INTRODUCTION

Performance evaluation is not, at base, an arcane concept. We all use performance evaluations in some capacity to guide our purchase decisions, whether we are buying items off the shelf at an established retail outlet or hiring a local carpenter to install cabinets in our kitchens. Indeed, we use past performance information even if there isn’t any, because the absence of any knowledge of past performance informs how we think about or judge a prospective seller, and this informs our thinking on the seller’s future performance. When we buy something important, do we want to buy it from someone who will be “learning on the job” on our job? Or do we want to buy that item or service from someone who has provided it previously, perhaps to other buyers?

The same holds true for the government when it is determining which aspiring offeror should be awarded a project. Over time, the federal government has evolved the following process for choosing the best performer for a job: Government representatives assemble a solicitation with specific guidelines and parameters that they need the bidder to address—regarding, among other things, the bidder’s past performance. After receiving all responses, they evaluate the information and award a contract based in part on the history of the bidder’s contract performance.

The question of how to best gather and judge information about past performance has been a challenge for the government from the very beginning. Consider the problem confronting the American colonies at the outset of the Revolutionary War, when creating a navy and acquiring the ships that would make it up was a matter of utmost importance to their defense and security. At the time that the colonies began contracting out for ships to be built, warship design and construction was solely the province of national governments and their shipyards. Since this monopoly was controlled by nations (e.g., Britain) not necessarily disposed to sell to the Americans, the Continental Congress’ Naval Committee did not have access to a whole category of shipbuilders. An additional factor for the Congress to consider when hiring contractors to design and build warships (as opposed to fishing vessels) was the recent advance of the use of detailed blueprints from which to build. A buyer making highly consequential ship-purchasing decisions would be wise to consider the varied experience of American shipbuilders and their workforces in following blueprints, as well as with current naval warship construction techniques.

How were they to make decisions about to whom they would award these valuable contracts? At a basic level, if we want to have a ship built, would we hire a person or a company that makes barrels or distills whiskey, or would we naturally turn to a company whose main focus has been building ships? This line of thinking naturally points the buyer toward a focus on past performance: Has this company built ships before? What types of ships? How good or effective were the ships built by this company?

There were several other notable elements of shipbuilding in the 1700s. British naval ship design had stagnated, and this was an active period of shipbuilding in the American colonies. A number of naval ships were built in the colonies, and wars between France, Spain, and England, from the War of the Spanish Succession through the French and Indian War, brought captured warships into colonial ports, where astute shipbuilders could study them. A number of privately owned shipyards that had recently built ships for the British Navy had retained the employees who had worked on these recently ended efforts and had a cadre of workers who had studied captured warships operated in the colonies (Chapelle, 1949).

Therefore, with specific ideas of the types of vessels and the number and placement of guns needed, the Naval Committee turned to the previous experience and performance of prospective shipbuilders and outfitters to base its decisions regarding which American shipbuilder would fulfill these needs. This use of past performance assisted the Naval Committee in discriminating between prospective sellers.

Although past performance is a natural consideration and has been used as an implied evaluation factor, this use was not formalized by the U.S. government until the 1960s through a Department of Defense past performance reporting system, the Contractor Performance Report. This system was in place for 11 years before DoD concluded that the costs of the program outweighed its benefits and it was discontinued (Edwards, 1995).

Lessons that carry through from this history are reflected in the 1997 National Performance Review benchmarking study report, which noted

All high-performance organizations whether public or private are, and must be, interested in developing and deploying effective performance measurement and performance management systems, since it is only through such systems that they can remain high-performance organizations.

For sellers, the lessons are to actively manage and understand their current performance as a feedback mechanism to develop better capabilities and higher performance, as well as to understand how, when, and why the government will need to rely on past performance information in buying decisions. For buyers, the lessons are to be aware of the market and market factors that enable meaningful discrimination between prospective suppliers and to recognize and act on the appropriate use of past performance as one of those factors.

Since the founding of the United States, the role of past performance in government evaluations and contract awards has continually produced challenges for contractors and government officials desiring to understand, manage, and work with it.

Today, great strides have been made in ensuring improved and increased access by government officials to pertinent past performance information. These improvements include standardization of the past performance information that is collected, how it is collected, where it is collected, and how and by whom it is accessed. Such advances have helped alleviate some of the frustrations that contractors and government officials have expressed with cataloging and accessing past performance information. However, there is still a demand for—and considerable room for—improvement. Gaps that remain include consistent completion of past performance reviews, uniformity in documenting past performance, adherence to past performance information collection protocols, accessibility, and the timeliness of past performance information collection.