Friday, October 21, 2011

Evaluation Criteria used for Awarding Government Contracts

When awarding contracts, FAR (Federal Acquisition Regulations) require agencies to consider firms' past performance records to help ensure that taxpayer dollars go to capable contractors. The FAR also provides agencies with broad discretion in deciding how they will consider firms' prior experience. Prior experience refers to whether the firms have done similar work before, and past performance describes how well they have done that work. As firms without prior federal contracting experience seek to gain entry into the federal marketplace, some potential contractors, especially small firms with limited prior experience, consider these factors to be impediments to entering the federal marketplace.

Agencies consider prior experience and past performance during three key phases in the award of contracts:
  1. preparing solicitations
  2. evaluating proposals
  3. making responsibility determinations as to whether firms have the ability and capacity to successfully perform.
Agencies have broad discretion under FAR in deciding the acquisition method, evaluation factors and their relative weights, as well as what prior experience and past performance they will consider relevant.

The GAO (Government Accountability Office) recently published the results of a study they conducted to determine (i) how agencies consider prior experience and past performance in awarding contracts and (ii) the resources available to assist firms in gaining entry to the federal marketplace. The study focused on construction contracts but the findings would also apply more broadly to all federal acquisition.

The GAO study found that the consideration of prior experience and past performance varied by agency. In general, these factors were considered to a greater degree in procurements in which agencies weighed price and nonprice selection factors and to a lesser degree in procurements in which price was the determining selection factor. No surprises there.

The consideration of prior experience and past performance is not limited to work performed under prior contracts with the government. Instead, agencies are to consider work performed on all contracts: federal, state, local, and private sector. GAO did not identify any instances in which an agency limited its evaluation of offerors' experience or past performance to only work performed on prior federal government contracts. The GAO study found that in almost all procurements, contracts were awarded to the offerors that received the highest rating for nonprice factors, such as prior experience or past performance.

The GAO study concluded that consideration of prior experience or past performance is not an impediment to winning government contracts as prospective contractors generally cite their prior work. However, the GAO noted that small firms seeking to win federal contracts face challenges in building up relevant work experience, financial resources, and bonding capacity to compete for large contracts.

Finally, the GAO study listed various resources that are available from federal agencies to help firms without relevant experience or past performance gain entry to the federal marketplace, including outreach and education, subcontracting opportunities, mentor-protege programs, and SBA programs specifically designed to assist small businesses.

The entire GAO report is available on-line. Click here.

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