they intended to use small business subcontractors in the performance of the contract, was well as “a description of the Offeror’s performance over the past THREE (3) calendar years, in complying with the requirements of FAR 52.219-8 Utilization of Small Business Concerns.”

Cajun Contractors, Inc. submitted a proposal.  Although Cajun proposed to exceed several of the solicitation’s subcontracting goals, Cajun did not specify whether small business subcontracting goals had been met on its prior contracts.  The Corps reviewed Cajun’s records in the Electronic Subcontract Reporting System and determined that Cajun had consistently failed to meet its subcontracting goals.  Based on Cajun’s history of unmet goals, the agency assigned Cajun a “Marginal” score for its small business subcontracting plan.  The Corps awarded the contract to a competitor.

Cajun filed a bid protest with the GAO.  Cajun alleged, among other things, that it was improper for the Corps to assign a “Marginal” score under the small business participation plan factor.  Cajun noted that it had proposed to exceed many of the subcontracting goals set forth in the solicitation, and argued that its subcontracting plan warranted at least an “Acceptable” rating.

The GAO disagreed.  After noting that the solicitation’s evaluation criteria specifically called for a consideration of historical subcontracting achievements, the GAO wrote:

Based on Cajun’s history of submitting aspirational proposals and then failing to deliver results consistent with the levels of small business participation it proposed, the agency concluded that Cajun’s performance history in this area indicated a high risk of unsuccessful performance warranting a “marginal” rating. We see nothing unreasonable about the agency’s conclusion.

The GAO denied Cajun’s protest.

In my opinion, the most important part of the Cajun Contractors case is the evaluation system used by the Corps.  Not only did the Corps include small business participation as an evaluation factor, the Corps required large business offerors to be evaluated, in part, on their historical subcontracting levels.  In this way, the Corps was able to determine whether offerors’ past performance demonstrated a genuine commitment to small businesses, or whether past contracts were more indicative of a “history of submitting aspirational proposals and then failing to deliver results consistent with the levels of small business participation it proposed . . ..”  If more procuring agencies adopt similar evaluation criteria, you can bet that many more large businesses will suddenly be meeting their goals.