Government Contracts & Investigations

Past Performance, Present (and Future) Problems

By | May 1, 2020

Government contractors should consider all contract performance vitally important because they can’t always control which past performance is considered by agency evaluators. The recent Government Accountability Office (GAO) decision in Sayres & Associates Corporation (Sayres), B-418382 (March 31, 2020) reminds offerors that poor past performance, even under just one contract, can have lasting negative effects on the ability to receive awards.

The Department of the Navy (Navy) sought to obtain program management support services related to its DDG-1000 Destroyer program. To this end, the underlying request for proposals (RFP), issued in April 2018 as a small business set-aside, contemplated the award of a cost-plus-fixed-fee task order to an offeror holding a Navy SeaPort Enhanced contract.

The solicitation stated that award would be made on a best-value tradeoff based on three factors: (1) technical and management, (2) past performance, and (3) total evaluated price. The RFP provided that the technical factor was more important than past performance, and that the technical and past performance factors combined were significantly more important than price, though the price factor’s importance would increase if the proposals were otherwise equally matched or if there was a significant difference between the offerors’ prices such that the price premium reduced the value of superior ratings under other factors.

Under the past performance evaluation factor, the RFP required offerors to provide relevant past performance references, as well as past performance references for each significant subcontractor. In addition, the solicitation explained that the government could limit or, particularly relevant here, expand the number of references it contacts, as the government could contact references not provided by the offeror and review performance data obtained from government databases or personal knowledge. Overall, past performance would be evaluated based on recency, relevance, and quality, and assigned an adjectival rating of (1) substantial confidence, (2) satisfactory confidence, (3) limited confidence, (4) no confidence, or (5) unknown confidence.

The Navy received three offers. Sayres’s proposal received an Outstanding technical and management rating and a Satisfactory Confidence past performance rating, and had a total evaluated price of $70,229,306. Reliability and Performance Technologies, LLC’s (RPT’s) proposal received a Good technical and management rating and Substantial Confidence past performance rating, and had a total evaluated price of $59,203,221. That is, Sayres was higher-rated on the technical factor, lower-rated on past performance, and offered a higher price than RPT. Ultimately, the award was made to RPT.

Sayres protested on numerous grounds, including that the Navy improperly evaluated its past performance. The crux of Sayres’s argument was that the Navy improperly considered its past performance under a DDG-51 Destroyer program support contract. The DDG-51 support contract was not referenced in Sayres’s proposal. Moreover, according to Sayres, the Navy “cherry-picked” its review of the DDG-51 support contract performance, as there were more recent, and less negative, past performance reports, and, overall, the Navy placed undue importance on the DDG-51 support contract.

The Navy, in turn, argued that the DDG-51 support contract was particularly relevant to its evaluation, since Sayres’s work thereunder was most similar to the scope of the task order under the instant procurement for the DDG-1000 Destroyer program. The Navy also explained that it was first made aware of Sayres’s poor performance under the DDG-51 support contract because the DDG-51 and DDG-1000 programs had adjacent offices. Due to this knowledge, the Navy sought out the contract performance assessment reports (CPARs) for Sayres’s work under the DDG-51 support contract in its evaluation. These CPARs indicated unsatisfactory or marginal ratings in Sayres’s quality, schedule, and management performance.

The GAO agreed with the Navy. Noting that agencies have discretion in their evaluation of the relative merit and relevance of past performance references, the GAO found the Navy’s evaluation reasonable. Indeed, the solicitation put offerors on notice that the Navy could seek additional sources of past performance information from personal knowledge as well as government databases, such as the CPARS. Moreover, agencies are not required to seek out all possible sources of past performance information, for example, by interviewing officials in the relevant contracting office, and can reasonably choose to rely on the annual, final versions of CPARs as opposed to interim CPARs. To the extent that Sayres argued that the Navy should have considered more recent CPARs, i.e. from 2019 and 2020, these newer CPARs were not available when the proposals were evaluated in 2018. Thus, the GAO denied the protest on this ground.

For offerors, this decision serves as an important reminder that, in negotiated procurements, federal law requires that agencies consider the offerors’ past performance in determining the best value to the government. Depending on the solicitation, this past performance information may come from a number of sources, some of which offerors have no control over. In light of this, it is crucial that offerors consistently perform in a satisfactory or exemplary manner – even one misstep can tarnish a contractor’s past performance and hinder the ability to obtain future awards.

Contact Judith Araujo for more information.