Contractor Performance: Actions Taken to Improve Reporting of Past Performance Information
Released: 2014-08-07T00:00:00

Letter

Background

When selecting contractors, the FAR generally requires agencies to consider past performance as a factor in most competitive procurements.

During source selection, contracting officials often rely on various sources of past performance information, such as the prospective contractor’s performance on 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.

FAR § 42.1502(a) and (b). Currently, the dollar threshold for simplified acquisitions, with limited exceptions, is $150,000. FAR § 2.101. The FAR has separate assessment thresholds of $650,000 and $30,000 for construction and architect-engineer services contracts respectively. FAR § 42.1502(e) and (f).

Navy, the system incorporates processes and procedures for drafting and finalizing evaluations, which are described in the CPARS Guide. In May 2010, OFPP designated CPARS as the single government-wide system for entering evaluations and by October 2010 all agencies had transitioned to using CPARS.

In completing past performance evaluations, the assessing official rates the contractor on various elements such as quality of the product or service, schedule, cost control, management, and small business utilization. For each applicable rating element, the assessing official determines a rating based on definitions from 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 to provide support for the rating assigned.

Once draft evaluations have been completed by the assessing official, the contractor is notified that the evaluation is available for review and comment through CPARS. After receiving and reviewing a contractor’s comments and any additional information, the assessing official may revise the evaluation and supporting narrative. If there is disagreement with the evaluation, the reviewing official—generally a government official at a level above the contracting officer—will review and finalize the evaluation.

Section 806 of the National Defense Authorization Act (NDAA) for Fiscal Year 2012 required DOD to develop a strategy to ensure that evaluations in past performance databases used for making source selection decisions are complete, timely, and accurate.process was also to be revised so that contractor past performance evaluations are posted to the databases used for source selection decisions no more than 14 days after the performance information is provided to the contractor. In June 2013, we reported on the status of Its contractor comment DOD’s actions to improve the quality and timeliness of past performance information and implement provisions of the NDAA for Fiscal Year 2012.

OFPP’s Past Performance Strategy Relies on Enhanced Oversight and Guidance and Revised Acquisition Regulations

OFPP’s strategy to improve past performance information and respond to section 853 of the NDAA for Fiscal Year 2013 is to increase oversight of contractor performance evaluations, develop government-wide past performance guidance, and revise the FAR. Since 2009, OFPP has taken a number of actions, in conjunction with other organizations, to improve the amount and quality of past performance information available, including emphasizing reporting requirements; assessing the level of compliance and quality of evaluations; developing a compliance tracking tool; setting agency performance targets; consolidating systems used to enter past performance information; and developing government-wide past performance guidance. In addition, OFPP worked with the FAR Council to revise the FAR to implement provisions of the NDAAs for Fiscal Years 2012 and 2013 related to assigning responsibility and accountability; implementing standards for complete evaluations; and ensuring submissions are consistent with award fee evaluations. Revisions by OFPP and the FAR Council to the timing of the contractor comment process in accordance with the acts became effective in July 2014.

Increased Oversight of Past Performance Evaluations

In 2009, the Deputy Administrator of OFPP issued a memorandum to Chief Acquisition Officers and Senior Procurement Executives emphasizing changes to the FAR such as submitting contractor performance into PPIRS and identifying agency officials who must prepare such evaluations. In addition, the memo outlined actions that agency officials must take to help implement these practices. OFPP also announced plans to conduct regular compliance assessments and quality reviews to ensure that agencies submit timely performance information to PPIRS on required contracts, and provide clear, comprehensive, and constructive information useful for making future contract award decisions.

In early 2011, an OFPP review highlighted the need to improve the quantity and quality of information in PPIRS. To see how well agencies managed their efforts to improve submission of past performance evaluations, OFPP assessed the compliance with reporting requirements and the quality of evaluations for the ten agencies that do the most contracting:

OFPP found that agencies generally did not meet the requirement to evaluate contractor performance. OFPP’s comparison of data from the Federal Procurement Data System-Next Generation and PPIRS indicated that past performance evaluations were completed for only a small percentage of contracts requiring an evaluation, especially in civilian agencies.

To assess the quality of the evaluations, OFPP reviewed a sample to see how well various rating elements were addressed. They found the evaluations generally lacked sufficient information—such as details about how the contractor exceeded expectations or corrected poor performance— to support the rating, or did not include a rating for all performance areas.

To improve the collection of contractor past performance information, agencies were asked to review their past performance reporting guidance to ensure it contained key characteristics and to improve management controls by using several strategies to improve compliance and increase the quality of the evaluations.

To increase management oversight of contractor performance evaluations, OFPP worked with the PPIRS program office to develop a compliance tracking tool within PPIRS for measuring and managing agency reporting efforts. This was made available to all agencies in early 2011. The compliance tool allows managers to monitor compliance at the department, agency, or contracting office level. In addition, the tool allows agency officials to identify the compliance of specific contracts or orders that meet the reporting criteria.

In March 2013, OFPP issued a policy memo to establish annual past performance reporting compliance targets for Chief Financial Officer (CFO) Act agencies. In establishing these targets, OFPP reviewed the compliance rates of agencies and found that the level of compliance varied widely. In order to make the compliance targets realistic and achievable, OFPP set differing fiscal year 2013 and 2014 targets by agency based on the agency’s level of compliance at the end of fiscal year 2012, with the expectation that all agencies will reach full compliance by the end of fiscal year 2015, as shown in table 1.

To assist CFO Act agencies in meeting these annual targets, the policy memo required that all of them establish their past performance reporting baselines, and set aggressive quarterly targets that reflect a strategy for meeting the annual performance targets. The memo also highlighted training opportunities for agencies’ acquisition workforces on documenting contractor performance.

Government-Wide Past Performance Guidance and Revisions to the FAR Address Statutory Requirements

OFPP has also sought to improve contractor performance information and implement provisions of the NDAA for Fiscal Year 2013 by working with the General Services Administration’s Integrated Award Environment, the CPARS program office, and the FAR Council to consolidate systems for entering past performance information and to develop government-wide past performance guidance, enhance FAR requirements, and change the contractor comment process. To standardize the past performance documentation process, the OFPP Administrator identified CPARS as the government-wide system for collecting contractor performance information, and by October 2010 agencies using other systems transitioned to CPARS. We previously reported that the various systems used to collect past performance information and the lack of standardized evaluation factors and rating scales limited the usefulness of the information in PPIRS. Because the CPARS Policy Guide was specific to DOD, the OFPP worked with the Integrated Award Environment, the CPARS program office, and an interagency working group to update the guide. A government-wide CPARS Guide was released in November 2012. In addition, OFPP worked with the FAR Council to revise the FAR in September 2013 to enhance various elements of documenting contractor performance and implement provisions of the NDAA for Fiscal Year 2013 and the NDAA for Fiscal Year 2012. The FAR was revised and the CPARS Guide was updated to implement these acts as follows:

Standards for timeliness: The FAR does not include a timeframe for completing evaluations. However, the CPARS Guide includes a standard that evaluations should be completed within 120 days after the end of the evaluation period.

Standards for completeness: Evaluation factors for each assessment must include, at a minimum: quality of product or service; cost control (where applicable); schedule/timeliness; management or business relations; and small business subcontracting (where applicable), and other (for example, late payments or nonpayment to subcontractors or tax delinquency).

Assigning responsibility for completeness of evaluations: The requirement that agency procedures identify roles and responsibilities was expanded to include preparing and reviewing evaluations. Also, the FAR now provides a default that the contracting officer is responsible for completing evaluations if agency procedures do not specify that role.

Management accountability: Agencies are required to evaluate compliance and assign responsibility and management accountability for completeness of performance submissions.

Ensuring past performance submissions are consistent with award fee evaluations: Award and incentive fee evaluations and adjectival ratings are to be included as part of the past performance evaluations.

OFPP, in conjunction with the FAR Council, recently implemented provisions of the acts related to changing the timing for obtaining contractor comments. Previously, contractors were allowed a minimum of 30 days to provide comments, rebuttals, or additional information. On May 30, 2014, the final rule changing the contractor comment process was issued with an effective date of July 1, 2014. The rule provides that contractors will have no more than 14 days from the date of notification of the availability of the evaluation to provide comments, rebuttals, or other information before the evaluation is posted to PPIRS, where it is available government-wide for source selection purposes for 3 years after the contract performance completion date.this deadline, its comments will be added to the evaluation after it has moved into PPIRS, as well as any agency review of the comments.

Compliance with the Reporting Requirement Varies Greatly by Agency

Although agencies have generally improved their level of compliance with the reporting requirements over the last year, that rate varies greatly by agency and most have not met the targets set by OFPP. As shown in table 2, all of the top 10 agencies, based on number of contracts or orders with an evaluation due in PPIRS, showed improvement in reporting compliance from 2013 to 2014, but the compliance rate varied from 13 percent to 83 percent as of April 2014. According to OFPP’s annual reporting performance targets, as shown in table 1, all CFO Act agencies should have been at least 65 percent compliant by the end of fiscal year 2013, but only two of the top 10 agencies were above 65 percent compliance as of April 2014.

According to an OFPP official, some agencies placed greater emphasis on improving timely reporting and have increased their management oversight, issued guidance, diligently monitored compliance, and frequently conduct internal meetings with management and accountable staff about reporting activity and responsibilities. However, the official noted that some agencies report workforce shortages, work priorities, and time constraints as hindering better compliance. Some contracting officers also reported that they had difficulty in obtaining timely feedback from other parts of the acquisition workforce so that they could complete the evaluation due to shifting workloads, retirements, and relocations.

The OFPP official stated the office plans to continue its efforts to improve past performance information and strengthen reporting compliance, by taking the following actions: collaborating with agency senior procurement executives to increase management oversight and leadership; working with the FAR Council on the development of additional regulatory guidance, as necessary, to standardize reporting practices and improve agency consideration of past performance information; directing the Federal Acquisition Institute to develop useful training aids to ensure agencies know how to consider performance information prior to contract award and rate a contractor's performance during the post-award process; overseeing the General Services Administration’s Integrated Award Environment on system enhancements to ensure agencies have a practical reporting tool with useful performance metrics to manage and monitor not only reporting compliance but also quality reporting of performance information; and conducting outreach with internal and external stakeholders to garner their thoughts on ways to improve past performance information reporting.

Agency Comments

We are not making recommendations in this report. We requested comments on a draft of this report from OFPP and DOD. On July 24, 2014, an OFPP Procurement Policy Analyst provided comments by e- mail. OFPP concurred with the findings of the draft report, and provided technical comments, which we incorporated as appropriate. DOD also provided technical comments by e-mail, which we incorporated as appropriate.

We are sending this report to appropriate congressional committees, the Director of the Office of Management and Budget, the Secretary of Defense, and other interested parties. The report will also be available at no charge at 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. LaTonya Miller, Assistant Director; Julia Kennon; Robert Swierczek; Bradley Terry; and Alyssa Weir made key contributions to this report.

Appendix I: Past Performance Policy Guidance and Federal Acquisition Regulation (FAR) Cases

Office of Federal Procurement Policy (OFPP) Past Performance Policy Guidance

Over the past five years, OFPP has issued additional policy guidance to strengthen agency use of past performance information and improve agency reporting compliance and documentation.

Making Better Use of Contractor Performance Information (July 10, 2014): Enhances agencies’ use of performance information when making source selection decisions on high-risk programs, major acquisitions, and other complex contract actions by directing agencies to conduct additional research and outreach to make more informed decisions, including obtaining as much relevant and recent performance information about a contractor’s performance beyond what is in the Past Performance Information Retrieval System (PPIRS). http://www.whitehouse.gov/sites/default/files/omb/procurement/memo/ma king-better-use-of-contractor-performance-information.pdf.

Improving the Collection and Use of Information about Contractor Performance and Integrity (March 6, 2013): Requested agencies to: (1) establish a baseline for reporting compliance, (2) set aggressive performance targets that agencies can use to monitor and measure reporting compliance, and (3) ensure the workforce is trained to properly report and use this information to improve the collection and use of performance and integrity information. http://www.whitehouse.gov/sites/default/files/omb/procurement/memo/imp roving-the-collection-and-use-of-information-about-contractor- performance-and-integrity.pdf.

Improving Contractor Past Performance Assessments: Summary of the Office of Federal Procurement Policy's Review, and Strategies for Improvement (January 21, 2011): Included OFPP’s initial assessment of agencies’ reporting of contractor performance information and additional steps and strategies for improving the collection of past performance information. http://www.whitehouse.gov/sites/default/files/omb/procurement/contract_p erf/PastPerformanceMemo-21-Jan-2011.pdf.

Improving the Use of Contractor Performance Information (July 29, 2009): Described new FAR requirements to strengthen the use of contractor performance information, included agency management responsibilities to support robust implementation, and established OFPP’s review process for evaluating agencies’ reporting of contractor performance information. http://www.whitehouse.gov/sites/default/files/omb/assets/procurement/im proving_use_of_contractor_perf_info.pdf.

Recent Past Performance Related FAR Cases

The FAR Council, chaired by the Administrator of OFPP, has recently amended the FAR to strengthen the collection of contractor past performance information, including: FAR Case 2012-028, Contractor Comment Period, Past Performance Evaluations: Implements section 806(c) the National Defense Authorization Act (NDAA) for Fiscal Year 2012, Pub. L. No. 112-81 (2011) and section 853(c) of the NDAA for Fiscal Year 2013, Pub. L. No. 112- 239. The final rule provides that contractors will have no more than 14 days from the date of notification of the availability of the evaluation to provide comments, rebuttals, or other information before the evaluation is posted to PPIRS. The final rule was published in the Federal Register on May 30, 2014, at 79 Fed. Reg. 31,197, and was effective July 1, 2014.

FAR Case 2012-009, Documenting Contractor Performance: Implements parts of section 806 of NDAA for Fiscal Year 2012, Pub. L. No. 112-81, and establishes standards of completeness of past performance evaluations, strengthens assignment of responsibility and management accountability for submitting assessments, and requires that past performance submissions include incentive/award fee information, where appropriate. This rule also incorporates certain requirements from section 853 of the NDAA for Fiscal Year 2013, Pub. L. No. 112-239. This final rule was published in the Federal Register on August 1, 2013, at 78 Fed. Reg. 46,783 and was effective on September 3, 2013.

FAR Cases 2008-016, Termination for Default Reporting: Establishes procedures for contracting officers to provide contractor information, such as terminations for cause or default and defective cost or pricing data, into PPIRS and Federal Awardee Performance and Integrity Information System module within PPIRS. This final rule was published in the Federal Register on September 29, 2010, at 75 Fed. Reg. 60,258, and effective October 29, 2010.

FAR Case 2008–027, Federal Awardee Performance and Integrity Information System: Amends the FAR to implement the Federal Awardee Performance and Integrity Information System. The system is designed to significantly enhance the Government’s ability to evaluate the business ethics and quality of prospective contractors competing for Federal contracts and to protect taxpayers from doing business with contractors that are not responsible sources. This final rule was published in the Federal Register on March 23, 2010, at 75 Fed. Reg. 14,059, and was effective April 22, 2010.