Agencies start to wield past-performance club

Federal agencies have started to wield the past-performance stick that Congress gave them in information technology reform legislation by using vendors' success rates on previous IT contracts to evaluate bids on pending pacts.

One of the more strict past-performance evaluations in government is the one the Defense Information Systems Agency plans to use. DISA officials, making it clear that they plan to use the power that DISA and other agencies received by the passage of the Clinger-Cohen Act to evaluate past performance as a key component of contract awards, revealed this month that they plan to conduct reviews on a quarterly basis.

DISA, which manages numerous task-order contracts, plans to use the reviews as a key evaluation tool in deciding whether a contractor receives another task order. DISA has developed an online evaluation tool and has made it available to other Defense Department agencies.

Little Room to Maneuver

William Curtis, DISA's deputy director for procurement and logistics until he signed on as the Pentagon's Year 2000 czar, told contractors that they will have little room to maneuver if they do not deliver what they have agreed to. "We want best value," Curtis told an audience of federal IT contractors this month. "If you're buying in now...and not giving us good products, you are going to suffer with a bad past-performance rating."

Some civilian agencies have embraced the notion of "perform or else." Richard Lieber, principal of acquisition services at the Transportation Department's Transportation Administrative Service Center (TASC), worked to include a special performance provision called Clause H.26 into the agency's Information Technology Omnibus Procurement contract, which was awarded two years ago. The $1.1 billion ITOP— which, when awarded to 20 vendors in 1996, was hailed as an example of the new kind of IT procurements possible under acquisition reform— offers information systems security, systems and facilities management, and maintenance and information systems engineering.

The ITOP clause says, "One or more instances of unsatisfactory ratings may result in the TASC [contracting officer] notifying the contractor in writing that a moratorium of a specified length may be imposed on the contractor pending satisfactory progress toward resolving unsatisfactory performance. During the moratorium period (which shall be unilaterally established by the TASC C.O. and may vary in length, depending on the severity of the unsatisfactory performance), the contractor shall be precluded from proposing on or being issued task orders under ITOP."

"I have 25 years of contracting behind me," Lieber said. "I've seen the good, bad and the ugly, and my goal is never to use [the clause]."

Lieber said that so far DOT has not had to eliminate a vendor from working on the contract due to poor performance because the agency has had "excellent performance" on the contract.

But he is uncertain whether the provision is the reason that performance has been excellent. "I sure as hell hope not. I sincerely hope I get the same performance," he said. "Does it act as a deterrent? It probably does."

Vendors are primarily concerned that any performance measurement system provide them with the chance to challenge adverse ratings.

"If it was a fair evaluation, a factual evaluation, none of my companies would argue with that,"' said Ken Salaets, director of government relations with the Information Technology Industry Council, who was not aware of the new DISA policy. "Basically, we support the government's ability to not do business with suppliers who are not producing or are falling short continually. There also needs to be sufficient protection so evaluations are factual, objective, and there is due process."

"Everybody knows you are going to be judged on your evaluations of what you've done in the past," said Olga Grkavac, senior vice president of the Information Technology Association of America's Systems Integration Division.

But, she said, if a vendor performs poorly on one kind of task, that does not mean it should be barred from competing for other work. "There are some task orders that are equivalent to a significant contract," she said. "I wouldn't expect [DISA] to be arbitrary. There have to be some apples-to-apples comparisons."

Ella Schiralli, government contracts adviser with Manatt, Phelps & Phillips in Washington, D.C., said DISA is "fully within their rights'' to evaluate how vendors perform on task orders, but she had not heard of any agency that has been rating vendors as systematically as DISA will. She questioned whether the online vendor-rating tools that DISA is providing would result in the dissemination of inaccurate data.

"It goes into a system, and suppose it [is] wrong?'' she said. "Who else has seen that data before it's pulled back?''