Sehlke Consulting, LLC

DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective Order. This version has been approved for public release.

Decision

Matter of: Sehlke Consulting, LLC

File: B-420538

Date: May 18, 2022

DIGEST

Protest that the awardee’s proposal is unacceptable due to the subsequent unavailability of a proposed key person is sustained when the agency had actual notice prior to completing its evaluation and making its award decision that the individual was resigning from the awardee’s subcontractor and was scheduled to depart prior to the commencement of contract performance.

Sehlke Consulting LLC, of Arlington, Virginia, protests the award of a contract to KPMG LLP, of McLean, Virginia, under request for proposals (RFP) No. NRO000-21-R-0226, which was issued by the Department of Defense, National Reconnaissance Office (NRO), for combined finance support services. The protester asserts that KPMG’s proposal should have been evaluated as technically unacceptable because one of its proposed key personnel became unavailable to perform on the resulting contract prior to the agency completing its evaluation and award decision.

We sustain the protest.

BACKGROUND

The RFP, which was issued in August 2021 and subsequently amended once, sought proposals for combined finance support services within NRO’s Business Plans and Operations Directorate, Office of Finance. Agency Report (AR), Tab 1Y, Conformed RFP, Statement of Work (SOW) at 2.[1] The contractor will be responsible for providing financial support services across a host of financial management areas, including: accounting and finance consulting; accounts payable; audit liaison; auditable financial statement generation; budget execution, tracking, and reconciliation of current, prior, and future year funds; general financial management; internal controls; enterprise funds execution; policy development; posting contractual obligations; property management and accounting; standard general ledger analysis; treasury operations payment and reconciliation functions; and travel processing. Id. The RFP contemplated the award of a cost-plus-award-fee, level-of-effort contract, with a 2-year base period (with performance expected to commence on February 1, 2022), and two, 2-year option periods. AR, Tab 1Z, Conformed RFP, attach. 10, Section L – Instructions, Conditions, and Notices to Offerors at 3.

Award was to be made on a best-value tradeoff basis with non-cost and cost factors to be given equal weight. The non-cost factor included five constituent “items,” which are listed in descending order of importance: (1) management; (2) past performance; (3) organizational conflict of interest; (4) intellectual property; and (5) security. AR, Tab 1CC, Conformed RFP, attach. 11, Section M – Evaluation Factors for Award at 2. The management item was further divided into four factors: (a) key personnel; (b) staffing; (c) management approach; and (d) transition approach. The key personnel factor was slightly more important than the staffing and management approaches factors, which in turn were slightly more important than the transition approach factor. Id. at 3. As addressed herein, only the key personnel factor is material to our resolution of the protest.

The RFP required offerors to provide resumes and letters of commitment for four specific key personnel positions. AR, Tab 1Z, Conformed RFP, attach. 10, Section L – Instructions, Conditions, and Notices to Offerors at 12; Tab 1L, Conformed RFP, Section L – attach. 1, Resume Template for Key Personnel. For each of the four required positions, the RFP included both expected and desired education and experience levels. AR, Tab 1Y, Conformed RFP, SOW at 21-25. One of the four required positions was a senior financial consultant. Id. at 23. NRO was to evaluate offerors’ proposed key personnel in relation to the RFP’s experience and education qualifications requirements and assign the proposals adjectival ratings ranging from unsatisfactory to exceptional for the key personnel factor. AR, Tab 1CC, Conformed RFP, attach. 11, Section M – Evaluation Factors for Award at 3, 5.

NRO received three proposals in response to the RFP, including from Sehlke and KPMG.[2] Sehlke and KPMG received evaluation ratings as follows:

AR, Tab 6, Source Selection Decision at 2 (prices rounded to nearest whole dollar).

The source selection authority found that KPMG’s proposal was the most advantageous across the non-cost criteria, and determined that the advantages of KPMG’s proposal, “specifically KPMG’s exceptional response to [the] most important management factor Key Personnel” warranted the associated cost premium. Thus, the source selection authority found that KPMG’s proposal presented the best value to the government, and selected the KPMG’s proposal for award. Id. at 7. Following a debriefing, this protest followed.

DISCUSSION

Sehlke challenges the agency’s evaluation of KPMG’s proposal under the key personnel factor--the factor the source selection authority found to be the determinative distinguishing factor supporting the selection of KPMG’s higher-priced proposal for award. The protester contends that the agency should have evaluated KPMG’s proposal as technically unacceptable when, prior to completing its evaluation of proposals and making its award decision, KPMG advised the agency that its proposed senior financial consultant had submitted a formal notice of resignation, thus putting the agency on notice that one of KPMG’s proposed key personnel was unavailable to perform the contract as KPMG had proposed. NRO argues that its evaluation of KPMG’s proposed key personnel, in particular, KPMG’s senior financial consultant, was reasonable. Specifically, the agency contends that despite the individual’s pending departure and despite the agency’s knowledge of the pending departure, the individual technically remained an employee of KPMG’s subcontractor on January 25--the date the agency executed the source selection decision. For the reasons that follow, we sustain the protest.[3]

It is a fundamental principal of federal procurement law that an agency’s evaluation of proposals must reflect a reasonable assessment of each offeror’s ability to successfully perform the contract requirements, and that the evaluation and the agency’s source selection decision must be adequately documented. Federal Acquisition Regulation 15.305(a), 15.308; Wyle Labs., Inc., B-408112.2, Dec. 27, 2013, 2014 CPD ¶ 16 at 8. A proposal that fails to conform to a material solicitation requirement is technically unacceptable and cannot form the basis for award. Pioneering Evolution, LLC, B‑412016, B-412016.2, Dec. 8, 2015, 2015 CPD ¶ 385 at 7. Relatedly, we have recognized that it is generally improper for an agency to award a contract or task order with the intent to materially alter it at or shortly after award. Naval Sys., Inc., B‑407090.3, Nov. 20, 2012, 2012 CPD ¶ 326 at 3; Business Computer Apps., Inc., B‑406230.3, May 16, 2012, 2012 CPD ¶ 159 at 3 n.2.

Relevant here, we have explained that when a solicitation requires resumes for--or otherwise requires the identification of--specific personnel, the proposed person forms a material requirement of the solicitation. See also AR, Tab 1X, Conformed RFP at 32 (stating that the four required key personnel “are considered essential for the work to be performed under this contract”). In the event of a change in availability of such staff or resources, the agency may either evaluate the proposal as submitted in light of the change, or hold discussions to allow for proposal revisions.[4] See, e.g., Ashlin Mgmt. Grp., B-419472.3, B‑419472.4, Nov. 4, 2021, 2021 CPD ¶ 357 at 4-5; PAE Applied Techs., LLC, B‑419133, Nov. 4, 2020, 2020 CPD ¶ 363 at 4; M.C. Dean, Inc., B‑418553, B-418553.2, June 15, 2020, 2020 CPD ¶ 206 at 4; Chenega Healthcare Servs., LLC, B‑416158, June 4, 2018, 2018 CPD ¶ 200 at 3-4 n.2.

The material facts here are not in dispute. On September 30, 2021, KPMG submitted a proposal identifying a candidate for the required senior financial consultant position. This candidate was employed by KPMG’s subcontractor and was performing on the incumbent contract. See, e.g., AR, Tab 2C, KPMG Mgmt. Proposal at 5; KPMG Comments, exh. B, Decl. of Subcontractor Manager, ¶ 3. On January 11, 2022, the proposed senior financial consultant notified KPMG’s subcontractor that he was resigning to accept employment with another company. KPMG Comments, exh. B, Decl. of Subcontractor Manager, ¶ 4. On the same date, the individual submitted a letter of resignation to the subcontractor’s human resources department identifying his last day as January 28. Id., ¶ 5.

On January 14, the subcontractor notified KPMG of the individual’s resignation. On or around January 17, the subcontractor and KPMG discussed a potential candidate to replace the previously proposed financial consultant. Id., ¶ 6; see also KPMG Comments, exh. A, Decl. of KPMG Director, ¶ 9 (stating that KPMG provided “advance notice” to the agency of the resignation “to ensure that [the senior financial consultant’s] ongoing, daily responsibilities were transferred to a suitable replacement should he leave [the subcontractor]”). On January 18, KPMG notified the contracting officer’s technical representative (COTR) for the incumbent contract that the financial consultant had resigned and would be departing within two weeks. KPMG Comments, exh. A, Decl. of KPMG Director, ¶ 9; AR, Tab 10, Skype Message from KPMG to COTR (stating that the individual “turned in his two weeks to [KPMG’s subcontractor] on Friday”). The COTR for the incumbent contract is also the proposed COTR for the follow-on contract, and was the chair of the team that evaluated the management proposals here, to include their proposed key personnel. See AR, Tab 1X, Conformed RFP at 12; Tab 3, Management Panel Report, at 1.

On January 24, the Source Selection Evaluation Team completed its evaluation and issued its final evaluation report. AR, Tab 4, Source Selection Eval. Team Report. On January 25, the source selection authority received an award recommendation briefing and executed the source selection decision. AR, Tab 5, Award Recommendation Briefing; Tab 6, Source Selection Decision. On January 27, NRO notified offerors of the agency’s award decision. AR, Tab 7A, Unsuccessful Offer Notice; KPMG Comments, exh. A, Decl. of KPMG Director, ¶ 15. On January 28, KPMG’s proposed senior financial consultant ceased working on the incumbent contract and left the employ of KPMG’s subcontractor. KPMG Comments, exh. A, Decl. of KPMG Director, ¶ 16; id., exh. B, Decl. of Subcontractor Manager, ¶ 10.

Thus, the undisputed facts reflect the following: (1) KPMG’s proposed senior financial consultant submitted a letter of resignation to his employer and provided a firm resignation date predating the RFP’s anticipated February 1 performance commencement date; (2) KPMG notified the government of the individual’s resignation prior to the agency completing its evaluation and award decision; (3) the agency did not consider the impact of the resignation on KPMG’s proposal or conduct discussions; and (4) the individual in fact left the employ of KPMG’s subcontractor prior to the start of the resulting contract’s performance. We find that the agency had actual notice with KPMG’s pre-award notice that one of its proposed key persons had resigned, and therefore would not be available to perform on the contract as KPMG had proposed. With that knowledge, we find that NRO was required either to evaluate the proposal as submitted in light of the change, or to conduct discussions with offerors.

The agency argues that notwithstanding the senior financial consultant’s letter of resignation and the government’s actual notice thereof, which predated the completion of the agency’s evaluation and award decision, the individual was still an employee of KPMG’s subcontractor at the time the agency made its award decision. In this regard, the agency and intervenor contend that the individual in question was technically not “unavailable” when the agency selected KPMG for award on January 25, because the effective date of the resignation was January 28. The parties further assert that because the individual was technically “available” at the time of the source selection decision--but would be unavailable prior to the commencement of performance of the resulting contract--our key personnel line of decisions is inapplicable. In this regard, the agency and intervenor assert that our Office has not previously found that a key person is unavailable when that person had not actually left their employer prior to award. The agency and intervenor additionally argue that it would not be reasonable to consider an employee unavailable before the employee has actually left their employer--what they refer to as “prospective unavailability.” In their view, considering the employee unavailable before the employee’s departure ignores the possibility that the individual could reverse course and elect not to resign.

We disagree with the agency’s apparent view that it could ignore the pending departure of this key person. Based on the facts here, we find that it was unreasonable for the agency to base its evaluation on KPMG’s offer of a senior financial consultant it had no realistic expectation would perform on the contract.

As an initial matter, we reject the argument advanced by the agency and the intervenor that KPMG’s key person could reasonably be viewed as available to perform the contract simply because the individual continued as an employee for two weeks after submission of the letter of resignation. In our view, this argument elevates form over substance and fails to appreciate that our prior decisions (discussed below) turn on whether there was definitive knowledge of the proposed key person’s unavailability to perform the intended contract.

While we recognize that these prior decisions are inherently fact specific, one of the touchstones of these cases is the definitive nature of the key person’s unavailability. For example, in PAE Applied Techs., LLC, supra, we denied a protest challenging an agency’s unacceptability determination when one of the protester’s proposed key persons became unavailable before the agency completed its evaluation and made its award decision. In PAE, the protester was the incumbent contractor, and proposed an individual working on the incumbent contract as a key person for the follow-on effort. That individual tendered a letter of resignation, and the protester notified the government in connection with its incumbent contract of the key person’s unavailability. Notwithstanding the protester’s efforts to negotiate with the departed key person candidate, we found that the agency reasonably concluded that the individual was unavailable after he terminated his employment with the protester’s subcontractor and there was no evidence of any intent to work on the follow-on contract. PAE Applied Techs., LLC, supra at 5-6.

In contrast, in MindPoint Grp., LLC, B-418875.2, B-418875.4, Oct. 8, 2020, 2020 CPD ¶ 309, we found that a proposed key person’s unavailability was not sufficiently definite. In that case, which we characterized as “a close call,” we denied a protest alleging that an offeror failed to notify the government of the apparent unavailability of one of its proposed key persons when the individual in that case notified the awardee prior to award that, due to the delay in awarding the contract at issue, he “would be pursuing another offer.” Id. at 6, 8. We explained that this “statement [was] not sufficiently definite to communicate unequivocally that the proposed key person would be unavailable” and the record did not otherwise reflect that the candidate had rescinded its offer to serve as a key person. Id. at 8.

Here, however, the senior financial consultant unambiguously resigned to take a position with a different firm, thereby making it clear that the individual would not be available to perform as part of the follow-on contract effort.[5] The agency could not reasonably ignore this fact simply because the individual had not yet completed the final two weeks of employment when the agency made its selection decision. The entire purpose of the evaluation and selection process was to discern which contractor offered the best value to the government to perform a contract that was not scheduled to begin until February 1, after the key person was scheduled to leave KPMG’s subcontractor. Thus, the operative date for consideration of the impact of the key person’s departure was February 1 (at the start of contract performance), not the January 25 selection decision date.[6]

KPMG and NRO also argue that the resignation should somehow be interpreted as limited to the incumbent contract, and had no actual bearing on the resulting follow-on effort protested here. This argument attempts to interject ambiguity about the scope of the resignation where none exists. In short, there is nothing to suggest that the individual’s notice of resignation was somehow limited to working on the incumbent contract. The record establishes that the individual was resigning to join another firm. We see no basis to assume, without evidence to the contrary, that despite this individual’s resignation during the course of the incumbent contract, the individual might return a week later to perform the follow-on contract for the same company.

There is also nothing in the record to suggest that the proposed senior financial consultant’s resignation was anything other than unequivocal. Indeed, as addressed above, the resignation was sufficiently definite for KPMG to notify the agency that the individual had resigned and would be departing within two weeks. In addition, although KPMG posits that it “was hopeful that [the senior financial consultant] would stay at [the subcontractor]” based on KPMG’s and its subcontractor’s overtures to the individual, KPMG Comments, exh. A, Decl. of KPMG Director, ¶ 11, KPMG’s own protest submissions suggest no basis for such a hope.[7]

In summary, our decision turns on the uncontested facts demonstrating that the awardee and agency both knew the proposed key individual was unavailable to perform in the key personnel role. Indeed, KPMG found the notice to be sufficiently definite to promptly disclose the anticipated departure to its government customer. At that point, before the agency had completed its evaluation and made its award decision, there was no reasonable basis for proceeding with an evaluation that KPMG would perform the contract as it had proposed. Thus, we find that the agency either needed to (i) evaluate KPMG’s proposal without reliance on this candidate for a required key person position, or (ii) open discussions and solicit revised proposals. Since the agency took neither of these limited options, we sustain the protest.[8]

RECOMMENDATION

We recommend that the agency either evaluate KPMG’s proposal as submitted, without considering the previously proposed and unavailable senior financial consultant, or open discussions with all offerors and allow for revised proposals to be submitted. The agency should then make a new source selection decision based on the reevaluation. We also recommend that the protester be reimbursed the reasonable costs of filing and pursuing its protest, including attorneys’ fees. 4 C.F.R. § 21.8(d)(1). Sehlke should submit its claim for costs, detailing and certifying the time expended and costs incurred, to the contracting agency within 60 days after receipt of this decision. 4 C.F.R. § 21.8(f)(1).

The protest is sustained.

Edda Emmanuelli Perez
General Counsel