This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its January 2013 decision in Matter of Northeast Military Sales, Inc., the U.S. Government Accountability Office (GAO) ordered the Department of Defense to conduct a re-evaluation after finding that the evaluation committee failed to properly assess the past performance of the initially selected bidder. The bid protest dealt with a Request for Proposals (RFP) for deli and resale operations. The RFP rules maintained that bidder selection would be based on an assessment of “best value” when considering technical capability, past performance, and price. However, the GAO noted that concerns were raised with respect to the evaluation of the winning bidder’s past performance and, in particular, repeated past problems with the quality of the sushi provided at the commissaries:
The record here shows that the technical evaluation team received past performance information from DeCA commissaries and from two other federal agencies. See AR, Tab 9, Past Performance Information, at 92-185. Although this information included a number of favorable comments regarding Nayyarsons’ past performance, e-mails from several DeCA commissaries also indicated that Nayyarsons had a number of performance problems. Specifically, the evaluation team was provided with e-mails from various commissaries which reported staff and product shortages during transition periods; unsanitary conditions; employee tardiness and cleanliness; and problems with sushi, including use of expired products and pre-dating products. See, e.g., id. at 147-48 (June 25 e-mail reporting “serious problems” with sushi at Memphis commissary which “nee[d] to be addressed immediately”); 145-46 (July 15 e-mails reporting an “ongoing problem” and that “there are still significant issues” with sushi at Memphis commissary); 154 (July 18 e-mail reporting problems “once again” with sushi at Scott AFB).
The GAO noted that the evaluation committee’s exercise of judgment “in the evaluation of proposals must be documented in sufficient detail to show that they are not arbitrary”. The GAO found that the committee failed to show how past issues were taken into account since the selected bidder’s past performance received an “exceptional” rating notwithstanding repeated past complaints about the sushi:
In our view, Nayyarsons’ past performance rating is inconsistent with the agency’s stated rating scheme, which provided that an “exceptional” rating would only be assigned for past performance reflecting few minor problems for which corrective actions taken by the contractor were highly effective. As discussed above, nothing in contemporaneous record shows that the agency considered whether the firm in fact took effective steps to correct the performance problems reported by DeCA commissaries. See AR, Tab 9, Evaluators’ Notes, at 75-91; Tab 5, Decision Summary, at 1-23. For example, the record shows that the Memphis commissary reported serious problems with Nayyarsons’ sushi products on June 25, but that significant problems with sushi were ongoing as of July 15. The record also shows that on July 18, the commissary at Scott AFB reported renewed problems with Nayyarsons’ sushi products.
The GAO concluded “that the agency ignored adverse past performance information and – in assigning a past performance rating of exceptional to the awardee – deviated from the agency’s evaluation scheme.” It therefore ordered a re-evaluation of the bids.
As this case illustrates, where past performance is established under an RFP as an evaluation factor, evaluation committees should not ignore evidence of past performance problems in their assessment of competing bidders since doing so may be fatal to the defensibility of their contract award decisions.
