Winning with Past Performance

Strategies for Industry and Government

Jim Hiles, W. Earl Wells

• Publisher: Berrett-Koehler Publishers
• Year: 2015
• ISBN:
  9781567264494
• Edition: 1
• Topic: Business
• Subtopic: Business Writing
• Index: Business

Use past performance to win contracts and deliver results at the lowest risk and cost!
The federal government has focused on past performance to rank bidders for almost two decades, yet both the collection and use of past performance information remain disjointed, siloed, and not fully understood in government or industry. Nonetheless, contractors' livelihoods depend on how the government collects and uses their past performance information.
Winning with Past Performance: Strategies for Industry and Government aims to enhance awareness and understanding of past performance processes as well as to promote smart business practices on both the buyer and seller sides of the equation. The authors examine all aspects of past performance, including using feedback to improve performance, the government's evolving use of past performance, and the future of past performance as an evaluation tool.
Winning with Past Performance brings it all together on the subject of past performance and is a ready reference for buyers, sellers, policymakers, contracting professionals, and service providers.

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.

DEFINITION

Our reference to the “system” of collection, retention, and use of past performance information is meant to refer to the overall ecosystem, meaning the aggregate of behaviors, methods, norms, and so on that make up the commonalities of collection, evaluation, retention, and use of past performance information across the government contracting market. The Federal Acquisition Regulation (FAR) has definitions for more than 247 terms that relate to procurement, and in FAR 2.101 defines past performance as an offeror’s or contractor’s performance on active and physically completed contracts. In the FAR, the term past performance appears approximately 20 times spelled out and a little more than 100 times abbreviated as PP. It is apparent that past performance is a substantial part of the government acquisition process although it is minimally defined, perhaps because it is an all-encompassing concept that involves many details and varying perspectives. Whatever the reason for the simple definition, knowledge and awareness of how past performance is evaluated are critical to successful proposals to perform government work.

One of the most succinct definitions of past performance is that it is an evaluation factor (Edwards, 1995). Past performance defined as an evaluation factor distinguishes it from past performance information, or relevant information about a contractor’s actions under previously awarded contracts (Edwards, 1995 and 2005). In this volume, however, we will not limit the term past performance to an evaluation factor and will use the definition put forth by Edwards in 1995:

“Past performance” is a composite of three things: (1) observations of the historical facts of a company’s work experience—what work it did, when and where it did it, whom it did it for, and what methods it used; (2) qualitative judgments about the breadth, depth and relevance of that experience based on those observations; and (3) qualitative judgments about how well the company performed, also based on those observations. (p. 25)

COLLECTING PAST PERFORMANCE INFORMATION

Government agencies have several methods of collecting past performance information that shows relevant experience and performance. They can review files from prior contracts, evaluate the information submitted by the offeror in a proposal, and reach out to a firm’s past customers with direct conversation by e-mail or phone or they may use questionnaires. Other sources and information that the government refers to are law enforcement bureaus, the Better Business Bureau, consumer protection agencies, business credit reports, and other measures of creditworthiness (Edwards, 2005).

It is also important for contractors to know that their past clients are satisfied. If a client hesitates to give thoughtful positive feedback to address concerns, or a mutually acceptable compromise cannot be reached, then consideration should be given to not using that client as a past performance reference.

If an offeror becomes aware of the potential that a specific client may provide negative feedback if queried about the firm’s past performance, it typically has time to respond and should do so. The evaluating government agency that first discovers or becomes aware of negative past performance information has the responsibility to inform the firm of the adverse information and allow them an opportunity to respond, rectify, or provide supporting documentation that presents its perspective on the information (FAR 15.306).

An unintended result of the increased use of past performance and associated queries to government personnel, such as past performance questionnaires (PPQs) and contractor performance assessment reports (CPARs), is PPQ/CPAR fatigue. Government clients of frequently bidding firms become annoyed or burdened by the associated “hurry up and submit them” PPQ requests. This fatigue is evident in some agencies’ decisions to not provide PPQs or participate in other forms of customer satisfaction surveys and measurements.

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 re...

Table of contents

• Cover
• Title Page
• Copyright
• ABOUT THE AUTHORS
• CONTENTS
• FOREWORD
• PREFACE
• ACKNOWLEDGMENTS
• INTRODUCTION
• CHAPTER 1: Past Performance in Context
• CHAPTER 2: The Past Performance Cycle
• CHAPTER 3: Past Performance as Storytelling
• CHAPTER 4: Past Performance Information
• CHAPTER 5: Past Performance Evaluations
• CHAPTER 6: Disputes and Protests
• CHAPTER 7: The Changing Face of Past Performance
• CHAPTER 8: The Future of Past Performance
• REFERENCES
• ACRONYMS AND ABBREVIATIONS
• GLOSSARY
• INDEX