Chapter 1 PAST PERFORMANCE IN CONTEXT

Past performance is frequently a central element of the process used by nearly all government agencies when they evaluate companies and proposals to determine which ones will be awarded contracts. A company’s past performance therefore helps connect it to the government agency acquiring products or services. For this reason, a strong grasp of past performance and its core components is essential to understanding the role it plays in government contracting. The three main elements of past performance are relevance, experience, and performance. The specific differences and similarities between these elements depend on the interpretation and use of past performance information by the government agency.

Most individuals who work for someone else are subject to and familiar with a close analogy to past performance—that of the performance evaluations commonly used to determine pay and pay raises, recommendations for promotion, or otherwise ensure they are an asset to the companies they work for. Performance evaluations are by their nature backward-looking; the evaluation is necessarily of performance that has already occurred; hence the word “past.” The use of firm past performance by the government is similar. The government uses past performance as an evaluation factor to determine the fit and positive impact that a specific business entity would have on the project for which it has created a solicitation.

To closely and accurately analyze the history of a firm, we must examine how it has conducted its business in the past and determine whether it has the specific proven expertise that lends strength to its past performance evaluation in context. For example, a shipbuilding entity likely has experience building ships—that is a fairly safe assumption. The key is identifying the business’ exact experience that is beneficial to the project it is vying for. Does its experience lie in laying keels or putting up sides? Or does it outfit interiors or install command and control systems? Is its experience in building one rowboat at a time as a jobber to a major shipbuilding company, or is it as a prime contractor managing the design and build-out of a new line of advanced frigates? The experience must be linked to the project the contractor is bidding on. This is the concept of relevance.

Many business schools teach a lesson regarding the individual who claims to have 20 years of “experience.” Claims such as that are not particularly interesting or noteworthy. After all, it does not tell us anything specific about the person or the experience. People commonly may have been employed in a particular field for the past 20 years. But have they grown their expertise during their career, or become specialists? Some people shy away from opportunities to learn and continue to grow professionally; they essentially have one year of experience 20 times over. It’s people who continue to educate themselves, challenge themselves, and make strides to become up-to-date experts in certain areas who can truly claim 20 years of experience. This is the concept of experience.

But a firm’s raw experience, while important, is not as critical as its performance. Government agencies need to know how well a firm has performed its project responsibilities in the past. The shipbuilder may have built the ship’s hull, but it is important to know that the ship stayed afloat, demonstrated maneuverability suitable for naval operations, and achieved other desired results, such as crew survivability or increased time between maintenance. This is the concept of performance.