Contract Performance - Research Paper Example

?Running head: Contract Performance Contract Performance Insert Insert Insert 23 November Contract Performance Federal agencies spend huge amounts of money in contracts, thus resulting in an obligation to ensure that firms awarded contracts have the capability of performing satisfactorily. Federal Acquisition Regulation (FAR) places emphasis on the need of federal agencies to ensure contracts are awarded to firms with proper track record in performance. These aspects are emphasized, considering the fact that taxpayer’s money is used to fund the contracts and thus performance obligation to the public. The Federal acquisition Regulation provides federal agencies with different means of considering firms’ past performance and prior experience with regards to how well these firms have performed in similar work. Federal Acquisition Regulation The Federal Regulations Requirement sets particular regulations with respect to solicitation procedures, as well as conditions and terms of contracts performance of the firms offered the contract, procedures of terminating contracts and controlling cost (Cushman and Myers, 1999, p.1623). Federal agencies that offer contracts include U.S. Army Corps of Engineers (USACE), Public Buildings Service (PBS), and Customs and Border Protection (CBP). Contract awarding in these agencies are usually based on procurement decision by the respective departments. In this case, past contract performance data is mainly based on the above named agencies with respect to regulations, procedures, and policies applied in awarding contracts to firms. However, contract performance review results cannot be generalized to all federal agencies contract procurement with consideration top past performance and experience. Consideration of past performance and prior experience of firms by federal agencies is applied during three phases of awarding contracts. The three phases include preparing solicitations, responsibility determination, and proposal evaluation with regards to whether firms to be awarded contracts have the potential and capability to perform satisfactorily. In addition, Federal Acquisition Regulation provides a broad spectrum of decisions-making processes by federal agencies with respect to methods of acquisition, evaluation aspects, relative comparisons alongside past performance and prior experience. Nevertheless, contract performance consideration factors outweigh price factor among federal agencies when determining factors to consider in awarding contracts to firms. Federal agencies use negotiated procurements and sealed bidding to award contracts to firms. Although sealed bidding focuses on lowest price bidder, it puts into consideration that all bidders have attained required performance standards and responsibility. Lowest-price technical selection process is used in awarding contracts that require a clearly defined technicality, where there are minimal chances of unsuccessful performance of the contracts. Negotiated procurements use one or more processes of source selection processes such as trade-off processes, which consider non-price aspects of evaluation. In contracts where development work is required, contract performance considerations can be achieved through best-value trade-off selection process when awarding the contracts. Decisions by federal agencies to award contracts to particular firms is based on factors of evaluation and sub factors that are of key significance and importance to contract performance consideration. The Federal Acquisition Regulation generally requires that every selection decision-making process should evaluate costs of the contracts to the government alongside quality consideration factors of the service through putting into consideration non-cost evaluation aspects. According to FAR cost principles, the contractors should follow specific criteria such as billings, contract proposals, and claims submitted to the government. Cost accounting standards seek to provide governments with an opportunity to review pricing data with regards to contract performance estimated costs. In addition, the Federal Acquisition Regulation also requires that when awarding contracts, competitive procurement negotiations should be put in place to ensure that the best performing and capable factors are put in place (Carmichael and Rosenfield, 2003, p.60) Responsibility Determination During determination of responsibility among the bidding firms, the contracting representatives determine if the bidder has the potential and capability of performing successfully. Generally, potential and capability analysis is based on analysis of many aspects such as technical ability, financial resources, quality adherence, and operational control. With regards to negotiated procurement of contracts, past performance is considered a factor of evaluation in mass solicitation, although prior experience and technical factors may also be included as evaluation factors. Moreover, past performance in many agencies is considered with respect to specific period in the past such as in the last three years. However, emphasis on past performance and prior experience varies depending on selection process used. Selection process may include lowest-price technically accepted aspects and best value-trade off aspects. Past performance and prior experience were less emphasized in the application of the lowest-price technically accepted aspects. In addition, contract performance is also achieved through past experience of firms on similar works, alongside effectiveness with management and contract schedules in the contracting agencies. Decisions as to whether a bidding firm has technically acceptable skills and facilities to ensure satisfactory performance. Contracts that are based on indefinite quantity require that past performance and experience on similar cases be considered to ensure successful performance. 1 During the phase of solicitation preparation, the contracting representatives develop the solicitation documentations that summon firms seeking to be awarded contracts to submit their bids, which fulfill particular requirements. The solicitation seeks to identify relevance of past performance and experience of the firms with the contract under consideration. Federal Agency representatives then conduct an assessment to compare bids against selection consideration factors to choose on the winning firm. Phase of contracting agency solicitations outlines how past performance and experience will be considered and in some cases, specifications of what to be considered in their solicitations as relevant experience is put across (Kulakowski, and Chronister, 2006, p.328). Contract Proposal Evaluation According GAO reports, Federal Acquisition Regulation requires that contracting agencies should place emphasis on evaluating competitive proposals through relative merit assessment in accordance to specified selection criteria in solicitations. A variety of methods such as adjectival rating, ordinal rankings, and numerical weights may be used by contractors when evaluating bidder proposals and past performance. Evaluation rating statements may include outstanding, satisfactory, highly satisfactory, and even unsatisfactory. The contracting representatives evaluating bidding firms may use a variety of reliable sources apart from database information of federal agencies. Information from federal agencies database, referred to as Performance Information Retrieval System, cannot be solely relied upon, since it consists of incomplete information limited to federal contracts. Rating of past performance of bidding firms such as unsatisfactory and high-risk performance may be due to the fact that the firm demonstrated that it had prior experience to contracts in question, but the experience is not particularly relevant in terms of technical skills and specific qualifications. According to the Federal Acquisitions Regulations, bidding firms that do not have relevant track record of past performance may not be favorably and unfavorably evaluated on the basis of past performance alongside other companies, thus the need for neutral rating. Past performance rating may be contested by the bidders who find their rating inappropriate, given that the stated and proposed prior experience is relevant to the contract under consideration. Agencies may however deny contested rating if the firm’s reference to past performance is clearly evaluated to be undemonstrative of the means of successful performance, and if the experience was irrelevant to contract procurement. In addition, firms’ past performance and prior experience must be in line with the specified solicitation criteria, since any slight deviation from the criteria renders the firms’ claims irrelevant. Responsibility determination is necessary before awarding the contracts to the winning offeror. The determination must put into consideration satisfactory performance track record, sufficient financial resources, and relevant contract experience among other appropriate requirements. Responsibility determination entails pass or fail conclusions with reference to evaluation of performance comparison from past contract performance. On the other hand, solicitation of sealed bids is automatically determined on the basis of responsibility, if the lowest bidding offered wins considering price and factors related to prices are responsive to solicitation criteria. Responsibility determination completes the process of possible success performance in case of sealed bidding. Nevertheless, contract performance generally puts into consideration firm’s capability, responsibility aspects, and experience relevance of the contract offerers irrespective on the period of experience. Conclusion Consideration of past performance and experience is not limited to past contracts done in the particular federal agencies, but also all other organizations such as the private sector, local governments and the government itself. Determination of firm’s responsibility aspect is also required for contract performance. However, consideration of past performance and experience is not an impediment to firms winning contracts, since firms are only required to prove their successful work. References Carmichael, D. R., & Rosenfield, P. (2003). Accountants Handbook Volume 1. NJ: John Wiley and Sons. Cushman, R.F., & Myers, J.J. (1999). Construction Law Book. NY: Aspen Publishers. Kulakowski, E.C. & Chronister, L.U. (2006). Research Administration and Management. 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