Guidance Regarding Generation and Use of Contractor Past Performance Information
ACQUISITION POLICY MEMORANDUM 2009 - 07
To: Heads of Contracting Activity
From: Nancy J. Gunderson /s/
Senior Procurement Executive
Subject: Guidance Regarding Generation and Use of Contractor Past Performance Information
Effective Date: Upon Issuance
1. Purpose. This Acquisition Policy Memorandum (APM): (a) reinforces current government-wide requirements concerning generation and use of contractor past performance information (PPI) and associated roles and responsibilities; (b) identifies pertinent Department of Health and Human Services (HHS) expectations and requirements for the Operating Divisions (OPDIVs); and (c) discusses plans for ensuring that HHS staff provide timely, complete, and useful PPI.
To comply with the governing statutory and regulatory requirements, contracting offices and requiring (program) offices must use due diligence in: (a) assessing the past performance of those entities with which it contracts; (b) making use of PPI, whether generated in that OPDIV or by another OPDIV or federal agency; and (c) evaluating sources, making source-selection decisions, and making responsibility determinations based (in part) on PPI. While this APM emphasizes OPDIV post-award assessment of contractor performance, an additional APM may be issued on the use of PPI in proposal evaluations, source selection, and enhanced contract administration.
2. Background. The Federal Acquisition Streamlining Act of 1994 (FASA) established a government-wide requirement for formal documentation of contractor past performance and use of PPI in evaluating sources and making source selection decisions, as well as in making responsibility determinations. Given the variation in agency buying profiles and the state of systems at that time, the Federal Acquisition Regulation (FAR) implementation was fairly non-prescriptive, and we used the same approach in passing down those requirements to the OPDIVs.
However, a number of issues have recently been identified with respect to PPI by: (a) the Government Accountability Office (GAO) in its report entitled “Federal Contractors: Better Performance Information Needed to Support Agency Contract Awards Decisions” (GAO-09-374, April 2009) (at http://www.gao.gov/new.items/d09374.pdf), and (b) the Office of Federal Procurement Policy (OFPP) in a July 29, 2009 memorandum, “Improving the Use of Contractor Performance Information,” to Agency Chief Acquisition Officers (CAOs) and Senior Procurement Executives (SPEs) (at http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_fy2009/m-09-25.pdf).
Primary among the GAO findings were the following:
- Different approaches to documenting and collecting PPI. Several agencies —most notably HHS’ National Institutes of Health (NIH) with its Contractor Performance System (CPS) and the Department of Defense (DoD) with its Contractor Performance Assessment Reporting System (CPARS)—developed separate systems to collect PPI, and some agencies subscribed to one or the other. The FAR requires such systems to provide information to the Past Performance Information Retrieval System (PPIRS)—a web-based system (part of the Integrated Acquisition Environment) that serves as the single, government-wide retrieval system for PPI. However, this does not resolve the underlying differences between CPS and CPARS.
- Issues with respect to knowing which contracts/orders require completion of PPI. In part this is due to applicability issues, which were clarified in Federal Acquisition Circular (FAC) 2005-34, July 1, 2009. That FAC now makes clear that orders under the GSA Federal Supply Schedules are subject to past performance evaluation.
- Compliance issues in completing PPI—including missing contracts, untimely information, or incomplete information—that cause agencies to either supplement or duplicate efforts to obtain reliable PPI or not use PPI as intended by FASA.
The OFPP memorandum cites as the basis for needed improvements in use of PPI the President’s March 4, 2009 Memorandum on Government Contracting, which directs agencies to “identify contracts that are wasteful, inefficient, or are not likely to meet government needs and to improve acquisition practices more generally.” It indicates that “greater and more effective use of contractor performance evaluations is essential to meeting this goal.”
3. Statutory and Regulatory Requirements.
Section 1091 of FASA states that (a) past contract performance of an offeror is one of the relevant factors that a contracting official of an executive agency should consider in awarding a contract, and (b) it is appropriate for a contracting official to consider the past contract performance of an offeror as an indicator of the likelihood that the offeror will successfully perform a contract to be awarded by that official.
FASA requires implementing guidance that, among other things, addresses—
- 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;
- policies for the collection, maintenance, and dissemination of information on past contract performance; and
- policies for ensuring that offerors are afforded an opportunity to submit relevant information on past contract performance and that such information is considered.
The FASA provisions were addressed in OFPP Policy Letter 92-5 (subsequently superseded by FAR coverage), OFPP’s “Best Practices for Collecting and Using Past Performance Information” (updated in May 2000), and the FAR.
FAR 42.1502 specifies, in part, that —
- for each (a) non-construction contract exceeding the simplified acquisition threshold, (b) order that exceeds the simplified acquisition threshold placed against a Federal Supply Schedule contract, or (c) order under a task-order contract or a delivery-order contract awarded by another agency (i.e., Governmentwide acquisition contract or multi-agency contract)—
- a past performance evaluation shall be prepared at the time the work under the contract or order is completed; and
- interim assessments shall be prepared as specified by the agencies to provide current information for source evaluation and selection purposes for contracts or orders with a period of performance, including options, exceeding 1 year.
- for single-agency task order and delivery order contracts, the contracting officer (CO) may require performance evaluations for each order in excess of the simplified acquisition threshold or as part of the overall contract evaluation (e.g., an order-by-order review may be warranted if the scope of the basic contract is “very broad and the nature of individual orders could be significantly different”).
- past performance evaluations shall be prepared for each (a) construction contract of $550,000 or more, and for each construction contract terminated for default regardless of contract value (past performance evaluations may also be prepared for construction contracts below $550,000); and (b) architect-engineer services (A-E) contract of $30,000 or more, and for each A-E services contract that is terminated for default regardless of contract value (past performance evaluations may also be prepared for architect-engineer services contracts below $30,000).
- past performance evaluations shall include an assessment of contractor performance against, and efforts to achieve, the goals identified in the small business subcontracting plan when the contract includes the clause at 52.219-9, Small Business Subcontracting Plan. This assessment is not required when an order is placed against an FSS, and is at the discretion of the CO for single-agency task order and delivery order contracts when evaluation occurs on an order-by-order basis.
FAR 42.15 also requires agencies to submit an electronic record of contractor performance to PPIRS and establish internal procedures and security controls for collecting PPI and reporting PPI to PPIRS.
In addition, please note that FAR 36.602-1(a)(4) requires an evaluation of past performance for A-E contracts, covering “cost control, quality of work, and compliance with performance schedules.”
The FAR continues to provide significant flexibility to the agencies with respect to PPI; requirements or procedures are stipulated in a few areas only. As indicated above, GAO and OFPP have identified basic non-compliance issues in addition to potential areas where government-wide improvement efforts are needed. This APM indicates actions that HHS will take or consider taking pending any further government-wide changes.
4. Analysis and Discussion.
a. HHS Expectations and Requirements
While HHS was not one of the agencies reviewed by GAO, we must assume that the issues cited in the GAO report were not unique to the agencies reviewed and that, to some degree, HHS experience is similar to that of those agencies.
At a minimum, we expect compliance with existing requirements. In our current implementation of FASA/OFPP/FAR requirements, we allow maximum flexibility to the OPDIVs in determining how they would implement these requirements. While we intend, to the maximum extent practical, to continue to provide such flexibility, this APM establishes a standard set of HHS policies and operating parameters, as well as clarifications as follows:
(1) All HHS OPDIVs will continue to use CPS as the feeder system for PPIRS unless there is an HHS-wide determination to do otherwise.
(2) All HHS OPDIVs will use the Federal Awardee Performance and Integrity Information System (FAPIIS), once available, to record information on termination proceedings and responsibility determinations under applicable contracts.
(3) OPDIVs should consider reviewing CPS/PPIRS for the availability of useful PPI on possible or suggested sources, as part of determining whether to require submission of specific PPI by offerors.
(4) FASA/OFPP/FAR emphasize use of PPI to distinguish among competitors, but they do not explicitly require use of past performance information as part of non-competitive justifications. However, we plan to update HHS’ standard Justification for Other than Full and Open Competition (JOFOC) template to explicitly address past performance considerations for sole-source acquisitions/limited-source competitions. You are reminded that, whether an initial requirement was competed or not competed, post-award past performance assessments must be completed for applicable contracts and orders.
(5) The Project Officer (PO)/CO/Contract Specialist (CS) shall include past performance as an evaluation factor for all competitive, non-commercial services acquisitions exceeding the simplified acquisition threshold (currently $100,000), inclusive of options.
(6) The FAR leaves the timing of interim assessments to the agencies. There are various perspectives on the timing of post-award performance assessment. Clearly, when using incentive-type contracts, such as a cost-plus-award fee contract, contractor performance assessment is an integral part of post-award administration. Quality assurance surveillance under performance-based acquisitions may facilitate the conduct of such past performance assessments. Periodic contact with contractors should be a routine part of all post-award administration and the Contracting Officer’s Technical Representative (COTR) and the CO should address performance issues as they arise. The question is when the COTR/CO should formally document performance in CPS/PPIRS for acquisitions subject to the requirements of FAR 42.1502. Accordingly, we are instituting the following minimum guidelines for interim performance assessments:
- For non-construction definitive services contracts/task orders valued at more than $100,000 ($30,000 for A-E services), and which do not provide for any performance or funding options or phases,
- if the performance period will be greater than 18 months but less than 3 years, at least one interim assessment must be conducted halfway through the performance period.
- if the performance period will be 3 years or more, an interim assessment must be conducted at least at 12-month intervals after award.
- For non-construction definitive services contracts/task orders valued at more than $100,000 ($30,000 for A-E services) (inclusive of options), when considering whether to exercise an option for continued performance, an interim assessment must be performed as part of the decision-making process leading to exercise of the option. Since the timing between contract award and initiation of the steps leading to exercise of the first option is typically short (6-8 months), this requirement applies to all options other than the initial option. However, the PO/CO shall ensure that the contractor’s performance is satisfactory before exercising the first option.
- If an interim assessment would otherwise occur within 6 months of the end of the performance period, it may be waived in favor of the final evaluation required as part of closeout.
- OPDIVs may use different approaches to interim performance assessment for non-construction contracts with defined phases, e.g., assessment at the conclusion of a contractual phase before proceeding to the next phase.
- Interim performance assessments for construction contracts must be conducted at appropriate intervals based on the construction phases specified in the contract.
- All interim assessments of the type indicated in subparagraphs (a) through (e) above must be submitted to CPS/PPIRS but may be tailored to the size, content, and complexity of the contractual requirements, consistent with the requirements of CPS/PPIRS.
(7) Upon award of a covered contract or order, the CO/CS will propose to the COTR the schedule for interim and final past performance assessments (consistent with the guidelines in this APM) and the timeframe for receiving COTR input for the assessments. The schedule then may be subject to negotiation between the CO/CS and the COTR; however, the agreed-on schedule must be documented in the official file. This information also should be communicated to the contractor.
(8) Each HCA will designate Past Performance Contact Point(s) to: (a) assist CPS/PPIRS users and identify system issues and needed system refinements, and (b) recommend policies and procedures related to creation and use of PPI by HHS. The HCA may designate one individual to serve in both roles or may designate two different individuals. For the longer term, these individuals may serve in a capacity similar to the cross-OPDIV group that advises us on the Departmental Contracts Information System.
b. Roles and Responsibilities
Past performance evaluation is a shared responsibility of the program office, contracting office and, where appropriate, end users of the product or service. Specific roles and responsibilities are as follows:
- Contracting Officer. The CO is responsible for ensuring that the required information for each covered contract/order under his or her cognizance is provided on a timely basis to CPS/PPIRS, and to FAPIIS (once available), and that such information is accurate and complete.
- Contracting Officer’s Technical Representative. The COTR is responsible for regular monitoring of contractor performance; resolving performance issues with contractors on a real-time basis; and assisting the CS in completing periodic assessments for submission to CPS/PPIRS that are timely, complete, and contain useful information.
- Contract Specialist. The CS is responsible for:
- as the primary awarding office representative, obtaining through CPS/PPIRS and other necessary and appropriate means, PPI (if available) on offerors when required to be evaluated as part of the process leading to source selection;
- upon award, proposing the schedule for required interim performance assessments and communicating it to the COTR;
- using a database or other tracking means, initiating and completing timely performance assessments, including interim and closeout assessments in accordance with the agreed-on schedule and based on required COTR and other input;
- coordinating with the COTR on the review of any contractor comments;
- considering the relationship between the achievement of small business subcontracting goals and past performance, on a contractor or contract basis; and
- bringing any system, policy, or procedural issues to the attention of the CO and the OPDIV Past Performance Contact Point(s).
- Heads of Contracting Activity. Heads of Contracting Activity are responsible for:
- (a) ensuring that awarding activities under their cognizance are aware of statutory, regulatory, and HHS requirements (including those established in this APM) concerning PPI;
- establishing local implementing procedures, including adding use of PPI as an element in pre-solicitation/pre-award (e.g., Board) reviews; and
- identifying which official above the CO is responsible for adjudicating disagreements with contractors regarding assessment of contractor past performance.
- Past Performance Contact Point. The OPDIV Past Performance Contact Point will serve as a technical resource for those that input/use PPI in CPS/PPIRS, including POs, COTRs, COs/CSs, and vendors. This individual will document systems and policy/procedural issues for discussion among all OPDIV focal points, as well as provide training to OPDIV system users.
- Project Officer. The PO is responsible for addressing in the AP or other acquisition request documentation for competitive negotiated acquisitions the use of past performance as an evaluation factor and, for sole-source acquisitions, addressing past performance of the intended contractor in the JOFOC. The PO works jointly with the CO/CS in determining past performance factors/subfactors for use in solicitations and determining the importance of past performance in evaluation. The PO also may be involved in checking references and other aspects of evaluating PPI.
- Senior Procurement Executive. The SPE is responsible for providing HHS-wide policy and procedural guidance related to past performance, for ensuring that an effective oversight program is in place, and for evaluating OPDIV compliance.
- Source Selection Officials. These individuals are responsible for applying the past performance factor/subfactor(s) consistent with the language of the solicitation.
5. Additional Operating Division Actions. In addition to meeting the requirements specified elsewhere in this APM, OPDIVs must do the following:
- Communicate to all of their program and awarding offices the requirements related to past performance, including those in this APM.
- Provide the name, e-mail address, and telephone number of their designated Past Performance Contact Point(s) to Dennise March (Dennise.March@hhs.gov) by January 15, 2010.
6. Future Actions by Office of Grants and Acquisition Policy and Accountability (OGAPA) (under Office of the Assistant Secretary for Financial Resources (ASFR)).
a. We believe it is important to develop our own baseline before proceeding with significant additional guidance, policies, or templates. To develop an HHS baseline and to better target any corrective actions, we plan to review the use of PPI and documentation of past performance. That review may take one or more of the following forms:
- An add-on to HHS’ review of DCIS/FPDS-NG data. Reviewers would review documentation related to: (a) whether past performance was used in the evaluation; (b) if so, how the evaluation factor was communicated in the solicitation; (c) how past performance was determined and documented as part of source selection; (d) post-award timing of assessing past performance; (e) compliance with requirements to provide past performance assessments to contractors and to resolve comments; and (f) completeness and accuracy of the associated CPS/PPIRS entries. This review would be based on the requirements in place at the time the contract action is reviewed.
- A separate tiger team-type effort that would address internal controls and transactional compliance. Such a review might include related processes, such as use of past performance in making award fee determinations, as well as issues related to timeliness of closeout.
- An add-on to HHS’ Procurement Management Reviews.
- An add-on to required OPDIV annual self-assessments.
- ASFR/OGAPA’s Division of Acquisition may also take one or more of the following steps:
(1) Ask the OPDIVs to share their best past performance procedures and practices, to foster continuous improvement.
(2) Update HHS’ standard acquisition templates and checklists to emphasize PPI.
(3) Revise the PO Handbook to address in detail past performance responsibilities of both POs and COTRs.
(4) Work with HHS University to emphasize use of past performance in PO/COTR courses.
(5) Refine the past performance metric under HHS’ Acquisition Dashboard.
(6) Consider whether specific HHSAR coverage is needed.
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 Bolded language is that added by FAC 2005-34.
 Note that currently a comparable provision does not exist for non-construction contracts; however, once sec. 872 of the National Defense Authorization Act of 2009 is fully implemented in the FAR, a comparable requirement will exist for submission of that information in a newly created umbrella database—the Federal Awardee Performance and Integrity Information System (FAPIIS). The new coverage will require that the CO document various types of adverse determinations in FAPIIS, including non-responsibility determinations, and consult the database before making an award. The Central Contractor Registry will be revised to record information on criminal proceedings and the Excluded Parties List System will continue to be used to record suspensions and debarments. Central access to FAPIIS data will be available through PPIRS.