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Is “Neutral” Neutral?

Emptor Cautus

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BLUF: No. Or, just maybe, it depends.

[For those of you who are unfamiliar with BLUF, it stands for “Bottom Line Up Front”. If you’re required to give presentations to high ranking officials on a repetitive basis, you learn their foibles. Some will listen patiently to your entire presentation, no matter how tedious. Others always jump to the Conclusion slide, just so they’ll know what’s coming. For the latter, we would put the conclusion on the first slide after the title slide to save time. But, you can’t really call it the Conclusion at that point, so it becomes BLUF.]

In a previous Blog, I had mentioned that in acquisition we have a tendency to use a number of words and terms not in the Federal Acquisition Regulation (FAR). One such was the term “neutral,” as used in past performance. Let’s explore that term, and its use in source selection evaluations, a little more, beginning with the term itself.

If you look up the term “neutral” in a dictionary, you will commonly see a number of meanings (e.g. non-belligerents in war, arbiters or mediators between parties, pale colors). I looked in a number of dictionaries (i.e., Webster’s New College Dictionary, The American Heritage Dictionary of the English Language, Oxford Dictionary of English, New Oxford American Dictionary, Black’s Law Dictionary). For instance, the third definition in Webster’s New College Dictionary:

belonging to neither extreme in type, kind, etc.; without strongly marked characteristics; indefinite, indifferent, middling, etc.

Interestingly enough, the definitions that were most appealing to me were the electrical and mechanical definitions of neutral, neither positively or negatively charged and gears in a disengaged position.

But, what does that mean for evaluation of past performance in source selections? Here are the five most recent protest decisions of the Comptroller General that discuss “neutral”.

Matter of: PeoplePower LLC

File: B-409396

Date: April 2, 2014

RFQ No. M67001-14-T-0001: If a vendor did not have a record of past performance, or past performance information was not available, the vendor would not be evaluated favorably or unfavorably under the factor; a rating of neutral would be assigned.

Matter of: Ashland Sales & Service Co.

File: B-408010.6; B-408010.7

Date: March 28, 2014

RFP No. SPM1C1-11-R-0132: The ratings for the past performance quality and delivery performance subfactor were exceptional, very good, satisfactory, marginal, unsatisfactory, and neutral.

Matter of: Ma-Chis Kawv V, LLC

File: B-409344

Date: March 20, 2014

RFP No. W912QR-13-R-0037: Offerors were informed that the agency would assess prime contractor experience as very relevant, relevant, somewhat relevant, or not relevant,2 and assess prime contractor past performance as substantial, satisfactory, limited, no confidence, or unknown confidence (neutral).3

3
Substantial confidence reflected a high expectation of successful performance, satisfactory confidence reflected a reasonable expectation of successful performance, limited confidence reflected a low expectation, no confidence reflected no expectation, and unknown confidence reflected a record that was so sparse no meaningful rating could be given. RFP amend. 1, at 8-9.

Matter of: Savvee Consulting, Inc.

File: B-408416.3

Date: March 5, 2014

RFQ No. SAQMMA12R0371: The agency’s technical evaluation panel (TEP) evaluated vendors’ nonprice quotations using an adjectival rating scheme that was set forth in the solicitation: excellent; good; marginal; unacceptable; and with regard to past performance, unknown/ neutral.

Matter of: A&D General Contracting, Inc.

File: B-409296

Date: February 24, 2014

RFP No. W91278-13-R-0046: The RFP provided that an offeror’s past performance would receive one of the following confidence assessment ratings: substantial confidence, satisfactory confidence, limited confidence, no confidence, or unknown confidence (neutral). RFP amend.

Have you been enlightened? Speaking for myself, I wasn’t. Ask yourself this question, “Now that a Neutral Rating has been assigned, how is that rating used when comparing various offerors in the evaluation of past performance?” Without a definition or a method of application, what is a rating of “neutral”? If you are unable to answer those questions, consider following the FAR, which doesn’t use “neutral”.

As discussed in a previous blog, the term neutral appears zero times in the Federal Acquisition Regulation (FAR). The phrasing used in FAR 15.305(a)(2)(iv) is “may not be evaluated favorably or unfavorably on past performance.” The regulatory requirement is derived from 41 U.S.C. 405(j)(2), now 41 U.S.C. § 1126 - Policy regarding consideration of contractor past performance.

41 U.S. Code § 1126 ( b ) Information Not Available.— If there is no information on past contract performance of an offeror or the information on past contract performance is not available, the offeror may not be evaluated favorably or unfavorably on the factor of past contract performance.

The requirement in the United States Code was a result of Section 1091, Policy Regarding Consideration of Contractor Past Performance, of Public Law 103-355, ‘‘Federal Acquisition Streamlining Act of 1994’’. So, where did the term neutral come from? The FAR itself, of course, that is the FAR as it was worded prior to Federal Acquisition Circular (FAC) 97-02, issued on September 30, 1997. The requirement was first written into the FAR at 15.608(a)(2) (iii) as, “Firms lacking relevant past performance history shall receive a neutral evaluation for past performance.”

Over the few short years that the term “neutral” appeared in the FAR, it caused a great deal of confusion, and litigation. The confusion can be seen in both the first and second sets of comments to the FAR Part 15 Rewrite (i.e., Federal Register, Volume 62, May 14, 1997 (62 FR 26639) and Federal Register, Volume 62 September 30, 1997 (62 FR 51226)). Here is the resolution in the latter:

. . . the final rule includes language based on 41 U.S.C. 405(j)(2) providing offerors, without a previous performance history, a rating that neither rewards nor penalizes the offeror. We selected this alternative to allow the facts of the instant acquisition to be used in determining what rating scheme would satisfy requirements of the statute.

What does “may not be evaluated favorably or unfavorably” or “neither rewards nor penalizes the offeror” mean? It would seem to me that the only way to achieve that in a direct comparison between two offerors, is that past performance would not be considered when one of the offerors has a neutral rating. Ignore it. Think about it. If you rank an offeror with the neutral rating lower than one with a good record of past performance on that criterion, you have treated the one with the neutral rating unfavorably by comparison. On the other hand, if you give them the same rating, which I have seen, you may be treating them favorably in comparison to other offerors. Either of these approaches is inconsistent with law and regulation. So, the only solution is to ignore past performance in any head-to-head comparison when one of the offerors does not have a record of relevant past performance or for whom information on past performance is not available. That is the only way to ensure they are not evaluated favorably or unfavorably.

The Comptroller General does not necessarily seem to see it my way. According to the United States Government Accountability Office (Wolf Creek Federal Services, Inc., B-409187,B-409187.2,B-409187.3: February 6, 2014, United States, in footnote 13):

Wolf Creek contends that its lack of relevant past performance was viewed by the SSA to be a significant weakness, because it was one of the discriminators that the SSA noted in his selection decision. Protest at 2, 7. The record shows, however, that Wolf Creek’s neutral past performance rating was not viewed to be a deficiency or a significant weakness. Rather, the SSA recognized, as he was permitted to do, that HMS’s past performance rating of moderate confidence provided benefits beyond Wolf Creek’s neutral rating. See West Coast Unlimited, B-281070.2, Aug. 18, 1999, 99-2 CPD ¶ 40 at 6.

However, if the SSA considered that HMS’ rating of moderate provided benefits wasn’t Wolf Creek treated unfavorably by comparison?

In the case that Wolf Creek cited to defend its case, West Coast Unlimited, the protestor had unsuccessfully argued that to meet the FAR requirement, they should receive the same rating as the successful offeror, to which the Comptroller General responded that would “require the agency to evaluate West Coast's lack of relevant past performance favorably, contrary to the specific language of the regulation, which requires a neutral (sic) evaluation.“ [Note that the Comptroller General’s FAR was not up to date, as the RFP was issued the year after deletion of “neutral,” so the language should have been “may not be evaluated favorably or unfavorably on past performance.”]

The evaluation approach put forth as a solution in West Coast is somewhat different than what I suggest, which has not been addressed by the Comptroller General. For those of you who are concerned about my approach giving an unfair advantage to an offeror with no past performance information, let me suggest, as Mr. McGuire did to Benjamin in The Graduate, “I just want to say one word to you. Just one word.” In this case the word is not “Plastics,” it’s “Experience.” But not today, that is a subject for another Blog.



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Points well taken. Looks like the answer to the title's musical question is "No."

"Neither favorably nor unfavorably," as you pointed out, logically requires throwing out past performance as an evaluation criterion.

This defeats the whole purpose of asking for past performance information as soon as a proposal is received from a vendor who has none.

There is a clear need for clearer thinking expressed in clearer language to balance the Government's interest in properly taking past performance information into consideration and the interest of fairness to new vendors.

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Interestingly enough, the FAR defines neither "Past Performance" nor "Past Performance Information". However, in the discussion of past performance evaluation, under the overall topic of proposal evaluation, FAR 15.305(a)(2) lays out the type of information that can be considered. For instance, FAR 15.305(a)(2)(ii) states, in part:

The solicitation shall describe the approach for evaluating performance, including evaluating offeros with no relevant performance history, and shall provide offerors an opportunity to identify past or current contracts (including Federal, State and local government and private) for efforts similar to the Government requirement.

That coverage, alone, gives fairly broad leeway. However, when combined with FAR 15.305(a)(2)(iii), there is much more:

The evaluation shall take into account past performance information regarding predecessor companies, key personnel who have relevant experience or subcontractos that will perform major or critical aspects of the requirement when such information is relevant to the instant acquisition.

As the old joke goes, "There has to be a pony in there somewhere." But, there is always the potential that an offeror may have no relevant performance history. Presuming that you don't want to buy a pig in a poke, what's to be done? As hinted, at the end of the Blog post, I believe the answer is "Experience," which will be adressed in an upcoming Blog post

By the way, source selection is not the only area where this is a potential concern, it is also relevant to contractor responsibility determinations:

FAR 9.104-1 General standards.

To be determined responsible, a prospective contractor must -

( c ) Have a satisfactory performance record (see 9.104( b ) and Subpart 42.15). A prospective contractor shall not be determined responsible or nonresponsible solely on the basis of a lack of relevant performance history, except as provided in 9.104-2;

FAR 9.104-2 deals with special standards.

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You are correct, of course. A 'neither favorable nor unfavorable' rating is a *relative* weakness in any competition where a competitor has a favorable rating.

Isn't the neutral rating requirement designed to allow firms to break in to new areas of business? If it fails, should it be scrapped entirely?

As an aside, there is a lot of discussion at Federal Computer Week about past performance . . . though not this issue.

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I enjoyed your article, however I disagree with your conclusion and here is why-

You have incorrectly read into the regulation a “comparison” to other offerors standard and the regulation says no such thing.

Wifcon readers may be misled by your article, and arrive at a nonsensical or illogical outcome (past performance must me a wash when comparing an offeror’s proposal who has no relevant past performance) when that is not the case and probably why GAO doesn’t agree.

Rather, the regulation means, in context, that an offeror with no past performance, administratively should not be assigned a weakness or significant weakness when assessing that proposal.

Now, when conducting COMPARISONS or source selection, you are not treating the offeror with no past performance more favorably or less favorably per se, you are treating the offeror who has bonified, relevant and better past performance more favorably, all things equal.

Please be more careful in your analysis as young wifcon readers sometimes take things as "gospel" from their peers without thinking and this instance or your article is not a mere disagreement or matter of interpretation, it's just wrong, for lack of a better term.

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. . .

Now, when conducting COMPARISONS or source selection, you are not treating the offeror with no past performance more favorably or less favorably per se, you are treating the offeror who has bonified, relevant and better past performance more favorably, all things equal.

. . .

Hello, Physiocrat,

I thought that was what Emptor was getting at. The neutral rating is weaker than the favorable rating.

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Not at all, reread - "So, the only solution is to ignore past performance in any head-to-head comparison when one of the offerors does not have a record of relevant past performance or for whom information on past performance is not available. That is the only way to ensure they are not evaluated favorably or unfavorably."

It is nonsensical to ignore an offeror's past performance for reasons I hope I adequately summarized above. If not, let me know.

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I was focusing on his point about how the 'neither favorable nor unfavorable' FAR language doesn't make sense from a practical standpoint (which I read as the main idea of the posting).

I read Emptor's "Ignore it" advice as a tongue-in-cheek, or an inevitable bizarre result the 'neither favorable nor unfavorable' language taken to its logical end. It was the "The Comptroller General does not necessarily seem to see it my way" that brought me to that conclusion, but as always, I could be missing something.

You seem worried that some CO may actually try this. I learned in college that if you can imagine it, then someone is doing it. Somewhere. Right now. So . . . you are absolutely right about that!

He promises a (corporate?) experience follow-up post so this may be clearer in the future.

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I might be mistaken, but it looks like another one-person debate show blog between original poster and commenter(s)? It is very skillfully done and a pleasure to read. It is a great learning technique. However, forensic linguistics could probably track the written text back to its author through the identification of quirks in our original poster/commenter’s style. But why unmask the Pseudonym(s)?

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That is a unique interpretation of the article Aposfaco, as tounge in cheek sort of analysis. The 1st article was not tounge in cheek, just advisory. And if this article was tounge in cheek or an educational lesson, well that should have been stated at the begining. You have provided a unique out for the author but his article defeats the purpose of communication and his inclusion as an "expert" at wifcon.

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To me the Government is disadvantaged by a proposer with no relevant past performance. Why did they write the regulation in such a manner? Just as you would not want to ignore favorable or unfavorable information, why would you ignore the lack of?

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Trust me, my tongue was not in my cheek when I suggested that past performance information be ignored.

Let me provide some background. I was invited to visit the group responsible for the FAR Part 15 Rewrite to discuss the “Neutral” issue, and a number of other comments that I had made in a series of public comments. The group made the change from “neutral” to “may not be evaluated favorably or unfavorably on past performance.” We discussed the ways to achieve that result. I addressed one in my original Blog entry, which appears to have created some consternation. There is another way to achieve the same effect; when comparing two offerors directly, give both offerors the same rating as the offeror with past performance information. (This may also cause some consternation among readers.) Either way, the purpose was to get away from neutral. I admit that my personal preference is for the approach originally presented in the Blog entry.

Recall the language from the Federal Register, Volume 62 September 30, 1997 (62 FR 51226)

“ . . . the final rule includes language based on 41 U.S.C. 405(j)(2) providing offerors, without a previous performance history, a rating that neither rewards nor penalizes the offeror. We selected this alternative to allow the facts of the instant acquisition to be used in determining what rating scheme would satisfy requirements of the statute.”

The latter sentence was to address the two approaches that could adequately address the statutory requirement, and allow the contracting organization to make a choice. Unfortunately, the FAR does not provide the alternatives that had been discussed.

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Apologies to Cautus and Physiocrat- I *was* projecting.

I don't have the guts to try this recommended approach in the event of the receipt of an offer with no past performance information, but I'm interested in the results if someone does.

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