Proposed Rule Limits Contractors’ Ability to Fight Negative Evaluations

Contractors who complete federal public projects are given Past Performance Evaluations (“PPE”) by the public entity, as outlined by Federal Acquisition Regulation (“FAR”) 42.15.  Currently, after a PPE is sent to the contractor, the contractor has 30 days to comment on the evaluation before it is published in the Past Performance Information Retrieval System (“PPIRS”).  Once the PPE is published in the PPIRS it becomes available for all other agencies to view.  A new rule has been proposed (78 FAR 48123) that would require the evaluations to be included in the PPIRS database not later than 14 days after the delivery of the information to the contractor.  This means the contractor would be limited to 14 days to respond to an evaluation before it is published for all agencies to obtain access, regardless of whether or not the contractor has been able to actually respond to or rebut a particular criticism.

This new rule was proposed by the Department of Defense (DOD), General Services Administration (GSA), and the National Aeronautics and Space Administration (NASA).  These agencies believe that shortening the time allotted for contractors to respond to reviews will help both contractors and government agencies.  In the written discussion and analysis of the proposed regulation, the agencies maintain that this change in procedure should “improve communication between the contractor and the Government, enable current information to be shared quickly throughout the Government, and ultimately ensure the Government does business with high preforming contractors.”  These agencies believe that expedient posting of reports will allow selection officials to award decisions in a timelier and better informed manner.

Contractors may feel quite differently about this new regulation than the government officials who have proposed it.  This rule would act to strictly limit contractors’ abilities to refute negative reviews before they are publicized for review by potential procurement authorities.  Additionally, under the proposed regulation change, the public entities who write the evaluations are allowed to edit their writings past the 14-day window, but contractors are cut off from adding more comments to those evaluations.  In a business where companies are often no better than their reputation in the community, this new regulation could make life difficult for many contractors.

Comment:  Each year, billions of dollars in federal contracts are awarded to government contractors.  Given that many of these contracts will be awarded on a best value procurement basis, the PPEs of the contractors vying for the award play a significant role in which bidder is chosen to perform the project.  Therefore, the PPEs must be accurate or, at the very least, an independent resolution forum should exist before the inaccurate PPEs have a chance to detrimentally affect the parties.  Chief among concerns are:  (1) the potential for “de facto debarment” of contractors, particularly small businesses, as result of unfavorable past performance information for which there is a limited standard of review, and the agencies are given significant deference by courts and boards; (2) the potential for undermining the statutory requirement for full and open competition as a result of the intensely subjective nature of contractor performance evaluations; and (3) a potential for unjust retaliation against contractors exists who choose to pursue legitimate request for equitable adjustment or claims and then are punished with a low-scoring PPE.  The concern regarding retaliation for a contractor submitting an equitable adjustment request and claim derives from the fact that there is no provision made for excluding such information from the PPIRS while disputes are resolved through the contract appeals process.  An inaccurate PPE could irreparably harm a particular bidder that loses a contract and later is able to show that the PPE was inaccurate or retaliatory.  The system, as it exists today, will not make that harmed contractor whole.

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