Government contractors know that an unfavorable performance review posted to the Contractor Performance Assessment Reporting System (“CPARS”) can be extremely costly. Many negotiated solicitations include past performance as an important or even primary evaluation factor for contract award. An unfavorable review on a past contract can impose significant costs on the contractor to address the unfavorable review with contracting officers on future solicitations. However, the contractor saddled with an unfair and inaccurate CPARS review may now have a means to challenge the review and recover some of these costs. 

Both the Federal Court of Claims and the Armed Services Board of Contract Appeals have held that they have jurisdiction to hear Contract Disputes Act claims regarding unfair and inaccurate CPARS reviews. However, the relief available up until this year was a declaration from the Court or Board that the unfair and inaccurate CPARS review was arbitrary and capricious. Neither the Court nor the Board have the power to order the contracting officer to change the unfavorable review. A contractor who receives a declaration from the Court or Board regarding an unfavorable CPARS review may use it in the future to explain the unfavorable review when bidding new government work, but the unfavorable review remains in CPARS.

However, the Board has recently validated a new type of claim related to an unfavorable CPARS review. In Appeal of Government Services Corporation, ASBCA No. 60367, 16-1 B.C.A. (CCH) ¶ 36411 (June 20, 2016), the contractor received a CPARS review that it believed was unfair and inaccurate. The contractor filed a claim for $100,000 in estimated damages. The estimate was not based on future profits from lost work, which cannot be recovered, but on the estimated costs to address the unfavorable review on future proposals. The contractor calculated how many proposals it would submit on solicitations that require consideration of past performance during the time period that the unfavorable review would remain in CPARS, and then estimated the cost “both administrative and legal, of addressing the issue with future Contracting Officers in the form of negotiations as well as protests.”

The Government moved to dismiss this claim on the basis that it failed to state a sum certain. The Board rejected this argument and validated the estimated claim, allowing the litigation to proceed. While the Board has not yet issued a decision granting such a claim, the ability to pursue monetary relief for an unfavorable CPARS review could be a game-changer for government contractors suffering from the consequences of unfair and inaccurate reviews.

This type of claim could be increasingly important if recent statutory changes to CPARS reviews are implemented. In May 2016, we summarized President Obama’s Executive Order 13673, known as the “Fair Play and Safe Workplaces” order, which imposes reporting requirements on government contractors for alleged labor law violations. One of Executive Order 13673’s lesser known effects was to add a subsection to FAR § 42.1502, which governs CPARS reviews, requiring past performance reviews to consider both the contractor’s labor law violations and steps the contractor took to address its subcontractors’ labor law violations.

Earlier this month, we reported that a federal court had enjoined the enforcement of Executive Order 13673. On October 25, 2016 the Office of Management and Budget issued a Memorandum directing Government agencies not to implement Executive Order 13673, including the new subsection of FAR § 42.1502. However, it is important to note that the district court did not address the new subsection of FAR § 42.1502 in its injunction. It is not yet clear what will happen to the new requirement to consider labor violations in CPARS reviews even if the rest of Executive Order 13673 is struck down.

We will continue to post on this issue to keep the government contractors we serve apprised of the situation as it develops.

Michael H. Payne is Chair of the Firm’s Federal Contracting Group and, together with other experienced members of the group, frequently advises contractors on federal contracting matters including bid protests, claims and appeals, procurement issues, small business issues, and dispute resolution.

Michael Richard is an Associate in the Firm’s Federal Contracting Group and focuses his practice on government contracts and construction litigation. He represents clients in all aspects of federal contracting.

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Photo of Michael H. Payne Michael H. Payne

As Chair of the firm’s growing Government Contracting Group, Michael H. Payne represents contractors, subcontractors, and suppliers on a wide range of federal contracting issues, including the interpretation of solicitation and contract provisions, the filing of bid protests, resolution of disputes, and the…

As Chair of the firm’s growing Government Contracting Group, Michael H. Payne represents contractors, subcontractors, and suppliers on a wide range of federal contracting issues, including the interpretation of solicitation and contract provisions, the filing of bid protests, resolution of disputes, and the preparation of contract claims and the litigation of appeals. Michael has vast experience in federal government contracting, stemming from his time as Chief Trial Attorney for the North Atlantic Division of the Army Corps of Engineers, and is recognized in the federal construction contracting industry as an attorney who enjoys a good working relationship with government agencies.

Michael’s high success rate in settling cases prior to litigation has earned him clients that rely on his advice in the long term. As a trusted advisor to his clients, he is known for his responsiveness and is not afraid to be straightforward about the realities of pursuing a case.

Michael is aggressive when called for and approaches each case analytically and develops strategies for his clients’ best long-term results. He thinks outside the box and frequently develops arguments in approaches that facilitate the resolution of disputes without litigation.

With in-depth knowledge of military and civil works construction, Michael represents clients before the Armed Services Board of Contract Appeals (ASBCA), the Government Accountability Office (GAO), the United States Court of Federal Claims, and a number of Federal District and Appellate Courts, including the United States Court of Appeals for the Federal Circuit. Throughout his career, he has enjoyed a strong relationship with the dredging industry, representing many dredging contractors nationwide.

Known in the legal community as a techie, Michael always uses the latest technology to practice law more efficiently. He regularly teaches other attorneys at the firm and local bar associations how they can use devices such as iPads to enhance their practices. Michael started the Federal Construction Contracting Blog, the first blog focused on federal construction contracting,  which is still a go-to resource for the industry.