The Defense Department is standardizing the way it rates contractors on their performance, under a new policy issued by the Pentagon's top acquisition official.
A Nov. 20 policy memorandum issued by Jacques Gansler, the new under secretary of Defense for acquisition and technology, established a five-level past performance rating system for almost all categories and sectors of contracts. Ratings range from unsatisfactory to exceptional.
Past performance ratings in the government have long been criticized as inconsistent, subjective and poorly organized. In the Defense Department, for example, each service and agency--and even subdivisions of the services and agencies--had their own rating system.
The new DoD policy, which takes effect Feb. 1, represents the first large-scale attempt at standardizing the collection of past performance information. However, the ways the information is used will still vary from contract to contract, DoD acquisition officials said.
The new policy lays out categories on which all contractors in various sectors must be rated. For example, services and information technology contracts will be rated on overall quality of product or service, adherence to schedules, business relations, key personnel management and cost control (except for fixed-price contracts). The policy sets thresholds over which contracts must be evaluated using the new standards: $5 million for systems and operations support and $1 million for services and information technology.
DoD is also working on automating the collection process so that people throughout the department and around the world can have ready access to past performance data. Standardizing the information is the first step toward automation, but numerous hurdles still must be jumped, not the least of which is industry's wariness over having sensitive company data zipping around the Internet. A DoD working group is expected to devise a plan for an automated past performance system by March 30.
Critics have questioned whether collecting past performance data is worth the effort. But officials say it not only helps managers make smart contracting decisions in the future, it improves contractors' performance on current projects.
"If we do it right we'll get contractors to perform above satisfactory," says David Drabkin, assistant deputy undersecretary of Defense for acquisition process and policies. "They'll improve their performance today."
Under the new policy, contractors will still have the opportunity, guaranteed by Federal Acquisition Regulation Parts 15 and 42, to comment on past performance ratings and evaluations. Contractors' rights are not affected by the new policy.
The new policy also applies to other government agencies who are under contract with the department. That means entrepreneurial agencies will be judged by the same criteria as private companies in public-private competitions for contracts.
DoD officials say they worked with the Office of Federal Procurement Policy, which oversees all agencies' acquisition policies, on the new system. OFPP has shied away from creating a mandatory governmentwide policy on past performance, though several agencies have taken an interest in DoD's efforts.
Drabkin cautioned that past performance is only one of many acquisition reforms aimed at helping the government get the best value on contracts.
"Past performance is only one of a series of tools we're trying to make available to our front-line acquisition professionals," Drabkin says. "It has to be taken in the context of a much larger set of tools."
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