This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its July 2016 decision in Jacqueline Sims, DBA JRS Staffing Services v. United States, the United States Federal Circuit Court of Appeals upheld the government’s decision to reject a bidder due to that bidder’s history of failing to enter into contracts after being selected for contract award. The case dealt with a federal government solicitation for horticultural instructional services at a federal prison camp in Alderson, West Virginia. The low bidder brought a lawsuit after its bid was rejected due to its past failure to meet the “responsibility” requirements that prevented the bidder from entering into contracts when selected for award in the past. The Court of Appeals summarized the government’s reason for rejecting the low bid as follows:
The contracting officer evaluated Ms. Sims’s offer on the basis of technical capability, past performance, and price. The officer determined that her quotation conformed to the solicitation; her past performance history was neutral, as she had not performed contracts similar in nature, size, and scope to the horticulture instruction contract; and that Ms. Sims’s quote was the lowest cost quote of the three received. However, the contracting officer found that Ms. Sims did not satisfy the “responsibility” requirement because she lacked the capacity to complete performance if offered the contract. In support of that determination, the contracting officer made several findings.
First, the contracting officer found that Ms. Sims had failed to accept an offered award of a contract for cosmetology instruction services at FPC Alderson in 2012. On that occasion, Ms. Sims was offered a contract on March 30, 2012, with an effective date to begin performance on April 9, 2012. The contracting officer told Ms. Sims that because the cosmetology program had been halted, the prison was anxious to complete a contract and resume instruction. Three days after the award, Ms. Sims indicated that she had not finalized the insurance needed to begin work on the contract and would complete that process within a week. One week later, on April 10, 2012, Ms. Sims informed the contracting office that she had still not secured insurance and that she intended to accept the contract offer once the insurance arrangements were finalized. On April 13, Ms. Sims informed the contracting officer that she had not been able to secure insurance on the private market and that she would seek it from a state program. She estimated it would take two more weeks to get an insurance policy. On April 16, the contracting officer withdrew the award.
Second, the contracting officer noted that Ms. Sims had failed to accept a contract offer in October 2014 for culinary arts instruction at the Federal Correctional Institution in Tallahassee, Florida. On September 29, 2014, after being awarded a contract offer by the BOP, Ms. Sims expressed concerns about being able to find a replacement candidate with the required qualifications should her preferred candidate resign during the contract. The contracting officer promptly responded that the requirements would not be changed and told Ms. Sims to respond by the close of business on September 30 if she was still interested in the contract. After receiving no response from Ms. Sims by the deadline, the contracting officer rescinded the offer to Ms. Sims and offered it to the next highest bidder.
Third, a company managed by Ms. Sims, Jacqueline R. Sims L.L.C., dba JRS Management, was awarded a contract to provide culinary arts instruction at the Federal Correctional Institution in Miami, Florida. Her company failed to provide a candidate during the base year, and the contract was terminated.
Finally, the contracting officer noted that Ms. Sims had previously been referred to the Small Business Administration for a Certificate of Competency and that the referral had been declined.
Based on those findings, the contracting officer determined that Ms. Sims would not be able to comply with the required performance schedule under the contract and made a determination of non-responsibility.
The Court of Appeals agreed with the trial judgment and determined that the government’s decision to reject the low bidder was valid given the bidder’s history of failing to enter into contracts:
We conclude that the contracting officer had a reasonable basis for his non-responsibility determination. To be determined responsible, a contractor must “[b]e able to comply with the required or proposed delivery or performance schedule, taking into consideration all existing commercial and governmental business commitments.” 48 C.F.R. § 9.104-1(b). In this case, the contracting officer rationally based his decision on Ms. Sims’ history of failing to accept offers after submitting bids. By making bids and then failing to accept contract offers after protracted negotiations, Ms. Sims caused delays in agency procurement. It was rational for the contracting officer to take that history into account and determine that it was likely she would be unable to comply with the proposed delivery schedule.
As this case illustrates, public institutions may be within their rights to reject bidders who have a past track record of failing to stand behind their bids once selected in a public tendering process.
