Solicitation that Required Evaluation of Past Performance under a Binary Acceptable/Unacceptable Approach Did Not Violate the FAR and Did Not Prejudice a Potential Offeror; COFC No. 18-1637C, Advanced Concepts Enterprises, Inc. v. United States

Pre-award protest challenging the NAICS code selected for the procurement and the RFP’s approach to evaluating past performance is denied, where the plaintiff lacked standing because it could not demonstrate it had the technical expertise or financial resources to perform the contract. On the merits, the court held that the agency’s NAICS code designation was rational. The court also denied the challenge to the past performance evaluation scheme, finding that the acceptable/unacceptable approach was not prohibited by the FAR and that adding a neutral rating would not change the outcome of the procurement, because past performance would not be considered as part of the best value tradeoff.

DoD’s Missile Defense Agency issued a solicitation for system design and development activities to integrate new programs into the U.S. Ballistic Missile Defense System. Advanced Concepts Enterprises Inc. filed a protest with SBA’s Office of Hearings and Appeals contesting MDA’s designation of the procurement under NAICS Code 541715 for Research and Development. Instead, ACE argued that NAICS Code 541513 for Computer Facilities Management was more appropriate. OHA, however, denied the protest, finding that MDA’s selection of the Research and Development code was not clearly erroneous.

ACE then filed a protest with the Court of Federal Claims, alleging that OHA’s decision was arbitrary and capricious. Additionally, ACE brought a second count, challenging the RFP’s past performance evaluation criteria. Thereafter, ACE and the government filed cross-motions for judgment on the administrative record.

In its cross-motion, the government contended that ACE lacked standing to maintain the protest because it had not demonstrated that it was qualified to compete for the contract. Specifically, the government argued, ACE’s complaint did not allege that the company had the network design capability required for the procurement. ACE conceded that it lacked the required capability, but the company asserted that it would partner with other contractors to meet the requirement.

The court sided with the government, noting that ACE had provided no detail as to how or with whom it would partner to perform the required design work. Moreover, the court noted, ACE’s largest previous contract was for $13.8 million; the MDA contract was expected to reach $308 million in funding. Thus, in addition to its lack of technical capability, it did not appear that ACE had the financial resources to perform the contract. Accordingly, the court found that ACE was unqualified and lacked standing to bring the protest.

Although ACE lacked standing, the court decided that in the interests of judicial economy, it would still address the merits of ACE’s claims. The court first considered ACE’s claim about the NAICS codes. The court noted that OHA had applied a footnote from NAICS Code 541715 on Research and Development. That footnote states that research and development for “guided missiles and space vehicles includes evaluations and simulation, and other services requiring thorough knowledge of complete missiles and spacecraft.”

After examining the solicitation, the court agreed with OHA that the tasks to be performed met the definition of research and development as set forth in the footnote to NAICS Code 541715. The solicitation required the contractor to respond to results for tests, develop tools, and participate in system design, which—in conformance with the footnote—would require a thorough knowledge of a missile defense system. It was not irrational for OHA to apply the footnote’s definition of research and development and thus not irrational for MDA to have designated the contract under the research and development code.

The court concluded by analyzing ACE’s claim regarding past performance evaluation. The RFP provided that offerors’ past performance would be rated as either acceptable or unacceptable. ACE argued that this evaluation approach was invalid because FAR 15.305(a)(2)(i) requires a comparative analysis of past performance that goes beyond a mere pass/fail scheme—i.e., agencies must conduct a comparative analysis of offerors’ performance histories. The court, however, was unpersuaded. While the FAR requires a “comparative assessment” of past performance, this assessment only requires an agency to “compare” the relevance of an offeror’s past performance to the solicitation’s requirements, not to other offerors’ past performance.

ACE also argued that the RFP’s past performance evaluation scheme violated FAR 15.305(a)(2)(iv), which mandates that offerors without any relevant past performance should not be rated favorably or unfavorably. The RFP provided that offerors without past performance history would receive an acceptable rating. ACE contended that this effectively gave offerors with no relevant past performance, a favorable past performance rating.

But the court found that even if this past performance scheme violated the FAR, ACE could not establish that had been prejudiced by the error. ACE proposed that instead of an acceptable rating, an offeror without past performance experience should be rated neutral. The solicitation, however, did not include past performance in the tradeoff analysis. Thus, even if some offeror received a neutral rating under ACE’s approach, it would not affect the best value tradeoff; that offeror would still have the same chance to receive award as an offeror with an acceptable past performance rating. In other words, adopting ACE’s approach would not change the outcome. To show prejudice, ACE needed to also challenge MDA’s failure to include past performance in the tradeoff analysis.

The court granted the government’s motion for judgment on the administrative record, denied ACE’s cross-motion, and denied ACE’s request for injunctive relief.

ACE is represented by Robert John Wagman, Jr., Laura Prebeck Hang, and Joshua M. Freda. The government is represented by Amanda L. Tantum, Joseph H. Hunt, Robert E. Kirschman, Jr., and Martin F. Hockey, Jr. of the U.S. Department of Justice as well as Brian Chapuran of the Missile Defense Agency.