Federal Contractors: Better Performance Information Needed to Support Agency Contract Award Decisions
Published: 2009-04-23T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In fiscal year 2007, federal agencies worked with over 160,000 contractors, obligating over $456 billion, to help accomplish federal missions. This reliance on contractors makes it critical that agencies have the information necessary to properly evaluate a contractor's prior history of performance and better inform agencies' contract award decisions. While actions have been taken to improve the sharing of past performance information and its use--including the development of the Past Performance Information Retrieval System (PPIRS)--concerns remain about this information. This report assesses agencies' use of past performance information in awarding contracts; identifies challenges that hinder systematic sharing of past performance information; and describes efforts to improve contractor performance information. In conducting this work, GAO analyzed 62 contract solicitations from fiscal years 2007 and 2008 and met with 121 contracting officials. While the solicitations represent a range of contracts and contractors, GAO's findings cannot be generalized to all federal contracts.
section_title: What GAO Found
paragraphs: Agencies considered past performance information in evaluating contractors for each of the 62 solicitations GAO reviewed. Generally, factors other than past performance, such as technical approach or cost, were the primary factors for contract award decisions. A majority of officials told us their reluctance to rely more on past performance was due, in part, to their skepticism about the reliability of the information and difficulty assessing relevance to specific acquisitions. Contracting officials agreed that for past performance information to be useful for sharing, it must be documented, relevant, and reliable. However, GAO's review of PPIRS data for fiscal years 2006 and 2007 indicates that only a small percentage of contracts had a documented performance assessment; in particular, we found little contractor performance information for orders against the General Services Administration's (GSA) Multiple Award Schedule. Other performance information that could be useful in award decisions, such as contract terminations for default and subcontract management, was not systematically captured across agencies. Some officials noted that a lack of accountability and lack of system tools and metrics made it difficult for managers to ensure timely performance reports. Variations in evaluation and rating factors have also limited the usefulness of past performance information. Finally, a lack of central oversight and management of PPIRS data has hindered efforts to address these and other shortcomings. Several efforts have been initiated to improve PPIRS, but little progress has been made. In 2005, an interagency work group established several broad goals for improving past performance information, including standardizing performance ratings used by various agencies. However, these goals have yet to be met, and no funding has been dedicated for this purpose. In April 2008, changes to federal regulations were proposed that would clarify past performance documentation requirements and require the use of PPIRS. However, as of February 2009, the proposed changes had not been finalized.

section_title: Letter
paragraphs: Each year, federal agencies hire thousands of contractors to help  accomplish their missions. In fiscal year 2007 alone, federal agencies  worked with over 160,000 contractors, obligating over $456 billion.  Contractors are involved in a broad array of activities, from basic  functions, such as landscaping and janitorial services, to more complex  functions, like acquisition support and security services. These contractors  often employ subcontractors to help them meet contract requirements.  This reliance on contractors makes it critical that federal agencies have  the information necessary to properly evaluate a contractor’s prior history  of performance and better inform agencies’ contract award decisions.
To facilitate the sharing of such information, the Office of Federal  Procurement Policy (OFPP) created the Past Performance Information  Retrieval System (PPIRS)—a system intended to be a repository of  performance information on federal contractors. However, more than 5  years after the implementation of PPIRS in July 2002, questions have been  raised about how well federal agencies are documenting and sharing  information on contractor past performance. Specifically, you have noted  that agencies were renewing or awarding contracts to contractors with  questionable performance records. Consequently, you asked us to review  several issues related to the use of past performance information. In  response to your request, we (1) assessed agencies’ use of information on  contractors’ past performances in awarding contracts; (2) identified  challenges that hinder systematic, governmentwide sharing of past  performance information; and (3) described efforts under way or planned  to improve the sharing of information on contractor performance.
To conduct our work, we reviewed and analyzed the Federal Acquisition  Regulation (FAR) and OFPP guidance on the use of past performance  information. We also reviewed guidance from the Department of Defense  (DOD), Department of Energy (DOE), Department of Homeland Security  (DHS), National Aeronautics and Space Administration (NASA), and the  General Services Administration (GSA). We discussed this guidance and a  broad range of issues related to how agencies use past performance  information with 121 contracting officials at 11 buying offices that  represented a range of acquisition activities. Further, we selected and  analyzed 62 contract files from fiscal years 2007 and 2008—focusing on  how buying offices considered past performance information relative to  other evaluation factors. We selected contracts that represent a range of  products and services, types of contracts, contract dollar values, and  contractors across the government, but our findings cannot be generalized  to all federal contracts. We also analyzed data in PPIRS, past performance  information that agencies feed into PPIRS, the evaluation factors and  rating scales used in the system, and met with agency officials who  administer the system. We conducted this performance audit from  February 2008 to February 2009 in accordance with generally accepted  government auditing standards. Those standards require that we plan and  perform the audit to obtain sufficient, appropriate evidence to provide a  reasonable basis for our findings and conclusions based on our audit  objectives. We believe that the evidence obtained provides a reasonable  basis for our findings and conclusions based on our audit objectives. See  appendix I for a more detailed discussion of our scope and methodology.
subsections: section_title: Background
paragraphs: The federal government relies heavily on contractors to provide a range of  goods and services. In fiscal year 2007, about 160,000 contractors provided  support to federal agencies. A large portion of these contractors was  concentrated in five agencies: DOD, DHS, DOE, NASA, and GSA. Among  these five agencies, DOD accounts for 72 percent of all contract  obligations across about 77,000 contractors in fiscal year 2007 (see table  1).
These five agencies often rely on the same contractors. Table 2 shows the  number and percentage of contractors DHS, NASA, DOE, and GSA had in  common with DOD in fiscal year 2007.
The FAR requires agencies to consider past performance information as an  evaluation factor in certain negotiated competitive procurements—along  with other evaluation factors such as price, management capability, and  technical excellence. Contractor past performance information may  include the contractor’s  record of conforming to contract requirements and to standards of good  workmanship;  record of forecasting and controlling costs;    adherence to contract schedules; and    history of reasonable and cooperative behavior and commitment to  customer satisfaction.
Although the FAR requires officials in selecting contractors to consider  past performance as an evaluation factor in certain negotiated  procurements, agencies have broad discretion in deciding its importance  relative to other factors in the evaluation scheme. Agencies determine  which of the contractor’s past contracts are similar to the contract to be  awarded in terms of size, scope, complexity, or contract type and the  relative importance of past performance. For procurements with clearly  defined requirements and minimal risk of unsuccessful contract  performance, cost or price may play a more important role than past  performance in selecting contractors. For procurements with less clearly  defined requirements and a higher risk of unsuccessful contract  performance, it may be in the government’s best interest to consider past  performance, technical capability, and other factors as more important  than cost or price. The FAR requires that solicitations disclose the  evaluation factors that will be used in selecting a contractor and their  relative importance. In evaluating past performance information, agencies  must consider, among other things, the 1) currency and relevancy, 2)  source and context, and 3) general trends in the contractor’s performance.   The solicitation must also describe how offerors with no performance  history will be evaluated.
Once a contract is awarded, the government should monitor a contractor’s  performance throughout the performance period. Surveillance includes  oversight of a contractor’s work to provide assurance that the contractor  is providing timely and quality goods or services and to help mitigate any  contractor performance problems. An agency’s monitoring of a  contractor’s performance may serve as a basis for past performance  evaluations. The FAR requires agencies to prepare an evaluation of  contractor performance for each contract that exceeds the simplified  acquisition threshold at the time the work is completed and gives agencies  discretion to include interim evaluations for contracts with a performance  period exceeding one year. The DOD has generally higher thresholds  based on business sectors.
A number of systems across the government are used to capture  contractor performance information, which is eventually passed on to  PPIRS. DOD maintains three systems for its military departments and  agencies—Architect-Engineer Contract Administration Support System  (ACASS), Construction Contractor Appraisal Support System (CCASS),  and Contractor Performance Assessment Reporting System (CPARS).  NASA has its own system, the Past Performance Database (PPDB). DHS  and DOE are transitioning to using DOD’s CPARS. Other civilian  departments use the Contractor Performance System (CPS) managed by  the National Institutes of Health. Effective July 1, 2002, all federal  contractor past performance information currently captured through these  disparate systems was to be centrally available for use by all federal  agency contracting officials through PPIRS—a Web-enabled,  governmentwide application for consolidating federal contractor  performance information.
Since its implementation, concerns have been raised about the  completeness of the information in PPIRS. In February 2008, a DOD  Inspector General report noted that the information in CPARS, which  feeds information into PPIRS, was incomplete and questioned whether or  not acquisition officials had access to all the information they needed to  make business decisions. Specifically, in reviewing performance  assessment reports in CPARS, the Inspector General reported that for  DOD contracts valued at more than $5 million, 82 percent did not contain  detailed narratives sufficient to establish that ratings were credible and  justifiable; 68 percent had performance reports that were overdue; and 39  percent were registered more than a year late. In addition, the report  identified material internal control weaknesses in the Air Force, Army, and  Navy procedures for documenting and reporting contractor performance  information.
section_title: Factors Other Than Past Performance Generally Drive Contract Award Decisions
paragraphs: Agencies considered past performance information in evaluating  contractors for the contract solicitations we reviewed, but many of the  officials we spoke with noted that past performance rarely, if ever, was the  deciding factor in their contract award decisions. Their reluctance to base  award decisions on past performance was due, in part, to their skepticism  about the comprehensiveness and reliability of past performance  information and difficulty assessing its relevance to specific acquisitions.
For the 62 contract solicitations we reviewed, the ranking of past  performance as an evaluation factor relative to other non-cost factors  varied. The company’s technical approach was the non-cost factor  considered most important for most solicitations. Past performance as an  evaluation factor was ranked first in order of importance in about 38  percent of solicitations (appendix I provides more details on the  methodology for selecting and reviewing contract solicitations).  Contracting officials who viewed past performance as an important  evaluation factor noted that basing contract award decisions, in part, on  past performance encourages companies to achieve better acquisition  outcomes over the long term. For example, according to officials at one  Air Force location, an incumbent contractor was not awarded a follow-on  contract worth over $1 billion primarily because of poor performance on  the prior contract. As a result, the contractor implemented several  management and procedural changes to improve its performance on  future contracts.
Despite the fact that past performance was an evaluation factor in all the  solicitations we reviewed, over 60 percent of the contracting officers we  talked with stated that past performance is rarely or never a deciding  factor in selecting a contractor.  Many contracting officers stated they  preferred to rely on other more objective factors such as technical  approach or price. Officials cited several reasons for their reluctance to  rely more on past performance in making award decisions including  difficulty obtaining objective and candid past performance information.  For example, over half of the contracting managers we met with noted  that officials who are assessing a contractor’s performance have difficulty  separating problems caused by the contractor from those caused by the  government, such as changing or poorly defined government  requirements. Fear of damaging contractor relations may also influence  assessments of contractor performance, particularly in areas where there  are a limited number of contractors that can provide a particular good or  service. Some contracting officials told us there may also be a tendency to  “water down” assessments if they perceive a contractor may contest a  negative rating.  Contracting officials also cited other challenges for not  relying more on past performance information including 1) difficulty  assessing relevance to the specific acquisition or offerors with no relevant  past performance information, 2) lack of documented examples of past  performance, and 3) lack of adequate time to identify, obtain, and analyze  past performance information.
Contracting officials often rely on multiple sources of past performance  information. Most officials told us they found information from the  prospective contractor’s prior government or industry customer  references—gathered through interviews or questionnaires—as the most  useful source of past performance information. Moreover, several  contracting officials noted that they use questionnaires to obtain past  performance information on major subcontractors. Officials noted,  however, that questionnaires are time-consuming and the performance  information collected through them is not shared governmentwide. Other  sources of past performance information include informal contacts such  as from other contracting officers who have dealt with the contractor in  the past. Most contracting officials we spoke with also used PPIRS, but  cited the absence of information in PPIRS as one reason for typically  relying on other sources along with challenges in ascertaining information  that was relevant to the specific acquisitions. Several contracting officials  stated a governmentwide system like PPIRS, if populated, could reduce  the time and effort to collect past performance information for use in  selecting contractors. Regardless of the source used, contracting officials  agreed that for past performance information to be meaningful in contract  award decisions, it must be documented, relevant, and reliable.
section_title: Challenges Hinder Systematic, Governmentwide Sharing of Past Performance Information
paragraphs: Our review of PPIRS data for fiscal years 2006 and 2007 found relatively  little past performance information available for sharing and potential use  in contract award decisions. One reason is that agencies are not  documenting contractor performance information that feeds into PPIRS to  include, in some cases, contract actions involving task or delivery orders  placed against GSA’s MAS. Other information that could provide key  insights into a contractor’s performance, such as information on contract  terminations for default and a prime contractor’s management of  subcontractors, was also not systematically documented. Contracting  managers also lack tools and metrics to monitor the completeness of past  performance data in the systems agencies use to record past performance  information. Further, the lack of standardized evaluation factors and  rating scales in the systems that collect past performance information has  limited the system’s usefulness in providing an aggregate level picture of  how contractors are performing. Finally, lack of central oversight of  PPIRS has undermined efforts to capture adequate past performance  information.
subsections: section_title: Agencies Are Generally Not Documenting Contractor Performance As Required
paragraphs: The FAR requires agencies to prepare an evaluation of contractor  performance for each contract that exceeds the simplified acquisition  threshold ($100,000 in most cases) when the contract work is completed.   While the FAR definition of a contract can be read to include orders  placed against GSA’s Multiple Award Schedule (MAS),  the FAR does not  specifically state whether this requirement applies to contracts or task or  delivery order contracts awarded by another agency.  While DOD and  many agencies we reviewed have issued supplemental guidance reiterating  the FAR requirement to evaluate and document contractor  performance—information that ultimately should be fed into PPIRS—the  agencies generally did not comply with the requirement.
We estimated that the number of contracts that required a performance  assessment in fiscal year 2007 for agencies we reviewed would have  totaled about 23,000. For the same period, we found about 7,000  assessments in PPIRS—about 31 percent of those contracts requiring an  assessment (see table 3). About 75 percent of all past performance  reports in PPIRS were from DOD, with the Air Force accounting for the  highest percent of completed assessments; however, there were relatively  few for some military services—a finding consistent with the DOD IG’s  February 2008 report. For the civilian agencies we reviewed, there were  relatively few performance reports in PPIRS compared to the number we  estimated. For example, for fiscal year 2007, an estimated 13 percent of  DHS contracts that would potentially require a performance assessment  were documented in PPIRS.
For specific types of contract actions, such as task and delivery orders  placed against GSA’s MAS, we found little contractor performance  information in PPIRS.  Between fiscal years 1998 and 2008, purchases  made against MAS have grown from over $7 billion to $37 billion.  Similarly, the number of MAS contracts has increased from 5,200 in the  mid-1990s to 18,000 in fiscal year 2008. Despite this significant growth, the  number of performance reports in PPIRS for orders placed against MAS  contracts is minimal. For example, about 5 percent of the DHS orders and  none of NASA’s were assessed in fiscal year 2007. Contracting officials we  spoke with confirmed that these assessments were generally not being  done; some told us that they believed GSA was collecting this information.  According to GSA officials, however, agencies are responsible for  documenting and reporting MAS contractor performance, and GSA does  not generally request feedback on performance for MAS contractors.  Without this information, GSA is in no position to know how a contractor  is performing when deciding whether or not to continue doing business  with that contractor.
section_title: Other Information for Insight into a Contractor’s Past Performance Is Not Systematically Documented
paragraphs: Currently, there is no governmentwide requirement for agencies to  document in PPIRS when a contract has been terminated because the  contractor defaulted on the terms of the contract. Consequently,  contracting officers may not have access to all information on a  contractor’s past performance that could factor into a contract award  decision. The recent awarding of contracts to defaulted contractors  highlights the need for information on contract terminations when making  contracting decisions. For example, a $280-million Army munitions  contract was awarded to a contractor that had previously been terminated  for default on several different contracts. The contracting officer told us  that this information, if available, would have factored into the contract  award decision. Subsequently, this same contractor defaulted under that  contract.  Similarly, an October 2008 report issued by the Office of the  Special Inspector General for Iraq Reconstruction documented that at  least eight contractors that had one or more of their projects terminated  for default received new contracts and purchase orders. As part of this  audit, the office examined whether the agencies had evaluated the  contractors’ prior performance before awarding contracts and whether  they had considered suspending or debarring the poor performing  contractors. Although the report found that the awards to defaulted  contractors were within the authority provided by the FAR, it raised  questions about the degree to which the contractors’ prior performance  was considered. In June 2008, the FAR Council opened a case to address  termination for default reporting. In addition, DOD issued policy in July  2008 on the need for departmentwide centralized knowledge of all  contracts that have been terminated regardless of dollar amount.
At the subcontractor level, apart from evaluating a prime contractor’s  management of its subcontractors, historically, the federal government has  had limited visibility into subcontractor performance despite the increased  use in subcontractors. In January 2008, we reported that total subcontract  awards from DOD contracts had increased by 27 percent over a 4-year  period—from $86.5 billion in fiscal year 2002 to $109.5 billion in fiscal year  2006. As we reported, federal contractors must manage contract  performance, including planning and administering subcontracts as  necessary, to ensure the lowest overall cost and minimize technical risk to  the government. The FAR provides that the agency’s past performance  evaluation should take into account past performance information  regarding a prospective contractor’s subcontractors that will perform  major or critical aspects of a requirement when such information is  relevant to an acquisition.
Agency contracting officials informed us that they do not assess the  performance of these subcontractors. Rather, if they collect any  information, it is in their assessments of the prime contractor’s  subcontract management. However, not all collection systems used by  agencies allow for systematic capturing of subcontract management  information, if it was applicable in a procurement. DOD’s CPARS system  has a separate rating factor for subcontract management for systems  contracts whereas systems used by NASA and other civilian agencies do  not have a separate factor. DOD guidance states assessments must not be  done on subcontractors, but CPARS allows the assessing official to  address the prime contractor’s ability to manage and coordinate  subcontractor efforts.  Beyond this information on subcontractors, no  additional information is routinely collected on subcontractors.
In addition, the FAR was recently revised to explain that information on  contractor ethics can be considered past performance information.  The  FAR now states that a contractor’s history of reasonable and cooperative  behavior and commitment to customer satisfaction may be considered  part of a contractor’s past performance. This type of data is not currently  being systematically captured and documented for use in contract award  decisions.
section_title: Lack of Priority and Accountability for Past Performance Hinders the Assessment Process
paragraphs: Several contracting officials acknowledged that documenting contractor  performance was generally not a priority, and less than half of the  contracting managers we talked with tracked performance assessment  completeness. Some agency officials we spoke with said that a lack of  readily accessible system tools and metrics on completeness has made it  difficult to manage the assessment process. CPARS and CPS—assessment  reporting systems used by DOD and DHS—do not have readily accessible  system tools and metrics on completeness for managers to track  compliance. According to officials who manage CPARS, a team is  developing requirements for system tools and metrics but has been  challenged to develop useful measures because of a lack of complete and  reliable contract information from FPDS. OFPP officials similarly  acknowledged there was a lack of tools and metrics for agency contracting  officials to monitor and manage the process of documenting contractor  performance. For example, managers currently do not have the ability to  readily identify contracts that require an assessment, how many are due  and past due, and who is responsible for completing assessments.
According to these officials, holding managers accountable for outcomes  without adequate tools to manage the assessment process would be  difficult.
However, a few contracting managers we spoke with placed a high priority  on documenting contractor performance, noting that doing so tended to  improve communication with contractors and encourage good  performance. One Air Force Commander issued guidance reiterating that  CPARS is a key component in selecting contractors; that Commander  personally oversees the performance reporting system, requiring a meeting  with responsible officials when a CPARS report is overdue. DHS officials  recognized that more emphasis is needed on documenting performance  assessments and told us they have included a past performance review as  part of their chief procurement officer oversight program for fiscal year  2009. Other indicators that some management officials placed a high  priority on documenting performance include the following:    Assigning past performance focal points—some activities assigned focal  points, individuals with specific responsibilities that included providing  training and oversight. At two Air Force locations, focal points also  reviewed performance narratives for quality.
Designating assessing officials—some activities designated managers as  the official assessor of contractor performance rather than contracting  officers or program office officials.
Who to assign accountability to is another challenge. OFPP generally  views the completion of contractor performance assessments as a  contracting officer function. However, many contracting officials we  talked with stated they often do not have the required information to  complete an assessment and have to rely on program officials to provide  the information. Some contracting offices delegated responsibility for  completing assessments to the program office but acknowledged program  office officials have little incentive to complete assessments because they  often did not see the value in them. We previously reported in 2005 that  conducting contactor surveillance at DOD, which includes documenting  contractor performance, was not a high priority and that accountability for  performing contractor surveillance was lacking.
section_title: A Lack of Standardized Evaluation Factors and Rating Scales Limits PPIRS Usefulness
paragraphs: Differing number and type of rating factors and rating scales agencies use  to document contractor performance limit the usefulness of the  information in PPIRS. NASA’s PPDB system has four rating factors, and  the CPS database, which is used by other civilian agencies, has five rating  factors. In contrast, DOD’s CPARS system has a total of 16 rating factors.  Each system also uses a different rating scale. Table 4 highlights these  differences.
Officials from GSA’s Integrated Acquisition Environment, which has  oversight of governmentwide acquisition systems, acknowledged the  utility of PPIRS is currently limited by the differences in rating factors and  scales. Because the ratings are brought into PPIRS as-is, aggregate ratings  for contractors cannot be developed—the data are too disparate. As a  result, contracting officials making contract award decisions may have to  open and read through many ratings to piece together an overall picture of  a contractor’s performance. Ultimately, the lack of this information  hinders the federal government’s ability to readily assess a contractor’s  performance at an aggregate level or how overall performance is trending  over time.
section_title: Central Oversight of PPIRS Data Is La
paragraphs: No one agency oversees, monitors, manages, or funds PPIRS to ensure  agency data fed into the system is adequate, complete, and useful for  sharing governmentwide. While GSA is responsible for overseeing, and  consolidating governmentwide acquisition related systems, which include  PPIRS, OFPP  is responsible for overall policy concerning past  performance, and DOD funds and manages the technical support of the  system. In May 2000, OFPP published discretionary guidance entitled  “Best Practices for Collecting and Using Current and Past Performance  Information.” Consistent with the FAR, this guidance stated that agencies  are required to assess contractor performance and emphasized the need  for an automated means to document and share this information.  Subsequently, OFPP issued a draft contractor performance guide in 2006  designed to help agencies know their role in addressing and using  contractor performance information. However, the guide was not intended  to, nor does it, establish governmentwide roles and responsibilities for  managing and overseeing PPIRS data.
section_title: Efforts to Improve PPIRS and the Sharing of Performance Information Have Made Little Progress
paragraphs: Since 2005, several efforts have been initiated to improve PPIRS and  provide pertinent and timely performance information, but little progress  has been made. Several broad goals for system improvement, established  in 2005 by an OFPP interagency group, have yet to be met. Likewise, a  short-term goal of revising the FAR to mandate the use of PPIRS by all  government agencies has yet to be achieved.
OFPP acknowledges that PPIRS falls short of its goal to provide useful  information to contracting officials making contracting decisions. When  PPIRS was established in 2002, OFPP officials envisioned it would simplify  the task of collecting past performance information by eliminating  redundancies among the various systems. In 2005, the Chief Acquisition  Officers Council, through an OFPP interagency work group, established  several broad goals for documenting, sharing, and using past performance  information, including the following:    Standardize different contracting ratings used by various agencies.    Provide more meaningful past performance information, including  terminations for default.
Develop a centralized questionnaire system for sharing governmentwide.    Possibly eliminate multiple systems that feed performance information in  PPIRS.
However, little progress has been made in addressing these goals.  According to OFPP officials, funding needs to be dedicated to address  these goals and realize long-term improvements to the current past  performance system.  GSA officials who oversee acquisition related  systems, to include PPIRS, told us that as of February 27, 2009, efforts  remain unfunded and no further action had been taken to make needed  improvements.
The first step in securing funding, according to OFPP and GSA officials, is  mandating the use of PPIRS.  However, proposed changes to the FAR that  would clarify past performance documentation requirements and require  the use of PPIRS have been stalled. The proposed rule provides clearer  instruction to contracting officers by delineating the requirement to  document contractor performance for orders that exceed the simplified  acquisition threshold, including those placed against GSA MAS contracts,  or for orders against contracts awarded by another agency. In proposing  FAR changes, OFPP focused, in part, on accountability by requiring  agencies to identify individuals responsible for preparing contractor  performance assessments. While the comment period for the proposed  changes closed in June 2008, the changes have not been finalized.  An  OFPP policy official stated that the final rule is expected to be published  by June 2009.
section_title: Conclusions
paragraphs: With the federal government relying on many of the same contractors to  provide goods and services across agencies, the need to share information  on contractors’ past performance in making contract award decisions is  critical. While the need for a centralized repository of reliable performance  information on federal contractors was identified in 2002 when OFPP  implemented PPIRS, we identified several underlying problems that limit  the usefulness of information in PPIRS for governmentwide sharing. These  problems include the lack of accountability or incentive at agencies to  document assessments in the system, lack of standard evaluation factors  and rating scales across agencies, and a lack of central oversight to ensure  the adequacy of information fed into the system. Any efforts to improve  sharing and use of contractor performance information must, at a  minimum, address these deficiencies. Until then, PPIRS will likely remain  an inadequate information source for contracting officers. More  importantly, the government cannot be assured that it has adequate  performance information needed to make sound contract award decisions  and investments.
section_title: Recommendations for Executive Action
paragraphs: To facilitate governmentwide sharing and use of past performance  information, we recommend that the Administrator of OFPP, in  conjunction with agency chief acquisition officers, take the following  actions:    Standardize evaluation factors and rating scales governmentwide for  documenting contractor performance.
Establish policy for documenting performance-related information that is  currently not captured systematically across agencies, such as contract  terminations for default and a prime contractor’s management of its  subcontractors.
Specify that agencies are to establish procedures and management  controls, to include accountability, for documenting past performance in  PPIRS.
Define governmentwide roles and responsibilities for managing and  overseeing PPIRS data.
Develop system tools and metrics for agencies to use in monitoring and  managing the documenting of contractor performance, such as contracts  requiring an evaluation and information on delinquent reports.
Take appropriate action to finalize proposed changes to the FAR that  clarify responsibilities and performance documentation requirements for  contract actions that involve orders placed against GSA’s Multiple Award  Schedule.
To improve management and accountability for timely documenting of  contractor past performance information at the agency level, we  recommend that the departments of Defense, Energy, Homeland Security,  and NASA establish management controls and appropriate management  review of past performance evaluations as required and in line with any  OFPP policy changes.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to OFPP and the departments of  Defense, Energy, Homeland Security, GSA, and NASA.  We received e-mail  comments from OFPP, in which OFPP concurred with the  recommendations.  We received written comments from the other five  agencies, which are included as appendixes III through VII.  In their  written comments, the agencies agreed with the recommendation on  improving management controls and most agencies outlined specific  actions planned or taken to address the recommendation.
In written comments to the draft of this report, DHS did not agree with the  figures contained in table 3 of the report regarding estimated contracts  requiring an assessment and number of assessments in PPIRS for selected  agencies.  DHS stated that our numbers significantly understate the  percentage of DHS contracts for which assessments were performed and  are possibly inaccurate or misleading in how DHS compared to other  agencies.  DHS presented its own data and requested that we revise ours.   We applied the same methodology across all civilian agencies, including  DHS, and found no basis for using the numbers or methodology provided  by DHS.  For example, while DHS indicates we should not include   delivery orders, as we state in the note under table 3, our estimates did not  include individual orders issued by agencies that exceed the threshold.   Therefore, we stand by our methodology and data, which as we stated in  the report, presents a conservative estimate of the contracts that required  an assessment.  Also, we assessed the reliability of data we used and found  it to be sufficiently reliable for the purposes of our analyses.  As a result,  we are not revising the figures in table 3.  As noted in our report,  improvements are needed across agencies for the management and  accountability of timely documenting contractor past performance  information.  In its response, DHS agreed that significant strides need to  be made in this area.
In written comments to the draft of this report, GSA stated that our  recommendation should be changed to show that the FAR Council in lieu  of agency chief acquisition officers would be involved in developing and  disseminating governmentwide acquisition policy through the FAR.   According to an OFPP policy official, while the FAR Council would be  involved in evaluating policy and making changes to the FAR, OFPP is  responsible for overall policy concerning past performance and can make  policy changes without involving the FAR Council.  In line with our  recommendations, this would include standards for evaluating past  performance and policies for collecting and maintaining the information.   As we state in the report, the Chief Acquisition Officers Council, through  an OFPP interagency work group, has already established several broad  goals for documenting, sharing, and using past performance information.   Our recommendations to OFPP, in coordination with this Council, are in  part aimed at actions necessary to address these goals.  These  recommendations could be implemented through an OFPP policy  memorandum and could result in changes to the FAR, which we recognize  would need to be coordinated through the FAR Council as appropriate. As  a result, we are not making changes to the recommendation.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution of it until 30 days from  the date of this report.  We will then send copies of this report to  interested congressional committees; the Director of the Office of  Management and Budget, the Secretary of Defense; the Secretaries of the  Army, Navy, and Air Force; the Secretary of the Department of Homeland  Security; the Secretary of the Department of Energy; the Secretary of the  National Aeronautics and Space Administration; and the Administrator of  the General Services Administration. In addition, we will also make copies  available at no charge on the GAO Web site at http://www.gao.gov.
If you have questions about this report or need additional information,  please contact me at (202) 512-4146 or LasowskiA@gao.gov. Contact  points for our Office of Congressional Relations and Public Affairs may be  found on the last page of this report. See appendix VIII for a list of key  contributors to this report.
section_title: Appendix I: Scope and Methodology
paragraphs: To assess agencies’ use of information on contractors’ past performance in  awarding contracts, we reviewed and analyzed the Federal Acquisition  Regulation (FAR) and Office of Federal Procurement Policy (OFPP)  guidance on use of past performance. We also reviewed source selection  guidance for the Department of Defense (DOD), Department of Energy  (DOE), Department of Homeland Security (DHS), National Aeronautics  and Space Administration (NASA), and the General Services  Administration (GSA)—agencies accounting for a large percentage of  federal contractors. To obtain agency contracting officials’ views on using  past performance, we used FPDS-NG data to select 11 buying offices  across the agencies to provide a cross-section of buying activities. At these  locations, we interviewed 121 contracting officials including supervisory  contract personnel to include division/branch contracting managers,  contracting officers, and contract specialists to discuss 1) how past  performance factored into the contract award decision, 2) sources upon  which they rely for the information, 3) completing contractor performance  assessments, and 4) challenge in using and sharing past performance  information. To identify the importance of past performance relative to  other non-cost factors in specific solicitations, we used FPDS-NG data  from fiscal year 2007 and the first eight months of fiscal year 2008, to  identify 62 competitively awarded contracts—49 definitive contracts and  13 orders placed against indefinite delivery vehicle contracts. We selected  these contracts to represent a range of contracts across different buying  activities and—though not generalized to all contract actions within these  agencies— represented a range of products and services, types of  contracts, and dollar values as shown in appendix II. We obtained contract  documents to verify the fields used in FPDS-NG to select the contracts,  including type of contract and product service code, and found the data  reliable enough for the purpose of selecting the contracts. For these  contracts, we obtained source selection documents including sections M  of the request for proposals, which described the evaluation factors for  award, and the source selection decision document that described how  past performance was evaluated for each offeror. We reviewed the  evaluation factors for each solicitation to identify how past performance  ranked in order of importance relative to other non-cost factors in the  evaluation scheme and summarized the results.
To assess the extent to which selected agencies in our review complied  with requirements for documenting contractor performance, we analyzed  FPDS-NG and PPIRS data and used information provided by the DOD  CPARS program office. In estimating the number of contracts requiring an  assessment for fiscal years 2006 and 2007 for civilian agencies in our  review, we aggregated contract actions in FPDS-NG for each year to  identify the number of contracts that exceeded the reporting thresholds of  $550,000 for construction contracts (FAR § 36.201), $30,000 for architect  and engineering (FAR § 36.604), and generally $100,000 for most other  contracts (FAR § 2.101).  We excluded contracts that are exempt from  performance assessments under FAR subpart 8.7—acquisitions from non  profit agencies employing people who are blind or severely disabled.  For  indefinite delivery contracts, including GSA’s multiple award schedule,  orders were accumulated against the base contract for each agency and  counted as one contract if the cumulative orders exceeded the reporting  thresholds. This analysis provides a conservative estimate of the number  of contracts that require an assessment because it does not include  individual orders that may exceed the threshold or contract actions that  span fiscal years. For this analysis, we used contract number and dollar  obligation fields from FPDS-NG and found them reliable enough for the  purpose of this analysis. Because DOD uses different reporting thresholds  based on business sectors—information that is not available in FPDS- NG—we obtained compliance reports from the CPARS program office for  fiscal years 2006 and 2007, which included estimates of the number of  performance assessments that would have been required for DOD  components and the number of those contracts with completed  assessments. To determine the number of fiscal year 2006 and 2007  contracts with performance assessments for civilian agencies, we obtained  and analyzed data from the PPIRS program office on contracts with  assessments, including the number of assessments against GSA MAS  contracts, as of February 26, 2009.  To assess the reliability of data  provided, we accessed the PPIRS system and compared the number of  contracts with assessments with those provided by the CPARS and PPIRS  program offices, and found the data sufficiently reliable for the purpose of  our analysis.
To assess the usefulness of PPIRS for governmentwide sharing of past  performance information, we compared information in each of the three  systems used to document contractor performance information including  rating factors and rating scales. In addition, we met with agency officials  who have responsibilities for managing the various systems—including the  Naval Sea Logistics Center Detachment, Portsmouth, which administers  CPARS and PPIRS, and officials at NASA who administer the Past  Performance Database. To identify challenges that may hinder the  systematic governmentwide sharing of past performance information, we  interviewed contracting officials from 11 buying offices regarding a  number of issues to include 1) roles in the assessment process, 2)  challenges in completing assessments, 3) performance information not  currently captured that might be useful for selecting contractors, 4) and  use of metrics for managing and monitoring compliance with reporting  requirements. Finally, we met with OFPP, GSA, and DOD to discuss the  extent of oversight of PPIRS data and roles and responsibilities as  applicable.
To assess efforts under way or planned to improve the sharing of  information on contractor performance, we obtained and reviewed  memorandums, plans, and other documents produced by OFPP including  proposed FAR changes and any proposed past performance guidelines. We  met with officials from these offices to discuss challenges already  identified in sharing and using past performance information, goals they  may have established for improving the system, and status of efforts to  address them.
Our work was conducted at the following locations: OFPP, Washington  D.C.; GSA, Arlington, Va; the Air Force Space and Missile Systems Center,  El Segundo, Ca; Hill Air Force Base, Ogden, Utah; the Army  Communications and Electronics Command, Fort Monmouth, N.J.; the  Army Sustainment Command, Rock Island, Ill.; the Army Contracting  Command, Fort Belvoir, Va.; the Naval Air Systems Command, Patuxent  River, M.d.; the Naval Sea Systems Command, Washington, D.C.; the  Defense Contract Management Agency located in Arlington, Va.; DHS  including the Customs and Border Protection, Washington, D.C., and the  Transportation Security Administration, Arlington, Va.; NASA including  the Goddard Space Flight Center, Greenbelt, M.d. and the Johnson Space  Center, Houston, Tex.; DOE including the National Nuclear Security  Administration Service Center located in Albuquerque, N.M.
We conducted this performance audit from February 2008 to February  2009 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Information on Selected Contracts
subsections: section_title: Contract Department/Agency Type of contract
section_title: Appendix III: Comments from the Department of Defense
section_title: Appendix IV: Comments from the Department of Energy
section_title: Appendix V: Comments from the Department of Homeland Security
section_title: Appendix VI: Comments from the General Services Administration
section_title: Appendix VII: Comments from the National Aeronautics and Space Administration
section_title: Appendix VIII: GAO Contact and Acknowledgments
subsections: section_title: GAO Contact
section_title: Acknowledgments
paragraphs: In addition to the individual named above, Ann Calvaresi Barr, Director;  James Fuquay, Assistant Director; Usman Ahmad; Jeffrey Barron; Barry  DeWeese; Julia Kennon; Flavio Martinez; Susan Neill; Karen Sloan; Sylvia  Schatz; and Bradley Terry made key contributions to this report.