HISTORY OF GOVERNMENT USE

Use of past performance is not a new concept in the government’s buying decisions; however, the “mandatory” use of past performance as a source selection evaluation factor is a recent phenomenon, as is the collection and centralization of past performance information (Nash et al., 1998). Nevertheless, the government has increasingly relied on past performance in source selection decisions. As a result, increasing the collection, evaluation, documentation, and utility derived from past performance information as an evaluation factor (and in the adjudication of contractor performance incentives, as discussed in Chapter 5) has been the subject not only of numerous acquisition regulations and policies but also of repeated reform efforts and highly critical government watchdog reports.

The first notable attempt to formalize the use of past performance information in government procurements occurred in the early 1960s. This was precipitated in part by growing pressure to achieve more competition in procurements, following a period marked by heavy use of sealed bidding procedures that had the effect of limiting bid evaluations to price and technical compliance. During that decade, procurement methods that included the adoption of contractor performance evaluation programs were created (Whelan, 1992). For example, the Department of Defense (DoD) implemented a departmentwide past performance evaluation system in 1963 that was subsequently abandoned in 1971 after a conclusion that the benefits of the system did not outweigh the costs.

Since then, several significant legislative and regulatory developments prescribing the use of past performance information have led to the concept of past performance as it is understood and used today. (Exhibit 1-A, at the end of this chapter, provides a more detailed timeline of events and regulations of significance in the history of past performance use by the government.)

Competition in Contracting Act (1984)

In 1984, the Competition in Contracting Act was passed to ensure increased competition for government contracts, which was to result in reduced costs of purchased goods and services. The act formally defined a “responsible source” of services and supplies. Among other attributes, a responsible source or contractor has a satisfactory performance record and a satisfactory record of business ethics.

Brooks Act (1992)

The Brooks Act amended the Federal Property and Administrative Services Act of 1949 to address what had been viewed as a propensity to award contracts to the lowest-priced bidder without paying adequate attention to the qualifications of the awardee to design and manage projects with significant public safety elements, such as bridges and highways.

This act established a procurement process to select architect and engineering firms for award of design contracts by the government, codifying a qualifications-based selection process. This process focused on the negotiation of contracts following a firm’s selection based on demonstrated competence and professional qualification for the services required. Under this qualifications-based process, price quotes are not initially considered.

If the agency is unable to negotiate a satisfactory contract with the firm considered to be the most qualified, at a price determined by the government to be fair and reasonable, negotiations with that firm end and new negotiations are begun with the second most qualified firm, and so on until a contract is awarded. This process is still followed today and is an exemplar for the use of past performance information as a primary source selection evaluation factor.

Federal Acquisition Streamlining Act (1994)

The Federal Acquisition Streamlining Act amended provisions enacted by the Competition in Contracting Act and other federal procurement law. Its purpose was to simplify the federal procurement process by reducing paperwork burdens, facilitating the acquisition of commercial items, enhancing the use of simplified procedures for small purchases, increasing the use of electronic commerce, and otherwise improving procurement process efficiency.

The act established a governmentwide requirement to formally document contractor past performance and to use past performance information to evaluate sources, make source selection decisions, and make responsibility determinations. The original threshold for this mandate was that all agencies must evaluate every prime contractor’s performance on contracts in excess of $1 million. This threshold was decreased to $100,000 in January 1998.

Clinger-Cohen Act (1996)

The Clinger-Cohen Act established a comprehensive approach for executive agencies to improve the acquisition and management of their information resources. This act established the chief information officer position at agencies and created a program to use solutions-based contracting for acquisitions of information technology that relied upon source selection factors emphasizing the qualifications of the offeror. These offeror qualifications included as factors personnel skills, previous experience in providing other private or public sector organizations with solutions for attaining objectives similar to the objectives of the acquisition, past contract performance, qualifications of the proposed program manager, and the proposed management plan. Although the act did not specifically call out “relevance,” it did emphasize considering a broader range of past performance experiences that could be considered relevant, such as commercial work performed and the experience of key persons.

Elements of the Brooks Act were repealed by the Clinger-Cohen Act, but the use of qualifications-based selection continues and is included in FAR part 36.

Office for Federal Procurement Policy Guide (2000)

The Office for Federal Procurement Policy (OFPP) has the authority to prescribe guidance for executive agencies regarding standards for evaluating the past performance of contractors and collecting and maintaining information on past contract performance. In 2000, OFPP published discretionary guidance in a best practices guide available online.

In the guide (Best Practices for Collecting and Using Current and Past Performance Information), OFPP states that agencies are required to assess contractor performance after a contract is completed and that they must maintain and share performance records with other agencies. The guidance encourages agencies to make contractor performance records an essential consideration in the award of negotiated acquisitions, and it gives guidelines for evaluation.

OFPP noted the importance of distinguishing comparative past performance evaluations used in an evaluation trade-off process from pass/fail performance evaluations. It goes on to point out that a comparative past performance evaluation conducted using a tradeoff process seeks to identify the degree of risk associated with each competing offeror, i.e., that the evaluation describes the degree of confidence the government has in the offeror’s likelihood of success.

The guide also encourages agencies to establish automated mechanisms to record and disseminate performance information. Performance records should specifically address performance in the areas of cost, schedule, technical performance (quality of product or service), and business relations, including customer satisfaction, using a five-point adjectival rating scale (i.e., Exceptional, Very Good, Satisfactory, Marginal, and Unsatisfactory; OFPP, 2000).

Contractor Performance Assessment Reporting System (2004)

CPARS originated in 1996 and has been designated as the DoD’s solution for collecting contractor performance information since 2004. CPARS has since evolved into the government enterprise solution for collection and retention of contractor past performance information. The titling of the program, program elements, and references in user guides and reports in the system were revised to remove DoD specifics in 2011. CPARS refers to this system in its entirety. The main activity associated with this system is the documentation of contractor and grantee performance information that is required by federal regulations. This is accomplished in web-enabled reports referred to as CPARS reports. CPARS currently contains three modules:

1. CPARS for performance assessments on systems, services, IT, and operations support contracts

2. Architect-Engineer Contract Administration Support System (ACASS) for performance assessments on architect-engineer contracts

3. Construction Contractor Appraisal Support System (CCASS) for performance assessments on construction contracts.

Department of Defense Inspector General Report (2008)

The efficiency and accuracy of government contract awards being reported to CPARS was reviewed by the DoD inspector general in 2008 (in Contractor Past Performance Information). It found that government acquisition officials do not have all the past performance information needed to make informed decisions related to market research, contract awards, and other acquisition matters. It also noted that CPARS did not contain information on all active system contracts over $5 million. Of the reports that should have been in CPARS, 39 percent were registered more than a year late, 68 percent had performance reports that were overdue, and 82 percent did not contain detailed, sufficient narratives to establish that the past performance ratings they contained were credible and justifiable.

In response to this report, one of the actions being taken by DoD is to remove any records in the system for contractor performance that began in 2007 or earlier for which no action other than contract data entry has occurred.

Duncan Hunter National Defense Authorization Act (2008)

This bill was first introduced in 2008 by Senator Carl Levin of Michigan and became law on October 14, 2008. Its purpose was to authorize appropriations for the fiscal year 2009 for all DoD military activities. This act emphasized the use of past performance information systems and the use of past performance in source selections by requiring the Administrator of General Services (Office of Management and Budget) to establish and maintain a database of information regarding the integrity and performance of grant and contract awardees of federal agency contracts and grants above the threshold of $500,000 for use by contracting officials.

The act also requires agency officials responsible for contract or grant awards to review the database of past performance information and to consider other past performance information available with respect to the offeror in making any responsibility determination or past performance evaluation for such offeror. The act also requires documenting in contract files the “manner in which the material in past performance databases was considered” in any responsibility determination or past performance evaluation.

Contractor Performance Assessment Rating System Policy (2011)

The CPARS policy and guidebook underwent significant revisions between 2011 and 2014 to reflect changes in the evolving user base, changes to the FAR, and changes in the way the system is used. This policy document and guide states that the contractor performance evaluations contained in CPARs are a method of recording contractor performance and should not be the sole method for reporting on it to the contractor. Government policy is that CPARs should be an objective report of contractor performance during a period against contract requirements. Completing CPARs is the responsibility of the designated assessing official, who may be a program manager or the equivalent individual responsible for program, project, or task/job/delivery/order execution. It may also mean the performance evaluator, quality assurance evaluator, requirements indicator, or contracting officer’s representative. CPARS information is passed to the PPIRS.

FAR 42.15 Revision (2013)

FAR 42.15, on contractor performance information, was revised in September 2013 to detail and standardize the when, where, who, what, and how of contractor performance evaluation and documentation. Existing contractor appeals processes were left in place. The revision made clarifying language changes along with these four significant revisions:

• 42.1502 states that past performance evaluations for contracts and orders should be prepared at least annually and when the work under the contract or order is completed.

• 42.1503(b) adds a new requirement that past performance reports must include a clear, nontechnical description of the principal purpose of the contract or order and standardizes past performance evaluation factors. The subpart also includes a minimum set of evaluation factors and a standardized rating scale. The minimum factors include:

Technical (quality of product or service)

Cost control (not applicable to firm fixed-price contracts)

Schedule/timeliness

Management or business relations

Small business subcontracting (as applicable)

Other (as applicable).

The ratings are:

Exceptional

Very Good

Satisfactory

Marginal

Unsatisfactory.

• 42.1503(c) adds a new requirement that agencies enter any award-fee performance adjectival rating and incentive-fee contract performance evaluations into CPARS.

• 42.1503(e) adds a new requirement that agencies conduct frequent evaluations of agency compliance with past performance evaluation requirements.

Although the collection of past performance information is currently required and specified in FAR 42.1502, an important distinction to note is that there is discretion regarding whether past performance has to be used as a source selection factor.

Much energy and effort has been applied toward improving the collection and retention of and access to contractor past performance information by the government, in particular by DoD. Progress is slow, and by most accounts neither long-term goals (standardize contracting ratings used by agencies, provide more meaningful past performance information, develop a centralized questionnaire system for sharing government wide, eliminate multiple systems that feed performance information into PPIRS) nor short-term goals (revising the FAR to mandate the use of PPIRS) for past performance information management have been achieved in a timely fashion, if at all. This can be attributed to an underestimation by government agencies of the challenges involved.

Exhibit 1-A: Past Performance History Timeline