December 1, 1996

The Use of Past Performance Information in the Source Selection Process

Contract Management
Under the new Federal Acquisition Regulation (FAR) and the Defense FAR Supplement (DFAR) procuring agencies must generate and utilize past performance information (PPI) when awarding government contracts. The new regulations phase this requirement in over three years beginning in 1995. The use of PPI can have serious ramifications for government contractors. Contractors companies should be aware of the new regulations and should consider changing the way that they respond to contract disputes in the future.

When a contractor completes performance the formal PPI process begins. The contractor is evaluated on considerations such as: 1) conformance to the contract; 2) good workmanship; 3) cost containment; 4) adherence to schedule; and 5) commitment to customer satisfaction. After it is completed, the evaluation is given to the contractor for comments. Contractor comments, the evaluation, and any review comments are kept on file. This PPI may be used for three years and is shared among federal agencies.

The evaluation, or PPI, will be reviewed in subsequent solicitations. The contracting officer (CO), however, is given discretion as to the weight PPI is to be given. When a would-be contractor bids on a project the government will ask that similar past contracts be identified. For example, the contracting agency may ask for the last five contracts completed. The CO must use PPI when evaluating a contractor's proposal, but there is no requirement governing the weight that the PPI must be given. The CO has the discretion to decide how much weight to give PPI and need not provide contractors with a numeric percentage, just a list of the relevant factors in order of preference.

The new rules for the use of PPI give the CO greater discretion and have the potential for surprising a contractor who is unaware of their implications. One negative review by a agency could ruin a contractor's chances of being awarded a contract. Contractors should work with the government during contract evaluations, provide data as needed, and iron out small discrepancies with the contracting agency to avoid a blemished record. This will enhance their prospects of being awarded future government contracts.
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