Consequences for Large Primes Not Hitting Subcontracting Plan Goals

April 13, 2015

By Kathryn V. Flood

The U.S. Government Accountability Office (“GAO”) recently ruled that the Defense Logistics Agency (“DLA”) properly excluded a large business prime contractor’s proposal from the competitive range based in part on the contractor’s consistent failure to meet its small business subcontracting goals on previous contracts.

In Graybar, B-410886 (Mar. 4, 2015), the large business prime contractor, Graybar, protested DLA’s exclusion of Graybar’s proposal from the competitive range. Specifically, Graybar challenged DLA’s assignment of deficiencies under the past performance factor, for Graybar’s failure to provide required information regarding its socioeconomic subcontracting goals and its actual performance in meeting its subcontracting plan goals on the contracts referenced in its past performance proposal. Graybar’s proposal did not include required information regarding its socioeconomic subcontracting goals and performance.

As a result of Graybar’s failure to provide this required information, DLA’s evaluators assigned Graybar’s proposal two deficiencies. GAO held that even though the evaluators found this information through other references such as through CPAR reports, they should not have had to look beyond the content of Graybar’s proposal.  Additionally, for the CPAR reports, the evaluators found that Graybar had consistently failed to meet certain small business and socioeconomic subcontracting goals.

Based on its review of Graybar’s CPAR reports, DLA assigned Graybar a “Satisfactory Confidence” for its past performance, and ended up eliminating Graybar from the competition because it was not one of the highest ranked proposals, in spite of its “Outstanding” rating under the socioeconomic technical subfactor.

Graybar’s protest alleged that DLA improperly evaluated Graybar under the past performance factor. In denying the protest, GAO noted that the evaluators had found “a consistent failure to meet certain small business and socioeconomic contracting goals.” Additionally, GAO found that Graybar had pointed to nothing in the CPAR data regarding socioeconomic subcontracting that warranted a higher past performance rating than satisfactory confidence.

In finding that DLA properly considered Graybar’s actual performance under its subcontracting plan goals on prior contracts, GAO’s decision provides some teeth to agencies seeking to police large business prime contractors’ compliance with their small business socioeconomic subcontracting goals.  Here, even though Graybar had apparently proposed a robust and fully-compliant small business socioeconomic  subcontracting plan for this particular procurement (earning it the “Outstanding” rating under the socioeconomic technical subfactor), under the terms of the solicitation Graybar’s failure to deliver its stated goals on other contracts permissibly swayed the agency’s evaluation of Graybar’s past performance.

The Graybar decision allows agencies to review not only whether large business prime contractors can talk the talk, but also if they can walk the walk in their small business subcontracting promises.  

Join Jon Williams Katie Flood for a webinar on Subcontracting Plan Compliance at 2 p.m. April 21.  Click here for more details.

About the Author: 
Katie Flood is an associate with PilieroMazza in the Government Contracts Group. She may be reached at kflood@pilieromazza.com.

 

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