Monday, March 7, 2016

Predecessor and Successor Contractors Identified when Making Responsibility Determinations

The FAR Councils published a final rule that requires FAPIIS (Federal Awardee Performance and Integrity Information System) to include, to the extent practicable, identification of any immediate owner or subsidiary, and all predecessors of an offeror that held a Federal contract or grant withing the last three years. The objective of this new rule is to provide a more comprehensive understanding of the performance and integrity of the corporation before awarding a Federal contract (or grant).

The information required to populate the FAPIIS is already required by FAR 52.204-17, Ownership and Control of Offeror, which offerors provide when maintaining their SAM (System for Award Management) registration. This process simply moves that information from SAM to the FAPIIS system.

In making responsibility determinations, the contracting officer is required to consider information available through FAPIIS (see FAR 9.104-6) with regard to the offeror and any immediate owner, predecessor, or subsidiary identified for that offeror in FAPIIS.

FAPIIS collects certain information on contractors that could lead to nonresponsibility determinations. These include

  • Terminations for default
  • Terminations for cause
  • Terminations for material failure to comply
  • Non-responsibility determinations
  • Recipient not qualified determinations
  • Defective pricing determinations
  • Administrative agreements
  • DoD determinations of contractor fault reported to FAPIIS by federal government personnel.

Obviously, contractors do not want to appear in a FAPIIS report but the idea behind the new rule is to identify contractors that are guilty by association (so to speak). That's why its already being referred to as the "Guilty by Association" rule. Predecessor and successor contractors are defined as follows:

Predecessor means an entity that is replaced by a successor and incudes any predecessors of the predecessor.

Successor means an entity that has replaced a predecessor by acquiring the assets and carrying out the affairs of the predecessor under a new name (often through acquisition or merger).

This may be a start but it will not solve the problem where principles of companies who somehow get in trouble with the Government, simply create new companies and continue on with their bad practices.

You can read the full text of the new rule by clicking here.

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