Breakout Session 310 Mark G. Jackson G. Matthew Koehl Preston Gates Ellis LLP

1. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

2. Increasing Your Competitive Edge: Protecting and Managing Your Past Performance Information Breakout Session 310 Mark G. Jackson G. Matthew Koehl Preston Gates Ellis LLP Date: April 28, 2004 Time: 11:40 a.m. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

3. Introduction • Why should you care about past performance? • Must be a substantial evaluation factor in negotiated contracts • Allows Government to avoid poor performers and award to preferred companies • Contractors with a strong past performance record can justify a higher price and still win best value awards NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

4. Historical Background • Past performance always part of procurement system • Past performance addressed by formal procurement system prior to 1990s, but far less prominently • Federal Acquisition Streamlining Act of 1994 (FASA) • May 1995, FAC 90-21 implements revisions to FAR Subpart 42.15 to reflect FASA’s approach to PPI • May 2000, OFPP issues revised Best Practices Guide For Collecting and Using Past Performance Information NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

5. Outline for Today • Collecting PPI • Common PPI Problems And Disputes • Contractor Strategies for Protecting/Managing PPI NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

6. Collecting Past Performance Information NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

7. Performance Assessment Reports • Preparation • Requirement for Performance Assessment Report (PAR) triggered by contract value and duration • FAR requires PAR for all contracts > $100k • DOD has class deviation to FAR threshold • Contractor provided opportunity to review draft PAR • Must submit comments within 30 days • Review above contracting officer in case of disagreement • Final PAR within agency’s discretion NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

8. Performance Assessment Reports • Storage & Maintenance • No single repository • Past Performance Information Retrieval System (PPIRS) • PPI good only for 3 years from the date of contract completion. FAR 42.1503(c) • Agencies generally treat contractor evaluations as protected source selection information under FAR 3.104. See, e.g., Air Force CPAR Policy ¶ 6.9 NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

9. Collecting Past Performance Information • Information Provided by the Contractor • Offeror may submit past performance information on Federal, S/L/E or commercial sector contracts. FAR 15.305(a)(2)(ii) • Offeror may also submit information explaining any performance problems and subsequent corrective action. FAR 15.305(a)(2)(ii) NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

10. Collecting Past Performance Information • PPI from Other Sources • Agency may seek PPI from “any other source.” FAR 15.305(a)(2)(ii) • Formal evaluations (PAR) that all agencies are required to perform and share. FAR 42.1503(c) • Less formal information known personally to agency employees or solicited by the agency, e.g., subcontractors and customers • Independence Construction, Inc., B-292052, 2003 CPD ¶ 105 NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

11. Collecting Past Performance Information • Subcontractor Past Performance Information • Agency may consider PPI where the subcontractor will perform a substantial portion of the contract and the information is relevant. FAR 15.305(a)(2)(iii) • Absent a prohibition in the solicitation, GAO will reject challenges to the agency’s consideration of subcontractor PPI. Rolf Jensen & Associates, Inc., B-289475.2, B289475.3, 2002 WL 1782710 (Jul. 2002) • Practical Tip: Do your homework on significant subcontractors’ PPI – it could affect your award! NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

12. Collecting Past Performance Information • Affiliate, Predecessor and Parent PPI • Agency may consider predecessor corporations and key employees, so long as the PPI is relevant. FAR 15.305(a)(2)(iii) • GAO will uphold consideration of predecessor and key employee PPI, so long as evaluation is consistent with solicitation. General Atomics, B-287348, B-287348.2, 2001 WL 1203372 (Jun. 11, 2001) • Practical Tip: Solicitation language is critical • Work with the agency to define criteria • Must protest solicitation definitions pre-award NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

13. Common Disputes and Problems NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

14. Common Disputes and Problems • “Stale” Past Performance Information • Agency should not consider PPI > 3 years old. FAR 42.1503(c) • “Fresher” PPI is favored over less current PPI. FAR 15.305(a)(2); Parmatic Filter Corp., B-285288.3; B-285288.4, 2001 CPD ¶ 71 (more recent negative PPI outweighs older more positive PPI) • But agency has no duty to update PPI submitted by offeror; this burden falls on offeror. IGIT, Inc., B-275299.2, 97-2 CPD ¶ 7 NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

15. Common Disputes and Problems • “Impeaching” Past Performance Information • Risk that agency receives and considers untrue, conflicting or unsupported PPI • E.g., former employees, Government employee with a personal vendetta against contractor, etc. • Agency should discount or at least provide the opportunity to comment on such information. FAR 15.305(a)(2) • Contractor often won’t learn of rogue PPI until evaluation is complete and award decision made, leaving protest as sole remedy • Wadsworth Builders, B-291633, 2003 CPD ¶ 43 NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

16. Common Disputes and Problems • Failure to Provide Notice of Adverse PPI • Adverse PPI is anything that results in less than an excellent score during proposal evaluation • Agency must address adverse PPI during discussions if the contractor has not previously had an opportunity to comment. FAR 15.306(d)(3) • Agency must conduct communications when PPI is the determining factor keeping offeror from competitive range. FAR 15.306(b)(1)(i) • Dismas Charities, Inc., B-292021, 2003 CPD ¶ 125 NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

17. Common Disputes and Problems • Failure to Document Properly • Especially when utilizing less formal sources, Agency must document its evaluation sufficiently to show that it is reasonable and consistent with the solicitation • Gemmo Imiantia SpA, B-290427, 2002 C.P.D. ¶ 146. Protest sustained where record of interviews does not support Agency’s conclusion that awardee’s past performance was “superior” because the interview notes were cryptic and did not contain the word “superior” NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

18. Common Disputes and Problems • Failure to Consider the Correct PPI • OSI Collection Services, Inc.; CB Accounts, Inc., B-286597, et al., 2001 WL 695077 (Oct. 2001). No general requirement to contact all offeror references, or contact the same number of references for each offeror • However, agency may not ignore relevant PPI. GTS Duratek, Inc., B-280511.2, 97-2 C.P.D. ¶ 7. GAO sustains protest where Agency fails to consider PPI on relevant contract NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

19. Common Disputes and Problems • Failure to Follow Evaluation Criteria • Agency must disclose all evaluation factors and specify their importance relative to price. FAR 15.304(c)(2) • PPI must be factor in all negotiated procurements > $100k. FAR 15.304(c)(3)(ii) • Agency risks successful protest where it fails to follow stated evaluation plan • Practical Tip: Carefully review agency conduct in evaluating PPI when evaluation plan references “same or similar” projects, magnitude, scope, etc. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

20. Common Disputes and Problems • Offerors With No Relevant Past Performance • Should not be evaluated “favorably or unfavorably” on past performance. FAR 15.305(a)(2)(iv) • CompareCOFC to some GAO holdings: • Metcalf Construction Co., Inc. v. United States, 53 Fed.Cl. 617 (Fed. Cl. 2002). “Exclusion approach,” don’t evaluate past performance at all. See alsoMeridian Mgmnt. Corp., B-285127, 2000 CPD ¶ 121 • Chicataw Constr., Inc., B-289592, B-289592.2, 2002 CPD ¶ 62. “Quantitative approach,” assign a rating at the mid-point of the evaluation range, i.e., 3 out of a possible 5 NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

21. Common Disputes and Problems • Improper Use of PPI • Agency may not punish a contractor for exercising legitimate rights (e.g., filing a claim) or based upon personal dislike not related to performance • Nova Group, Inc., B-282947, 99-2 CPD ¶ 56. Protest sustained where Agency downgraded protester’s past performance based merely on history of filing claims, w/o showing abuse of claims process • Allegations of bias, improper punishment, etc., are difficult to prove given (1) Agency’s broad discretion and (2) limited discovery NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

22. Contractor Strategies NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

23. Contractor Strategies • Perform Well • Obvious point, but make sure you adequately staff and train program teams to earn excellent ratings • Tie program teams’ individual performance ratings to successful contract performance ratings • Communicate with Agency • Regular formal (PMRs, etc.) and informal dialogue with CO and Government program team • Make sure to give and request that you receive early warnings of performance problems – fix little problems before they become big problems NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

24. Contractor Strategies • Don’t Fight About Everything • Pick your battles carefully • Reserve your battles for issues that truly matter • Review and comment on contract evaluations • Formal review and comment process • Informal dialogue with Contracting Agency • Prepare strong response to negative findings with as much detail as space will permit • Be reasonable and dispassionate NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

25. Contractor Strategies • Perform complete review, analysis and summary of all contracts performed during the most recent 3-5 years • Research any performance problems • Create a well-supported -- but not overly-defensive or shrill – explanation for performance problems • Monitor public sources of information regarding your PPI • PPIRS • Errors not infrequent, many are easily corrected • Ask your customers what they’re hearing NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

26. Contractor Strategies • Closely examine your subcontractors’ and teammates’ PPI • May have dramatic impact on your rating • Do this early in bid preparation process – finding out at your de-briefing only helps on the next bid! • Participate in post-award de-briefings • Excellent sources of information about how your PPI was evaluated and how well your B&P group responded to the PPI requirement • Keep detailed files on de-briefings • Worth your time even if you don’t protest NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

27. Contractor Strategies • Document key events related to performance of current contracts • Anticipate past performance evaluation problems • Avoid proof issues associated with departed or disgruntled employees, incomplete memories, etc. • Treat Government concerns seriously • Respond promptly and thoroughly • Make sure company executives are informed and, where necessary, engage to resolve problems NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

28. Contractor Strategies • Shape RFP Requirements • Informal dialogue, comments to draft solicitation, Q & A, or even agency-level or GAO protest • Battle is often won or lost prior to bid – once bids are submitted, too late to challenge evaluation criteria • Provide PPI Tailored to RFP • “Cookie Cutter” approach often won’t work well • B&P Group needs a well-organized and detailed summary of all current and recently-completed contracts: contract type, project description, agency, value, performance ratings, etc. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

29. Questions? NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”