"We always had past performance requirements, but because of procurement reform, we could put more teeth into it," says Skip Kemener, head of NASA's Center for Automated Data Processing Procurement, which oversees the agency's recent Outsourcing Desktop Initiative and Scientific and Engineering Workstation Procurement III.
Contractors are better at addressing problems than in the past. "They know if they screw up, it is going to hurt them," Kemener says.
Phil Odeen, executive vice president and general manager of TRW Inc.'s systems integration group, says past performance reinforces that companies must pay attention to their customers. "If you don't, it'll come back to haunt you," he says.
Using past performance as a contracting criteria began in earnest about three years ago when Congress passed sweeping procurement reforms. Under the revised rules, the same or more weight can be given to past performance as the price quoted in a proposal, officials say.
And that means the government can act more like a commercial buyer, says Kevin Carroll, assistant deputy chief of staff for research, development and acquisition at the Army Materiel Command.
"When we awarded just by lowest price, we experienced difficulties getting things on time and good quality," he says.
At the General Services Administration, past performance has become the single most important criteria in awarding large IT contracts, says Mary Whitley, deputy assistant commissioner in the Office of IT Integration. Her office oversees the Federal Systems Integration Management Center 9600 and the Seat Management contracts.
"Past performance is a predictor of future success. So we go through a lot of time and trouble calling references and talking to them," she says.
Whitley credits past performance with helping her office weed through 35 proposals for the 9600 contract, a five-year, $1.6 billion contract won by eight companies.
Walking the Walk
Companies such as Bell Atlantic Federal of Washington, DynCorp of Reston, Va., and Cisco Systems Inc. of San Jose, Calf., monitor past performance by keeping close contact with their customers through surveys and questionnaires.
Bell Atlantic hires an outside company to interview major accounts every year, company officials say. But just getting feedback isn't enough, says Barbara Connor, president of Bell Atlantic Federal. "Things need to be followed up on and acted on," she says.
If a company is doing its job properly, she says, the government's emphasis on past performance shouldn't be a problem. "We believe it is one of our strengths."
Connor says high past performance ratings helped her company clinch two big-ticket telecom support services contracts in the past year: a $12 million contract from the Federal Emergency Management Agency, and a $10 million Metropolitan Washington Airport Authority contract.
Cisco takes a similar approach to measuring past performance. The company surveys customer satisfaction, says Jim Massa, director of federal operations. That annual survey of major customers looks at factors such as ease of doing business and handling of complaints, as well as product effectiveness.
The company not only surveys end users of its products, but its partners as well. The relationship between $7.8 billion a year Cisco and its systems integrators is "very symbiotic," Massa says. If one is performing poorly, it can make the other look bad, he says.
About half the contracts on which Massa's unit bids have some past performance element. In those efforts, anywhere from 10 percent to 30 percent of the decision is based on past performance, he says.
For Paul Lombardi, president and chief executive of $1.2 billion a year DynCorp, managing expectations is a key factor in keeping a good past performance record.
"If you don't manage expectations, you get into trouble," he says.
As a result, at the start of big projects the systems integrator brings in a facilitator, who questions both the customer and company program officials about what they think the project will accomplish and what is expected of the other.
"You really have to establish upfront the expectations of the customer and the contractor," says Lombardi, whose company's contract backlog has risen from $3 billion to $3.6 billion during the past three years. "We win 45 percent of what we bid on." He attributes part of that increase to greater government reliance on past performance.