Contractor protests the United States Army Corps of Engineers' decision not to award it the contract for construction of a health care facility at the Port Isabel Service Processing Center in Los Fresno, Texas.

The RFP was issued as a section 8(a) set-aside. It provided for the award of a fixed-price contract to the responsible bona fide 8(a) Offeror Region 6 whose proposal, conforming to the Solicitation, is fair and reasonable, and has been determined to be the most advantageous to the Government, Past Performance, price, and other factors considered

The RFP provided for three phases of evaluation: a proposal compliance review (to ensure that proposals met all pro forma requirements of the RFP), a quality evaluation (to evaluate past performance), and a price evaluation. Past performance and price were of equal importance. The sole purpose of the past performance evaluation was to make an overall risk assessment of the Offeror's ability to perform the work required by the Solicitation. . . . the assessment represents the evaluation team's judgment of the probability of an Offeror successfully accomplishing the work required by the solicitation, based on the Offeror's demonstrated past performance.

For past performance, offerors were required to provide a list of at least five (5), but no more than ten (10), of the most relevant contracts performed for Government or commercial customers within the last 5 years involving construction of a 50-100 bed hospital or large clinic. Relevant contracts were defined as construction projects that would be considered similar in scope and magnitude to this project; vertical construction consisting of buildings with structural steel frame masonry exteriors and low slope single roofs, and within the range of $5,000,000 to $10,000,000.

Only one offeror, the protestor, submitted a proposal. The proposed price of $6,332,078 was approximately $2 million less than the Government estimate of $8,487,198. However, the contractor was not awarded the contract because its past performance was rated as marginal/little confidence. By letter dated September 11, 2002, the agency notified the contractor that award would not be made to it. The letter explained that:

"[Contractor's] past performance information was for projects that were... significantly below the estimated range of $5 to $10 million for the cost of the work as set forth in Sec. 00110, Para. 2.1.1(a), . . . and did not involve medical construction. Based upon the foregoing, the technical evaluation panel determined that there is substantial doubt that your company will successfully perform the required work, and therefore, assessed the overall risk rating of marginal/little confidence. . . . Based on the above, the award of this project will not be made to your company.

On September 25, the contractor filed a protest with GAO, primarily asserting that the rejection of its proposal constituted a de facto non-responsibility determination, which must be referred to the Small Business Administration (SBA) under its certificate of competency (COC) procedures. Thereafter, the agency canceled the RFP because only one proposal was received and it was determined not to have met the technical evaluation factors set out in the RFP.

Under the Small Business Act, agencies may not find a small business non-responsible without referring the matter to the SBA, which has the ultimate authority to determine the responsibility of small businesses under its COC procedures. 15 U.S.C. 637(b)(7) (2000); FAR Subpart 19.6. Past performance traditionally is considered a responsibility factor, that is, a matter relating to the offeror's ability to perform the contract. See FAR 9.104-1(c). Traditional responsibility factors may be used as technical evaluation factors in a negotiated procurement, but only when a comparative evaluation of those areas is to be made. Comparative evaluation in this context means that competing proposals will be rated on a scale, relative to each other, as opposed to a pass/fail basis.

Here, the agency did not, and could not, perform a comparative evaluation (since only one proposal was received, there was nothing to compare it to). The only technical evaluation factor, past performance, was evaluated for the sole purpose of making an assessment of the Offeror's ability to perform. The contractor's proposal was rejected because it allegedly failed to meet the RFP requirements that the offeror have past performance experience in medical construction on projects of 50 to 100 bed hospitals or large clinics valued at between $5 and $10 million. Because of this, past performance was clearly evaluated on a pass/fail basis.

During the course of evaluations, the agency held discussions with the contractor and requested additional information concerning its proposed subcontractors. The "intent of requesting this additional information was to give the [evaluators] more confidence in [the contractor's] ability to construct a 50-100 bed hospital . . . to allow the offeror every opportunity to provide evidence of subcontracting capability." The contractor provided the requested information, as well as additional explanation concerning its experience, but the evaluators still remained doubtful over its ability to successfully perform the contract.

1. Was the agency's rejection of the proposal due to lack of confidence in the offeror's ability to perform proper?

2. When is past performance considered a responsibility factor, instead of a technical factor?

3. Is past performance a reliable indicator of a contractor's ability to perform, from a capacity and technical capability perspective?

4. Based on the facts presented, who do you think GAO sided with and why?