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.

Prime Contractors Must Self-Report Delayed or Reduced Payments Made to Small Business Subcontractors

The Small Business Jobs and Credit Act of 2010 requires prime contractors to self-report to the contracting officer when the prime contractor makes late or reduced payments to small business subcontractors. In addition, the Act also requires contracting officers to record the identy of contractors with a history of late or reduced payments to small business subcontractors in the Federal Awardee Performance and Integrity Information System (FAPIIS).

These requirements, although becoming effective back in August 2013, never made their way to the Federal Acquisition Regulations and as a result, seemingly very few contractors and government personnel were aware of the requirements.

That is about to change. The FAR Councils have just published an interim rule that revises FAR Part 42 to include in the past performance evaluation, reduced or untimely payments reported to the contracting officer by the prime contractor that are determined by the contracting officer to be unjustified. That's well and good but first, contractors are going to have to self-report late or reduced payments made to small business concerns. It seems unlikely that contractors will have systems in place to track such information. Second, contracting officers are going to have to make a judgment call on whether the late/reduced payments were justified. Quite probably, like most contract compliance issues, contracting officers will accept contractor supplied justifications. Third, contracting officers will need to report the information into FAPIIS. We already know from prior internal Government audits that the compliance rate for FAPIIS reporting is very low (but getting better).

There is no penalty for contractors who fail to self-report except perhaps as part of an accounting system or billing system review where such failure could be considered a deficiency.

Contractor Performance Information - Senate Subcommittee Hearing

Yesterday, the Senate Subcommittee on Financial and Contracting Oversight held a hearing on the state of contractor performance information. The purpose of the hearing was to examine how the federal government collects, manages, and uses information about contractor performance and integrity. The hearing focused on how the Federal Awardee Performance and Integrity Information System (FAPIIS) has been implemented and used over its first four years, as well as examining how well FAPIIS works with other past performance databases and potential improvements that can be made to the information available on the databases.

FAPIIS collects the following information. With the exception of No. 9, Past Performance Evaluations, all information is available to the public. Past performance evaluations, is considered source selection sensitive and are not available to the public

1. Criminal convictions
2. Certain civil judgments and administrative findings of fault
3. Certain compromises or agreements that settle criminal, civil, or administrative proceedings
4. Ineligibility due to suspension or debarment
5. Administrative agreements issued in lieu of suspension or debarment
6. Non-responsibility determinations
7. Contracts and grants terminated for default
8. Defective pricing determinations
9. Past performance evaluations

Through February 13, 2014, a total of 1,791 records have been uploaded into FAPIIS. 91% of these records relate to contracts that were terminated for default or cause. There were 47 non-responsibility determinations and 109 administrative agreements. There is only one reported instance of defective pricing. There are no reported instances of criminal convictions even though everyone knows that there are numerous criminal convictions of Government contractors every year.

Prominent in the hearing was the case of CGI Group, the prime contractor responsible for the "Healthcare.gov" debacle. CGI purchase AMS and renamed it to CGI Federal. While there was no negative information about CGI Federal in the FAPIIS, there was plenty of negative information concerning AMS. However, because of the acquisition and name change, the negative information was obscured and never obtained by the Government when awarding the "healthcare.gov" contract.

Another problem raised was the multiple DUNS numbers. Lockheed Martin, for example, was cited as having more than 80 DUNS numbers. Senator McCaskil wondered why there couldn't be just one number.

A third issued raised was the sheer number of records made it difficult for a contracting officer to digest into useful information. One of the witnesses reported that work was in process to aggregate this information into some kind of numerical score to make it easier on the user.

If you desire to view the one and a half hour hearing, go here.

Enhancements Sought for Contractor Integrity Databases

The Government is soliciting public comment on how to improve contracting officers' access to relevant information about contractor business ethics. The Government implemented a database called FAPIIS (Federal Awardee Performance and Integrity Information System) back in 2010 to collect performance information. Contracting officers now routinely consider information contained in this database when making responsibility determinations prior to awarding contracts.

Information in FAPIIS comes from different sources, including the CCR (Central Contractor Registration) and directly from contracting officers for past performance data, suspensions, debarment, termination for default, etc. to collect information about contractor performance. Government contractors submitting bids greater than $500 thousand having more than $10 million in active contracts must report criminal convictions, civil liability, and adverse administrative actions into CCR.

The problem that contracting officers have been finding is in the unique identifiers that contractors use to identify themselves. Information in FAPIIS is organized by DUNS numbers (Data Universal Numbering System). However, the system, as it is currently constructed, requires contractors to maintain a unique DUNS for each physical location or different business address in an organization. The FAPIIS does not associate all DUNS numbers of a corporate entity. Thus, a contracting officer cannot determine if there may be relevant information reported under different DUNS numbers assigned to other locations at which the entity named on the contract conducts business or under different DUNS numbers assigned to other parts of the corporate entity that are not named on the contract, such as an affiliate or subsidiary, the share the same management, infrastructure, and systems as the entity uses in doing business with the Government.

For information on how you can submit ideas for fixing this conundrum, click here.

Award Fee Reductions or Eliminations

The Department of Defense issued an interim rule that requires contracting officers to include in the evaluation criteria of any award-fee plan, a review of contractor and subcontractor actions that jeopardized the health or safety of Government personnel (either military or civilian) through gross negligence or reckless disregard for the safety of such personnel.

There was a similar interim rule published last November. That one required conviction in a criminal proceeding, or finding of fault and liability in a civil or administrative proceeding. This one adds contractors and subcontractors that are not under the jurisdiction of the U.S. courts, presumably to include foreign companies that provide support for overseas deployments (Germany, Korea, Japan, Iraq, Afghanistan, etc). For those contractors, a final determination of fault resulting from a DoD investigation is required.

Under the interim rule, the contracting officer shall consider reducing or denying award fees for a period if contractor (or subcontractor) actions caused serious bodily injury or death of civilian or military Government personnel during the period under review. Serious bodily injury is defined as a "grievous physical harm that results in a permanent disability."

In addition, this rule requires that information on the final determination of award fee be entered into the Federal Awardee Performance and Integrity Information System (FAPIIS).

FAPIIS is 'Live"

Earlier this month, we reported that the Government's Federal Awardee Performance and Integrity System (FAPIIS) was set to go public on April 15th. FAPIIS is an information system that collects contractors' past performance reviews, suspensions, debarments, non-responsibility determinations, and civil, criminal, and administrative proceedings relating to a contractor's performance of federal, state, and local contracts, grants, and cooperative agreements. Contracting officers review the information in FAPIIS when making their responsibility determinations. Information posted after April 15th becomes public record. Information posted prior to April 15 continues to be for offical use only.

You can access FAPIIS here. It doesn't require any registration, login ID or password. The program is off to a slow start. So far, there are only two records in the entire database, both involving terminated contracts (one for default, the other for cause).

By the way, if you're a contractor, you don't want to see your name listed in this database. Although the FAPIIS contains past performance evaluations which are usually positive, that part of the database is not available to the public. It appears that only negative information will be available. We recommend that contractors periodically monitor it to ensure its accuracy, especially when (or before) submitting proposals to the Government. Erroneous information in this database could affect you chances of winning a bid.

FAPIIS Update

Here's an update to our previous posting on the Government's intentions to make information posted to the FAPIIS (Federal Awardee Performance and Integrity System) publicly available.

FAPIIS is an information system that collects contractors' past performance reviews, suspensions, debarments, non-responsibility determinations, and civil, criminal, and administrative proceedings relating to a contractor's performance of federal, state, and local contracts, grants, and cooperative agreements. Contracting officers must review the information in FAPIIS when making their responsibility determinations. To support this purpose, initially the information in FAPIIS was only available to the contractor, government personnel, and authorized users performing business on behalf of the government.


Last January, the FAR councils rolled out a proposal to make any data posted to FAPIIS after April 15, 2011, publicly available. The 60 day comment period ended on March 25th and public comments have now been posted to Regulations.gov. There were about a dozen responses to the proposal. A couple respondents thought the whole thing was a bad idea and wanted the proposal dropped. Those comments are not going anywhere because giving the public access to the FAPIIS database is statutorily required. The comments that resonated most with us had to do with the giving contractors the ability to review any data prior to public posting in order to ensure that company proprietary data and information is not being improperly disclosed. Propriety data is not supposed to be disclosed anyway but deciding what data is proprietary and what data is releasable requires judgment and a contractors judgment may differ from a Government employee's judgment.

One commenter proposed that all data be made public, not just information posted to the database after April 15th.

Contractors can see what information FAPIIS currently contains about themselves by filing a FOIA (Freedom of Information Request) with GSA (General Services Administration).

FAPIIS Information Set to Go Public

Last April, the Government launched its contractor responsibility database called FAPIIS (Federal Awardee Performance and Integrity System). The purpose of this database is to enhance the government's ability to evaluate the business ethics and quality of prospective contractors competing for Federal contracts. Access has been limited to Government acquisition personnel for use in making responsibility determinations prior to award of a contract. 

The FAPIIS data base tracks five years worth of contractor misconduct and performance data. It includes criminal, civil, and administrative proceedings (input by contractors and prospective contractors through the CCR system), past performance evaluations, records of suspensions and debarments, administrative agreements issued in lieu of suspension or debarment, nonresponsibility determinations, terminations for default, defective pricing determinations, and instances where a contractor's behavior "might" have put its employees in harm's way. Also, cases where procurement officials denied or reduced contractor's award fees because of reckless or negligent behavior must now be disclosed. For contracts above the simplified acquisition threshold (currently $150 thousand), contracting officers must check the FAPIIS data base and document (in writing) its responsibility determination.

On January 24, 2011, the FAR Councils published an interim rule that will make all information in the FAPIIS database, except for past performance data, publicly available on April 15, 2011. The actual wording states that all information posted by contractors, offerors, and the Government after April 15, 2011 will be made publicly available which presumably means that data already in the database will not be made available to the public. There is a 60 day public comment period however since this new regulation is required by statute (section 3010 of the Supplemental Appropriations Act of 2010), don't count on significant revisions.

As expected, Government watchdog groups are enthusiastic about the increased transparency available through this new regulation while contractors and industry groups are not. A PSC (Professional Services Council) representative stated that "Making this data public opens the door to all kinds of misperceptions, misunderstandings and even mischief.” The Government is aware of these concerns and is emphasizing the importance of ensuring the integrity of the data base, cautioning procurement officials to redact company proprietary data, avoid information related to pending litigation, and give "thought and consideration" to the information they enter.

If you would like more information on FAPIIS, watch this short Federal Acquisition Institute trailer.