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.