Q.  We are a subsidiary of a large company and believe extensive referencing of our parent’s resources will help us win a contract we are pursuing.  Our parent company is quite willing (even anxious) to participate in the contract but refuses to sign anything that would commit itself to the government.  Can we still reference the resources or should we not discuss them since our parent refuses to formally commit itself?

A.  Discussing how your parent’s resources will enhance contract performance provides a powerful competitive advantage and we have seen many subsidiaries win contracts largely based on their parent’s competencies.  An agency does have the discretion to ask for a formal agreement from a parent but, in our experience, such a request is quite rare.  An agency is pleased to see considerable resources used to help make a procurement successful and understands that it is usually in both the subsidiary and parent’s interest to help meet the objectives of the contract without having to unnecessarily complicate the procurement with formal agreements and other such red tape.

We have been reading a discussion of a relevant case in an article written by Professor John Cibinic in The Nash & Cibinic Report.  A subsidiary of Hallmark (Ensemble) extensively referenced Hallmark’s technical, manufacturing, systems and financial strengths in a successful competition.  A bidder protesting the award stated the agency should have obtained a formal written notice from Hallmark that would back up its commitments to help Ensemble perform the contract.  The court rejected the protest stating it is quite proper for an agency to consider a parent’s resources in performing the contract with or without a formal agreement and furthermore, it is rational for an agency to risk that a parent will not help perform.  The Court cited with approval numerous cases where agencies were found to have properly used parents’ resources in evaluating the capability of subsidiaries without requiring formal agreements.  This green light to consider parent resources without agreements indicates agencies will be unlikely to ask or expect an agreement from the parent.

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