• Challenging Negative Performance Evaluations
  • April 28, 2016 | Authors: Kathleen Hsu; Alan I. Saltman
  • Law Firm: Smith, Currie & Hancock LLP - Washington Office
  • In the course of evaluating the past performance of offerors competing for the award of a federal contract, agencies routinely examine performance evaluations contained in the government’s Past Performance Information Retrieval System (“PPIRS”). Information is available through the PPIRS for three years after a company completes a service or supply contract, and for six years after the completion of a construction or architect-engineer contract. Given the weight that agencies give past performance, negative information in PPIRS can have a significantly negative impact on a company’s ability to obtain future government contracts.

    Pursuant to FAR § 42.1502(a), contracting agencies are required to prepare a performance evaluation both annually and at the completion of every contract or order. Agencies may also prepare interim evaluations. All evaluations are to be based on factors such as technical quality, cost control, timeliness, and management.

    Performance evaluations are initially entered into the Contractor Performance Assessment Reporting System (“CPARS”). Pursuant to FAR § 42.1503(d), a contractor has 14 days from the date it is notified of the evaluation within which to submit any comments, rebutting statements or additional information regarding the evaluation. The regulations also require that the agency provide for a review at a level above the contracting officer to consider disagreements between the contractor and the contracting officer regarding the evaluation.

    Given these opportunities to be heard, a contractor receiving a negative performance assessment should prepare a response, and, if at all possible, present it at a face-to-face meeting with the contracting officer. If those efforts do not change the contracting officer’s position, promptly schedule a meeting with the contracting officer’s supervisor.

    While the agency’s evaluation is automatically submitted to PPIRS no later than 14 days after the contractor is notified the evaluation is available for comment, FAR § 42.1503(f) requires the agency:
    • to include any contractor-submitted information along with the evaluation;
    • indicate whether or not the agency is still reviewing the matter; and
    • update PPIRS with any:
      • contractor comments provided after the 14 day period, and
      • subsequent agency review of comments received.
    Even if the contracting officer does not change the evaluation, submitting rebuttal material allows the contractor to get its side of the story into the record that will be examined by agencies using PPIRS evaluations for future procurements.

    Should the contractor feel that simply getting its side of the story into the record is insufficient to overcome a potentially harmful performance evaluation, the law provides the contractor with a further opportunity to correct the record. A contractor can bring a non-monetary claim under the Contract Disputes Act (CDA) disputing the agency’s evaluation and its failure to change it. As provided in FAR § 2.101, which is incorporated into the Disputes clause of all federal contracts, a “claim” includes not only a written demand “payment of a sum certain”, but also includes a demand for “the adjustment or interpretation of contract terms or other relief ... related to the contract.”

    To seek relief under the CDA, a contractor must first submit to the contracting officer a written demand to reverse the negative performance evaluation. The demand must be separate from any other post-evaluation communications seeking relief. Depending on the facts, a contractor should allege that:
    • the agency misinterpreted and/or failed to follow the provisions of the contract that relate to performance evaluations, for example, the government failed to comply with its duties under the contract’s performance assessment or performance evaluation clause, which typically incorporates FAR subpart 42.15 and § 36.201, each of which require the government to follow certain procedures in making evaluations;
    • by doing an incorrect performance evaluation, the government breached its implied contractual duty of good faith and fair dealing—a duty inherent in every contract; and/or
    • the contracting officer did not act reasonably in rendering the disputed performance rating or was arbitrary and capricious and abused his or her discretion because the negative evaluation was not founded on a reasonable basis.
    The demand should affirmatively invoke the CDA claims process and demand that the contracting officer either correct the negative performance evaluation or issue final decision refusing correction within 60 days of receipt of the demand. The contracting officer then has 90 days within which to issue a final decision. If in that decision the contracting officer refuses to correct the negative evaluation, the contractor may appeal the decision to either the Board of Contract Appeals or the Court of Federal Claims and commence litigation.

    The CDA provides both the Boards and the Claims Court with jurisdiction to decide “any appeal” from a contracting officer’s final decision “relative to a contract”. But the Boards have been much more circumspect than the Claims Court in recognizing their jurisdiction to hear performance evaluation cases.

    Despite the Boards’ reluctance, when a case is properly pleaded each forum has the same jurisdiction and basic authority. Both can issue declaratory judgments interpreting contract clauses and the parties’ rights thereunder and deciding whether the agency breached its implied contractual duty of good faith and fair dealing and/or determine if the contracting officer was arbitrary and capricious in making the evaluation. The Claims Court has, however, gone on to state that it also has authority to remand the matter to the agency with specific instructions, although that authority is not unlimited.

    The Boards and the Claims Court have the same limitations. Neither has established authority to issue an injunction prohibiting the government from using an erroneous performance evaluation, to order specific performance, or to order an agency to rescind a performance evaluation. The Claims Court has recently noted that the Federal Circuit has declined to rule on the question of the Claims Court’s authority to issue an injunction with respect to a claim of an improper performance evaluation brought under the CDA. At the same time, the Claims Court has made it plain that a contractor may bring an action for injunctive relief under the Claims Court’s bid protest jurisdiction when an agency relies on an incorrect negative evaluation in the course of a subsequent procurement.