Two sustained protest decisions released by the U.S. Government Accountability Office (GAO) last week illustrate a risk of relying on affiliated entities to demonstrate qualifications in a proposal for a government contract. Ignoring legal distinctions between related companies is a trap for the unwary that can ruin a proposal's chances for award.
Though the prime offeror need not in every instance hold all necessary qualifications, GAO's decisions 1) reinforce the importance of paying close attention to what the solicitation allows and 2) emphasize that care must be taken to adequately describe the offeror's relationship with any affiliate whose qualifications are relied upon and the affiliate's proposed involvement in performance. As the following cases show, where offerors rely on affiliates' qualifications, clarity is the best policy, and blurred lines create risks.
Enviremedial Services
In Enviremedial Services Inc., B-423552 et al., Aug. 28, 2025, GAO sustained a protest on the basis that the awardee should not have received credit for past performance of its affiliate. The request for proposal (RFP) stated that a project identified for the past performance evaluation would be considered only if the offeror or a team member was awarded the contract as a prime contractor. And even if that solicitation provision was not present, GAO noted there is a general rule that an agency may attribute the past performance of an affiliated company to an offeror only where the firm's proposal demonstrates that the resources of the affiliate will affect the performance of the offeror.
For one of its past performance projects, the awardee cited a contract performed by its affiliate. Even though the awardee's proposal did not explain the relationship between the awardee and the entity who performed this project and did not describe any role that the affiliate would have in performance, the agency found this past performance to be relevant.
When this evaluation was protested, the agency claimed that the affiliate was the offeror's joint venture. But it could cite no evidence of this in the record, and the evaluation contained no explanation of why this past performance was deemed relevant. The record indicated that the agency had simply treated this as a contract performed by the awardee, ignoring the legal distinction between the awardee and its affiliate. GAO held it was improper for the agency to credit the awardee with its affiliate's past performance and sustained the protest.
Island Peer Review Organization
A second decision issued last week dealt with another blurring of affiliates' roles, and it also worked to the offeror's detriment in that case. In Island Peer Review Organization Inc., d/b/a IPRO, B-417297.2, Sept. 12, 2025, GAO sustained a protest challenging the awardee's eligibility for award where the awardee's proposal failed to clearly establish the nature of the relationship between it and various companies that it alternatively identified as joint venture members and as subcontractors.
The RFP required the agency to perform a pass/fail eligibility assessment of offerors based on certain "prequalification criteria." The RFP stated that prime offerors must satisfy the eligibility assessment "on the merits and structure of their own organization" – not through subcontractors. The protester challenged the awardee's eligibility on the basis that, as an organization with no employees (an unpopulated joint venture), the awardee impermissibly relied on subcontractors to satisfy the prequalification criteria.
The agency found the awardee met the prequalification criteria because its proposal asserted that it was a joint venture comprising eight member organizations. But the awardee's proposal elsewhere repeatedly described the member organizations as subcontractors for the performance of this contract. GAO sustained the protest because the agency's evaluation record contained no discussion or analysis of how the agency determined the proposal was compliant on the merits and structure of the awardee's own organization, and the agency made no attempt to reconcile the numerous references to the joint venture members as subcontractors.
Takeaways for Government Contractors
In each of these procurements, the would-be awardee was bitten by either a lack of sufficient clarity in its proposal that might have helped the agency justify its evaluation or, potentially, a proposal approach that was simply misaligned with the solicitation's requirements. These decisions highlight the importance of 1) understanding the solicitation's terms when developing proposal strategy and text, and 2) explaining in the proposal – in a clear, consistent and solicitation-compliant manner – the affiliate's relationship with the offeror and role in performance. A blurring of the lines between the offeror and its related companies can be fatal for a proposal, as can a lack of clarity about their roles.
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