“Clicks” and “likes” drive much of the modern economy. Positive reviews and five-star ratings help identify premium service providers and lead consumers to vote with their feet.

The federal marketplace works in much the same way.

Federal agencies evaluate contractors through the Contractor Performance Assessment Reporting System (CPARS or CPAR System). Other federal agencies can then access and rely on those written evaluations when assessing a contractor’s past performance and fitness for a new contract award.

The majority of competitive solicitations include past performance as an evaluation factor—so poor reviews can lead to less business for contractors. Even worse, CPARS evaluations can include a Recommendation Against Future Performance—a devastating blow for any contractor seeking new business from the government.

But what about erroneous reviews based on subjective interpretations or other agency evaluation errors? The Contract Disputes Act of 1978 has an answer for that.

The law is increasingly recognizing a contractor’s right to use CDA claims to challenge erroneous performance evaluations issued by federal agencies on public contracts. The purpose of the claim is to compel the agency to modify the evaluation to reflect the contractor’s actual performance.

This article provides practical strategies for contractors to push back against unfair and harmful performance evaluations before they become final. It also details the claim and litigation process in the event that early intervention is unsuccessful—including innovative strategies for performance evaluation disputes that open the door to recovering monetary damages associated with negative government performance evaluations.

Government CPARS Evaluation Ratings and Narratives

Understanding how the CPAR System operates is essential for contractors competing in the federal marketplace.

The Federal Acquisition Regulation requires agencies to track and collect contractor performance information for use in future source selection decisions. The central repository for contractor performance information is the CPAR System. The System provides current, complete and accurate contractor past performance information that is available for use by federal agencies during source selection decisions.

By relying on well documented past performance ratings, the government theorizes that it increases the odds of agencies continuing to do business with contractors that provide quality products and services in support of the agency’s missions. The CPAR System provides information for use in awarding best value procurements, including, among other things, whether the contractor consistently provides quality and on-time products and services, and otherwise meets all contract requirements. The Contracting Officer can also use this performance information (in conjunction with the other sources of information outlined in FAR 9.105-1(c)) to support responsibility determinations for prospective contractors.

The FAR provides that every CPARS evaluation must include an assessment of—at a minimum—the following five factors:

• technical (i.e., the objective quality of the product or service);
• cost control;
• schedule/timeliness;
• management; and
• small business subcontracting (when applicable).

In addition to these core areas, the agency is free to add additional evaluation criteria—including subfactors—on a contract-by-contract basis.

Agencies evaluate each factor (and subfactor) using a five-tier rating scale. The scale includes the following range of possible ratings: Unsatisfactory (the lowest rating), Marginal, Satisfactory, Very Good and Exceptional (the highest). The agency must also provide a written narrative that satisfies the requirements for the assigned rating, as set forth in FAR 42.1503, Table 42-1.

In addition to these individual ratings, the CPARS evaluation also includes an overall recommendation concerning future performance. At the end of the evaluation, the agency must complete the following statement regarding its willingness to work with the contractor moving forward:

Given what I know today about the contractor’s ability to perform in accordance with this contract or order's most significant requirements, I (‘would’ or ‘would not’) recommend them for similar requirements in the future.

CPARS Procedure and Timeline

The CPAR System involves a three-step process that offers a direct line of communication between the contractor and the agency to discuss the performance evaluation:

1. agency initial evaluation;
2. contractor comments; and
3. final evaluation.

The entire evaluation process should not take more than 120 days following the end of the period of performance.

The critical element of this process is the contractor’s comments. In the event of a negative evaluation, the comments should be as detailed and specific as possible by addressing the agency’s concerns point-for-point. The objective is to show that the agency’s narrative is factually incorrect and that the corresponding negative ratings lack a rational basis in light of the contractor’s actual performance.

The contractor has a total of 60 days to submit comments. That said, contractors should seek to finalize comments in the CPAR System within 14 days (when the evaluation is released in the CPAR System in pre-final form). That way, the version of the evaluation released on the CPAR System is guaranteed to include the contractor’s comments. Even assuming the agency refuses to make any changes to the evaluation, at least the ratings will be viewed in the context of the contractor’s comments.

Strategies Resolving Negative Performance Evaluationsthe Critical Juncture

A company commendably performed a government contract, but the agency’s negative performance evaluation includes errors and false claims. What now?

Contractors must treat every CPARS performance evaluation (interim and final) with a level of attention and detail commensurate with the importance to the business. That includes participating in the CPAR System comment period and engaging with the agency to make sure that the evaluation is fair and accurate. If those proactive measures are not enough, the contractor should take advantage of the claim (and, if needed, appeal) process. The risks of negative performance evaluation living in the CPAR System are simply too great to ignore.

If the agency does not self-correct in response to contractor comments, the contractor must file a conforming CDA claim with the contracting officer as a prerequisite to litigation. The contracting officer has the authority to resolve the dispute at the claim level or, alternatively, agency counsel can step in and engage with the contractor to resolve the claim. It is therefore possible to resolve CPARS disputes without the contractor having to engage in full litigation before the Court of Federal Claims or a Board of Contract Appeals. If the agency stands by the CPARS evaluation and denies the contractor’s claim, the contractor may appeal that decision to the Court or appropriate Board. A contractor facing litigation against the agency must focus on:

• highlighting the agency’s specific evaluation errors; and
• demonstrating prejudice arising out of the unfair and unjust evaluation.

This effort must amount to more than a bare recitation of the elements for relief. The contractor must point to detailed errors in the agency’s evaluation procedure and/or specific factual mistakes in the evaluation itself. The factual findings contained in the evaluation may only be successfully challenged when the contractor proves the findings are arbitrary, capricious or an abuse of discretion.

Cutting Edge Strategy: Monetary Damages

Although contractors typically pursue CPARS appeals as equitable claims, there is at least one recent Armed Services Board of Contract Appeals case (Gov’t Servs. Corp., ASBCA No. 60367 (June 20, 2016) suggesting the possibility of recovering monetary damages.

While no Board or Court has actually granted monetary damages in a CPARS claim (yet)—the rising road suggests that outcome is inevitable. Specifically, the Board’s decision suggests that contractors can pursue a very specific type of monetary relief as part of a performance evaluation claim. The Board allowed the contractor to proceed with a claim for “administrative and legal” costs associated with addressing an allegedly arbitrary and capricious performance evaluation that remained in the CPARS System while the contractor continued to bid on new work. These administrative and legal costs are different from “future profits” on work that the contractor claims it would have received, but for the erroneous evaluation. The law appears settled that claims for that kind of harm are too speculative and not available to contractors.

CPARS performance evaluations serve a critical function in government contracting. Federal agencies want to work with skilled and upstanding contractors—and the CPAR System provides a central repository for agencies to review how a contractor performed on previous projects. While the process intends to provide an objective assessment of contractor performance, history and experience tell us that is not always the case. An inaccurate CPARS evaluation can be fatal to a growing business. A government contractor that cannot get new work from federal agencies cannot survive, let alone thrive. Contractors must vigilantly monitor agency performance evaluations and participate in the CPAR System’s comment process. In the event of an unfair evaluation, contractors should follow the practical steps outlined in this article to ensure that the agency corrects its errors.