Past Performance Evaluation and Reporting Criteria Standardized Under New FAR Rule

8.20.2013 - Posted in E&B Alerts - Government Contracts

Earlier this month, the Federal Acquisition Regulation (FAR) Council issued a long-awaited final rule amending the FAR to adopt government-wide standards for the collection and recording of Past Performance Information (PPI). See Documenting Contractor Performance, 78 Fed. Reg. 46783 (Aug. 1, 2013). Initiated in response to recommendations from the Government Accountability Office (GAO) and the Office of Federal Procurement Policy (OFPP),[1] the proposed rule was twice amended in 2011 and finally released as a second proposed rule on September 6, 2012. The second proposed rule also sought comments on the merits of modifying or possibly eliminating the existing appeals process for past performance reporting.

The final rule makes a number of significant additions and changes to the provisions of FAR subpart 42.15 governing past performance, including the following:

  • Timing – FAR 42.1502: Revised to clarify that past performance evaluations should be prepared at least annually and also at the time the work under a contract or order is completed.
  • Agency Procedures – FAR 42.1503(a): Revised to clarify agency procedures and responsibilities for contributing to and conducting past performance evaluations.
  • Evaluation Factors – FAR 42.1503(b)(2): Standardized evaluation factors have been codified to include, at a minimum: (i) Technical (quality of product or service); (ii) Cost Control; (iii) Schedule/Timeliness; (iv) Management or business relations; (v) Small business subcontracting; and (vi) Other (e.g., late or nonpayment to subcontractors, trafficking violations, tax delinquency, etc.).
  • Contract Purpose – FAR 42.1503(b)(1): A new requirement is added to include a non-technical description of the principal purpose of the contract or order in the past performance evaluation.
  • Evaluation Ratings – FAR 42.1503(b)(4): Establishes a five scale rating system (i.e., exceptional, very good, satisfactory, marginal, and unsatisfactory) to be applied to each evaluation factor.
  • CPARS Reporting – FAR 42.1503(c): Requires performance evaluations to be reported in the Contractor Performance Assessment Reporting System (CPARS).
  • Agency Compliance – FAR 42.1503(e): Requires the agency to conduct frequent evaluations (e.g., monthly or quarterly) of agency compliance with reporting requirements.

The final rule also includes two new tables, added to clarify and define the five scale rating system: (a) Table 42-2, for when the Small Business Subcontracting evaluation factor is used; and (b) Table 42-1, for use with all other factors. These tables have previously appeared in CPARS and have been used by various agencies since the program’s inception. The final rule, however, standardizes their use throughout the Federal Government.

In response to the requested comments on the merits of modifying the appeals process for past performance reporting, several comments were submitted urging that the appeals process be retained. Currently, FAR 42.1503(b) requires agencies to provide for review of agency performance evaluations at a level above the contracting officer when the evaluations are disputed. Respondents argued that elimination of the appeals process would, among other things, harm contractor competition, increase litigation, reduce evaluation accuracy, and eliminate an important due-process protection for contractors. The final rule does not eliminate or modify the appeals process.

A copy of the new rule, including the two tables referenced above, can be found here in the Federal Register. For further information regarding the new rule and any questions regarding past performance evaluations, please visit our Website or contract Mark J. Blando at [email protected].

[1] See GAO Report No. 09-374, "Better Performance Information Needed to Support Contract Award Decisions" and OFPP Memorandum, "Improving the Use of Contractor Performance Information."