Contractor Performance: DOD Actions to Improve the Reporting of Past Performance Information
Published: 2013-06-27T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: DOD relies on contractors to perform a broad array of activities. Having complete, timely, and accurate information on contractor performance is critical so officials responsible for awarding new federal contracts can make informed decisions. Agencies are required to document contractor performance for contracts exceeding certain dollar thresholds.
In 2009, GAO found that contractor past performance information was incomplete, citing low priority and lack of system tools and metrics to track compliance. In 2011, the Office of Federal Procurement Policy (OFPP) reported that DOD assessments often lacked sufficiently detailed narratives. Section 806 of the NDAA for 2012 required DOD to develop a strategy to ensure that contractor performance assessments are complete, timely, and accurate. Section 806 also required GAO to report on DOD's actions and their effectiveness. GAO (1) identified actions taken by DOD to improve the quality and timeliness of past performance information and implement provisions of the act, and (2) assessed the effectiveness of those actions. GAO reviewed DOD policy and guidance, and interviewed DOD and OFPP officials. GAO also reviewed available data on compliance with reporting requirements from 2011-2013 and timeliness data for fiscal years 2010-2012. GAO did not independently assess the quality of assessment narratives.
GAO is not making any recommendations in this report. DOD concurred with GAO's findings and OFPP had no comments.
section_title: What GAO Found
paragraphs: The Department of Defense (DOD) strategy for improving the reporting of contractor past performance information consists of providing additional training to its acquisition workforce and developing tools and metrics to improve oversight. The number of personnel trained more than doubled since 2010 to more than 7,000, and DOD oversight officials now have the ability to track compliance with reporting requirements down to the level of individual contracting offices. DOD continues to utilize existing past performance guidance, which generally aligns with requirements specified in the National Defense Authorization Act (NDAA) for Fiscal Year 2012.
Compliance metrics show that the submission of required assessments has increased. Specifically, the percentage of required assessments submitted increased from 56 to 74 percent from October 2011 to April 2013. Officials at DOD said the ability to track completion of assessments has greatly improved oversight and accountability. Despite this progress, DOD faces challenges completing assessments on time.
DOD officials attribute the lack of timeliness to acquisition workforce shortages, turnover, and the difficulty in obtaining needed information. DOD is working with other agencies on a regulatory change, consistent with a requirement in the NDAA for 2012, that would reduce the time allowed for contractors to submit comments on draft assessments. This change should help officials submit final assessments on a more timely basis.

section_title: Letter
paragraphs: The Department of Defense (DOD) relies on thousands of contractors to  perform a broad array of activities needed to meet its mission. Therefore,  complete and timely information regarding contractor’s past performance  is critical to ensuring that the government does business with companies  that deliver quality goods and services on time and within budget. The  Federal Acquisition Regulation (FAR) requires agencies to document  contractor performance on contracts that exceed certain dollar thresholds  and to make such information available to other agencies through a  shared government-wide database. We reported in 2009, however, that  the DOD components had completed assessments for less than half of  the fiscal year 2007 contracts that required such an assessment. Agency  officials noted at the time that a low priority for completing assessments  and a lack of system tools and metrics to monitor compliance made it  difficult for managers to ensure timely completion of contractor  performance assessments. The need to improve both the quantity and  quality of past performance information also was highlighted in a 2011  Office of Federal Procurement Policy (OFPP) report that found that DOD  and other federal agency contractor assessments often lacked quality  narrative information, such as sufficient details about how the contractor  exceeded expectations or corrected poor performance, to support the  assessment. According to OFPP, some of the deficiencies identified were  likely due to staff shortages and the lack of training.
Section 806 of the National Defense Authorization Act (NDAA) for Fiscal  Year 2012 required DOD to develop a strategy for ensuring that  contractor past performance assessments are complete, timely, and  accurate. Section 806 outlines several requirements related to  documenting contractor performance and obtaining contractor comments  on performance assessments. In addition, section 806 also requires the  Defense Federal Acquisition Regulation Supplement (DFARS) to be  revised to require that contractor assessments be posted to the  databases used for making source selection decisions no later than 14  days after delivery of the performance assessment to the contractor. The  act also mandates us to report on DOD’s actions to implement the  required provisions. For this report, we (1) identified the actions taken by  DOD to improve the quality and timeliness of past performance  information and implement provisions of the act, and (2) assessed the  effectiveness of those actions.
To identify DOD’s actions to improve the timeliness and quality of  contractor past performance information and implement provisions of the  act, we reviewed DOD policy and guidance related to contractor  assessments. We also interviewed DOD officials responsible for  contractor past performance information at the Office of the Under  Secretary of Defense for Acquisition, Technology, and Logistics; the three  DOD components—the Air Force, Army, and Navy— which account for  more than 90 percent of DOD’s required assessments; and the  Contractor Performance Assessment Reporting System (CPARS) and  Past Performance Information Retrieval System (PPIRS) program offices  to discuss actions taken or planned. We also interviewed DOD and  OFPP officials to discuss the status of implementing the requirement to  submit contractor assessments to the past performance database within  14 days. To assess the effectiveness of DOD’s past performance efforts,  we reviewed data for calendar years 2011 to 2013 for compliance with  contractor assessment requirements. To assess the reliability of these  data, we reviewed system information and tested the processes and  found these data to be sufficiently reliable for the purpose of this report. In  addition, we obtained data for fiscal years 2010, 2011, and 2012 on the  number of DOD contracting officials that received training on contractor  past performance reporting and the timeliness of performance  assessments. We also reviewed an OFPP report on compliance with  reporting requirements and quality of assessments. We did not  independently assess the quality of contractor performance assessment  narratives or the use of contractor past performance information in the  source selection process.
We conducted this performance audit from February 2013 to June 2013  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.
subsections: section_title: Background
paragraphs: When selecting contractors, the FAR requires agencies to consider past  performance as one evaluation factor in most competitive procurements.  During the source selection process, contracting officials often rely on  various sources of past performance information, such as the prospective  contractor’s prior government or industry contracts for efforts similar to  the government’s requirements, and the past performance information  housed in the government-wide PPIRS database.
Once a contract is awarded, the agency should monitor the contractor’s  performance throughout the performance period. At the time the work is  completed, the FAR requires agencies to prepare an assessment of the  contractor’s performance for contracts or orders that exceed the simplified  acquisition threshold. DOD has dollar thresholds that are generally  higher than the simplified acquisition threshold for contractor  assessments, which vary based on business sector.
To document and manage contractor performance information internally,  DOD has used CPARS since 2004. The system, which was developed by  the Navy, incorporates processes and procedures for drafting and  finalizing assessments, which are described in the CPARS Guide. The  assessing official rates the contractor based on various elements such as  quality of product or service, schedule, cost control, business relations,  small business utilization, and management of key personnel. For each  applicable rating element, the assessing official determines a rating  based on definitions in the CPARS Guide that generally relates to how  well the contractor met the contract requirements and responded to  problems. In addition, for each rating element, a narrative is required to  provide examples and support for the assessment.
Once draft assessments are completed by the assessing official, the  contractor is notified that the assessment is available for their review and  comment through CPARS. The comment process includes the following:
Contractors are allowed a minimum of 30 days to provide comments,  rebuttals, or additional information. The assessing official has the  discretion to extend the comment period.
The contactor can request a meeting with the assessing official to  discuss the assessment or request a review by the reviewing official.
After receiving and reviewing a contractor’s comments and any  additional information, the assessing official may revise the  assessment and supporting narrative.
If there is disagreement with the assessment, the reviewing official— generally a government official one level above the assessing official  organizationally—will review and finalize the assessment.
After contractor comments are considered, or if the contractor elects not  to provide comments, the assessment is finalized and submitted to  PPIRS, where it is available government-wide for source selection  purposes for 3 years after the contract performance completion date.
Section 806 of the NDAA for Fiscal Year 2012 required DOD to develop a  strategy for improving contractor past performance information to include  standards for timeliness and completeness, assigning responsibility and  accountability for completing assessments, and ensuring assessments  are consistent with award fee evaluations. In addition, the section  requires the DFARS to be revised to require contractor assessments to  be posted to databases used for making source selection decisions no  later than 14 days after delivery of the draft assessment to the  contractor.
section_title: DOD’s Past Performance Strategy Relies on Workforce Training, Enhanced Oversight, and Existing Guidance
paragraphs: DOD’s strategy to improve reporting of contractor past performance  information and respond to section 806 of the NDAA for Fiscal Year 2012  is to provide training on past performance to acquisition officials, develop  tools and metrics to track compliance and enhance oversight, and  continue to rely on the CPARS Guide. Some elements of this strategy are  in place already, while others are still in progress.
subsections: section_title: Training on Past Performance Requirements
paragraphs: In order to improve compliance with past performance reporting  requirements and the quality of assessments, the CPARS program office  provides training opportunities and assessment tools for acquisition  officials. As a result of increased emphasis on training, the number of  contracting officials trained on contractor past performance more than  doubled from fiscal year 2010 to fiscal year 2012, as shown in   figure 1.
Training included on-site classes; instructor-led, web-based training; and  most recently, automated on-line training. Courses include overviews,  and training on how to write quality narratives supporting contractor  assessments. In addition, the CPARS program office provides tools to  facilitate completing assessments, including a quality checklist which  includes best practices and guidance for writing sufficiently detailed  narratives. We did not assess the quality of assessment narratives in this  review.
section_title: Tools and Metrics Allow for Increased Oversight
paragraphs: To increase management oversight of contractor performance  assessments, the CPARS program office in 2010, in conjunction with  OFPP, developed system tools and metrics within PPIRS to track  compliance with the reporting requirements. This allows managers to  track compliance at the department, component, or contracting office  level. For example, contracting managers can identify overall compliance  for their office and identify specific non-compliant contracts with this new  tracking tool.
Officials at DOD components told us that having the ability to track  completion of required assessments through PPIRS has greatly improved  the ability to effectively oversee and manage compliance, and has also  improved accountability for completing assessments. In an effort to  increase accountability, the Director of Defense Procurement and  Acquisition Policy issues quarterly compliance reports to senior  procurement executives. Senior procurement executives at DOD  components have required reporting of actions taken by individual  contracting activities, set goals for compliance, and encouraged or  required training. In addition, DOD officials told us contractor past  performance is now discussed at senior level acquisition quarterly and  monthly meetings.
section_title: CPARS Guide Addresses Most of the Elements in Section 806
paragraphs: DOD plans to continue implementing existing policies contained in the  CPARS Guide, which addresses most of the required elements specified  in section 806. Specifically, the CPARS Guide aligns with section 806  through the following:
Contractor performance assessment must be finalized within 120  days after the end of the evaluation period. For contracts and orders  with performance exceeding one year, annual interim assessments  are required and a final assessments is required when the work is  completed.
Roles and responsibilities for documenting contractor performance:
The assessing official, usually the contracting officer, is responsible  for preparing and finalizing the assessment.
The reviewing official reconciles any disagreements between the  assessing official and the contractor.
The CPARS Focal Point provides overall support for the CPARS  process for a particular organization and assigns key roles for each  contract requiring an assessment based on information from the  contracting officer, program, or project manager.
Provides sources of data to consider, including earned incentive and  award fee determinations. In addition, DOD provided additional  guidance on translating award fee determinations into past  performance assessments.
Although the CPARS Guide does not currently specify standards for  completeness, one of the elements specified in section 806, a recent  proposed change to the FAR will address completeness by providing  minimum government-wide standards for past performance rating  elements. Specifically, the proposed rule requires that all assessments  address, at a minimum, quality of product or service, timeliness, and  management or business relations.
section_title: DOD Increased the Number of Assessments Completed, but Still Faces Challenges in Completing Assessments on Time
paragraphs: PPIRS compliance metrics show the percentage of required assessments  completed increased from 56 percent in 2011 to 74 percent in 2013. In  addition, the number of assessments completed overall more than  doubled from 2010 to 2012. DOD still faces challenges, however, in  completing assessments on time.
subsections: section_title: Submission of Required Assessments Has Increased
paragraphs: An increased focus on completing past performance assessments, both  within the components and among individual contracting activities, has  resulted in more required assessments being completed and submitted to  PPIRS. As of April 2013, PPIRS’s metrics show compliance with the  reporting requirement of about 74 percent—an increase of 18 percentage  points since October 2011. Based on our review of government-wide  PPIRS compliance metrics, DOD compliance with the reporting  requirement is generally much higher than other federal agencies. For  example, as of April 2013, more than half of federal agencies had no  required contractor assessments in PPIRS. Among DOD’s major  components, most showed significant improvement, as shown in table 1  below.
Although compliance with the reporting requirements for performance  assessments has increased, DOD still faces challenges with completing  assessments on time. As shown in figure 2, the total number of  assessments completed more than doubled from 2010 to 2012. In  addition, the number of assessments completed on time also increased  significantly—from about 5,600 to almost 14,000. However, the majority  of assessments completed each year exceeded the 120-day standard for  timeliness. In part, the number of assessments completed after the  specified time frame may be the result of increased emphasis on working  down the backlog of past-due assessments. For example, about 31,000  assessments became due during fiscal year 2012, but DOD completed  over 33,000 during that year.
DOD officials told us that department-wide acquisition workforce  shortages and turnover, as well as difficulty obtaining contractor  performance information remain as challenges to completing contractor  performance assessments on time. For example, completing contractor  assessments is considered a joint responsibility between the contracting  and program office and, the assessing official often relies on others to  provide information needed to complete the assessment, and in some  cases may have difficulty obtaining the information.
In addition, assessments are not finalized until the contractor has an  opportunity to provide comments, and the 120-day standard for finalizing  assessments includes the contractor comment period. The FAR currently  requires that all federal contractors be given a minimum of 30 days to  submit comments, rebutting statements, or additional information to  performance assessments. As shown in Table 2, DOD received  comments from contractors on over 80 percent of all assessments from  fiscal years 2010 through 2012, and most were received within the  current 30-day minimum requirement for responding.
Section 806 would limit the comment period to 14 days before the  assessment is submitted to PPIRS, which should help DOD meet the  120-day standard for submitting past performance assessments. DOD is  currently working with the rest of the FAR Council to implement this  change.
section_title: Agency Comments
paragraphs: We are not making recommendations in this report. We provided a draft  of this report to DOD and OFPP for their review and comment. DOD  informed us by email that it concurred with our findings and the  information presented in this report and would not be providing written  comments. DOD officials provided technical comments, which we  incorporated as appropriate. OFPP informed us by email that the office  had no comments.
We are sending copies of this report to appropriate congressional  committees, the Secretary of Defense, the Under Secretary of Defense  for Acquisition, Technology, and Logistics, the Director of the Office of  Management and Budget, and other interested parties. This report will  also be available at no charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-4841 or woodsw@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix I.
section_title: Appendix I: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, LaTonya Miller, Assistant  Director; John Neumann, Assistant Director; Dani Green; Julia Kennon;  John Krump; and Bradley Terry made key contributions to this report.