The Audit
On May 9, the Department of Defense Inspector General (“DoD IG”) released Audit Report No. DODIG-2017-081, Summary of Audits on Assessing Contractor Performance: Additional Guidance and System Enhancements Needed (the “Audit Report”). In the Audit Report, the DoD IG found that Department of Defense (“DoD”) contracting officials were not consistently complying with the Federal Acquisition Regulations (“FAR”) and the Guidance for the Contractor Performance Assessment Reporting System (“CPARS Guide”) for evaluating contractor past performance. The audit identified weaknesses within DoD’s contracting officials’ preparation of contractor performance assessment reports (“PARs”) and potential improvements to the Contractor Performance Assessment Reporting System (“CPARS”). The Audit Report is a cogent reminder that contractors, and their counsel, must be cognizant about how executive agencies review and assess contractors’ performance.
By regulation, executive agencies must assess contractors’ performance under a contract, at least annually (for long-term contracts), and at the time the work under a contract or order is completed, in CPARS. Executive agencies are required to use CPARS “to ensure that current, complete, and accurate information on contractor performance is available for use in procurement source selections.” Audit Report at 1. See also FAR 42.1502(a). Upon completion of a contract or order, contracting officials enter the PAR into CPARS. The PAR is then available through CPARS to other DoD designated contracting personnel (or other agencies’ designated contracting personnel) so that procurement officials will have access to up-to-date past performance information for any contractor participating in a procurement.
The DoD IG found that because of inadequate training, lack of internal controls, and ineffective procedures for timeliness and PAR review, DoD contracting officials sometimes failed to: (i) write sufficient narratives to justify past performance ratings; (ii) properly rate past performance evaluation factors; and (iii) prepare sufficient contract effort descriptions. To remedy these shortcomings, the Office of the Under Secretary of Defense for Acquisition, Technology and Logistics (USD (AT&L)) advised the DoD IG that, within 60 days of the Audit Report’s publication, the Director of Defense Procurement and Acquisition Policy will issue a memorandum to implement the DoD IG’s recommendations that will ensure DoD contracting professionals comply with requirements for assessing contractor performance. In addition, the USD (AT&L), in coordination with the government-wide Past Performance Systems program manager, proposed recommended system enhancements that were approved April 27, 2017.
How Contractors Can Challenge Performance Evaluations
CPARS still relies on human input and occasionally human bias, and remains, therefore, fallible. Contractors should be aware that FAR 42.1503 allows contractors an opportunity to challenge an agency’s past performance evaluation. Yet the time provided for response is short. Contractors must be proactive in their efforts to ensure the accuracy of PARs; a contractor’s reputation with agencies is integral to any contractor’s success.
FAR 42.1503(b)(1) requires PARs to be accurate and based on facts; those based on speculation are improper. They should include all aspects of a contractor’s performance – the negative as well as the positive. Id. They should include at least the following factors: technical, cost control, timeliness, and management. PARs may also include factors such as small business contracting, and other issues such as trafficking violations, tax delinquency, failure to report in accordance with the contract terms and conditions, etc., if appropriate. FAR 42.1503 (b)(2). CPARS notifies contractors once a PAR is available for contractor comment. FAR 42.1503(d). Contractors have only 14 days to respond. Id. Generally, when a contractor disagrees with a PAR, they should take an immediate first step to initiate a conversation with the contracting officer responsible for the contract under which the PAR was issued. If the contractor and the contracting officer cannot reach an agreement on the contents of the PAR, the FAR provides that such a dispute will be reviewed at a level above the contracting officer. Id. As the PARs may be used to support future award decisions, the FAR requires the PARs to be marked “Source Selection Information.” As such, PARs may not be released to any entity beyond the contractor and the government without the contractor’s permission, or during a bid protest where such information would be protected by a protective order. Id. The government is required to provide a copy of the annual or final past performance evaluation to the contractor as soon as it is finalized.
To ensure the right to appeal an inaccurate PAR, the contractor must file a claim with the contracting officer in accordance with the Contract Disputes Act. Without that claim, and the contracting officer’s ultimate denial of that claim, the Board of Contracts Appeal or the U.S. Court of Federal Claims will have no jurisdiction over the challenge. See, e.g., Fed. Contracting, Inc. v. U.S., 128 Fed. Cl. 788, 796 (2016) (contractor’s performance evaluation challenge allowed to proceed when contractor submitted claim to contracting officer). Further, contractors should be diligent about maintaining records of their evaluation, review comments, and agency communications.
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Client Alert 2017-125
