By Nicholas T. Solosky
The Contract Disputes Act (CDA) creates the framework for handling “claims” against the government on Federal contracts. Contract claims most commonly relate to issues of time or money. But not all claims are so straightforward.
The law is increasingly recognizing a contractor’s right to use CDA claims to challenge erroneous performance evaluations issued by Federal agencies on public contracts. Most performance evaluation claims do not involve adjustments to contract time or compensation. Instead, the heart of the matter is the contractor’s dissatisfaction with arbitrary and capricious evaluations. The purpose of the claim is to compel the agency to modify the evaluation to reflect the contractor’s actual performance.
The importance of performance evaluation claims is significant and far-reaching. A negative performance evaluation—or worse, a recommendation against future performance—can ruin a contractor’s ability to get new work (the life-blood of every government contractor).
Slowly, but steadily, the United States Court of Federal Claims (COFC) and Agency Boards of Contract Appeals are opening the door to relief for contractor claims based on arbitrary and capricious past performance evaluations—including the potential for recovering monetary damages that flow from erroneous evaluations.
PAST PERFORMANCE
Federal agencies evaluate contractor performance through the Contractor Performance Assessment Reporting System (CPARS or CPAR System). All Federal agencies access and rely on information in the CPAR System when assessing a contractor’s “Past Performance” and fitness for a new contract award. In fact, the majority of competitive solicitations include Past Performance as an evaluation factor.
Understanding how the CPAR System works—and how to challenge erroneous CPARS evaluations—is essential for contractors that want to compete in the extremely competitive Federal marketplace.
RATINGS AND NARRATIVES
The Federal Acquisition Regulation (FAR) (specifically, FAR 42.1503) requires agencies to collect contractor performance data for use in source selection decisions. By relying on this data, the Government theorizes that it increases the odds of doing business with contractors that provide quality products and services.
Agencies evaluate critical contractor performance factors (and subfactors) using a five-rating scale: Unsatisfactory (the lowest rating), Marginal, Satisfactory, Very Good, and Exceptional (the highest rating). The agency must support these ratings through written narratives that satisfy the requirements of FAR 42.1503. In addition to these adjectival ratings, the evaluation also includes an overall recommendation concerning the agency’s willingness to work with the contractor in the future:
“Given what I know today about the contractor’s ability to perform in accordance with this contract or order’s most significant requirements, I (‘would’ or ‘would not’) recommend them for similar requirements in the future.”
The recommendation for/against future performance is key for contractors seeking new government contract awards.
CPARS PROCEDURE/TIMELINE
The CPAR System involves a three-step process that offers a direct line of communication between contractor and agency to discuss the performance evaluation: (1) Agency Initial Evaluation, (2) Contractor Comments, (3) Final Evaluation.
The entire evaluation process should not take more than 120 days following the end of the period of performance.
The contractor has 60 days after receipt of the evaluation to submit comments. That said, contractors should seek to finalize comments in the CPAR System within 14 days to guarantee that all versions of the evaluation released on the System include the contractor’s comments.
Contractor comments should be as detailed and specific as possible—addressing the agency’s stated concerns point-for-point. The objective is to show that the agency’s narrative is factually incorrect and that the corresponding negative ratings lack a rational basis in light of the contractor’s actual performance. Following the comment period, the agency finalizes the evaluation in the CPAR System—for better or worse.
PRACTICAL RESOLUTION STRATEGIES
Now we come to the critical juncture. Your company commendably performed a government contract and participated in the comment period, but the agency’s negative performance evaluation still includes errors, false statements, and negative ratings. What now?
Assuming the agency does not change its position on a negative evaluation during the comment period, the contractor should take advantage of the claim process. The risk of an erroneous performance evaluation living unchallenged in the CPAR System is simply too great to ignore.
The first step is to submit a conforming CDA claim with the contracting officer. The contracting officer (or agency counsel) has the authority to resolve the claim without need for litigation before the COFC or Board of Contract Appeals.
If the contracting officer denies the claim, the contractor must appeal the decision to appropriate Board of Contract Appeals within 90 days or to the COFC within 12 months. Typically, Board appeals are less formal and move faster, while proceedings at the COFC are more akin to traditional litigation. Selecting the correct forum will ultimately depend on a number of factors, including whether there are other issues in dispute.
Regardless of forum, a contractor facing litigation against the agency must focus on highlighting specific evaluation errors and the resulting prejudice. To prevail, the contractor must prove that the agency’s evaluation is arbitrary, capricious, or an abuse of discretion. The Court or Board will determine whether the agency’s evaluation violates the law and, if necessary, remand the matter to the agency to produce a fair and accurate evaluation.
As a final note, recent developments in the law suggest the possibility of recovering monetary damages through performance evaluation claims. Specifically, the door is open for contractors to claim administrative and legal costs associated with erroneous performance evaluations that remain in the CPAR System while the contractor bids for new work.
CLOSING THOUGHT
CPARS performance evaluations serve a critical function in government contracting. Federal contractors must participate in the CPAR System’s comment process and, in the event of an unfair evaluation, follow the steps outlined in this article to ensure that the agency corrects its errors.
About the author:
Nicholas T. Solosky is a partner in the Federal Government Contracts & Procurement Group at Fox Rothschild LLP. His practice concentrates on national government contracts and construction-related matters with an emphasis on federal procurement issues, including a wide-range of risk management and dispute resolution matters. He can be reached at nsolosky@foxrothschild.com.
Modern Contractor Solutions, October 2020
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