We can learn a lot from bid protests. Today, we review a protest from American Systems Corporation that demonstrates why you need to stick to the evaluation criteria when responding to an RFP.
Details of the Bid Protest
Contract/Task Order: Naval Sea Systems Command Seaport-e Contract (Seaport-e), TORFP N00024-16-R-3130, Zone 6, Readiness Assistance Team Support Services for Commander Naval Surface Force, U.S. Pacific Fleet (CNSP).
Protesting Entity: American Systems Corporation (ASC)
Background: The TORFP was issued in June 2016 and included a requirement for naval engineering and combat systems experience through subject matter experts (each with over 20 years of naval experience) to conduct sailor centric deck-plate training, material review, program auditing, and naval readiness support to enhance overall proficiency and material readiness. The agency received three proposals, including those from ASC (the incumbent) and CDI Marine. On September 30, 2016, the agency issued a task order to CDI Marine.
Subject of the Protest: ASC had a higher overall technical rating and was rated equally or higher in each category than CDI Marine. However, the solicitation also included a clause, NAVSUP 5252.237-9400, Substitution or Addition of Personnel (Jan 1992), under which “[t]he [c]ontractor agrees to assign to the contract those persons whose resumes…were submitted as required by [s]ection L to fill the requirements of the contract” and agrees that “during the entire contract performance period no personnel substitutions will be permitted unless such substitutions are necessitated by an individual’s sudden illness, death or termination of employment.”
Despite this clause, ASC indicated that it planned to “green out” (replace, usually with more junior, less expensive personnel) approximately 40% of the proposed key personnel – including the program manager – beginning with Option Year 2. The benefit that ASC touted of this practice to the Navy was that “…the ‘influx’ of new individuals…allows for the highest levels of currency with Naval Systems, since replacement personnel will meet the requirements describe in the [solicitation] as well as be more recent active duty personnel. This aligns with what we have experienced on the existing contract with personnel turn-over.”
However, the CO viewed that ASC’s “express intent to substitute key personnel,” was directly in conflict with NAVSUP clause 5252.237-9400, Substitution or Addition of Personnel (Jan. 1992). The CO further found that even if the substitution of personnel clause was not in the solicitation, ASC’s proposed approach nonetheless would increase the risk of unsuccessful performance because the replacement personnel were represented by unnamed labor categories with no knowledge, experience, or minimum qualifications specified.
Although ASC’s technical proposal was superior in the less important sample task and past performance factors, this was more than offset by the uncertainty and technical risk created by ASC’s proposed plan to substitute personnel of unknown ability during the performance of the task order.
Stick to the Evaluation Criteria
ASC, as the incumbent, wrote a more highly technically scored proposal than its two competitors, but lost due to a self-inflicted wound by raising the whole issue of greening of the key personnel across the task order when the TORFP had explicit prohibitions on doing so.
In this case, ASC knew that, despite what the solicitation said, key personnel were routinely replaced with the right coordination and approvals on the current contract. However, it failed to grasp that this would be viewed as a risk and weakness given the objective evaluation criteria and explicit replacement of personnel clause. Making matters worse was the fact that key personnel and resumes was the most important technical criteria, so that was the last place they could afford to have a weakness or be deemed non-compliant.
In this instance, all ASC had to do was to be silent on the issue of replacing key personnel. There was no evaluation criteria or other requirement in the solicitation to address that issue – and thus no benefit to be gained by adding it into the proposal. Had they not brought up the issue, they may have won the award, despite being evaluated as more than 10% higher than the next highest rated competitor.
Speaking of the pricing difference, ASC noted in their proposal that their “greening” practice was reflected in their pricing. However, ASC was still more expensive than CDI Marine, and appears to have not adjusted their prices downward enough to reflect the savings created by the key personnel greening practice. In other words, had ASC developed a price more in line with CDI Marine’s and consistent with their stated key personnel management approach, they may still have been awarded the contract since the award was a best value trade-off.