DETERMINING PAST PERFORMANCE VERSUS EXPERIENCEbyMachelle Y. RobinsonBMGT 378 - Legal Environment of Business May 2, 2002 Background Contracting Officers within the Federal Government are tasked with negotiating contracts for goods and services with the contractor that is best able to satisfy that particular requirement in terms of quality, timeliness and cost. Best value analysis strives to apply good business judgement to making source selection decisions. It seeks to isolate technical differences between proposals to determine which offer represents the best value to the customer. The Federal Government is steadily moving away from awarding contracts purely on the basis of low price and opting to employ evaluation factors such as past performance, management capabilities and technical superiority. Confidence in a prospective contractor's ability to perform satisfactorily is an important factor in the source selection process making for 'best value' analysis.

Therefore, the purpose of this paper is to explore the difference between experience and past performance in the source selection process of 'best value' procurements. Definition Experience is the active participation in events or activities, leading to the accumulation of knowledge or skill (Houghton Mifflin Company, 1988). In other words it is the process of 'learning by doing'. It reflects whether a contractor has performed a job that is similar or of 'comparable size and complexity'.

Comparable size and complexity meaning that which is similar in dollar amount; number of client / customer employees services; and number of contractor employees assigned to the contract, and types of services performed. When you consider that every requirement has its own set of problems and pitfalls, it makes perfectly good sense to look at whether a contractor is knowledgeable of where those problems are likely to occur and if the contractor has experience in solving such problems. Past performance serves as an indication of a contractor's ability to perform virtually any contract. In addition to whether or not a contractor has experience doing a particular job it is also important to know 'how well' that particular job was performed as it relates to the pending procurement.

Evaluation of a contractor's past performance enables contracting professionals to better predict the quality of and customer satisfaction of future work. Past performance takes into account everything from whether a vendor's products or services from previous federal contracts were delivered on time and within budget to whether a company did a good job of managing subcontractors. In addition to looking at workmanship, past-performance evaluations also include judgments on an offeror's reputation for cooperative behavior. Past performance may pertain to any number of things such including: (1) Quality of supplies delivered or services rendered, in terms of compliance with adequate specifications and statements of work; (2) Timeliness of performance, taking into account all excusable delays; (3) Price, in terms of initial reasonableness and control of exigencies (i. e. , changes and claims); (4) Reasonable compliance with other contract terms and conditions; (5) Effective management of the administrative aspects of performance, such as communicating and performing routine clerical tasks; (6) Cooperation with, and assistance to, the customer in routine matters and when confronted by unexpected difficulties; (7) Business integrity; (8) Breadth; (9) Depth; and (10) Relevancy.

Although it is safe to assume that most contracting professionals would consider that experience relates to 'what' a contractor has done and past performance relates to 'how well' the 'what' was performed. The federal procurement regulation does not specifically differentiate between experience and past performance. In Nash (2001) it is argued that 'experience is sometimes ignored and, when considered, has often been given sloppy treatment. Nash (2001) goes on to say 'there is an undeniable need to evaluate past performance in best value procurements and that 'there should be an important distinction between a contractor's experience and its past performance'. The following argument for separate evaluation of experience and past performance is posed: It is essential that past performance and experience be evaluated separately. The fact that they are the two components of a contractor's capability that involve inquiries in the past seems to have caused some to believe that they are one and the same.

Nothing could be further from reality. Their evaluation requires asking entirely different questions. To determine a contractor's experience the questions are: What have you done? And how many times or for how long have you done it? The question for past performance is: How well have you done it? (Nash, 2001). Additionally, the 'the evaluation of past performance is a meaningless exercise unless it is related to the type of activity that will be required under the contract' (Cibinic, 2001). This argument is further supported by the General Services Administration Board of Contract Appeals in Telcom Systems Services, Inc. v.

Department of Justice, GSA BCA 1372-P, 95-BCA 27849, 1995 BPD 145 where it is stated that 'it is unreasonable to suggest that past performance does not encompass experience.' The direct evaluation of 'how much' is what makes experience valuable as a separate evaluation factor (Cibinic, 2001). Federal Acquisition Regulations (government contract law) Consideration of a contractor's track record has always been a part of the government's buying decisions. FAR 9. 104-1-c states that 'a prospective contractor must have a satisfactory performance record in order to do business with the government. If the government is going to get the type of high quality demanded of contractors in the commercial sector, it must compare the past records of its competing offeror's to help identify which one relatively speaking is offering the best value. It should be noted, however, that the FAR does not include a prescription for the evaluation of 'experience' except in 15.

304 (c) (2) when it simply identifies 'prior experience' as non-cost evaluation factor nor does it differentiate between experience and past performance. I find it ironic that the FAR does state that past performance is separate from the responsibility determinations. The FAR 15. 304 (c (3) (i) (2001) mandates that 'past performance shall be evaluated in all source selections for negotiated competitive acquisitions issued on or after January 1, 1999, for acquisitions expected to exceed $100, 000.' The FAR (2001) provides further definition of past performance information (PPI) as an indicator of a potential contractor's ability to successful performance.

The following approach to past performance evaluations is prescribed at FAR 15. 305 (a) (2): (i) Past performance information is one indicator of an Offeror's ability to perform the contract successfully. The currency and relevance of the information, source of the information, context of the data, and general trends in contractor's performance shall be considered. This comparative assessment of past performance information is separate from the responsibility determination required under Subpart 9. 1. (ii) The solicitation shall describe the approach for evaluating past performance, including evaluating offeror's with no relevant performance history, and shall provide offeror's an opportunity to identify past or current contracts (including Federal, State, and local government and private) for efforts similar to the Government requirement.

The solicitation shall also authorize offeror's to provide information on problems encountered on the identified contracts and the Offeror's corrective actions. The Government shall consider this information, as well as information obtained from any other sources, when evaluating the Offeror's past performance. The source selection authority shall determine the relevance of similar past performance information. In Nash (2001), it summarized that the FAR instructs agencies to consider a contractor's past performance assigning greater credit to past performance on 'like' work. Nash (2001) goes on to say that this is completely different from directly evaluating 'how much' experience a contractor has in performing 'like' work. Argument The FAR mentions the 'relevancy' of past performance information several times.

There are many factors to be considered in determining similarity, including dollar value, complexity and nature of work. It is not effective to consider data simply because it is available. It is, however, necessary to look at the contract requirements to see if the data is meaningful. Will the data provided substantiate whether or not an offeror will be successful in the performing the proposed contract? For example, it is useless to evaluate subcontract management if subcontract management is not a part of the requirement at hand.

When deciding what specific information to seek, the issue of relevance should play a key role. In Comptroller General Decision B-275356, Computer Systems Development Corporation the Comptroller noted the following description contained in the solicitation: Under the corporate experience factor, the RFP provided that consideration would be given to the 'breadth (i. e. , variety or number of contracts) and significance (i. e.

, size, complexity, participation) of corporate experience (including subcontractors and consultants of this proposal) in accomplishing efforts relevant to those described in the Statement of Work. The RFP also provided that 'when cited contracts cover a variety of size and complexity, greater weigh goes to relevant contracts of a size and complexity equal to or greater than this solicitation,' and that 'particular emphasis shall be placed on contracts that provide services in a dynamic environment such as open architecture or systems migration experience (Cibinic 1997). An evaluation factor may be valid in the sense that it measures what it is intended without being relevant to the source selection. For example, in a source selection for services, experience in manufacturing would not be relevant experience. In more instances than not, solicitations simply state that the experience must be similar and relevant. Similarity should factor in the dollar value, complexity and nature of work.

For instance a company that provides janitorial services could have experience in a variety of facilities such as hospitals, schools, hotels or recreation centers. The CO would also want to consider the amount of square footage because there is a significant difference between an office environment of 500 employees and that of 5000 employees in the following protest: Protestor alleges that an agency's evaluation of past performance was unreasonable is sustained where the technical evaluation scheme envisioned a price / past performance trade off among technically acceptable proposals to determine best value and where the agency failed to consider past performance of the protester on a contract involving the same agency, services and CO because an individual within the agency did not complete and return the past performance evaluation materials (Nash 2001). Contractor's experience should also be current. In the matter of Marathon Construction Corporation (B-284816, May 22, 2000), the Comptroller General held that it was appropriate for the Navy to reject the experience that was performed almost 20 years prior to the pending requirement. Lack of Experience Contractor experience is a contractor's expertise in a particular area when performance data is not used as a qualifier (e. g.

15 years experience as a custodial or security firm). Contractors and their employees may not have the same levels of experience. For example, the contractor may have relatively little experience in a particular area but may have hired employees who have a great deal of experience in that area. FAR 15. 305 (a) (2) (iii) prescribes the following: The evaluation should take into account past performance information regarding predecessor companies, key personnel who have relevant experience, or subcontractors that will perform major or critical aspects of the requirement when such information is relevant to the instant acquisition.

The Comptroller has held that is entirely appropriate to consider the experience of contractors employees. In EBA Engineering, Inc, B-275818, the Comptroller noted that 'the majority of key and non-key proposed personnel were incumbents who had direct, relevant experience in performing the subject contract and the proposed program manager had relevant experience in managing a large laboratory' (Cibinic, 1997). In some instances, lack of corporate experience may be overcome by the experience of its employees is evidenced in Consultants on Family Addiction, B-274924. 2: While the awardee had not performed these contracts before, the agency found that the offeror had the capacity and experience to provide the services, in part based on the experience of the protester's former counselor who had performed the same services under the protester's contracts. As a result of her experience under the protestor's contracts, the counselor was familiar with assessments, individual and group counseling, supervision of group co-leaders, preparing reports, case management, administering urine tests, reporting results, maintaining client files, and overseeing the general functioning of services in various county services.

There is nothing improper in evaluating an Offeror's capacity to perform services based on the expertise of those who will perform those services (Cibinic 1997). The FAR requires that an offeror without 'relevant past performance' be evaluated 'favorably or unfavorably on past performance (FAR, 2001). Restricting Competition By definition, experience requirements restrict competition except when such restrictions are necessary to the meet the Government's needs. In an RFP for security guard services at the Ronald Reagan Building in Washington, DC limited eligibility for award to those offeror's that, within the past five years, have performed two similar security guard contract involving at least 175, 000 hours each (Cibinic, 1997). The Comptroller found these requirements to be reasonable in light of the size and unique character of the building, as well as the threat posed to Government building in the aftermath of the Oklahoma City bombing of the Murray Federal Building: Under the Competition in Contracting Act of 1984 (CICA), an agency is required to specify its needs and solicit offers in a manner designed to achieve full and open competition, so that all responsible sources are permitted to compete. 41 U.

S. C a (a) (1) (A). A contracting agency may include restrictive provisions or conditions only to the extent necessary to satisfy the agency's needs. 41 U. S. C 253 a (a) (2) (B).

As GSA correctly points out, contracting agencies have discretion to use restrictive provisions however, as her, the solicitation requirement relates to safety concerns, provided that the agency establishes that the challenged restriction is necessary to ensure the highest level of reliability and effectiveness. Harry Feurberg & Steven Steinbaurm, B 261333, Sept 12, 1995, 95-2 CPD Paragraph 109 at 3 (Cibinic 1997). In B-261671, Industrial Maintenance Services, Inc. , it is noted that: With respect to solicitation provisions relating to human safety, an agency has the discretion to set its minimum needs so as to achieve not just reasonable results, but the highest possible reliability and effectiveness. Tucson Mobile phone, Inc. , B-250389, Jan 29, 1993, 93-1 CPD Paragraph 79, a ff'd, B-250389, June 21, 1993-1 CPD Paragraph 472 (Cibinic 1997).

Comptroller Decisions (cases) Following is a synopsis of Comptroller General Decisions that relate to the evaluation of past performance and experience: Matter of Marathon Construction Corporation, B-284816 Protest is denied in the procurement for the construction of a berthing wharf for nuclear powered aircraft carriers, Marathon Construction Corporation, protested that it should have received a higher rating for its experience and past performance based on numerous small projects, even though it never successfully completed a project of this magnitude. The protest was denied because the agency reasonable concluded that Marathon's lack of experience on comparable large projects represented a higher performance risk than that of a contractor with comparable experience on large projects. CAN Industrial Engineering, Inc, B-2711034, June 7, 1996 Where request for proposals for an automated storage and retrieval system stated as a minimum requirement that proposals must demonstrate expertise and experience with the Army's information software system, and the agency stated at a pre proposal conference that only expertise and experience with the Army's information software system would meet the RFP's minimum requirement, award to an offeror that had expertise and experience with a similar software system but not the Army's software system was an improper relaxation of the RFP's stated minimum requirement. PMT Services, Inc, B-270538, April 1, 1996 Agency's technical evaluation of an Offeror's past performance of hazardous waste disposal contracts under the solicitation's past performance evaluation factor and selection of a substantially higher-price proposal for award is unreasonable where the agency did not meaningfully consider the complexity of the protester's prior contracts vis-'a-vis the complexity of the pending requirement. Conclusion While the FAR does not treat experience as a separate evaluation factor, the Comptroller General recognizes that separate evaluation makes sense.

I believe that it is in contracting activities best interest not to dilute the importance of experience and past performance when determining what offer represents the best value. When experience and past performance are treated as separate evaluation factors it becomes clearer in the minds of potential offeror's that experience and past performance are each important evaluation factors for consideration. Treating the experience and past performance as distinct and identifiable factors reduces the likelihood that its impact being lost within other factors is greatly reduced and the evaluation process is simplified. Therefore, COs should ascertain that the terms of experience and past performance are clearly defined in the solicitation. Therefore, I have personally have decided to treat experience and past performance as separate evaluation factors.

In my attempt to distinguish between the two factors, following are excerpts from Sections L and M of a pending solicitation for custodial services: Excerpt 1: As described below, each offeror shall (a) provide information that demonstrates its experience and past performance on relevant contracts. a) Experience - The Government will evaluate Offeror's experience on custodial contracts and related services that are of similar size and complexity of this requirement. 'Similar size and complexity' for the purpose of the evaluation means: similar in dollar amount; number of client / customer employees services; and number of contractor employees assigned to the contract, and types of services performed. b) Past Performance - The Government will evaluate the quality and timeliness of service; effective management of the contract; and customer satisfaction. The Government will use information submitted by the offeror. Additionally, the Government may, at its discretion, obtain and evaluate information from sources other than those provided by offeror.

Excerpt 2: The purpose of the past performance evaluation is to allow the Government to assess the Offeror's ability to perform the effort described in this RFP based on the Offeror's demonstrated experience and performance on relevant contracts performed within the past three (3) years that are similar in size and complexity. The assessment process will result in an overall risk rating of exceptional, very good, satisfactory, neutral, marginal, or unsatisfactory. Offerors with no relevant past or present performance history shall receive the rating "neutral"; meaning the rating is treated neither favorably nor unfavorably. Excerpt 3: If the lowest priced evaluated offer is judged to have an exceptional performance risk rating, that offer represents the best value to the Government and the evaluation process stops at this point. Award shall be made to that offeror without further consideration of any other offers. Excerpt 4: The Government reserves the right to award a contract to other than the lowest priced offer if that offeror is judged to have a performance risk rating of "very good" or lower.

In that event, the contracting officer shall make an integrated assessment best value award decision. ReferencesCibinic, J. (1997). Experience Requirement in Best Value Procurements: Rampart Confusion. (pp. 90 - 95) The Nash & Cibinic Report, Volume.

11, Number 6. Washington DC: West Group. General Service Administration, Department of Defense & National Aeronautics and Space Administration (2001). Federal Acquisition Regulation (FAC 2001-06). Chicago: CCH. Houghton Mifflin Company (1988).

Webster's II New side Riverside University Dictionary. (p. 450) Boston, MA: Riverside Publishing Company. Nash R. (2001). Postscript: Experience Requirement in Best Value Procurements.

(pp. 150 - 153) The Nash & Cibinic Report, Volume 15, Number 10. Washington DC: West Group. Figure 1 Sample Reference Sheet Question Company/Customer Reference Information 1.

Provide Name of Company/Customer or Government Agency if applicable Customers Address Where Work Performed City, State, Zip CodeName of contact who can verify your work performance and submitted information: Contact Phone Number/ Fax Number: Contact Cell Phone and / or Pager Number if applicable: Contact: Phone: Phone: 2. If a Government Contract, Contract Number: Contract Officer (CO): Phone Number and Fax Number: 3. Provide a brief description of all services performed on the contract. 4.

Number of building (s) on-site / off site. Total square footage serviced and number of occupants per each building. 5. Number of occupants per building. # On-Site: Total Square Footage: Number of Occupants: # Off-Site: Total Square Footage: Number of Occupants: 6. Number of permanent supervisors / employees assigned to the contract project.

Supervisors: Employees: 7. Contract Start Date: Contract Completion Date: 8. What was the dollar value of the contract per year: Total for term of contract: 9. Names of all Sub-Contractors and their roles on the contract. Name: Role: Name: Role: Name: Role: Name: Role: 10. Brief statement regarding your compliance with the contract terms and conditions.

11. Your statement regarding any known performance outlined as unacceptable and / or not in accordance with the contract terms and conditions. 12. If contract was not renewed for all option years, what is your explanation why it was not renewed?.