Federal Acquisition Regulation; Documenting Contractor Performance, 46783-46792 [2013-18461]

Agencies

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

[Federal Register Volume 78, Number 148 (Thursday, August 1, 2013)]
[Rules and Regulations]
[Pages 46783-46792]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-18461]


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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

[FAC 2005-69; FAR Case 2012-009; Item III; Docket 2012-0009, Sequence 
1]
RIN 9000-AM09


Federal Acquisition Regulation; Documenting Contractor 
Performance

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

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending 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), 
the single Governmentwide past performance reporting system.

DATES: Effective: September 3, 2013.

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 FAC 2005-69, 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 
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 proposed rule were published in the Federal Register 
at 76 FR 48776 on August 9, 2011, and at 76 FR 50714 on August 16, 
2011. Twenty three respondents submitted comments on the proposed rule. 
A second proposed rule that was published in the Federal Register at 77 
FR 54864 on September 6, 2012, addressed all comments received in 
response to the first proposed rule and, in addition, proposed to 
implement paragraphs (a), (b), and (d) of section 806 of the National 
Defense Authorization Act for Fiscal Year 2012 (Pub. L. 112-81). The 
second proposed rule further requested comments on 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. 
Seventeen respondents submitted comments on the second proposed rule. 
This rule also incorporates agency management accountability 
requirements from section 853 of the National Defense Authorization Act 
for Fiscal Year 2013 (Pub. L. 112-239). In the interim, the 
Governmentwide Guidance for the Contractor Performance Assessment 
Reporting System (CPARS) was released in November 2012 and is available 
at https://www.cpars.gov/cparsfiles/pdfs/CPARS-Guidance.pdf.

II. Discussion and Analysis

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

[[Page 46784]]

A. Summary of Significant Changes

 FAR 42.1503(b)(4) is revised by adding two tables:
    [cir] Table 42-1--Evaluation Ratings Definitions; and
    [cir] Table 42-2--Evaluation Ratings Definitions (for the Small 
Business Subcontracting Evaluation Factor when the FAR clause at 
52.218-9 is used).
 FAR subpart 42.15 is reorganized for clarity and consistency 
of subject matter.
 FAR 42.1502, Policy, is revised to clarify when past 
performance evaluations are required for contracts and orders.
 The procedures and responsibilities for contributing to and 
conducting past performance evaluations are addressed and clarified at 
FAR 42.1503, Procedures. This section also includes a new requirement 
for past performance reports to include a clear, non-technical 
description of the principal purpose of the contract or order.
 In accordance with statutory direction, FAR 42.1503(c) 
includes the requirement to enter the award-fee performance adjectival 
rating and incentive-fee contract performance evaluation into CPARS 
when applicable.
 Agencies are required, at FAR 42.1503(e), to conduct frequent 
evaluations of agency compliance with past performance evaluation 
requirements so agencies can readily identify delinquent and deficient 
past performance reports for quality control.

B. Analysis of Public Comments

1. General
    Comment: Three respondents expressed support for the intent of the 
rule to standardize the past performance evaluation factors and rating 
categories.
    Response: Noted.
    Comment: One respondent commented that, under FAR 17.207, language 
should be added to paragraph (c)(6), or a new paragraph (c)(7) should 
be added, to ensure that past performance evaluations are done on all 
recently completed task/delivery orders so that the contracting officer 
considering exercising an option had the most recent performance 
information.
    Response: The text at FAR 17.207(c)(6) has been revised, and a new 
(c)(7) has been added to address the respondent's concern.
    Comment: One respondent commented that, in FAR 42.1503(b)(2)(vi), 
``defective cost and pricing data'' should be changed to ``defective 
cost or pricing data''.
    Response: Agreed.
    Comments: Three respondents commented that the examples listed for 
a sixth evaluation factor should be deleted. It was noted that the FAR 
43.1503(b)(2)(vi) examples should be deleted because they are 
inflammatory negative examples, they duplicated Federal Awardee 
Performance and Integrity Information System (FAPIIS), and they were 
examples of performance findings rather than other areas of evaluation.
    Response: The ``other'' evaluation factor was added to capture 
events that may have a bearing on contractor performance that do not 
fit well within any of the other five categories. The examples listed 
are just some of the factors that the contracting officer may consider, 
and they in no way preclude the inclusion of positive information 
regarding the contractor's performance. Evaluations include negative 
and positive information about the contractor's performance to inform 
the contractor of the Government's concerns so improvements can be made 
to achieve the intended results under the contract. The ``Other'' 
evaluation factor allows flexibility for contracting officers to 
consider factors unique to each contract.
    Comment: One respondent commented that the contractor should be 
allowed to evaluate Government input.
    Response: Contractors are given an opportunity to provide rebuttal 
statements in response to agency evaluations. The final decision is 
solely the agency's discretion.
    Comment: One respondent commented that the proposed FAR case should 
be withdrawn and reconsidered by the FAR Council.
    Response: It is in the Government's interest to proceed with the 
case.
    Comments: Two respondents commented that the three- to six-year 
retention period for past performance information is not long enough. 
One respondent commented that, in FAR 42.1503(g), the language 
``Agencies shall use the past performance information in PPIRS that is 
within three years (six for construction . . .)'' should be changed to 
``Agencies shall use the past performance information in PPIRS that 
reflects performance within the last three years (six for 
construction)''.
    Response: The respondents' comments are noted. However, the current 
retention periods in the Past Performance Information Retrieval System 
(PPIRS) are appropriate.
    Comment: One respondent commented that cost control can be harmful 
to some businesses.
    Response: The requirement for cost control is not new to contractor 
performance information; it is included in FAR 42.1501 and listed as an 
example to consider when reviewing relevant information. Cost control 
is not the only factor that is considered relevant past performance 
information, but it is relevant information for source selection 
officials to consider especially under cost contracts. Other factors 
such as technical, schedule/timeliness, and management or business 
relations are some of the relevant considerations reported in past 
performance evaluations, and that also will be used to evaluate a 
contractor's overall performance.
    Comment: One respondent commented on establishing uniform 
definitions for evaluation factors.
    Response: By adding the CPARS rating factors, uniform definitions 
are established and standardized for evaluation ratings. However, there 
is flexibility to tailor evaluation ratings to the contract type, size, 
content, and complexity of the contractual requirements.
    Comment: One respondent commented on linking past performance in 
FAR 42.1503(d) to future responsibility determinations in FAR subpart 
9.1 and the impact of a contractor with more than one contract to have 
a negative performance evaluation on one contract take precedence over 
good or excellent performance on many other contracts in future 
responsibility determinations.
    Response: Contracting officers are required to use sound judgment 
in determining the weight and relevance of all information in relation 
to the present acquisition. FAR 15.305(a)(1)(i) on use of past 
performance information in source selection states that the comparative 
assessment of past performance is separate from the responsibility 
determination required under FAR subpart 9.1.
    Comment: The respondent's company was unfairly evaluated in 
multiple 100 percent 8(a) set-aside solicitations because an agency 
procurement office blocked the contracting officer technical 
representatives from putting their past performance evaluations in the 
CPARS and PPIRS, according to the respondent.
    Response: This comment is outside the scope of this case. However, 
the respondent should contact the agency small business office or the 
Small Business Administration's (SBA) Procurement Center 
Representatives (PCR) and Commercial Market

[[Page 46785]]

Representatives (CMR) for assistance. SBA's PCRs and CMRs play an 
important role in helping ensure that small businesses gain access to 
contracting and subcontracting opportunities.
    Comment: One respondent commented that an important feature of the 
system is the ability of the seller to be able to post a response to 
all (particularly negative) reviews, as well as the buyer being able to 
revise an evaluation.
    Response: FAR 42.1503(d) does allow contractors to submit comments, 
rebutting statements, or additional information. If there is a 
disagreement between the parties, the contractor can request a review 
of the evaluation at a level above the contracting officer. The 
ultimate conclusion on the performance evaluation is a decision of the 
contracting agency.
    Comments: Two respondents applauded the Councils for clearly 
identifying the contracting officer as the ultimate person responsible 
for performing past performance evaluations where agency procedures do 
not specify a responsible representative.
    Response: Noted.
    Comment: One respondent expressed appreciation for the standardized 
evaluation ratings; however, the respondent felt that, while 
standardization may mitigate some evaluation inconsistencies, the 
rating inconsistencies would likely persist given the subjective nature 
of the system.
    Response: The objective of the rule is to standardize the past 
performance evaluation rating definitions. Any specific individual 
evaluation should be addressed with the agency contracting officer 
responsible for that past performance rating.
    Comment: One respondent commented that the FAR Council should 
consider requiring that regularly scheduled past performance evaluation 
discussions be considered as part of the partnering process that the 
agencies promote.
    Response: The comment reflects issues related to administration and 
not policy.
    Comment: One respondent commented that the FAR Council should 
consider mandating that Federal agencies regularly assess the 
evaluations given by their regional offices. The respondent was 
concerned because of inconsistent evaluations among the regional 
offices within an agency, such as different parameters for the top 
rating.
    Response: Agencies are encouraged to conduct contract management 
reviews or procurement management reviews that entail reviewing 
contract administration functions performed under the contract, such as 
monitoring whether or not evaluations are timely, complete, and include 
quality and useful information. See FAR 42.1501(b).
    Comments: Two respondents commented that many agencies require past 
performance questionnaires, which require much of the same information 
as the past performance evaluation. The respondents stated that these 
processes needed to be better integrated and streamlined to save time 
and money for both the Government and contractors.
    Response: FAR 15.305(a)(2)(ii) provides offerors an opportunity to 
identify past or current contracts (including Federal, State, and local 
government and private) for efforts similar to the Government 
requirement. In this fashion, an offeror may convey relevant 
performance information of which the Government may be unaware.
    Comments: Several respondents commented on Construction Contractor 
Appraisal Support System (CCASS). One respondent commented that 
contracting officers should be required to utilize and rely upon 
Contractor Performance Assessment Reporting System (CPARS). Another 
respondent commented that individuals responsible for completing the 
past performance information in CCASS were not required to address all 
elements of the evaluation.
    Response: CCASS includes assessments of a contractor's performance 
and provides a record, both positive and negative, on completed 
construction contract performance. All reports should be complete. 
Questions about incomplete CCASS reports should be directed to the 
contracting officer or https://www.cpars.gov.
    Comments: Two respondents recommended that there should be 
additional requirements for the timely completion and timely release of 
past performance evaluations. One respondent suggested a FAR clause to 
better bind the Government to completing evaluations on time. This 
respondent also recommended the appointment of a past performance 
ombudsman.
    Response: Contracting officers are required to provide evaluations 
to contractors as soon as practicable after completion of the 
evaluation. This FAR change encourages agencies to monitor their timely 
reporting of past performance information, so the respondent's concerns 
should lessen over time. The Office of Federal Procurement Policy 
(OFPP), since FY 2010, has issued policy memoranda to ensure agencies 
are compliant with the past performance reporting requirements in FAR 
subpart 42.15 (see OFPP Memo dated March 6, 2013, Improving the 
Collection and Use of Information about Contractor Performance and 
Integrity at https://www.whitehouse.gov/sites/default/files/omb/procurement/memo/improving-the-collection-and-use-of-information-about-contractor-performance-and-integrity.pdf; OFPP Memo dated January 21, 
2011, Improving Contractor Past Performance Assessments: Summary of the 
Office of Federal Procurement Policy's Review, and Strategies for 
Improvement at https://www.whitehouse.gov/sites/default/files/omb/procurement/contract_perf/PastPerformanceMemo-21-Jan-2011.pdf; and the 
OFPP memo date July 29, 2009, Improving the Use of Contractor 
Performance Information at https://www.whitehouse.gov/sites/default/files/omb/assets/procurement/improving_use_of_contractor_perf_info.pdf.
2. Appeals Process
    Comment: 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. In 
accordance with the FAR Council's Retrospective Plan and Analysis of 
Existing Rules, this requirement, at FAR 42.1503(b), was singled out in 
the second proposed rule with a request for comments on whether 
modifying the appeal process would improve or weaken the effectiveness 
of past performance policies and associated principles of impartiality 
and accountability. There were seven responses to this request; all 
urged that the appeals process be retained.
    The respondents considered that elimination of the appeals process 
would reduce contractor competition, increase the likelihood of 
disruptive and costly litigation, weaken the effectiveness of past 
performance review procedures, and undermine confidence in the process. 
One respondent noted that, even when the appeals process was not used, 
it acted as an important due-process protection for contractors. The 
availability of the appeals process, according to respondents, ensures 
that individual Government rater bias or lack of understanding of the 
complete program, not just contracting issues, can be brought out and 
addressed.
    None of the respondents was of the opinion that eliminating the 
past performance evaluation appeals process would improve economy or 
efficiency. One respondent cited the statistic that 30 percent of its 
initial past performance

[[Page 46786]]

evaluations contained errors that, upon appeal, resulted in substantive 
changes in the final performance ratings and/or narratives. Another 
respondent stressed that the past performance appeals process benefits 
not just contractors, but the Government, in that it ensures more 
accurate information is available for source selection decisions.
    Response: The process for appealing an initial past performance 
evaluation remains in FAR 42.1503 to allow the contractor the ability 
to comment on the evaluation and agencies the opportunity to consider 
the contractor's rebuttal statement and material, and, if appropriate, 
revise the evaluation to reflect any agreed upon changes. However, it 
should be noted that the existence of an appeal need not delay making a 
past performance evaluation available to source selection officials.
    Comment: One respondent suggested changing the text at FAR 
42.1503(d) from ``Agencies shall provide for review at a level above 
the contracting officer to consider disagreements between the parties 
regarding the evaluation,'' to ``Agencies shall provide for review at a 
level above the individual who completed the evaluation in CPARS to 
consider disagreements between the parties regarding the evaluation.''
    Response: The FAR language explicitly refers to a level above the 
contracting officer, which means within the contracting office. The 
Councils consider it appropriate to retain the review function in the 
contracting office.
    Comments: Six respondents commented that they did not support the 
elimination of the ``appeals process'' where agencies are required to 
provide for review of agency evaluation at a level above the 
contracting officer. A seventh respondent commented on the need for a 
procedure to ensure impartiality and hold agencies accountable for 
their assessments.
    Response: A contractor is authorized to appeal a past performance 
evaluation and the agency is required to provide for review at a level 
above the contracting officer to consider disagreements between the 
parties. The appeals process is addressed at FAR 42.1503(b) in the 
current FAR, but is moved to FAR 42.1503(d) in this final rule. This 
final rule does not eliminate or modify the appeals process.
    Comment: One respondent stated CPARS and the FAR do not properly 
address the contractor appeal process.
    Response: The FAR requires that agencies provide for a review at a 
level above the contracting officer. The ultimate conclusion on the 
performance evaluation is a decision of the contracting agency. 
Specifics of the appeal process properly are left to agencies' 
discretion.
3. Rating Tables
    Comment: One respondent commented that the evaluation ratings 
definitions included in the proposed Tables 42-1 and 42-2 need to be 
changed. The phrase ``and exceeds many'' under the Exceptional rating, 
as well as the phase ``and exceeds some'' under the Very Good rating, 
should be removed.
    Response: These phrases allow the exceptional or very good 
contractor to be rewarded for exceeding Government requirements. This 
benefits the contractor not only in regard to the current requirement, 
but also future requirements that it may be considered for.
    Comment: One respondent commented that the FAR Council should 
consider reducing the number of possible ratings from the currently 
proposed five. This respondent recommended that the proposed rule 
eliminate the exceptional and marginal ratings. The respondent 
suggested that the FAR Council should consider mandating that Federal 
owners clearly define in the solicitation or contract what type of 
performance on a particular project merits ratings of Exceptional, Very 
Good, Satisfactory, etc.
    Response: The exceptional rating allows the Government to recognize 
performance that goes well beyond the norm, and the marginal rating 
allows the Government to identify a contractor that has serious 
performance issues, but that is still trying to perform to the 
Government requirement. The respondent's second comment is noted. The 
Governmentwide CPARS Guide was released in November 2012 with the 
existing five ratings (exceptional, very good, satisfactory, marginal, 
and unsatisfactory) that were considered necessary to address various 
levels of performance. It includes the description of each rating, and 
the rating assigned the contractor should correspond to the performance 
requirements stated in the contract or order (e.g., 30 day delivery 
schedule, 100 percent report accuracy).
    Comment: One respondent had a concern with the evaluation rating 
definitions in Table 42-1. Specifically, the respondent felt that the 
Councils should use numbers and not subjective terms such as ``few 
minor problems'' or ``some minor problems''.
    Response: The Councils see no issue with the words ``few'' or 
``some'' in this context.
    Comment: One respondent had a concern regarding past performance 
evaluations including records of forecasting and cost controlling and 
the impact on future contracts. This respondent felt that a contractor 
could not use the best quality of raw materials in order to achieve a 
lower than forecasted cost.
    Response: Noted.
    Comment: One respondent agreed that the revision to FAR 
42.1503(b)(2)(vi) referencing ``late or nonpayment to subcontractors'' 
is a substantial improvement of the current FAR provision. This 
respondent also suggested that the language could be further enhanced 
by breaking it out from the evaluation factor ``other'' and offering it 
as another evaluation factor on its own.
    Response: It is not necessary to break out a separate category.
    Comment: One respondent commented that, in FAR 42.1503(b)(4), the 
sentence ``Rating definitions shall reflect those in the tables 
below:'' should be changed to ``The narratives for the evaluation 
factors must support the ratings given by reflecting the rating 
definitions in the tables below:''
    Response: The change to the FAR text uses similar language.
    Comment: One respondent commented that, in Table 42-1, Definitions; 
``Exceptional'', in the last sentence, ``corrective actions taken by 
the contractor was highly effective'', should be changed to 
``corrective actions taken by the contractor were highly effective''. 
This respondent also commented that under the ``Very Good'' definition 
in the last sentence, that ``corrective actions taken by the contractor 
was effective'', should be changed to ``corrective action taken by the 
contractor were effective''.
    Response: These corrections were made in the final rule.
4. Past Performance Evaluations on Science and Technology/Research and 
Development Contracts
    Comments: Several respondents requested that the Councils exempt 
research and development contracts, or the subset of science and 
technology contracts, from past performance assessments. One respondent 
asked to limit the requirement to actions exceeding $10 million 
dollars. Two respondents pointed out that the CPARS guidance excludes 
certain science and technology contracts. Two respondents stated that 
many of the mandatory evaluation factors are not relevant to science 
and technology contracts.
    Response: It is not in the Government's best interest to exempt

[[Page 46787]]

research and development contracts from past performance assessments, 
at any dollar value, because doing so would not allow the Government to 
obtain information about the contractor's performance. There are past 
performance evaluations of science and technology contracts in CPARS 
now. The requirement at FAR 42.1503(b)(1) to ``include a clear, non-
technical description of the principal purpose of the contract or 
order'' was added specifically for science and technology contracts.
5. Release of Information
    Comments: One respondent recommended increased clarity for FAR 
42.1503(d) because the paragraph could be read to allow release of past 
performance information to third parties once the periods in FAR 
42.1503(g) have expired. The respondent recommended that past 
performance evaluations be made public after source selection. A 
respondent asked that the rule clarify that the past performance 
information would not be publicly displayed.
    Another respondent advocated the wide release of past performance 
evaluations to the public.
    One respondent advocated a revision to the rule that would permit 
the release of past performance information relating to late or 
nonpayment of subcontractors.
    Response: The purpose of this case is to provide Governmentwide 
standardized past performance evaluation factors and performance rating 
categories and require that past performance information be entered 
into the CPARS. The proposed rule did not propose any changes to the 
FAR with regard to public release of past performance evaluations. 
Therefore, any such changes in the final rule would be outside the 
scope of this case.
    Comments: One respondent recommended that past performance ratings 
information in FAPIIS be publicly displayed. The respondent requested 
that it be made legal to disclose past performance information.
    Response: It is outside the scope of this case to seek a 
legislative change.
6. Other Comments
    Comment: One respondent stated that the proposed rule creates a 
double standard and allows personal judgment by the evaluator. The 
respondent recommended a definition of what qualifies a contract to be 
assessed under more scrutiny and a new table for contracts that fit the 
definition be added to the FAR.
    Response: An additional definition and new table are not necessary. 
The tables added are existing tables that reside in CPARS and have been 
used by various Federal acquisition personnel since the system was 
established. These tables and definitions are being transferred into 
the FAR to standardize and regulate the ratings and evaluation factors 
across the Federal Government.
    Comments: Two respondents recommended that the new process provided 
for in any final rule be applied only to new solicitations first issued 
after the effective date of any final rule.
    Response: As a matter of policy, CPARS was implemented 
Governmentwide on October 1, 2010. There was no migration of the past 
performance reviews to CPARS. If a review was in process, it would have 
been completed in the review system an agency was using before October 
1, 2010.

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

    The Department of Defense, the General Services Administration, and 
the National Aeronautics and Space Administration certify that this 
final rule will not 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 past performance reporting guidelines and practices. 
The evaluation factors and rating system language proposed are 
currently used by Federal agencies. There are no new requirements 
placed on small entities.

V. Paperwork Reduction Act

    The final 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).

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

    Government procurement.

    Dated: July 26, 2013.
William Clark,
Acting Director, Office of Government-wide Acquisition Policy, Office 
of Acquisition Policy, Office of Government-wide Policy.

    Therefore, DoD, GSA, and NASA amend 48 CFR parts 8, 12, 15, 17, 42, 
and 49 as set forth below:

0
1. The authority citation for 48 CFR parts 8, 12, 15, and 17 continues 
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]

0
2. Amend section 8.406-4 by removing from paragraph (e) ``42.1503(f)'' 
and adding ``42.1503(h)'' in its place.
0
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]

0
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]

0
5. Amend section 15.407-1 by removing from the introductory text of 
paragraph (d) ``42.1503(f)'' and adding ``42.1503(h)'' in its place.

PART 17--SPECIAL CONTRACTING METHODS

0
6. Amend section 17.207 by--
0
a. Removing from paragraph (c)(4) ``and'';
0
b. Removing from the end of paragraph (c)(5) the period and adding 
``;'' in its place; and
0
c. Adding paragraphs (c)(6) and (7) to read as follows:


17.207  Exercise of options.

* * * * *

[[Page 46788]]

    (c) * * *
    (6) The contractor's past performance evaluations on other contract 
actions have been considered; and
    (7) The contractor's performance on this contract has been 
acceptable, e.g., received satisfactory ratings.
* * * * *

PART 42--CONTRACT ADMINISTRATION AND AUDIT SERVICES

0
7. The authority citation for 48 CFR part 42 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.

0
8. 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 or orders. It includes, for example, the contractor's 
record of--
    (1) Conforming to requirements and to standards of good 
workmanship;
    (2) Forecasting and controlling costs;
    (3) Adherence to 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 
Contractor Performance Assessment Reporting System (CPARS) and Past 
Performance Information Retrieval System (PPIRS) metric tools to 
measure the quality and timely reporting of past performance 
information.

0
9. 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 a contract or order is 
completed. Past performance evaluations are required for contracts and 
orders for supplies, services, research and development, and 
contingency operations, 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 
the Architect-Engineer Contract Administration Support System (ACASS) 
and Construction Contractor Appraisal Support System (CCASS) databases 
of CPARS. These evaluations are generally for the entity, division, or 
unit that performed the contract or order. Past performance information 
shall be entered into CPARS, the Governmentwide evaluation reporting 
tool for all past performance reports on contracts and orders. 
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 (as defined in FAR part 2) that exceeds 
the simplified acquisition threshold and for each 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) Orders under multiple-agency contracts. Agencies shall prepare 
an evaluation of contractor performance for each order that exceeds the 
simplified acquisition threshold that is placed under a Federal Supply 
Schedule contract or placed under a task-order contract or a delivery-
order contract awarded by another agency (i.e., Governmentwide 
acquisition contract or multi-agency contract). Agencies placing orders 
under their own multiple-agency contract shall also prepare evaluations 
for their own orders. 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) Orders under single-agency contracts. 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 information 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).

0
10. Revise section 42.1503 to read as follows:


42.1503  Procedures.

    (a)(1) Agencies shall assign responsibility and management 
accountability for the completeness of past performance submissions. 
Agency procedures for the past performance evaluation system shall--
    (i) Generally provide for input to the evaluations from the 
technical office, contracting office, program management office and, 
where appropriate, quality assurance and end users of the product or 
service;
    (ii) Identify and assign past performance evaluation roles and 
responsibilities to those individuals responsible for preparing and 
reviewing interim evaluations, if prepared, and final evaluations 
(e.g., contracting officers, contracting officer representatives, 
project managers, and program managers). 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; and
    (iii) Address management controls and appropriate management 
reviews of past performance evaluations, to include accountability for 
documenting past performance on PPIRS.
    (2) If agency procedures do not specify the individuals responsible 
for past performance evaluation duties, the contracting officer is 
responsible for this function.
    (3) Interim evaluations may be prepared as required, in accordance 
with agency procedures.
    (b)(1) The evaluation should include a clear, non-technical 
description of the

[[Page 46789]]

principal purpose of the contract or order. 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 or order 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 
or pricing data, terminations, suspension and debarments).
    (3) Evaluation factors may include subfactors.
    (4) Each factor and subfactor used shall be evaluated and a 
supporting narrative provided. Each evaluation factor, as listed in 
paragraph (b)(2) of this section, shall be rated in accordance with a 
five scale rating system (i.e., exceptional, very good, satisfactory, 
marginal, and unsatisfactory). The ratings and narratives must reflect 
the definitions in the tables 42-1 or 42-2 of this section.
    (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. The 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., monthly, 
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 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) of the completion of performance of the evaluated contract 
or order, 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 Federal Awardee 
Performance and Integrity Information System (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).

                                   Table 42-1--Evaluation Ratings Definitions
----------------------------------------------------------------------------------------------------------------
                    Rating                                Definition                           Note
----------------------------------------------------------------------------------------------------------------
(a) Exceptional..............................  Performance meets contractual     To justify an Exceptional
                                                requirements and exceeds many     rating, identify multiple
                                                to the Government's benefit.      significant events and state
                                                The contractual performance of    how they were of benefit to
                                                the element or sub-element        the Government. A singular
                                                being evaluated was               benefit, however, could be of
                                                accomplished with few minor       such magnitude that it alone
                                                problems for which corrective     constitutes an Exceptional
                                                actions taken by the contractor   rating. Also, there should
                                                were highly effective.            have been NO significant
                                                                                  weaknesses identified.

[[Page 46790]]

 
(b) Very Good................................  Performance meets contractual     To justify a Very Good rating,
                                                requirements and exceeds some     identify a significant event
                                                to the Government's benefit.      and state how it was a benefit
                                                The contractual performance of    to the Government. There
                                                the element or sub-element        should have been no
                                                being evaluated was               significant weaknesses
                                                accomplished with some minor      identified.
                                                problems for which corrective
                                                actions taken by the contractor
                                                were effective.
(c) Satisfactory.............................  Performance meets contractual     To justify a Satisfactory
                                                requirements. The contractual     rating, there should have been
                                                performance of the element or     only minor problems, or major
                                                sub-element contains some minor   problems the contractor
                                                problems for which corrective     recovered from without impact
                                                actions taken by the contractor   to the contract/order. There
                                                appear or were satisfactory.      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.
(d) Marginal.................................  Performance does not meet some    To justify Marginal
                                                contractual requirements. The     performance, identify a
                                                contractual performance of the    significant event in each
                                                element or sub-element being      category that the contractor
                                                evaluated reflects a serious      had trouble overcoming and
                                                problem for which the             state how it impacted the
                                                contractor has not yet            Government. A Marginal rating
                                                identified corrective actions.    should be supported by
                                                The contractor's proposed         referencing the management
                                                actions appear only marginally    tool that notified the
                                                effective or were not fully       contractor of the contractual
                                                implemented.                      deficiency (e.g., management,
                                                                                  quality, safety, or
                                                                                  environmental deficiency
                                                                                  report or letter).
(e) Unsatisfactory...........................  Performance does not meet most    To justify an Unsatisfactory
                                                contractual requirements and      rating, identify multiple
                                                recovery is not likely in a       significant events in each
                                                timely manner. The contractual    category that the contractor
                                                performance of the element or     had trouble overcoming and
                                                sub-element contains a serious    state how it impacted the
                                                problem(s) for which the          Government. A singular
                                                contractor's corrective actions   problem, however, could be of
                                                appear or were ineffective.       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
----------------------------------------------------------------------------------------------------------------
(a) Exceptional..............................  Exceeded all statutory goals or   To justify an Exceptional
                                                goals as negotiated. Had          rating, identify multiple
                                                exceptional success with          significant events and state
                                                initiatives to assist, promote,   how they were a benefit to
                                                and utilize small business        small business utilization. A
                                                (SB), small disadvantaged         singular benefit, however,
                                                business (SDB), women-owned       could be of such magnitude
                                                small business (WOSB), HUBZone    that it constitutes an
                                                small business, veteran-owned     Exceptional rating. Small
                                                small business (VOSB) and         businesses should be given
                                                service disabled veteran owned    meaningful and innovative work
                                                small business (SDVOSB).          directly related to the
                                                Complied with FAR 52.219-8,       contract, and opportunities
                                                Utilization of Small Business     should not be limited to
                                                Concerns. Exceeded any other      indirect work such as cleaning
                                                small business participation      offices, supplies,
                                                requirements incorporated in      landscaping, etc. Also, there
                                                the contract/order, including     should have been no
                                                the use of small businesses in    significant weaknesses
                                                mission critical aspects of the   identified.
                                                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.

[[Page 46791]]

 
(b) Very Good................................  Met all of the statutory goals    To justify a Very Good rating,
                                                or goals as negotiated. Had       identify a significant event
                                                significant success with          and state how it was a benefit
                                                initiatives to assist, promote    to small business utilization.
                                                and utilize SB, SDB, WOSB,        Small businesses should be
                                                HUBZone, VOSB, and SDVOSB.        given meaningful and
                                                Complied with FAR 52.219-8,       innovative opportunities to
                                                Utilization of Small Business     participate as subcontractors
                                                Concerns. Met or exceeded any     for work directly related to
                                                other small business              the contract, and
                                                participation requirements        opportunities should not be
                                                incorporated in the contract/     limited to indirect work such
                                                order, including the use of       as cleaning offices, supplies,
                                                small businesses in mission       landscaping, etc. There should
                                                critical aspects of the           be no significant weaknesses
                                                program. Endeavored to go above   identified.
                                                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.
(c) Satisfactory.............................  Demonstrated a good faith effort  To justify a Satisfactory
                                                to meet all of the negotiated     rating, there should have been
                                                subcontracting goals in the       only minor problems, or major
                                                various socio-economic            problems the contractor has
                                                categories for the current        addressed or taken corrective
                                                period. Complied with FAR         action. There should have been
                                                52.219-8, Utilization of Small    no significant weaknesses
                                                Business Concerns. Met any        identified. A fundamental
                                                other small business              principle of assigning ratings
                                                participation requirements        is that contractors will not
                                                included in the contract/order.   be assessed a rating lower
                                                Fulfilled the requirements of     than Satisfactory solely for
                                                the subcontracting plan           not performing beyond the
                                                included in the contract/order.   requirements of the contract/
                                                Completed and submitted           order.
                                                Individual Subcontract Reports
                                                and/or Summary Subcontract
                                                Reports in an accurate and
                                                timely manner.
(d) Marginal.................................  Deficient in meeting key          To justify Marginal
                                                subcontracting plan elements.     performance, identify a
                                                Deficient in complying with FAR   significant event that the
                                                52.219-8, Utilization of Small    contractor had trouble
                                                Business Concerns, and any        overcoming and how it impacted
                                                other small business              small business utilization. A
                                                participation requirements in     Marginal rating should be
                                                the contract/order. Did not       supported by referencing the
                                                submit Individual Subcontract     actions taken by the
                                                Reports and/or Summary            government that notified the
                                                Subcontract Reports in an         contractor of the contractual
                                                accurate or timely manner.        deficiency.
                                                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.
(e) Unsatisfactory...........................  Noncompliant with FAR 52.219-8    To justify an Unsatisfactory
                                                and 52.219-9, and any other       rating, identify multiple
                                                small business participation      significant events that the
                                                requirements in the contract/     contractor had trouble
                                                order. Did not submit             overcoming and state how it
                                                Individual Subcontract Reports    impacted small business
                                                and/or Summary Subcontract        utilization. A singular
                                                Reports in an accurate or         problem, however, could be of
                                                timely manner. Showed little      such serious magnitude that it
                                                interest in bringing              alone constitutes an
                                                performance to a satisfactory     Unsatisfactory rating. An
                                                level or is generally             Unsatisfactory rating should
                                                uncooperative. Required a         be supported by referencing
                                                corrective action plan.           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.
----------------------------------------------------------------------------------------------------------------
Note 1: Plus or minus signs may be used to indicate an improving (+) or worsening (-) trend insufficient to
  change evaluation status.
Note 2: 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.


[[Page 46792]]

PART 49--TERMINATION OF CONTRACTS

0
11. The authority citation for 48 CFR part 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.


49.402-8  [Amended]

0
12. Amend section 49.402-8 by removing ``42.1503(f)'' and adding 
``42.1503(h)'' in its place.

[FR Doc. 2013-18461 Filed 7-31-13; 8:45 am]
BILLING CODE 6820-EP-P