Imagine a scenario in which a solicitation, calling in part for certain vehicle storage by bidders, requires that “[t]he contractor shall provide evidence that it has complied with all laws and ordinances associated with vehicle storage. Applicable permits shall be kept current throughout the terms of the contract.” Imagine then that a bidder does not demonstrate in its proposal that its intended vehicle storage facility has the necessary permits and is in compliance with state law and local ordinances regarding vehicle storage. Nevertheless, the Government awards the contract to that bidder after failing to consider whether the bidder has suitable property to satisfy the vehicle storage requirement of the solicitation. This seems like a clear instance of error by the government justifying a protest, right? This very scenario was recently addressed by the U.S. Court of Federal Claims (“COFC”) in Vintage Autoworks, Inc. v. United States, a decision that should remind bidders/protestors to pay careful attention to the difference between responsibility criteria and contract performance requirements (also known as “matters of contract administration”). While the failure to demonstrate compliance with a responsibility criteria is protestable (with some limitations), the failure to demonstrate compliance with a contract performance requirements is a matter of contract administration and is not protestable.
Spotting the Difference
How can you tell the difference between a responsibility criteria and a performance requirement? Responsibility criteria are those criteria that require the bidder to demonstrate, prior to award, its capability to perform the contract requirements. This does not necessarily mean that a bidder needs to have achieved contractual performance requirements at this point, it just means that a bidder must have the capability of doing so. As the COFC has explained:
While a responsibility determination is made at the time of contract award, it is not necessary that a bidder have all licenses and authorizations required to perform the contract work at that time. It is sufficient if the licenses can be secured prior to contract performance.
Failure to meet responsibility criteria may be protested, as it relates to the legitimacy of the Government’s award.
While contract performance requirements can sound very similar, the big difference is that the solicitation does not require the bidder to demonstrate compliance with the requirement prior to award. Compliance with a performance requirement is a matter of contract administration, and, with a very limited exception, is not protestable. As GAO has explained:
In the absence of a solicitation requirement that offerors provide proof of qualifications or certifications prior to award, such requirements contained in a solicitation’s SOW constitute performance provisions rather than preconditions for award. … Whether an offeror complies with such qualification and certification requirements is a matter of contract administration, which we do not review as part of our bid protest function.
In many cases, responsibility criteria may be easier to satisfy than actual contract performance requirements. For example, looking at the Vintage Autoworks scenario outlined above, it is conceivable that the Government could find the bidder responsible so long as the bidder has a viable path to meeting all contract performance requirements contained in the Statement of Work. That is, in fact, what the COFC found in Vintage Autoworks. This does not mean that the bidder would need property zoned for vehicle storage, as well as all requisite permits, at the time of its bid; it simply means that the bidder would need to be capable of acquire both property zoned for vehicle storage and the required permits in such a time as would allow the bidder to perform the contract.
In the Vintage Autoworks procurement, the Government could have required the bidders to submit proof of existing licenses or permits alongside its proposal. If such a requirement had existed, having the existing licenses and permits at the time of bid, necessary for contract performance, would have been a responsibility criteria. However, because the Government did not require bidders submit proof of existing licenses or permits alongside its proposal, whether or not the awardee would obtain the necessary licenses and permits to perform the project was a matter of contract administration (a performance requirement), not a matter of responsibility. Therefore, it could not be protested.
Exceptions to the Rule
Lastly, it’s important to understand that there are some exceptions to the above discussed rule.
By regulation, GAO will not consider most protests of affirmative determinations of responsibility. Pursuant to 4 C.F.R. 21.5(c), “GAO will generally not consider a protest challenging [an affirmative determinations of responsibility]. The exceptions are protests that allege that definitive responsibility criteria in the solicitation were not met and those that identify evidence raising serious concerns that, in reaching a particular responsibility determination, the contracting officer unreasonably failed to consider available relevant information or otherwise violated statute or regulation.” The COFC has a less defined standard (as is evident from the Vintage Autoworks case), and will generally consider protests of affirmative demonstrations of responsibility based on a “violation of a statute or regulation, or alternatively, if the agency determination lacked a rational basis.”
Finally, there is one very limited circumstance where a protest challenging a offeror’s compliance with a contract performance requirement will be considered. Both GAO and the COFC agree that where a proposal, on its face, should lead an agency to the conclusion that an offeror could not and would not comply with a contract performance requirement, the matter changes from contract administration to proposal acceptability. As a result, a protest on this basis will be considered.