Matter of:T. Head and Company, Inc.

B-275783 Mar 27, 1997 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights Was proper where unacceptable rating was consistent with comparative evaluation scheme set forth in RFP and did not result from pass/fail evaluation. There were three corporate experience/past performance subfactors: (1) "performance history-how well offeror has performed on previous contracts. Proposals were to be rated exceptional. Nine proposals were received. THI's offered price was low and. The past performance rating was based on past performance surveys for four of THI's past contracts. THI's proposal would have been ranked third. Sec. 287 (1994) (the False Claims Act) [2] and was subject to a $256. THI was found guilty of inflating time records and labor costs under an Environmental Protection Agency (EPA) contract. View Decision Matter of: T. Head and Company, Inc. File: B-275783 Date: March 27, 1997 * Redacted Decision DIGEST Attorneys DECISION T. Head and Company, Inc. (THI), a small business, protests the rejection of its proposal as technically unacceptable under Department of State (DOS) request for proposals (RFP) No. S-OPRAQ-96-R-0600. The solicitation sought proposals to provide mail processing and handling services for DOS's Diplomatic Pouch and Mail Division. We deny the protest. The RFP, issued as a total small business set-aside, sought proposals on a fixed-price basis, with some indefinite quantity line items. [1] It provided for award on a best value basis, with price equal in weight to the two technical factors, technical approach and corporate experience/past performance. There were three corporate experience/past performance subfactors: (1) "performance history-how well offeror has performed on previous contracts," (2) "cost management-whether offeror has provided quality services at reasonable prices," and (3) "termination history-whether offeror has had previous contracts terminated for default or otherwise terminated due to customer dissatisfaction." Proposals were to be rated exceptional, acceptable, marginal, or unacceptable. Nine proposals were received. THI's offered price was low and, initially, the agency evaluated THI's proposal as exceptional under the technical factor and acceptable under past performance. The past performance rating was based on past performance surveys for four of THI's past contracts, including DOS contract No. 1026-950172 for mail and messenger services, performed from March 1, 1989 to August 31, 1994. Based on this initial evaluation, THI's proposal would have been ranked third. However, the agency subsequently received an offset notice from the Department of Justice (DOJ) requesting that DOS liabilities to THI under the DOS contract be paid to DOJ to offset a civil judgment and criminal fine against the firm. In this regard, DOJ advised DOS that THI had been convicted of 39 counts of false claims under 18 U.S.C. Sec. 287 (1994) (the False Claims Act) [2] and was subject to a $256,546.56 civil judgment (entered October 3, 1995 in favor of the United States) and a $9,750 criminal fine/special assessment (imposed April 19, 1996). Specifically, THI was found guilty of inflating time records and labor costs under an Environmental Protection Agency (EPA) contract. In light of this information, the contracting officer requested a reevaluation of THI's past performance, including a resurvey of THI's performance under the DOS contract and a Dun & Bradstreet supplier evaluation. Based on the reevaluation, the evaluators determined that THI's past performance was unacceptable; under the performance history subfactor, they noted that THI's actions under the EPA contract reflect a history of "mismanagement of contract administration requirements"; under the cost management subfactor, they noted the false claims under the EPA contract and the Dun & Bradstreet supplier evaluation rating of high risk; [3] and under the termination history subfactor, they noted that THI's DOS contract for courier messenger services "is in dispute for cost/inconsistencies." In this last regard, the cognizant DOS contract specialist noted that "[f]inal invoice payments were rejected due to insufficient obligations because of cost overruns," and that certain disputed contract costs were the subject of an audit report. [4] The contracting officer concluded that THI's past performance was unacceptable, and that this warranted excluding the firm's proposal from the competitive range. THI asserts that the rejection of its proposal based on unacceptable past performance was improper because this determination amounted to a finding that THI was not a responsible prospective contractor, and the matter thus had to be referred to the Small Business Administration (SBA) for review under the certificate of competency procedures. This argument is without merit. THI is correct that the Small Business Act, 15 U.S.C. Sec.