Federal Acquisition Regulation; Documenting Contractor Performance, 54864-54872 [2012-21973]

Download as PDF 54864 Federal Register / Vol. 77, No. 173 / Thursday, September 6, 2012 / Proposed Rules Protection Agency, Office of Resource Conservation and Recovery, (MC: 5304P), 1200 Pennsylvania Avenue NW., Washington, DC 20460, Phone: 703–347–8769; or by email: noggle.william@epa.gov. SUPPLEMENTARY INFORMATION: Table of Contents I. Why is EPA issuing this proposed rule? II. Does this action apply to me? III. Statutory and Executive Order Reviews I. Why is EPA using this proposed rule? This document proposes a number of revisions to 40 Code of Federal Regulations (CFR) part 761 of the PCB regulations. In the ‘‘Rules and Regulations’’ section of this Federal Register, EPA is making these changes as a direct final rule without a prior proposed rule because we view this as a noncontroversial action and anticipate no adverse comment. We have explained our reasons for this action, including our reasons to all of the specific amendments, in the preamble to the direct final rule. Additionally, the amendments to the regulatory text for this proposed rule can also be found in the direct final rule. If we receive no adverse comment on any of the changes we are promulgating today, we will not take further action on this proposed rule. If, however, we receive such comment, we will publish a timely withdrawal in the Federal Register informing the public that these amendments will not take effect, and the reason for such withdrawals. We do not intend to institute a second comment period on this action. Any parties interested in commenting must do so at this time. EPA will address public comments in any subsequent final rule. For further information, please see the information provided in the ADDRESSES section of this document. TKELLEY on DSK3SPTVN1PROD with PROPOSALS II. Does this action apply to me? The discussion of the potentially affected entities by this proposed rule can be found in the preamble to the direct final rule. 16:15 Sep 05, 2012 Jkt 226001 List of Subjects in 40 CFR Part 761 Environmental protection, Hazardous substances, Manifest, Polychlorinated biphenyls, Reporting and recordkeeping requirements. Dated: August 17, 2012. Lisa Feldt, Acting Assistant Administrator, Office of Solid Waste and Emergency Response. [FR Doc. 2012–21675 Filed 9–5–12; 8:45 am] BILLING CODE 6560–50–P DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION III. Statutory and Executive Order Reviews For a complete discussion of all the administrative requirements applicable to this action, see the direct final rule in the ‘‘Rules and Regulations’’ section of this Federal Register. The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies VerDate Mar<15>2010 that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions. For purposes of assessing the impacts of today’s rule on small entities, small entity is defined as: (1) A small business that is primarily engaged in hazardous waste treatment and disposal as defined by NAICS code 562211, with annual receipts of less than 12.5 million dollars (based on Small Business Administration size standards); (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and (3) a small organization that is any not-forprofit enterprise which is independently owned and operated and is not dominant in its field. After considering the economic impacts of today’s proposed rule on small entities, I certify that this action will not have a significant economic impact on a substantial number of small entities. This rule merely updates the existing regulations for manifesting PCB wastes to match the existing Uniform Hazardous Waste Manifest form. Once updated, the regulations will match what is currently being conducted by industry. NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 48 CFR Parts 8, 12, 15, 17, 42, and 49 [FAR Case 2012–009; Docket 2012–0009; Sequence 1] RIN 9000–AM34 Federal Acquisition Regulation; Documenting Contractor Performance Department of Defense (DoD), General Services Administration (GSA), AGENCY: PO 00000 Frm 00026 Fmt 4702 Sfmt 4702 and National Aeronautics and Space Administration (NASA). ACTION: Proposed rule. DoD, GSA, and NASA are proposing to amend the Federal Acquisition Regulation (FAR) to provide Governmentwide standardized past performance evaluation factors and performance rating categories and require that past performance information be entered into the Contractor Performance Assessment Reporting System (CPARS). DATES: Interested parties should submit written comments to the Regulatory Secretariat on or before November 5, 2012 to be considered in the formulation of a final rule. ADDRESSES: Submit comments identified by FAR Case 2012–009 by any of the following methods: • Regulations.gov: http:// www.regulations.gov. Submit comments via the Federal eRulemaking portal by searching for ‘‘FAR Case 2012–009’’. Select the link ‘‘Send a Comment or Submission’’ that corresponds with FAR Case 2012–009. Follow the instructions provided to complete the ‘‘Public Comment and Submission Form’’. Please include your name, company name (if any), and ‘‘FAR Case 2012–009’’ on your attached document. • Fax: 202–501–4067. • Mail: General Services Administration, Regulatory Secretariat (MVCB), ATTN: Hada Flowers, 1275 First Street NE., 7th Floor, Washington, DC 20417. Instructions: Please submit comments only and cite FAR Case 2012–009 in all correspondence related to this case. All comments received will be posted without change to http:// www.regulations.gov, including any personal and/or business confidential information provided. FOR FURTHER INFORMATION CONTACT: Mr. Curtis E. Glover, Sr., Procurement Analyst, at 202–501–1448 for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at 202–501–4755. Please cite FAR Case 2012–009. SUPPLEMENTARY INFORMATION: SUMMARY: I. Background DoD, GSA, and NASA published a proposed rule in the Federal Register at 76 FR 37704 on June 28, 2011, under FAR Case 2009–042, to implement recommendations from Government Accountability Office (GAO) Report GAO–09–374, entitled ‘‘Better Performance Information Needed to E:\FR\FM\06SEP1.SGM 06SEP1 Federal Register / Vol. 77, No. 173 / Thursday, September 6, 2012 / Proposed Rules Support Agency Contract Award Decisions,’’ and Office of Federal Procurement Policy (OFPP) memorandum entitled ‘‘Improving the Use of Contractor Performance Information’’ (dated July 29, 2009). Two amendments to the Federal Register notice were published (76 FR 48776, dated August 9, 2011, and 76 FR 50714, dated August 16, 2011). The due date for receipt of public comments was extended twice and was ultimately set at September 29, 2011. Twentythree respondents submitted comments on the proposed rule. This proposed rule addresses all comments received in response to the proposed rule published in the Federal Register at 76 FR 37704 on June 28, 2011. This proposed rule also implements paragraphs (a), (b), and (d) of section 806 of the National Defense Authorization Act for Fiscal Year 2012 (Pub. L. 112–81) which requires, at a minimum— (1) Establishment of standards for the timeliness and completeness of past performance submissions for purposes of databases; (2) Assignment of responsibility and management accountability for the completeness of past performance submissions for such purposes; and (3) Assurance that past performance submissions are consistent with award fee evaluations in cases where such evaluations have been conducted. The FAR Council is soliciting public comments on a proposal to remove the appeal language at FAR 42.1503(d) to improve economy and efficiency. This proposal was included in and consistent with the FAR Council’s Retrospective Plan and Analysis of Existing Rules as required by Executive Order 13563. The FAR currently requires agencies to provide for review of agency evaluations at a level above the contracting officer to consider disagreements between the parties regarding the evaluation. The Government is considering the merits of modifying the FAR requirements governing the appeal process to evaluate if this would improve or weaken the effectiveness of past performance policies and associated principles of impartiality and accountability. TKELLEY on DSK3SPTVN1PROD with PROPOSALS II. Discussion and Analysis of the Public Comments The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (the Councils) reviewed the public comments in the development of this proposed rule. A discussion of the comments and the changes made to the rule as a result of those comments are provided as follows: VerDate Mar<15>2010 16:15 Sep 05, 2012 Jkt 226001 A. Summary of Significant Changes 1. The Councils amended FAR 42.1503 language in this proposed rule to require the past performance report to include a clear, non-technical description of the principal purpose of the contract; 2. FAR 42.1503(b)(4) is revised by adding two tables: • Table 42–1—Evaluation Ratings Definitions; and • Table 42–2—Evaluation Ratings Definitions (for the Small Business Subcontracting Evaluation factor when the clause at 52.219–9 is used). 3. The Evaluation Ratings Definitions included in the Tables are based upon guidance provided in the Department of Defense CPARS Policy Guide currently available on the Web site. The U.S. Small Business Administration provided recommendations to Table 42– 2, and the revised text is included in this proposed rule. 4. Evaluation descriptions are revised under FAR 42.1503(b)(2) to the following: Evaluation factors for each assessment shall include, at a minimum, the following: (i) Technical (quality of product or service.) (ii) Cost control (not applicable for firm-fixed-price or fixed-price with economic price adjustment arrangements). (iii) Schedule/Timeliness. (iv) Management or Business Relations. (v) Small Business Subcontracting (as applicable, see Table 42–2). (vi) Other (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 and pricing data, terminations, suspension and debarments, etc.) 5. Architect-Engineer Contract Administration Support System (ACASS) and Construction Contractor Appraisal Support System (CCASS) are not changed at this time. There is an effort that will combine all three systems into one, namely CPARS, and all evaluation rating scales will be the same at that point. This issue will be resolved when the systems are merged. B. Support for the Rule Comments: Seven respondents expressed support for the rule’s purpose of standardizing the collection and evaluation of past performance information. One of these respondents deemed the proposed rule a positive implementation of the Government Accountability Office (GAO) recommendation. PO 00000 Frm 00027 Fmt 4702 Sfmt 4702 54865 Response: Noted. C. OFPP Act Requirements Comments: Two respondents expressed concern that including the past performance categories and definitions in the CPARS Guide rather than in the text of the FAR was effectively a violation of the Office of Federal Procurement Policy Act (41 U.S.C. 1707 (formerly 41 U.S.C. 418b)) and the FAR 1.501–2 requirement to publish significant revisions that affect the public for comment. The CPARS Guide has not been published for public comment at this time. Both respondents recommended that the proposed FAR rule be revised to include the past performance ratings definitions in the FAR text and that the revised FAR rule be published for public comment. Response: The respondents’ concerns have been addressed in FAR 42.1503(b)(4) and by this second proposed rule by adding Table 42–1 and Table 42–2. D. Alleged Weaknesses in CPARS System Comments: Four comments were received alleging weaknesses in the current CPARS system. One respondent noted the lack of standard, reliable past performance ratings. Other issues raised concerned the current high overdue rates Governmentwide for submission of past performance ratings, the failure of the Government’s ‘‘chain of command’’ to ensure timely completion of past performance ratings, and the need to make the CPARS system even simpler and less time consuming. Response: The comment on the reliable past performance ratings definitions is addressed under category C of this rule. The comments on overdue rates and timely completion reflect issues related to administration, which can be addressed by the respective contracting officers. The comments related to the CPARS system have been provided to the appropriate office for consideration. E. Public Availability of Information/ FAPIIS Comments: Four comments were submitted. One respondent recommended that the background section of the final rule explain how the Federal Awardee Performance and Integrity Information System (FAPIIS) is affected by the CPARS requirements and what role it will play in the process. Another respondent recommended increased clarity for FAR 42.1503(d) because it could be read to allow release of past performance information to third parties once the periods in FAR E:\FR\FM\06SEP1.SGM 06SEP1 54866 Federal Register / Vol. 77, No. 173 / Thursday, September 6, 2012 / Proposed Rules 42.1503(g) have expired. A third respondent advocated the wide release of past performance evaluations, i.e., not requiring the marking of such information ‘‘Source Selection Information’’ and releasing past performance evaluation information in FAPIIS. Response: The publication of past performance reviews in the public version of FAPIIS is currently prohibited by law (section 3010 of Pub. L. 111–212, enacted July 29, 2010). The relationship between FAPIIS and CPARS is explained at the FAPIIS Web site as follows: ‘‘FAPIIS is a distinct application that is accessed through the Past Performance Information System (PPIRS) and is available to federal acquisition professionals for their use in award and responsibility determinations. FAPIIS provides users access to integrity and performance information from the FAPIIS reporting module in the Contractor Performance Assessment Reporting System (CPARS), proceedings information from the Central Contractor Registration (CCR) database, and suspension/ disbarment information from the Excluded Parties List system (EPLS).’’ Regarding the release of past performance information, FAR 42.1503(d) reads as follows: TKELLEY on DSK3SPTVN1PROD with PROPOSALS These sentences, which were not in any way limited by the time periods in FAR 42.1503(g), were not changed by this proposed rule. F. Exceptions/Applicability Comment: One respondent recommended exempting all science and technology contracts from the requirement to evaluate past performance. Response: The Councils have determined that it is not in the Government’s best interest to exempt science and technology contracts from past performance assessments. Comment: Respondent asked that the final rule clarify (1) whether past performance evaluations are required for individual task orders and delivery orders or only for the base indefinitedelivery contract; and (2) who is the responsible party for completing these evaluations. Response: The requirement for past performance assessments for individual 16:15 Sep 05, 2012 Jkt 226001 (c) Multiple-agency orders. Agencies shall prepare an evaluation of contractor performance for each order that exceeds the simplified acquisition threshold placed against a Federal Supply Schedule contract, or under a task-order contract or a deliveryorder contract awarded by another agency (i.e., Governmentwide acquisition contract or multi-agency contract). This evaluation shall not consider the requirements under paragraph (g) of this section. Agencies are required to prepare an evaluation if a modification to the order causes the dollar amount to exceed the simplified acquisition threshold. (d) Single-Agency orders. For single-agency task-order and delivery-order contracts, the contracting officer may require performance evaluations for each order in excess of the simplified acquisition threshold when such evaluations would produce more useful past performance for source selection officials than that contained in the overall contract evaluation (e.g., when the scope of the basic contract is very broad and the nature of individual orders could be significantly different). This evaluation need not consider the requirements under paragraph (g) of this section unless the contracting officer deems it appropriate. G. Rating Factors ‘‘The completed evaluation shall not be released to other than Government personnel and the contractor whose performance is being evaluated during the period the information may be used to provide source selection information. Disclosure of such information could cause harm both to the commercial interest of the Government and to the competitive position of the contractor being evaluated as well as impede the efficiency of Government operations.’’ VerDate Mar<15>2010 task and delivery orders, and the parties responsible, are addressed in FAR 42.1502(c) and (d) as follows: Comments: One respondent suggested that a sixth rating category, entitled ‘‘Other,’’ be added to the current five categories. Another respondent recommended that each past performance evaluation should be required to include an evaluation of the contractor’s small business subcontracting instead of the current requirement to do so only ‘‘when applicable.’’ Response: The Councils agree that adding the evaluation factor ‘‘Other’’ at FAR 42.1503(b)(2) allows the Government to consider contingencies not contemplated by factors (i) through (v) that are unique to each contract award and are relevant to the contractor’s evaluation. FAR 42.1503(b)(2) is changed to add evaluation factor ‘‘(vi) Other (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 and pricing data, terminations, suspension and debarments, etc.)’’. ‘‘Small Business Subcontracting’’ may be included as a past-performance factor ‘‘as applicable.’’ The Councils did not change this language because there are instances where ‘‘Small Business Subcontracting’’ may require a past performance assessment. PO 00000 Frm 00028 Fmt 4702 Sfmt 4702 H. Interim Ratings and Frequency of Ratings Comments: One respondent recommended revising FAR 42.1502(b) to require more than one past performance evaluation a year for ongoing contracts. However, another respondent strongly urged a prohibition against including interim ratings in final past performance evaluations. The same respondent stated that problems can arise with performance evaluations when the Government rater for an interim evaluation is transferred before the contract is completed. This respondent also noted that it has observed evaluation disparities among various contracting entities. Response: FAR 42.1502(a) requires a minimum of one evaluation a year; however, agencies are not precluded from assessing past performance on a more frequent basis. The comments regarding interim evaluations and changes in Government personnel (rater) reflect issues of administration, and can be discussed with the respective contracting officer. The comment on observed evaluation disparities among various contracting entities is noted but this, too, is not a policy issue. I. Other Comments Comments: One respondent submitted a draft for a new past performance evaluation form. The respondent also asked whether additional items could be added to the CPARS past performance evaluation for comments from (1) Government quality assurance personnel, (2) contractor quality control personnel, and (3) the contracting officer’s representative. Another respondent expressed concern that allowing contractors to ‘‘report to the CPARS system’’ would have a negative impact on future competitiveness because all contractors would give themselves a positive performance rating. A third respondent stated its concern that the proposed rule was ‘‘essentially a creation of several memorandums and not a direct result of the traditional rulemaking process.’’ Response: CPARS has a preestablished, electronic format for assessment of past performance; therefore, a new form is not needed at this time. FAR 42.1503(a) provides agencies the flexibility of requesting and obtaining input from other Government representatives as the contracting officer considers necessary. It may not be appropriate to require past performance input from (1) Government quality assurance personnel, (2) contractor quality control personnel, and (3) the E:\FR\FM\06SEP1.SGM 06SEP1 TKELLEY on DSK3SPTVN1PROD with PROPOSALS Federal Register / Vol. 77, No. 173 / Thursday, September 6, 2012 / Proposed Rules contracting officer’s representative in every case. These individuals, when requested by the Government past performance official, can provide input under the ‘‘Assessing Official Representative’’ field. Contractors have the opportunity to respond to the Government’s past performance assessment in every case. This material is in addition to, not in lieu of, the Government’s assessment. Therefore, a contractor’s tendency to give itself a positive performance rating in every case will not have a negative impact on future competitiveness, the concern expressed by one respondent. The Councils complied with all of the drafting and approval requirements applicable to every FAR Case. Comment: One respondent commented on the proposed FAR 42.1503(a) statement that, if contracting officers’ representatives and program managers are not specifically tasked with preparing interim and final past performance evaluations, then the contracting officer ‘‘will remain responsible’’ for their preparation. The respondent asked where past performance duties are assigned in the FAR as the responsibility of the contracting officer. Response: The Councils agree that FAR 42.1503 was not sufficiently clear. FAR 42.1503(a) is changed to reflect that the contracting officer ‘‘is’’ responsible for this function if agency procedures do not specify a different responsible individual. Comment: One respondent recommended that the duties of the CPARS Focal Point, at FAR 42.1503(h)(3), would be more accurate if the paragraph were revised to read as follows: ‘‘The primary duties of the CPARS Focal Point include administering CPARS and FAPIIS access, monitoring CPARS compliance, and providing assistance, guidance, and training to CPARS and FAPIIS users.’’ Response: FAR 42.1503(h)(2) clarifies that only a CPARS Focal Point has the authority to grant access to the information in the system. FAR 42.1503(h)(3) merely listed some of the Focal Point’s key duties. Upon reflection, the Councils decided that this information is not pertinent to an acquisition regulation and belongs, rather, in a position description. FAR 42.1503(h)(3) currently references the disclosure exemption under the Freedom of Information Act. Comment: One respondent proposed that FAR 42.1503 should be revised to include ‘‘ACASS/CCASS’’ and requiring that the standardized five ratings must be used in source selections. VerDate Mar<15>2010 16:15 Sep 05, 2012 Jkt 226001 Response: The second proposed rule already requires agencies to use the standardized five ratings, with certain exceptions that were listed at FAR 42.1502. These exceptions are retained in the second proposed rule, e.g., for construction and architect-engineering contracts; language is added to 42.1502(b) on reporting into ACASS and CCASS. Comment: A respondent stated that FAR 42.1503(h)(1) was missing the ‘‘vertical list that currently resides at FAR 42.1503(f).’’ Response: The vertical list referred to by the respondent was added to the previous proposed rule by the Federal Register notice correction, published August 9, 2011, at 76 FR 48776. The respondent submitted this comment prior to issuance of the correction. Comment: One respondent asked that the word ‘‘generally,’’ at FAR 42.1503(a), be removed because it allows for exceptions to the broad policy. Response: The term ‘‘generally’’ is in the current FAR and was not proposed for change in the previous proposed rule. The input of the technical office, contracting office, and end-users of the products or services is not always required in every case. Therefore, the requested change is not made. Comment: One respondent recommended revising FAR 42.1503(b)(1) to read as follows: ‘‘The report should include a clear description of the principal purpose of the contract in plain English, a description of the contractor’s performance based on objective facts supported by program, project, and contract performance data, and any unusual circumstances affecting contractor performance, e.g., hazardous location of performance. Ensure tailoring of each report to the contract dollar value, visibility, complexity, and value.’’ The respondent suggested that the revisions were needed because the terms ‘‘size’’ and ‘‘content’’ were unclear. Response: The Councils agree that the CPARS ratings will be more useful to those using the system during source selection if the report were to include a requirement to ‘‘include a clear, nontechnical description of the principal purpose of the contract.’’ This language is added at FAR 42.1503(b)(1) in the second proposed rule. The balance of the respondent’s comment was not adopted because the language proposed to be included at FAR 42.1503(b)(1) is considered to be appropriately clear and descriptive. Comment: At FAR 42.1503(b)(4), the respondent recommended revising the paragraph as follows in order to increase PO 00000 Frm 00029 Fmt 4702 Sfmt 4702 54867 clarity: ‘‘Each evaluation factor at paragraph (b)(2) of this section requires narrative that clearly supports the rating assigned using the rating definitions in the CPARS Policy Guide, http://www. cpars.gov/.’’ Response: Given that the CPARS rating categories and definitions are proposed to be added in this same paragraph by this proposed rule (see section II.C. above), the respondent’s intent has been addressed. Comment: At FAR 42.1503(f), the respondent recommended that additional clarity could be achieved by changing the wording to read: ‘‘Agencies shall prepare all past performance reports electronically in CPARS at http://www.cpars.gov/. All completed reports in CPARS transmit to the Past Performance Information Retrieval System (PPIRS) at http://www. ppirs.gov for viewing by Government source selection officials.’’ Response: Most of the material in the respondent’s recommendation is now in this proposed rule; the part of the recommendation that is new is the addition of the phrase ‘‘for viewing by Government source selection officials’’. However, this is not adopted because, while access to the information in CPARS is limited, it is not limited in every case only to source selection officials. III. Executive Orders 12866 and 13563 Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804. IV. Regulatory Flexibility Act DoD, GSA, and NASA do not expect this proposed rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because this rule codifies in the FAR existing guidelines and practices. The evaluation factors and rating system language proposed are currently used by Federal E:\FR\FM\06SEP1.SGM 06SEP1 54868 Federal Register / Vol. 77, No. 173 / Thursday, September 6, 2012 / Proposed Rules agencies. There are no new requirements placed on small entities. Therefore, an initial regulatory flexibility analysis was not performed, and no comments on the expected impact of this rule on small entities were received in response to the request for comments in the Federal Register notice for the prior proposed rule. DoD, GSA, and NASA invite comments from small business concerns and other interested parties on the expected impact of this rule on small entities. DoD, GSA, and NASA will also consider comments from small entities concerning the existing regulations in subparts affected by the rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (FAR Case 2012–009), in correspondence. V. Paperwork Reduction Act The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35). No public comments were received on the information collection requirements in response to the request in the proposed rule. List of Subjects in 48 CFR parts 8, 12, 15, 17, 42, and 49 Government procurement. Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 U.S.C. 20113. PART 8—REQUIRED SOURCES OF SUPPLIES AND SERVICES TKELLEY on DSK3SPTVN1PROD with PROPOSALS 2. Amend section 8.406–4 by removing from paragraph (e) ‘‘42.1503(f)’’ and adding ‘‘42.1503(h)’’ in its place. 3. Revise section 8.406–7 to read as follows: 8.406–7 Contractor Performance Evaluation. Ordering activities must prepare at least annually and at the time the work under the order is completed, an evaluation of contractor performance for each order that exceeds the simplified Jkt 226001 [Amended] 4. Amend section 12.403 by removing from paragraph (c)(4) ‘‘42.1503(f)’’ and adding ‘‘42.1503(h)’’ in its place. PART 15—CONTRACTING BY NEGOTIATION 15.407–1 [Amended] 5. Amend section 15.407–1 by removing from paragraph (d) ‘‘42.1503(f)’’ and adding ‘‘42.1503(h)’’ in its place. PART 17—SPECIAL CONTRACTING METHODS 6. Amend section 17.207 by adding paragraph (c)(6) to read as follows: 17.207 Exercise of options. * * * * * (c) * * * (6) The contractor’s past performance evaluations have been reviewed and the contractor’s performance rated. * * * * * PART 42—CONTRACT ADMINISTRATION AND AUDIT SERVICES Scope of subpart. This subpart provides policies and establishes responsibilities for recording and maintaining contractor performance information. This subpart does not apply to procedures used by agencies in determining fees under award or incentive fee contracts. See subpart 16.4. However, the fee amount paid to contractors should be reflective of the contractor’s performance and the past performance evaluation should closely parallel and be consistent with the fee determinations. 42.1501 [Amended] 16:15 Sep 05, 2012 12.403 42.1500 Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 8, 12, 15, 17, 42, and 49 as set forth below: 1. The authority citation for 48 CFR parts 8, 12, 15, 17, 42, and 49 is revised to read as follows: VerDate Mar<15>2010 PART 12—ACQUISITION OF COMMERCIAL ITEMS 7. Revise sections 42.1500 and 42.1501 to read as follows: Dated: August 31, 2012. Laura Auletta, Director, Office of Governmentwide Acquisition Policy, Office of Acquisition Policy, Office of Governmentwide Policy. 8.406–4 acquisition threshold in accordance with 42.1502(c). General. (a) Past performance information (including the ratings and supporting narratives) is relevant information, for future source selection purposes, regarding a contractor’s actions under previously awarded contracts. It includes, for example, the contractor’s record of— (1) Conforming to contract requirements and to standards of good workmanship; (2) Forecasting and controlling costs; (3) Adherence to contract schedules, including the administrative aspects of performance; PO 00000 Frm 00030 Fmt 4702 Sfmt 4702 (4) Reasonable and cooperative behavior and commitment to customer satisfaction; (5) Reporting into databases (see subparts 4.14 and 4.15, and reporting requirements in the solicitation provisions and clauses referenced in 9.104–7); (6) Integrity and business ethics; and (7) Business-like concern for the interest of the customer. (b) Agencies shall monitor their compliance with the past performance evaluation requirements (see 42.1502), and use the CPARS and PPIRS metric tools to measure the quality and timely reporting of past performance information. 8. Amend section 42.1502 by revising paragraphs (a) through (d) and (i) to read as follows: 42.1502 Policy. (a) General. Past performance evaluations shall be prepared at least annually and at the time the work under the contract or order is completed. Past performance evaluations are required for contracts and orders for supplies, services, and research and development, including contracts and orders performed inside and outside the United States, with the exception of architect-engineer and construction contracts or orders, which will still be reported into ACAAS and CCASS databases. Past performance information shall be entered into the Contractor Performance Assessment Reporting System (CPARS), the Governmentwide evaluation reporting tool for all past performance reports. Instructions for submitting evaluations into CPARS are available at http://www.cpars.gov/. (b) Contracts. Except as provided in paragraphs (e), (f) and (h) of this section, agencies shall prepare evaluations of contractor performance for each contract or order that exceeds the simplified acquisition threshold. Agencies are required to prepare an evaluation if a modification to the contract causes the dollar amount to exceed the simplified acquisition threshold. (c) Multiple-agency orders. Agencies shall prepare an evaluation of contractor performance for each order that exceeds the simplified acquisition threshold placed against a Federal Supply Schedule contract, or under a task-order contract or a delivery-order contract awarded by another agency (i.e., Governmentwide acquisition contract or multi-agency contract). This evaluation shall not consider the requirements under paragraph (g) of this section. Agencies are required to prepare an evaluation if a modification to the order E:\FR\FM\06SEP1.SGM 06SEP1 Federal Register / Vol. 77, No. 173 / Thursday, September 6, 2012 / Proposed Rules causes the dollar amount to exceed the simplified acquisition threshold. (d) Single-Agency orders. For singleagency task-order and delivery-order contracts, the contracting officer may require performance evaluations for each order in excess of the simplified acquisition threshold when such evaluations would produce more useful past performance for source selection officials than that contained in the overall contract evaluation (e.g., when the scope of the basic contract is very broad and the nature of individual orders could be significantly different). This evaluation need not consider the requirements under paragraph (g) of this section unless the contracting officer deems it appropriate. * * * * * (i) Agencies shall promptly report other contractor information in accordance with 42.1503(h). 9. Revise section 42.1503 to read as follows: 42.1503 Procedures. (a) Agency procedures for the past performance evaluation system shall— (1) Generally provide for input to the evaluations from the technical office, contracting office and, where appropriate, end users of the product or service; (2) Identify and assign past performance evaluation roles and responsibilities to those individuals responsible for preparing and reviewing interim evaluation, if prepared, and final evaluations (e.g., contracting officers, contracting officer representatives and program managers); and (3) Address management controls and appropriate management reviews of past performance evaluations, to include accountability, for documenting past performance on PPIRS. If agency procedures do not specify the individuals responsible for past performance evaluation duties, the contracting officer is responsible for this function. Those individuals identified may obtain information for the evaluation of performance from the program office, administrative contracting office, audit office, end users of the product or service, and any other technical or business advisor, as appropriate. (b)(1) The evaluation should include a clear, non-technical description of the principal purpose of the contract. The evaluation should reflect how the contractor performed. The evaluation should include clear relevant information that accurately depicts the contractor’s performance, and be based on objective facts supported by program and contract performance data. The evaluations should be tailored to the 54869 contract type, size, content, and complexity of the contractual requirements. (2) Evaluation factors for each assessment shall include, at a minimum, the following: (i) Technical (quality of product or service.) (ii) Cost control (not applicable for firm-fixed-price or fixed-price with economic price adjustment arrangements). (iii) Schedule/Timeliness. (iv) Management or Business Relations. (v) Small Business Subcontracting (as applicable see Table 42–2). (vi) Other (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 and pricing data, terminations, suspension and debarments, etc.) (3) Evaluation factors may include subfactors. Each factor and subfactor used shall be evaluated and a supporting narrative provided. (4) Each evaluation factor, as listed in paragraph (b)(2) of this section, shall be rated in accordance with a five scale rating system (e.g., exceptional, very good, satisfactory, marginal, and unsatisfactory). Rating definitions shall reflect those in the tables below: TABLE 42–1—EVALUATION RATINGS DEFINITIONS Rating Definition Note Exceptional ................. Performance meets contractual requirements and exceeds many to the Government’s benefit. The contractual performance of the element or sub-element being evaluated was accomplished with few minor problems for which corrective actions taken by the contractor was highly effective. Performance meets contractual requirements and exceeds some to the Government’s benefit. The contractual performance of the element or sub-element being evaluated was accomplished with some minor problems for which corrective actions taken by the contractor was effective. Performance meets contractual requirements. The contractual performance of the element or sub-element contains some minor problems for which corrective actions taken by the contractor appear or were satisfactory. To justify an Exceptional rating, identify multiple significant events and state how they were of benefit to the Government. A singular benefit, however, could be of such magnitude that it alone constitutes an Exceptional rating. Also, there should have been NO significant weaknesses identified. To justify a Very Good rating, identify a significant event and state how it was a benefit to the Government. There should have been no significant weaknesses identified. Very Good .................. Satisfactory ................ TKELLEY on DSK3SPTVN1PROD with PROPOSALS Marginal ..................... VerDate Mar<15>2010 Performance does not meet some contractual requirements. The contractual performance of the element or sub-element being evaluated reflects a serious problem for which the contractor has not yet identified corrective actions. The contractor’s proposed actions appear only marginally effective or were not fully implemented. 16:15 Sep 05, 2012 Jkt 226001 PO 00000 Frm 00031 Fmt 4702 Sfmt 4702 To justify a Satisfactory rating, there should have been only minor problems, or major problems the contractor recovered from without impact to the contract/order. There should have been NO significant weaknesses identified. A fundamental principle of assigning ratings is that contractors will not be evaluated with a rating lower than Satisfactory solely for not performing beyond the requirements of the contract/order. To justify Marginal performance, identify a significant event in each category that the contractor had trouble overcoming and state how it impacted the Government. A Marginal rating should be supported by referencing the management tool that notified the contractor of the contractual deficiency (e.g., management, quality, safety, or environmental deficiency report or letter). E:\FR\FM\06SEP1.SGM 06SEP1 54870 Federal Register / Vol. 77, No. 173 / Thursday, September 6, 2012 / Proposed Rules TABLE 42–1—EVALUATION RATINGS DEFINITIONS—Continued Rating Definition Note Unsatisfactory ............ Performance does not meet most contractual requirements and recovery is not likely in a timely manner. The contractual performance of the element or sub-element contains a serious problem(s) for which the contractor’s corrective actions appear or were ineffective. To justify an Unsatisfactory rating, identify multiple significant events in each category that the contractor had trouble overcoming and state how it impacted the Government. A singular problem, however, could be of such serious magnitude that it alone constitutes an unsatisfactory rating. An Unsatisfactory rating should be supported by referencing the management tools used to notify the contractor of the contractual deficiencies (e.g., management, quality, safety, or environmental deficiency reports, or letters). Note 1: Plus or minus signs may be used to indicate an improving (+) or worsening (¥) trend insufficient to change the evaluation status. Note 2: N/A (not applicable) should be used if the ratings are not going to be applied to a particular area for evaluation. TABLE 42–2—EVALUATION RATINGS DEFINITIONS [For the Small Business Subcontracting Evaluation Factor, when 52.219–9 is used] Rating Definition Note Exceptional ................. Exceeded all statutory goals or goals as negotiated. Had exceptional success with initiatives to assist, promote, and utilize small business (SB), small disadvantaged business (SDB), women-owned small business (WOSB), HUBZone small business, veteran-owned small business (VOSB) and service disabled veteran owned small business (SDVOSB). Complied with FAR 52.219–8, Utilization of Small Business Concerns. Exceeded any other small business participation requirements incorporated in the contract/order, including the use of small businesses in mission critical aspects of the program. Went above and beyond the required elements of the subcontracting plan and other small business requirements of the contract/order. Completed and submitted Individual Subcontract Reports and/or Summary Subcontract Reports in an accurate and timely manner. Met all of the statutory goals or goals as negotiated. Had significant success with initiatives to assist, promote and utilize SB, SDB, WOSB, HUBZone, VOSB, and SDVOSB. Complied with FAR 52.219–8, Utilization of Small Business Concerns. Met or exceeded any other small business participation requirements incorporated in the contract/order, including the use of small businesses in mission critical aspects of the program. Endeavored to go above and beyond the required elements of the subcontracting plan. Completed and submitted Individual Subcontract Reports and/or Summary Subcontract Reports in an accurate and timely manner. Demonstrated a good faith effort to meet all of the negotiated subcontracting goals in the various socio-economic categories for the current period. Complied with FAR 52.219–8, Utilization of Small Business Concerns. Met any other small business participation requirements included in the contract/order. Fulfilled the requirements of the subcontracting plan included in the contract/order. Completed and submitted Individual Subcontract Reports and/or Summary Subcontract Reports in an accurate and timely manner. Deficient in meeting key subcontracting plan elements. Deficient in complying with FAR 52.219–8, Utilization of Small Business Concerns, and any other small business participation requirements in the contract/order. Did not submit Individual Subcontract Reports and/or Summary Subcontract Reports in an accurate or timely manner. Failed to satisfy one or more requirements of a corrective action plan currently in place; however, does show an interest in bringing performance to a satisfactory level and has demonstrated a commitment to apply the necessary resources to do so. Required a corrective action plan. To justify an Exceptional rating, identify multiple significant events and state how they were a benefit to small business utilization. A singular benefit, however, could be of such magnitude that it constitutes an Exceptional rating. Small businesses should be given meaningful and innovative work directly related to the contract, and opportunities should not be limited to indirect work such as cleaning offices, supplies, landscaping, etc. Also, there should have been no significant weaknesses identified. Very Good .................. Satisfactory ................ TKELLEY on DSK3SPTVN1PROD with PROPOSALS Marginal ..................... VerDate Mar<15>2010 16:15 Sep 05, 2012 Jkt 226001 PO 00000 Frm 00032 Fmt 4702 Sfmt 4702 To justify a Very Good rating, identify a significant event and state how they were a benefit to small business utilization. Small businesses should be given meaningful and innovative opportunities to participate as subcontractors for work directly related to the contract, and opportunities should not be limited to indirect work such as cleaning offices, supplies, landscaping, etc. There should be no significant weaknesses identified. To justify a Satisfactory rating, there should have been only minor problems, or major problems the contractor has addressed or taken corrective action. There should have been no significant weaknesses identified. A fundamental principle of assigning ratings is that contractors will not be assessed a rating lower than Satisfactory solely for not performing beyond the requirements of the contract/order. To justify Marginal performance, identify a significant event that the contractor had trouble overcoming and how it impacted small business utilization. A Marginal rating should be supported by referencing the actions taken by the government that notified the contractor of the contractual deficiency. E:\FR\FM\06SEP1.SGM 06SEP1 Federal Register / Vol. 77, No. 173 / Thursday, September 6, 2012 / Proposed Rules 54871 TABLE 42–2—EVALUATION RATINGS DEFINITIONS—Continued [For the Small Business Subcontracting Evaluation Factor, when 52.219–9 is used] Rating Definition Note Unsatisfactory ............ Noncompliant with FAR 52.219–8 and 52.219–9, and any other small business participation requirements in the contract/order. Did not submit Individual Subcontract Reports and/or Summary Subcontract Reports in an accurate or timely manner. Showed little interest in bringing performance to a satisfactory level or is generally uncooperative. Required a corrective action plan. To justify an Unsatisfactory rating, identify multiple significant events that the contractor had trouble overcoming and state how it impacted small business utilization. A singular problem, however, could be of such serious magnitude that it alone constitutes an Unsatisfactory rating. An Unsatisfactory rating should be supported by referencing the actions taken by the government to notify the contractor of the deficiencies. When an Unsatisfactory rating is justified, the contracting officer must consider whether the contractor made a good faith effort to comply with the requirements of the subcontracting plan required by FAR 52.219–9 and follow the procedures outlined in FAR 52.219–16, Liquidated Damages-Subcontracting Plan. TKELLEY on DSK3SPTVN1PROD with PROPOSALS Note 1: Plus or minus signs may be used to indicate an improving (+) or worsening (¥) trend insufficient to change evaluation status. Note 2: For subcontracting plans under the DoD Comprehensive Small Business Subcontracting Plan (Test Program), DFARS 252.219–7004 (deviation), the ratings entered in CPARS shall mirror those assigned by the Defense Contract Management Agency who is responsible for monitoring such plans. Note 3: Generally, zero percent is not a goal unless the Contracting Officer determined when negotiating the subcontracting plan that no subcontracting opportunities exist in a particular socio-economic category. In such cases, the contractor shall be considered to have met the goal for any socio-economic category where the goal negotiated in the plan was zero. (c)(1) When the contract provides for incentive fees, the incentive-fee contract performance evaluation shall be entered into CPARS. (2) When the contract provides for award fee, the award fee-contract performance adjectival rating as described in 16.401(e)(3) shall be entered into CPARS. (d) Agency evaluations of contractor performance, including both negative and positive evaluations, prepared under this subpart shall be provided to the contractor as soon as practicable after completion of the evaluation. Contractor will receive a CPARS-system generated notification when an evaluation is ready for comment. Contractors shall be given a minimum of 30 days to submit comments, rebutting statements, or additional information. Agencies shall provide for review at a level above the contracting officer to consider disagreements between the parties regarding the evaluation. The ultimate conclusion on the performance evaluation is a decision of the contracting agency. Copies of the evaluation, contractor response, and review comments, if any, shall be retained as part of the evaluation. These evaluations may be used to support future award decisions, and should therefore be marked ‘‘Source Selection Information.’’ Evaluation of Federal Prison Industries (FPI) performance may be used to support a waiver request (see 8.604) when FPI is a mandatory source in accordance with subpart 8.6. The completed evaluation shall not be released to other than Government personnel and the contractor whose performance is being evaluated during VerDate Mar<15>2010 16:15 Sep 05, 2012 Jkt 226001 the period the information may be used to provide source selection information. Disclosure of such information could cause harm both to the commercial interest of the Government and to the competitive position of the contractor being evaluated as well as impede the efficiency of Government operations. Evaluations used in determining award or incentive fee payments may also be used to satisfy the requirements of this subpart. A copy of the annual or final past performance evaluation shall be provided to the contractor as soon as it is finalized. (e) Agencies shall require frequent evaluation (e.g., quarterly) of agency compliance with the reporting requirements in 42.1502, so agencies can readily identify delinquent past performance reports and monitor their reports for quality control. (f) Agencies shall prepare and submit all past performance evaluations electronically in the CPARS at http:// www.cpars.gov/. These evaluations are automatically transmitted to the Past Performance Information Retrieval System (PPIRS) at http://www.ppirs.gov. Past performance evaluations for classified contracts and special access programs shall not be reported in CPARS, but will be reported as stated in this subpart and in accordance with agency procedures. Agencies shall ensure that appropriate management and technical controls are in place to ensure that only authorized personnel have access to the data and the information safeguarded in accordance with 42.1503(d). (g) Agencies shall use the past performance information in PPIRS that PO 00000 Frm 00033 Fmt 4702 Sfmt 4702 is within three years (six for construction and architect-engineer contracts) and information contained in the Federal Awardee Performance and Integrity Information System (FAPIIS), e.g., terminations for default or cause. (h) Other contractor performance information. (1) Agencies shall ensure information is accurately reported in the FAPIIS module of CPARS within 3 calendar days after a contracting officer— (i) Issues a final determination that a contractor has submitted defective cost or pricing data; (ii) Makes a subsequent change to the final determination concerning defective cost or pricing data pursuant to 15.407–1(d); (iii) Issues a final termination for cause or default notice; or (iv) Makes a subsequent withdrawal or a conversion of a termination for default to a termination for convenience. (2) Agencies shall establish CPARS Focal Points who will register users to report data into the FAPIIS module of CPARS (available at http:// www.cpars.gov/, then select FAPIIS). (3) With regard to information that may be covered by a disclosure exemption under the Freedom of Information Act, the contracting officer shall follow the procedures at 9.105– 2(b)(2)(iv). E:\FR\FM\06SEP1.SGM 06SEP1 54872 Federal Register / Vol. 77, No. 173 / Thursday, September 6, 2012 / Proposed Rules PART 49—TERMINATION OF CONTRACTS 49.402–8 [Amended] 10. Amend section 49.402–8 by removing ‘‘42.1503(f)’’ and adding ‘‘42.1503(h)’’ in its place. [FR Doc. 2012–21973 Filed 9–5–12; 8:45 am] BILLING CODE 6820–EP–P DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 48 CFR Parts 8, 9, and 52 [FAR Case 2009–024; Docket 2009–024; Sequence 2] RIN 9000–AM07 Federal Acquisition Regulation; Prioritizing Sources of Supplies and Services for Use by the Government Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). ACTION: Proposed rule; correction. AGENCIES: This document corrects the preamble to a proposed rule published in the Federal Register of June 14, 2011, regarding Prioritizing Sources of Supplies and Services for Use by the Government. This document adds an Initial Regulatory Flexibility Analysis which has been determined to be necessary since the initial publication of the proposed rule. DATES: Interested parties should submit written comments to the Regulatory Secretariat at one of the addressees shown below on or before October 9, 2012 to be considered in the formation of the final rule. ADDRESSES: Submit comments in response to FAR Case 2009–024 by any of the following methods: • Regulations.gov: http:// www.regulations.gov. Submit comments via the Federal eRulemaking portal by searching for ‘‘FAR Case 2009–024.’’ Select the link ‘‘Submit a Comment’’ that corresponds with ‘‘FAR Case 2009– 024.’’ Follow the instructions provided at the ‘‘Submit a Comment’’ screen. Please include your name, company name (if any), and ‘‘FAR Case 2009– 024’’ on your attached document. • Fax: 202–501–4067. • Mail: General Services Administration, Regulatory Secretariat (MVCB), ATTN: Hada Flowers, 1275 TKELLEY on DSK3SPTVN1PROD with PROPOSALS SUMMARY: VerDate Mar<15>2010 16:15 Sep 05, 2012 Jkt 226001 First Street NE., 7th Floor, Washington, DC 20417. Instructions: Please submit comments only and cite FAR Case 2009–024, in all correspondence related to this case. All comments received will be posted without change to http:// www.regulations.gov, including any personal and/or business confidential information provided. FOR FURTHER INFORMATION CONTACT: Ms. Patricia Corrigan, Procurement Analyst, at 202–208–1963, for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at 202–501– 4755. Please cite FAR Case 2009–024. SUPPLEMENTARY INFORMATION: DoD, GSA, and NASA published a proposed rule in the Federal Register at 76 FR 34634 on June 14, 2011, to amend the FAR part 8. FAR part 8 requires Federal agencies to satisfy their requirements for supplies and services from or through a list of sources in order of priority. The proposed rule would amend FAR part 8 by revising FAR 8.000, 8.002, 8.003, and 8.004, eliminating outdated categories, and distinguishing between mandatory sources and non-mandatory sources for consideration. Public comments were received requesting the publication of Initial Regulatory Flexibility Analysis (IRFA) as part of the rule. Based on the comments, DoD, GSA and NASA determined it necessary since the initial publication of the proposed rule to issue an IRFA. Comments on the rest of the proposed rule will be addressed with the issuance of the final rule. Regulatory Flexibility Act The change may have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act 5 U.S.C. 601, et seq., because the Initial Regulatory Flexibility Analysis (IRFA) is summarized as follows: The objective of this rule is to clarify the order of preference for sources that must be considered, and to distinguish them from sources that should be considered where an agency is unable to satisfy requirements for supplies and services from mandatory sources. The basis for this proposed rule is the Government Accountability Office (GAO) decision in the protest of Murray-Benjamin Electric Company, B–298481, 2006 CPD 129, September 7, 2006 at http://www.gao.gov/ decisions/bidpro/298481.pdf. Based upon issues brought forward in the decision, it was determined that FAR Part 8 should be amended to eliminate confusion about the use of mandatory versus non-mandatory sources. Two sections of the FAR are being amended to list only mandatory Government supply sources, and a new section is being added to encourage agencies to give PO 00000 Frm 00034 Fmt 4702 Sfmt 4702 consideration to using certain existing nonmandatory sources to leverage agency buying power and achieve administrative efficiencies that reduce costs and produce savings for our taxpayers. No new mandatory sources are proposed for consideration, only existing sources were included for informational purposes. The clarification is being made to assist both the public and the Federal contracting community by allowing them to better understand and distinguish between sources that are mandatory for use and those that are not mandatory. The nonmandatory sources (e.g., Federal Supply Schedules, Governmentwide acquisition contracts, multi-agency contracts, blanket purchase agreements (BPAs) under Federal Supply Schedule contracts (e.g., Federal Strategic Sourcing Initiative (FSSI) agreements)) in the new section are existing sources intended for use by multiple agencies, and existed prior to promulgation of the proposed change to the FAR. The proposed rule only reflects the practice and use of the existing non-mandatory sources throughout the Government. The existing non-mandatory sources are being listed prior to commercial sources, but agencies remain free to compete their requirements among commercial sources of supply, where it is in their best interest to meet their needs through an open-market procurement. Because the rule clarifies regulations in FAR Part 8 on the use of existing mandatory and non-mandatory sources, it is estimated that the rule will apply to all entities doing business with the Government, regardless of business size. Based on Federal Procurement Data System reporting data, in Fiscal Year 2011, a Governmentwide total of 193,515 new awards were made to small businesses and other than small businesses. Of that total, 130,704 new award actions were made to small business entities. The remaining 62,811 award actions were made to other than small businesses. This clarification, consistent with the GAO decision in the Murray-Benjamin Electric Company protest (B–298481), clarifies existing FAR text regarding existing mandatory and non-mandatory sources. No new sources were added to the FAR and all contractors are encouraged to participate in the mandatory and non-mandatory source programs. This rule does not add any new compliance requirements or information collection requirements. The rule does not duplicate, overlap, or conflict with any other Federal rules. No acceptable alternatives were determined. By providing clarification, the rule reduces the probability that applicable statutes, regulation, and policy will be misinterpreted or misapplied at the possible economic detriment of small entities. The Regulatory Secretariat will be submitting a copy of the Initial Regulatory Flexibility Analysis (IRFA) to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the IRFA may be obtained from the Regulatory Secretariat. The Councils invite comments from small business concerns and other interested parties on E:\FR\FM\06SEP1.SGM 06SEP1

Agencies

[Federal Register Volume 77, Number 173 (Thursday, September 6, 2012)]
[Proposed Rules]
[Pages 54864-54872]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-21973]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 8, 12, 15, 17, 42, and 49

[FAR Case 2012-009; Docket 2012-0009; Sequence 1]
RIN 9000-AM34


Federal Acquisition Regulation; Documenting Contractor 
Performance

AGENCY: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: DoD, GSA, and NASA are proposing to amend the Federal 
Acquisition Regulation (FAR) to provide Governmentwide standardized 
past performance evaluation factors and performance rating categories 
and require that past performance information be entered into the 
Contractor Performance Assessment Reporting System (CPARS).

DATES: Interested parties should submit written comments to the 
Regulatory Secretariat on or before November 5, 2012 to be considered 
in the formulation of a final rule.

ADDRESSES: Submit comments identified by FAR Case 2012-009 by any of 
the following methods:
     Regulations.gov: http://www.regulations.gov.
    Submit comments via the Federal eRulemaking portal by searching for 
``FAR Case 2012-009''. Select the link ``Send a Comment or Submission'' 
that corresponds with FAR Case 2012-009. Follow the instructions 
provided to complete the ``Public Comment and Submission Form''. Please 
include your name, company name (if any), and ``FAR Case 2012-009'' on 
your attached document.
     Fax: 202-501-4067.
     Mail: General Services Administration, Regulatory 
Secretariat (MVCB), ATTN: Hada Flowers, 1275 First Street NE., 7th 
Floor, Washington, DC 20417.
    Instructions: Please submit comments only and cite FAR Case 2012-
009 in all correspondence related to this case. All comments received 
will be posted without change to http://www.regulations.gov, including 
any personal and/or business confidential information provided.

FOR FURTHER INFORMATION CONTACT: Mr. Curtis E. Glover, Sr., Procurement 
Analyst, at 202-501-1448 for clarification of content. For information 
pertaining to status or publication schedules, contact the Regulatory 
Secretariat at 202-501-4755. Please cite FAR Case 2012-009.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD, GSA, and NASA published a proposed rule in the Federal 
Register at 76 FR 37704 on June 28, 2011, under FAR Case 2009-042, to 
implement recommendations from Government Accountability Office (GAO) 
Report GAO-09-374, entitled ``Better Performance Information Needed to

[[Page 54865]]

Support Agency Contract Award Decisions,'' and Office of Federal 
Procurement Policy (OFPP) memorandum entitled ``Improving the Use of 
Contractor Performance Information'' (dated July 29, 2009). Two 
amendments to the Federal Register notice were published (76 FR 48776, 
dated August 9, 2011, and 76 FR 50714, dated August 16, 2011). The due 
date for receipt of public comments was extended twice and was 
ultimately set at September 29, 2011. Twentythree respondents submitted 
comments on the proposed rule. This proposed rule addresses all 
comments received in response to the proposed rule published in the 
Federal Register at 76 FR 37704 on June 28, 2011. This proposed rule 
also implements paragraphs (a), (b), and (d) of section 806 of the 
National Defense Authorization Act for Fiscal Year 2012 (Pub. L. 112-
81) which requires, at a minimum--
    (1) Establishment of standards for the timeliness and completeness 
of past performance submissions for purposes of databases;
    (2) Assignment of responsibility and management accountability for 
the completeness of past performance submissions for such purposes; and
    (3) Assurance that past performance submissions are consistent with 
award fee evaluations in cases where such evaluations have been 
conducted.
    The FAR Council is soliciting public comments on a proposal to 
remove the appeal language at FAR 42.1503(d) to improve economy and 
efficiency. This proposal was included in and consistent with the FAR 
Council's Retrospective Plan and Analysis of Existing Rules as required 
by Executive Order 13563. The FAR currently requires agencies to 
provide for review of agency evaluations at a level above the 
contracting officer to consider disagreements between the parties 
regarding the evaluation. The Government is considering the merits of 
modifying the FAR requirements governing the appeal process to evaluate 
if this would improve or weaken the effectiveness of past performance 
policies and associated principles of impartiality and accountability.

II. Discussion and Analysis of the Public Comments

    The Civilian Agency Acquisition Council and the Defense Acquisition 
Regulations Council (the Councils) reviewed the public comments in the 
development of this proposed rule. A discussion of the comments and the 
changes made to the rule as a result of those comments are provided as 
follows:

A. Summary of Significant Changes

    1. The Councils amended FAR 42.1503 language in this proposed rule 
to require the past performance report to include a clear, non-
technical description of the principal purpose of the contract;
    2. FAR 42.1503(b)(4) is revised by adding two tables:
     Table 42-1--Evaluation Ratings Definitions; and
     Table 42-2--Evaluation Ratings Definitions (for the Small 
Business Subcontracting Evaluation factor when the clause at 52.219-9 
is used).
    3. The Evaluation Ratings Definitions included in the Tables are 
based upon guidance provided in the Department of Defense CPARS Policy 
Guide currently available on the Web site. The U.S. Small Business 
Administration provided recommendations to Table 42-2, and the revised 
text is included in this proposed rule.
    4. Evaluation descriptions are revised under FAR 42.1503(b)(2) to 
the following:
    Evaluation factors for each assessment shall include, at a minimum, 
the following:
    (i) Technical (quality of product or service.)
    (ii) Cost control (not applicable for firm-fixed-price or fixed-
price with economic price adjustment arrangements).
    (iii) Schedule/Timeliness.
    (iv) Management or Business Relations.
    (v) Small Business Subcontracting (as applicable, see Table 42-2).
    (vi) Other (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 
and pricing data, terminations, suspension and debarments, etc.)
    5. Architect-Engineer Contract Administration Support System 
(ACASS) and Construction Contractor Appraisal Support System (CCASS) 
are not changed at this time. There is an effort that will combine all 
three systems into one, namely CPARS, and all evaluation rating scales 
will be the same at that point. This issue will be resolved when the 
systems are merged.

B. Support for the Rule

    Comments: Seven respondents expressed support for the rule's 
purpose of standardizing the collection and evaluation of past 
performance information. One of these respondents deemed the proposed 
rule a positive implementation of the Government Accountability Office 
(GAO) recommendation.
    Response: Noted.

C. OFPP Act Requirements

    Comments: Two respondents expressed concern that including the past 
performance categories and definitions in the CPARS Guide rather than 
in the text of the FAR was effectively a violation of the Office of 
Federal Procurement Policy Act (41 U.S.C. 1707 (formerly 41 U.S.C. 
418b)) and the FAR 1.501-2 requirement to publish significant revisions 
that affect the public for comment. The CPARS Guide has not been 
published for public comment at this time. Both respondents recommended 
that the proposed FAR rule be revised to include the past performance 
ratings definitions in the FAR text and that the revised FAR rule be 
published for public comment.
    Response: The respondents' concerns have been addressed in FAR 
42.1503(b)(4) and by this second proposed rule by adding Table 42-1 and 
Table 42-2.

D. Alleged Weaknesses in CPARS System

    Comments: Four comments were received alleging weaknesses in the 
current CPARS system. One respondent noted the lack of standard, 
reliable past performance ratings. Other issues raised concerned the 
current high overdue rates Governmentwide for submission of past 
performance ratings, the failure of the Government's ``chain of 
command'' to ensure timely completion of past performance ratings, and 
the need to make the CPARS system even simpler and less time consuming.
    Response: The comment on the reliable past performance ratings 
definitions is addressed under category C of this rule. The comments on 
overdue rates and timely completion reflect issues related to 
administration, which can be addressed by the respective contracting 
officers. The comments related to the CPARS system have been provided 
to the appropriate office for consideration.

E. Public Availability of Information/FAPIIS

    Comments: Four comments were submitted. One respondent recommended 
that the background section of the final rule explain how the Federal 
Awardee Performance and Integrity Information System (FAPIIS) is 
affected by the CPARS requirements and what role it will play in the 
process. Another respondent recommended increased clarity for FAR 
42.1503(d) because it could be read to allow release of past 
performance information to third parties once the periods in FAR

[[Page 54866]]

42.1503(g) have expired. A third respondent advocated the wide release 
of past performance evaluations, i.e., not requiring the marking of 
such information ``Source Selection Information'' and releasing past 
performance evaluation information in FAPIIS.
    Response: The publication of past performance reviews in the public 
version of FAPIIS is currently prohibited by law (section 3010 of Pub. 
L. 111-212, enacted July 29, 2010). The relationship between FAPIIS and 
CPARS is explained at the FAPIIS Web site as follows:

    ``FAPIIS is a distinct application that is accessed through the 
Past Performance Information System (PPIRS) and is available to 
federal acquisition professionals for their use in award and 
responsibility determinations. FAPIIS provides users access to 
integrity and performance information from the FAPIIS reporting 
module in the Contractor Performance Assessment Reporting System 
(CPARS), proceedings information from the Central Contractor 
Registration (CCR) database, and suspension/disbarment information 
from the Excluded Parties List system (EPLS).''

    Regarding the release of past performance information, FAR 
42.1503(d) reads as follows:

    ``The completed evaluation shall not be released to other than 
Government personnel and the contractor whose performance is being 
evaluated during the period the information may be used to provide 
source selection information. Disclosure of such information could 
cause harm both to the commercial interest of the Government and to 
the competitive position of the contractor being evaluated as well 
as impede the efficiency of Government operations.''

    These sentences, which were not in any way limited by the time 
periods in FAR 42.1503(g), were not changed by this proposed rule.

F. Exceptions/Applicability

    Comment: One respondent recommended exempting all science and 
technology contracts from the requirement to evaluate past performance.
    Response: The Councils have determined that it is not in the 
Government's best interest to exempt science and technology contracts 
from past performance assessments.
    Comment: Respondent asked that the final rule clarify (1) whether 
past performance evaluations are required for individual task orders 
and delivery orders or only for the base indefinite-delivery contract; 
and (2) who is the responsible party for completing these evaluations.
    Response: The requirement for past performance assessments for 
individual task and delivery orders, and the parties responsible, are 
addressed in FAR 42.1502(c) and (d) as follows:

    (c) Multiple-agency orders. Agencies shall prepare an evaluation 
of contractor performance for each order that exceeds the simplified 
acquisition threshold placed against a Federal Supply Schedule 
contract, or under a task-order contract or a delivery-order 
contract awarded by another agency (i.e., Governmentwide acquisition 
contract or multi-agency contract). This evaluation shall not 
consider the requirements under paragraph (g) of this section. 
Agencies are required to prepare an evaluation if a modification to 
the order causes the dollar amount to exceed the simplified 
acquisition threshold.
    (d) Single-Agency orders. For single-agency task-order and 
delivery-order contracts, the contracting officer may require 
performance evaluations for each order in excess of the simplified 
acquisition threshold when such evaluations would produce more 
useful past performance for source selection officials than that 
contained in the overall contract evaluation (e.g., when the scope 
of the basic contract is very broad and the nature of individual 
orders could be significantly different). This evaluation need not 
consider the requirements under paragraph (g) of this section unless 
the contracting officer deems it appropriate.

G. Rating Factors

    Comments: One respondent suggested that a sixth rating category, 
entitled ``Other,'' be added to the current five categories. Another 
respondent recommended that each past performance evaluation should be 
required to include an evaluation of the contractor's small business 
subcontracting instead of the current requirement to do so only ``when 
applicable.''
    Response: The Councils agree that adding the evaluation factor 
``Other'' at FAR 42.1503(b)(2) allows the Government to consider 
contingencies not contemplated by factors (i) through (v) that are 
unique to each contract award and are relevant to the contractor's 
evaluation. FAR 42.1503(b)(2) is changed to add evaluation factor 
``(vi) Other (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 
and pricing data, terminations, suspension and debarments, etc.)''. 
``Small Business Subcontracting'' may be included as a past-performance 
factor ``as applicable.'' The Councils did not change this language 
because there are instances where ``Small Business Subcontracting'' may 
require a past performance assessment.

H. Interim Ratings and Frequency of Ratings

    Comments: One respondent recommended revising FAR 42.1502(b) to 
require more than one past performance evaluation a year for on-going 
contracts. However, another respondent strongly urged a prohibition 
against including interim ratings in final past performance 
evaluations. The same respondent stated that problems can arise with 
performance evaluations when the Government rater for an interim 
evaluation is transferred before the contract is completed. This 
respondent also noted that it has observed evaluation disparities among 
various contracting entities.
    Response: FAR 42.1502(a) requires a minimum of one evaluation a 
year; however, agencies are not precluded from assessing past 
performance on a more frequent basis. The comments regarding interim 
evaluations and changes in Government personnel (rater) reflect issues 
of administration, and can be discussed with the respective contracting 
officer. The comment on observed evaluation disparities among various 
contracting entities is noted but this, too, is not a policy issue.

I. Other Comments

    Comments: One respondent submitted a draft for a new past 
performance evaluation form. The respondent also asked whether 
additional items could be added to the CPARS past performance 
evaluation for comments from (1) Government quality assurance 
personnel, (2) contractor quality control personnel, and (3) the 
contracting officer's representative. Another respondent expressed 
concern that allowing contractors to ``report to the CPARS system'' 
would have a negative impact on future competitiveness because all 
contractors would give themselves a positive performance rating. A 
third respondent stated its concern that the proposed rule was 
``essentially a creation of several memorandums and not a direct result 
of the traditional rulemaking process.''
    Response: CPARS has a pre-established, electronic format for 
assessment of past performance; therefore, a new form is not needed at 
this time. FAR 42.1503(a) provides agencies the flexibility of 
requesting and obtaining input from other Government representatives as 
the contracting officer considers necessary. It may not be appropriate 
to require past performance input from (1) Government quality assurance 
personnel, (2) contractor quality control personnel, and (3) the

[[Page 54867]]

contracting officer's representative in every case. These individuals, 
when requested by the Government past performance official, can provide 
input under the ``Assessing Official Representative'' field. 
Contractors have the opportunity to respond to the Government's past 
performance assessment in every case. This material is in addition to, 
not in lieu of, the Government's assessment. Therefore, a contractor's 
tendency to give itself a positive performance rating in every case 
will not have a negative impact on future competitiveness, the concern 
expressed by one respondent. The Councils complied with all of the 
drafting and approval requirements applicable to every FAR Case.
    Comment: One respondent commented on the proposed FAR 42.1503(a) 
statement that, if contracting officers' representatives and program 
managers are not specifically tasked with preparing interim and final 
past performance evaluations, then the contracting officer ``will 
remain responsible'' for their preparation. The respondent asked where 
past performance duties are assigned in the FAR as the responsibility 
of the contracting officer.
    Response: The Councils agree that FAR 42.1503 was not sufficiently 
clear. FAR 42.1503(a) is changed to reflect that the contracting 
officer ``is'' responsible for this function if agency procedures do 
not specify a different responsible individual.
    Comment: One respondent recommended that the duties of the CPARS 
Focal Point, at FAR 42.1503(h)(3), would be more accurate if the 
paragraph were revised to read as follows: ``The primary duties of the 
CPARS Focal Point include administering CPARS and FAPIIS access, 
monitoring CPARS compliance, and providing assistance, guidance, and 
training to CPARS and FAPIIS users.''
    Response: FAR 42.1503(h)(2) clarifies that only a CPARS Focal Point 
has the authority to grant access to the information in the system. FAR 
42.1503(h)(3) merely listed some of the Focal Point's key duties. Upon 
reflection, the Councils decided that this information is not pertinent 
to an acquisition regulation and belongs, rather, in a position 
description. FAR 42.1503(h)(3) currently references the disclosure 
exemption under the Freedom of Information Act.
    Comment: One respondent proposed that FAR 42.1503 should be revised 
to include ``ACASS/CCASS'' and requiring that the standardized five 
ratings must be used in source selections.
    Response: The second proposed rule already requires agencies to use 
the standardized five ratings, with certain exceptions that were listed 
at FAR 42.1502. These exceptions are retained in the second proposed 
rule, e.g., for construction and architect-engineering contracts; 
language is added to 42.1502(b) on reporting into ACASS and CCASS.
    Comment: A respondent stated that FAR 42.1503(h)(1) was missing the 
``vertical list that currently resides at FAR 42.1503(f).''
    Response: The vertical list referred to by the respondent was added 
to the previous proposed rule by the Federal Register notice 
correction, published August 9, 2011, at 76 FR 48776. The respondent 
submitted this comment prior to issuance of the correction.
    Comment: One respondent asked that the word ``generally,'' at FAR 
42.1503(a), be removed because it allows for exceptions to the broad 
policy.
    Response: The term ``generally'' is in the current FAR and was not 
proposed for change in the previous proposed rule. The input of the 
technical office, contracting office, and end-users of the products or 
services is not always required in every case. Therefore, the requested 
change is not made.
    Comment: One respondent recommended revising FAR 42.1503(b)(1) to 
read as follows:

    ``The report should include a clear description of the principal 
purpose of the contract in plain English, a description of the 
contractor's performance based on objective facts supported by 
program, project, and contract performance data, and any unusual 
circumstances affecting contractor performance, e.g., hazardous 
location of performance. Ensure tailoring of each report to the 
contract dollar value, visibility, complexity, and value.''

    The respondent suggested that the revisions were needed because the 
terms ``size'' and ``content'' were unclear.
    Response: The Councils agree that the CPARS ratings will be more 
useful to those using the system during source selection if the report 
were to include a requirement to ``include a clear, non-technical 
description of the principal purpose of the contract.'' This language 
is added at FAR 42.1503(b)(1) in the second proposed rule.
    The balance of the respondent's comment was not adopted because the 
language proposed to be included at FAR 42.1503(b)(1) is considered to 
be appropriately clear and descriptive.
    Comment: At FAR 42.1503(b)(4), the respondent recommended revising 
the paragraph as follows in order to increase clarity: ``Each 
evaluation factor at paragraph (b)(2) of this section requires 
narrative that clearly supports the rating assigned using the rating 
definitions in the CPARS Policy Guide, http://www.cpars.gov/.''
    Response: Given that the CPARS rating categories and definitions 
are proposed to be added in this same paragraph by this proposed rule 
(see section II.C. above), the respondent's intent has been addressed.
    Comment: At FAR 42.1503(f), the respondent recommended that 
additional clarity could be achieved by changing the wording to read: 
``Agencies shall prepare all past performance reports electronically in 
CPARS at http://www.cpars.gov/. All completed reports in CPARS transmit 
to the Past Performance Information Retrieval System (PPIRS) at http://www.ppirs.gov for viewing by Government source selection officials.''
    Response: Most of the material in the respondent's recommendation 
is now in this proposed rule; the part of the recommendation that is 
new is the addition of the phrase ``for viewing by Government source 
selection officials''. However, this is not adopted because, while 
access to the information in CPARS is limited, it is not limited in 
every case only to source selection officials.

III. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is not a significant regulatory action and, therefore, was not 
subject to review under Section 6(b) of E.O. 12866, Regulatory Planning 
and Review, dated September 30, 1993. This rule is not a major rule 
under 5 U.S.C. 804.

IV. Regulatory Flexibility Act

    DoD, GSA, and NASA do not expect this proposed rule to have a 
significant economic impact on a substantial number of small entities 
within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et 
seq., because this rule codifies in the FAR existing guidelines and 
practices. The evaluation factors and rating system language proposed 
are currently used by Federal

[[Page 54868]]

agencies. There are no new requirements placed on small entities. 
Therefore, an initial regulatory flexibility analysis was not 
performed, and no comments on the expected impact of this rule on small 
entities were received in response to the request for comments in the 
Federal Register notice for the prior proposed rule. DoD, GSA, and NASA 
invite comments from small business concerns and other interested 
parties on the expected impact of this rule on small entities.
    DoD, GSA, and NASA will also consider comments from small entities 
concerning the existing regulations in subparts affected by the rule in 
accordance with 5 U.S.C. 610. Interested parties must submit such 
comments separately and should cite 5 U.S.C. 610 (FAR Case 2012-009), 
in correspondence.

V. Paperwork Reduction Act

    The rule does not contain any information collection requirements 
that require the approval of the Office of Management and Budget under 
the Paperwork Reduction Act (44 U.S.C. chapter 35). No public comments 
were received on the information collection requirements in response to 
the request in the proposed rule.

List of Subjects in 48 CFR parts 8, 12, 15, 17, 42, and 49

    Government procurement.

    Dated: August 31, 2012.
Laura Auletta,
Director, Office of Governmentwide Acquisition Policy, Office of 
Acquisition Policy, Office of Governmentwide Policy.
    Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 8, 12, 
15, 17, 42, and 49 as set forth below:
    1. The authority citation for 48 CFR parts 8, 12, 15, 17, 42, and 
49 is revised to read as follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 
U.S.C. 20113.

PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES


8.406-4  [Amended]

    2. Amend section 8.406-4 by removing from paragraph (e) 
``42.1503(f)'' and adding ``42.1503(h)'' in its place.
    3. Revise section 8.406-7 to read as follows:


8.406-7  Contractor Performance Evaluation.

    Ordering activities must prepare at least annually and at the time 
the work under the order is completed, an evaluation of contractor 
performance for each order that exceeds the simplified acquisition 
threshold in accordance with 42.1502(c).

PART 12--ACQUISITION OF COMMERCIAL ITEMS


12.403  [Amended]

    4. Amend section 12.403 by removing from paragraph (c)(4) 
``42.1503(f)'' and adding ``42.1503(h)'' in its place.

PART 15--CONTRACTING BY NEGOTIATION


15.407-1  [Amended]

    5. Amend section 15.407-1 by removing from paragraph (d) 
``42.1503(f)'' and adding ``42.1503(h)'' in its place.

PART 17--SPECIAL CONTRACTING METHODS

    6. Amend section 17.207 by adding paragraph (c)(6) to read as 
follows:


17.207  Exercise of options.

* * * * *
    (c) * * *
    (6) The contractor's past performance evaluations have been 
reviewed and the contractor's performance rated.
* * * * *

PART 42--CONTRACT ADMINISTRATION AND AUDIT SERVICES

    7. Revise sections 42.1500 and 42.1501 to read as follows:


42.1500  Scope of subpart.

    This subpart provides policies and establishes responsibilities for 
recording and maintaining contractor performance information. This 
subpart does not apply to procedures used by agencies in determining 
fees under award or incentive fee contracts. See subpart 16.4. However, 
the fee amount paid to contractors should be reflective of the 
contractor's performance and the past performance evaluation should 
closely parallel and be consistent with the fee determinations.


42.1501  General.

    (a) Past performance information (including the ratings and 
supporting narratives) is relevant information, for future source 
selection purposes, regarding a contractor's actions under previously 
awarded contracts. It includes, for example, the contractor's record 
of--
    (1) Conforming to contract requirements and to standards of good 
workmanship;
    (2) Forecasting and controlling costs;
    (3) Adherence to contract schedules, including the administrative 
aspects of performance;
    (4) Reasonable and cooperative behavior and commitment to customer 
satisfaction;
    (5) Reporting into databases (see subparts 4.14 and 4.15, and 
reporting requirements in the solicitation provisions and clauses 
referenced in 9.104-7);
    (6) Integrity and business ethics; and
    (7) Business-like concern for the interest of the customer.
    (b) Agencies shall monitor their compliance with the past 
performance evaluation requirements (see 42.1502), and use the CPARS 
and PPIRS metric tools to measure the quality and timely reporting of 
past performance information.
    8. Amend section 42.1502 by revising paragraphs (a) through (d) and 
(i) to read as follows:


42.1502  Policy.

    (a) General. Past performance evaluations shall be prepared at 
least annually and at the time the work under the contract or order is 
completed. Past performance evaluations are required for contracts and 
orders for supplies, services, and research and development, including 
contracts and orders performed inside and outside the United States, 
with the exception of architect-engineer and construction contracts or 
orders, which will still be reported into ACAAS and CCASS databases. 
Past performance information shall be entered into the Contractor 
Performance Assessment Reporting System (CPARS), the Governmentwide 
evaluation reporting tool for all past performance reports. 
Instructions for submitting evaluations into CPARS are available at 
http://www.cpars.gov/.
    (b) Contracts. Except as provided in paragraphs (e), (f) and (h) of 
this section, agencies shall prepare evaluations of contractor 
performance for each contract or order that exceeds the simplified 
acquisition threshold. Agencies are required to prepare an evaluation 
if a modification to the contract causes the dollar amount to exceed 
the simplified acquisition threshold.
    (c) Multiple-agency orders. Agencies shall prepare an evaluation of 
contractor performance for each order that exceeds the simplified 
acquisition threshold placed against a Federal Supply Schedule 
contract, or under a task-order contract or a delivery-order contract 
awarded by another agency (i.e., Governmentwide acquisition contract or 
multi-agency contract). This evaluation shall not consider the 
requirements under paragraph (g) of this section. Agencies are required 
to prepare an evaluation if a modification to the order

[[Page 54869]]

causes the dollar amount to exceed the simplified acquisition 
threshold.
    (d) Single-Agency orders. For single-agency task-order and 
delivery-order contracts, the contracting officer may require 
performance evaluations for each order in excess of the simplified 
acquisition threshold when such evaluations would produce more useful 
past performance for source selection officials than that contained in 
the overall contract evaluation (e.g., when the scope of the basic 
contract is very broad and the nature of individual orders could be 
significantly different). This evaluation need not consider the 
requirements under paragraph (g) of this section unless the contracting 
officer deems it appropriate.
* * * * *
    (i) Agencies shall promptly report other contractor information in 
accordance with 42.1503(h).
    9. Revise section 42.1503 to read as follows:


42.1503  Procedures.

    (a) Agency procedures for the past performance evaluation system 
shall--
    (1) Generally provide for input to the evaluations from the 
technical office, contracting office and, where appropriate, end users 
of the product or service;
    (2) Identify and assign past performance evaluation roles and 
responsibilities to those individuals responsible for preparing and 
reviewing interim evaluation, if prepared, and final evaluations (e.g., 
contracting officers, contracting officer representatives and program 
managers); and
    (3) Address management controls and appropriate management reviews 
of past performance evaluations, to include accountability, for 
documenting past performance on PPIRS. If agency procedures do not 
specify the individuals responsible for past performance evaluation 
duties, the contracting officer is responsible for this function. Those 
individuals identified may obtain information for the evaluation of 
performance from the program office, administrative contracting office, 
audit office, end users of the product or service, and any other 
technical or business advisor, as appropriate.
    (b)(1) The evaluation should include a clear, non-technical 
description of the principal purpose of the contract. The evaluation 
should reflect how the contractor performed. The evaluation should 
include clear relevant information that accurately depicts the 
contractor's performance, and be based on objective facts supported by 
program and contract performance data. The evaluations should be 
tailored to the contract type, size, content, and complexity of the 
contractual requirements.
    (2) Evaluation factors for each assessment shall include, at a 
minimum, the following:
    (i) Technical (quality of product or service.)
    (ii) Cost control (not applicable for firm-fixed-price or fixed-
price with economic price adjustment arrangements).
    (iii) Schedule/Timeliness.
    (iv) Management or Business Relations.
    (v) Small Business Subcontracting (as applicable see Table 42-2).
    (vi) Other (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 
and pricing data, terminations, suspension and debarments, etc.)
    (3) Evaluation factors may include subfactors. Each factor and 
subfactor used shall be evaluated and a supporting narrative provided.
    (4) Each evaluation factor, as listed in paragraph (b)(2) of this 
section, shall be rated in accordance with a five scale rating system 
(e.g., exceptional, very good, satisfactory, marginal, and 
unsatisfactory). Rating definitions shall reflect those in the tables 
below:

               Table 42-1--Evaluation Ratings Definitions
------------------------------------------------------------------------
            Rating                   Definition              Note
------------------------------------------------------------------------
Exceptional...................  Performance meets    To justify an
                                 contractual          Exceptional
                                 requirements and     rating, identify
                                 exceeds many to      multiple
                                 the Government's     significant events
                                 benefit. The         and state how they
                                 contractual          were of benefit to
                                 performance of the   the Government. A
                                 element or sub-      singular benefit,
                                 element being        however, could be
                                 evaluated was        of such magnitude
                                 accomplished with    that it alone
                                 few minor problems   constitutes an
                                 for which            Exceptional
                                 corrective actions   rating. Also,
                                 taken by the         there should have
                                 contractor was       been NO
                                 highly effective.    significant
                                                      weaknesses
                                                      identified.
Very Good.....................  Performance meets    To justify a Very
                                 contractual          Good rating,
                                 requirements and     identify a
                                 exceeds some to      significant event
                                 the Government's     and state how it
                                 benefit. The         was a benefit to
                                 contractual          the Government.
                                 performance of the   There should have
                                 element or sub-      been no
                                 element being        significant
                                 evaluated was        weaknesses
                                 accomplished with    identified.
                                 some minor
                                 problems for which
                                 corrective actions
                                 taken by the
                                 contractor was
                                 effective.
Satisfactory..................  Performance meets    To justify a
                                 contractual          Satisfactory
                                 requirements. The    rating, there
                                 contractual          should have been
                                 performance of the   only minor
                                 element or sub-      problems, or major
                                 element contains     problems the
                                 some minor           contractor
                                 problems for which   recovered from
                                 corrective actions   without impact to
                                 taken by the         the contract/
                                 contractor appear    order. There
                                 or were              should have been
                                 satisfactory.        NO significant
                                                      weaknesses
                                                      identified. A
                                                      fundamental
                                                      principle of
                                                      assigning ratings
                                                      is that
                                                      contractors will
                                                      not be evaluated
                                                      with a rating
                                                      lower than
                                                      Satisfactory
                                                      solely for not
                                                      performing beyond
                                                      the requirements
                                                      of the contract/
                                                      order.
Marginal......................  Performance does     To justify Marginal
                                 not meet some        performance,
                                 contractual          identify a
                                 requirements. The    significant event
                                 contractual          in each category
                                 performance of the   that the
                                 element or sub-      contractor had
                                 element being        trouble overcoming
                                 evaluated reflects   and state how it
                                 a serious problem    impacted the
                                 for which the        Government. A
                                 contractor has not   Marginal rating
                                 yet identified       should be
                                 corrective           supported by
                                 actions. The         referencing the
                                 contractor's         management tool
                                 proposed actions     that notified the
                                 appear only          contractor of the
                                 marginally           contractual
                                 effective or were    deficiency (e.g.,
                                 not fully            management,
                                 implemented.         quality, safety,
                                                      or environmental
                                                      deficiency report
                                                      or letter).

[[Page 54870]]

 
Unsatisfactory................  Performance does     To justify an
                                 not meet most        Unsatisfactory
                                 contractual          rating, identify
                                 requirements and     multiple
                                 recovery is not      significant events
                                 likely in a timely   in each category
                                 manner. The          that the
                                 contractual          contractor had
                                 performance of the   trouble overcoming
                                 element or sub-      and state how it
                                 element contains a   impacted the
                                 serious problem(s)   Government. A
                                 for which the        singular problem,
                                 contractor's         however, could be
                                 corrective actions   of such serious
                                 appear or were       magnitude that it
                                 ineffective.         alone constitutes
                                                      an unsatisfactory
                                                      rating. An
                                                      Unsatisfactory
                                                      rating should be
                                                      supported by
                                                      referencing the
                                                      management tools
                                                      used to notify the
                                                      contractor of the
                                                      contractual
                                                      deficiencies
                                                      (e.g., management,
                                                      quality, safety,
                                                      or environmental
                                                      deficiency
                                                      reports, or
                                                      letters).
------------------------------------------------------------------------
Note 1: Plus or minus signs may be used to indicate an improving (+) or
  worsening (-) trend insufficient to change the evaluation status.
Note 2: N/A (not applicable) should be used if the ratings are not going
  to be applied to a particular area for evaluation.


               Table 42-2--Evaluation Ratings Definitions
 [For the Small Business Subcontracting Evaluation Factor, when 52.219-9
                                is used]
------------------------------------------------------------------------
            Rating                   Definition              Note
------------------------------------------------------------------------
Exceptional...................  Exceeded all         To justify an
                                 statutory goals or   Exceptional
                                 goals as             rating, identify
                                 negotiated. Had      multiple
                                 exceptional          significant events
                                 success with         and state how they
                                 initiatives to       were a benefit to
                                 assist, promote,     small business
                                 and utilize small    utilization. A
                                 business (SB),       singular benefit,
                                 small                however, could be
                                 disadvantaged        of such magnitude
                                 business (SDB),      that it
                                 women-owned small    constitutes an
                                 business (WOSB),     Exceptional
                                 HUBZone small        rating. Small
                                 business, veteran-   businesses should
                                 owned small          be given
                                 business (VOSB)      meaningful and
                                 and service          innovative work
                                 disabled veteran     directly related
                                 owned small          to the contract,
                                 business (SDVOSB).   and opportunities
                                 Complied with FAR    should not be
                                 52.219-8,            limited to
                                 Utilization of       indirect work such
                                 Small Business       as cleaning
                                 Concerns. Exceeded   offices, supplies,
                                 any other small      landscaping, etc.
                                 business             Also, there should
                                 participation        have been no
                                 requirements         significant
                                 incorporated in      weaknesses
                                 the contract/        identified.
                                 order, including
                                 the use of small
                                 businesses in
                                 mission critical
                                 aspects of the
                                 program. Went
                                 above and beyond
                                 the required
                                 elements of the
                                 subcontracting
                                 plan and other
                                 small business
                                 requirements of
                                 the contract/
                                 order. Completed
                                 and submitted
                                 Individual
                                 Subcontract
                                 Reports and/or
                                 Summary
                                 Subcontract
                                 Reports in an
                                 accurate and
                                 timely manner.
Very Good.....................  Met all of the       To justify a Very
                                 statutory goals or   Good rating,
                                 goals as             identify a
                                 negotiated. Had      significant event
                                 significant          and state how they
                                 success with         were a benefit to
                                 initiatives to       small business
                                 assist, promote      utilization. Small
                                 and utilize SB,      businesses should
                                 SDB, WOSB,           be given
                                 HUBZone, VOSB, and   meaningful and
                                 SDVOSB. Complied     innovative
                                 with FAR 52.219-8,   opportunities to
                                 Utilization of       participate as
                                 Small Business       subcontractors for
                                 Concerns. Met or     work directly
                                 exceeded any other   related to the
                                 small business       contract, and
                                 participation        opportunities
                                 requirements         should not be
                                 incorporated in      limited to
                                 the contract/        indirect work such
                                 order, including     as cleaning
                                 the use of small     offices, supplies,
                                 businesses in        landscaping, etc.
                                 mission critical     There should be no
                                 aspects of the       significant
                                 program.             weaknesses
                                 Endeavored to go     identified.
                                 above and beyond
                                 the required
                                 elements of the
                                 subcontracting
                                 plan. Completed
                                 and submitted
                                 Individual
                                 Subcontract
                                 Reports and/or
                                 Summary
                                 Subcontract
                                 Reports in an
                                 accurate and
                                 timely manner.
Satisfactory..................  Demonstrated a good  To justify a
                                 faith effort to      Satisfactory
                                 meet all of the      rating, there
                                 negotiated           should have been
                                 subcontracting       only minor
                                 goals in the         problems, or major
                                 various socio-       problems the
                                 economic             contractor has
                                 categories for the   addressed or taken
                                 current period.      corrective action.
                                 Complied with FAR    There should have
                                 52.219-8,            been no
                                 Utilization of       significant
                                 Small Business       weaknesses
                                 Concerns. Met any    identified. A
                                 other small          fundamental
                                 business             principle of
                                 participation        assigning ratings
                                 requirements         is that
                                 included in the      contractors will
                                 contract/order.      not be assessed a
                                 Fulfilled the        rating lower than
                                 requirements of      Satisfactory
                                 the subcontracting   solely for not
                                 plan included in     performing beyond
                                 the contract/        the requirements
                                 order. Completed     of the contract/
                                 and submitted        order.
                                 Individual
                                 Subcontract
                                 Reports and/or
                                 Summary
                                 Subcontract
                                 Reports in an
                                 accurate and
                                 timely manner.
Marginal......................  Deficient in         To justify Marginal
                                 meeting key          performance,
                                 subcontracting       identify a
                                 plan elements.       significant event
                                 Deficient in         that the
                                 complying with FAR   contractor had
                                 52.219-8,            trouble overcoming
                                 Utilization of       and how it
                                 Small Business       impacted small
                                 Concerns, and any    business
                                 other small          utilization. A
                                 business             Marginal rating
                                 participation        should be
                                 requirements in      supported by
                                 the contract/        referencing the
                                 order. Did not       actions taken by
                                 submit Individual    the government
                                 Subcontract          that notified the
                                 Reports and/or       contractor of the
                                 Summary              contractual
                                 Subcontract          deficiency.
                                 Reports in an
                                 accurate or timely
                                 manner. Failed to
                                 satisfy one or
                                 more requirements
                                 of a corrective
                                 action plan
                                 currently in
                                 place; however,
                                 does show an
                                 interest in
                                 bringing
                                 performance to a
                                 satisfactory level
                                 and has
                                 demonstrated a
                                 commitment to
                                 apply the
                                 necessary
                                 resources to do
                                 so. Required a
                                 corrective action
                                 plan.

[[Page 54871]]

 
Unsatisfactory................  Noncompliant with    To justify an
                                 FAR 52.219-8 and     Unsatisfactory
                                 52.219-9, and any    rating, identify
                                 other small          multiple
                                 business             significant events
                                 participation        that the
                                 requirements in      contractor had
                                 the contract/        trouble overcoming
                                 order. Did not       and state how it
                                 submit Individual    impacted small
                                 Subcontract          business
                                 Reports and/or       utilization. A
                                 Summary              singular problem,
                                 Subcontract          however, could be
                                 Reports in an        of such serious
                                 accurate or timely   magnitude that it
                                 manner. Showed       alone constitutes
                                 little interest in   an Unsatisfactory
                                 bringing             rating. An
                                 performance to a     Unsatisfactory
                                 satisfactory level   rating should be
                                 or is generally      supported by
                                 uncooperative.       referencing the
                                 Required a           actions taken by
                                 corrective action    the government to
                                 plan.                notify the
                                                      contractor of the
                                                      deficiencies. When
                                                      an Unsatisfactory
                                                      rating is
                                                      justified, the
                                                      contracting
                                                      officer must
                                                      consider whether
                                                      the contractor
                                                      made a good faith
                                                      effort to comply
                                                      with the
                                                      requirements of
                                                      the subcontracting
                                                      plan required by
                                                      FAR 52.219-9 and
                                                      follow the
                                                      procedures
                                                      outlined in FAR
                                                      52.219-16,
                                                      Liquidated Damages-
                                                      Subcontracting
                                                      Plan.
------------------------------------------------------------------------
Note 1: Plus or minus signs may be used to indicate an improving (+) or
  worsening (-) trend insufficient to change evaluation status.
Note 2: For subcontracting plans under the DoD Comprehensive Small
  Business Subcontracting Plan (Test Program), DFARS 252.219-7004
  (deviation), the ratings entered in CPARS shall mirror those assigned
  by the Defense Contract Management Agency who is responsible for
  monitoring such plans.
Note 3: Generally, zero percent is not a goal unless the Contracting
  Officer determined when negotiating the subcontracting plan that no
  subcontracting opportunities exist in a particular socio-economic
  category. In such cases, the contractor shall be considered to have
  met the goal for any socio-economic category where the goal negotiated
  in the plan was zero.

    (c)(1) When the contract provides for incentive fees, the 
incentive-fee contract performance evaluation shall be entered into 
CPARS.
    (2) When the contract provides for award fee, the award fee-
contract performance adjectival rating as described in 16.401(e)(3) 
shall be entered into CPARS.
    (d) Agency evaluations of contractor performance, including both 
negative and positive evaluations, prepared under this subpart shall be 
provided to the contractor as soon as practicable after completion of 
the evaluation. Contractor will receive a CPARS-system generated 
notification when an evaluation is ready for comment. Contractors shall 
be given a minimum of 30 days to submit comments, rebutting statements, 
or additional information. Agencies shall provide for review at a level 
above the contracting officer to consider disagreements between the 
parties regarding the evaluation. The ultimate conclusion on the 
performance evaluation is a decision of the contracting agency. Copies 
of the evaluation, contractor response, and review comments, if any, 
shall be retained as part of the evaluation. These evaluations may be 
used to support future award decisions, and should therefore be marked 
``Source Selection Information.'' Evaluation of Federal Prison 
Industries (FPI) performance may be used to support a waiver request 
(see 8.604) when FPI is a mandatory source in accordance with subpart 
8.6. The completed evaluation shall not be released to other than 
Government personnel and the contractor whose performance is being 
evaluated during the period the information may be used to provide 
source selection information. Disclosure of such information could 
cause harm both to the commercial interest of the Government and to the 
competitive position of the contractor being evaluated as well as 
impede the efficiency of Government operations. Evaluations used in 
determining award or incentive fee payments may also be used to satisfy 
the requirements of this subpart. A copy of the annual or final past 
performance evaluation shall be provided to the contractor as soon as 
it is finalized.
    (e) Agencies shall require frequent evaluation (e.g., quarterly) of 
agency compliance with the reporting requirements in 42.1502, so 
agencies can readily identify delinquent past performance reports and 
monitor their reports for quality control.
    (f) Agencies shall prepare and submit all past performance 
evaluations electronically in the CPARS at http://www.cpars.gov/. These 
evaluations are automatically transmitted to the Past Performance 
Information Retrieval System (PPIRS) at http://www.ppirs.gov. Past 
performance evaluations for classified contracts and special access 
programs shall not be reported in CPARS, but will be reported as stated 
in this subpart and in accordance with agency procedures. Agencies 
shall ensure that appropriate management and technical controls are in 
place to ensure that only authorized personnel have access to the data 
and the information safeguarded in accordance with 42.1503(d).
    (g) Agencies shall use the past performance information in PPIRS 
that is within three years (six for construction and architect-engineer 
contracts) and information contained in the Federal Awardee Performance 
and Integrity Information System (FAPIIS), e.g., terminations for 
default or cause.
    (h) Other contractor performance information. (1) Agencies shall 
ensure information is accurately reported in the FAPIIS module of CPARS 
within 3 calendar days after a contracting officer--
    (i) Issues a final determination that a contractor has submitted 
defective cost or pricing data;
    (ii) Makes a subsequent change to the final determination 
concerning defective cost or pricing data pursuant to 15.407-1(d);
    (iii) Issues a final termination for cause or default notice; or
    (iv) Makes a subsequent withdrawal or a conversion of a termination 
for default to a termination for convenience.
    (2) Agencies shall establish CPARS Focal Points who will register 
users to report data into the FAPIIS module of CPARS (available at 
http://www.cpars.gov/, then select FAPIIS).
    (3) With regard to information that may be covered by a disclosure 
exemption under the Freedom of Information Act, the contracting officer 
shall follow the procedures at 9.105-2(b)(2)(iv).

[[Page 54872]]

PART 49--TERMINATION OF CONTRACTS


49.402-8  [Amended]

    10. Amend section 49.402-8 by removing ``42.1503(f)'' and adding 
``42.1503(h)'' in its place.
[FR Doc. 2012-21973 Filed 9-5-12; 8:45 am]
BILLING CODE 6820-EP-P