The GAO Stands Up For Small Business

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When the SBA released new rules in 2013, I noted that if a prime’s Contractor Performance Assessment Reporting System (CPARS) ratings were downgraded because of their subcontracting activity (or lack thereof) it could make a real difference. Today we can see that happening.

The GAO recently made an important decision to deny a business from competing for a contract, in part due to that business’s history of failing to fulfill its subcontracting goals.

Steven Koprince did an excellent job of explaining the situation on his SmallGovCon blog, and gave us permission to reprint his article here:

Large Prime Hit For “Consistent Failure” To Meet Subcontracting Goals

A large prime contractor’s “consistent failure” to meet its small business and socioeconomic subcontracting goals on prior projects resulted in a lower past performance score–and led to the prime’s elimination from the competition.

In a recent bid protest decision, the GAO held that the agency properly eliminated a prospective prime contractor from the competition in part because the large business had not met its subcontracting goals on three recent contracts.

The GAO’s decision in Graybar, B-410866 (Mar. 4, 2015) involved a DLA solicitation for maintenance, repair and operations supply items and services.  The contract was to be awarded on a “best value” basis, considering technical merit, past performance, and price.

The technical factor included consideration of socio-economic objectives, that is, the offeror’s goals for subcontracting with small business and socioeconomic subcategories of small businesses.  Under the past performance factor, the solicitation provided that the DLA would consider, among other things, the offeror’s performance with respect to its small business and socioeconomic goals under previous contracts.

Graybar was one of several offerors to submit proposals.  In evaluating Graybar’s past performance, the DLA noted that Graybar had not submitted information regarding Graybar’s subcontracting goals and its actual performance meeting those subcontracting goals on previous contracts.  However, the DLA evaluated CPAR reports for each of the contracts submitted with Graybar’s proposal.  The evaluators discovered that Graybar had failed to meet its subcontracting goals on all three of the contracts.  For example, on one of the submitted contracts, Graybar’s CPAR for the prior three years all reflected a failure to meet SDB and SDVOSB goals.  On another contract, Graybar missed the WOSB and SDB goals all three years.

Based on this review, the DLA assigned Graybar a mere “Satisfactory Confidence” for its past performance.  With respect to the technical factor, Graybar received an “Outstanding” for the socio-economic objective sub-factor, but this high sub-factor score did not overcome the lower past performance score (and lower scores on other technical sub-factors).  The DLA eliminated Graybar from the competition because Graybar’s was not one of the highest-ranked proposals.

Graybar filed a GAO bid protest challenging the elimination of its proposal.  Graybar argued, in part, that the DLA had improperly evaluated Graybar under the past performance factor.

The GAO disagreed.  The GAO noted that the evaluators had found “a consistent failure to meet certain small business and socioeconomic contracting goals.”  After describing the various areas in which Graybar had fallen short of its subcontracting goals, the GAO write “Graybar has pointed to nothing in this CPAR data regarding socioeconomic subcontracting which warranted a higher past performance rating than satisfactory confidence.”  The GAO denied Graybar’s protest.

The Graybar bid protest involves an interesting juxtaposition of small business subcontracting objectives and small business subcontracting performance.  Evidently, Graybar submitted an impressive subcontracting plan for the DLA solicitation, earning itself an “Outstanding” for its subcontracting objectives.  But when the DLA looked at Graybar’s actual subcontracting performance on three prior contracts, the DLA discovered a pattern of failing to meet subcontracting goals.

I have said it before and I will say it again: with all due respect to the SBA’s initiatives to strengthen subcontracting plan enforcement, the best way to ensure that large primes meet their subcontracting goals is for procuring agencies to do what the DLA did here, and consider large primes’ past subcontracting successes–or failures–as part of the evaluation process.  After all, impressive subcontracting goals are a good thing, but only if they are followed by impressive subcontracting.

This post originally appeared on the SmallGovCon website at http://smallgovcon.com/gaobidprotests/large-prime-hit-for-consistent-failure-to-meet-subcontracting-goals/ and was reprinted with permission.


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