For a Long Life, Be Named Key Personnel

For a Long Life, Be Named “Key Personnel”

By Alan Chvotkin
Executive Vice President and Counsel
The Professional Services Council

For services contracts, the government understandably wants to know who will be performing the work they require. They frequently ask for staffing plans to assess the contractors’ understanding of the work to be performed. And they often ask bidders and contract holders to detail the individuals who will work on the contract when the agency designates one or more positions on the contract, such as a program manager or primary researcher, as “key personnel.” For these individuals, the solicitation and contract typically identify specific educational qualifications, work experience and/or technical knowledge.

In the post-award environment, agencies acknowledge that, over the life of the contract, there are likely to be changes in the workers performing in these “key personnel” positions. Contract provisions frequently require that the contractor demonstrate to the agency’s satisfaction that any substitute personnel have the same or better qualifications as the “original” staff, and the agencies reserve the right to approve or disapprove nominated candidates. But at least the performing contractor can fill vacancies that might arise in these “key personnel” positions.

The same flexibility and permission might not be available during the proposal evaluation phase. In fact, one of the important considerations for vendors when responding to key personnel provisions in their offer is to be sure that their nominated candidate will have a long, healthy and happy life working for the offeror! There are several bid protests that uphold the risk of dire consequences for the bidder if that were not the case. When the issue arises because of actions the bidder takes, the consequences may be understandable, as discussed in the first case below. But when the issue arises through no fault of the bidder, as discussed below, the results can be draconian.

In a February 2019 decision by the Court of Federal Claims (CoFC), the court assessed a post-award bid protest on an Army procurement. The procurement required offerors to designate by name certain individuals for “key personnel” positions. It also provided that, post-award, the contractor could substitute its key personnel under certain circumstances. Conley & Associates (Conley) named an individual to one of these key positions in its proposal but, during the government’s proposal evaluation, he was laid off by Conley. However, Conley never informed the Army and, in fact, reaffirmed their original proposal submission following multiple rounds of protests at the Government Accountability Office (GAO). The Army then excluded Conley from the continuing competition because of their “bait and switch” of this position and Conley unsuccessfully challenged the Army’s exclusion at the CoFC.

In a leading 2017 GAO case, General Revenue Corp., GAO sustained a protest because an apparent successful offeror was forced to change its key personnel when an employee voluntarily left the company but the procuring agency was never notified of their departure and no substitute was provided. While GAO did not find any evidence of any material representation, GAO nevertheless reaffirmed its long-standing rule that offerors have an obligation to notify agencies of changes in its proposed staff, particularly regarding identified key personnel, after the submission of proposals. GAO then stated that when an agency is notified of a change in key personnel, it has two options: it could open discussions with the offeror (and with all other offerors) and permit the offeror to amend its proposal, or it could evaluate the proposal as submitted and either reject the offer as non-responsive because it failed to meet a material requirement of the solicitation or it could downgrade the offer because of the risk of performance it introduces.

The Department of Energy took that second path. In a post-award protest filed at the GAO, Chenega Healthcare Services, LLC challenged the Department of Energy’s (DoE) award of a support services contract to Kupono Government Services LLC. As part of the solicitation, DoE required offerors to submit a letter of commitment from the individual who would serve as the general manager for the contract. DoE notified bidders that failure to submit the letter would result in the proposal being eliminated from the competition. DoE said it reserved the right to make an award without discussions. Chenega offered a letter of commitment from its planned general manager. Following its proposal submission but while the agency was still evaluating proposals, the planned employee developed a medical condition that prevented him from fulfilling the position. Chenega notified DoE and offered a letter of commitment from a substitute general manager. However, invoking the provisions of the solicitation, DoE refused to “open discussions” with Chenega (and with the other offerors); DoE then rated Chenega’s technical proposal “unsatisfactory” and the agency made a “best value” award to Kupono. GAO concluded that DoE “was not obligated to enter into discussions with Chenega regarding the proposed substitution.” After losing at GAO, Chenega challenged the award at the Court of Federal Claims but, in January 2019, the Court of Federal Claims refused to reopen the issue. This decision of agencies to not allow for the substitution of these key personnel during the often lengthy proposal evaluation phase arises often.

I propose two easy alternative remedies for both the government and the offerors that still preserves the fairness of the bidding process but guards against irrational results. In either alternative, permitting the substitution of key personnel cannot be used to improve an offeror’s proposal. The first alternative, and by far the easiest, is for the solicitation to provide a mechanism for the post-proposal submission of substitute personnel akin to what is commonly provided for in the post-award environment. Alternatively, the FAR (or GAO decisions) could conclude that an offeror’s substitution of a key personnel during the proposal evaluation phase, when not arising because of the action of the contractor (such as firing the employee), does not constitute “discussions,” thus permitting the substitution.