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By Steve Kelman

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Should contractors keep the right to respond to past-performance reviews?

There’s some buzz around a provision in the newly introduced Comprehensive Contingency Contracting Reform Act that would eliminate the ability established in the Federal Acquisition Regulation for a contractor unhappy with their past-performance evaluation to enter their own version of events in the file and to appeal the original past-performance evaluation to one level higher in the organization from where the original evaluation was done.

Matthew Weigelt wrote about the provision recently on FCW.com, with a moderately incendiary headline saying the provision would “stifle” contractor responses to past-performance reports. Matthew’s article was a top-five read and emailed article on the FCW site, so the issue is attracting attention.

With a small tweak, this could actually be a really good change. But the tweak is necessary, and I hope the bill’s authors will make it.

The big problem with the current FAR language is that it allows a contractor to appeal a past-performance rating one level above where it was made. In my view, this appeal right has been devastating for the honesty of past-performance ratings, and therefore for the ability of past-performance to be a differentiator in contract awards. For past-performance to work in choosing contractors, the government needs to be able to observe differentiation between better performers, who should be rewarded with new contracts, and poorer ones, who shouldn’t.

The serious shortcomings in the government’s past-performance rating system in turn is really too bad, because judgments, formal and informal, of the past performance of those with whom we do business are an absolutely crucial part of the ability of a market system to work in improving results. If we like the haircut a barber gave us, we go back, and if we didn’t, we don’t – this really provides an incentive for barbers to do a good job.

I was the person, as OFPP administrator, who authorized the current FAR language when the past-performance evaluation system began in the ‘90s. I was concerned at the time that this appeal provision was a mistake, and I believe that subsequent results have confirmed my worries. Contracting officers believe that a bad rating is an invitation to spend countless hours having to defend their judgments, and the easy response, especially with staff shortages and not enough time, is simply to go light on bad comments.

So as the person responsible for the original language, I vote for its repeal.

However, the bill’s provisions go a bit too far. There is no reason to eliminate the ability of the contractor to give their version of events and have it put in the contract file. That just seems like elementary fairness, so others using the past-performance report get to see a different version of what happened, if there is one. I think that at least enlightened elements in the contractor community could support elimination of the dysfunctional appeal process, which undermines the ability of the past-performance system to work at all. But elimination of even the right to comment is sure to arouse the ire of all contractors, as Weigelt’s article seems to show.

Can the bill authors tweak their language so it can help create a real improvement in the government’s past-performance rating system?

Posted by Steve Kelman on Mar 05, 2012 at 7:27 PM


Reader Comments

Sat, Oct 19, 2013

As a contractor the past performance systems as with most Government systems is flawed. We received a contract and at the time had a flawless quality rating. It is now so low I wouldn't want to enter into a contract with us. The TDP was flawed one sub totally blew it on quality and delivery and since our cage is on all parts delivered we take the heat both the Governement (Flawed TDP) and our sub walk away scott free. This will eventually force the company of 50 years to close its doors

Wed, Mar 21, 2012

It would appear that having a system that makes both contracting parties accountable for their actions is fair regardless of the drowning of paperwork. The US constitution limits goverment action to the public. So are we saying that the US government past performance against a contractor should not be appealable?

Fri, Mar 9, 2012 Alan

I think the Law of Large Numbers is our friend. The typical Amazon.com-style ratings yield a pretty good average of the quality of the merchandise they sell. Some of these reviews are unreasonable, and made in bad faith, but most are fairly reliable. I think how Prof. Kelman's barbershop metaphor fails is that there are not Large Numbers here like there are at the barber shop. One bad past performance review can seriously hinder a Contractor's ability to get future business. Regardless of whenther that review was made in good faith or bad, they must fight it. They can do this in Court, or administratively. I vote for the cheaper option.

Wed, Mar 7, 2012 Vern Edwards

Steve, I have long been a supporter of the use of past performance in source selection and in a past performance rating system, and I agree that the right of appeal is a bureaucratic problem that it may weaken the past performance system. However, we must acknowledge that government personnel sometimes behave unreasonably and that they even act in bad faith occasionally. I wrote about one such case in the February issue of The Nash & Cibinic Report. The government gave the contractor a defective design and then blamed everything that happened on the contractor, terminated them for default, and bad-mouthed them to the press. The judge on the Court of Federal Claims accused the government of "duplicity" and ordered the termination for default converted to a termination for convenience. The case was Martin Construction, Inc. v. United States, 2011 WL 6367690 (Dec. 20, 2011). I wonder what has the agency said about the company in the past performance data base? See Prof. Nash's article in the same issue about government breaches of the duty of good faith and fair dealing. I wish that I could say that every member of the government's corps of contracting officers is sufficiently well-trained and professional that we can rely on their sense of fairness and good judgement when making entries in PPIRS and FAPIIS and deny contractors a right of appeal. But I can't say that. If we want companies to be willing to do business with the government, we must assure them that they will be treated fairly and they will have some way to administratively challenge what they consider to be libel in PPIRS. If we don't provide administrative relief, the alternative may turn out to be litigation. See the decisions of the Court of Federal Claims in Kemron Environmental Services, Inc. v. U.S., 93 Fed. Cl. 74 (2010) and Record Steel and Construction, Inc. v. U.S., 62 Fed. Cl. 508 (2004), in which the court held that a negative past performance rating is grounds for a nonmonetary claim under the Contract Disputes Act of 1978. See also, Sacilotto, "Challenging Contractor Performance Evaluations: FAR Processes and Claims Before the Court of Federal Claims and the Boards of Contract Appeals," Briefing Paper No. 11-10 (Sept. 2011). As a former contracting officer, I would rather defend my review to my boss than to the Court of Federal Claims s board of contract appeals. The key to many of our problems is not legislation or regulation, but genuine professionalization of the contracting officer corps.

Tue, Mar 6, 2012 SPMayor Summit Point, WV

Steve - I understand your reasoning but am unable myself to conclude the root problem [avoiding the extra work associated with contractor pushback] is that prevalent or problematic.I distinguish between wasted and meaningless dialgue efforts based on idle counter assertions by unhappy contractors and meaningful discussions that 'square' the client's view of performance and the contractor's.To me this is the backend of the myth-buster message of communication and dialogue.If we are going to preclude a dialogue before the rating is finalized then I think, implementing policy needs to provide guidance to the CO looking at this information, particularly in regard to how past performance reviews with noticibly differing points of view should be handled.

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