With references to past performance

This GAO decision is interesting in that, factually, it arises in connection with a solicitation conducted in Malawi. Its official government website on my Google search suggests the site might be hacked. The CIA World Factbook describes Malawi's economy as ranking "among the world's most densely populated and least developed countries. The country’s economic performance has historically been constrained by policy inconsistency, macroeconomic instability, limited connectivity to the region and the world, poor infrastructure, rampant corruption, high population growth, and poor health and education outcomes that limit labor productivity. The economy depends on substantial inflows of economic assistance from the IMF, the World Bank, and individual donor nations." In other words, there is likely not a deep history and trained understanding of the niceties of the procurement norms we are accustomed to.

Such as the role of past performance in evaluating bidder responsibility or bid responsiveness. The decision involves many issues, but this post is limited to the past performance controversy, because I suspect Malawians may not be alone in the failure, seen in this decision, to appreciate the past performance evaluation. It is not a "tick the box" evaluation, though it often seems that way.

The usual caveats apply: I take terrible liberties with the presentation of source material, so you are admonished to go to the source at the links.

Matter of: Fattani Offset Printers

On June 23, 2017, the United States Agency for International Development (the agency) issued an RFP for printing, binding, and distribution services to be performed pursuant to a fixed-price contract over a two-year period. The RFP specified, among other matters, that “[t]he purpose of this contract is printing, binding, and distribution of 773,025 English Standard Four Learners’ Books (LBs) and 6,000 Stock Management Cards.” Fattani Offset Printers, of Blantyre, Malawi, protests the award of a contract to Kris Offset & Screen Printers, Ltd., also of Blantyre, Malawi, alleging the agency unreasonably evaluated its proposal.

Award would be made on a best-value tradeoff basis considering two evaluation factors, technical and price. RFP at 50. For the technical factor, the RFP divided a total of 100 points between technical understanding and past performance, with 85 points allocated to technical understanding and 15 points to past performance. Fattani, low offeror, was awarded 35 out of 100 points. Kris Offset was awarded 92 points, and the contract.

GAO considered all of the firm’s allegations and found no basis to sustain the protest, noting at the outset that, in reviewing protests challenging an agency’s evaluation of proposals, our Office does not reevaluate proposals or substitute our judgment for that of the agency; rather, we review the record to determine whether the agency’s evaluation was reasonable and consistent with the solicitation’s evaluation criteria, as well as applicable statutes and regulations.

Past Performance

The RFP instructed offerors to provide a list of at least five organizations to serve as past performance references. For each organization, offerors were instructed to provide a contact name, address, telephone number, description of the work performed, and date of performance. The RFP also stated that proposals would be evaluated based on successful completion of previous similar projects.

Fattani provided reference letters from five different organizations. Each reference letter provided a positive review of Fattani’s performance. The record shows that the agency contacted three of Fattani’s references, and it also contacted references outside of Fattani’s listed references. Following its review, the agency assigned Fattani’s proposal two weaknesses and several significant weaknesses. Chief among the agency’s concerns was that Fattani had received negative past performance evaluations. The agency also determined that Fattani had not performed any projects of similar size and complexity (i.e., contracts of $5 million in value with distributions to over 5,500 outlets). The agency assigned Fattani’s past performance proposal only 5 out of a total of 15 points.

Fattani asserts that the agency’s evaluation was unreasonable because the RFP did not expressly permit the agency to seek additional past performance references. Additionally or alternatively, Fattani contends that the agency improperly determined that none of Fattani’s past performance references were of similar size and complexity.

In light of the RFP’s stated evaluation criteria, we find that the agency reasonably evaluated Fattani’s past performance references. Contrary to Fattani’s view, our cases explain that an agency is generally not precluded from considering any relevant past performance information, regardless of its source. Consequently, the agency acted reasonably when it solicited additional past performance references beyond those listed in Fattani’s proposal, notwithstanding the fact that the solicitation did not specify that the agency could seek alternate past performance information sources. Furthermore, GAO’s in camera review of the record reveals that Fattani received negative reviews of its performance from some of its listed references and other entities the agency had contacted.

As to Fattani’s alternate allegation, we find that the agency reasonably evaluated Fattani’s past performance references for similar size and complexity. Of Fattani’s five references, only one adequately describes the performance, and that job was not similar in size or complexity to the instant contract. That job required distribution to only 90 stores, while the instant contract requires distribution to over 5,500 outlets. Thus, Fattani’s past performance proposal did not demonstrate that it had successfully completed previous similar projects. Accordingly, based on the record before us, we find that the agency reasonably evaluated Fattani’s proposal under the past performance factor.

The protest is denied.

When all salient factors are rated similarly for best value, there is no prejudice to rejected offeror; But...

In a best value photo finish, when a protesting offeror’s past performance evaluation factor was recognized by the agency as more advantageous than the others, there is a reasonable possibility that the protester was prejudiced by award being made to another offeror. Thus, the protest was valid.

The following GAO decision is instructive for its discussion of the means for evaluating technical factors, past performance factors and price factor trade-offs. It is particularly instructive for dealing with photo finishes. As always, I take great liberty in presenting cases and articles, so this is not an official recitation. If you need that, go to the link.

Matter of: SITEC Consulting, LLC; VariQ Corporation; Logistics Systems, Inc.

1. Protests challenging the agency’s evaluation of technical proposals are denied where the evaluations were reasonable, performed in accordance with the solicitation evaluation criteria, and equal.

2. Protests challenging the agency’s failure to conduct an adequate risk assessment of the awardee’s price are actually challenges that the agency failed to perform a price realism analysis and, where the solicitation did not provide for a price realism analysis, such challenges are without merit.

3. Protest challenging the agency’s evaluation of past performance is sustained where the agency concedes errors in its past performance evaluation and the record establishes that one protester was prejudiced.

Under the terms of the RFQ, award was to be made to the firm whose proposal represented the best value to the government, considering technical approach, past performance, and price. Technical approach was more important than past performance. Those two factors, when combined, were significantly more important than price.

With respect to past performance, the RFQ advised offerors that the government would evaluate “relevant past performance.” Relevant is defined as “similar to the IT services in the PWS and similar in nature, scope, size and complexity to the required services.”

Past performance was to be rated based on a stepped adjectival rating scale from “Significant Confidence” (highest) to “Confidence” to “Neutral” to “No Confidence” (lowest). Each rating was defined, for instance: ‘Confidence’ shows “the Vendor’s past performance record indicates the Vendor should be able to successfully perform the required effort. Some Government intervention is expected to be required in achieving the required level of performance.” The next lowest rating, ‘Neutral’, shows “the Vendor has no relevant performance record. A thorough search was unable to identify any relevant past performance information. This is a neutral rating. It does not hinder or help the Vendor.”

In the Technical evaluation, one offeror (the highest price) was rated a notch above the other three offerors, who all received the same rating. In Past Performance evaluation, the agency rated all offerors equally, as “Confidence”. In the result, award was made to CWS, the second lowest price offeror. VariQ protested. It asserted that the agency deviated from the past performance evaluation criteria specified in the solicitation and should have been rated higher than its given rating.

Here, the agency ultimately admitted the substance of the protested error. A review of the agency’s own evaluation of past performance information supplied by CWS, SITEC, and LSI supports a past performance rating of neutral for each of those offerors. The agency determined that while LSI and CWS had some past performance that was similar in scope, it was smaller in size. The agency also determined that SITEC had past performance that was narrower in scope than the current requirement. However, in all cases, because the agency did not find any negative past performance, it assigned each of those offerors a confidence rating. The agency conceded that neutral is the appropriate past performance rating for all of the offerors except VariQ.

But, the agency asserted that the errors in the past performance evaluation did not prejudice the protester, and that even if the other three vendors had been given a “Neutral” rating for past performance, the source selection authority (SSA) could not have used that as a discriminator due to the fact that a “Neutral” rating can neither hinder nor help the vendor. In effect, the agency said that the hierarchy of the four rating levels specified in the solicitation was neutralized by the description of one of them.

But the agency had chosen a “best value” method of source selection, and that entails a trade-off of the various stated factors according to their relative ratings. The agency’s assertion that the SSA could not have considered VariQ’s past performance confidence rating in VariQ’s favor in its tradeoff decision, because the other offerors’ proposals were rated neutral, is inconsistent with prior decisions of this Office. Although agencies may not rate an offeror that lacks relevant past performance favorably or unfavorably with regard to past performance standing alone, an agency may, in a price/technical tradeoff, determine that a high past performance rating is worth more than a neutral past performance rating.

Competitive prejudice is an essential element of a viable protest; where the protester fails to demonstrate that, but for the agency’s actions, it would have had a substantial chance of receiving the award, there is no basis for finding prejudice, and our Office will not sustain the protest. However, GAO will “resolve doubts regarding prejudice in favor of the protester; a reasonable possibility of prejudice is sufficient to sustain a protest.”

Here, the RFQ stated that the technical factor is more important than the past performance factor and that those two factors combined are significantly more important than price. The record shows that there are variances behind the technical factor ratings, the offeror’s prices are clustered relatively closely together, and, as the agency has now stated, VariQ’s proposal is the only one to have a past performance rating of confidence rather than neutral.

Under these circumstances, we find a reasonable possibility that the protester was prejudiced. Consequently, we sustain VariQ’s challenge to the agency’s past performance evaluation.

FURTHER READING: GAO Makes Rare Finding of Error in Past Performance Evaluation, and Underscores Incumbents Are Not Automatically Entitled to Highest Technical Rating

Huntington Ingalls Industries fails the cut for Coast Guard cutter

HII protest over lost contract bid is rejected

Eight companies originally pursued the project to design the new Coast Guard offshore patrol cutter, smaller than the national security cutter. It is intended to replace its fleet of 210-foot and 270-foot medium endurance cutters.

In a rare move, HII and another shipbuilder filed a formal protest with the federal government. Between Ingalls and Newport News Shipbuilding, HII is the government's most productive shipbuilder. But the Government Accountability Office recently denied the protest in a 21-page decision that sheds light on what factored into a highly competitive bidding war for a program presumed to be worth an eventual $12 billion.

A side-by-side comparison of the bids showed HII running even with the three eventual winners in factors such as sound design, its design approach, organizational management and production capability.

The key difference was past performance. In this case, the company's past performance on other programs came into play, including the San Antonio class amphibious transport dock ships, the GAO report showed. HII was rated "marginal" while the three winners were deemed "satisfactory."

Regarding the San Antonio class problems, HII spokeswoman Beci Brenton said the company "has vigorously applied lessons learned, markedly improving quality and efficiency with each successive ship, resulting in very successful trials and, we believe, a very satisfied customer." "We are seeing the benefits of lower costs, higher quality and increased learning which comes from serial production," she said.

"I think it was a big surprise to the industry that Huntington Ingalls was not included," said Loren Thompson, a defense analyst with The Lexington Institute, Arlington-based research group. "First of all, they make the national security cutter, which is widely considered to be a success." Thompson said these types of solicitations place a major emphasis on past performance. But in this case, "past performance isn't really indicative of current capability," he said.

Still, Thompson said Coast Guard's source selection authority "is in a legal strait jacket in terms of applying its selection criteria. If the solicitation places an emphasis on past performance, then Huntington Ingalls is stuck with that aspect of its credentials, even though the company is better run today and has better capability."

"You've got to stick with the rules," he said.

This short description of the GOA decision is pretty accurate so far as it goes, but a reading of the whole decision reveals a close attention to detail that renders the implication that the decision was based on arbitrary subjective criteria out of place. I also will not provide all of it, so you should read the whole decision at the link. I do hope, however, to provide enough information taken from the decision to suggest a more dispassionate judgment. 

As usual, I cut, paste, rearrange, delete citations and paraphrase, so go to the source if you need reliable unedited authority.

Matter of: Huntington Ingalls Industries, Inc.; VT Halter Marine, Inc., File: B-409541; B-409541.2; B-409541.3; B-409541.4; B-409541.5, June 2, 2014 (pdf here)

Huntington Ingalls and VT Halter Marine both challenge the Coast Guard’s evaluation of Bollinger’s past performance, arguing that the agency unreasonably assigned Bollinger a satisfactory past performance rating despite receiving negative information about Bollinger’s performance on the Fast Response Cutter contract. In this regard, Huntington Ingalls contends that the Coast Guard unequally evaluated its and Bollinger’s past performance. Specifically, Huntington Ingalls contends that the Coast Guard ignored negative information with respect to Bollinger’s performance of the Fast Response Cutter contract, while focusing on negative comments in a PPIRS report in evaluating Huntington Ingalls’ performance of the LPD contract.

As a general matter, the evaluation of an offeror’s past performance is within the discretion of the contracting agency, and we will not substitute our judgment for reasonably based past performance ratings. Where a protester challenges an agency’s past performance evaluation and source selection, we will review the evaluation and award decision to determine if they were reasonable and consistent with the solicitation’s evaluation criteria and procurement statutes and regulations, and to ensure that the agency’s rationale is adequately documented. A protester’s disagreement with the agency’s judgment concerning the merits of the protester’s past performance does not establish that the evaluation was unreasonable.

The technical evaluation team (TET) determined that the offerors had corrected all identified weaknesses or deficiencies, and assigned all offerors superior ratings under the two concept design subfactors, and under the design approach factor.

With respect to past performance, the agency’s past performance evaluation team (PPET) reviewed the past performance questionnaires for contracts identified by the offerors for recency and relevance. The PPET also identified additional recent and relevant contracts through the past performance information retrieval system (PPIRS). Where the PPET found negative or questionable past performance information, the PPET had telephone conversations with references.

The RFP stated that the agency’s evaluation of offerors’ relevant past performance would be based on the following elements (in descending order of importance):
(1) Overall Customer Satisfaction – Would the customer select this firm again?
(2) Cost Control – Delivered within budget, provided current and accurate/complete billings, and relationship of negotiated costs to actuals.
(3) Quality of Product – Compliance with contract requirements, accuracy of reports, technical excellence, management responsiveness, appropriateness of personnel, and stood behind warranty.
(4) Timeliness of Performance – Met interim milestones, reliable, completed on time, including wrap-up and contract administration.

Here, the record shows that the Coast Guard’s evaluation of Bollinger’s past performance on the Fast Response Cutter was reasonable. The agency’s past performance evaluation team recognized that the most recent PPIRS report included four marginal ratings in the areas of schedule, management, management responsiveness, and logistic support/sustainment. The PPET also received, however, a more recent past performance questionnaire from the same individual (the contracting officer) that prepared the PPIRS report for this cutter. The questionnaire provided adjectival ratings that ranged from mostly exceptional to satisfactory; there were no marginal or unsatisfactory ratings. The questionnaire’s narrative comments indicated that Bollinger had made “substantial changes” to its organization and to its management, which resulted in improved performance.

With respect to Huntington Ingalls, the PPET determined that the offeror’s past performance was marginal. The PPET received past performance questionnaires for four contracts for the Coast Guard’s National Security Cutters and the U.S. Navy’s DDG 51 destroyer. All were found to be recent and relevant, and included mostly positive comments. However, the PPET noted that a PPIRS report for the National Security Cutter No. 5 contract indicated schedule problems. The PPET also identified three PPIRS reports for Huntington Ingalls’ contract for LPD-17 class amphibious transport dock ships. The PPET found that the PPIRS reports, which covered performance from October 2009 to September 2012, included adjectival ratings that ranged from exceptional to unsatisfactory. In this regard, the PPET noted that, although the customer that completed the PPIRS report stated that it “probably would” again award a contract to Huntington Ingalls, the PPIRS report included numerous adverse comments. For example, the PPET noted Huntington Ingalls’ unsatisfactory rating for cost control, under which the LPD customer commented that “[c]ost performance . . . has degraded” over the performance period. The PPET’s follow-up conversations on the LPD contract indicated that negative performance was continuing. In this regard, the customer for the LPD contract noted that Huntington Ingalls’ work had deteriorated prior to Hurricane Katrina, worsened after the hurricane, and had improved to be “stabilized at a poor level.” On this basis, the PPET concluded that Huntington Ingalls’ failure to meet contract requirements was the contractor’s fault.

The evaluation results were provided to the agency’s Source Selection Authority (SSA), who weighed the comparative merits of the offers based upon the final evaluation reports. In this regard, the SSA identified strengths and differentiating characteristics of the offerors’ proposals under each of the evaluation factors. With respect to the most important factor, concept design, the SSA concluded that all the competitive range offerors had strong technical concept designs and that no offeror stood out. The SSA recognized, however, that various offerors had strengths under the hierarchical requirements.

Under the design approach factor, the SSA concluded that all offerors provided a comprehensive design approach, with few discriminators, but noted that Bollinger offered an approach that increased the government’s confidence of success.

Under the organizational management factor, the SSA concluded that all offerors provided adequate descriptions of their organizational management and met the minimum requirements of the RFP, but noted that the proposals of Huntington Ingalls and Bath Iron Works were the only ones to receive strengths under this factor.

Ultimately, the SSA concluded that past performance provided the basis upon which to differentiate these proposals. With respect to Huntington Ingalls’ past performance problems, the SSA noted that the customer provided updated information that indicated that Huntington’s performance, though improved, remained at a poor level. The SSA agreed with the PPET that Huntington Ingalls’ and VT Halter Marine’s past performance should be assessed as marginal.

Based upon his review, the SSA concluded that, although Huntington Ingalls’ and VT Halter Marine’s proposals met all technical and management requirements and offered some unique strengths, the offerors’ recent and relevant past performance records did not provide confidence that they would be able to satisfactorily perform the contract. The SSA further concluded that Huntington Ingalls’ proposal included “essentially a threshold Concept Design” and otherwise had limited distinguishable benefits in comparison to other offerors. The SSA also noted that considering the firm’s marginal past performance rating, its proposal was the least advantageous to the government.

The protests are denied.

In contrast to the Huntington Ingalls Industries case, another case, Gaver Technologies, illustrates a winning protest when evaluation factors are questioned.

Here, the protest is sustained where record shows that agency’s source selection authority lacked a reasonable basis for failing to give weight to several source evaluation board findings pertaining to strengths in the protester’s proposal. The RFP sought services for computer science, computer software engineering, IT security, networking, application development, and web services. The protestor, Gaver Technologies, Inc., is referred to as GTI.

The RFP provided for award to the offeror whose proposal was considered most advantageous to the government based on the following three factors (of approximately equal weight): mission suitability, relevant experience/past performance, and cost. The mission suitability factor was comprised of three subfactors: technical requirements (worth 45% of the factor weight), management plan (worth 35%), and work management (worth 20%).

 Matter of: Gaver Technologies, Inc., File: B-409535 June 3, 2014 (pdf here)

It is a fundamental principle that agencies must evaluate proposals consistent with the terms of a solicitation and, while the evaluation of offerors’ proposals generally is a matter within the procuring agency’s discretion, our Office will question an agency’s evaluation where it is unreasonable, inconsistent with the solicitation’s stated evaluation criteria and requirements, or undocumented. Further, while source selection officials reasonably may disagree with the evaluation ratings and results of lower-level evaluations, they are nonetheless bound by the fundamental requirements that their independent judgments be reasonable, consistent with the stated evaluation factors, and adequately documented.

Of relevance to this protest, the RFP explained that in evaluating offerors’ technical approaches, the agency would consider their overall understanding and approach to accomplishing the requirements of the SOW, taking into account the “adequacy, realism, effectiveness, quality assurance, risk reductions, efficiencies, and completeness” of the information provided in the following areas:
1. Proposed approach of disciplines, skills, and techniques the Offeror plans to use in the performance of this work.
2. Proposed innovative processes, systems, and technology trends the Offeror suggests for accomplishing and/or streamlining the tasks required in the SOW with supportive rationale.

Of significance to this protest and our discussion below, with regard to the technical requirements subfactor, three of the five significant strengths for GTI concerned its technical approach.

The Source Selection Board's (SEB’s) first significant strength was that GTI had “demonstrated a thorough understanding of the SOW [Statement of Work] by proposing the critical disciplines, skills and techniques needed to effectively implement the SOW requirements.” The evaluators found that GTI’s proposed initiatives, as summarized in the five bullets, would “significantly increase the quality and timeliness of contract deliverables,” which was “expected to result in greatly enhanced performance of IT services throughout the life of the contract.”

The second significant strength assigned GTI was based on the SEB’s finding that GTI’s proposed technical approach contained “a multitude of highly innovative processes and insightful technology trends.” This finding was supported by six bullets with explanatory details. The third significant strength was based on the finding that GTI’s technical proposal demonstrated “an in‑depth understanding and innovative approach to accomplishing the requirements in the SOW area of IT Security (ITS).” The evaluators supported this conclusion with four detailed bullets.

In comparing GTI’s and Peerless’s proposals under the technical requirements subfactor, the Source Selection Authority (SSA) noted that while she had initially agreed with the SEB’s observation that the protester’s proposal provided several innovations and insights, she concluded after extensive discussions with the SEB that “there existed offsetting considerations,” which led her to “question the overall impact of the findings.” Summarizing the technical requirements subfactor, I acknowledge the potential benefits stemming from the GTI proposal. However, considering the unknown implementation costs, I find them of relatively lesser value to the Government because I do not have high confidence that the innovations could be implemented. Based on this, I believe that the quantitative difference between the two Offerors is immaterial.

The SSA then compared the two proposals under the management plan subfactor. She noted that Peerless offered an organizational structure that mirrored the agency’s own structure, which, in her view, demonstrated a keen understanding of the GRC’s requirements and culture that would lead to successful contract performance. The SSA also noted that she was impressed with Peerless’s proposed customer feedback mechanism and viewed it as a discriminator in her selection decision. She went on to identify Peerless’s proposed phase-in plan as a second key discriminator, noting that Peerless’s approach left the final 30 days of phase-in for dealing with contingences and unexpected issues associated with start up of the new contract, which ensured that GRC would have “no systematic problems upon full contract initiation.” The SSA further noted that in comparing the proposals under the management plan subfactor, she had considered the significant strength assigned GTI’s proposal for subcontracting agreements, but had concluded that this significant strength was not “of the same qualitative merit” as the findings associated with Peerless’s proposal under the management plan subfactor.

As a result of the above findings, the SSA concluded that Peerless’s proposal had a slight advantage over the protester’s with regard to the mission suitability factor. She further found that while both offerors received ratings of high confidence under the relevant experience/past performance factor, Peerless’s proposal had a slight edge under the factor due to the highly relevant experience of its team members and “the direct experience and overall successful performance of its major subcontractor” on the predecessor contract to the contract here. Finally, the SSA noted that the probable costs of the two proposals were almost equal, with Peerless’s being slightly lower. She concluded that because Peerless’s proposal offered slight advantages under each of the three factors, it represented the best value to the government.

GTI complains that the SSA failed to adhere to the evaluation scheme set forth in the RFP in evaluating its proposal under the technical requirements subfactor by unreasonably failing to credit GTI’s proposal with any of the proposed innovations identified by the SEB, as contemplated by the solicitation. The protester further contends that Peerless’s phase-in plan should not have been viewed as a significant strength, and that the SEB and the SSA treated the two proposals unequally by crediting Peerless’s proposal, but not its own, for offering a management structure mirroring the structure of the OCIO.

As noted above, under the technical requirements subfactor, the SSA considered the protester’s proposed innovations, which formed the basis for the significant strengths assigned by the SEB, to be “of relatively lesser value to the Government,” and she gave them little weight in her source selection decision. In dismissing the weight of the SEB’s findings, the SSA concluded that she did not have high confidence that the innovations could be implemented due to their unknown implementation costs. In order to further shed light on the extent to which the SSA’s concerns regarding funding pertained to the innovations underpinning the significant strengths assigned GTI’s proposal by the SEB, our Office held a hearing.

In our view, the SSA’s explanation for why she did not attribute value to the innovative approaches proposed by the protester that were funded is not supported by the contemporaneous record. The SSA made no contemporaneous reference to insufficiently detailed descriptions in her SSS (she referred only to unknown implementation costs), nor is there any indication in the record that she directly reviewed the content of the proposals herself (rather, she based her decision on the information presented by the SEB). Moreover, there is no evidence in the record that the SEB questioned the value of proposed innovative approaches, such as horizontal protection, on the basis that the approaches were not adequately described, or that the SEB conveyed such a concern to the SSA.

In sum, we find that the record fails to support the SSA’s conclusion that the protester’s proposal should not be given any meaningful credit for the multiple proposed innovative approaches for which implementation funding either was included in the protester’s proposal or was not required. That is, while we recognize that the overall impact of the SEB’s findings pertaining to the protester’s proposed innovations is diminished when items with unknown implementation costs are excluded, we nonetheless fail to see a reasonable basis for the SSA to have given the innovations for which unknown implementation costs was not an issue--in particular, those pertaining to IT security--essentially no weight. Accordingly, we sustain GTI’s complaint pertaining to the evaluation of its proposed innovative approaches.

GTI further argues that the SEB unreasonably assigned Peerless’s proposal a significant strength for its proposed phase-in plan -- indeed, the SSA cited Peerless’s plan to complete phase-in within 30 days, rather than the required 60, as a key discriminator in her selection decision.

The record supports GTI’s position. While Peerless represented in its proposal that it “can complete transition in as little as 30 days because we are very familiar with all aspects of the contract,” it went on to indicate that “[w]e acknowledge a lower level of risk associated with a 60-day transition and planned our schedule accordingly.” Peerless Mission Suitability Proposal at 59 (emphasis added). Thus, while Peerless believed that it could accomplish the phase-in transition in as little as 30 days, it did not commit to do so; rather, it proposed a 60-day phase-in schedule to reduce risk. Because Peerless did not propose to complete the phase-in transition within 30 days, both the SEB’s finding to that effect and the SSA’s reliance upon that finding as a key discriminator in her source selection decision lacked a reasonable basis.

We recommend that the SSA make a new source selection decision, taking into account our findings above. If, as a result, the protester is selected for award, the agency should terminate the contract awarded to Peerless and make award to the GTI. The protest is sustained.

Of performances past

Evaluating performance is a delicate task; so much nuance and shades of grey. The choices are not the easy ones: good, bad or ugly. More like superlatives: good, better, best.

The following GAO decision illustrates the care that must be undertaken to conduct past performance evaluation, and the limited scope a bidder has to complain.

It also illustrates how our federal government works right up to the New Year.

Matter of: IJC Corporation, B-408950, December 31, 2013

IJC Corporation (IJC), a service-disabled veteran-owned small business concern in Windham, New Hampshire, protests the Department of Agriculture’s award of a contract to Drainpipe Plumbing and Solar, of Pahoa, Hawaii, under request for proposals (RFP) No. AG-9AD6-S-13-0004, for plumbing work at Laupahoehoe Science and Education Center, Hilo, Hawaii. The protester asserts that the agency improperly evaluated IJC’s past performance.

The contract requirement includes the excavation and backfill of approximately 1,950 linear feet of trench; the supply and installation of various water lines, two water catchment tanks, and sewer lines; the preparation and coordination for various electrical conduits, as needed; and the complete pressure testing of all water lines prior to backfill. The RFP provided for the award of a fixed-price contract to the offeror whose proposal represents the best value to the government, considering price and past performance, with price being more important.

Past performance references were to be evaluated for recency, relevancy, and quality.

The possible relevancy ratings were relevant, somewhat relevant, and not relevant.

Possible quality ratings were exceptional, very good, satisfactory, marginal, unsatisfactory, and not applicable.

To determine the quality of contract performance, the RFP provided that the government would contact some of each offeror’s customers on past similar projects to ask whether: the offeror was capable, efficient, and effective; the offeror’s performance conformed to the terms and conditions of its contract; the offeror finished within the contract time; the offeror was reasonable and cooperative during performance; and the offeror was committed to customer satisfaction. Id. Based on these ratings, the agency would develop an overall confidence assessment--reflecting the agency’s determination of whether the offeror could perform as proposed and described in the statement of work (SOW)--of substantial, satisfactory, or marginal confidence.

The protestor's past performances references were indicated by this table:

In contrast, the agency evaluated two of Drainpipe’s cited past performance references for plumbing contracts as recent, relevant, and satisfactorily completed. Id. In addition, the contracting officer had “direct personal knowledge” of two prior Drainpipe contracts, at least one of which was for plumbing work, and both of which were “successfully completed on time.”

IJC was given an overall confidence assessment of marginal, while Drainpipe received an overall assessment of substantial.

IJC’s proposed price was $138,353, slightly lower than Drainpipe’s proposed price of $147,937. The contracting officer determined that Drainpipe’s higher past performance confidence assessment warranted that firm’s price premium, and award was made to Drainpipe. The protester asserts that the agency should have permitted IJC the opportunity to respond to this negative past performance information, and claims that had it known the kind of reference this customer would supply, IJC would not have used this contract as a past performance reference.

Our Office will examine an agency’s evaluation of an offeror’s past performance only to ensure that it was reasonable and consistent with the stated evaluation criteria and applicable statutes and regulations, because determining the relative merit or relative relevance of an offeror’s past performance is primarily a matter within the agency’s discretion. A protester’s disagreement with the agency’s judgment is insufficient to establish that an evaluation was improper.

Where award is made without discussions, offerors may be given the opportunity to clarify certain aspects of proposals, such as the relevance of an offeror’s past performance information and adverse past performance information to which the offeror has not previously had an opportunity to respond. As we have previously recognized, however, agencies are not required to request clarifications in the context of an award, such as the one here, made without discussions.

IJC also asserts that the work performed under contract -0036 should have been evaluated as relevant, rather than somewhat relevant, because both contract -0036 and the current requirement included the installation of a catchment tank. As noted above, the statement of work for the current requirement contained more than just the installation of a catchment tank; it also included the excavation and backfill of approximately 1,950 linear feet of trench, the supply and installation of various water lines and sewer lines, the preparation and coordination for various electrical conduits, and the complete pressure testing of all water lines prior to backfill. We see no basis in this record to question the agency’s conclusion that contract -0036 was only “somewhat relevant” to the work at issue here.

The protester asserts that, because contract -0388 included “trenching, soil erosion controls, the installation of piping in the trench, [and] backfilling the trench,” the agency unreasonably evaluated it as “not relevant.” The contracting officer, however, explains that, while the current requirement includes some trenching and backfill work, it is estimated to be 20 percent or less of the contract effort. In answering the agency, the protester concedes that the current requirement is only 21 percent trenching, but disagrees with the agency’s claims about the extent of the plumbing involved in the current work.

Even if we agreed with the protester that contract -0388 should be viewed as somewhat relevant, the fact remains that on its other somewhat relevant contract (-0036), performed in Hilo, its performance was reasonably rated as marginal. In addition, the reference advised the agency that it would not use IJC for future projects. Under these circumstances, we see no prejudice to the protester from any such possible error in the relevancy rating assigned for contract -0388. See ITT Corp.-Electronic Sys., B-402808, Aug. 6, 2010, 2010 CPD ¶ 178 at 7 (prejudice is an essential element of every viable protest, and where none is shown or otherwise evident we will not sustain a protest, even where a protester may have shown that an agency's actions arguably were improper.)

Finally, the protester challenges the agency’s best value determination, asserting that it “seems unwarranted” for the agency to expend “more of the taxpayers’ [funds] than is necessary.”

A protester’s assertion that it should have received the award solely because of its low price, however, fails to state a valid basis for protest where, as here, the RFP provided that award would be based on technical factors as well as on cost. In any case, we find the agency’s best value determination here to be reasonable. As indicated above, Drainpipe cited in its proposal two past performance references for plumbing contracts that were found to be relevant with a satisfactory quality rating, and the contracting officer was aware of a third Drainpipe contract for plumbing that was “successfully completed on time” and a fourth contract not primarily for plumbing work that was also “successfully completed on time.” Drainpipe accordingly received a confidence assessment of “substantial.” In contrast, IJC had no contracts that were deemed relevant, one past performance reference that was deemed “somewhat relevant” but for which IJC’s performance was reasonably rated as marginal, and a fourth contract with satisfactory performance but that was but no better than “somewhat relevant.”

In these circumstances there is no basis for us to question the contracting officer’s determination that it was worth a price premium of approximately 7 percent to obtain the superiority of Drainpipe’s performance record.

The protest is denied.

Multi protestor pile up on procurement highway

The following article comes from Federal News Radio, by Jason Miller. It's pretty impressive in scale, and the apparent readiness of the government to deal with the onslaught of protests, until that is the government shut down. 

After getting a very negative reaction in a recent Guam legislative hearing proposing the introduction of ADR techniques in local procurement processes, such as debriefings, the willingness to respond with written debriefs to each protestor in this pile-on caught my eye.

27 vendors protest awards under DHS $22B IT services contract

A downpour of protests hit the Government Accountability Office this week over the Homeland Security Department's decision to award 15 companies a spot under the one of the unrestricted portions of its EAGLE II IT services multiple-award contract. GAO has until March 19 to decide on the protests.

Ralph White, GAO's managing associate general counsel, said it's too early to determine any trends for why the companies filed protests. He said, however, all of the losing bidders have to be protesting DHS' evaluation of their proposal and conclusion as to why they shouldn't get an award.

The government shutdown delayed the debriefings to the unsuccessful bidders. DHS said it sent out "comprehensive written debriefings" on Nov. 29 to all those unsuccessful bidders who requested it. "Each debriefing included a detailed summary of the evaluation of the offeror's proposal, responses to the offeror's questions and the rationale for why the offeror was or was not selected for award. Additionally, DHS has a procurement ombudsman and industry liaison within the DHS Office of the Chief Procurement Officer with an open door policy to meet with industry."

One vendor source who received one of those debriefs said DHS' email was less than comprehensive. The source, who requested anonymity because their company still hoped to win work with the agency, said the debriefs didn't provide any details of the company's weaknesses. Instead, it just focused on the strengths. "I think DHS' goal was not to highlight any problems so you can't protest the perceived weaknesses," the source said. "This isn't done a lot. I think the old Immigration and Naturalization Service did it years ago for an IT services contract."

DHS calculated the total price based on labor rates submitted by each vendor multiplied by the applicable evaluation hours over all seven years for both work at the contractor site and work at the government site. DHS also added the costs for materials, subcontracts and other direct costs, including travel, for all seven years to get the total price of the bid.

DHS pushed back against the idea that it was only after lowest price. "Proposals were evaluated on the following non-price factors in descending order of importance: corporate experience, past performance, program management, staffing, and small business participation approach (for other than small businesses). Past performance was the second most important non-price evaluation factor after corporate experience," said DHS Chief Procurement Officer Nick Nayak.

"DHS conducted a comprehensive evaluation of past performance, including the receipt and evaluation of questionnaires from offerors' references. The combination of these non-price factors was considered significantly more important than price; however, under all best value awards, price is a key consideration in assessing the value to the government and the taxpayer."

In all, DHS evaluated 639 proposals, comprised of more than 20,000 pages of technical documents and past performance questionnaires and 2 million labor and indirect rates, across all nine distinct EAGLE II solicitations over the last 31 months. Nayak said it cost DHS an estimated $9.26 million to prepare for and execute EAGLE II. He said the agency expects to save more than $240 million through the use of the contract over seven years.

Past performance as responsiveness issue

In many of the posts on this blog, I have referred to past performance as a measure of prospective contractor responsibility. It may at times be the case that past performance is a measure of responsiveness. Almost always, that should be when the subject of the test of past performance is the thing solicited (including when the "thing" is a particular service, such a one in which a particular license or other certificate of qualification is necessary), not the bidder or offeror. This article is one such example. It involves the solicitation of a light, armed aircraft, to be purchased by the US Air Force for an allied country's services. One bidder is from a state, Kansas, that offers a full court press of its "Hill" representatives. The other is to be produced in a state, Florida, but is based on the design and license of Brazil, a US ally. The standard to be selected here is "best value", not lowest cost.

As always, read the story at the link for the full enchilada. This rendition is just an appetizer.

Beechcraft Protests Light Air Support Award; Kansas Lawmakers On Warpath

Depending on how you count, this marks the second or third time the military has tried to buy Super Tucanos (from Florida) only to run afoul of Beechcraft and its backers (from Kansas).

The Air Force announced that Sierra Nevada would provide 20 aircraft plus spare parts, training, and other support for $427 million. Beechcraft's bid for its AT-6 Texan II was about 30 percent less, $297 million. Beechcraft and the AT-6 scored "excellent" in five of five criteria for "mission capability," criteria ranging from the technical performance of the aircraft to the kind of training programs the company could provide. The Super Tucano only got "excellent" on four of five.

But that's only part of the story and of the scoring system. It's entirely possible for Beechcraft to get more "excellent" marks and still lose overall.

the AT-6 aircraft is still in prototype: While Beechcraft has built thousands of T-6 trainers for the US and its allies, the specific variant on offer -- the armed ground-attack version, the AT-6 -- is significantly different and not entirely proven. Competitor Sierra Nevada is hardly risk-free either, because their Florida factory has yet to build a single aircraft, but they would be making the exact same plane already mass-produced in Brazil and in service with nine nations. So there are both business and technological reasons the Air Force might have rated the Beechcraft AT-6 as higher risk.

In fact, alongside "mission capability" and price, the Air Force applies a whole third set of criteria, "past performance." The Super Tucano boasts an extensive track record of service in countries from Colombia, where it's seen combat against drug traffickers, to Mauritania. The basic T-6 has an even longer track record as the standard trainer for both the US Air Force and Navy, but only two prototypes of the specific AT-6 combat variant even exist.

If the US were choosing an aircraft for itself, the AT-6 would be a slam dunk, because it's the big brother of something the American military knows and loves. But these planes are being bought on behalf of the fledging Afghan air force, and Afghanistan's capabilities are a lot more like Mauritania's than America's. So the Super Tucano's "past performance" track record looks both stronger and more relevant than the AT-6's.

Beechcraft backers argue that the administration is tilting the scales to appease Brazil, noting that Deputy Secretary of Defense Ash Carter called Brazil's defense minister to offer his congratulations within hours of the 2012 award. Beechcraft mobilized a massive "buy American" campaign in favor of its aircraft, even though Sierra Nevada insists it would build its Brazilian-designed airplane in its (yet to be completed) Florida factory.

So the Light Air Support contract has been a rolling, multi-year disaster, a microcosm of everything that's wrong with the military acquisitions system: meddling by politicians, incompetence by bureaucrats, and legal wrangling by the contractors. (Sierra Nevada filed suit itself at one point). Meanwhile US troops and their Afghan allies are without a lightweight, low-altitude air support plane that commanders first said was necessary in August 2009.

Hawaii proposes legislation to consider past performance of bidder

This is the link to the article that is the subject of this post, followed by excerpts. As usual, read the whole article to learn more: Bill to Change Building Code Moves Ahead

HB 1374, introduced by House Finance Committee Vice Chairman Aaron Ling Johansen, R-Moanalua, would add a mechanism to the procurement code to consider whether a company previously completed projects that had significant delays or cost overruns.

“The usual principle of awarding contracts to the lowest bidder may lead to substandard work, because contractors may artificially lower bids to gain a contract, in spite of a lack of qualifications or worse a record of poor performance in the past,” the bill’s introductory language said.

the bill passed through the House Finance Committee unamended with unanimous support.

State procurement code is relatively strict in dictating which factors government officials may or may not consider when it comes to awarding contracts, Corporation Counsel Lincoln Ashida said.

Finance Director Nancy Crawford disagreed that the procurement code prohibits government officials from looking at a company’s past performance, though. She said the county can issue a request for proposals and write broad criteria to include quality measures that the contracting company must meet.

This is interesting to me because, as with Guam, Hawaii is generally speaking a Model Procurement Code state, based on the ABA MPC. The Model Procurement Code requires bids to be issued to the lowest responsive -- and responsible -- bidder. Hawaii deviated in details but not principle from the MPC. The MPC allows responsibility to be determined after bids are opened by before the award is made final, and it cannot be given to a bidder determined not to meet the standards of responsibility.

I am not at all conversant with Hawaii procurement law, but I do note it has this code section, from which I extract this excerpt:

§103D-310 Responsibility of offerors. (a) Unless the policy board, by rules, specifies otherwise, before submitting an offer, a prospective offeror, not less than ten calendar days prior to the day designated for opening offers, shall give written notice of the intention to submit an offer to the procurement officer responsible for that particular procurement.

(b) Whether or not an intention to bid is required, the procurement officer shall determine whether the prospective offeror has the financial ability, resources, skills, capability, and business integrity necessary to perform the work.

Guam follows more closely the ABA MPC. It has also pretty much adopted in original form the MPC regulations. Guam's version already requires that past performance be considered before a bidder passes the standards of responsibility test, not before it even bids. Its regulation is, in excerpted part, as follows:

2 GAR §3116. Responsibility of Bidders and Offerors.
(b)(2) Standards of Responsibility.
  (A). Standards. Factors to be considered in determining whether the standard of responsibility has been met include whether a prospective contractor has:
    (ii) a satisfactory record of performance;
  (B) Information Pertaining to Responsibility. The prospective contractor shall supply information requested by the Procurement Officer concerning the responsibility of such contractor. If such contractor fails to supply the requested information, the Procurement Officer shall base the determination of responsibility upon any available information or may find the prospective contractor nonresponsible if such failure is unreasonable.

 (4) Duty Concerning Responsibility. Before awarding a contract, the Procurement Officer must be satisfied that the prospective contractor is responsible.

I'm reminded of the lament of the authors of the ABA MPC, found in one of the comments to the code that does not immediately come to my mind, to the effect that problems with the implementation of the code is often the result of local tinkering.

Past performance as a measure of responsibility

The UK law firm CMS Cameron McKenna LLP, as previously noted in prior posts, provides a valuable free resource of various legal issues called Law-Now, including procurement issues.  

The article noted below describes the newly adopted scheme in the UK to formalize consideration of bidder past performance in certain government acquisitions.  As always, you are advised to read the source document (at the link); I cut and paste and re-arrange and paraphrase in ways which may not do justice to the source.

Taking Account of a Bidder’s Past Performance  

There has been no consistent approach to considering previous performance in assessing a bidder’s ability to perform a contract.  The government has now published the PPN to ensure that, in certain cases, public bodies will now be required to include minimum standards for reliability based on past performance.  As a result, suppliers will now be required to give more detailed information and should expect that such information will be carefully checked within government.

The PPN applies to Departments, Executive Agencies and Non Departmental Public Bodies (together, “Departmental Bodies”) procuring goods and/or services in respect of information and communications technology, facilities management or business processing outsourcing with a total anticipated value of £20 million or more (excluding VAT).

In order to assess a bidder's past performance, Departmental Bodies should:

· specify the minimum standards relating to past performance and information required in relation to those standards in the OJEU notice.

  · verify information provided by any bidder in relation to past performance by checking with any reasonably available source of information and giving the bidder an opportunity to make representations on any further information obtained.

  · apply the minimum standards for reliability based on past performance to exclude bidders which fail to meet them. 

  · assess whether a bidder continues to meet the minimum standards for reliability at specified subsequent stages in the procurement process, particularly in complex or lengthy procurement processes.

To demonstrate compliance with the minimum standards for reliability based on past performance, bidders are required to provide:

  · a list comprising a statement of the principal goods sold and/or services provided by the bidder in the previous three years.  Bidders (including consortia or group entities) are entitled to satisfy the minimum standards for reliability by reference to the past performance of members of a consortium or other group entities; and 

  · certificates from those to whom the goods and/or services on the list were provided.  If the certificate does not state that the goods and/or services provided satisfactorily, bidders are required to provide information to show that the reason for such failure will not recur in the performance of the contract being procured.  In the event that a certificate cannot be obtained, the supplier may provide a self-certification. 

It should be noted, however, that although the application of minimum standards for reliability is important, it is only one aspect of the overall assessment of the suitability of bidders in any procurement.  The other requirements of technical or professional ability and economic and financial standing should continue to be assessed for all bidders who have met the minimum standards of reliability.

Past performance has long been one factor among others to be considered by US governmental bodies in the determination of bidder or offeror responsibility.  

The ABA Model Procurement Code as adopted on Guam defines responsibility to mean having "the capability in all respects to perform fully the contract requirements and the integrity and reliability which will assure good faith performance".  (5 GCA § 5201(f).)  Guam and Model regulations specifically identify "a satisfactory record of performance" as one of the factors to consider in determining responsibility.  (2 GAR § 3116(b)((2)(A)(ii).)   

Beauty contest or drawing straws?

This article is about the debate over negotiated best value versus lowest price technically acceptable ("multi-step") competitive bidding. The subplot is whether one source selection method necessarily determines a more optimal outcome. If all facts, past, present and future, were known, best value would be a no-brainer, but best value has not insulated government from cost overruns or less than optimal contractor performance.

OFPP lets DOD deal with pricing complexities first

the Office of Federal Procurement Policy looks to DOD's experience for guidance on the balance of price against value in contract awards, [as revealed by] Joe Jordan, OFPP administrator, at a recent breakfast hosted by the Coalition for Government Procurement. “The bottom line is it’s just a tough area, because you’ve got tricky incentives,” Jordan said.

Generally speaking, he said industry likes best-value procurements. They allow companies to propose higher prices, since officials will consider other evaluation criteria beyond price. On the other hand, the government is pushing low price and not always fully analyzing the entire lifecycle of a project, Jordan said. Both sides have good arguments, so the contracting officer's judgment is the final arbiter.

“It’s always a challenge with the overburdened acquisition workforce, but I think we’re at a place where we need to do some more analysis, having some more conversations with industry and agencies, especially the Department of Defense, to figure out exactly where equilibrium lies,” Jordan said.

Industry experts have been increasingly concerned that federal officials have developed a lowest price technically acceptable attitude for their procurements.

Larry Allen, president of Allen Federal Business Partners, said “They [DOD] seem happy with the drive to low price and uninterested in whether it may be misapplied in some circumstances.”

In his speech, Jordan said both the lowest price technically acceptable and the best value procurements have their place. He emphasized that he isn’t choosing one over the other.

“Do both, but do them at the right time,” he said.

Read more at the link to the article above.

The problem is that no one can predict the future. One method gives the procurement officer a warm fuzzy feeling at the time the bid is awarded, in the belief that "best value" has been achieved. The other gives the procurement officer cover from second-guessing score keepers of her career. But either method can, and too often does, yield to buyer's remorse when the winning bidder hits the road.

Buyers like to find comfort in dealing with proven bidders with known track records, thus tend to favor "best value" and its "old boy" network of quantifiable "past performance". But multi-step must also be made only after the responsibility of the bidder is determined, so I tend to suspect that the presumed reliability of "past performance" is a red herring, deflecting the process away from competition from newcomers, erecting unnecessary obstacles to market entry.

It's a case of choosing a winner by beauty contest (best value) or drawing straws (lowest price technically acceptable). Only time will tell which method truly gives the government what it actually seeks at the most optimal cost over the life cycle, through an efficient source selection process.

And there is no "right time" to make that choice before the ultimate facts are known.

Is past performance a guaranty of future profit?

The financial industry is infamous for massaging past profit-making performance to sell new investment products, or often the same old ones, with the implication that profit is a repeatable routine regardless of other changes in the market mix. So much so that they must, in effect, offer the chant "past performance is no guaranty of future success" as a legal spell against misrepresentation charges.

But in procurement, in order to get government contracting work, past performance is often held out as the key. But is it a key to something else, maybe, like the old boys network executive washroom?

When past performance includes failure, even epic failure, shouldn't that be taken as a guaranty of future failure? If so, why are so many failed government contractors still in that game?

WellCare Health Plans pays $137.5 million to settle fraud allegations April 3, 2012

U.S. Attorney for Connecticut announced Tuesday WellCare Health Plans Inc. will pay $137.5 million to the federal government and nine states to resolve four lawsuits alleging violations of the False Claims Act. WellCare, based in Tampa, Fla., provides managed health care services for approximately 2.6 million Medicare and Medicaid beneficiaries nationwide.

The lawsuits alleged a number of schemes to submit false claims to Medicare and various Medicaid programs, including allegations that WellCare falsely inflated the amount it claimed to be spending on medical care in order to avoid returning money to Medicaid and other programs in various states, including the Florida Medicaid and Florida Healthy Kids programs; knowingly retained overpayments it had received from Florida Medicaid for infant care; and falsified data that misrepresented the medical conditions of patients and the treatments they received.

Additionally, it was alleged that WellCare engaged in certain marketing abuses, including the “cherrypicking” of healthy patients in order to avoid future costs; manipulated “grades of service” or other performance metrics regarding its call center; and operated a sham special investigations unit.

The settlement requires that Wellcare pay the United States and nine states – Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Missouri, New York and Ohio – a total of $137.5 million. WellCare may also be required to pay an additional $35 million in the event that the company is sold or experiences a change in control within three years of this agreement.

“Government health plans increasingly rely on managed care organizations to provide patient care. This case illustrates our commitment to ensure that government funds are in fact used to render care and not to line the pockets of those more concerned with the bottom line,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division.

This is the second monetary settlement reached with WellCare since the government initiated a criminal and civil investigation of WellCare in 2006. On May 5, 2009, in order to resolve potential criminal charges related to losses by the Florida Medicaid and Healthy Kids programs, WellCare entered a Deferred Prosecution Agreement (DPA) with the U.S. Attorney in the Middle District of Florida, under which WellCare paid $40 million in restitution and forfeited an additional $40 million. The U.S. Attorney’s office also has pursued criminal charges against several former Wellcare employees. One former WellCare analyst, Gregory West, entered into a plea agreement and pleaded guilty to a conspiracy charge shortly after execution of a search warrant on WellCare’s corporate headquarters in Tampa; he is currently awaiting sentencing. Five former executives – including former CEO Todd Farha, former CFO Paul Behrens and former general counsel Thaddeus Bereday – were indicted in March 2011 and are currently awaiting trial, which is presently scheduled for January 2013. Additionally, Wellcare previously executed a Corporate Integrity Agreement (CIA) with the Office of Inspector General of the U.S. Department of Health and Human Services (HHS-OIG) that imposes compliance obligations on the company for a period of five years.

The resolution of the civil suits announced today brings the total recoveries from WellCare to $217.5 million, a number that will rise to over a quarter billion ($252.5 million) if the contingency payment provision is triggered.

In the article below, it is reported,

"Five former executives — including CEO Todd Farha, CFO Paul Behrens and general counsel Thaddeus Bereday — were indicted in March 2011, and are awaiting trial.

Evidence against them includes taped conversations between executives discussing how they could duplicate their bills to the state. The executives also discussed plans to save money by terminating coverage for neonatal babies and terminally ill patients, and throwing parties to reward employees who ousted expensive enrollees, according to whistle-blower documents.

Fast forward a mere few months since the ink almost dried on the settlement.

Saying it's changed, WellCare wants in on state Medicaid contracts

WellCare's decision to bid, though not unexpected, has sparked an outcry from critics who say they wonder how badly a company must act before it is banned from government contracts — and from serving the state’s most vulnerable residents.

WellCare officials maintain that the company has changed in the two years since it agreed to pay a $137.5 million fraud settlement amid accusations the company bilked the state’s Medicaid and Healthy Kids programs and that it systematically dumped patients with expensive health needs.

“I think we have a highly competent and ethical group now running the company,” said former U.S. Sen. Bob Graham, a paid director on the company’s board and chairman of a committee to ensure the company acts ethically and complies with regulations. “Our service will be our best evidence of our corporate integrity.”

Our service will be our best evidence of corporate integrity? Fool me once...

Let them serve time outside the system a while before deciding performance is evidence of that. That's what the inquiry into responsibility is meant to look at: past performance. For goodness sake, we require doctors to wash their hands, and even cafe cooks, before they return to their next job.

If all a failed contractor has done is rearrange his or her deckchairs, it will sink again. And where you have the same board, the same owners, replacing a few executive operators is simply that.

And the settlement payments? Just the cost of doing business any way it can. Like hiring actors for shills.

The only time the government should give a contractor the benefit of doubt to allow future service covenants to indicate responsibility is when it does not have a past record of poor, or fraudulent, behaviour.

WellCare Settles Massive Healthcare fraud

The settlement allows the company to continue providing services under the Medicare and Medicaid programs.

Like most major health care fraud cases, the WellCare cases were successful because concerned employees and insiders came forward. The allegations against the company not only impacted on taxpayers (Medicare is a federally funded program) but involved patient health and safety as well.

Federal government contracting: how to get in with the in crowd

I'm in with the in crowd
I go where the in crowd goes
I'm in with the in crowd
And I know what the in crowd knows

Anytime of the year
Don't you hear
Dressin' fine, makin' time

We breeze up an down the street
We get respect
From the people we meet
They make way day or night
They know the in crowd is out of sight

We make every minute count, yeah!
Our share is always the biggest amount
Other guys imitate us
But the original's still the greatest

Got our own way a walkin'
We got our own way of talkin', yeah!

Anytime of the year, don't you hear
Spendin' cash, talkin' trash

Girl, I'll show you a real good time
Come on with me and leave your troubles behind
I don't care where you've been
You ain't been no where
'Till you've been in

With the in crowd, yeah!
(Billy Page, sung by Dobie Gray --)
Lyrics from elyrics.net

The following article concerns US federal procurement and the same type of bureaucratic thinking that brought us Catch 22.

How to Overcome Past Performance Issues When You Lack Government Contracting Experience

Past performance in the federal government can be tricky. Like any business, the government requires contractors to have past-performance (or prior government experience). But for business owners new to government contracting, how are they supposed to earn past performance?

According to a report by the Government Accounting Office (GAO), most agencies continue to award contracts to businesses with past performances, making prior experience the second most important selection criteria after price. So how do novice business owners overcome this obstacle?

The author goes on to suggest six different strategies for racking up "past performance" credits. Frankly, it is a conundrum brought on by whack-a-mole mentality, risk avoidance run amuck, the "old boy" network by default if not design. Someone ought to be informed "past performance is no guarantee of success", and look for a way that is more equitable, rational and that expands the pool of vendors.

Anyway, here are his six ideas, and you should read his post to get more detail:

1. Consider relevant commercial experience to boost your proposal

2. Look for micro-purchases or credit card purchases to gain past performance in a timely fashion

3. Obtain subcontracts and acquire experience

4. Team up with a more experienced company to get your foot in the door

5. Look for awarded contracts on www.fbo.com within your specific field and location

6. Research the Small Business Administration website to find out if your business is eligible for any Small Business Certifications, such as the 8(a) and Hub-Zone programs

Transparency usually means public access

FAPIIS Coming Soon to a Computer near You

Now, the public will have access to information on a [US Federal] contractor's past performance, specifically if the government has slapped them with any penalties, including non-responsibility determinations, terminations for default, administrative agreements over suspension or debarment, and criminal and civil proceedings.

FAPIIS (Federal Awardee Performance and Integrity Information System) is the government's recently created "one-stop shop" for contractor performance data, compiling information from the many disparate performance databases scattered throughout the federal government.

Now, the looming question is how long will it take GSA to implement the new law.

Feast Your Eyes on FAPIIS

FAPIIS is off-limits to the public, but POGO obtained some screen shots of the database as it appears on the Central Contractor Registration (CCR) government contracting portal. [Read the article to get imagery and other links.]

This is the part of FAPIIS that was modeled on POGO’s Federal Contractor Misconduct Database. Note that the “Disposition” pull-down menu in FAPIIS only has two options—“Conviction/Finding of Fault” and “Other acknowledgement of fault.” In contrast, ours has 13. What’s more, FAPIIS only covers misconduct in connection with the award or performance of a contract or grant. POGO’s database is far more extensive, covering 17 distinct types of misconduct plus an all-inclusive “Other”

.
The Federal Awardee Performance and Integrity Information System

It is one thing for government officials involved with the award of contracts and grants to be aware of the outcome of normal business disputes (they should be aware of the outcomes that are adverse to the government as well). It is quite another for such information to be recorded and released publicly through a database that characterizes these routine business disputes as ethical violations. Unfortunately, if the pending legislation passes, contractors and grantees can expect that even the most routine civil and administrative disagreements and proceedings will be put under a microscope and potentially highlighted as evidence of ethical misbehavior.

Entities that contract with the government or accept federal grant funds must be attuned to this requirement and the likelihood that the information will become public.

FAR Council Issues Final Rule Unveiling A New Measure Designed To Ensure Only Responsible Contractors Obtain Contract Awards

Currently, before the award of any federal government contract, contracting officers are required to make an “affirmative determination of responsibility.” (FAR 9.103(b)). To make this determination, contracting officers are required to “possess or obtain information sufficient to be satisfied that a prospective contractor currently meets the applicable standards . . . .” (FAR 9.105-1).

Contracting officers, in fulfilling their obligation to make a responsibility determination prior to contract award, will be required to review the FAPIIS data pertaining to the contractor. That information will include: contracting officers’ non-responsibility determinations; default terminations; defective pricing determinations; administrative agreements with suspension and debarment officials; contractor criminal convictions, civil liability, and adverse administrative actions involving a finding of fault and liability in connection with the award or performance of a government contract; and certain settlements in criminal, civil, or administrative proceedings.

FAR 9.104-6 will require contracting officers to review the FAPIIS database, located at http://www.ppirs.gov/fapiis.html, prior to any contract award that exceeds the simplified acquisition threshold. The rule is applicable to commercial item and commercial-off-the-shelf (COTS) procurements, and to contracts awarded to small business concerns.

Under FAR 52.209-7, offerors will be required to report information pertaining to legal proceedings in connection with the award or performance of a federal government contract. Specifically, offerors will be required to report whether within the last five years they or a principal were involved in any proceedings that resulted in: (1) a criminal conviction; (2) a finding of fault and liability in a civil proceeding that results in a payment of greater than $5,000; (3) a finding of fault and liability in an administrative proceeding that results in a fine of greater than $5,000, or reimbursement, restitution, or damages greater than $100,000; and (4) a settlement in a criminal, civil, or administrative proceeding where fault is admitted and a decision on the merits could have led to any of the results above.

If the FAPIIS database contains adverse information, contracting officers will be required to give offerors the opportunity to provide additional information to demonstrate their responsibility before making a non-responsibility determination, unless the contractor already has been suspended or debarred. Consistent with the current protections provided to small business concerns, where the contracting officer determines that such a concern is not responsible, the contracting officer is required to refer the concern to the Small Business Administration, which will decide whether to issue a Certificate of Competency. In addition, FAPIIS will notify contractors whenever the government posts new information to the contractor’s record, and the contractor will have an opportunity to post comments and respond.

That last article, provided by law firm McKenna Long & Aldridge LLP, includes a great deal more helpful information, and you are encouraged to refer to it if this issue is on your radar screen.