Source: https://govtcontractsmonitor.jacksonkelly.com/responsibility/page/2/
Timestamp: 2019-04-26 04:34:44+00:00

Document:
Sometimes, circumstances force offerors to consider making changes to their proposal after it’s been submitted. In some cases, offerors decide they need to go so far as to alter their own structure to address a newly discovered problem. As the recent decision in Task Source/Military Personnel Services Corporation FEPP, LLC, B-411173.3 (July 8, 2015) shows, however, material changes to the offeror itself may render it ineligible for award.
In this case, the protester was a joint venture between 8(a) concern, Task Source, Inc. (Task Source), and Military Personnel Services Corporation (MPSC), which had graduated from the 8(a) program and was serving as Task Force’s mentor under the Small Business Administration’s mentor-protégé program. The joint venture, Task Source/Military Personnel Services Corporation FEPP, LLC (the Joint Venture) was awarded a contract for support staff services by the Defense Human Resource Agency (DHRA) on February 18, 2015. That same day, DHRA learned that two individuals associated with MPSC had recently pled guilty to bribery, a fact that the Joint Venture had failed to identify in its initial representations and certifications, and failed to update as required. For these reasons, the agency terminated the Joint Venture’s contract for cause on February 25, 2015. At about the same time, Task Source e-mailed DHRA to explain that MPSC had withdrawn from the Joint Venture and provided a letter from MPSC’s President confirming the withdrawal.
After terminating the contract, DHRA decided to make award to one of the remaining firms that had submitted a proposal in response to the initial request for proposals (RFP). When the agency awarded a contract to Interactive Government Holdings, Inc. on April 1, 2015, the Joint Venture protested. It argued that: (i) the agency improperly excluded the Joint Venture from consideration when it awarded the replacement contract and the exclusion constituted a negative responsibility determination; (ii) the agency acted unreasonably when it considered the two individuals who had pled guilty to bribery charges as “principals” of MPSC; (iii) the agency’s actions were improper because MPSC had withdrawn from the Joint Venture; and (iv) the agency failed to refer its negative responsibility determination to SBA so that it could consider a certificate of competency (COC) as required by law. The Government Accountability Office (GAO) found no merit in any of these protest grounds.
GAO’s denial of the protest did not, however, rest on a close analysis of the substance of all the protester’s various grounds. Instead, GAO identified a single fact that precluded the need to consider any of the Joint Venture’s arguments: since MPSC had withdrawn from the Joint Venture, “the entity that originally had submitted a proposal in response to the solicitation – [the Joint Venture] – is different than the entity that now seeks to be considered for award of the contract.” According to GAO, DHRA’s consideration of the Joint Venture’s proposal after MPSC had withdrawn from it “would be tantamount to the agency allowing the firm to make material changes to its proposal.” Those changes would include both the composition of the offeror and substantive proposal changes. For example, only one of the four past performance questionnaires initially submitted by the Joint Venture related to Task Source. The other three related to contracts performed by MPSC, which was no longer part of the Joint Venture.
GAO noted that an agency’s evaluation of such a materially altered proposal “essentially would amount to the agency engaging in discussions.” Here, however, the RFP provided for award of a contract based on initial proposals, which is exactly what DHRA did. Under these circumstances, GAO held that the agency properly declined to consider the Joint Venture’s proposal in connection with the re-award of the contract: “Simply stated, [the Joint Venture] itself rendered its proposal ineligible for award based on the firm’s decision to make a material change in the composition of the offeror, and the agency’s decision not to evaluate its proposal did not constitute a negative responsibility determination” – so there was no requirement that anything be referred to SBA.
To be sure, the circumstances faced by the Joint Venture in this case are significantly more dire than those faced by most offerors. But the case does provide valuable guidance for firms considering mid-procurement changes to their proposals. First, try to avoid changing the composition of the offeror itself. Second, if you decide that changes to your proposal are necessary, beware of making “material” changes unless the RFP has made clear that discussions will be conducted. Even then, make sure to consider the evaluation criteria and adequately address your changes in those discussions so that they do not adversely impact your evaluation.
We often hear complaints from contractors that have not received Past Performance Evaluations (PPEs), and for good reason. PPEs are critical to a contractor’s ability to compete successfully for new government business. It therefore is surprising to see a contractor complain – actually sue – when the government issues a PPE. But that’s exactly what happened in a somewhat bizarre case recently decided by the U.S. Court of Appeals for the Federal Circuit, Jacqueline R. Sims v. United States, 14-5076.
In Sims, the contractor argued that the government breached its contract when the Contracting Officer (CO) prepared Past Performance Evaluations regarding the quality, timeliness and other aspects of Sims’ work fulfilling service contracts with the Bureau of Prisons. Not surprisingly, the PPEs reflected poor performance by Sims and formed the basis upon which a CO (in an unrelated procurement) found Sims to be nonresponsible.
According to Sims, the PPEs were not required under the Federal Acquisition Regulation (FAR) or the terms of Sims’ contracts and, thus, the Agency exceeded its authority and thereby breached Sims’ contracts when it prepared PPEs under circumstances not expressly identified in FAR 42.15 as requiring PPEs. The Court of Federal Claims disagreed, and the Federal Circuit affirmed.
Sims claimed that the FAR describes the “only situations in which a government agency can prepare PPEs”. On the contrary, however, the trial court found that COs have broad discretion to create PPEs, except in the very limited circumstances set forth in the FAR (for example, under FAR 8.7, Acquisitions from Nonprofit Agencies Employing People Who are Blind or Severely Disabled). The Federal Circuit agreed that a “contracting officer is given discretion to prepare performance evaluations” and held that the FAR does not describe the only situations in which PPEs may be generated.
There are many obvious take-aways from this case, but the take-away we wish to focus on is this: Even under contracts where the CO is not required to prepare and file a PPE, you can and should urge the CO to do so if your performance is strong. Building a robust database of PPEs that establish your track record of performing at a high level is very important.
Happy New Year! The start of a new year is a time for New Year’s Resolutions. Here are several we strongly urge you to follow-through on early in 2015.
1. Reassess Your (and Any Subcontractors’) Small Business Size Status: Most companies operate on a calendar year for tax reporting purposes. For such companies the start of a new tax year, and the end of the prior year, means a change and forward adjustment of the three-year period used to calculate a company’s average annual receipts (AAR) for size determination purposes. See our prior blog article on this topic here. Thus, effective January 1, 2015, companies that have been calculating their size based upon 2011-2013 receipts are required, for the first time, to start using 2012-2014 receipts. Obviously, and depending upon the company’s receipts last year (tax year 2014) vs. 2011, this change alone could change a company’s size status eligibility. Moreover, there have been significant changes in size standards over the past year as a result of (i) SBA’s ongoing industry-by-industry review and increases to many size standards, and (ii) SBA’s Interim Final Rule issued last June adjusting all monetary-based size standards for inflation over the prior five years, previously discussed here. A size status review thus is particularly important this year, not only to ensure that future size certifications are correct, but also to consider whether your company might now be eligible for procurements as to which you previously were too large. Please note that this review needs to consider each individual NAICS Code under which your company is listed or considering bidding. While especially important for small businesses, a size status review also is important for large businesses with respect to any current or proposed small business teaming partners or subcontractors.
2. Review and Update Your Dynamic Small Business Search (DSBS) Listing: The start of a new year is also a good time, if you are a small business, to review, and update as necessary, your company’s listing in SBA’s DSBS. This is a primary source for government agencies, and you need to ensure that your listing is accurate, up-to-date and fully reflects any new information that might help you get new work. In addition to ensuring accuracy as to your current address, phone numbers and size and any socioeconomic status representations, be sure to update your listing to include any new performance history and professional and industry certifications, and make sure that your keywords are comprehensive, so as to make it easy for contracting specialists to find you. You might also want to check the listings of some of your key competitors to see how your listing stacks up and whether other changes might enhance your competitive status.
3. Review and Update Your SAM Listing: Once you have completed the size status reassessment, you need to review and update your listings on the Government’s System for Acquisition Management (SAM), at www.SAM.gov. This is necessary both to ensure the current accuracy of the listed information and if you are a small business, to maintain and continue your company’s small business status. Please remember that information on SAM is now deemed to be a representation and certification by you as to the current accuracy of the posted information, as to which both you and the company can be held liable. Moreover, at least annual updating is required or you will lose and be unable to claim small business size status until you update. On a related note, if your business address has changed, be sure to update your Dun & Bradstreet DUNS number listing and follow-up to ensure that the changes are passed through to and show up on SAM and DSBS.
4. Review and Ensure the Accuracy and Currency of Your Past Performance Information: The start of a new year also is a good time to review the accuracy and currency of your past performance information in the Contractor Performance Assessment Reporting System (CPARS), Past Performance Information Retrieval System (PPIRS) and elsewhere, so that you can initiate efforts to correct and update this information, if needed, in advance of future procurements where such information might be key to your competitive standing and award eligibility. Once a procurement comes down to the critical evaluation and award stages, it is often too late to get anything done. This is particularly true as to missing past performance evaluations, which take time to be prepared and go through the comment and review process. If you have performed well under one or more contracts over contract performance years that ended during the past year, you should ensure that CPARS evaluations have been performed and entered, documenting your good performance, so that you can claim, and agencies can give you credit, in any new procurement. This also will ensure that you have an opportunity to reply to and explain any negative comments.
While there are certainly many other good resolutions you might consider for the coming year – including remaining current on new developments, reviewing and ensuring the sufficiency of your company’s ethics and compliance programs, and enhancing your teaming and marketing efforts – and we certainly encourage all of them – the four actions listed above will position you well to move forward in 2015.
Hopewell Darneille is the attorney responsible for the content of this article.
Just because a small business award involves security clearance issues does not automatically mean there is a “responsibility matter” that must be referred to the Small Business Administration (SBA) for a Certificate of Competency (COC) determination. Sometimes, as in the recent case of MT & Associates, LLC, B-410066 (October 17, 2014), the protestor simply fails to convince the agency that it can fulfill the solicitation requirements, including the required clearances for its personnel. Under such circumstances, there is no need for a COC referral.
At the heart of this protest are solicitation provisions requiring that “intermittent [personnel] “shall possess a TS/SCI [security clearance] at contract start date” and explaining that “[p]ersonnel clearances for the intermittent personnel will be evaluated for the prospective awardee only, just prior to contract award.” Unfortunately, despite numerous exchanges with the agency during discussions, MT & Associates (MTA) focused more on the need to have cleared personnel “at contract start date” than on being able to meet that requirement “just prior to contract award” as mandated in the solicitation. As a result, MTA was forced to scramble to get commitments from cleared personnel in the hours just before the proposal deadline. Ultimately, those efforts were unsuccessful: MTA was unable to obtain the signatures of the required individuals.
When the agency awarded the contract to MTA’s competitor, MTA protested, asserting both that the agency had failed to conduct adequate discussions and that it had failed to refer MTA’s proposal to the SBA for a COC determination. The GAO made quick work of both arguments.
That conclusion in turn gutted MTA’s argument concerning the need for a COC determination by the SBA. While the “the ability to obtain a security clearance is generally a matter of responsibility” to be considered by the SBA, such a determination is only necessary where the solicitation does not require a demonstration of the clearance prior to award, “which would indicate that the requirement was a definitive responsibility criterion.” Unfortunately for MTA, the solicitation here contained just such a requirement – and MTA’s final proposal did not identify any personnel with the required clearances.
This decision underscores the importance of paying close attention to both the solicitation and the agency’s comments during discussions. It’s easy for offerors to misinterpret requirements, particularly when the requirements are difficult to meet. To avoid this trap, when an agency conducts discussions contractors should listen very carefully to what the agency is “saying” – step back and assess their understanding of the requirements in light of input from the agency – and revise their proposals accordingly.
The Court of Federal Claims recently determined, for the second time in two years (see our March 2013 blog: Due Process is Alive and Well), that the Department of Veterans Affairs (VA) failed to provide due process to a Service-Disabled Veteran-Owned Small Business (SDVOSB) in connection with its eligibility decertification. The Court also ruled that VA’s Office of Small and Disadvantaged Business Utilization (OSDBU) misapplied VA’s “unconditional ownership” regulations in determining that the SDVOSB’s Operating Agreement would impermissibly cause ownership benefits to vest in non-veterans. The Court set-aside the OSDBU’s decertification decision, and directed the VA to (i) restore the company as an approved and certified SDVOSB, (ii) reinstate the company in the VetBiz VIP database, and (iii) consider the company’s apparent low bid in response to the instant solicitation. AmBuild Company, LLC v. United States, COFC No. 14-786C.
The case arose out of a SDVOSB set-aside solicitation. AmBuild Company LLC (AmBuild) was the apparent low bidder, duly certified as a qualified SDVOSB. The second low bidder, Welch Construction, Inc. (Welch), protested both AmBuild’s size and its SDVOSB eligibility. SBA considered and denied the size protest and the VA determined that the SDVOSB eligibility protest was without merit.
However, VA’s Center for Verification and Eligibility (CVE) sua sponte considered an ownership issue not raised by either Welch or the contracting officer. Specifically, CVE determined, based upon AmBuild’s 2011 Operating Agreement, that AmBuild’s owner was not an “unconditional owner” as required by 38 C.F.R. § 74.3(b) because the “Involuntary Withdrawal” provision of that agreement “include[d] numerous conditions that are outside of [the owner’s] control, which would force [him] to sell his ownership interest ….” CVE did not notify AmBuild that it was investigating the impact of these provisions, or provide AmBuild an opportunity to comment. CVE decertified AmBuild on this basis, declared AmBuild ineligible for award and removed AmBuild from the VetBiz website.
AmBuild appealed to the OSDBU Executive Director, challenging (i) the lack of notice, and (ii) that CVE had relied on the 2011 Operating Agreement, rather than a superseding 2014 Agreement that AmBuild had provided to CVE. The OSDBU, citing to VA’s revised 38 C.F.R. § 819.307(e), permitting status determinations to be based on the “totality of circumstances,” determined that certain provisions in the 2014 Agreement relating to events outside the owner’s control impermissibly infringed upon his unconditional ownership and, therefore, denied AmBuild’s appeal. AmBuild then filed a bid protest at the Court, challenging both VA’s lack of due process and the OSDBU’s substantive ruling.
The Court sustained AmBuild’s protest on both grounds and issued an injunction setting aside the OSDBU’s decertification decision. First, the Court rejected VA’s argument that the revised regulation permitted VA to “cast aside” the required due process notice and opportunity to comment, stating that the “totality of the circumstances” language “simply designates a standard of review;” it does not abrogate VA’s procedural due process obligations. The Court also rejected VA’s alternative argument that the notice of CVE’s decertification decision and right to appeal satisfied VA’s due process obligations, terming this argument “wholly unconvincing.” The Court pointed out that the grounds on which the OSDBU ruled – the 2014 Agreement – were different from those cited by CVE – the 2011 Agreement.
This decision is important for all SDVOSBs and VOSBs for several reasons: (1) it reaffirms that a decertified SDVOSB or VOSB can seek judicial review and obtain relief on an expedited basis. (2) it reconfirms that SDVOSBs and VOSBs are entitled to due process notice and the opportunity to comment on all issues under consideration in an eligibility protest or other decertification proceeding, (3) it clarifies that the “totality of circumstances” language in 38 C.F.R. § 819.307(e) simply designates a standard of review, and does not entitle the OSDBU to rely upon previously undisclosed grounds to decertify anyone, and (4) it clarifies the interpretation and application of the “unconditional ownership” requirements in 38 C.F.R. § 74.3(b). Hopefully, the VA also will take note of these points in future decertification proceedings.
Many companies licensing software to federal agencies have been frustrated by their government customers’ apparent inability to effectively manage their licensing efforts. Too often agencies either: (i) buy more licenses that they need and later ask for rebates or concessions because they “didn’t use the software”; or (ii) purchase too few licenses and exceed licensed usage limits, triggering a sometimes cumbersome “true-up” process. According to a recent report by the Government Accountability Office (“GAO”), help may be on the way for these contractors.
Back in May 2014, the GAO issued a report on the state of the federal government’s efforts to effectively manage its software licenses. That report found that the Office of Management and Budget (“OMB”) and the vast majority of agencies reviewed lacked adequate policies for managing software licenses and that the agencies generally were not following leading practices in this area. The GAO also issued over 100 recommendations addressing the specific weaknesses identified. Subsequently, Senator Tom Carper, head of the Homeland Security and Governmental Affairs Committee, asked for a description of OMB’s and agencies’ current and planned actions to address those findings. In the new report, GAO concludes that most agencies have reported planned actions to address it prior recommendations. More specifically, GAO found that the agencies had planned actions in response to all but 7 of the 136 recommendations.
Interestingly, the OMB continues to disagree with GAO’s prior recommendation that OMB issue a directive to help guide how agencies manage their software licenses. GAO believes that, without sufficient direction from OMB, the agencies will likely continue to miss opportunities to systematically identify software license related costs savings across the federal government. Obviously, it is still too soon to tell whether the agencies’ implementation of these plans will have the desired effect and actually improve their management of software licenses in a tangible way. But the fact that agencies have improvements in the works is at least a step in the right direction.

References: v. 
 v. 
 § 74
 § 819
 § 819
 § 74