For evaluation purposes in a federal procurement, may an offeror rely upon the past performance and experience of its affiliates? The answer generally is a qualified yes, but the answer and the qualifications may change depending on the terms of each solicitation. If, on the other hand, the question is whether affiliation alone entitles one to cite an affiliate’s past performance or experience, the answer is almost universally no.
The General Rule on Counting an Affiliate’s Past Performance and Experience
Many procurements include past performance as an evaluation factor: whether the offeror has recent history of performing requirements of similar size, scope, and complexity and, if so, how well the offeror performed those requirements. Some procurements include prior experience as an additional or alternative evaluation factor. A prior experience evaluation factor usually considers only whether the offeror has relevant experience, without further considering the quality of that performance. Although related, these two criteria are distinct, and solicitations occasionally provide different rules for which projects may be considered for each.
As a general rule, agencies usually may credit (or fault) an offeror for the past performance or experience of an affiliated company (such as the offeror’s parent, subsidiary, or sister company) if, and only if, the offeror’s proposal makes clear that the affiliate will have a meaningful role in performance of the contract being competed. This is reasonable because, if the affiliate will meaningfully contribute to performance, its past performance and experience may be rational predictors of whether it (together with the offeror) will be successful on the new contract. If, on the other hand, the affiliate will not meaningfully contribute to performance, its past successes and failures are irrelevant to how well the offeror will perform.
The decisional law at the Government Accountability Office (GAO) and the Court of Federal Claims illustrates this rule. In IAP World Services, Inc.; EMCOR Government Services, B-407917.2 et al., July 10, 2013, 2013 CPD ¶ 171, an agency awarded a contract to a joint venture based in part on a favorable past performance and experience evaluation. The record, however, showed the agency credited the joint venture for the past performance and experience of two affiliates of one of the joint venturers, even though the proposal did not propose any role for those two affiliates. The GAO set the agency straight and sustained the protest. The GAO articulated the familiar rule:
An agency properly may attribute the experience or past performance of a parent or affiliated company to an offeror where the firm’s proposal demonstrates that the resources of the parent or affiliate will affect the performance of the offeror. Perini/Jones, Joint Venture, B-285906, Nov. 1, 2000, 2002 CPD ¶ 68 at 4. The relevant consideration is whether the resources of the parent or affiliated company—its workforce, management, facilities or other resources—will be provided or relied upon for contract performance such that the parent or affiliate will have meaningful involvement in contract performance. Ecompex, Inc., B-292865.4 et al., June 18, 2004, 2004 CPD ¶ 149 at 5. While it is appropriate to consider an affiliate’s performance record where the affiliate will be involved in the contract effort or where it shares management with the offeror, it is inappropriate to consider an affiliate’s record where that record does not bear on the likelihood of successful performance by the offeror. National City Bank of Indiana, B-287608.3, Aug. 7, 2002, 2002 CPD ¶ 190 at 10.
Id. at 8–9. The GAO rejected the argument that the offeror met this standard by vague proposal references to corporate “reach back” and the generic possibility that the offeror might possibly draw on the “resources” of corporate subsidiaries. Id. at 10. Under these facts, the GAO found it was unreasonable for the agency to count the past performance and experience of the uninvolved affiliates.
The GAO has reaffirmed this general rule on numerous occasions over the years. See, e.g., Apex Transit Solutions, LLC—Costs, B-418631.8, Aug. 13, 2021, 2021 CPD ¶ 282 (protest was clearly meritorious where agency unreasonably credited awardee with past performance of its affiliates but the awardee’s quotation did not establish those affiliates would perform any aspects of the order); MetroStar Sys., Inc., B-416377.5, B-416377.8, Apr. 2, 2020, 2020 CPD ¶ 135 at 8–9 (“oblique references” to potential performance by non-specific affiliates of non-specific tasks were an insufficient basis for crediting the offeror with its affiliates’ past performance and experience); Alutiiq Pacific, LLC, B–409584, B–409584.2, June 18, 2014, 2014 CPD ¶ 196 at 7–8 (generalized references to the offeror’s “team” are insufficient to assume specific affiliates will have meaningful involvement in the proposed contract effort). The Court of Federal Claims also follows this general rule. See, e.g., Am. Auto Logistics, LP v. United States, 117 Fed. Cl. 137 (2014) (quoting Femme Comp Inc. v. United States, 83 Fed. Cl. 704, 747 (2008)) (“[A]n agency properly may attribute the experience or past performance of a parent or affiliated company to an offeror where the firm’s proposal demonstrates that the resources of the parent or affiliated company will affect the performance of the offeror.”).
On the other hand, unless the procuring agency has a very good reason, a solicitation that flatly prohibits any consideration of the experience or past performance of meaningfully involved affiliates is vulnerable to a pre-award protest. See, e.g., Iyabak Constr., LLC, B-409196, Feb. 6, 2014, 2014 CPD ¶ 62 at 5 (finding absolute prohibition on consideration of affiliate past performance to be unduly restrictive of competition, where agency did not articulate a rational basis for solicitation’s restriction).
Exceptions to the General Rule
There are exceptions to the general rule that affiliate experience and past performance count as long as the proposal specifies how the affiliate will be meaningfully involved in performance.
The first exception is where the terms of the solicitation exclude such consideration. Although Iyabak stands for the proposition that an agency may not exclude affiliate past performance or experience without a reasonable basis, Iyabak was a pre-award solicitation challenge. If a solicitation excludes affiliate past performance or experience outright, and no offeror protests that provision prior to the time set for receipt of proposals, any subsequent objection will be untimely, and the offerors will be stuck with the exclusion. There may be a workaround, however, if the solicitation allows consideration of subcontractor past performance, in which case the offeror often can simply issue the affiliate a subcontract that meets the solicitation’s requirements.
Thus, in KGJJ Engineering Solutions, LLC v. United States, 2022 WL 3270062 (Fed. Cl. July 29, 2022), a solicitation’s prior experience evaluation criterion provided that the agency would “not consider any project submitted for experience that was performed by a firm other than the Offeror,” except for “first-tier small business subcontractors, joint ventures, parent companies, subsidiary companies, predecessor companies, or satellite offices of the offeror.” Under these terms, the agency was not permitted to consider the experience of an offeror’s sister companies (i.e., other subsidiaries of a common parent company), even if the sisters were proposed to have a meaningful role in performance. The court found the agency improperly credited the awardee with the experience of its sisters, and held that the general rule on affiliate experience did not apply under the specific terms of this particular solicitation.
A second exception is where a solicitation imposes additional conditions for the consideration of affiliate experience or past performance. Consider, for example, many of the large governmentwide acquisition contract solicitations such as OASIS, POLARIS, and CIO-SP4. Under these solicitations, procuring agencies have permitted affiliate past performance and experience only if the offeror, in addition to committing to meaningful involvement of the affiliate, also submits a “meaningful relationship commitment letter” for the affiliate. These solicitations typically also prohibit the same affiliate’s projects from being cited in more than one proposal. Thus, if an offeror failed to meet these additional requirements, it would not receive credit for its affiliates’ past performance and experience, even if the offeror met the relatively easier burden imposed by the GAO’s general rule on the matter.
Tips and Takeaways
- Scrutinize each solicitation’s past performance and experience evaluation factors if you want to rely upon the past performance or experience of an affiliate. If a solicitation is unclear or contains objectionable restrictions, consider posing questions or filing a timely pre-award protest.
- Ensure that your proposal clearly describes which affiliate(s) were involved in which past performance reference(s) and the meaningful role the cited affiliate(s) will have in contract performance. The more specific the commitment and identification, the better.
- If a solicitation contains additional conditions on affiliate experience or past performance (such as the submission of commitment letters), ensure that your proposal clearly satisfies those conditions.
- Don’t assume that the rules for the past performance factor are the same as those for the experience factor. These are distinct evaluation criteria, and a reference may be permissible for one factor but prohibited by the other.
- Be aware that an agency has the discretion to consider not only the favorable past performance of your meaningfully involved affiliate, but also that affiliate’s adverse, relevant past performance. Unless a solicitation provides otherwise, an agency generally is free to consider relevant past performance information outside the ones you chose to include in your proposal.
- There are no regulations dictating what weight an agency must attribute to an affiliate’s past performance or experience. Thus, unless a specific solicitation addresses the question, this is left to the procuring agency’s reasonable discretion.