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

Agencies

• DEPARTMENT OF DEFENSE
• General Services Administration
• National Aeronautics and Space Administration

[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]


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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.

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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: https://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 https://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, https://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 https://www.cpars.gov/. All completed reports in CPARS transmit 
to the Past Performance Information Retrieval System (PPIRS) at https://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 
https://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 https://www.cpars.gov/. These 
evaluations are automatically transmitted to the Past Performance 
Information Retrieval System (PPIRS) at https://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 
https://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