Why past performance must be part of acquisition reform

Although the failed rollout of HealthCare.gov brought attention to how the federal government purchases technology, little consideration has been given to how contractors with poor track records of performance continue to get federal contracts.

Sen. Claire McCaskill (D-Mo.), chairwoman of the Homeland Security and Governmental Affairs Committee's Financial and Contracting Oversight Subcommittee, raised this issue at a recent hearing by saying that the Centers for Medicare and Medicaid Services "could have avoided a black eye" for the failed rollout of the HealthCare.gov website if the agency had had relevant data on the past performance of CGI Federal.

That raises the question of what is being done to improve data on contractors' past performance. And perhaps more important, why is past-performance data not being captured properly in the first place?

Last year, the government issued a new rule in an attempt to create governmentwide, standardized contract performance rating and evaluation factors for federal contractors. However, without the metrics and objective performance parameters needed to create uniformity and consistency in the evaluations of a contractor's past performance, the rule simply continued the current system of subjective ratings by evaluators.

Furthermore, performance ratings under the new rule follow the same procedures as before: Appeals go to only one level above the contracting officer, after which the decision becomes final and irreversible. That approach, which could do permanent damage to a company, does not ensure a holistic and objective view of the factors involved in the "poor" performance.

Finally, the new rule does nothing to create clear requirements for protecting proprietary contractor information or keeping past-performance data confidential while ensuring the transparency needed for effective use of that information.

Past-performance data should be one of the most important factors in contractor selection. Unlike in the stock market, past performance in government contracting is very much an indication of future performance, and bad actors are regrettably plentiful in the federal contracting arena. The lack of effective oversight not only keeps new, innovative firms out of the market, but it allows the bad actors to continue to receive contracts. One need only look at the list of government contractors that owe hundreds of millions of dollars in back taxes to see there is a problem.

From another angle, efforts to alleviate some of the pressure on procurement officials to write past-performance reviews have also not been productive. Namely, recent changes to the Federal Acquisition Regulation to shorten the time contractors have to respond to past-performance reviews from 30 days to 15 days have had little impact on contracting officers' reporting.

Those impacts seem to be doing nothing more than limiting the due-process rights of contractors to refute poor evaluations. On FCW's "The Lectern" blog, Steve Kelman says such rights should be limited because contractors are afforded an "exaggerated notion of due-process protections." But without a standardized method of evaluation, the current subjective nature of past-performance evaluations continues to make due-process protections necessary. There has been an unfortunate increase in hostility and animosity between procurement officials and industry, but blaming a contractor for poor performance is only half the story.

Why is past-performance data not being captured properly in the first place?

Less often mentioned are the weaknesses in government management that lead to poor requirements definitions, which in turn result in contracts that have little chance of success. Poor requirements combined with the little attention that is being paid to quality in this lowest price, technically acceptable environment make it more important than ever that objective performance data be captured and reported to make any past-performance review credible.

Another critical missing piece is accountability on the part of contracting officers. Performance information should be readily available for any project the federal government is undertaking. Every contract has some project management requirement, so there is no excuse for not reporting such data. Requirements normally include monthly reports, data on earned value management, status updates and more. Enormous sums of money are spent to create that data, but it does not seem to be used effectively, if at all.

Only when those responsible are held accountable for reporting that data and only when that data is objective, standardized and publicly available will past-performance reviews be effective and used as originally intended.