So You Want to Hire a Former Agency Employee and Propose them as a Key Person. How Can You Do this Without Getting an Unfair Competitive Advantage?

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Contractors often hire former agency employees to get a leg up on the competition. Often a former agency employee will give an offeror an unfair leg up. That’s what the protester alleged in this case where the awardee had hired an agency official and proposed them as a key person. But GAO found that the awardee’s hiring of the former official was not problematic. The individual had been away from the agency for a while. Any competitively useful information had been created after he left, so he had no special insight into the solicitation.

ASRC Federal Systems Solutions, LLC, GAO B-420443, B-420443.2

Background

NASA posted an RFP seeking engineering technical and trade support services. The procurement was set aside for small businesses. NASA received three offers, including proposals from ASRC Federal Systems Solutions and RSi-QuantiTech, JV. NASA awarded the contract to RSi, finding that the company had a superior approach. ASRC protested.

Legal Analysis

  • RSi Didn’t Have Unfair Advantage – ASRC contended that RSi should have been disqualified due to a conflict of interest. RSi hired a former NASA official and proposed that individual as a key person. ASRC claimed that this former official had knowledge of non-public information and direct insight into the procurement. But GAO found that the person proposed by RSi did not have access to competitively useful information. He had not overseen the predecessor contract and did not have access to price information. Moreover, this individual retired from the agency long before any competitively useful information had been created.
  • ASRC Wasn’t Prejudiced by Misleading Discussions – ASRC alleged NASA conducted misleading discussions. GAO agreed, finding that NASA had indicated to the company that concerns with its past performance references had been resolved when in fact the agency still had concerns. GAO, however, determined that ASRC had not been prejudiced by this error. Even if the past performance weakness assessed to ASRC had been removed, ASRC’s competitive standing would not have improved; its past performance rating would have still been lower than RSi’s.
  • RSi Submitted Valid JV Agreement – ASRC argued that RSi had not submitted a valid joint venture agreement approved by the SBA as required by the RFP. GAO found that RSi had submitted a joint venture agreement. It further found that the SBA changed its rules during the competition to no longer require approval of JVs. In light of the rule change rule, GAO opined that requiring such an approval would be absurd.
  • RSi’s Mentor-Protege Agreement Was Acceptable – The RFP required mentor-protege JV’s, like RSi, to submit a copy of their mentor-protege agreement. ASRC alleged that the mentor partner in the RSi JV had undergone a corporate change, and that this change should have been approved by the SBA. GAO rejected this argument, finding that while the ownership of the mentor had changed, there had been no change in the company’s operations.The mentor had notified the SBA of the change and had avowed there would be no changes in the agreement itself. NASA asked about this issue during discussions, and reasonably determined it had been resolved.
  • NASA Didn’t Force ASRC to Adjust Its Price – ASRC complained that NASA misled it through discussions into raising its price. GAO found this was not the case. NASA did not direct ASRC to change its rates. Rather, the company made a decision to do so in response to reasonable concerns that they were too low.

ASRC is represented by Amy L. O’Sullivan, Zachary H. Schroeder, Issac D. Schabes, and Karla V. Perez Chacon of Crowell & Moring LLP. The intervenor RSi-QuantiTech JV, is represented by Carla J. Weiss, David B. Robbins, Noah B. Bleicher, Moshe B. Broder, and Scott E. Whitman of Jenner & Black LLP. The agency is represented by Ian Rotfuss and Jerry L. Seemann of NASA. GAO attorneys Kasia Dourney and Alexander O. Levine participated in the preparation of the decision.

GAO - ASRC Federal System Solutions