Is “Neutral” Neutral?
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
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
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
3Substantial 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.
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.
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.