Incumbent Contractor and Filing Bid Protest

Recently, incumbent contractors are finding that they are losing more and more government contracts and subsequent bid protest. They also find it difficult to write more competitive government proposals that increase their filing a GAO bid protest as the incumbent contractorchances of follow-on contracts. As the apparent successful offeror, you should also be mindful of the dreadful affiliation rules about hiring large amounts of incumbent employees.

New Approach Needed

Writing a bid for the new project should capitalize on unique experiences that other proposals may not have. Although you must develop a technical approach to meet the new PWS requirement, incumbent contractors should consider the following above and beyond getting past performance write ups and ratings:

  • Make sure that the PWS does not include any changes when compared to the previous contract;
  • Focus on increasing strengths that exceed the RFP requirements;
  • Do not write your technical approach that primarily relies on your incumbency;
  • Include unique knowledge about the Agency operations and mission; and
  • Make sure to use the government’s historical data for technical and pricing.

Decision to File a Bid Protest

As an incumbent contractor looking to do business with another small business, when you receive notification that you are not awarded the follow-on contract, an attempt to file a bid protest either at the GAO or Court of Federal Claims should be looked at with caution.  You should also be mindful that another company may file an SBA bid protest that challenges the size status with the apparent awardee. When it comes to challenging your technical evaluation, you want avoid the costly mistake of relying solely on your incumbent status. The agency will often try to justify why it awarded the contract to your competition. The best approach is to learn how to counter the agency’s source selection decision by showing how the source selection team neglected your proposal and its contents.

  • Your bid protest cannot primarily rest on the premise that you are the incumbent.
  • You must focus on the Agency’s evaluation and whether the government followed the solicitation criteria. You have to show that it did not.
  • You should not file a GAO protest that attacks your past performance evaluation ratings as being unreasonable simply because you are the incumbent contractor. You have to do more in order to stand a chance of winning.

Bid Protest Cases and Focusing on Incumbent Status

The recent case in the Matter of: New Mexico State University, B-409566 shows how incumbent contractors can lose awards. In that case, NMSU was the longstanding incumbent contractor for the agency’s requirements.

Yet the incumbent lost the follow-on contract in the GAO protest. Federal contracting agencies are advertising RFPs to seek more competition.

  • As an incumbent, you should develop more competitive proposals and realign your bids to meet the government’s overall procurement goals.
  • There are strategies that incumbent contractors can use when filing a bid protest.

In the NMSU case, GAO found that the government is not required to structure acquisitions in order to neutralize the competitive advantage of an incumbent, agencies may nonetheless use an evaluation method that attempts to foster competition by increasing the feasibility of a proposal being submitted by non-incumbent offerors. 

GAO cited Int’l Computaprint Corp., B-207466, Nov. 15, 1982, 82-2 CPD ¶  440 at 3. This was a case where a university was the incumbent contractor and even with a longstanding relationship and good past performance write up, they lost.

SBA Bid Protest and Hiring Incumbent Employees

One of the common problems with follow on small business contracts and incumbent contractors is that the incumbent cannot compete for the contract but then allows the small business awardee to employ its incumbent employees. This can be a dangerous move when the competition files a Small Business Administration SBA bid protest.

The general rule is that a small business should not hire incumber contractor employees in large amounts, or en masse. This can create problems with allegations of violation of SBA affiliation rules.  Also, be mindful of having the awardee hiring management employees of the incumbent contractor.

Incumbent Contractors Must Avoid the Ostensible Subcontractor Rule

When incumbent contractors decide to patter with other small businesses that are the prime contractors, the company must make sure that it is not violating the ostensible subcontractor rule. SHA OHA has explained that “[t]he initial step in an ostensible subcontractor analysis is to determine whether the prime contractor will self-perform the contract’s primary and vital requirements.” Size Appeal of Innovate Int’l Intelligence & Integration, LLC, SBA No. SIZ- 5882, at 6 (2018).

When you are performing under the statement of work, you cannot as the incumbent be found to perform the primary and vital parts of the contract. 

The “primary and vital” requirements are those associated with the principal purpose of the acquisition.  Further,  SBA OHA will attach some weight to the CO’s opinion of the primary and vital contract requirements, although OHA has recognized that “a contract’s primary and vital requirements are ascertained from the solicitation itself, and not from comments by the procuring agency.” See information about the SBA certificate of competency process.

SBA bid protest lawyers often struggle with this brutal rule. However, you can get the issue resolved when you have to defend a size protest.  Note that the law states that ” if the prime contractor and subcontractor will perform the same types of work, “the firm that will perform the majority of the total contract must be deemed to be performing the ‘primary and vital’ contract requirements.” Size Appeal of XOtech, LLC, SBA No. SIZ-5957, at 7 (2018) (quoting Size Appeal of A-P-T Research, Inc., SBA No. SIZ-5798, at 11 (2016)).

What Does This Decision Mean For Incumbent Contractors?

You simply have to do something different when writing your proposals. The bottom line is that as an incumbent contractor, you cannot simply rely on your existing relationship with the federal government to get follow-on contracts. Instead, you should focus on the PWS and solicitation requirements and try to include strengths and unique knowledge about the Agency’s mission, that other bidders may not be aware. Learn additional tips for protesting government contract awards.

  •  If you decide to file a protest, you simply have to show that the government failed to evaluate your proposal in accordance with the solicitation. Everything else will more than likely fail.
  • Be aware that the SBA looks for negative control during SBA bid protest litigation and size standards violation cases.

If you are an incumbent government contractor and need help with filing a GAO or SBA bid protest or seeking better ways to write government proposals, call our COFC, GAO and SBA bid protest lawyers and proposal consultants at 1-866-601-5518.