We Already Have the Tool We Need to Get the Most Out of Federal Contractors

Government services have never been more essential to the American people than they are today. The need for the government to excel in meeting all of its responsibilities will persist given the challenges brought on by the Covid-19 pandemic, climate change, racial and social inequities, and other crises in the United States and around the world.

As the Biden administration addresses these challenges, it’s critical to get the most not only from federal agencies, but from the contractors who help implement agency missions. The federal government relies heavily on a blended workforce of dedicated federal employees and contractors to get its work done. The government spends about 40% of its discretionary budget on contracts for goods and services, adding up to more than $586 billion in fiscal 2019.

We believe there is an underutilized tool that can better leverage the spending of that taxpayer money and help achieve desired mission outcomes by motivating federal contractors to improve their performance. That tool is called the Contractor Performance Assessment Reporting System, or CPARS.

CPARS tends to be used as a report card at the end of a performance period of a contract. It should be used as a management tool to help improve contractor performance, and in turn, improve outcomes on contracts. This would be a paradigm shift for many procurement officials, but the change could be as simple as this: The contractor submits a mid-term performance self-assessment (with appropriate supporting data and metrics) and the government rating official provides feedback on the contractor’s performance.

This creates the perfect opportunity for both parties to reaffirm or realign priorities, ensure proper resources on both sides are focused on the priorities, and make other adjustments necessary to ensure better contract and mission outcomes. Those outcomes would be reflected in the CPARS rating for that period.

This creates a win-win situation for both parties and allows CPARS to be a true differentiator during source selection. Multiple examples of this phenomenon exist, and they all stem from looking at CPARS as a means to improve contract outcomes and performance, and not merely as a report card at the end of the contract period. 

The idea of measuring and evaluating contractors’ past performance has been around since the mid-1990s, when Steve Kelman, then administrator of the Office of Federal Procurement Policy, emphasized using it as a factor in source selections. The simple concept was that past performance is a key indicator of future performance. That concept is at the heart of CPARS. 

Systems in which the customer has a voice and ratings can be used by others to make decisions is now prevalent in business and society through tools such as Tripadvisor, Yelp and Rate My Professor. However, as well as these public ratings systems work, CPARS, as it operates today, is less than ideal and its use as a tool to motivate contractors to improve performance falls short of its potential.

OFPP’s career staff has been examining ways to improve CPARS. They seek to ensure the system meets its stated objectives, yet is not so burdensome that acquisition and program officials won’t provide ratings on their contractors. They also want to find ways to better leverage the data that comes out of CPARS.

One problem with that data is the tendency of agency evaluators to give contractors “satisfactory” or average ratings (such as 3 on a 1-to-5 scale), because to do otherwise can invite more work. The result of this clustering of ratings around the average level is the nullification of the tool to distinguish performance differences.

In a recent survey by the performance management firm GovConRx, the majority of federal contractor respondents said they did not believe CPARS provided fair or accurate ratings. The goal of using the system as a motivating tool will only be achieved when the data is accurate, relevant, differentiates levels of performance, and is used by federal agencies both on individual source selection decisions and in new, more strategic ways. 

Some agencies are already finding new ways to use CPARS. The Department of Homeland Security’s Chief Procurement Office, for example, is looking at using artificial intelligence to extract and use information currently in CPARS. Jeff Koses, the General Services Administration’s senior procurement executive, recently issued guidance to all GSA contracting officers on requesting contractor self-assessments as part of the CPARS process. This is another great step toward reducing contracting officers’ burdens and producing fairer and more accurate CPARS ratings.

We believe CPARS is an underutilized tool that needs a new vision to achieve the goals that underlie the system but are not being met today. This should include both tactical and strategic use of the CPARS data as outputs or outcomes and implementation of input goals that ensure the data characteristics mentioned above are achieved in a less burdensome way. On the input side, contractors will be motivated if the ratings are perceived as fair and reflect performance differences. Additionally, the input process must not be so burdensome that government officials struggle to comply with it.

However, what really will motivate contractors is when the data in the system is used more in both source selections as a discriminator and in other more strategic ways by the government. The federal government accomplishes a lot of its work, particularly in the information technology and professional services fields, via multiple award contracts, where the real work is done after individual task orders are competed and issued. Requiring decision makers to use CPARS data for these types of task order award decisions should result in better source selection decisions. 

We also believe that proper use of CPARS can help small businesses, who often face the unfounded perception that they will not perform as well as a large business. Using good CPARS data can counter that perception. Also, using CPARS data tactically as part of ongoing performance reviews during contract performance will also cause contractors to pay greater attention to their ratings at senior levels of contract companies. This will also bring more focus from the government’s perspective and enable interim CPARS reviews to help drive better performance.

Strategic use of CPARS data by higher-level government leaders could involve new ways of analyzing and using data in the system. This could include looking at top- or bottom-performing contractors at an agency, comparing CPARS data across agencies or multiple award contract vehicles, and using the system to see how well a contractor is performing at different agencies doing similar work. We are not aware of these types of analyses being done today. 

CPARS has a good foundation and great potential to improve the business of government. If it had the data characteristics outlined above and was being used tactically and strategically to its fullest advantage, then it would support both mission success and help assess progress on other goals, such as addressing climate change or social inequity. We’re not there yet, but there is a path to get us where we need to go. 

Greg Giddens retired as the chief acquisition officer at the Veterans Affairs Department after 35 years in the civil service and is now a partner at Potomac Ridge Consulting and a strategic advisor to GovConRx. Mike Smith is a retired senior executive from the Homeland Security Department with over 35 years of acquisition experience who currently runs a small consulting practice and is the executive director at GovConRx. Jim Williams has more than 30 years experience in government, including serving as acting administrator of GSA, and is a strategic advisor to GovConRx.