Failing to Respond to Negative CPARS May Affect Future Contracts

by Davis Wright Tremaine LLP

When the performance of a federal contract runs into trouble, the contractor may face a variety of issues including threats of default, delays and acceleration, cost overruns, etc. During this time, worrying about the government’s evaluation of its performance is often not the contractor’s main focus. However, ensuring that the contractor responds timely and addresses any negative performance ratings should be a top priority as the government may consider negative performance evaluations for three years (six years for construction contracts) following the completion of the project. A contractor who fails to appropriately address a negative evaluation may have that failure come back to haunt that contractor on future bids.

During and after the performance of federal contracts the government evaluates the contractor’s performance through the Contractor Performance Assessment Reporting System (CPARS). The evaluations entered into CPARS become the basis of evaluating a contractor’s past performance for purposes of future awards. Federal contractors know the importance of these part performance ratings, as it can make or break an agency’s decision to award a contract. However, even experienced federal contractors fail to timely submit responses to an inaccurate or unfair negative performance rating.

In 2014, the government restructured its prior contractor rating programs into the CPARS program in an effort to create more consistency in the ratings process. See 48 CFR § 42.1500.  The CPARS program requires agencies evaluate contractors on six main factors: (1) Technical/Quality, (2) Schedule, (3) Cost Control, (4) Management, (5) Utilization of Small Business, and (6) Other (i.e. factors such as failing to comply with regulations or in accordance with the contract). See 48 CFR § 42.1503. For each factor, the contractor’s performance is rated as “Exceptional,” “Very Good,” “Satisfactory,” “Marginal,” or “Unsatisfactory.” The agency is required to provide a narrative with each rating to explain the basis of the rating.

Depending on the length of the contract, the government may issue an interim CPAR in addition to a final CPAR, so a contractor must not assume it can wait until the end of a project to determine how to respond. In fact, once a CPAR is issued, a contractor only has 14 days to provide a response. See 48 CFR § 42.1503(d). This is a hard deadline because if the contractor fails to respond, the evaluation is automatically posted on the Past Performance Information Retrieval System (“PPIRS”) and can be viewed by agencies immediately. While late comments from a contractor can be added to PPIRS, until and unless that happens the only information available to source selection officials will be the government’s evaluation.

In addition to addressing inaccuracies in the facts the evaluation is based on, Contractors should be aware of the requirements for each rating as the contractor’s response to the CPAR should identify any failure by the agency to properly justify its ratings. For example, to justify an “Unsatisfactory” rating the government must “identify multiple significant events in each category that the contractor had trouble overcoming and state how it impacted the Government.” See 48 CFR § 42.1503, Table 42-1. A contractor who receives an unsatisfactory rating that references a singular event should submit comments describing the issue.

If a contractor provides comments to the evaluation, the agency shall have another official who is above the level of the contracting officer, review the evaluation and the contractor’s comments and provide a response if necessary. If the reviewing official’s response does not correct or address the issues raised in the contractor’s comments, it may be necessary for the contractor to file a claim requesting revision of the CPARS evaluation. If the Contracting Officer denies the claim, the contractor may appeal that decision to the Court of Federal Claims or the Boards of Contract Appeals.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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