第5章 CHAPTER 2

PRE-AWARD: USING PAST

PERFORMANCE AS AN

EVALUATION FACTOR

“… [P]ast performance shall be evaluated in all source selection for negotiated acquisitions expected to exceed the simplified acquisition threshold.” FAR[9]

This chapter provides guidance to government personnel in preparing a request for proposals (RFP) when past performance is used as an evaluation factor in source selection. The evaluation process has not changed. Past performance has been and remains one of the six non-cost evaluation factors cited in the FAR that may be used to assess the quality of an offeror's proposal. What has changed is the requirement to use past performance as an evaluation factor or significant subfactor in source selection.[10]

To comply with that requirement, contracting officers should answer the following questions before preparing the RFP:

Which evaluation factors would be most appropriate?

Is there a reasonable explanation for not using past performance as an evaluation factor?

What is the relative importance of the evaluation factors selected?

What will be evaluated as past performance?

How will past performance be described in the RFP?

How will past performance be rated or scored?

The following sections will address these areas, suggest how they might be handled, discuss some of the problems that might be encountered, and propose solutions.

EVALUATION FACTORS

Before deciding whether and how to use past performance as an evaluation factor, the contracting officer should consider what other factors might be important in the instant acquisition. The FAR identifies seven areas that are considered in source selection decisions. In addition to cost or price, which must be considered in every source selection, there are six non-cost evaluation factors: past performance, compliance with solicitation requirements, technical excellence, management capability, personnel qualifications, and prior experience.[11]

Cost or Price

Cost or price is a mandatory evaluation factor in all procurements. Although cost or price need not be the most important factor, no award is valid unless cost or price has been considered in some fashion during the source selection process.[12]

Past Performance

Past performance is used to evaluate how well the offeror performed the same or similar effort on past or current contracts or orders and how that past performance is likely to affect the current effort. The evaluation should consider the currency and relevance of an offeror's past performance, the source and validity of the past performance information received, the context of the data, and the general trend of the offeror's past performance.

The use of past performance as an evaluation factor is required by the FAR for all procurements in excess of the simplified acquisition threshold,[13] except when the contracting officer documents the contract file to indicate why using past performance as an evaluation factor is not appropriate for the acquisition.[14]

Compliance with Solicitation Requirements

When compliance with solicitation requirements is used as an evaluation factor, the offeror must demonstrate that the proposed product or service meets the requirements of the solicitation. Generally, compliance with solicitation requirements is used in fixed-price acquisitions in which the requirements are not complex and the technical and management aspects are not likely to be factors in discriminating among the potential offerors.

Compliance with solicitation requirements is appropriate to use when the prime consideration, besides price, is that the offeror's proposal demonstrates that all the mandatory solicitation requirements will be met, as might be the case with fixed-price construction contracts or contracts for the manufacture or provision of standard supplies, equipment, or services. It is also appropriate in solicitations in which the award will be made to the lowest-priced, technically acceptable proposal. In such cases, technical excellence is not a factor; the only requirement is that the proposal demonstrate that it meets the minimum standard for compliance with the solicitation requirements. All proposals that meet the minimum standards (i.e., are acceptable) are then competed on the basis of the proposed prices.

Technical Excellence

Technical excellence has to do with evaluating the quality of an offeror's technical proposal in terms of meeting the contractual requirements. The proposal is evaluated considering such things as technical understanding, as demonstrated by the offeror's analysis of the requirement; technical approach, as demonstrated by the techniques or methodology to be employed; and technical planning, as demonstrated by the scheduling and sequencing of the planned effort. Overall, the technical evaluation must consider the feasibility of the technical proposal, the probability of technical success, and the offeror's ability to do what is proposed within the contractual time frames.

Technical excellence is most appropriate when the requirement is unique or complex and the government needs to see how the competing offerors propose to meet the technical requirements of the RFP. Its use is also appropriate when there are a number of different ways to meet the technical requirements and the government wants to select the best technical approach.

Generally, technical excellence is used as an evaluation factor if the government determines that (1) it must evaluate how the offerors propose to meet the contract requirements, (2) the differences in the technical proposals will be a discriminating factor in the evaluation, and (3) there is likely to be a need to discuss aspects of the technical proposals with the offerors in the competitive range.

Management Capability

Management capability involves the evaluation of how well an offeror's proposal demonstrates that the offeror can effectively manage all aspects of contract performance. The proposal is evaluated according to (1) how well the management plan demonstrates that the work effort will be managed effectively and establishes well-defined lines of authority, responsibility, and communication; (2) how well management techniques are established to facilitate the early identification and resolution of problems and a prompt response to changes; (3) the extent to which the staffing represents an appropriate level and labor mix and reflects the technical input and ability for successful and timely contract performance; and, as appropriate, (4) the offeror's ability to react to workload fluctuations.

Using management as an evaluation factor is most appropriate for large, complex requirements when how the work is staffed and managed could be a major factor in the success or failure of the contract effort, such as in systems acquisition, research and development, technical support services, bundled contracts, and other complex acquisitions. Evaluating management issues is less important in standard, noncomplex acquisitions, such as acquiring commercial items and standard supplies or services. Management capability also may be used as a subfactor to the technical excellence evaluation factor.

Management capability is probably an overused evaluation factor. Often it is automatically coupled with the technical excellence evaluation factor. Except for the large, complex efforts noted above, how an offeror proposes to manage its contractual effort is not necessarily a discriminating factor in an evaluation. However, even when other management aspects are not particularly important, how an offeror proposes to staff the work effort could be a discriminating factor.

Basically, staffing is evaluated to determine if the offeror is proposing adequate staffing. The evaluation should also consider, however, how the offeror proposes to manage its staffing, considering such things as staffing distribution, staffing for standard and peak workload conditions, cross-utilization, personnel turnover, and retention plans. Staffing, rather than management, might be used as a primary evaluation factor when acquiring complex technical support services or in other acquisitions in which how an offeror proposes to manage its staffing effort could be a discriminating factor.

It should be noted that proposed staffing is inherent to assessing the offeror's understanding of the requirement. Staffing could also be used as a subfactor to the technical excellence evaluation factor.

Personnel Qualifications

Personnel qualifications (often called key personnel) involve evaluating the availability, competency, pertinent education, and related experience of an offeror's proposed key personnel with respect to their potential contribution to successful contract performance. Personnel qualifications are evaluated on the basis of information provided by the offeror regarding each individual's qualifications and commitment to work on the proposed contract.

Personnel qualifications often are used in evaluating proposals for research and development, information technology services, technical and other complex support services, and other requirements in which the qualifications of proposed key personnel are vital to the success of contract performance and would be a discriminating factor in the evaluation. Personnel qualifications may be used as a primary evaluation factor or as a subfactor under technical excellence, management capability, or staffing.

The use of personnel qualifications as an evaluation factor has been the subject of numerous protests. Generally, protests in this area can be minimized if the RFP (1) identifies the key positions so that the offeror can provide specific names and résumés, (2) identifies the minimum qualifications required of the personnel proposed to fill these positions so that the offeror can provide the appropriate qualification information, (3) identifies the documentation required (such as résumés and letters of commitment) to support the offeror's identification of such personnel, and (4) warns that it is the offeror's responsibility to ensure that the proposed key personnel are available and committed to perform under the contract throughout the acquisition process and to propose new personnel should the originally proposed personnel become unavailable.

Prior Experience

Prior experience (often referred to as corporate experience) involves the evaluation of an offeror's knowledge based on its work on past and current contracts of the same or similar nature. It is related to whether the offeror has done such work before, not to how well it performed the work. Prior experience is evaluated on the basis of information provided by the offeror (and verified as necessary) that identifies specific past or current contracts demonstrating the offeror's involvement with work relevant to the current procurement.

Prior experience is typically evaluated in terms of the number of years of general or specialized experience or the number of comparable or relevant contracts. Prior experience also can be evaluated in terms of the experience of an offeror's senior technical or management personnel, subcontractors, or other members of a joint venture.

Prior experience is important when the government needs some assurance that the offeror has performed the required work. The degree of importance depends on the size and complexity of the required work effort. Prior experience is an indicator of an offeror's ability to complete a complex effort that involves many personnel and multiple work units and requires interfacing both inside and outside the corporate structure. In large efforts, the existence of prior experience often provides some assurance that corporate memory will be retained.

Prior experience may be less important on smaller efforts that involve only a few personnel because the retention of corporate experience is less assured if only a few personnel were involved in the contract. Prior experience is, after all, little more than the corporate memory of the persons currently working for the offeror. The fact that an offeror previously performed the same or similar work is not necessarily a qualifying factor if the key experienced personnel who performed the work are no longer employed by the offeror.

When prior experience is used as an evaluation factor, the RFP should permit offerors to show how the innovative use of their products or services or of subcontractors or joint venture partners will enable the offeror to meet the contractual requirements.

SELECTING EVALUATION FACTORS

When selecting the evaluation factors and significant subfactors to use in a competitively negotiated procurement, certain conditions must be met. The contracting officer (1) must tailor the evaluation factors and subfactors to the needs of the specific procurement, (2) must use only those evaluation factors and subfactors that support meaningful comparison and discrimination between and among competing proposals, (3) should limit the number of evaluation factors, and (4) must always include cost or price and address quality by considering one or more non-cost evaluation factors.

Tailor the Evaluation Factors to the Procurement

Evaluation factors must be tailored to the requirement being procured.[15] The relationship between the evaluation factors and the statement of work (SOW) and other contractual requirements should be clear. The evaluation scheme should include only those evaluation factors and significant subfactors that represent the key areas of importance and emphasis to be considered in the source selection decision. In a competitive acquisition, the evaluation factors (as well as the SOW requirements) cannot be designed so that only one offeror can meet the requirements. It should be noted that, with the exception of cost or price (which is always required) and past performance (which is required when appropriate), the evaluation factors cited in the FAR are not required for all procurements and are not the only criteria that may be used. Any factors appropriate to the evaluation may be used.

Ensure That the Evaluation Factors Discriminate among Offerors

Evaluation factors and significant subfactors must support meaningful comparison and discrimination among the competing proposals.[16] They must reflect that which is most important in determining which offeror can perform the contract successfully and which, when considering cost or price, offers the best value. Using evaluation factors that are likely to result in similar evaluation results is not effective. Select the factors and subfactors that are most likely to point out the differences rather than the similarities between the proposals. Keep in mind that the purpose of the evaluation is first to identify the most highly rated proposals (for the competitive range determination) and then to determine which of the competitive proposals offers the best value (for source selection). This cannot be done effectively unless the evaluation criteria provide the basis for identifying the differences, and the respective value of those differences, among the competing proposals.

Limit the Number of Evaluation Factors

Keep the number of different evaluation factors and subfactors to a minimum. Do not try to evaluate every facet of an offeror's proposal. Limit the factors and subfactors to only those most important to the success of the procurement. Proposal scoring often becomes diluted if there are a large number of evaluation factors and subfactors. The overall scores tend to level off and become roughly equal, making it difficult to distinguish between and rank the relative worth of the competing proposals and to select the proposal offering the best value. Usually, using more than three primary factors and a similar number of subfactors will have a leveling effect.

Always Include Cost or Price and Quality

All procurements must include cost or price as an evaluation factor, although it need not be the most important factor. Cost or price does not even need to be weighted or scored, but it must be considered in the source selection because an evaluation scheme in which cost or price is not considered in some fashion can be successfully protested.

Quality also must be addressed in some fashion. As noted earlier, quality may be expressed in terms of such non-cost evaluation factors as past performance, compliance with solicitation requirements, technical excellence, management capability, personnel qualifications, prior experience, or any other non-cost factor appropriate to the procurement. Past performance must be used in acquisitions that exceed the simplified acquisition threshold unless the contracting officer documents a decision that the use of past performance is not appropriate.

Before addressing the decision to use past performance as an evaluation factor, a few words about the other non-cost evaluation factors are in order. Prior to the current emphasis on the use of past performance in the evaluation, the standard primary evaluation factors were technical excellence, management capability, and prior experience. Often these were used automatically, with personnel qualifications as a subfactor to either technical excellence or management capability when appropriate. Compliance with solicitation requirements was used when the acquisition did not require the evaluation of technical excellence and management capability. Past performance was used as an evaluation factor, but its use was uncommon.

Now that the FAR requires the use of past performance, we are seeing some variances in evaluation schemes, particularly with fixed-price contracts. Agencies now look more critically at using non-cost evaluation factors. Some agencies are soliciting on the basis of price and past performance as the only evaluation factors when acquiring standard supplies or services. Other agencies, when appropriate, are substituting past performance for the technical and management evaluation factors when they have determined that how an offeror has performed in the past is a better indicator of how it will perform in the future than the promises made in technical and management proposals.

DETERMINING WHETHER TO USE PAST PERFORMANCE AS AN EVALUATION FACTOR

Despite the emphasis on using past performance in competitive evaluations, keep in mind that the final decision is up to the contracting officer. The contracting officer must determine whether using past performance as an evaluation factor is appropriate and, if so, how it should be used. If past performance is not used in the evaluation, however, the contracting officer must document the reason why in the contract file.

Using past performance as an evaluation factor should depend on the significance of past performance as a discriminator in the current procurement. It cannot be assumed automatically that past performance is an important factor without first considering whether it is needed to discriminate among offerors. For example, if all potential offerors are good performers, the evaluation of past performance might not enhance the evaluation process. If the acquisition is a once-in-a-generation acquisition, there will not likely be any significant past performance to evaluate (assuming that there is no sufficiently similar effort).

The effective use of past performance also can be diminished when a number of new firms with no performance history are competing or when the acquisition is for a new item or service that has no germane performance history. The rationale for not using past performance as an evaluation factor should indicate the circumstances of the procurement that preclude using past performance as a discriminating factor and state that, because past performance will not be a significant discriminator, it should not be used in the evaluation.

Generally, past performance can be used in most acquisitions either as a primary evaluation factor or as a significant subfactor. For example, if previous contracts for the same or similar items or services have a history of performance problems, past performance, as an indicator of performance risk, is a very important criterion and should be used as a primary evaluation factor. Past performance is also an effective evaluation factor in the repetitive acquisition of standard supplies or services when there are many competing offerors and a significant performance history.

Past performance also is significant if strict conformance with the specifications and delivery times is critical to the program the procurement supports. For example, the acquisition of military clothing requires strict conformance to the specifications and delivery schedule. This field is very competitive, and the evaluation of past performance helps limit the competition to proven suppliers. Past performance also is important in the acquisition of supplies and equipment when the required items are sensitive and complex devices and the proven ability to produce the items successfully in conformance to specifications and to make timely delivery are critical to selecting the successful offeror.

The evaluation of past performance is also applicable to services, such as technical support services, when the proven ability to respond successfully to complex technical requirements is critical to source selection, or even standard services, such as janitorial services, where successful past performance is an important indicator of an offeror's likely future performance.

Past performance also can be evaluated separately from the standard non-cost evaluation factors as a performance risk factor, in which the risk of successful performance is evaluated through assessing risk and determining the likelihood that instances of poor past performance (or superior past performance) will be repeated in the prospective contract.

Performance risk should not be confused with proposal risk. Proposal risk is an assessment of the likelihood that the proposed technical and management approach will be successful, based solely on the contents of an offeror's technical and management proposals. Performance risk evaluation is based on information such as the agency's personal knowledge, customer surveys, past performance questionnaire replies, and reports in the Past Performance Information Retrieval System (PPIRS).[17] Performance risk assessment is not restricted to the information contained in the proposal.

DETERMINING THE RELATIVE IMPORTANCE OF PAST PERFORMANCE AS AN EVALUATION FACTOR

To submit accurate and realistic proposals, offerors must understand the criteria against which their proposals will be evaluated. Therefore, the evaluation factors and significant subfactors and their relative importance must be set forth in the RFP in a manner that clearly expresses their value and interrelationships.

Determining the Relative Importance of Evaluation Factors

Once the evaluation factors and subfactors to be used have been identified, the relative importance of each should be determined based on an assessment of the value of each factor to the overall evaluation.[18] This is usually done by determining first the relative importance of each primary evaluation factor and then the relative importance of each subfactor to its associated primary factor.

To determine relative importance, you must first review the solicitation requirements to decide what it is that you need to know from each offeror to determine the worth of the offeror's proposal. The things you need to know are represented by the evaluation factors (e.g., technical excellence, management capability, prior experience, past performance), and the relative importance of each factor depends on how important each is to the identification of those offerors to be included in the competitive range and the eventual source selection.

Evaluation factors are listed in the RFP in descending order of importance, and their relative importance is set forth either in a narrative (if the relationships are simple and easy to understand and there are not many factors) or by publishing the specific evaluation weights in the RFP. The primary purposes of describing the relative importance of the evaluation factors and subfactors are (1) to ensure that offerors address the issues represented by the evaluation factors with the appropriate emphasis and (2) to ensure that offerors understand how their proposals will be evaluated.

Determining the Relative Importance of Past Performance

When past performance is used as a primary evaluation factor, it should be weighted at 25 percent or more, or at least equal in significance to the other non-cost evaluation factors. This ensures that significant consideration is given to past performance. A very low weighting might reduce the overall perception of how important good contract performance is as an element of the source selection process.

Note, however, that the importance of past performance as an evaluation factor must be based on its importance in determining which proposal offers the best value, which in turn depends on a number of varying factors, all relating to the current acquisition and not to a policy statement or general guidance. The overall requirement must be assessed carefully, first to determine which evaluation factors to use and then to determine the relative importance of each. Automatically assigning past performance some predetermined evaluation weight would be a poor practice.

When used, past performance usually is one of the primary evaluation factors, but not necessarily the most important. Technical excellence and management capability factors provide insight into how the offeror proposes to perform the current requirement. The prior experience factor indicates the offeror's knowledge of the subject matter. When the requirement is large and complex, specific technical expertise is required. There are different ways to accomplish the requirement, and how an offeror proposes to do the work and its technical and management expertise could be critical discriminators in the evaluation. In such instances, past performance might be of lesser importance in the evaluation scheme.

There are times, however, when technical excellence or management capability factors might not be significant to the source selection. For example, in the procurement of continuing services (particularly when using performance-based acquisition contracting), how a contractor plans to perform or manage the contract might not be as significant as its track record in performing the same or similar services.

When the performance of services is standardized, as in commercial or commercial-like services, the competitors typically will be alike in their technical and management approaches. If their technical and management proposals were to be evaluated, it is likely that they would be rated as roughly equal, in effect rendering technical and management capabilities ineffective as discriminators. In such instances, substituting past performance for the technical excellence or management capability evaluation factors rather than adding past performance as another evaluation factor would make the evaluation more effective. A number of agencies, when acquiring standard supplies or services on a fixed-price basis, have found that using past performance and price as the only evaluation factors is an effective and efficient approach.

Distinguishing between Past Performance and Prior Experience

The evaluation of past performance and of prior experience is similar in that both use the same database-previous contracts for the same or similar effort. They differ in the way the previous contracts are evaluated. Prior experience is used to evaluate whether the offeror has performed such work in the past. Past performance is used to evaluate how well the offeror has performed the same or similar past or current contracts. Therefore, past performance is a better indicator of future performance. Prior experience demonstrates that the offeror is capable of performing the proposed contract.

Because past performance and prior experience use the same database, only one or the other should be used in the same source selection. Past performance is a required non-cost evaluation factor. If the contracting officer determines that past performance is not appropriate in the instant solicitation, prior experience may be considered. Using both prior experience and past performance can dilute the importance of past performance, as shown by the GAO decision in Si-Nor, Inc., B-282064; B-282064.2, May 25, 1999, summarized in Example 2.1.

Example 2.1-Relative importance of past performance can be diluted by adding prior experience.

Issue: In a fixed-price solicitation for refuse collection and disposal services, proposals were to be evaluated based on (1) past performance/experience and (2) price/cost, which were to be approximately equal in weight. Past performance and experience were also to be approximately equal in weight. Award was to be made on a best-value basis. Si-Nor protested on the basis that Eagle's higher performance rating did not warrant payment of an $858,636.80 premium.

Resolution: The award decision was successfully protested because the reasonableness of the tradeoff decision was not adequately documented. Of interest here, however, is the perhaps unintended consequences of the evaluation scheme as explained by the Comptroller General in a footnote to his decision. Since past performance/experience and price/cost were to be given approximately equal weight, each was worth approximately 50 percent of the overall rating; since, within past performance/experience, each of the two component[s] was approximately equal, past performance was worth approximately 25 percent of the overall rating.

By adding prior experience as equal in importance to past performance, the relative importance of past performance was diminished, which would make a tradeoff favoring superior past performance difficult to support.

For an abridged version of GAO's decision in Si-Nor, Inc., see Appendix B, Example 2.1.

The problem noted in Example 2.1 could have been avoided by using either past performance or prior experience. If past performance is appropriate, it must be used. As noted above, both evaluation factors use the same database-past or current contracts of the same or similar nature and scope as the requirements of the instant solicitation.

Same or Similar Efforts

It is critical that the contracts identified by the offeror be for the same or similar efforts. After all, an evaluation of past performance should be made using relevant past effort. How else can you relate an offeror's past performance to its likely performance on the prospective contract? The GAO decision in Power Connector, Inc., B-286875, B-286875.2, January 14, 2001, summarized in Example 2.2, demonstrates the need for relevancy.

Example 2.2-Basing evaluation on contracts most relevant to solicitation.

Issue: In a Federal Bureau of Prisons UNICOR solicitation for a best-value award of a fixed-price, indefinite-quantity contract for leather to be used in manufacturing work gloves, the solicitation cited three evaluation factors in a descending order of importance-past performance, compliance with technical specifications, and price.

Power Connector, Inc. (PCI) listed four past performance references-two for leather contracts and two for communications components contracts. After concluding that the communications components contracts were not similar to the current leather requirement, the contracting officer checked UNICOR's database and found that PCI had a current contract to supply leather to UNICOR. Because she viewed this contract as similar to the solicited requirement, she used it as the third reference instead of the communications components contracts. Based on the ratings for these three contracts-one excellent, two good-the contracting officer evaluated PCI as overall good for past performance.

After another firm received the award, PCI protested, asserting, among other issues, that the contracting officer had improperly failed to consider the two communications components contract references. PCI claimed that had those contracts been considered, PCI would have received all excellent ratings and would have been in line for award.

Resolution: The GAO determined that:

In evaluating past performance, an agency has discretion to determine the scope of the vendors' performance history to be considered, provided that it evaluates all submissions on the same basis and consistent with the solicitation.[19] An agency may base its evaluation on contracts it believes are most relevant to the solicitation,[20] it has discretion to consider information other than that provided by the vendors,[21] and need not consider all references a vendor submits.[22]

UNICOR's actions fall within the above standard. The contracting officer sought to identify the most relevant contracts for purposes of assessing PCI's past performance and, in doing so, considered a relevant contract not listed in PCI's quotation and disregarded two listed contracts which were not similar to the current requirement. This was reasonable, and well within the agency's discretion. Moreover, although we think the logic of evaluating similar contracts to assess past performance is obvious, the RFQ requirement that firms provide references for “similar” contracts put PCI and the other vendors on notice that the agency wanted to evaluate similar contracts; thus, the agency's reliance on PCI's ongoing leather contract was fully consistent with the evaluation scheme.

For an abridged version of the GAO decision in Power Connector, Inc., see Appendix B, Example 2.2.

Distinguishing between Past Performance as a Responsibility Factor and Past Performance as an Evaluation Factor

Using past performance as a responsibility factor must be distinguished from using it as an evaluation factor to ensure that both are handled properly.

FAR Subpart 9.1 requires that all contracts be awarded to responsible contractors and establishes the responsibility standards that must be met. Past performance is one of the responsibility standards. FAR 9.104-3(b) requires the use of past performance in making determinations of responsibility, stating that “ [a] prospective contractor that is or recently has been seriously deficient in contract performance shall be presumed to be non-responsible, unless the contracting officer determines that the circumstances were properly beyond the contractor's control, or that the contractor has taken appropriate corrective action. Past failure to apply sufficient tenacity and perseverance to perform acceptably is strong evidence of non-responsibility. Failure to meet the quality requirements of the contract is a significant factor to consider in determining satisfactory performance.”

Distinguishing between past performance as a responsibility factor and past performance as an evaluation factor is necessary because determining responsibility and evaluating proposals are two distinct and separate functions. They are performed for different purposes at different times by different people during the procurement process.

As an evaluation factor, past performance is evaluated for purposes of source selection in competitively negotiated acquisitions. All evaluation factors are evaluated by the application of specific criteria set forth in the RFP, through a comparative assessment that establishes the relative value of each proposal and the relative ranking of each offeror. Past performance is evaluated during the initial evaluation for the establishment of the competitive range and later during the final evaluation to establish which proposal represents the best value to the government.

It should be noted that in a comparative assessment, a failure to meet the minimum requirements of an evaluation factor does not in itself require automatic rejection of a proposal. It simply results in a lower assessment or score. A technical evaluation team performs this evaluation.

Responsibility factors are assessed in all acquisitions to determine whether a proposed contractor is a responsible business able to perform the contract. Past performance is one of a number of responsibility factors that are assessed by the application of specific responsibility standards established in the FAR. This assessment is made on a pass/fail basis, and a failure to meet the minimum requirements of any responsibility standard requires rejection of the proposal. A contractor is either responsible or not responsible; there is no middle ground. The contracting officer performs this assessment after completion of the final evaluation and immediately before award.

The need to distinguish between past performance as a responsibility factor and past performance as an evaluation factor lies in how failures are handled if a small business is involved. If a small business firm fails to meet the responsibility standards and is determined to be not responsible, the matter must be referred to the Small Business Administration (SBA), which may issue a Certificate of Competency (COC) declaring that the firm is a responsible business concern. If the SBA does not issue a COC, the firm's proposal must be rejected.

If, however, a small business firm's proposal is downgraded under past performance during a comparative assessment (evaluation) of all proposals, the matter is not reviewable by the SBA because, as noted earlier, a failure to meet the minimum requirements of an evaluation factor does not require automatic rejection of a proposal but simply results in a lower assessment or score. The SBA's authority extends only to matters of non-responsibility and does not encompass matters involving comparative assessments.

Using past performance as an evaluation factor is not a substitute for assessing past performance in the responsibility determination. Past performance is an established responsibility factor and must be considered in a determination of responsibility. Therefore, if past performance is used as an evaluation factor, it could be evaluated twice-first, as part of the assessment of the value of an offeror's proposal in comparison to the proposals of other offerors and second, to determine whether the offeror's past performance meets the minimum standards of responsibility.

Generally, however, if past performance is an evaluation factor, an offeror whose past performance is such that it would be considered non-responsible would not remain in the competition long enough for a responsibility determination. Only the most highly rated offerors are included in the competitive range, and an offeror's significantly deficient performance record will, in most cases, lower the offeror's score enough to result in proposal rejection during the initial proposal evaluation. However, there are always exceptions to the rules, and knowing the difference between using past performance as an evaluation factor and using it in a responsibility determination before issuing the RFP will help avoid mistakes that can be protested successfully.

WHAT IS EVALUATED AS PAST PERFORMANCE

A contractor's actions executed under previously awarded contracts are relevant past performance information. That information is categorized under four areas- quality of product or service, timeliness, cost control, and business relations. The first three assessment areas relate to the contractor's compliance with contractual requirements. The fourth concerns the contractor's relationship with the acquisition team and some of the other requirements of the contract not related to quality, timeliness, or cost control. Each assessment area contains specific elements, as can be seen from the following:

Quality of Product or Service-This area includes a contractor's performance in making sure that the product or service conforms to contractual specifications or standards of good workmanship.

Timeliness-This area has to do with a contractor's reliability. It encompasses the contractor's adherence to contract schedules, such as milestones, delivery dates for interim or final products, or reporting requirements.

Cost Control-This area is concerned with a contractor's performance with respect to forecasting costs, controlling costs, submitting reasonably priced change proposals, and providing current, accurate, and complete billings. It is applicable only to cost reimbursement, time and materials, and labor-hour contracts.

Business Relations-This area involves an assessment of the contractor's business management philosophy and practice that includes both the external relations of the contractor with the government's acquisition team and the internal relations with its own staff and subcontractors.

DETERMINING HOW THE RFP WILL ADDRESS PAST PERFORMANCE

It is important that the RFP clearly explain how past performance will be evaluated. Section L, Instructions, Conditions, and Other Statements to Offerors, asks for a list of current and past contracts that demonstrate performance relevant to the solicitation requirements. In Section M, Evaluation Factors for Award, the past performance factor and/or subfactors must be tailored to the acquisition.

Tailor Past Performance Factor and Subfactors to the Acquisition

Whether past performance is used as one factor or as one or more significant subfactors, it “must (1) represent the key performance criteria of the statement of work and (2) support meaningful comparisons and discrimination between and among competing proposals.”[23]

Past performance may be described by a narrative listing one or more of the key performance criteria (e.g., quality of product or service, timeliness, cost control), or it can be described by identifying each key criterion separately (i.e., one or more significant past performance subfactors). The difference lies in the amount of information that must be provided. If the key areas of importance or emphasis are listed as subfactors, each must be clearly described and its relative importance indicated. If a narrative approach is used, only the relative importance of the primary past performance factor need be identified.

The important thing to remember is that the description of the past performance factor or significant subfactors must be tailored to the requirement. The description must be such that offerors will clearly understand the areas of importance and emphasis that they should address in their proposals.

Indicate How Past Performance Will Be Evaluated

In addition to identifying the past performance areas to be evaluated, the RFP should state that an offeror's past performance will be evaluated to assess its relative merit with respect to the current requirement and then as compared to that of competing offerors. The RFP should indicate that the evaluation will be based on current and past performance information furnished by the offeror as well as information from other available sources, such as other government agencies, suppliers, subcontractors, or customers of the offeror. The RFP should also state that offerors without a record of relevant past performance or those for whom information on past performance is not available will not be evaluated favorably or unfavorably on past performance but will be given a neutral rating.

If past performance will be evaluated separately from the other technical evaluation factors, as a performance risk factor, this should be specifically noted along with an explanation of the evaluation criteria to be used.

The evaluation must be conducted as set forth in the RFP. If the RFP indicates that certain areas will be evaluated and certain methods will be used, the evaluators may not deviate from this unless the RFP is first amended to show the changes and offerors are given an opportunity to revise their proposals accordingly. A failure to evaluate in accordance with the RFP can result in a successful protest.

When describing past performance in Section M of the RFP, the more subfactors used, the more complicated the evaluation will be because each subfactor listed in the RFP must be evaluated. Therefore, the number of past performance evaluation subfactors should be kept to a minimum, using only those that would be significant to the performance of the proposed contract. Or, the past performance factor might be described as containing those areas otherwise used as subfactors.

Indicate the Documentation Required

In the proposal preparation instructions (RFP Section L), the information that the offeror should submit as past performance information is identified. Offerors are required to list current and past contracts (which may be federal, state, or local government or private contracts) for the same or similar work.[24] To ensure that the listed contracts are properly identified (e.g., contract number, dollar value, dates, contracting party, description of the work effort, contact telephone number), it is recommended that a form similar to the sample in Appendix C be included with the instructions.[25] State that it is important that the work under each referenced contract be relevant to the proposed effort. Inform the offerors that some, but not necessarily all, of the references will be checked to assess the quality of the contractor performance.

Indicate that offerors may describe the quality of their performance on the referenced contracts and may (or must, as appropriate) also provide information on predecessor companies, key personnel who have relevant experience, or subcontractors that will perform major or critical aspects of the requirement, when such information is relevant to the instant acquisition.

It is important to require offerors to identify any performance difficulties in the referenced contracts and to discuss the corrective action taken. The offeror should provide evidence that it was able to identify the cause of the problems and demonstrate that the problems were resolved. Tell the offerors that if past problems are not fully addressed, it will be assumed that they still exist and the proposal will be evaluated accordingly.

You also should indicate that offerors may provide information on awards or commendations that they may have received regarding work on referenced contracts. These are positive indicators of an offeror's past performance and could significantly affect the evaluation.

DETERMINING HOW PAST PERFORMANCE WILL BE RATED OR SCORED IN THE EVALUATION

Before issuing the RFP, consider how offerors' past performance will be rated or scored. In the initial evaluation, each offeror's proposal is evaluated based on the factors and significant subfactors stated in the RFP. The evaluation facilitates developing an initial rating and ranking the proposals for the contracting officer's use in establishing the competitive range. Although some comparative assessment may be done when establishing the competitive range, the primary emphasis is on assessing how well the offeror met the past performance evaluation criteria.

In the final evaluation for source selection, an offeror's past performance is primarily assessed on a comparative basis with the competing offerors to determine which proposal offers the best value. Tradeoffs between past performance and other non-cost evaluation factors, or between past performance and price, are often determinative in the source selection decision.

When the contract will be awarded without discussions, an offeror's past performance is first evaluated based on the RFP's evaluation criteria and then comparatively assessed (with tradeoffs as necessary) with the competing offerors to provide a basis for the award decision.

There are two ways to rate past performance information: (1) with respect to the quality of performance in meeting past contractual requirements and (2) with respect to the degree of performance risk.

Rating the Quality of Past Performance

The rating system for source selection should be compatible with the rating system used to evaluate contracts on completion of performance in compliance with FAR 42.1502. This is logical considering that the purpose of those evaluations is to provide past performance information in source selection. Using a compatible rating system alleviates the need to correlate the principal source of past performance information, i.e., past performance reports.

The rating system recommended by the Office of Federal Procurement Policy (OFPP) has five adjectival ratings-Excellent, Very Good, Satisfactory, Marginal, and Unsatisfactory-with a definition assigned to each rating. For offerors with no past performance history, a neutral rating is given. In effect, a range of scores with the middle score equivalent to meeting the requirement or norm allows the evaluators to measure the extent to which the contractor has exceeded or fallen below the requirement or norm.

A numerical value may be assigned to each of the above ratings. It should be noted, however, that assigning numerical scores to such a varied informational base conveys a preciseness that might be misleading. The numerical scores are only guides for the evaluators and cannot be used as the basis for decisions. Decisions are made on the basis of the narrative explanations supporting the scores or rating assigned.

Color coding also may be used. It provides a broad evaluation range, and the absence of numbers eliminates the implied preciseness of numerical scoring.

Whether numerical scoring or color coding is used, documenting an evaluation using only the wording of the definitions provided for each score or rating does not constitute adequately explaining the scores assigned. A narrative explanation that is related to the specific proposal is required. It must relate the problems (or strengths) found in the past performance information to the rating assigned and its definition.

Develop Narrative Before Scoring

Two problems are associated with both numerical scoring and color-coding systems: (1) although both systems work well in identifying poor proposals (for the competitive range determination), they do not work as well in distinguishing the best of the most highly rated proposals (for the source selection decision); and (2) there is a tendency to concentrate more on the rating categories than on the required narrative evaluation. In a properly conducted evaluation, the narrative evaluation should be developed before assigning any numerical ratings or color codes. Comptroller General decisions offer ample evidence, however, that the documentation in this area is not as good as it should be. Competitive range and source selection decisions must be based on the narrative and not the adjectival, numerical, or color-coded rating.

Rating the Degree of Performance Risk

Evaluating past performance separately as performance risk is probably the most effective way to evaluate past performance. The evaluation of past performance is essentially an assessment of the risk of successful performance based on an offeror's past performance history. The evaluation of performance risk uses broad ranges, such as high, moderate, and low risk, and requires a risk analysis rather than detailed scoring. The risk analysis relates the strengths or weaknesses of the offeror's past performance to the likelihood of successful performance on the prospective contract. Using broad ranges is more effective primarily because trying to rate prospective performance more closely is not realistic. A quotation from a Comptroller General decision amplifies this point:[26]

Past performance instills confidence that a company will probably do well but does not, in and of itself, guarantee that a company will do well, whereas, poor performance is a good indicator of performance risk.

When used, the evaluation of past performance in terms of performance risk should be kept simple, particularly for fixed-price contracts. Generally, there is no need to use multiple evaluation ratings because the degree of risk, particularly at the high and low ends, is not particularly important in distinguishing one proposal from another.

Remember that scoring systems are only guides to evaluation decisions. The actual decisions must be based on the narratives developed during the evaluation, which should provide the basis for distinguishing the differences between the proposals, particularly with respect to supporting tradeoff and source selection decisions.