The use of services contracts to provide support to government agencies has exploded over recent years.
A large proportion of these contracts provide personnel to meet the continuing needs of government agencies. While the contract may terminate after the base year, and options may be exhausted, there is likely still a need for the support. In order to comply with competition requirements, the government must recompete the effort and allow other prospective contractors to receive the award.
When recompeting a services contract, it is fair to assume the incumbent will likely viefor award. As the current contract holder, the incumbent has an edge in a reprocurement because it understands the work and has an ongoing working relationship with the government. Short of barring the incumbent from the recompete, this advantage is almost impossible to negate. As a consequence, regulations and case law recognize the impracticality of ignoring the potential competitive edge held by an incumbent. At some point, however, these advantages can go beyond a point of acceptability and, ultimately, amount to an unfair competitive advantage.
In this light, this article addresses some of the recurrent issues that arise when an incumbent offeror competes for a follow-on contract.
Organizational Conflicts of Interest
The contracting officer is responsible for avoiding, neutralizing, and mitigating one of the more obvious issues that may arise with a services contract—that is, an organizational conflict of interest (OCI). An OCI may occur:
[W]hen factors create an actual or potential conflict of interest on an instant contract, or when the nature of the work to be performed on the instant contract creates an actual or potential conflict of interest on a future acquisition. In the latter case, some restrictions on future activities of the contractor may be required.1
OCIs may take one of three forms2:
- Biased Ground Rules—This type of OCI may occur when a contractor “set[s] the ground rules for the competition for another government contract by, for example, writing the [statement of work (SOW)] or providing materials upon which a SOW was based.”3 While some OCIs can be mitigated, it is essentially impossible to take any corrective action that does not involve barring the incumbent from the reprocurement effort.4 The contracting officer must ensure that the incumbent is not preparing the requirement for a future procurement that it will bid on in the future.
- Unequal Access to Information—This type of OCI can result 1) when a party has access to information unavailable to other parties and 2) when that information may provide an unfair competitive advantage.5 As an incumbent is routinely located with the government offices, support contractors may unwittingly (or wittingly) be exposed to information not available to other parties that may provide them with a competitive advantage, such as independent government cost estimates, proprietary information of other prospective offerors, or source-selection-sensitive documents. The requiring activity must have the proper control measures in place to avoid incumbents from gaining unfair access to nonpublic information. Support contractors should be required to wear badges and to identify themselves as contractors on phone calls and in their e-mail signature block. Presenting this information upfront alerts government personnel that they must censor their communications.6 Firewalling of personnel can also be an effective measure.7
- Impaired Objectivity OCI—This results when a contractor “evaluate[s] its own offers for products or services, or those of a competitor, without proper safeguards to ensure objectivity to protect the government’s interests.”8 In the case of an incumbent, a possible scenario arises when an incumbent is relied on to provide technical assistance in a recompetition. If the incumbent intends on competing for the follow-on effort, it should not be involved in the process in an official or unofficial capacity.
While most of the instances can generally be categorized among these three broad areas, OCIs must be examined on a case-by-case basis.9 What might be deemed as appropriate mitigation in one instance might not be an appropriate solution in a slightly different context. Government personnel must carefully consider what action to take when deciding on an appropriate course of action. However, it is important to note that incumbent status alone is insufficient to result in an OCI.10 Incumbent contractors also need to be cognizant of OCIs; failure to remedy such a situation may result in disqualification from a future award.
Overly Restrictive Requirement
When drafting requirements, unless it is for some justifiable reason, the government cannot design them to be so restrictive that the incumbent alone can perform the effort. A specification that is challenged as being overly restrictive must be demonstrated by the government to be “reasonably necessary.”11 Failure to provide a sensible explanation for the requirement’s restrictive nature will likely result in a protest being sustained.12 A party will not have standing to challenge a requirement as being overly restrictive if it can actually satisfy the solicitation requirements.13 Moreover, when challenging the government’s requirements, a prospective offeror cannot merely offer supposition or conjecture to support the claim that the requirement was crafted solely for the incumbent.14 The contracting officer must examine the requirements to determine if they are too restrictive and will ultimately result in a de facto sole-source award for the incumbent. Exchanges with industry should also be considered to determine whether the requirements are appropriate for the proposed effort.15
Consideration of Incumbency During the Evaluation Process
While it is permissible when evaluating proposals to give a contractor credit for the benefits derived from its incumbent status, the Government Accountability Office (GAO) recognizes the limitations of such an approach. In Consolidated Engineering Services, Inc.,16 the solicitation stated that for the “Experience Factor,” the government would evaluate proposals in eight critical areas. The incumbent-awardee and protestor received the same adjectival rating (“Extremely Similar”).17 In the source selection decision, the contracting officer distinguished between the incumbent-awardee and the protestor, rationalizing that because the incumbent-awardee’s experience in the critical areas occurred under one contract, it was thus more beneficial to the government. In contrast, the protestor’s experience in the critical areas was spread over several contracts that did not require performance of all the functions at one site.18 As the solicitation did not expressly specify that the critical functions needed to be performed under one contract, this was determined to be an unstated evaluation criteria.19
GAO continued that “the [contracting officer’s] interpretation appears to have unduly restricted competition by unreasonably disfavoring non-incumbent firms competing with the incumbent.”20 In the author’s experience, evaluators tend to gravitate toward assigning strengths in favor of an incumbent based on the effort preceding the current source selection. In some cases, it may very well be permissible.21 However, each instance of credit is based on incumbent status and should be scrutinized and justified by the evaluation team.
In Emax Financial & Real Estate Advisory Services, LLC,22 the protestor challenged solicitation language indicating that the government would look more favorably on experience with the U.S. Navy’s Military Housing Privatization Initiative (MHPI) program. The protestor further argued that this was too restrictive, and others, that it would be more appropriate for the Navy to look more favorably on the Department of Defense MHPI experience as whole.23
GAO noted that if “even under generally-worded experience criteria, an agency properly may evaluate the extent to which offerors have experience directly related to the work required by the [request for proposals].”24 It was determined that the Navy adequately explained its rationale by stating that the MHPI program was complex, and thus, the more favorable consideration of Navy MHPI-related experience was justified.25 Moreover, the Navy did not restrict the competition to solely those offerors with Navy-specific MHPI experience.26
What can be concluded from Emax is that while someone, such as an incumbent, may have an edge in the competition, other offerors without the more-valued experience were still afforded an opportunity to submit a proposal. An outright bar of competitors with less-relevant experience would likely trigger a different outcome. The lesson to be learned is while you may give more weight to incumbent-based experience, you cannot preclude others from competing.
Assumptions Regarding Incumbent Ability
A common evaluator mistake is to make an assumption regarding an incumbent’s previous approach that is not contained in the recompete proposal and then to assign a strength (or weakness) solely based on the assumption. For example, if an incumbent previously provided a critical capability and fails to mention it in the proposal, the evaluator will consider not penalizing the incumbent because he or she “knows how they do the work.” An evaluator needs to be truly unbiased and not ignore omissions, additions, or different approaches that evaluators believe conflict with the incumbent’s standard way of performing the subject work.27 They need to be reminded that the burden to submit a proposal that addresses the government’s requirements lies with the offeror.28 Incumbents are no different and are not granted an exemption from meeting the requirements of the solicitation.29
Assumptions that favor the incumbent are often discovered when the evaluation record reveals that an evaluation team penalized one offeror for an omission but fails to do likewise for the incumbent. It is critical that the contracting officer read the proposals to discover this sort of discrepancy; otherwise, this mistake will likely go undiscovered until it is too late. The contracting officer must emphasize to the evaluation team that although the incumbent performed the work a specific way on the previous effort, there is no guarantee the same approach will be applied again.30
While GAO is reluctant to require or allow evaluators to read information into a proposal in a technical context, such is not the case when the information being considered relates to past performance. In that regard, the government must consider information that is “simply too close at hand to require offerors to shoulder the inequities that spring from an agency’s failure to obtain, and consider, the information.”31 In the case of an incumbent contractor competing on a follow-on effort, it is difficult to argue that any information regarding past performance is not close at hand. In most cases, the same acquisition center, and maybe even the same acquisition personnel, competed or administered the previous effort. If the contracting officer or other personnel are aware, or should have been aware, of information not contained in the past performance questionnaire or evaluation, this must be addressed.32
Performing as the incumbent on the previous contract does not necessarily equate to a superior past performance rating. While an incumbent’s past performance is certainly relevant on a recompete contract, GAO does not equate incumbency to a higher rating per se.33 Procurement officials must be careful not to overweigh previous incumbent experience.
Source Selection Decision
The contracting officer must carefully consider incumbency and not overweigh its value when creating a source selection decision. An approach based on incumbency itself does not necessarily necessitate the paying of a cost premium.34 That is not to say that this sort of approach could not present the government with the best value, provided the decision to award is well reasoned and documented—just like any other source selection decision.
Aside from weighing incumbency too favorably, contracting officers are admonished not to penalize an offeror based on non-incumbency. In Consolidated Engineering Services, Inc.,35 the contracting officer reasoned in the source selection decision and in testimony that awarding a contract to a non-incumbent carried with it additional transition risk. The contracting officer based this determination on “general knowledge” and personal “experience.”36 GAO determined that this was an unreasonable basis and sustained the protest.37 It is understandable why GAO ruled against the government. If the contracting officer’s analysis in Consolidated Engineering
Services, Inc. was deemed reasonable, contracting officers could, in essence, eliminate all non-incumbents from receiving an award owing to the “disadvantages” of awarding to a new contractor.
The one constant thread that runs through this discussion of common issues involving incumbents is “fairness.” While no one can be expected to know every aspect of the procurement process and every rule, one should be able to spot issues. When confronted with a source selection problem, be it a suspected OCI, overly restrictive requirements, and so forth, the contracting officer needs to step back and ask himself or herself, “Might this give the incumbent an unfair competitive advantage, and why?” From there, a contracting officer can define the concerns and perform a thoughtful analysis to resolve them. CM
ABOUT THE AUTHOR
KENNETH C. GILLILAND is an attorney with the U.S. Army Armaments Research, Development, and Engineering Center. He is a member of the New Jersey and Pennsylvania bars. He received his BA and JD from Rutgers University.
The views expressed in this article are those of the author and do not necessarily represent the official position of the U.S. Army.
Send comments about this article to email@example.com.
1. FAR 9.502(c).
2. While FAR 9.505 and 9.508 provide examples of possible situations that may result in an OCI, they are fact-specific. But they can possibly take other forms. See FAR 9.505 (“Conflicts may arise in situations not expressly covered in this section 9.505 or in the examples in 9.508”).
3. Energy Systems Group, B-402324, 210 CPD 73 (February 26, 2010). FAR 9.505-2(a)(1) states: “If a contractor prepares and furnishes complete
specifications covering nondevelopmental items to be used in a competitive acquisition, that contractor shall be allowed to furnish these items as a prime contractor or as a subcontractor.”
4. See Ralph C. Nash, “Postscript IV: Organizational Conflicts of Interest,” Nash and Cibinic Report (May 2010) (“It can be concluded that, when the work creating the bias has already been done, biased ground rules OCIs are not subject to mitigation.”).
5. FAR 9.505-4 addresses unequal access to information OCIs; see also ITT Corp.-Electronic Sys., B-402808, 2010 CPD 178 (August 06, 2010) (“An unequal access to information OCI exists where a firm has access to nonpublic information as part of its performance of a government contract and where that information may provide the firm a competitive advantage in a later competition.”).
6. FAR 37.114(c) states: “All contract personnel attending meetings, answering government telephones, and working in other situations where their contractor status is not obvious to third parties are required to identify themselves as such to avoid creating an impression in the minds of members of the public or Congress that they are government officials, unless, in the judgment of the agency, no harm can come from failing to identify themselves. They must also ensure that all documents or reports produced by contractors are suitably marked as contractor products or that contractor participation is appropriately disclosed.”
7. See Enterprise Information Services, Inc., B-405152, 2011 CPD 174 (September 2, 2011) (“Mitigation efforts that screen or wall-off certain individuals within a company from others, in order to prevent an improper disclosure of information, may be an effective means to address an unequal access to information OCI.”)
8. FAR 9.505-3.
9. See Diversified Collection Services, Inc., B-406958.3, 2013 CPD 23 (January 8, 2013) (“The identification of conflicts of interest is a fact-specific inquiry that requires the exercise of considerable discretion.”).
10. See Harmonia Holdings, LLC, B-407186.2, 2013 CPD 66 (March 05, 2013) (Without more, “unique information, advantages, and capabilities” gained from incumbent status do not amount to an OCI).
11. Inventory Accounting Service, B-286814, 2001 CPD 37 (February 07, 2001).
12. See Total Health Resources, B-403209, 2010 CPD 226 (October 04, 2010) (Protest sustained where agency failed to explain why only the prime contractor can satisfy the solicitation’s experience requirement).
13. See Government and Military Certification Systems, Inc., B-409420 (April 2, 2014).
14. Ibid. (“Where a solicitation’s requirements favor an incumbent who possesses the required knowledge and experience, any such advantage is not improper when the requirements are reasonably related to the agency’s needs. There is no requirement that an agency equalize or discount an advantage gained through incumbency, provided that it did not result from preferential treatment or other unfair action by the government.”).
15. FAR 15.201 provides a list of the various ways to have exchanges with industry prior to the closing of the solicitation.
16. B-311313, 2008 CPD 146 (June 10, 2008).
21. This is assuming that the previous experience is not already accounted for in another factor. See Glasslock, Inc., B-299931, 2007 CPD 216 (October 10, 2007) (Strength simultaneously assigned under “plan/schedule factor and past performance factor amounted to an improper ‘double-counting’ of strength.”).
22. B-408260, 2013 CPD 180 (July 25, 2013).
27. See HealthStar VA, PLLC, B-299737, 2007 CPD 114 (June 22, 2007) (“An offeror’s technical evaluation is dependent upon the information furnished; there is no legal basis for favoring a firm with presumptions on the basis of its incumbent status. It is the offeror’s burden to submit an adequately written proposal; an offeror, including an incumbent contractor, must furnish, within its proposal, all information that was requested or necessary to demonstrate its capabilities in response to the solicitation.”).
30. See Incident Catering Servs., LLC, B-296435.2, 2005 CPD 193 (September 7, 2005) (“An offeror’s proposed technical capabilities, including equipment, may be varied by the offeror in response to the specifics of each solicitation, and merely because certain equipment may have been proposed or used in the past does not require the offeror to propose it on subsequent occasions.”).
31. Exelis Systems Corporation, B-407111, 2012 CPD 340 (November 13, 2012), quoting International Bus. Sys., Inc., B-275554, 97–1 CPD 114 (March 3, 1997).
32. See TriWest Healthcare Alliance Corp., B-401652.12, 2012 CPD 191 (“The protester must show that the agency was aware (or should have been aware) of the information, and that the agency acted unreasonably in failing to consider it.”).
33. See ABSG Consulting, Inc., B-407956, 2013 CPD 111 (April 18, 2013) (“While an agency may provide for evaluation of relevance, the agency is not required to evaluate the past performance of the incumbent contractor as superior to its competitors simply because the incumbent has the most relevant past performance.”).
34. See LEADS Corp., B-311002, 2008 CPD 86 (March 26, 2008).
35. B-311313, 2008 CPD 146 (June 10, 2008).