Neutral Past Performance

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NeutralPast Performance

NeutralPast Performance

Themost appropriate manner in which to address a neutral pastperformance situation during a source selection evaluation

Firstly,it is vital to explain the relationship between experience and pastperformance by considering both as evaluation factors (Causey,2000). In case an offeror does not have records that show their pastperformance there is no basis for positive or negative evaluation onpast performance. The neutral rule, therefore, stipulates thatjudgment is only possible when there are facts that point out theofferor’s past performance. It rests on the pretext thathistorical quality is an important parameter for measuring the pastperformance of a firm due to its predictive value. The predictivevalue lies in the vitality of the factors that are used to determinethe risk of engaging a firm in business through a contract or as apartner. Thus, the neutral rule considers a firm with a lowperformance history as potentially unprofitable while one with apositive performance history as potentially profitable. The riskvalue of a firm depends on its performance history. The neutralaspect introduces common sense logic in risk assessment. The same waythe neutral rule applies to past performance it also does forevaluation of experience through use of past data, but with adifferent meaning to the data. The difference is that the rule’sapplication assessing experience lies in the pretext that firms withexperience have a chance to learn many lessons. The lessons providethe knowledge the firm can use to deal with future challenges. Itsresponse to market challenges will be different from a firm that hasdoes not have experience in dealing with market issues that increasethe risk of investment.

Theimpact of a negative rating for neutral past performance on sourceselection evaluation

Thepossible impact is a law suit because the law provides that it islikely to set a wrong precedent for future neutral past performanceevaluations. Conventionally or as provided by the federalacquisition regulation (FAR) law, or U.S.C. 405(j)(2), offerorswithout a record of past performance are be rated in manner thatneither rewards nor appears to cast them as unfit for the task(Pettijohn&amp Qiao, 2000). The intention to enact the neutral rule in pastperformance of selection evaluation was to avoid discrimination ofnew firms because they would definitely lack the records to showabout their past performance. However, the same rule does notprotect new firms from getting negative ratings on the basis ofexperience. If an agency cites the lack of experience as reason forits negative neutral rating, it must also demonstrate that thedecision does to intend to cast the firm as incompetent. The decisionmust point out specific technical aspects that require experiencebefore performing the task. In essence, if a firm can be denied acontract due to lack of experience as any agency may deem fit, thenthe applicability of neutral past performance loses meaning becauseexperience emanates from engaging in a trade for a considerableperiod. A new firm lacks both. There are chances that a firm maydecide to give a negative rating in disguise of lack of experience.Negative past performance rating is likely to have immediateconsequences for a contractor that may have a similar impact on theirability to successfully obtain future contracts.

Twodifferent methods to evaluate past performance of a new businessentity

Defacto debarment: It is based upon the ability of the contractor tomeet the needs of the government under a specific project (Manuel2012). The method does not exclude new business from dealing withthe government in future. In fact any use of the method in such ascope constitutes de facto debarment. The method ensures thatagencies do not deprive new businesses of the due process, which theyare entitled to. The limitation of the de facto debarment method isthat it has the potential to deprive contractors of theirconstitutional liberty interests. In some cases it has been applied,contractors have been excluded from government contracts withoutnotice due to concerns touching on their integrity. Contractors haveconstitutional protection from any descriptions that would stigmatizeor defames their business. Using this method should be done undercareful considerations to avoid protests from new business on thebasis of being defamed or stigmatized in manner that has a tangibleeffect on the ability of the business to engage with government inprocurement processes.

Debarmentand suspension as provided by FAR: Under this method, a businesscould be new in the industry, but a few cases where it hasdeliberately failed to perform its roles in other related trades. The application of this method is restricted to cases where thegovernment needs to be protected. The shortcoming of the debarmentand suspension method is that the determining agency must demonstratethat it has not violated the Administrative Procedure Act byexcluding the new business from taking part in the procurementprocess.


Causey,N. (2000). Past Performance Information,&quot De facto&quotDebarments, and Due Process: Debunking the Myth of Pandora`s Box.PublicContract Law Journal,637-691.

Manuel,K. (2012). Evaluatingthe&quot past Performance&quot of Federal Contractors: LegalRequirements and Issues.Congressional Research Service, Library of Congress.

Pettijohn,C., &amp Qiao, Y. (2000). Procuring technology: Issues faced bypublic organizations. Journalof Public Budgeting Accounting and Financial Management,12, 441-461.

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