EVALUATING PAST PERFORMANCE

As stated, three main criteria make up the standards for evaluating past performance (Nash et al., 1998):

• Observation of a company’s historical facts

• Qualitative judgments about the breadth, depth, and relevance of projects

• Qualitative judgments regarding how a company performed based on observations.

These three criteria allow the government to get the full scope of a bidder’s ability to do a similar project in the present or future.

Organizations should develop a portfolio of past performance projects that gives them relevant experience for the types of contracts that they wish to bid on. The government evaluates a contractor’s actions under previously awarded contracts, including its ability to meet contract specifications, provide good workmanship, control costs, keep to a schedule, cooperate and otherwise exhibit reasonable behavior, achieve high customer satisfaction, and demonstrate concern for customer well-being (FAR 42.1501).

We mentioned earlier that experience and past performance are often used interchangeably. This holds true in the FAR. However, some government agencies show differences between the two. Although the FAR does not specifically define experience, agencies define it as the kind and amount of work that an offeror has done. This definition distinguishes experience from past performance as an assessment of how well an offeror did in past work, and it is the meaning used in this book.

One of the best things about experience from an organizational or government point of view is that it presents opportunity to learn from errors, improve systems, and grow. This inevitably improves an organization’s relevant experience because it will develop a history of problem-solving—or, better yet, problem prevention.

Relevant Experience as It Relates to Past Performance

Depending on the specific circumstances under which past performance is being evaluated, in addition to the past performance and experience of the firm, the past performance and experience of key personnel, subcontractors, predecessor companies, and project managers may be cited in a proposal. Including individuals or organizations in a proposal that are not proposed as an active part of the project being bid is less relevant than referencing individuals and organizations that are proposed. The focus must remain on highlighting the relevant experience within the abilities of the individuals or organizations that will be involved with the project the firm is bidding on. This is reaffirmed by FAR 15.305, which states that evaluations should take into account past performance information regarding predecessor companies, key personnel with relevant experience, or subcontractors that will perform major or critical aspects of the solicitation requirements of the project being bid on, when such information is relevant to the acquisition.

There are two opposing, complementary approaches an evaluation scheme can take to relevant experience for past performance purposes. These approaches can be blended in a variety of ways. One is to accept the performance of an offeror’s project managers, key personnel, and subcontractors as past performance for that offeror. The other option is to evaluate the offeror on its own record and specifically exclude the performance of its project managers, key personnel, and subcontractors. The first option can obscure the fact that an offeror may have no relevant experience as a company for this specific bid. This is especially true if it hires people who have relevant experience just for the project and purposes of submitting the proposal (Edwards, 2005).

Firms new to the government contracting market, of course, must have a starting point, which may appear to an evaluator as a lack of relevant experience. FAR 15.305 states a “neutral rule” that in cases where an offeror has no relevant past performance experience or for whom information on past performance is not available, that offeror may not be evaluated—favorably or unfavorably—on past performance. The spirit and intent of this rule is that a firm with no record of performance is different from a firm with a record of poor performance. To maintain this spirit, the comment “none” or “no record” will usually be incorporated into the review when there is no relevant experience. The information is neither good nor bad: One cannot give a negative review of something that does not exist.

Although the government may not downgrade a contractor for lack of relevant experience under the neutral rule, that does not mean that contractors without relevant experience will be rated as favorably as an offeror that has sound relevant experience. This is important to keep in mind, and a bidder must include details and emphasis in other sections of the proposal to give strength and merit to the offeror’s proposal when the offeror has no relevant past performance.

Relevant is loosely defined by the government. Most offerors should be able to find some past experiences to place in the relevant experience area. It may seem a reach at times, but if it shows initiative, determination, and successful results, it will speak positively about the aspirations and potential of the contractor. If done correctly (see Chapter 5), this is more favorable than “none” or “no record.”

Use of Past Performance as an Evaluation Factor

Both buyers (agencies) and sellers (bidders/offerors) evaluate past performance and have much at stake when doing so. However, the government is working to award a contract and the bidder is working to get the best rating and receive the award. The purpose of past performance as an evaluation factor is to help the government distinguish between offerors who are vying for government contracts. Bidders, on the other hand, are evaluating their own performances to select those projects that maximize their past performance evaluations.

The most effective way for a firm to relate or share past performance experiences is through telling a story. Thinking of the presentation of past performance information as a story helps to lay out the scenario, show the solutions that were developed and used, detail any obstacles and how they were overcome, and demonstrate the outcome and impact of the firm’s efforts on the agency’s mission.

Use of Past Performance by the Buyer

Past performance evaluations are used by the buyer to assess the risk of award to a specific offeror—the “risk” of satisfactory performance if an award is made to that specific offeror. When considering an offeror’s record of past performance, government agencies can and may evaluate the past performance information gleaned from an offeror’s proposal along with information from other sources, such as the evaluating agency’s direct knowledge, government repositories (e.g., the Past Performance Information Retrieval System), or direct conversation with/questionnaires from other government agencies. However, the relevant experience that a contractor relates through the past performance stories in its proposal, in most cases, will be the primary and in many cases the only source of past performance information used by the evaluating agency to determine the qualifications and value of the contractor.

The information that the government is looking for will be specified in the solicitation. Straying from what is requested will not usually result in a favorable outcome for the offeror. For example, as an offeror, you may have a completed project that went phenomenally well—it may even be your crown jewel. But if that experience does not relate to the upcoming project, it will not help obtain a more favorable rating from the government agency.

The stories that an offeror tells are evaluated, analyzed, confirmed, and weighted by the government evaluation team or evaluator. The specific approach used to perform this evaluation is dependent on numerous factors, including the size and scope of the procurement, the level of competition expected or achieved, and the availability of government personnel to perform the evaluation. Government personnel have varying degrees of knowledge, experience, and skills in conducting these evaluations. Their ability to dissect the pertinent past performance information submitted and discern the important and relevant elements is at the heart of the evaluation. That is why a well-told story, based on fact, is so important for a firm that wishes to succeed in the competitive government contracting market.

Use of Past Performance by the Seller

Stories and other elements of past performance information that a contractor shares in its bid for government work should express the unique pieces of information that help it stand apart from other offerors. Reporting a success with “We did teamwork, found solutions to unexpected problems, and reached a satisfactory conclusion” is not a unique story. Organizations need to provide specific details and to elaborate how the conclusion would have been different had anybody else been involved. These details create the distinction between a firm’s experiences being truly unique and the firm’s merely hoping they are unique.

When an organization is attempting to sell its goods or services to a government agency, it must use its past performance to show the relevance of the work it has done previously and carry it to the present. However, government agencies typically limit the inclusion of past performance information in proposals to a time period, such as the previous three or five years.

Stories persistently retold in organizations, such as those presented in proposals submitted to government agencies, maintain an organization’s identity. These stories are either influenced by the organization or they are not. There is a saying about social media: The question is not whether you have a social media presence. You do—you just might not have created it yourself. Past performance is a similar phenomenon. Sellers cannot dictate their identities to a buyer, at least not as much as they would like to. Some stories about firms are told by others, as in Contractor Performance Assessment Reporting System (CPARS) reports for example. Sellers do describe their past performance and explain “who they are” to the best of their ability, and many times these descriptions are tailored to very specific audiences of buyers. Buyers rely upon stories from multiple sources to determine the seller’s identity and to understand the seller’s identity in the specific context of a bid or purchasing decision.

Because people are attracted to organizations with persistent stories that end in positive outcomes, contractors must create factually accurate stories that show how their abilities and efforts led to the desired results for their customers. In the same way, evaluators are attracted to stories of past performance that are easily relatable to their current requirements and challenges—and that make it very clear the contractor not only has achieved positive outcomes in the past but can achieve them in the future. The most common organizational story has the following script: organizational members confront a problem, the employees take action, and the problem is either solved or not. Past performance guidance in solicitations, without using this language, frequently asks for these elements in proposals.

Whatever script is followed, the stories a contractor tells about its past performance will be viewed as either favorable or unfavorable by the evaluator. The aspiring bidder needs to find ways to make the story both unique and relevant to the evaluating audience by detailing specific actions taken to reach a favorable outcome for past customers.