Government Contracts: The Peril of Proposing Key Personnel

Jerome Gabig*

According to the Congressional Research Service, in FY 2017, DOD spent 41% of its budget on services. In the competitive market to provide professional services to the government, highly qualified personnel often make the difference whether a proposal is selected for award of a contract or task order. It is generally known that proposing top talent (such as distinguished scientist) without any intend of using that individual is considered fraudulent. Also, practicing what is known as “bait and switch” of key personnel falls short of the Government’s expectation that “contractors must conduct themselves with the highest degree of integrity.” FAR § 3.1002.

However, where a contractor submits a proposal fully intending to use the proposed key personnel but late into the evaluation process learns that a proposed key person is no longer available, there can be a peril that is not fully appreciated by many government contractors. The root of the problem is that exceptionally qualified individuals generally are in high demand. Typically, such individuals are unlikely to remain idle for months waiting for a contract or task order to be awarded. This dynamic of highly qualified individuals pursuing other opportunities can create a dilemma for contractors.

A protest in 2017 to the General Accountability Office (GAO) captures the dilemma that an offeror faces when a proposed key person is no longer available after final proposal revisions have been submitted. The protest involved a Department of Labor (DOL) solicitation to operate its Job Corps center in Los Angeles. The solicitation required the offerors to submit a resume and letter of commitment for the proposed center director. YMCA of Greater Los Angeles was the incumbent. The proposal of Management and Training Corporation (MTC) was selected for award. However, twenty-six days after submission of final proposal revisions, MTC notified DOL that its proposed center director was no longer available; MTC offered another center director. YMCA protested that the switch of proposed directors constituted unequal discussions. The GAO sustained the protest.

Because of the harsh result in the YMCA decision from the perspective of the apparent winner, offerors may be tempted not to disclose that a proposed key person is no longer available. This temptation should be resisted since there are serious consequences to not disclosing. The GAO has made clear that:

Our Office has explained that offerors are obligated to advise agencies of changes in proposed staffing and resources, even after submission of proposals. When the agency is notified of the withdrawal of a key person, it has two options: either evaluate the proposal as submitted, where the proposal would be rejected as technically unacceptable for failing to meet a material requirement, or open discussions to permit the offeror to amend its proposal.

General Revenue Corporation, B-414220.3, March 27, 2017.

According to the GAO, the obligation to disclose the nonavailability of a proposed key person is fundamental to the integrity of the procurement process. FCi Federal, Inc., B-408558.8, August 5, 2015. More recently, a contractor’s failure to notify an agency that a proposed key person was no longer employed by the company was held to be a “misrepresentation” resulting in a rescission of the award. NetCentrics Corporation, B-417285.3, June 5, 2019.

The bottom line is that in responding to solicitations, offerors should perform a risk assessment of each proposed key person as to whether he or she is likely to be available should the proposal be selected for award. Otherwise, despite an exhaustive (and expensive) effort to compete for a lucrative contract or task order, award may be lost because the offeror cannot provide a proposed key person.

* Jerome Gabig has over thirty years of experience practicing federal contract law. He has been the government legal advisor for numerous major systems; a partner is large Washington DC law firm; a member of the Army Science Board; the General Counsel for a government contractor; and the CEO of a technology company. He is an NCMA Fellow the chairman of the Alabama State Bar Contracts Section.