Small businesses sometimes complain that large prime contractors are not always held accountable for failing to meet their small business subcontracting goals.  If that complaint sounds familiar, you may be cheered by the GAO’s decision in a bid protest filed by one very well-known large prime contractor.  In that case, the prime’s history of meeting (or perhaps, not always meeting) its small business subcontracting goals was a critical factor causing the large prime to lose out on a contract.

The GAO Protest of Honeywell Technology Solutions, Inc., B-406036 (Jan. 3, 2012), involved an Army solicitation for the repair and refurbishment of armored security vehicles.  The solicitation identified subcontracting goals of 31.7% for small businesses and 5% for small disadvantaged businesses.  Importantly, the solicitation stated that the agency would evaluate the extent to which offerors proposed to meet those goals, and the risk probability that the offeror would achieve the proposed goals based on its past efforts.  In other words, the large primes’ small business subcontracting history was an important evaluation factor.

Honeywell apparently proposed to meet the 31.7% and 5% goals.  (I say “apparently” because the GAO decision redacts the specifics of Honeywell’s proposal and past performance history, meaning that I am making an educated guess, based on context, as to the contents.  Honeywell’s attorneys, if you’re reading this: no, I have not seen your client’s proposal or any other protected information.  Also, allow me to commend you on your choice of reading material).  However, in keeping with the solicitation, the agency also examined Honeywell’s Individual Subcontracting Reports to determine its success—or lack thereof—in meeting its past small business subcontracting goals.

In fairness to Honeywell, the results of the process suggest that its small business subcontracting was not too shabby: Honeywell received a “Good” rating, the second-highest of the adjectival scores.  However, apparently based on the Individual Subcontracting Reports, Honeywell did not receive the top score, “Excellent.”  In contrast, Textron, Inc., received an “Excellent” score, because, as the GAO stated, “Textron had a better record of meeting small business goals than did Honeywell.”

The difference between an “Excellent” and a “Good” probably cost Honeywell the contract.  Honeywell outscored Textron on the other adjectival factor, past performance, earning an “Excellent” to Honeywell’s “Good.”  Honeywell’s price was about $200,000 more, but in the context of a $42 million procurement, that difference was negligible.

In performing its best value tradeoff, the Army determined that Textron, by virtue of its superior small business subcontracting history and slightly lower price, offered the best value to the government.  The GAO denied Honeywell’s bid protest, holding that the Army’s award was fair and reasonable.  Textron, thanks to its superior record of meeting its small business subcontracting goals, walked off with a contract worth more than $40 million.

The Honeywell Technology Solutions GAO bid protest should be a wake-up call to large primes: take your small business subcontracting goals seriously.  Sure, many times procuring agencies don’t focus on small business subcontracting goals to the extent seen in this case.  But when a procurement like this one comes out, if your large company’s small business subcontracting history doesn’t stack up to your competitors’, you could be out of luck.

For all the smalls out there, this case might be a good one to (very politely) bring to the attention of your large teammates.