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What happens when a key person for a contractor resigns while a procurement is still pending? A recent protest decision by the Government Accountability Office, Ashlin Management Group, B-419472.3, Nov. 4, 2021, 2021 CPD ¶ 357, addresses this question. The GAO was asked to consider whether the Department of Labor should have evaluated a prospective contractor’s quotation as technically acceptable and awarded it a task order notwithstanding the known unavailability of one of the awardee’s key personnel during the source selection process. In sustaining this protest, the GAO discussed the offeror’s obligation to disclose to the government its employee’s departure and how the agency should have modified its evaluation of the quotations to account for this new development.

Solicitation

On September 9, 2020, the agency issued a solicitation to federal supply schedule contract holders. The solicitation sought quotations for a vendor to assist the National Office of Job Corps in identifying, developing, and implementing career pathway programming.

The solicitation contemplated issuance of a time-and-materials order for a one-year base period and four one-year option periods. It established that award would be made on a best-value tradeoff basis considering price and the following non-price factors: (1) technical approach; (2) key personnel, staff experience and qualifications; (3) management plan; and (4) past performance. The non-price factors were listed in descending order of importance, and combined were significantly more important than price. Under the second most important factor (key personnel), the solicitation required vendors to describe their “processes for recruiting, retaining, and providing highly skilled qualified personnel,” and advised that the agency would evaluate “the effectiveness” of a vendor’s “proposed plan.”

Award and Protest

In December 2020, the agency selected for award a quotation submitted by Booz Allen Hamilton (BAH). Ashlin protested the award to the GAO. In response to the protest, the agency notified the GAO of its intent to take corrective action, committing to reconsider quotations and make a new award decision. This action resulted in a dismissal of the protest as academic.

Upon reconsideration, the agency reevaluated the BAH quotation along with three other technically acceptable, lower rated and higher priced quotations (including the Ashlin quotation). It concluded that none of these three quotations, had any “unique features… that provided better value based on non-price factors,” and that on the basis of non-price factors alone BAH provided better value. The agency found that BAH’s quotation clearly provided better value when considering both the non-price factors and BAH’s lower price, and again selected BAH’s quotation for award.

Ashlin submitted a supplemental protest of the second award to BAH. In this supplemental protest, it noted that the solicitation established three key personnel positions — project director, project manager, and senior project specialist. The protester contended that the person quoted by BAH to fill the senior project specialist key position resigned from BAH’s employ during the corrective action period. The protester maintained that due to this employee’s resignation, BAH had actual knowledge of the unavailability of one of its key personnel, and was obligated to notify the agency.

Legal Authority

In addressing the effect of the departure of one of the awardee’s key personnel, the GAO explained that vendors are obligated to advise agencies of material changes in proposed staffing, even after submission of proposals or quotations. MindPoint Group, LLC, B-418875.2, B-418875.4, Oct. 8, 2020, 2020 CPD ¶ 309. A contractor may not properly receive award of a contract based on a knowing material misrepresentation in its offer. M.C. Dean, Inc., B-418553, B-418553.2, June 15, 2020, 2020 CPD ¶ 206. An offeror or vendor generally is required to advise an agency when it knows that one or more key employees have become unavailable. Id. The duty to notify does not arise, however, if an offeror or vendor does not have actual knowledge of the employee’s unavailability. DZSP 21, LLC, B-410486.10, Jan. 10, 2018, 2018 CPD ¶ 155.

When an agency is notified of the withdrawal of a key person, it has two options: either evaluate the proposal or quotation as submitted without considering the resume of the unavailable employee (in which case the proposal or quotation would likely be rejected as technically unacceptable for failing to meet a material requirement); or open discussions to permit the offeror or vendor to amend its proposal or quotation. M.C. Dean, Inc., supra.

Protest Decision

In defense of the supplemental protest, BAH maintained that the departed employee might be rehired. It recited that it had no knowledge that the resigned senior project specialist would reject an offer of rehiring. The agency similarly maintained that just because the senior project specialist was not currently employed by BAH, this did not necessarily Legal Insights: Departure of Winning Bidder’s Key Person During Source Selection Requires Reevaluation of Award Legal Insights mean that the employee would not agree to return to work under the contract.

The GAO found the argument that BAH lacked actual knowledge of its senior project specialist’s unavailability to ring hollow. To the contrary, the facts were that the senior project specialist submitted a letter of resignation and left BAH’s employ the following month, providing BAH with actual knowledge of the employee’s unavailability. Thus, the GAO concluded that prior to completion of the agency’s source selection process, BAH had actual knowledge that one of its quoted key personnel was unavailable.

The GAO decided that BAH had an obligation to inform the agency of the unavailability of this person, which it did not do. Accordingly, the protest was sustained. The GAO recommended that the agency either evaluate BAH’s quotation as submitted, without considering the previously quoted senior project specialist, or open discussions with all vendors, allow for revised quotations to be submitted, and then make a new source selection decision based on the reevaluation.

Lessons to be Learned

In service contracts it is almost always the case that “people are the product.” In such settings, prospective contractors need to be especially aware that (1) the departure of key personnel during the source selection process must be disclosed to the agency, and (2) this disclosure may very well endanger an award of the contract to the disclosing offeror. It follows that offerors ought to be as confident as possible their key personnel are committed to staying on board should a contract award be forthcoming. Unfortunately, such confidence can be elusive as employees commonly do not share their plans to seek greener pastures until their two weeks’ notice is tendered. A back-up strategy may be to build redundancy into proposals that allow for more than one key person to be available to perform each critical task. Another alternative is to be prepared in advance to quickly replace a key employee headed out the door.

If you have any questions regarding this client alert or how a key person's resignation may affect your contract proposals, please contact Ross Crown at rcrown@lewisroca.com.