Elimination of Proponent Due to Post-award Resignation of Key Personnel

Elimination of Proponent Due to Post-award Resignation of Key Personnel

Was Arbitrary and Capricious The U.S. Court of Federal Claims held that a federal agency’s elimination of a proponent due to a key personnel’s plan to resign­—after the contract was awarded to the proponent—was arbitrary, capricious, and contrary to law.

In the procurement at issue, the National Reconnaissance Office awarded KPMG a contract for financial services. The day after the award was notified, one of KPMG’s key personnel informed KPMG’s subcontractor that he planned on resigning. Shortly thereafter, he joined Deloitte, the runner-up offeror.

Another offeror filed a bid protest before the GAO. The GAO sustained the protest, concluding that it was unreasonable for the agency to award the contract to KPMG if it knew that one of the key personnel would not be available to perform the contract. Based on the GAO’s decision and resulting recommendations, the agency re-evaluated the proposals, eliminated KPMG and awarded the contract to Deloitte.

KPMG then filed a complaint before the COFC seeking injunctive relief. The court ruled in favor of KPMG, finding that the agency’s determination to follow the GAO’s recommendation was arbitrary and capricious. The court reasoned that the key personnel’s unavailability was not as definitive as the GAO assumed, since KPMG was attempting to convince the key personnel to stay.

The court also noted that it has previously taken the position that key personnel only become unavailable once they actually depart their employer or join another employer.

Additionally, the court noted that KPMG did not have the obligation to inform the agency that the key personnel announced his plan to resign. As a result, for the court, the GAO’s recommendation would penalize KPMG for demonstrating good and prudent behavior: namely, voluntarily informing the agency about a possible future staffing issue and proposing a solution to help further the efficient administration of the contract.