In most federal procurements, regulations require procuring agencies to consider an offeror’s past performance in evaluating proposals. However, while the consideration of past performance may be a standard element of an evaluation, what an agency actually considers as part of that past performance evaluation is not set in stone. Agencies can consider different types of past performance, and weigh the importance of different elements of past performance in various ways, changing from procurement to procurement. Agencies have the discretion to choose the kinds of past performances it will review, which personnel are relevant to an evaluation, how many references should be provided, and the cut-off date for each past performance reference. As long as the evaluation is reasonable, it is generally acceptable. However, if the agency’s chosen method or execution of its past performance evaluation is ultimately unreasonable, a challenge to the evaluation may lead to a sustained protest.

Two recent U.S. Government Accountability Office (GAO) bid protest decisions help draw the line between reasonable and unreasonable past performance evaluations. The recent decision in Logistics Management International, Inc. demonstrates that it is permissible for an agency to ignore the past performances of key individual personnel, and instead only concentrate on a company’s previous performances as a whole. In denying that protest, GAO found that it is within an agency’s discretion to define the scope of its own past performance review. On the other hand, in the recent decision of Patricio Enterprises Inc., GAO decided it was unreasonable for the agency to essentially penalize an offeror simply because it provided more past performance references than the competing contractor.

The procurement at issue in Logistics was an award by the Department of the Air Force for repair support services for the Royal Saudi Air Force. In the solicitation, the agency advised that past performance would be an element of its evaluation of proposals, and the past performance evaluation would have more weight on the award decision than the offeror’s cost/price calculation. In determining the rating of an offeror’s past performance, the agency specified that it would not consider the performance of key personnel. Instead, the agency issued ratings based on the past performance of the prime contractor and critical subcontractors – those whose performance would equal at least 30 percent of the overall effort.

The protester in Logistics argued that ignoring the past performance of key personnel was “unduly restrictive of competition,” and disfavored newly formed entities. GAO disagreed, finding that past performance evaluation criteria can be set at the agency’s discretion. An agency has the right to choose a contractor based on their needs, even if this means a small business has a lesser chance of obtaining the award. While the Federal Acquisition Regulation states that an agency should take into account the past performance of key personnel and major or critical subcontractors, GAO noted that it is not required to do so. In this case, the agency discounted the experience of individual personnel due to a belief that a small group of experienced key personnel could not effectively execute the contract. GAO found this position to be reasonable and thus denied the protest.

In contrast, GAO sustained a protest challenging an agency’s past performance evaluation in Patricio Enterprises. The procurement in Patricio Enterprises was a task order awarded by the United States Marine Corps for program and financial management support services.  The agency stated it would award the task order based on a best-value evaluation of the offeror’s management and staffing capability, the price and past performance. In evaluating past performance, the Past Performance Evaluation Team explained it would issue a rating of “substantial performance confidence” to any offeror submitting past performance references that were all rated “exceptional” and determined to be “very relevant.” On the other hand, all other combinations of ranks and ratings would be assigned a lower performance confidence of “satisfactory.”

The protester’s proposal included five past performance references, in which two were rated “very relevant/exceptional,” one was rated “very relevant/very good,” and the remaining two were rated “relevant/exceptional.” The awardee, on the other hand, only submitted three past performance references, with two being rated “very relevant/exceptional” and the third rated “not relevant.” Despite the fact that both the protester and the awardee each submitted two references that were rated “very relevant/exceptional,” the agency assigned the awardee an overall past performance rating of “substantial confidence,” but only assigned the protester an overall rating of “satisfactory confidence.” The agency justified the lower score for the protester based on the additional references it submitted which did not receive the same relevancy and quality ratings.

The protester asserted it was prejudiced by the agency’s improper assignation of a lower confidence rating based solely on the fact it offered a greater number of relevant references, and argued that the agency’s evaluation was irrational and unreasonable. GAO agreed and sustained the protest. As a result, GAO recommended that the agency re-evaluate the past performance of each offeror, and if the updated ratings required it, make a new source selection decision.

These two cases demonstrate the myriad issues that may arise with regard to the evaluation of offerors’ past performance. Procuring agencies have very broad discretion in establishing a framework for evaluating past performance. Given this agency discretion, offerors should tailor their past performance submissions to the specific evaluation structure established by the agency in the solicitation. However, the agency’s chosen method of past performance evaluation must still be reasonable and rationally applied. If the agency’s chosen evaluation process is unreasonable or if it is irrationally disfavoring your business, you may have grounds for a successful protest.