Improving agency assessments of contractor past performance has been a priority since the Government Accountability Office published its 2009 report criticizing the system. A number of new FAR rules can be linked to GAO’s recommendations. For example, GAO pointed to the lack of reporting on default terminations and defective pricing. The FAR has now been amended to require default terminations and defective pricing be reported as part of a contractor’s past performance. See 75 Fed. Reg. 60258 (Sept. 29, 2010) [pdf]. The latest proposed revision to the FAR responds to GAO’s recommendation that there be greater uniformity in past performance reporting. See 76 Fed. Reg. 37704 (June 28, 2011). The proposed rule would revise FAR 42.1503 to include five minimum evaluation factors for which contractors are to be evaluated:  (i) Technical or Quality; (ii) Cost Control (as applicable); (iii) Schedule/Timeliness; (iv) Management or Business Relations; and (v) Small Business Subcontracting (as applicable).  The proposed rule would also impose a uniform ratings scale for use by past performance evaluators. As defined in the CPARS Policy Guide, past performance would have to be described as exceptional, very good, satisfactory, marginal, or unsatisfactory.

One element of the proposal should be of concern to contractors. The proposed revisions eliminate FAR 42.1503(b), which protects the interests of contractors in the past performance process. It states that contractors are entitled to respond to or rebut agency evaluations of their past performance, to have the evaluation reviewed at a level above the contracting officer, and to have their response included as part of the past performance evaluation. It also provides for the confidentiality of past performance evaluations, limiting access to government personnel and requiring evaluations to be marked “Source Selection Information.”

The deletion of FAR 42.1503(b) could eliminate the contractor’s role in the assessment of contractor past performance. Nothing in the proposed rule formally permits a contractor to respond to a past performance evaluation or to rebut the conclusions of agency officials. There is no language affirmatively requiring agencies to consider contractor rebuttals or to establish an appeal process for disputes concerning past performance. There is no requirement that contractor responses be included with the past performance evaluation record. The proposed language does not address the confidentiality of contractor past performance evaluations. The only part of FAR 42.1503(b) that would remain is the general requirement that contractors receive a copy of their past performance evaluation when it is complete.

While permitting an agency to ignore a contractor’s response to a past performance evaluation might simplify the process in the short run, it would certainly have adverse consequences in the long run. In addition to pushing contractors into litigation challenging erroneous evaluations, it would decrease the value of past performance assessments as tools in predicting future performance. It would also increase the risk of de facto debarment, against which contractors have constitutional protections. See Old Dominion Dairy Products, Inc. v. Secretary of Defense, 631 F.2d 953 (D.C. Cir. 1980). If nothing else, the loss of uniformity resulting from the elimination of FAR 42.1503(b) seems to be inconsistent with the goal of improving uniformity in past performance evaluations.

We’ll be watching for commentary and the final version of this rule. Submit comments on the proposed rule by August 29, 2011. Comments can be submitted here. Include a reference to “FAR Case 2009-042.”

[UPDATE.  A corrected version of the proposed rule reinstating the contractor protections in FAR 42.1503 was published on August 9, 2011.  We discuss the correction here.]