Government Contracts Monitor

When is the Past Performance of an Affiliate Attributable to the Offeror?

August 7, 2014

Raytheon Company protested the award of a contract to EFW, Inc. for integrated fixed towers needed to support the U.S. Customs and Border Protection (Agency) in its border enforcement efforts. Raytheon Co., B-409651 (Comp. Gen. July 9, 2014). One basis of this protest related to past performance -- that when the Agency evaluated EFW’s past performance it “conflated” various members of EFW’s parent company and improperly credited EFW with the past performance of such companies. Raytheon argued that this error was prejudicial because, in fact: (i) EFW lacks the relevant past performance that other members of its corporate family possess; and (ii) there is no evidence that those members will be used in the performance of this contract. GAO agreed.

While the RFP permitted offerors to submit relevant contracts and subcontracts for acquired companies, divisions, subsidiaries or major subcontractors, they could do so only if they clearly identified the relevance of the submitted past performance, the entity’s contribution to the proposed effort, and how the entity would contribute to the ability to successfully perform the contract. In short, the Agency was only interested in past performance information for entities that would be performing the work required by the solicitation.

EFW submitted information concerning five contracts performed “key subcontractors” that were related entities. The Past Performance Evaluation Team evaluated EFW’s past performance as “satisfactory” by attributing several contracts performed by one of these subcontractors directly to EFW. Since there was no evidence that this subcontractor would perform on this contract as a subcontractor, GAO concluded that the Agency must have evaluated the contracts as EFW’s own past performance, as an affiliated company.

An agency is permitted to attribute the experience or past performance of a parent or affiliated company to an offeror if the offeror’s proposal shows that the resources of the parent or affiliate will contribute to the offeror’s performance. “The relevant consideration is whether the resources of the parent or affiliated company -- its workforce, management, facilities or other resources -- will be provided or relied upon for contract performance such that the parent or affiliate will have meaningful involvement in contract performance.” It is only appropriate to consider an affiliate’s past performance where the affiliate will be involved in the performance of the contract, not otherwise.

Here GAO found no evidence that the affiliated “subcontractor” would be contributing any resources to EFW’s proposed effort. As a result, GAO concluded that the Agency improperly considered the affiliate’s contracts as past performance attributable to EFW.

The Lesson: If you are relying on an entity’s past performance, make certain your proposal is also clear with respect how you are relying on that entity to successfully perform the requirements of the RFP.

Lindsay Simmons is the attorney responsible for the content of this article.

Attorneys

Lindsay Simmons