Past Performance Revisited

I looked at past performance as an evaluation factor back in 1996, af­ter Con­gress had pas­sed the Federal Ac­qui­si­tion Stream­lin­ing Act of 1994 (FASA), a stat­ute which in­clud­ed legis­la­tive find­ings that past con­tract per­for­man­ce was “one of the rele­vant fac­tors that a con­trac­ting of­fi­cer of an exec­u­tive agen­cy should con­sid­er,” and that past per­form­ance could be ap­pro­priat­e­ly con­sid­er­ed “as an in­di­ca­tor of the like­li­hood that the con­trac­tor will suc­ces­s­ful­ly per­form.” Pub. L. No. 103-355, § 1091­(b)­(1), 108 Stat. 3272 (1994). I ex­plain­ed back then that past per­form­ance, tra­di­tion­al­ly an ele­ment of the res­pon­si­bil­ity de­ter­mi­na­tion re­quired by 10 U.S.C. § 2305­(b)­(4)­(C)/41 U.S.C. § 253­b, had been fair game for use an eval­u­ation fac­tor since Del­ta Data Sys­tems Corp. v. Web­ster, 744 F.2d 197, 201 (D.C. Cir. 1984). Now we have the FASA stat­u­tory im­ple­men­ta­tion; the Of­fice of Fed­er­al Pro­cure­ment Pol­icy’s guide, BEST PRAC­TICES IN PAST PER­FORM­ANCE; a sub­stan­tial­ly re­writ­ten Fed­er­al Ac­qui­si­tion Reg­u­la­tion (FAR) sec­tion on “Con­tracting by Ne­go­ti­ation,” with cover­age on ad hoc past per­for­mance eval­u­a­tions; FAR cov­er­age on sys­te­mat­i­cal­ly re­cord­ing and main­tain­ing con­trac­tor per­form­ance in­for­ma­tion; and de­vel­op­ing case law. So it’s time for an­oth­er look at this issue.

Systematic Past Performance Evaluation and Reporting Systems

We’ll begin with a look at the re­quire­ments for sys­te­mat­ic col­lec­tion and use of past per­for­mance in­for­ma­tion. Gen­er­al­ly, the statute requires:

(1) The Administrator shall prescribe for executive agencies guidance regarding con­sid­er­ation of the past con­tract per­form­ance of of­fer­ors in award­ing con­tracts. The guid­ance shall include—

(A) standards for evaluating past per­form­ance with respect to cost (when ap­pro­priate), sched­ule, com­pli­ance with tech­ni­cal or func­tion­al spec­i­fi­ca­tions, and oth­er rele­vant per­for­mance fac­tors that fa­cili­tate con­sis­tent and fair evaluation by all exec­u­tive agencies;

(B) policies for the collection and maintenance of information on past con­tract performance that, to the maximum extent practicable, facilitate auto­mated collection, main­te­nance, and dis­se­mi­na­tion of information and pro­vide for ease of col­lec­tion, main­te­nan­ce, and dis­semi­na­tion of in­for­ma­tion by other meth­ods, as ne­ces­sary;

(C) policies for ensuring that—

(i) offerors are afforded an opportunity to sub­mit rele­vant in­for­ma­tion on past con­tract per­form­ance, in­clud­ing per­form­ance un­der con­tracts en­ter­ed in­to by the exec­u­tive agency con­cern­ed, con­tracts en­ter­ed in­to by oth­er de­part­ments and agen­cies of the Fed­er­al Gov­ern­ment, con­tracts en­ter­ed in­to by agen­cies of State and lo­cal gov­ern­ments, and con­tracts en­ter­ed in­to by com­mer­cial customers; and

(ii) such in­for­ma­tion sub­mit­ted by of­fer­ors is considered; and

(D) the period for which in­for­ma­tion on past per­form­ance of of­fer­ors may be main­tain­ed and con­sidered.

(2) In the case of an offeror with respect to which there is no information on past contract performance or with respect to which in­for­ma­tion on past contract per­for­mance is not available, the offeror may not be eval­u­ated favorably or unfavorably on the factor of past contract performance.

41 U.S.C. § 405­(j). Guid­ance for sys­te­mat­ic col­lec­tion and main­te­nance of past per­for­mance in­for­ma­tion is set out in FAR Subpart 42.15, “Con­trac­tor Per­form­ance In­for­ma­tion.” Guid­ance for ad hoc past per­form­ance eval­u­ation is set out in FAR Sub­part 15.3, “Source Selection.”

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Relevant Past Performance Information

Only “rele­vant in­for­ma­tion” is to be col­lec­ted and re­port­ed (or, to be eval­u­ated ad hoc)—this in­cludes, in­ter alia, the con­trac­tor’s rec­ord of con­form­ing to con­tract re­quire­ments and good work­man­ship stand­ards; where ap­pli­cable, the con­trac­tor’s rec­ord of fore­cas­ting and con­trol­ling costs; the con­trac­tor’s his­tory of “rea­son­able and co­op­er­ative be­hav­ior and com­mit­ment to cus­to­mer sat­is­fac­tion;” and, gen­er­ally, the con­trac­tor’s his­tory of “busi­ness-like con­cern” for cus­tomer in­ter­ests. FAR 42.1501.

But there are “no-no’s” among other­wise rele­vant past per­form­ance information.

Agencies may not consider a con­trac­tor’s re­sort to the con­tract claims pro­cess, Nova Group, Inc., B-282­947, Sept. 15, 1999, at 8, and nei­ther may agen­cies con­si­der prop­er con­trac­tor exer­cise of con­tract ad­just­ment pro­vis­ions, One­Source En­er­gy Serv­ices, Inc., B-283­445, Nov. 19, 1999, at 9. Un­less an agen­cy can doc­u­ment that a con­trac­tor was “ob­struc­tive or dis­pu­ta­tious,” or that con­trac­tor claims “were friv­o­lous or filed in bad faith,” Nova Group, at 8-9, that a con­trac­tor pur­sued the con­tract claims pro­cess is not rele­vant past per­form­ance in­for­ma­tion, and any re­lia­nce on such a thing for a past per­form­ance eval­u­ation will re­sult in a post-award pro­test that is sus­tain­ed on its merits. See al­so Am­Clyde En­gine­ered Prod­ucts Co., Inc., B-282­271, June 21, 1999, at 6 n.5. So also with exercises of con­tract ad­just­ment pro­vis­ions ex­cept where these exer­cises “lacked merit” or “ad­ver­se­ly af­fec­ted the per­form­ance of the con­tract.” One­Source En­er­gy Services.

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Detailed Requirements for Systematic Past Performance Evaluations

Agencies must periodically col­lect and main­tain past per­form­ance in­for­ma­tion for all sup­ply and ser­vice con­tracts in ex­cess of $100,000. FAR 42.1502(a). Agen­cies are re­quired to pre­pare eval­u­ations of con­tract per­for­mance “at the time the work un­der the con­tract is com­plet­ed.” FAR 42.1502­(a). To pro­vide cur­rent past per­for­mance in­for­ma­tion for source se­lec­tions, in­ter­im eval­u­ations of con­tract per­form­ance should be pre­pared for mul­ti-year con­tracts. Id.

Evaluations of completed contract performance, and any in­ter­im eval­u­ations, must be shared with oth­er de­part­ments or agen­cies con­duc­ting source se­lec­tions. FAR 42.1503­(c); Ad­vanced Data Con­cepts, Inc. v. United States, 43 Fed. Cl. 410, 421 (1999).

Once an evaluation of contract performance has been pre­pared, a pre­lim­i­nary copy must be of­fer­ed to the con­trac­tor “as soon as prac­ti­cable,” and the con­trac­tor must have at least 30 days to sub­mit com­ments, re­but­tals, or ad­di­tion­al in­for­ma­tion. Dis­agre­e­ments be­tween the par­ties about the fi­nal con­tract per­form­ance eval­u­ation are to be re­view­ed at a level ab­ove the con­trac­ting of­fi­cer. FAR 42.1503­(a); D.F. Zee’s Fire Fight­er Ca­ter­ing, B-280­767.4, Sept. 10, 1999, at 7.

Although the FAR provides that “[t]he ul­ti­mate con­clu­sion on the per­form­ance eval­u­ation is a de­ci­sion of the con­trac­ting agen­cy,” it is doubt­ful that this reg­u­la­tion en­tire­ly in­su­lates these mat­ters from re­view. Rig Mas­ters, Inc. v. United States, 42 Fed. Cl. 369, 372-73 (1999) fol­low­ing Burn­side-Ott Avia­tion Train­ing Cen­ter v. Dal­ton, 107 F.3d 854, 858-59 (Fed. Cir. 1997) (hold­ing that a con­tract pro­vis­ion, this one al­so re­quir­ed by reg­u­la­tion, could not in­su­late a dis­pute con­cern­ing award fee from board of con­tract ap­peals or court re­view); but see RCS En­ter­pris­es, Inc. v. United States, 46 Fed. Cl. 509, 2000 U.S. Claims LEXIS 72, slip op. at 25-26 (a dis­pute whet­her or not to make a con­tract change is prop­er­ly ex­empt from review).

Systematic evaluations of past per­form­ance un­der com­plet­ed con­tracts can­not be used as source se­lec­tion in­for­ma­tion be­yond 3 years af­ter the con­tract was com­plet­ed. FAR 42.1503­(e). If, for in­stance, an agen­cy has reports of po­or per­form­ance that was de­liv­er­ed in cal­en­dar year 1996 un­der a sup­port serv­ices con­tract with a five-year term that is fi­nal­ly com­plet­ed in cal­en­dar year 2000, then this poor per­form­ance may be con­sid­er­ed for source se­lec­tion pur­poses at any time through cal­en­dar year 2003. D.F. Zee’s, at 8.

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Ad Hoc Past Performance Evaluations

Past performance must be an eval­u­ation fac­tor in any so­li­ci­ta­tion for com­pe­ti­tive proposals:

In prescribing the evaluation fac­tors to be in­clud­ed in each so­li­ci­ta­tion for com­pe­ti­tive pro­po­sals, the head of an agen­cy—

(i)  shall clear­ly establish the re­la­tive im­por­tance as­signed to the eval­u­ation fac­tors and sub­fac­tors, in­clud­ing the qual­i­ty of the prod­uct or serv­ice to be pro­vided (in­clud­ing tech­ni­cal ca­pa­bil­ity, man­age­ment ca­pa­bil­ity, prior ex­per­i­ence, and past per­form­ance of the offeror). . . .

10 U.S.C. § 2305(a)(3); 41 U.S.C. § 253a(c); FAR 15.304(c)(2).

As we have already learned, offerors shall al­ways be giv­en “an op­por­tun­ity to sub­mit rele­vant in­for­ma­tion on past con­tract per­form­ance,” 41 U.S.C. § 405­(j)­(1)­(C)­(i), and of­fer­ors with no past per­form­ance in­for­ma­tion, or with res­pect to which past per­form­ance in­for­ma­tion is not avail­able, “may not be eval­u­ated fa­vor­ably or un­fav­or­ably on the fac­tor of past con­tract per­form­ance,” 41 U.S.C. § 405­(j)(2).

FAR 15.305(a)(2) provides further, detailed re­quire­ments for ad hoc past per­form­ance evaluations:

Past performance evaluation. (i) Past per­form­ance in­for­ma­tion is one in­di­ca­tor of an of­feror’s abil­ity to per­form the con­tract suc­ces­s­ful­ly. The cur­ren­cy and rele­vance of the in­for­ma­tion, source of the in­for­ma­tion, con­text of the data, and gen­er­al trends in con­trac­tor’s per­form­ance shall be con­sid­er­ed. This com­par­ative as­ses­s­ment of past per­form­ance in­for­ma­tion is sep­a­rate from the res­pon­si­bil­ity de­ter­mi­na­tion re­quired under Sub­part 9.1.

(ii) The solicitation shall des­cribe the ap­proach for eval­u­ating past per­form­ance, in­clud­ing eval­u­ating of­fer­ors with no rele­vant per­form­ance his­tory, and shall pro­vide of­fer­ors an op­por­tun­ity to iden­ti­fy past or cur­rent con­tracts (in­clud­ing Fed­er­al, State, and lo­cal gov­ern­ment and pri­vate) for ef­forts sim­ilar to the Gov­ern­ment re­quire­ment. The so­li­ci­ta­tion shall al­so au­thor­ize of­fer­ors to pro­vide in­for­ma­tion on prob­lems en­count­er­ed on the iden­ti­fied con­tracts and the of­fer­or’s cor­rec­tive ac­tions. The Gov­ern­ment shall con­sid­er this in­for­ma­tion, as well as in­for­ma­tion ob­tained from any oth­er sour­ces, when eval­u­ating the of­fer­or’s past per­form­ance. The source se­lec­tion au­thor­ity shall de­ter­mine the rele­vance of sim­ilar past per­form­ance information.

(iii) The evaluation should take into ac­count past per­form­ance in­for­ma­tion re­gard­ing pred­e­ces­sor com­pan­ies, key per­son­nel who have rele­vant ex­per­ience, or sub­con­trac­tors that will per­form ma­jor or crit­i­cal as­pects of the re­quire­ment when such in­for­ma­tion is rele­vant to the in­stant acquisition.

(iv) In the case of an offeror with­out a rec­ord of rele­vant past per­form­ance or for whom in­for­ma­tion on past per­form­ance is not avail­able, the of­fer­or may not be eval­u­ated fav­or­ably or un­fav­or­ably on past performance.

(v) The evaluation should include the past per­form­ance of of­fer­ors in com­ply­ing with sub­con­trac­ting plan goals for small dis­ad­van­taged busi­ness (SDB) con­cerns (see Sub­part 19.7), mon­etary tar­gets for SDB par­ti­ci­pa­tion (see 19.1202), and no­ti­fi­ca­tions sub­mit­ted un­der 19.1202-4(b).

Id.

FAR 15.306(a)(2) explicitly pro­vides an op­por­tunity to com­ment, in awards with­out dis­cus­sions, on neg­ative ex par­te past per­form­ance information:

If award will be made without con­duc­ting dis­cus­sions, of­fer­ors may be giv­en the op­por­tun­ity to clar­ify cer­tain as­pects of pro­po­sals (e.g., the rele­vance of an of­fer­or’s past per­form­ance in­for­ma­tion and ad­verse past per­form­ance in­for­ma­tion to which the of­fer­or has not pre­vious­ly had an op­por­tun­ity to res­pond) or to re­solve mi­nor or cler­i­cal errors.

Id.

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Negative Ex Parte or Incomplete Ad Hoc Past Performance Information

Delta Data holds that agencies must give of­fer­ors an op­por­tun­ity to com­ment when nega­tive ex parte in­for­ma­tion is re­ceived, i.e., from a refer­ence iden­ti­fied for pro­pos­al eval­u­ation pur­pos­es, 744 F.2d at 203 (agen­cy fail­ure to of­fer an op­por­tun­ity to com­ment on neg­ative ex par­te in­for­ma­tion would con­sti­tute an abuse of dis­cret­ion), and Delta Data is still go­od law, as it was fol­low­ed in El­con En­ter­pris­es, Inc. v. Wash­ing­ton Metro­pol­i­tan Area Trans­it Au­thor­ity, 977 F.2d 1472, 1481-82 (D.C. Cir. 1992).

But the General Accounting Office (GAO) does not follow Delta Data, a point that it first made clear in Sat­urn Con­struc­tion, Inc., B-236­209, Nov. 16, 1989, at 4-5, there hold­ing that, in GAO’s view, an eval­u­ation of past per­form­ance es­sen­tial­ly in­vol­ves his­tor­i­cal in­for­ma­tion not sub­ject to change, and thus neit­her dis­cus­sions nor an op­por­tun­ity to com­ment on nega­tive ex par­te re­fer­en­ces is re­quired. More re­cent­ly, GAO has held that “[r]e­ports from refer­ences are rou­tinely re­lied on in com­mer­cial trans­ac­tions . . . [and we] fail to see why the gov­ern­ment can­not fol­low or­di­nary com­mer­cial and con­su­mer prac­tices in se­lec­ting the most ca­pa­ble con­trac­tor.” SDA, Inc., B-256­075, May 2, 1994, at 7 n.9.

Notwithstanding this GAO opposition, early reg­u­la­tory im­ple­men­ta­tion of ad hoc past per­form­ance eval­u­a­tions pro­vid­ed, at FAR 15.610­(c)­(6), an ex­plic­it re­quire­ment that com­pet­i­tive range of­fer­ors be pro­vid­ed “an op­por­tun­ity to dis­cuss past per­form­ance in­for­ma­tion ob­tain­ed from ref­er­en­ces on which the of­fer­or has not had a pre­vious op­por­tun­ity to com­ment. . . .” GAO granted sev­er­al pro­tests where of­fer­ors had not been given an op­por­tun­ity to com­ment on neg­a­tive ex par­te past per­form­ance in­for­ma­tion, even from agen­cy sour­ces, and GAO could con­clude that this in­for­ma­tion had played a crit­i­cal role in the source se­lec­tion de­ci­sion. E.g., Mc­Hugh/Cal­u­met, a Joint Ven­ture, B-276­472, June 23, 1997, at 6-9.

When Federal Acquisition Circular (FAC) 97-02 im­ple­ment­ing the FAR Part 15 Re­write was is­sued on Sep­tem­ber 30, 1997, FAR 15.610­(c)­(6) was sub­sum­ed in FAR 15.306­(a)­(2) and FAR 15.306­(d)­(2), but none­the­less, the draft­ers’ in­ten­tion was that the sub­stan­ce of FAR 15.610­(c)­(6) would remain:

• Ability of offerors to ad­dress ad­verse past per­form­ance in­for­ma­tion be­fore it can be used in a source selec­tion. Res­pond­ents, es­pecial­ly the small busi­ness com­mu­nity, ex­pres­sed con­cerns that of­fer­ors might be ex­clud­ed from a com­pe­ti­tion on the ba­sis of in­cor­rect past per­form­ance in­for­ma­tion that they have not had the op­por­tun­ity to ad­dress. In res­ponse to this con­cern, the fi­nal rule pro­vid­es that, when con­duct­ing com­mu­ni­ca­tions prior to es­tab­lish­ing the com­pe­ti­tive range, of­fer­ors, in­clud­ing small en­tities, shall be granted the op­por­tun­ity to ex­plain sit­u­ations that con­trib­u­ted to an ad­verse past per­form­ance ra­ting to which they have not had a prev­ious op­por­tun­ity to res­pond, be­fore such ra­tings can be the de­term­in­ing fac­tor for ex­clus­ion from the com­pe­ti­tive range.

FAC 97-02, 62 Fed. Reg. 51,224, at 51,226 (1997) (emphasis added).

GAO has taken a different approach. So much for the principles of stat­u­tory/reg­u­la­tory construction!

In the first such case, Roh­mann Serv­ices, Inc., B-280­154.2, Nov. 16, 1998, at 8-9, per GAO, the of­fer­or was “aware of much of that in­for­ma­tion,” and GAO re­fus­ed to read FAR 15.306­(a)­(2) as man­da­tory, not­with­stand­ing the clear, con­trary lan­gu­age in the FAC 97-02 com­ments. See al­so In­land Serv­ice Corp., B-282­272, June 21, 1999, at 4-5 (of­fer­or was aware of the spe­cif­ic de­fic­ien­cies claimed, had con­tes­ted them, and was pur­su­ing a con­tract claim).

GAO later elaborated on this departure from the pre­cepts of Fed­er­al Ac­qui­si­tion Circular 97-02:

With regard specifically to clar­i­fi­ca­tions con­cern­ing ad­ver­se past per­form­ance in­for­ma­tion to which the of­fer­or has not pre­vious­ly had an op­por­tun­ity to res­pond, we think that, for the exer­cise of dis­cret­ion to be rea­son­able, the con­trac­ting of­fi­cer must give the of­fer­or an op­por­tun­ity to res­pond where there clear­ly is a rea­son to ques­tion the valid­ity of the past per­form­ance in­for­ma­tion, for ex­ample, where there are ob­vious in­con­sis­ten­cies be­tween a refer­ence’s nar­ra­tive com­ments and the ac­tual ra­tings the refer­ence gives the of­fer­or. In the ab­sence of such a clear ba­sis to ques­tion the past per­form­ance in­for­ma­tion, we think that, short of act­ing in bad faith, the con­trac­ting of­fi­cer rea­son­ably may de­cide not to ask for clarifications.

A. G. Cullen Con­struc­tion, Inc., B-284­049.2, Feb. 22, 2000, at 5.

GAO’s permissive view of the prec­atory lan­gu­age in FAR 15.306­(a)­(2) (“of­fer­ors may be given the op­por­tun­ity to clar­ify”) has been ex­tend­ed to sub­mis­sions of in­com­plete past per­form­ance in­for­ma­tion. In U.S. Con­struc­tors, Inc., B-282­776, July 21, 1999, an of­fer­or sub­mit­ted past per­for­mance in­for­ma­tion, but it of­fer­ed no com­plet­ed past per­form­ance refer­en­ces. To his cred­it, the con­trac­ting of­fi­cer tele­phon­ed one refer­en­ce, who rated the of­fer­or’s past per­form­ance as “poor,” cal­led a sec­ond refer­en­ce, but calls were not re­turn­ed, and a tele­phone num­ber for the third refer­en­ce turn­ed out to be not a work­ing num­ber. Id., at 2. The con­trac­ting of­fi­cer did not give the of­fer­or an op­por­tun­ity to clar­ify or dis­cuss these ex parte past per­form­ance refer­en­ces, and the agen­cy down­graded the pro­po­sal when ra­ting it, be­fore making an award on in­i­tial pro­po­sals. But this was suf­fi­cient for GAO, un­der the broad prin­ci­ple that of­fer­ors as­sume the bur­den of sub­mit­ting a pro­po­sal ade­quate for evaluation:

On this record, we think that in the first instance, it was in­cum­bent up­on USC to com­ply with the RFP re­quire­ment to fur­nish com­plet­ed past per­form­ance refer­en­ce ques­tion­nair­es in its in­i­tial pro­po­sal be­fore it could cred­i­bly ar­gue that it was en­ti­tled to om­mu­ni­ca­tions re­gard­ing its per­form­ance history.

Id., at 4.

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Ad Hoc Past Performance Information That Must be Evaluated

Systematic past performance infor­ma­tion must be eval­u­ated. While past per­form­ance refer­en­ces sub­mit­ted with a com­pe­ti­tive pro­po­sal need not be con­tac­ted, Ro­tech Med­i­cal Corp., B-283­295.2, Nov. 8, 1999, at 3, ad hoc past per­form­ance in­for­ma­tion sub­mit­ted with a com­pe­ti­tive pro­po­sal must be eval­u­ated, if on­ly by read­ing, re­view­ing, and rating the pro­po­sal. Here there is an anom­a­ly—while agen­cies may not use sys­te­matic past per­form­ance in­for­ma­tion for source se­lec­tion pur­pos­es be­yond 3 years after con­tract com­ple­tion, rele­vant past per­form­ance in­for­ma­tion sub­mit­ted by refer­ences iden­ti­fied in a com­pe­ti­tive pro­po­sal, even past per­for­mance in­for­ma­tion or refer­en­ces ob­tained be­yond 3 years af­ter con­tract com­ple­tion, may prop­er­ly be eval­u­ated. Ore­gon Iron Works, Inc., B-284­088.2, June 15, 2000, at 7-8.

An agency may not fail to contact an of­fer­ed refer­en­ce, or fail to rate ad hoc past per­for­mance in­for­ma­tion, when the of­fer­or is an in­cum­bent un­der an agen­cy con­tract com­par­able to the con­tract pro­pos­ed by the so­li­ci­ta­tion, or the of­fer­or is an in­cumb­ent un­der a com­par­able con­tract and this is per­sonal­ly known by one or more of the eval­u­ators. TRW, Inc., B-282­162, B-282­162.2, June 9, 1999, at 4-5. An agen­cy may not con­tact some past per­form­ance ref­er­en­ces, while at the same time it ig­nores other refer­en­ces, these for past per­form­ance as an in­cum­bent un­der a com­par­able con­tract. SCIEN­TECH, Inc., B-277­805.2, Jan. 20, 1998, at 5-6. Where an of­fer­or’s past per­form­ance of a com­par­able con­tract is known to one or more of the eval­u­ators, this past per­form­ance in­for­ma­tion may not be ig­nor­ed even though an of­fer­or does not sub­mit a past per­form­ance refer­en­ce for it. And nei­ther may an agen­cy ig­nore rele­vant past per­form­ance in­for­ma­tion that comes to light dur­ing the eval­u­a­tion pro­cess, e.g., as a re­sult of a pre­award sur­vey. GTS Dura­tek, Inc., B-280­511.2, B-280­511.3, Oct. 19, 1998, at 14-15.

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Derivative Ad Hoc Past Performance Information

FAR 5.305(a)(2)(iii) com­mands eval­u­ation of rele­vant der­i­va­tive ad hoc past per­form­ance in­for­ma­tion, i.e., eval­u­ation of past per­form­ance in­for­ma­tion for a com­pany’s pred­e­ces­sor, or pro­posed key per­son­nel, or pro­posed ma­jor subcontractors.

The issue, in evaluations of relevant der­i­vat­ive ad hoc past per­form­ance in­for­ma­tion, is whet­her or not the per­form­ance of a pro­posed team­ing part­ner/ma­jor sub­con­trac­tor may “sig­nif­i­cant­ly bear on the like­li­hood of suc­cess­ful per­form­ance.” If not, if top lev­el man­age­ment of the pro­posed team­ing part­ner/ma­jor sub­con­trac­tor have not been in­volv­ed, then this er­i­va­tive ad hoc past per­form­ance in­for­ma­tion is not of any rele­vance. Xeno Tech­nix, Inc., B-278­738, B-278­738.2, Mar. 11, 1998, at 3-4, cit­ing ST Aero­space En­gines Pte. Ltd., B-275­725, Mar. 19, 1997, at 3-4. Like­wise with a cor­por­ate par­ent or oth­er sub­si­di­aries that will not have mean­ing­ful in­vol­ve­ment in per­form­ance of the pro­pos­ed con­tract. Uni­ver­sal Build­ing Main­te­nance, Inc., B-282­456, July 15, 1999, at 6-7.

Contrariwise, if a proposed teaming partner is to be sub­stan­tial­ly in­vol­ved in con­tract per­form­ance, even though this is prop­er­ly a dis­crete part of the to­tal per­form­ance, and over­all man­age­ment res­pon­si­bil­ity re­mains with the prime con­trac­tor, then an of­fer­or is prop­er­ly cred­it­ed with relevant der­i­vative past per­form­ance information of a pro­posed team­ing part­ner/ma­jor sub­con­trac­tor. Wack­en­hut Serv­ices, Inc., B-276012.2, Sept. 1, 1998, at 6.

Of course, this prin­ciple works both ways. If, on a rele­vant past per­form­ance ref­er­ence, an of­feror re­ceives a bad ad hoc eval­u­ation for poor per­form­ance of a sub­con­trac­tor, the rating is prop­er, even though the poor per­form­ance is not its own—primes are res­pon­si­ble for sub­con­trac­tor per­form­ance. Neal R. Gross & Co., Inc., B-275­066, Jan. 17, 1997, at 3-4. The same is true for cor­por­ate pred­e­ces­sors, par­tic­u­lar­ly so where the of­fer­or operates in the same fa­cil­ity, with the same per­son­nel and man­age­ment team, and the cor­po­rate pred­ec­es­sor pre­vious­ly could not, or would not, meet re­quire­ments for the same items. Quality Fab­ri­ca­tors, Inc., B-271­431, B-271­431.3, June 25, 1996, at 2, 6.

Whether or not an offeror has prop­er­ly re­ceiv­ed cred­it for the rele­vant past per­form­ance of pro­posed key per­son­nel de­pends on writ­ten or oral com­mit­ments from the pro­pos­ed key per­son­nel that they will work for the of­fer­or. Thus even though an of­fer­or pro­pos­es in­cumbent’s per­son­nel, and yet the in­cumb­ent al­so com­pet­es for the pro­pos­ed con­tract, these sorts of com­mit­ments sup­port a fav­or­able ad hoc eval­u­ation. EBA En­gine­er­ing, Inc., B-275­818, Mar. 31, 1997, at 6-8. This is not so, of cour­se, in the ab­sence of a com­mit­ment, a meet­ing of the minds on sal­ary and bene­fits, and the pro­pos­ed key per­sons know­ing that their serv­ices have been of­fer­ed. Aero­space De­sign & Fab­ri­ca­tion, Inc., B-278­892.2 et al., May 4, 1998, at 6-8.

Agencies also may prop­er­ly give non-in­cum­bent of­fer­ors cred­it for the past per­form­ance of in­cum­bent per­son­nel where so­li­ci­ta­tions per­mit it, even though pro­pos­ed key per­sons do not know that their serv­ices have been of­fer­ed, on the pro­viso that there is al­so of­fer­ed a com­pen­sa­tion pack­age at or ab­ove the level pro­vid­ed by the in­cum­bent, and a de­tail­ed trans­i­tion plan, to­get­her with a rep­re­sen­ta­tion that the of­fer­or will at­tempt to hire the in­cum­bents. Con­struc­tion Tech­nol­ogy Lab­o­ra­tor­ies, Inc., B-281­836, April 12, 1999, at 4-5.

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Similar Ad Hoc Past Performance Information

41 U.S.C. § 405(j)­(1)­(C)­(i) and FAR 15.305­(a)­(2)­(ii) re­quire that of­fer­ors be giv­en an op­por­tun­ity to iden­ti­fy past or cur­rent per­form­ance in­for­ma­tion “sim­i­lar” to the of­fer­ed re­quire­ment. FAR 15.305­(a)­(2)­(ii) leaves it to the sour­ce se­lec­tion au­thor­ity to deter­mine the “rele­vance” of sim­i­lar ad hoc past per­form­ance information.

Whether or not past or cur­rent per­form­ance is #8220;sim­i­lar” to the of­fer­ed re­quire­ment de­pends on so­li­ci­ta­tion stand­ards for de­term­in­ing com­par­abil­ity. In UNI­CCO Gov­ern­ment Serv­ices, Inc., B-277­658, Nov. 7, 1997, the so­li­ci­ta­tion pro­vid­ed, for re­quired fa­cil­i­ties man­age­ment serv­ices, a stand­ard of past or cur­rent per­form­ance at a build­ing ap­prox­i­mate­ly 750,000 square feet, with a pop­u­la­tion of ap­prox­i­mate­ly 2,300, and for de­liv­ery of the same serv­ices as those re­quired. Id., at 7. The ab­so­lute num­ber of past or cur­rent per­form­ance refer­en­ces was there­fore of no sig­nif­i­cance; the agen­cy could make a best val­ue award to an of­fer­or with a single, out­stand­ing past per­form­ance refer­ence from a sim­i­lar build­ing, and this al­though a low­er-priced of­fer­or had more, but less glow­ing, past per­form­ance refer­en­ces from sim­i­lar buildings. Id., at 8.

So also for those solicitations that do not de­fine just what is “sim­i­lar” past or cur­rent per­form­ance. Here, the agen­cy could make a best val­ue award on a high­er-priced pro­pos­al where the of­fer­or’s past per­form­ance, in con­trast to the pro­tes­ter’s past per­form­ance, was on larg­er con­tracts, for the full range of re­quired serv­ices (house­hold main­te­nance serv­ices—the pro­tes­ter’s ex­per­ience was only as a paint­ing con­trac­tor), and this even though the so­li­ci­ta­tion did not ex­plic­it­ly pro­vide that mag­ni­tude and com­plex­ity of past or cur­rent per­form­ance would be con­sid­er­ed. Bird­well Brot­hers Paint­ing & Re­fin­ish­ing, B-285­035, July 5, 2000, at 6.

Agencies must consider whether or not com­pa­ra­tive past or cur­rent per­form­ance is similar. In a small bus­i­ness set-aside so­li­ci­ta­tion for a pro­pos­ed multi-mil­lion dol­lar con­tract for re­pair of air­craft nav­i­ga­tion­al ra­dio trans­cei­vers (TACAN), an agen­cy im­prop­er­ly de­ter­mined a low­er-priced pro­po­sal to be the best val­ue, this on the prem­ise that the pu­ta­tive award­ee’s per­form­ance risk (as well as the per­form­ance risk for all eight of­fer­ors) was as low as (but no bet­ter than) the pro­tes­ter’s (the in­cum­bent), where the ad hoc past per­form­ance in­for­ma­tion sub­mit­ted by the award­ee was four con­tracts for less com­plex re­quire­ments, ra­dio pow­er sup­ply re­pairs, and all four con­tracts were each sig­ni­fi­cant­ly less than $1 mil­lion. Nav­Com De­fen­se Elec­tron­ics, Inc., B-276163, May 19, 1997, at 3-5. See al­so Og­den Sup­port Serv­ices, Inc., B-270­012.2, Mar. 19, 1996, at 6-7 (award­ee’s ad hoc past per­form­ance in­for­ma­tion and refer­en­ces did not demon­strate mail/cour­ier serv­ice or sim­ilar ex­per­ien­ce, as re­quir­ed by the solicitation).

Whether or not comparative past or current performance is sim­i­lar does not de­pend on a com­par­i­son of the size of prior con­tracts per­formed, but ra­ther, it de­pends on con­sid­er­ation of a his­tory of suc­ces­sful per­form­ance of like serv­ices (de­liv­ery of like sup­plies) as those required:

  Here, we find that the agen­cy’s de­ter­mi­na­tion of PMT’s past per­form­ance as “mar­gin­al with a prob­abil­ity of poor per­form­ance” is not rea­son­ably based. The agency’s as­sess­ment of PMT’s pri­or con­tract ex­per­ien­ce was based en­tire­ly on the con­clu­sion that PMT had not per­form­ed con­tracts of sim­i­lar “com­plex­ity.” The agency has not de­fin­ed, eit­her in the RFP or in its pro­test sub­mis­sions, what is in­tend­ed by the term om­plex­ity with res­pect to these serv­ices. None­the­less, it seems rea­son­able to be­lieve that fac­tors rele­vant to com­plex­ity may in­clude such things as the de­gree of care or spec­ial hand­ling need­ed for dis­pos­al of spe­cif­ic types of waste, the size of the staff need­ed to ac­com­plish the work, the level of re­port­ing and rec­ord keep­ing re­quir­ed, and the num­ber of ve­hic­les need­ed for per­form­ance. The agen­cy did not, how­ever, take in­to ac­count these fac­tors or any oth­er fac­tor oth­er than size.

PMT Serv­ices, Inc., B-270538.2, April 1, 1996, at 6.

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Relevance of Similar Ad Hoc Past Performance Information

Agencies may consider the rele­vance of sim­i­lar ad hoc past per­form­ance in­for­ma­tion, even though an of­fer­or has not list­ed a par­tic­u­lar prior con­tract in its com­pe­ti­tive proposal. TEAM Sup­port Serv­ices, Inc., B-279379.2, June 22, 1998, at 6. When com­pe­ti­tive pro­po­sals show com­par­able sim­i­lar ad hoc past per­form­ance in­for­ma­tion, then an agen­cy can­not de­cide that one of­fer­or’s past per­form­ance is less rele­vant than the past per­form­ance of oth­er of­fer­ors where the agen­cy’s rating is not sup­port­ed by the eval­u­ation rec­ord, and in fact a par­tic­u­lar of­fer­or’s past per­form­ance is com­par­able to the past per­form­ance of the oth­er of­fer­ors. Tri­fax Corp., B-279­561, June 29, 1998, at 5-8.

And despite solicitation lan­g­u­age re­quir­ing iden­ti­fi­ca­tion of cur­rent or past per­form­ance in­for­ma­tion “sim­i­lar in mag­ni­tude,” agen­cies can prop­er­ly con­sid­er as “rele­vant” on­ly that sim­i­lar ad hoc past per­form­ance in­for­ma­tion that is for serv­ices like those re­quired. Ostrom Paint­ing & Sand­blast­ing, Inc., B-285­244, July 18, 2000, at 4.

Just as agencies may not fail to con­sid­er whet­her or not com­par­ative past or cur­rent per­form­ance is sim­i­lar, so al­so may agen­cies not fail to con­sid­er the rele­vance of par­tic­u­lar com­par­a­tive sim­i­lar past per­form­ance in­for­ma­tion. In Green Val­ley Trans­por­ta­tion, Inc., B-285­283, Aug. 9, 2000, when the agen­cy con­duc­ted a com­par­a­tive eval­u­ation of of­fer­ors, each with a num­ber of sim­i­lar ad hoc past per­form­ances, the agen­cy did not re­late the num­ber of prob­lems re­port­ed to the ab­so­lute num­ber of ship­ments made in the same time per­iod, Id., at 6; the agen­cy did not con­sid­er an of­fer­or’s jus­ti­fi­ca­tions for prob­lem ship­ments, Id., at 7; and the agen­cy did not con­sid­er ship­ping vol­ume when analy­zing on-time per­form­ance, Id., at 10. This was not the con­sid­er­a­tion of rele­vance for sim­ilar ad hoc past per­form­ance in­for­ma­tion that is com­mand­ed by stat­ute and reg­u­la­tion, and GAO rec­om­mend­ed a e­eval­u­ation. Id., at 11.

Similar ad hoc past performance references (because they were for the aircraft fuel monitoring systems required for delivery) are more relevant than another offeror’s claimed similar ad hoc past per­form­ance information, and they are proper support for a best value selection, even on a com­pe­ti­tive proposal with a significantly higher evaluated price. And this even though the pro­tes­ter might in fact have had relevant similar ad hoc past per­form­ance references on air­craft fuel-monitoring systems:

The record shows that Lear reported and documented more relevant successful ex­per­i­ence than did Israel Aircraft. Moreover, since the RFP stated that it was the of­fer­or’s res­pon­si­bil­ity to provide the information sufficient for evaluation, including rele­van­ce of past contracts, and that the agency may rely solely on the information pro­vid­ed by the offeror, we do not think the agency was required to do a more ex­ten­sive in­ves­ti­ga­tion than it did here, not­with­stand­ing the un­sup­port­ed gen­er­al state­ments in Israel Air­craft’s pro­pos­al ab­out claim­ed ex­per­ien­ce in fuel mea­sure­ment sys­tems. Thus, we find from this rec­ord that the eval­u­ation of past per­form­ance was reasonable.

Israel Aircraft Industries, Ltd., MATA Helicopters Division, B-274389, B-274389.2, B-274389.3, Dec. 6, 1996, at 9.

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Neutral Past Performance Evaluations

Recall this deceptively simple FASA language:

In the case of an offeror with respect to which there is no information on past con­tract per­form­ance or with respect to which information on past contract performance is not avail­able, the offeror may not be evaluated favorably or unfavorably on the factor of past cont­ract performance.

41 U.S.C. § 405(j)(2). How is this part of the statute implemented? Just what does the statute mean?

It turns out that the statute means just what it says: nothing more, nothing less:

• Use of neutral past performance evaluations. Some respondents expressed con­cerns that neutral past performance evaluations are not ade­quately defined, and that the rule does not contain sufficient im­ple­ment­ing guidance. One res­pondent sug­ges­ted that, to avoid abuses of neutral rating, offerors granted such ratings should be re­quir­ed to sub­mit a record of their lack of opportunity to ac­quire a record of relevant past per­form­ance. The second proposed rule contained a definition of neutral rating, and asked res­pond­ents to provide suggestions for a better defi­ni­tion. We received only one such sug­ges­tion, and, upon analysis, we found that the suggestion did not ac­tual­ly provide a definition of neutral rating but, rather, provided a way to limit the ap­pli­ca­tion of neutral ratings. Instead, the final rule includes language based on 41 U.S.C. 405(j)(2) pro­vid­ing offer­ors, without a previous performance history, a rating that neither re­wards nor pena­lizes the offeror. We selected this alternative to allow the facts of the in­stant ac­qui­si­tion to be used in determining what rating scheme would satisfy requirements of the statute.

FAC 97-02, 62 Fed. Reg. 51,224, at 51,226 (1997).

So again, the question—what does this mean? What happens when an agency wishes to make a best value selection, and the discriminator is past performance? If the proposed awardee has relevant past performance experience and another offeror has none, then, all other things being equal, wouldn’t a best value award based on past performance penalize the offeror with­out relevant past performance experience? GAO answered this question long ago, and since you know just how GAO has treated the ability of offerors to comment on negative ex parte ad hoc past performance information, disregarding the drafters’ intent, also expressed in Federal Ac­qui­si­tion Circular 97-02, you’ve got an answer here as well.

In Excalibur Systems, Inc., B-272017, July 12, 1996, the agency had made a best value award on a lower price, and in doing so, had evaluated the lower-priced offeror’s past performance as the same as that for a slightly higher-priced offeror. The slightly higher-priced offeror was the incumbent, one with relevant ad hoc past performance information; the lower-priced offeror had no production ex­per­ience for the item, ergo no relevant ad hoc past performance in­for­ma­tion. Id., at 2.

GAO sustained this selection decision, but not without some dicta announcing that a best value selection of an offeror with relevant ad hoc past performance information over an offeror with­out rele­vant past performance information would not penalize the offeror without relevant past per­form­ance experience:

In general, we do not view RFP evaluation schemes that specify a “neutral” rating for ven­dors with no past performance record, see, e.g., Quality Fabricators, Inc., B-271431; B-271­431.3, June 25, 1996, 96-2 CPD ¶ __; Caltech Serv. Corp., B-261044.4, Dec. 14, 1995, 95-2 CPD ¶ 285, as pre­clud­ing this same type of source selection e­cis­ion-making. That is, we think that the use of a neutral rating approach, to avoid penalizing a vendor with­out prior experience and thereby enhance competition, does not preclude, in a best value procurement, a determination to award to a higher-priced offeror with a good past performance record over a lower-cost vendor with a neu­tral past performance ra­ting.³ Indeed such a de­ter­mi­na­tion is inherent in the con­cept of best value.

Here, however, the Navy explains that its evaluation scheme does not call for re­ward­ing a vendor with good past performance over a vendor with no relevant past per­form­ance. Rather, the Navy further explains, its eval­u­ation scheme is intended to dif­fer­en­ti­ate between those with good past performance and those with differing degrees of less than good per­form­ance. In other words, the Navy’s position is that un­der the RFP an offeror with a green rating is superior to an offeror with a red or yel­low rating but not to an offeror with the neutral insufficient data rating.

We have no basis to disagree with the Navy. . . .

Id., at 3-4.

With respect, I can’t find any statutory provision, anything about “best value,” where the concept of best value overrides plainly-written statutory language, i.e., that an offeror without rele­vant past per­form­ance information may not be evaluated favorably or unfavorably on the factor of past con­tract performance. This being so, then how is it that a best value selection where the dis­crim­i­nator is past performance does not penalize an offeror without relevant past performance in­for­ma­tion? As noted by GAO in Excalibur Systems, wasn’t it congressional intent to “avoid penal­i­zing a vendor without prior experience and thereby enhance competition?”

I had just this sort of case, and I presented it to the United States Court of Federal Claims. I lost. Unified Architecture & Engineering, Inc. v. United States, 46 Fed. Cl. 56, 63-64 (2000). It is now be­fore the United States Court of Appeals for the Fed­er­al Circuit, and the matter will be sub­mit­ted on oral argument this fall. So we’ll see how it turns out.

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Conclusion

Save that the law so far ignores statutory language and the drafters’ intent in two are­as, (1) the abil­ity of offerors to comment on negative ex parte ad hoc past per­form­ance information, and (2) neu­tral past performance evaluations, routine use of past performance as an evaluation factor has de­vel­oped just as could be ex­pec­ted. And there is still an opportunity for case law to iron out the prob­lems iden­ti­fied in this article.

— Cy Phillips

Copyright © 2000 Cyrus E. Phillips, IV. All rights reserved.

Republished from Where in Federal Contracting?.

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