Subcontractor Experience Irrelevant Where Subcontractor Won’t Perform Similar Tasks, Says GAO

Prime and subcontractor teaming is a common way for contractors to leverage the experience of the team’s anticipated subcontractors to make proposals more attractive to federal clients, particularly when past performance is a substantial evaluation consideration.

This approach, however, recently ran into a snag when the proposed subcontractor was not going to perform the discrete work areas that its past performance experience supported, which lowered the past performance score of the bid. In the resulting protest, GAO concluded the agency got the evaluation right, and was not required to credit all of the subcontractor’s experience.

Red River Science & Technology, LLC, B-417798.2 (Comp. Gen. Oct. 24, 2019), involved an Army Materiel Command procurement for maintenance, supply, and transportation logistics services. The procurement was set aside for economically disadvantaged small businesses holding Enhanced Army Global Logistics Enterprise (EAGLE) Basic Ordering Agreements.

The Solicitation incorporated a somewhat convoluted multi-step evaluation process to winnow the field of potential offers. As relevant to Red River’s eventual protest, the Solicitation anticipated making a single award on a lowest price technically acceptable basis. Award would be made to the technically acceptable contractor offering the lowest price and receiving a past performance rating of “substantial confidence.”

With respect to past performance, offerors were required to provide examples of prior experience performed within the three years preceding the proposal submission date. Examples would be considered “relevant” if the example reflected similar experience, magnitude, and complexity to the Solicitation’s statement of work. Experience examples would be considered “similar” if the example called for work in one or more of the Solicitation’s three functional areas: maintenance, supply, or transportation logistics.

To the extent offerors proposed subcontractor participation, subcontractor experience could also be submitted for evaluation. Consideration of subcontractor experience was not automatic, however. As GAO summarized, “[t]he solicitation also established that, when evaluating past performance, the Army may consider the specific functional areas the offeror and its proposed subcontractors have performed, the areas each is proposed to perform, and the overall percentage of participation proposed for the offeror and any subcontractors.”

Red River timely responded to the Solicitation. Importantly, Red River submitted a proposal that included a significant subcontractor, The Logistics Company. As proposed, Red River would perform all of the transportation functional area itself and split the performance of the supply functional area with The Logistics Company. The remaining functional areas would be handled by The Logistics Company. Red River also supplied an organizational chart with its proposal that documented these work allocations.

To support its proposal, Red River supplied 9 past performance references. Of these references, 8 were from Red River and 1 was from The Logistics Company. Only half of the examples supplied by Red River, however, involved some type of transportation work. The sole example submitted by The Logistics Company demonstrated experience in all of the Solicitation’s functional areas, including transportation logistics.

When evaluating Red River’s past performance, the Army determined that none of the transportation functional area examples supplied by Red River were relevant because they were not of similar magnitude and complexity. The experience example supplied by The Logistics Company was relevant and had favorable ratings under all of the Solicitation’s functional areas.

Given that Red River proposed to be solely responsible for providing transportation logistics, the Army concluded “Red River’s lack of relevant past performance in this area created ‘some uncertainty about its ability to perform the Ft. Jackson effort.’” While the Army noted The Logistics Company did possess relevant transportation experience, it concluded that it had “no impact” on the evaluation because the proposal did not state that The Logistics Company would be responsible for any of the transportation logistics services. As a result, the Army awarded Red River’s proposal a satisfactory confidence rating—a step below the requirement of substantial confidence.

Red River subsequently protested the Army’s evaluation. Specifically, Red River challenged the Army’s conclusion that Red River failed to demonstrate transportation experience. Red River argued The Logistics Company possessed the relevant transportation experience and Red River’s proposal should have been credited with that experience, regardless of which entity was proposed to perform the work. Red River further noted that its proposal repeatedly referred to Red River and The Logistics Company as “teammates” and argued it could have received transportation assistance from The Logistics Company, if necessary.

GAO was not persuaded. GAO first rejected Red River’s argument that identifying The Logistics Company as a teammate meant it could have received transportation assistance from The Logistics Group, if necessary. As GAO explained:

Although [The Logistics Company] may have been its “teammate,” Red River’s proposal specified that it would self-perform the transportation work, and gave no indication that [The Logistics Company] would provide assistance of any kind. Rather, the proposal identified [The Logistics Company] as performing in the areas of maintenance and supply only, and included an organization chart showing all transportation-related work being performed solely by Red River.

Since the division of labor did not expressly state that The Logistics Company would assist with Transportation, GAO believed the Army to have acted reasonably in not crediting The Logistics Company’s experience with transportation to the team. GAO further concluded that it was reasonable for the Army to evaluate past performance experience in context with the specific functional areas each contractor would perform because the Solicitation made it apparent this type of evaluation would take place. As such, GAO denied Red River’s Protest.

GAO’s decision in Red River serves as a cautionary tale for contractors looking to leverage the past performance experience of a teammate to compete for awards. Leveraging subcontractor experience can be a powerful proposal technique, but this strategy does have limits.

When a Solicitation allows the agency to evaluate whether the company with the experience will also perform similar tasks under the present procurement, it is important for contractors to ensure that entities with relevant experience are proposed to perform the same services. As Red River painfully learned, failing to build a proposal with this in mind can be the difference between winning and losing an award.  

Questions about this post? Email us or give us a call at 785-200-8919.

Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook.