Poor performance under a federal contract can have immediate consequences for contractors, who could potentially be denied award or incentive fees, required to pay damages, or terminated for default. In addition, it can affect their ability to obtain future contracts because federal law generally requires agencies to evaluate contractor's "past performance" and consider past performance information when making source selection decisions in negotiated procurements and when determining whether prospective contractors are "responsible." "Past performance" refers to contractors' performance on "active and physically completed contracts" and certain orders under existing contracts. Reports alleging that some contractors received new contracts despite allegedly deficient performance under prior or current contracts have recently prompted interest in the role that evaluations of past performance play in federal contracting, as well as attempts by some Members of Congress and the Obama Administration to improve agencies' compilation and use of past performance evaluations. The 112 th Congress enacted legislation that requires the Department of Defense (DOD) ( P.L. 112-81 ) and the Federal Acquisition Regulatory Council ( P.L. 112-239 ) to develop "strateg[ies] for ensuring" that past performance reports are timely, accurate and complete; and would give contractors 14 days to comment on, rebut, or supplement past performance reports. The 113 th Congress also enacted legislation addressing certain issues relating to past performance, although such legislation was narrower in scope than that enacted in the 112 th Congress. In addition, the Obama Administration updated the Federal Acquisition Regulation (FAR) in 2013 to standardize the factors used in evaluating contractors' performance, and require that all past performance information be entered into the Contractor Performance Assessment Reporting System (CPARS). It made further updates to the FAR in 2014 to implement P.L. 112-81 and P.L. 112-239 . Contractors, however, have expressed concern that increased emphasis on past performance information could lead to de facto debarment or "blacklisting" of contractors. This report provides an overview of existing legal requirements pertaining to past performance, including the issues raised by contractors' attempts to challenge (1) agency evaluations of their past performance, (2) source selection decisions based, in part, on consideration of past performance information, and (3) responsibility determinations. While agencies have long informally evaluated contractors' performance and generally kept some records regarding this performance, at least during the term of the contract, they were not required to compile evaluations of past performance until 1993. Then, as part of reforms requiring agency consideration of past performance in certain source selection decisions, discussed below, the Office of Federal Procurement Policy (OFPP) directed federal agencies to "[p]repare evaluations of contractors' performance on all new contracts over $100,000." One year later, Congress enacted the Federal Acquisition Streamlining Act (FASA) of 1994, which established a statutory basis for agency evaluation of past performance. Among other things, FASA required OFPP to prescribe policies for the collection and maintenance of information on past contract performance that, to the maximum extent practicable, facilitate automated collection, maintenance, and dissemination of information and provide for ease of collection, maintenance, and dissemination of information by other methods, as necessary. OFPP met this requirement, in part, by promulgating regulations regarding "contractor performance information" in Subpart 42.15 of the FAR. These regulations, as amended, currently prescribe the content of contractor performance evaluations, as well as procedures for the compilation, posting, and use of such evaluations. The requirement that agencies evaluate contractor performance was imposed, in part, because "performance assessment is a basic 'best practice' for good contract administration, and is one of the most important tools available for ensuring good contract performance." Additionally, Congress and the executive branch hoped that written evaluations of contractor performance would "improve the amount and quality of performance information available to source selection teams," which would, in turn, "enable agencies to better predict the quality of, and customer satisfaction with, future work." However, although OFPP, in particular, anticipated that agencies would ultimately be able to rely almost exclusively on agency performance evaluations in their source selection decisions, this does not seem to have occurred, as discussed below. Under Subpart 42.15 of the FAR, agencies are generally required to evaluate contractors' performance on contracts or orders valued in excess of $150,000 ($30,000 for architect-engineer contracts, $650,000 for construction contracts) "at least annually and at the time the work under a contract or order is completed." Prior to August 2013, Subpart 42.15 left the content of this evaluation largely to the agency's discretion, requiring only the evaluation of the contractor's performance on and efforts to achieve any small business subcontracting goals. Agencies were encouraged to consider other factors, such as "the contractor's record of conforming to contract requirements and to standards of good workmanship," but were not obligated to do so under the FAR provisions then in effect. The situation changed in August 2013, however, when the FAR was amended to require that evaluation factors for each assessment generally include, at a minimum, the following: (i) [t]echnical (quality of product or service)[;] (ii) [c]ost control [;] (iii) [s]chedule/timeliness[;] (iv) [m]anagement or business relations[;] (v) [s]mall business subcontracting ...[; and] (vi) [o]ther (as applicable) (e.g., late or nonpayment to subcontractors, trafficking violations, tax delinquency, failure to report in accordance with contract terms and conditions, defective cost or pricing data, terminations, suspension and debarments). Other factors could be considered in the agency's discretion. Any required or other factors are typically incorporated into a "performance assessment clause" or similar clause in the contract. Prior to August 2013, such clauses established the categories that agencies would use in rating performance and the metrics used in applying particular ratings to specific conduct, both of which could be quite broad. However, the 2013 FAR amendments standardized the rating categories to be used by agencies, as well as defined how each rating (e.g., exceptional, marginal) is to be used. Subpart 42.15 of the FAR also requires agencies to follow certain procedures when compiling, posting, and using performance evaluations. The contracting officer, or someone else who has been delegated this responsibility, is to prepare the evaluation. However, the evaluation should generally be based on the experiences of the technical office, the program management office, and quality assurance and end users, where appropriate, as well as those of the contracting office. A copy of the evaluation should be provided to the contractor "as soon as practicable after [its] completion," with the contractor then having "up to 14 calendar days ... to submit comments, rebutting statements, or additional information." Prior to May 2014, contractors had "a minimum of 30 days" to submit such information. However, the FAR was amended in May 2014 to shorten this period, in conformity with the requirements of P.L. 112-81 and P.L. 112-239 . Disagreements between the contractor and the contracting officer are reviewed "at a level above the contracting officer," although "[t]he ultimate conclusion on the performance evaluation is a decision of the contracting agency." The evaluation and any response from the contractor should be marked "source selection information" and submitted to the Contractor Performance Assessment Reporting System (CPARS), from which it is "automatically transmitted" to the Past Performance Information Retrieval System (PPIRS). Marking the evaluation and response as "source selection information" ensures that they cannot be released to anyone other than eligible government personnel, or the contractor whose performance was evaluated, for at least three years. Because of this limitation on access to performance evaluations, access to the CPARS and PPIRS databases are similarly limited, and information about a contractor in these databases can only be viewed by authorized government personnel or the contractor in question. Access to the Federal Awardee Performance Integrity Information System (FAPIIS), which includes PPIRS information along with contractor-submitted information and information from other federal databases, was originally similarly limited. However, although Congress subsequently required that most FAPIIS information be made publicly available on the web, past performance information was explicitly exempted from such disclosure because of its protected status as source selection information. Subpart 42.15 of the FAR further requires that agencies "use" recent evaluations of past performance stored in PPIRS, but it does not specify for what they are to be used. This provision presumably refers to consideration of agency past performance evaluations in source selection decisions, as discussed in the following section. However, nothing in Subpart 15.3 of FAR, which generally governs use of past performance as an evaluation factor, expressly requires consideration in source selection decisions of the past performance evaluations that agencies are required to complete under Subpart 42.15. Because of the potential use of agency performance evaluations in source selection decisions, contractors are generally concerned about the contents of their evaluations and want to ensure that these evaluations are accurate and unbiased. However, their ability to challenge their evaluations outside the agency was historically limited, and they could generally only allege improprieties in their evaluations in the course of bid protests challenging agency source selection decisions based, in part, on the contents of these evaluations. This arguably afforded contractors little relief from erroneous or biased evaluations because (1) the focus of the protest is upon the reasonableness of the contracting officer's source selection decision, not the reasonableness of the evaluation of the contractor's past performance, and (2) the judicial and administrative tribunals hearing bid protests give substantial deference to the contracting officer's determinations in the source selection process. More recently, however, disputes over performance evaluations have come to be seen as potential claims under the Contract Disputes Act (CDA) of 1978. This trend began in 2004, when the U.S. Court of Federal Claims issued its decision in Record Steel & Construction, Inc. v. United States . The contractor in Record Steel had sued seeking, among other things, a declaratory judgment that its evaluation be "corrected to reflect accurately" its performance under the contract. The government countered by asserting that the court lacked jurisdiction because, while the Tucker Act waives the government's sovereign immunity as to "claims" arising under the CDA, Record Steel's letter to the contracting officer requesting that its performance rating be reevaluated and changed did not constitute a claim since it did not seek relief "as a matter of right" or arising from or related to the contract. The court disagreed. It found that it had jurisdiction, assuming the other requirements of the CDA were met, because Record Steel's letter to the contracting officer constituted a "claim" as that term is defined in the FAR. In reaching this conclusion, the court found that a request for reevaluation and/or change of performance ratings was a "claim of right" because the FAR requires agencies to prepare such evaluations for contracts of the size and type held by Record Steel. The court also rejected the government's assertion that the precedent of the boards of contract appeals, which had long declined to exercise jurisdiction over challenges to performance evaluations, meant that the court lacked jurisdiction. Then, on May 6, 2010, the Armed Services Board of Contract Appeals (ASBCA) also found that it has jurisdiction over contractor challenges to performance evaluations. Previously, in a series of decisions issued between 1991 and 2006, the ASBCA and other boards of contract appeals had found that they lacked jurisdiction in such cases because a "performance evaluation under a contract is an administrative matter not a Government claim, and a contractor's request that a contracting officer change an evaluation is not a contractor's claim." Like the decision in Record Steel , the May decision of the ASBCA relied on the FAR's definition of "claim" to find that the contractor's request that the board "rescind" the contractor's evaluation constituted a claim, although the board grounded the contractor's entitlement to a "fair and accurate" performance evaluation in the terms of the contract and the "implied ... duty of good faith and fair dealing inherent in every contract," not the FAR. A subsequent decision by the ASBCA expanded upon the May decision by suggesting that earlier board decisions had been misconstrued as holding that the boards always lacked jurisdiction over contractor challenges to performance evaluations, and that the government's duty to provide an "accurate and fair" performance evaluation arises from both the FAR and the contract. Nonetheless, despite these recent decisions finding that the federal courts and boards of contract appeals have jurisdiction to hear contractor challenges to allegedly erroneous or biased performance evaluations, it is presently unclear what, if any, relief they might be able to grant. This question was first directly addressed in the Court of Federal Claims' decision on July 22, 2009, in Todd Construction, L.P. v. United States . Todd Construction had asked the court to (1) determine that the Air Force's final evaluation of its performance was unlawful and should be set aside and (2) direct the Air Force to remove the final performance evaluation from the Construction Contractor Appraisal Support System (CCASS). The court, however, found that neither form of relief was within its authority. It found that, while it has inherent authority to grant declaratory relief, a declaration of rights would not resolve the case at hand because it would not cause the performance evaluation to be changed or removed from CCASS. It similarly found that its statutory authority to remand the case to the agency with directions that the agency take "proper and just" steps could only be used to direct the agency's attention to matters that the court believes require further action to create an adequate record of the agency's decision, not to mandate particular factual determinations. Subsequent board of contract appeals decisions also found that the boards lack authority to order an agency to rescind a poor performance evaluation or revise the agency's evaluation. Although not expressly required to do so, agencies appear to have considered past performance when selecting vendors in "negotiated procurements" since at least the 1960s. A negotiated procurement is one in which the contract is awarded to the vendor whose proposal represents the "best value" for the government. This is not necessarily the vendor whose proposal has the lowest price, but rather the vendor whose proposal represents the greatest overall benefit to the government given its price, technical merit, and relationship to other evaluation criteria specified in the request for proposals (RFP). Such consideration of past performance in source selection decisions was not, however, standardized or required until the mid-1990s. Then, in 1993, OFPP issued guidelines that required agencies to consider past performance information in all negotiated procurements valued in excess of $100,000. This requirement was given a statutory basis one year later, when Congress enacted FASA. FASA directed OFPP to promulgate "standards for evaluating past performance with respect to cost (when appropriate), schedule, compliance with technical or functional specifications, and other relevant performance factors that facilitate consistent and fair evaluation by all executive agencies." OFPP did so by promulgating regulations in 1995-1997 regarding consideration of past performance information in negotiated procurements. These regulations were codified in FAR Subpart 15.3 and fully took effect in 1999. Subpart 15.3, as amended, currently governs use of past performance as an evaluation factor in negotiated procurements. Congress and the executive branch required agencies to consider past performance in source selection decisions in the hope that the government would obtain better performance under its contracts—and better value for its procurement dollars—by shifting the basis of its source selection decisions. Previously, agencies conducting negotiated procurements had relied heavily on what some commentators described as "complex technical and cost proposals," which these commentators asserted had "no correlation to the contractor's ability to perform the job." Consideration of past performance in source selection decisions was seen as an alternative to reliance on such proposals, especially by those who characterized past performance information as the best indicator of a contractor's ability to provide quality goods and services at a reasonable cost. Such consideration was not intended to exclude contractors with poor performance histories from future contracts. Rather, it was anticipated that certain contractors with poor performance histories would be able to compensate for this in other aspects of their proposals (e.g., offering lower prices, partnering with companies with better records), while others would be found nonresponsible for purposes of particular contracts or excluded from government contracting generally through the operation of other legal authorities. Subpart 15.3 of the FAR currently requires agencies to consider past performance or some other non-cost evaluation factor in all procurements, although the requirements differ somewhat depending upon the value of the procurement: With procurements valued at or below the simplified acquisition threshold (generally $150,000) , agencies must consider past performance or some other non-cost evaluation factor (e.g., technical excellence, management capability). With procurements whose value exceeds the simplified acquisition threshold , agencies must consider past performance unless the contracting officer documents why past performance is not an appropriate evaluation factor for the acquisition. Subpart 15.3 further requires (1) that agencies' evaluation of past performance be in accordance with the terms of the solicitation, and (2) that contractors' performance in subcontracting with small disadvantaged businesses be considered when evaluating their past performance. Beyond these requirements, however, Subpart 15.3 generally gives agencies broad discretion in their use of the past performance evaluation factor. Agencies may define what constitutes "past performance" for purposes of the procurement, including any subfactors that comprise the past performance evaluation factor. They may also determine what performances qualify as "recent" and "relevant" for purposes of the procurement, as well as whose performances are considered when past performance is evaluated (e.g., prime contractors, subcontractors, key employees). Additionally, agencies may determine what role the "past performance" factor plays in relation to other evaluation factors. Agencies are required to consider cost/price and the quality of the product or service, along with past performance, in all negotiated procurements. However, depending upon their requirements, they may consider a range of other factors, such as corporate experience, management, key personnel and staffing plan, organizational capacity, "proven plan to achieve efficiency and cost-effectiveness," "continuous enhancement of processes and systems(s)," and the offeror's small business status. Moreover, agencies have broad discretion in assigning various weights to the evaluation factors. Past performance need not be the most heavily weighted factor, and poor scoring on the past performance factor could be offset by higher scores on other factors, particularly if little weight is given to past performance. Agencies also generally have broad discretion in their consideration of various sources of information about contractors' past performance. Much of the information used in evaluating contractors' past performance comes from questionnaires or customer surveys submitted by the contractor, although agencies have, and often explicitly reserve, the right to consider other information. This can include any evaluations of contractor performance that agencies were required to prepare under Subpart 42.15 of the FAR. It should be noted, however, that Subpart 15.3 does not require agencies to consider evaluations prepared pursuant to Subpart 42.15 in source selection decisions, although Subpart 42.15 does require "use" of such evaluations, and failure to consider them could be found unreasonable under the "close at hand" doctrine. While the federal courts and the Government Accountability Office (GAO) have held that contracting officers need not consider all possible information about a contractor's past performance when evaluating such performance for source selection purposes, GAO, in particular, has noted that some information may be so "close at hand" that agencies cannot reasonably ignore it. For example, in Shaw-Parsons Infrastructure Recovery Consultants, LLC , GAO found that the Federal Emergency Management Agency (FEMA) acted unreasonably when it relied solely on information regarding past performance submitted by the contractor, and failed to consider information contained in customer questionnaires that FEMA had required the offerors to submit. GAO noted that, while the solicitation may have given FEMA discretion to seek out additional information, FEMA "could not simply ignore" the questionnaires once it had them because they were "close at hand." Agencies generally need not seek out information that would mitigate potentially adverse past performance information contained in the sources they consult, although there are a few circumstances in which they must do so, as Table 1 illustrates. They are also generally free to draw their own inferences regarding contractors' past performance from the sources they consult so long as these inferences are reasonable. However, Subpart 15.3 does require contracting officers to take into account "[t]he currency and relevance of the information, source of the information, context of the data, and general trends in contractor's performance" when considering past performance information. Contractors that object to the procuring activity's evaluation of their own past performance, or that of the winning offeror, in making its source selection decision could potentially file a bid protest challenging the decision with the Court of Federal claims or the GAO, although protesters must overcome significant hurdles to disturb a challenged award. The protester first has to demonstrate standing to bring the protest, which generally requires that the protester be in line for the award if the protest is sustained. Then, assuming that the protester has standing, it has to allege defects in the evaluation process sufficient to overcome the substantial deference that GAO and the federal courts accord to contracting officers' evaluations of past performance. This generally means that the protester must allege that the evaluation was unreasonable, not adequately documented, or not in accordance with the law or the terms of the solicitation. Protests that fail to allege one of these three things are generally seen as "mere disagreements ... as to the relative merit of competing proposals" and are denied. Moreover, beyond having broad discretion in determining whether particular past performance merits a particular rating, contracting officers also have broad discretion in determining which proposal represents the "best value" for the government. GAO and the federal courts have expressly approved of agencies' selection of contractors with lower past performance ratings over contractors with higher, or even "perfect," ratings, notwithstanding the fact that the solicitation calls for past performance to be given more weight than price in the source selection decision. Agencies sometimes also consider contractors' past performance in source selection decisions in ways that do not entail use of the past performance evaluation factor. For example, agencies may consider past performance as a component of other evaluation factors (e.g., experience, mission capability), as well as its own factor. Additionally, under FASA, agencies may use past performance as a factor in determining with whom to place certain orders under multiple-award contracts. Subpart 16.5 of the FAR, which implements the relevant provisions of FASA, encourages contracting officers to take into account "[p]ast performance on earlier orders under the contract, including quality, timeliness and cost control" when developing procedures for ensuring that all contractors holding a multiple-award contract have a "fair opportunity" to be considered for orders exceeding $5 million. Such consideration does not involve a source selection decision, per se , because the sources were selected at the time when the contract was awarded, and only those sources holding a multiple-award contract are eligible for orders placed under it. However, it is akin to a source selection decision in that it effectively determines who supplies particular goods to, or performs particular work for, the procuring activity. Ever since the FAR was promulgated in 1984, agencies have considered whether contractors have a "satisfactory performance record," among other things, in determining whether they are sufficiently "responsible" to be awarded a government contract. Agencies are prohibited from awarding a contract to a contractor who has not been determined to be affirmatively responsible. Then, in 1995, after the issuance of OFPP Policy Letter 92-5 and the enactment of FASA, OFPP amended Subpart 9.1 of the FAR to further require that agencies consider "relevant past performance information," as defined in Subpart 42.15, when making responsibility determinations. Guidance issued by OFPP shortly thereafter clarified that agencies are to use consideration of past performance in the responsibility determination process—not the source selection process—as a means of avoiding contractors with poor performance histories: A contractor with a record of unsatisfactory past performance should be screened out of the selection process as part of the responsibility determination. If a contractor's past performance record passes the responsibility determination, then the record should be compared to the other responsible offerors to determine the offeror that provides the best value to the Government. However, it should be noted that, while OFPP characterizes the responsibility determination process as the means for "screening out" contractors with poor past performance, agencies may not use nonresponsibility determinations to punish contractors for poor performance, and poor performance or even default on one or several prior contracts does not necessarily constitute adequate grounds for a nonresponsibility determination. Additionally, as discussed below, any use of the responsibility determination process to avoid a contractor with poor past performance must be short-term and procurement-specific so as to avoid de facto debarment of the contractor. For dealings with a contractor to be avoided long-term and/or government-wide, the contractor would need to be formally excluded from government contracting (i.e., debarred or suspended). Because of the amendments made to Subpart 9.1 of the FAR in 1995, past performance has traditionally played a unique role in the responsibility determination process. Until recently, "relevant past performance" information was the only information that contracting officers were required by law to consider when making responsibility determinations. They otherwise had broad discretion as to what and how much information to consider, although they were encouraged to consider certain information (e.g., commercial sources of supplier information, preaward survey reports, business and trade associations). This changed in 2008, when Congress enacted legislation requiring contracting officers to consider the information contained in FAPIIS when making responsibility determinations. FAPIIS is required to contain, among other things, brief descriptions of civil, criminal, and administrative proceedings involving federal contracts that resulted in a conviction or finding of fault, as well as terminations for default, administrative agreements, and nonresponsibility determinations relating to federal contracts, within the past five years for all persons holding a federal contract or grant worth $500,000 or more. Consideration of this information would arguably be most helpful in assessing responsibility criteria other than whether the contractor possesses a satisfactory performance record (e.g., whether the contractor has a satisfactory record of integrity and business ethics). However, because FAPIIS includes information from CPARS/PPIRS, the requirement to consider the information in FAPIIS arguably augments agency consideration of past performance evaluations. Additionally, Subpart 9.1 of the FAR, which governs responsibility determinations, establishes a presumption that contractors who are, or recently have been, "seriously deficient" in contract performance are nonresponsible unless the contracting officer determines that the circumstances were beyond the contractor's control, or the contractor has taken appropriate corrective action. Subpart 9.1 does not define what constitutes a "serious deficiency" in performance, but GAO and the courts have found that it could potentially include delinquent performance, delivery of nonconforming items, failure to adhere to contract specifications, late deliveries, poor management or technical judgment, failure to correct production problems, failure to perform safely, and inadequate supervision of subcontractors. Contractors' ability to challenge agency determinations that they are nonresponsible, or that another contractor is responsible, is limited. Judicial and other tribunals that hear protests of contract awards do not routinely review contracting officers' responsibility determinations because such determinations are "practical, ... not legal determination[s]" and "are not readily susceptible to judicial review." The GAO hears protests regarding responsibility determinations only when the protester alleges that "definitive responsibility criteria" were not met, or "identif[ies] evidence raising serious concerns that ... the contracting officer unreasonably failed to consider available relevant information or otherwise violated statute or regulation." The federal courts similarly consider the merits of protested responsibility determinations only when the protester's allegations that the agency's determination was arbitrary and capricious, an abuse of discretion, or otherwise not in accordance with the law can survive a preliminary motion to dismiss. Moreover, judicial and administrative tribunals decline to overturn contracting officers' responsibility determinations in many of the protests that they do hear. They generally overturn a determination only when the protester can show that the determination was clearly unreasonable given the record before the contracting officer. The GAO and the courts have also held that a contracting officer's determination is not unreasonable merely because another contracting officer made a different determination after considering the same information. Because the focus of a responsibility determination is upon the contractor's ability to satisfy the needs of the government under a particular proposed contract, the responsibility determination process is not designed to exclude contractors with allegedly deficient past performance, or other problems, from future dealings with the government. To the contrary, any use of it to this effect could potentially be found to constitute de facto debarment. The federal courts developed the concept of de facto debarment as a way of ensuring that agencies do not deprive contractors of the due process to which they are entitled in formal exclusion proceedings (i.e., debarment and suspension) by effectively excluding contractors by other means. Repeated determinations of nonresponsibility based on the same alleged conduct by the contractor have been found to constitute de facto debarment, as have statements or other conduct evidencing an intent to exclude a contractor from future government contracts. For example, in Old Dominion Dairy Products , Inc. v. Secretary of Defense , the Air Force was found to have de facto debarred a contractor when the contracting officer determined that the contractor lacked integrity and was nonresponsible after another contracting officer had determined that the contractor was nonresponsible due to billing irregularities. Similarly, in Art-Metal-USA, Inc. v. Solomon , the General Services Administration was found to have de facto debarred a contractor when it determined that the contractor was nonresponsible for a new contract and suspended its existing contracts in response to concerns that it had supplied "inferior products." In both cases, the courts noted that the challenged agency conduct effectively excluded the contractor without providing the contractor with the notice or opportunity for a hearing that the contractor would have received had they been formally debarred or suspended. The courts thus enjoined the agency conduct that resulted in de facto debarment or granted other relief to the contractor. Cases that involve de facto debarment sometimes also involve unconstitutional deprivation of contractors' liberty interests. This generally occurs when contractors are excluded from government contracts without notice or a hearing because of concerns about their integrity, as contractors have a cognizable liberty interest in being "free from 'stigmatizing' governmental defamation having an immediate and tangible effect on [their] ability to do business." However, depending upon the circumstances, concerns about past performance could be implicated in concerns about integrity. Agencies also have legal authority under Subpart 9.4 of the FAR to debar or suspend contractors for willful failure to perform under a contract or a history of failure to perform. Debarment and suspension are government-wide and last for a fixed period of time. Such exclusions may, however, only be implemented to protect the government, not to punish the contractor, and the agency could be found to have violated the Administrative Procedure Act (APA) if it subsequently excludes the contractor for conduct that it was aware of when it determined that the contractor was responsible. For example, in Lion Raisins, Inc. v. United States , the U.S. Court of Federal Claims found that the U.S. Department of Agriculture's (USDA's) suspension of a contractor for falsifying raisin certifications violated the APA, given that the USDA knew of the contractor's conduct when making five prior determinations that the contractor was "responsible." While the decision in Lion Raisins has been criticized by some commentators and distinguished by some courts, it has been followed or cited approvingly by others and could potentially be read to preclude agencies from debarring or suspending contractors under the FAR based on "stale" allegations of wrongdoing. "Stale" allegations of wrongdoing could potentially include allegations of poor performance under contracts completed some time ago. 

Summary: Poor performance under a federal contract can have immediate consequences for contractors, who could be denied award or incentive fees, required to pay damages, or terminated for default. In addition, it could affect their ability to obtain future contracts because federal law generally requires agencies to evaluate contractors' past performance and consider past performance information when making source selection decisions in negotiated procurements and determining whether prospective contractors are "responsible." "Past performance" refers to performance on "active and physically completed contracts" and certain orders under existing contracts. Federal law generally requires agencies to evaluate and document contractor performance on contracts or orders whose value exceeds the simplified acquisition threshold (generally $150,000). The evaluation must generally address the quality of the product or service supplied by the contractor, its efforts to control costs, its timeliness and compliance with schedules, its conduct of management or business relations, its performance in subcontracting with small businesses, and other applicable factors (e.g., tax delinquency). The evaluation and any contractor response comprise the past performance information that is stored in government databases (e.g., Past Performance Information Retrieval System (PPIRS), Federal Awardee Performance and Integrity Information System (FAPIIS)) and may be used in future source selection decisions. Federal law also generally requires agencies to consider contractors' past performance when making source selection decisions in negotiated procurements whose value exceeds the simplified acquisition threshold. In a negotiated procurement, the contract is awarded to the offeror whose proposal represents the "best value" for the government based on various factors identified in the solicitation. These factors typically must include price and past performance. However, other factors may be considered, and procuring agencies determine the weight given to various factors. Additionally, agencies are required by law to consider whether the contractor has a "satisfactory performance record" when determining whether the contractor is sufficiently "responsible" to be awarded a federal contract. Agencies generally cannot award a contract without determining that the contractor is "responsible." While agencies are generally prohibited from repeatedly finding a contractor nonresponsible based upon the same deficient past performance, they may debar or suspend contractors for willful failure to perform under a contract or contracts, or for a history of failure to perform or of unsatisfactory performance of a contract or contracts. Reports alleging that contractors received new contracts or orders despite poor performance under prior ones have recently prompted interest in the role that evaluations of past performance play in contracting, as well as attempts by some Members of Congress and the Obama Administration to strengthen requirements pertaining to performance evaluations. The 112th Congress enacted legislation that requires the Department of Defense (P.L. 112-81) and the Federal Acquisition Regulatory Council (P.L. 112-239) to develop "strateg[ies] for ensuring" that past performance reports are timely, accurate and complete; and give contractors 14 days to comment on, rebut, or supplement past performance reports. The 113th Congress also enacted legislation addressing certain issues relating to past performance (P.L. 113-6, P.L. 113-291), although this legislation was narrower in scope than that enacted by the 112th Congress. In addition, the Obama Administration updated the Federal Acquisition Regulation (FAR) in 2013 to standardize the factors used in evaluating contractors' performance, and require that all past performance information be entered into the Contractor Performance Assessment Reporting System (CPARS). It made further updates to the FAR in 2014 to implement P.L. 112-81 and P.L. 112-239.