like to tell federal contractors that in the new federal business environment what you do counts, but how you do it counts just as much. The "what" is getting the job done well. The "how" is your customer relations. Do you go the extra mile for your client? Today, that's the kind of contractor the government wants.
In the past, agencies didn't have the leverage to get that kind of responsiveness. Implicit in the idea of "full and open" competition for government business was the notion that everyone should have an equal chance to play. As long as a firm was qualified, past failures were wiped away. It was a whole new ball game each time around.
The only problem with that view was that it makes no business sense. If the last time you bought a car, it turned out to be a lemon, is that model likely going to be first on the list for your next purchase? Probably not. If, on the other hand, the car ran well, and service was dependable and prompt, shouldn't that count for something? If the dealer believes that every new purchase is entirely independent of anything that has gone on before, what's the incentive to perform?
In a $200 billion federal marketplace with thousands of contractors vying for agency dollars the same considerations apply. What does the agency know about the competitors? How have they done in similar settings? Does the agency itself have any experience with their work? Agencies always have considered track records in deciding whether firms should be eligible to win contract awards. In contracting parlance, this evaluation is called a "responsibility" determination, that is, an assessment of whether the contractor is capable of performing the work. But the answer is yes or no. The determination says nothing about how well firms have done the job.
Today, various government guidelines and legislative mandates make past performance a major selection criterion in awarding new contracts. As a result, a job well done doesn't just open the door, it has a significant influence on a firm's quest for future business.
Traditionally, agencies making selection decisions have considered such factors as the qualifications of key contractor employees performing the work and the technical and management plans for conducting the job. Now, for contracts worth more than $1 million, there is a past performance criterion ordinarily weighted at 25 percent or more of the overall score. Agencies are encouraged to consider past performance in awarding lower dollar value contracts as well. What is measured? The quality, timeliness and cost control of the firm's previous efforts, along with its responsiveness to agency employees and their satisfaction with the results. Systems are being developed across the government for collecting this data.
Is past performance evaluation an unmitigated success? Donna Ireton, contracts director for Advanced Systems Development Inc., doesn't think so. It's not so much the idea as the practice she dislikes. Agencies just don't know how to do it, she argues, "There is no standardized approach, no centralized database." Vendors are excluded based on informal comments outside of any formal evaluation process, she says. "And often, there is no evaluation performed at all." A recent General Accounting Office decision (McHugh/Calumet, a Joint Venture, B-276472, June 23, 1997) buttresses this view. GAO sustained a bidder's protest because the agency failed to offer the firm an opportunity to explain away negative past performance information. The information proved critical in the firm's losing the award.
There are other criticisms as well. Some see past performance evaluations as just another subjective tool for agencies to use arbitrarily in selecting business partners: The less favored need not apply. Others argue it represents another barrier to entry, keeping new and small firms out of the federal market. These firms must compensate for a "neutral" rating that immediately puts them at a disadvantage in any best-value selection.
Agency contracting officials are not all happy about these new requirements either. Some complain about the increased administrative burden, others about the time spent on the phone responding to other agencies' requests for information. They argue that evaluations tend to be inflated, with past performance scores offering little real discrimination among candidates.
Some of these concerns will be taken care of over time as record keeping and communications are improved. Firms need to be informed of the evaluations they are getting and their recourse if they disagree. The guidelines require this notice and agencies need to see that it is carried out. For new entrants to the government market, agencies need to make every effort to measure something, either people or performance. Of course, if neither the firm nor key staffers have done relevant work somewhere, shouldn't agencies think twice about hiring them? As for grade inflation, if past performance proves less useful because all the firms competing know they must be responsive to their customers or they won't get new business, is that such a bad outcome?
Allan V. Burman, a former administrator of federal procurement policy, authored the 1992 policy requiring collection of past performance data. He is president of Jefferson Solutions in Washington.
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