Kate M. Manuel
Legislative Attorney
Poor performance under a federal contract can have immediate consequences for contractors, who could be denied award or incentive fees, required to pay liquidated damages, or terminated for default. In addition, it could 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.”
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.
Federal law also requires agencies to 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 are required by law to 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 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 have authority to debar or suspend contractors for willful failure to perform under a contract or a history of failure to perform.
Recent reports alleging that some contractors received new contracts despite allegedly deficient performance under prior or current contracts have 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 requirements pertaining to performance evaluations. The 112th Congress enacted legislation that requires the Department of Defense (P.L. 112-81) and the Federal Acquisition Regulatory Council (P.L. 112-239) to develop “strateg[ies] for ensuring” that past performance reports are timely, accurate and complete; and would give contractors 14 days to comment on, rebut, or supplement past performance reports. It also considered measures that would have addressed the content, use, and/or availability of past performance information, among other things.
In addition, the Obama Administration recently renewed its proposal to standardize the factors used in evaluating contractors’ performance, and require that all past performance information be entered into the Contractor Performance Assessment Reporting System (CPARS).
Date of Report: February 4, 2013
Number of Pages: 26
Order Number: R41562
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