Government Contracts Monitor

Want Credit For Your Past? Challenge Acceptable/Unacceptable Past Performance Evaluation Criteria

September 14, 2015

Much criticism has been voiced in recent years with respect to the use of acceptable/unacceptable technical evaluation criteria, particularly in the context of lowest-price technically-acceptable (LPTA) procurements. However, a recent decision by the Government Accountability Office (GAO) highlights the even greater problems raised by the use of acceptable/unacceptable evaluation criteria for past performance. Invertix Corp., B-411329.2, July 8, 2015. Because of the prohibition on penalizing an offeror for the lack of any relevant past performance, an offeror with absolutely no relevant past performance must be given the same “acceptable” rating as an offeror with outstanding, relevant, past performance. Procuring agencies and offerors alike should consider carefully the appropriateness and desirability of using a pure acceptable/unacceptable evaluation scheme where there is a perceived value in demonstrated, relevant, past performance.

The principal complaint about LPTA procurements has been that an acceptable/unacceptable technical judgment obscures important differentiators, and prevents agencies from achieving best value. Indeed, this past winter, in a policy Memorandum previously discussed here, the Under Secretary of Defense for Acquisition, Technology and Logistics cautioned against the use of LPTA procurements where innovative, cost-effective solutions are desired. Nonetheless, a perceived saving grace for many LPTA procurements has been the continued ability to evaluate past performance, so that the agency at least has the assurance that the LPTA winner has a good track record.

Indeed, FAR 15.305(a)(2)(i) recognizes that “Past performance information is one indicator of an offeror’s ability to perform the contract successfully,” and explicitly envisions a “comparative assessment of past performance information,” separate and apart from a responsibility determination. (Emphasis added.) The FAR specifically mandates that a solicitation describe the approach for evaluating past performance, and that such include an assessment as to “the relevance of similar past performance information.” However, in order not to unduly penalize and foreclose offers from companies lacking a record of relevant past performance or for whom information on past performance in not available, the FAR mandates that such companies “may not be evaluated favorably or unfavorably on past performance.” This requirement has often been addressed by an evaluation scheme permitting such companies to be rated “neutral” for past performance.

However, in a true “acceptable/unacceptable” evaluation scheme, there is no “neutral” rating. This means, as the GAO affirmed in Invertix, that an offeror with no past performance record, in order not to be rated unfavorably for the lack of such a record, must be rated “acceptable.” Such a rating makes it essentially impossible for the procuring agency to differentiate and reward a company with a good record vs. a company with no record. Moreover, it means that a company with a good past performance record cannot expect any recognition or credit therefor in the evaluation and award selection decision.

This was the situation in Invertix, where the protestor had recent, relevant performance, with ratings from marginal to very good, and received an overall rating of “acceptable” for past performance. In contrast, the awardee had no relevant past performance. The protestor challenged the proposed award, arguing, inter alia, that the agency failed to consider the relative merits of its superior past performance in the best value determination.

However, while the solicitation provided for an evaluation of past performance, and particularly an assessment of the “risk probability that the Offeror will meet contract technical and schedule requirements, within estimated prices, by evaluating recent and relevant past performance history,” the solicitation provided that past performance would be rated only as “acceptable” or “unacceptable.” Moreover, the solicitation expressly provided that any offeror “without a record of recent and relevant past performance, upon which to base a meaningful performance risk prediction, will be identified as an unknown risk and therefore rated as ‘Acceptable,’ which is neither favorable nor unfavorable.”

Under such solicitation terms, the GAO concluded that “there simply was no basis for the agency to give Invertix greater credit for its past performance,” and denied Invertix’s protest. While the solicitation provided for consideration of the quality of each offeror’s past performance for purposes of rating the offeror’s past performance as “acceptable" or “unacceptable,” the chosen acceptable/unacceptable rating scheme did not provide for a comparison between offerors as to the relative quality or amount of their past performance.

This evaluation scheme certainly worked to the detriment of offerors with substantial relevant past performance, and deprived the agency of the ability to differentiate between offerors on this basis. Companies desiring credit for their past performance should carefully review the solicitation’s evaluation scheme, and raise questions and even challenge an acceptable/unacceptable evaluation scheme where the result would be inconsistent with other aspects of the solicitation. A challenge might at least force the agency to reconsider and determine whether an acceptable/unacceptable evaluation scheme truly serves the Government’s best interests and desire to obtaining true “best value.”