Monday, May 2, 2011

Responsibility Determinations - General

Before awarding any contract, the contracting officer must make an affirmative determination of responsibility with respect to the prospective contractor. The award of a contract to a supplier based on lowest evaluated price alone can be false economy if there is subsequent default, late deliveries, or other unsatisfactory performance resulting in additional contractual or administrative costs. While it is important that Government purchases be made at the lowest price, this does not require an award to a supplier solely because that supplier submits the lowest offer.

It is crucial for contractors and prospective contractors to assist contracting officers in that determination by providing all of the information requested. According to FAR 9.104, in the absence of information clearly indicating that the prospective contractor is responsible, the contracting officer shall make a determination of nonresponsibility.

In order to be considered “responsible”, prospective contractors must meet seven criteria. Failure to affirmatively demonstrate even one of these, will, if the Government is following its own regulations, cause a supplier to be determined nonresponsible. These seven criteria are,

1.     Have adequate financial resources to perform the contract, or the ability to obtain them.

2.     Be able to comply with the required or proposed delivery or performance schedule, taking into consideration all existing commercial and governmental business commitments;

3.     Have a satisfactory performance record. (However, a prospective contractor shall not be determined responsible or nonresponsible solely on the basis of a lack of relevant performance history).

4.     Have a satisfactory record of integrity and business ethics.

5.     Have the necessary organization, experience, accounting and operational controls, and technical skills, or the ability to obtain them

6.     Have the necessary production, construction, and technical equipment and facilities, or the ability to obtain them

7.     Be otherwise qualified and eligible to receive an award under applicable laws and regulations

As you might expect, the contracting officer must exercise a fair amount of judgment in making responsibility determinations. However, these judgments are often based on factual data and information that, in many cases, only the prospective contractor can provide.

Over the next few days, we will examine some of these criteria in more detail and provide some real-life cases where contractors were determined nonresponsive.

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