Agency Erred By Failing to Tell Offeror During Discussions That “Neutral” Past Performance Was a Weakness

In December 2017, the Court of Federal Claims ruled in favor of protestor Precision Asset Management Corp. after finding the agency failed to inform Precision that the agency assessed Precision’s “Neutral” past performance rating negatively.

In 2014, Precision submitted its proposal for a Department of Housing and Urban Development property management contract. After the agency awarded the contract to Alpine-First Preston JV II LLC, Precision filed a protest, charging that the agency had acted arbitrarily and capriciously by failing to bring up Precision’s “Neutral/Unknown Confidence” rating for past/present performance during discussions, despite relying on the rating as a weakness in the later award decision. Precision Asset Management Corp. v. United States, No. 16-261C at 15 (Fed. Cl.) (December 13, 2017).

The agency relied heavily on the adjectival rating—“Neutral/Unknown Confidence”—in arguing that it had no obligation to discuss a neutral rating with Precision.

The agency claimed that Precision’s proposal had no significant weaknesses, deficiencies, or adverse performance information because it received a “Neutral” rating.

The full text of the agency’s discussion point related to past performance was, “No adverse past performance information,” reflecting its reliance on the rating itself to leave past performance out of the discussion.

The Court of Federal Claims rejected the agency’s explanation, holding that the significance of the rating in the final decision controls whether it should have been discussed with Precision. In other words, even if the rating itself is “Neutral,” if its significance is not neutral—if it makes a critical difference in the final decision—Precision should have had the opportunity to provide more information following discussion.

The court found that the “Neutral” rating “was of critical importance” in the award, where the decision letter stated that, “I determine that making award to the best overall offeror in terms of past performance outweighs the minimal difference in price . . .” Id. at 15-16.  While the court accepted that a “Neutral” rating may, in fact, have little to no effect on the final decision and therefore need not be discussed with the offeror, “it is clear that the evaluators in this case chose to treat it” as showing an increased risk of unacceptable performance, triggering the agency’s responsibility to bring it up during discussions. Id. at 16.

The decision highlights the importance of a “fact-centered, materiality-based approach” to determine the focus of discussions, rather than a strict adherence to specific adjectival ratings. Id. at 14.

In addition to the improper discussion the court also took issue with the evaluation panel’s misunderstanding that an affiliate of a joint venture partner of Alpine would be closely involved in performance in the contract. To the contrary, the affiliate would have had no direct involvement in performance and should have been treated simply as a factor in Alpine’s past performance.