Kate M. Manuel
Legislative Attorney
Poor performance under a federal contract can have immediate consequences for contractors, who could potentially be denied award or incentive fees, required to pay liquidated damages, or terminated for default. In addition, it can affect their ability to obtain future contracts because various provisions of federal law require agencies to evaluate contractors’ “past performance” and consider past performance information when making source selection decisions in negotiated procurements and when determining whether prospective contractors are “responsible.” “Past performance” refers to contractors’ performance on “active and physically completed contracts.” Recent reports alleging that some contractors received new contracts despite allegedly deficient performance under prior or current contracts has prompted interest in the role that evaluations of past performance play in federal contracting, as well as attempts by some members of Congress and the Obama Administration to strengthen existing requirements pertaining to the compilation and use of performance evaluations.
Currently, federal law requires agencies to evaluate and document contractor performance on all contracts whose value exceeds $150,000. The evaluation must address the contractor’s performance vis-à-vis any required subcontracting plan and may address its conformity to contract requirements, adherence to contract schedules, and related factors. The evaluation and any contractor response comprise the past performance information that is stored in government databases (e.g., Past Performance Information Retrieval System (PPIRS), Federal Awardee Performance and Integrity Information System (FAPIIS)) and may be used in future source selection decisions. Agencies must also consider contractors’ past performance when making source selection decisions in negotiated procurements whose value exceeds $150,000. In a negotiated procurement, the contract is awarded to the offeror whose proposal represents the “best value” for the government based on various factors identified in the solicitation. These factors typically must include price and past performance. However, other factors may be considered, and the factors can carry various weights. Additionally, agencies must consider whether the contractor has a satisfactory performance record when determining whether the contractor is sufficiently “responsible” to be awarded a federal contract. Agencies cannot award a federal contract without determining that the contractor is “responsible.” While agencies are generally prohibited from repeatedly finding a contractor nonresponsible based upon the same deficient past performance, they also have authority to debar or suspend contractors for willful failure to perform under a contract or a history of failure to perform.
The 111th Congress enacted or proposed legislation regarding agency evaluations of contractors’ past performance and use of past performance information in source selection decisions (e.g., P.L. 111-23, P.L. 111-83, P.L. 111-212). The Obama Administration has also implemented initiatives that would reward contractors for good performance, including the Navy’s “Preferred Supplier Program.” Under this pilot program, which the Department of Defense (DOD) recently proposed expanding DOD-wide, contracting officers can grant favorable contract terms and conditions to contractors based on good past performance.
Contractors, however, have expressed concern about certain proposed reforms on the grounds that these reforms could result in de facto debarment or otherwise deprive contractors of due process. Contractors’ ability to challenge allegedly erroneous or biased performance evaluations at the time of their issuance is limited, and courts and the Government Accountability Office generally give substantial deference to agency source selection decisions and responsibility determinations.
Date of Report: January 3, 2011
Number of Pages: 26
Order Number: R41562
Price: $29.95
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Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
Legislative Attorney
Poor performance under a federal contract can have immediate consequences for contractors, who could potentially be denied award or incentive fees, required to pay liquidated damages, or terminated for default. In addition, it can affect their ability to obtain future contracts because various provisions of federal law require agencies to evaluate contractors’ “past performance” and consider past performance information when making source selection decisions in negotiated procurements and when determining whether prospective contractors are “responsible.” “Past performance” refers to contractors’ performance on “active and physically completed contracts.” Recent reports alleging that some contractors received new contracts despite allegedly deficient performance under prior or current contracts has prompted interest in the role that evaluations of past performance play in federal contracting, as well as attempts by some members of Congress and the Obama Administration to strengthen existing requirements pertaining to the compilation and use of performance evaluations.
Currently, federal law requires agencies to evaluate and document contractor performance on all contracts whose value exceeds $150,000. The evaluation must address the contractor’s performance vis-à-vis any required subcontracting plan and may address its conformity to contract requirements, adherence to contract schedules, and related factors. The evaluation and any contractor response comprise the past performance information that is stored in government databases (e.g., Past Performance Information Retrieval System (PPIRS), Federal Awardee Performance and Integrity Information System (FAPIIS)) and may be used in future source selection decisions. Agencies must also consider contractors’ past performance when making source selection decisions in negotiated procurements whose value exceeds $150,000. In a negotiated procurement, the contract is awarded to the offeror whose proposal represents the “best value” for the government based on various factors identified in the solicitation. These factors typically must include price and past performance. However, other factors may be considered, and the factors can carry various weights. Additionally, agencies must consider whether the contractor has a satisfactory performance record when determining whether the contractor is sufficiently “responsible” to be awarded a federal contract. Agencies cannot award a federal contract without determining that the contractor is “responsible.” While agencies are generally prohibited from repeatedly finding a contractor nonresponsible based upon the same deficient past performance, they also have authority to debar or suspend contractors for willful failure to perform under a contract or a history of failure to perform.
The 111th Congress enacted or proposed legislation regarding agency evaluations of contractors’ past performance and use of past performance information in source selection decisions (e.g., P.L. 111-23, P.L. 111-83, P.L. 111-212). The Obama Administration has also implemented initiatives that would reward contractors for good performance, including the Navy’s “Preferred Supplier Program.” Under this pilot program, which the Department of Defense (DOD) recently proposed expanding DOD-wide, contracting officers can grant favorable contract terms and conditions to contractors based on good past performance.
Contractors, however, have expressed concern about certain proposed reforms on the grounds that these reforms could result in de facto debarment or otherwise deprive contractors of due process. Contractors’ ability to challenge allegedly erroneous or biased performance evaluations at the time of their issuance is limited, and courts and the Government Accountability Office generally give substantial deference to agency source selection decisions and responsibility determinations.
Date of Report: January 3, 2011
Number of Pages: 26
Order Number: R41562
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
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