Industry and Government Can Learn a Lot from Bid Protests
We can learn a lot from bid protests. Today, we review a protest from SURVICE Engineering that provides valuable lessons learned for government, incumbent bidders, and non-incumbent bidders.
Details of the Bid Protest
Contract/Task Order: Air Force SEEK EAGLE Office (AFSEO), Eglin Air Force Base, issued the SEEK EAGLE Modeling Analysis, and Tools Support (SEMATS 2) RFP (FA2486-16-R-0065) on December 2, 2015. The government awarded a single, IDIQ fixed-price contract to Engineering Research and Consulting, Inc. (ERC).
Protesting Entity: SURVICE Engineering (SEC), the incumbent contractor
Background: While the RFP was originally released on December 2nd of 2015, there were five modifications. After reviewing the three proposals received on November 10th of 2016, the government determined all of them had deficiencies that prohibited making an award. The government then entered into discussions with each bidder and requested final proposal revisions (FRPs). The technical evaluation board (TEB) re-evaluated the offerors as follows:
Subject of the Protest: SEC protested three aspects of the award.
SEC alleged that the government did not conduct a proper evaluation of ERC’s compensation plan. ERC’s originally proposed labor rates and salaries were so low the government deemed it a material deficiency. In evaluating the FRP submitted by ERC after discussions, the government indicated that ERC’s new proposed labor rates and salaries were sound, though there is no documentation of this analysis demonstrating a proper evaluations.
SEC alleged that the evaluation criterial was not applied equally across offerors. ERC was awarded a strength for their ability to retain SEC’s “high-performing, highly-skilled senior incumbent staff”. SEC was not awarded a strength for offering these same personnel who were their current employees and currently performing the work.
SEC alleged that two of their strengths were evaluated inconsistent with the RFP language, which resulted in these strengths appearing less valuable as compared to other offers. Specifically, the government:
- Gave a strength to SEC on a workforce evaluation criteria but then weakened it by insisting that the strength needed to “ensure” the improved outcome for the government instead of just “increasing the likelihood” as defined in the proposal.
- Assumed that any firm could retain the workforce, develop knowledge quickly on start-up, and would demonstrate the same expertise over the long-run which leveled this requirement amongst offerors and minimized the fact that SEC brought more knowledge and currently held the incumbent staff.
Decision: GAO ruled in favor of the protestor, SEC, sustaining 2 out of 3 allegations.
What Can We Learn From This Bid Protest?
There are lessons to be learned on all sides of the equation in this situation.
Lessons Learned for Government
It appears that the government was either intentionally trying to increase the score of the ERC bid to be able to switch contractors, or realized they had not described the evaluation criteria in the manner they desired. The government could have added specific factors to the evaluation criteria that would result in a higher or lower adjective score for a given awarded strength.
Key take-aways: 1) accurately document the basis of all evaluation findings and ratings, and 2) tailor the evaluation criteria such that the winning bidder meets or exceeds all mission-critical criteria.
Lessons Learned for Incumbent Bidders
Notably, the SEC did not exceed the ratings of ERC in any category—not just those subject to protest. As the incumbent, SEC should have been able to score higher in Technical Risk and Past Performance.
Key take-away: avoid the symptoms of “incumbentitis”, such as complacent attitude, lack of capture efforts, using old proposal materials, and spending insufficient time on price. Further, aspects such as transition and staff retention should be highlighted such that they result in strengths.
Lessons Learned for Non-incumbent Bidders
Personnel compensation is more critical than ever. The government is aware that bidders are lowering salaries and/or benefits to get to a winning price which negatively impacts incumbent personnel. Compensation plans are evaluated (per FAR 52.222-46) to determine if:
- Compensation plans will ensure program continuity with qualified personnel
- Lower compensation packages are sufficiently justified with supporting data
- Bidders understand the requirement and are able to retain and attract skilled, competent employees
Key take-away: don’t cut salaries/benefits to get to a low price. Instead, spend the time and effort to do competitive pricing, a price to win analysis, and use of legitimate accounting methods to lower rates.
