GAO Holds that Agency Properly Determined Sister Subsidiary’s Past Performance Evaluation Lacked Credibility In Evaluating Response to Solitication

By: Christine V. Williams on 06/25/2017

Summary: In PacArctic, LLC, B-413914.3; B-413914.4 (May 2017), the GAO upheld that an agency’s  decision to disregard the past performance evaluation of a sister subsidiary when the only information on one of the contracts used for past performance came from a rating done by its sister subsidiary.  As such, the GAO held that the agency reasonably determined that the information in the past performance questionnaire lacked credibility and it was reasonable for the agency not to consider the information as part of its evaluation.   Here is a link to the case:

Background: The Department of Defense issued an 8(a) competitive set-aside solicitation for advisory and assistance services.  The agency issued award to Na Ali’I Consulting and Sales, LLC (Na Ali’l) in the amount of $13 million.  Another offeror, PacArctic, LLC (PacArctic), bid $17 million and received a higher technical rating but a lower past performance rating than Na Ali’l, for the reasons stated above.

Notably, PacArctic is a wholly owned subsidiary of Koniag, Inc., an Alaska Native Regional Corporation.  PacArctic filed a protest challenging the agency’s past performance evaluation, among other issues.  In arriving at its past performance rating of “moderate confidence,” the agency had decided not to consider past performance information on a task order where PacArtic worked as a subcontractor for a sister subsidiary because the exceptional rating lacked credibility.

Commentary:  This is another in a line of cases delineating when a company may and may not use the past performance of its sister subsidiary successfully and in accordance with FAR Subpart 15.  Previous cases have held when an agency may fully exclude past performance of a sister subsidiary, consider only performance tied to specific portions of a contract, when experience comes into play, and when, if not considered, the rating should be neutral instead of negative.