Prior Experience and Past Performance as Evaluation Criteria in the Award of Federal Construction Contracts

Over the last 10 fiscal years, federal agencies have increased their spending on construction contracts, leading to obligations of almost $54 billion in fiscal year 2010. When awarding contracts, the Federal Acquisition Regulation (FAR) requires agencies to consider firms' performance records to help ensure that taxpayer dollars go to capable contractors. The FAR also provides agencies with broad discretion in deciding how they will consider firms' prior experience, which refers to whether the firms have done similar work before, and past performance, which describes how well they have done that work. As construction firms without prior federal contracting experience seek to gain entry into the federal marketplace, some may regard the consideration of these factors as an impediment. In response to your request for information on the consideration of prior experience and past performance, we reviewed (1) how selected agencies consider prior experience and past performance in awarding construction contracts and (2) the resources available to assist firms in gaining entry to the federal marketplace.

Agencies consider prior experience and past performance during three key phases in the award of construction contracts: preparing solicitations, evaluating proposals, and making responsibility determinations as to whether firms have the ability and capacity to successfully perform. Agencies have broad discretion under the FAR in deciding the acquisition method, evaluation factors, and their relative weights, as well as what prior experience and past performance they will consider relevant. The consideration of prior experience and past performance varied for the contracts we reviewed. Specifically, these factors were considered to a greater degree in procurements in which agencies weighed price and nonprice selection factors and to a lesser degree in procurements in which price was the determining selection factor. The consideration of prior experience and past performance is not limited to work performed under prior contracts with the government. Instead, agencies are to consider work performed on all contracts: federal, state, local, and private sector. We did not identify any instance in which an agency limited its evaluation of offerors' experience or past performance to only work performed on prior federal government contracts. We found that in almost all procurements we reviewed, the contracts were awarded to the offerors that received the highest rating for nonprice factors, such as prior experience or past performance. We identified only one procurement in which offerors received neutral past performance ratings because they lacked relevant past performance. Prior experience and past performance are also two of the elements considered in the responsibility determination, which is required for all contracts. All the contract files we reviewed contained evidence of a responsibility determination. Officials at USACE, PBS, CBP, and SBA told us that the consideration of prior experience or past performance is not an impediment to winning government contracts as offerors generally cite their prior work. However, they noted that small firms seeking to win federal construction contracts face challenges in building up relevant work experience, financial resources, and bonding capacity to compete for large contracts. Various resources are available from federal agencies to help firms without relevant experience or past performance gain entry to the federal marketplace, including outreach and education, subcontracting opportunities, mentor-protege programs, and SBA programs specifically designed to assist small businesses.