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Federal contractors understandably associate litigation at the Court of Federal Claims (COFC) with recovering monetary damages.  Appealing denied claims to the COFC (along with the Boards of Contract Appeals) is the exclusive way for contractors to recover damages for changes, delays, and other government-caused impacts under the Contract Disputes Act (CDA).

But contractors can suffer other kinds of harm at the government’s hands – including reputational damages via the Contractor Performance Assessment Reporting System (CPARS). 

To avoid or mitigate that harm, Contractors need to:

  • Proactively manage CPARS evaluations for every covered contract to identify unfair, arbitrary, or factually incorrect ratings. 
  • Timely submit responsive comments through the CPARS portal – including specific facts and performance details to counter the agency’s erroneous narrative, and
  • If necessary, proceed with filing a CDA claim challenging the evaluation.

For additional information regarding CPARS strategy, claims, and appeals, check out my presentation materials and other posts.

A new decision at the COFC also reinforces contractors’ ability to take CPARS battles to court by seeking declaratory relief.

Declaratory Relief Primer

The COFC decision addresses a contractor’s claim for declaratory relief (in addition to monetary damages).

The short version – the contractor leased commercial space to the USPS.  When the agency allegedly failed to pay rent or maintain the property, the contractor demanded payment (of course) – but also sought a declaratory judgment stating that USPS could no longer exercise its option to purchase the building due to its material breach.

The government moved to dismiss the declaratory judgment claim, arguing that the COFC lacks jurisdiction under the CDA to award non-monetary relief. The Court denied the motion and reinforced critical precedent – contractors have jurisdiction at the COFC to seek declaratory relief.

The decision specifically highlights the importance of declaratory relief when money alone cannot resolve the dispute or restore the parties’ contractually defined positions.

Relevance to CPARS Disputes: Protecting Reputation Through Non-Monetary Relief

A negative CPARS rating can ruin a contractor’s reputation and ability to secure future work.  Contractors seeking staying power in the federal marketplace need to understand and monitor the CPARS system – and learn to harness it as a business development tool.

The concept of declaratory relief is critically important to challenging an unfair CPARS evaluation.  Money is often not the (primary) factor – but these contentions claims need a forum for contractors to fight back against unreasonable, arbitrary, and capricious agency action.

Important note – disagreement with a CPARS evaluation does NOT confer immediate jurisdiction at the COFC.

Contractors must trust the process, including participating in the defined comment period through the CPARS portal.  CPARS comments (if done effectively) can be a powerful tool to push back on arbitrary evaluations by presenting factual, legal, and procedural arguments.

If the government persists, contractors must submit a formal CDA claim that meets all of the statutory requirements.  If the government denies that claim, the path forward at the COFC is secure.

Takeaways for Government Contractors

  • Non-Monetary Claims Are Viable: Contractors should not overlook the power of declaratory relief in contract disputes. It can be a valuable tool to gain leverage.
  • Trust the Process: Contractors must follow the CPARS comment period requirements and submit a formal CDA claim.  Jumping immediately to litigation will get you bounced.
  • CPARS Litigation Is Real—and Growing: Developing case law gives contractors a forum to protect their reputational interests – even without direct financial harm.

This is the seventh of an eight-part series addressing cutting-edge strategies for Certified Claims under the Contract Disputes Act (CDA).  Certified Claims are the primary avenue available to government contractors to recover damages due to changes, delays, inefficiencies, and other government-caused issues – a particularly important point for contractors seeking to maintain positive cashflow while facing the prospect of an economic slowdown or recession.

You can check out previous posts starting here.

In this series, I’ve looked at the CDA in terms of a contractor’s ability to pursue time and costs against the federal government.  Those remedies are key to contractors holding the government accountable for project changes and delays – and staying financially solvent.

But while time and money are undoubtedly important – they are not the only metrics that matter for a successful business.

For federal contractors, it is not an exaggeration to say that performance evaluations are the lifeblood of the business.  A less-than-satisfactory evaluation in the Contractor Performance Assessment Reporting System (CPARS) affects far more than just the agency’s assessment of performance on a particular project.  A negative evaluation follows a contractor around – impacting the ability to obtain future contracts due to the specter of negative past performance ratings.

Fortunately for contractors, the CDA offers the ability to challenge and reverse negative CPARS evaluations through the established Claims process.

The CPARS Portal Process & CDA Claims

The first step in any successful CPARS challenge involves meaningful participation in the evaluation process through the CPARS portal.  Federal Acquisition Regulation (FAR) Part 42.15 entitles contractors to submit comments regarding a disputed performance evaluation.  Specifically, contractors are entitled to submit comments, rebuttal statements, and/or other information in response to the agency’s evaluation. 

The agency must then review those comments at a level above the contracting officer and update the evaluation, if necessary.  In an ideal world, the contractor’s detailed and impactful comments demonstrate to the government that an adjustment is required.

However, if the review and comment process proves unsuccessful in resolving the issues, both the U.S. Court of Federal Claims and Boards of Contract Appeals recognize that contractors may bring a CDA Claim to address performance evaluation disputes. 

Keys to CPARS Claim Litigation

Although litigation over a performance evaluation dispute is a relatively new development – the law is now clear that a condition precedent to litigating the issue before a Court or Board is a CDA Claim.  That is – just like a Claim for damages based on (for example) delay or a differing site condition – the contractor must file a written claim in accordance with the CDA and receive a denial of that Claim in order to move forward.

Generally speaking, in order to prevail on a performance evaluation dispute, the contractor must be prepared to prove that the agency’s evaluation is arbitrary, capricious, and contrary to law.  This requirement ties back neatly to the CPARS comment process.  From the outset, the contractor’s goal should be to show that the agency’s evaluation is at odds with the project record, as well as common sense.

The takeaway for contractors is therefore very simple – engage in the process and follow the required steps in the CPARS portal when disputing a CPARS evaluation.  The contractor must participate in the review and comment procedure articulated in FAR 42.15 – but if that fails, the next logical step is to proceed with a CDA claim (or, perhaps as an intermediate step, a request for equitable adjustment).  Before a performance evaluation dispute can escalate to CDA litigation, the contractor must be armed with a denial or deemed denial of that Claim.

Come back next Tuesday (December 20) when I’ll wrap up this series with Part 8 and discuss best practices for contractor CDA claims.

Nick Solosky is a Partner in Fox Rothschild’s Government Contracts Practice Group.  You can reach Nick directly at NSolosky@FoxRothschild.com or 202-696-1460.

In case you missed it, Sean Milani-nia and I recently hosted a webinar regarding the importance of CPARS performance evaluations for federal contractors.

We were fortunate to have an engaged audience and, as a result, some productive Q&A throughout the presentation. The discussion focused on two key subjects:

The Need for Internal CPARS Corporate Processes

CPARS performance evaluations are highly regulated — including important rules related to the time for inputting comments in the CPARS system,

When a business receives a CPARS evaluation, it should trigger an automatic response from corporate leadership to review the evaluation and consider whether comments are needed (and comments are almost always needed). The goal should be to input comments within 14 days.

We also discussed that the most effective CPARS comments include specific and detailed information — often to the point of citing specific project correspondence or communications. In order to meet this standard, it is important to include the project team in the comment drafting process. Too often, we encounter contractor comments that are too generic or that fail to include important information that could have resulted in a better evaluation rating.

Early Intervention and Dispute Resolution

When dealing with a less than ideal CPARS evaluation, contractors need to act quickly and deliberately to achieve the best results.

During our discussion period, we heard multiple stories about detailed comments submitted early in the process yielding positive results. Often, comments followed by a phone call or letter can be even more effective in terms of raising the profile of an erroneous evaluation.

When these early intervention strategies fail, contractors need to be aware of the availability of legal remedies at the Court of Federal Claims or Board of Contract Appeals — both have jurisdiction to hear CPARS claims. While these types of claims are usually equitable (no damages attached), they can be essential for contractor business development. CPARS evaluations are a key part of agency Past Performance evaluations. An unjustified Marginal or Unsatisfactory rating could be the difference between a win or loss on your next proposal.

If you were not able to attend the webinar and have questions about a CPARS evaluation, we would be happy to discuss. We also have copies of the presentation materials available.

Nick Solosky is a Partner in Fox Rothschild’s Government Contracts Practice Group.  You can reach Nick directly at NSolosky@FoxRothschild.com or 202-696-1460.

I am excited to host this upcoming Webinar on Protecting the Reputation of Government Contractors by Challenging Erroneous CPARS Evaluations.

The Webinar goes Live on Wednesday, August 19 at Noon Eastern.  If you are unable to attend, please contact me directly :  nsolosky@foxrothschild.com or 202-696-1460.

Click Here To Register Now

Webinar Preview

A negative performance evaluation from a Federal agency, or worse a recommendation against future performance, can make it very difficult for a government contractor to win new work.

But all is not lost.

Contractors that have been unjustly injured by an erroneous Contractor Performance Assessment Reporting System (CPARS) evaluation have options.  Venues such as the U.S. Court of Federal Claims and Boards of Contract Appeals are increasingly entertaining claims filed by contractors over inaccurate CPARS evaluations – including claims for monetary damages.

In this webinar, we will cover:

• Practical strategies for contractors to deal with unfair and harmful CPARS performance evaluations before they become final.

• A review of the claim and litigation process in the event that early intervention is unsuccessful.

• New and innovative strategies emerging for performance evaluation disputes – including how contractors can seek to recover monetary damages associated with negative performance evaluations.

Register for the Webinar Here

Nick Solosky is a Partner in Fox Rothschild’s Government Contracts Practice Group.  You can reach Nick directly at NSolosky@FoxRothschild.com or 202-696-1460.

For federal contractors, it is not an exaggeration to say that performance evaluations are the lifeblood of the business.  A less-than-satisfactory evaluation in the Contractor Performance Assessment Reporting System (CPARS) affects far more than just the agency’s assessment of performance on a particular project.  A negative evaluation follows a contractor around – impacting the ability to obtain future contracts due to the specter negative past performance ratings.

The good news for contractors is that the ability to challenge and – if successful – reverse negative CPARS evaluations is a quickly developing area of government contracting law.

The first step in any successful CPARS challenge involves meaningful participation in the evaluation process.  The Federal Acquisition Regulation (FAR) Part 42.15 entitles contractors to submit comments and receive an agency review of a disputed performance evaluation.  Specifically, contractors are entitled to submit comments, rebuttal statements, and/or other information in response to the agency’s evaluation.  The agency must then review those comments at a level above the contracting officer and update the evaluation, if necessary.

If the review and comment process is unsuccessful in resolving the issues, both the U.S. Court of Federal Claims and Boards of Contract Appeals recognize that contractors may bring a lawsuit to address performance evaluation disputes.  Generally speaking, in order to advance a performance evaluation dispute to the next level, the contractor must be prepared to prove that the agency’s evaluation is arbitrary, capricious, and contrary to law.

Although litigation over a performance evaluation dispute is a relatively new development – the law is now clear that a condition precedent to litigating the issue before a Court or Board is a certified claim.  That is – just like a claim for damages based on (for example) delay or a differing site condition – the contractor must file a written claim in accordance with the Contract Disputes Act (CDA) and receive a denial or “deemed denial” of that claim in order to move forward.

In a recent decision, the Court of Federal Claims reinforced the notion that there is no substitute for a CDA claim.  The case originated with a complaint filed by a contractor concerning an allegedly unreasonable negative performance evaluation issued by the United States Transportation Command.  The contractor sought a declaratory judgment vacating the evaluation.

Before the contractor could even begin to prove its case, the government filed a motion to dismiss, arguing that the contractor did not submit a CDA claim to the contracting officer.  Without a claim (the government argued), the Court lacks jurisdiction to hear the case.  In response, the contractor asserted that it engaged in a series of communications with the agency regarding the CPARS evaluation, but the agency would not change its allegedly improper position.

On review, the Court sided with the government and dismissed the contractor’s complaint.  In this instance – far from proving a legitimate dispute that could substitute for a CDA claim – the Court relied on the contractor’s communications with the government as evidence its the lack of jurisdiction.  The Court held that the on-going nature of the parties’ negotiations showed that the contracting officer had no notice that the contractor sought a “final decision” of any kind.

The takeaway for contractors is very simple – engage in the process and follow the required steps when disputing a CPARS evaluation.  The contractor must participate in the review and comment procedure articulated in FAR 42.15 – but if that fails, the next logical step is to proceed with a CDA claim (or, perhaps as an intermediate step, a request for equitable adjustment).  Before a performance evaluation dispute can escalate to litigation, the contractor must be armed with a denial or deemed denial of that claim.

 

This is the eighth (and last) of an eight-part series addressing cutting-edge strategies for Certified Claims under the Contract Disputes Act (CDA).  Certified Claims are the primary avenue available to government contractors to recover damages due to changes, delays, inefficiencies, and other government-caused issues – a particularly important point for contractors seeking to maintain positive cashflow while facing the prospect of an economic slowdown or recession.

You can check out previous posts starting here.

In this series, I’ve covered contractor CDA Claims against the government from several perspectives.  While primarily used as a mechanism for recovering time and costs, CDA Claims can arise under a variety of remedy granting contract clauses – and even be used to challenge negative CPARS performance evaluations.

Regardless of the underlying basis for the Claim or the specific relief sought, there are certain best practices that apply across the board.  Contractors should be mindful of these core principles throughout the Claim process and (if necessary) litigation against the government.

Proper Notice and Supporting Documentation

Contractors should take prompt and purposeful action to document government-directed contract changes and government-caused project impacts.  In fact, proper notice is not just a best practice – is an express requirement for recovery.

After a change or other impact arises, contractors must take care to continue to perform and document the additional time impacts and/or costs incurred.  That documentation is key to negotiating a change order with the government or, if all else fails, proving damages before the Court of Federal Claims (COFC) or Board of Contract Appeals.

Certification Requirements – and Consequences

For Claims over $100,000 (as well as certain Requests for Equitable Adjustment), contractors must sign a certification indicating that the submission is made in good faith and with accurate/complete supporting data.  Signing this certification is a required step – but should not be viewed as a mere formality.

Once signed, the certification provides a key tool for the government to push back against alleged false claims.  To be clear, contractors should not view the certification as a deterrent to filing legitimate claims or litigating in good faith against the government.  Certifying the claim should instead be a helpful reminder of the need to present costs with solid supporting data and backup.

Choosing the Path Forward

Submitting a claim does not guarantee an actual dispute with the government.  In many cases, the government can (and should) engage in good faith/cooperative negotiations to provide just compensation.

However, if the government does deny the claim (in whole or in part), it sets off a chain reaction of important decisions that the contractor must make.  The contractor should consider the context of the project as a whole (are there other claims out there?), the appropriate forum (COFC or Board), and whether there are advantages to accelerated procedures or other alternative dispute resolution mechanisms available.

Claims that end up before a Board or the Court must be proved in a hearing or trial – and contractors should treat the process with the same rigor as a perhaps more traditional courtroom setting.  By that point, the legal arguments for entitlement are set.  The outcome often comes down to the evidence in the record and the credibility of testifying witnesses (including experts).

In that way, thinking of the possibility of litigation as an endgame can be helpful when contemplating, preparing, and submitting a claim.  Do you have the documentation and cost backup in place to convince a neutral third party that you are entitled to the claimed contract adjustment?

Contractors with that kind of proactive mindset not only tend to win at the end of the day, they are more likely to present comprehensive claims that get paid up front.

Nick Solosky is a Partner in Fox Rothschild’s Government Contracts Practice Group.  You can reach Nick directly at NSolosky@FoxRothschild.com or 202-696-1460.

This is the sixth of an eight-part series addressing cutting-edge strategies for Certified Claims under the Contract Disputes Act (CDA).  Certified Claims are the primary avenue available to government contractors to recover damages due to changes, delays, inefficiencies, and other government-caused issues – a particularly important point for contractors seeking to maintain positive cashflow while facing the prospect of an economic slowdown or recession.

You can check out previous posts here:  Part 1, Part 2, Part 3, Part 4, Part 5

As discussed elsewhere in this series, the CDA offers contractors a jurisdictional avenue to bring Claims when the government causes time/cost impacts on a federal project.  Such Claims rarely exist in a vacuum – those government impacts inevitably flow down and affect subcontractors providing services on the project.

A subcontractor (which has a direct contractual relationship with the prime) does not hold a contract with the government and therefore (in the vast majority of cases) may not bring a direct CDA Claim.  However, that does not necessarily mean that subcontractors lack a remedy for the impacts that they experience during the project.

It is important for both prime contractors and subcontractors to understand how to effectively navigate the contract disputes process and prepare/pass through properly vetted subcontractor claims.

Direct Subcontractor Claims against the Government

The nature of subcontracts on federal projects usually does not allow for direct claims by a subcontractor against the government.  In fact, it is the official policy of the government to not deal directly with subcontractors.

However, in rare and limited cases, the Court of Federal Claims and Boards of Contract Appeals have found that a subcontractor may bring a direct claim against the government.  The key is a direct relationship with the government – but again, those circumstances (which typically arise through direct government action or approval of third-party beneficiary status) are very rare.

Indirect or Pass-Through Subcontractor Claims

The vast majority of subcontractor claims will be indirect or pass-through claims sponsored by the prime contractor.

For a prime contractor to sponsor a claim, following elements must be considered:

  • Sponsorship: A recent ruling by the Armed Services Board of Contract Appeals found that the prime contractor appropriately sponsored the claim that had been prepared by the subcontractor’s attorney. The claim was signed by the prime contractor and placed on the prime contractor’s letterhead.  Therefore, the Board concluded that the subcontractor “properly brought its claim through and with the consent of [the prime contractor], and in [the prime contractor]’s name.” 
  • Claim Vetting and Validity: Claims that are mere disputes between a prime contractor and its subcontractor are not valid claims to bring against the government.  It is an important part of the prime contractor’s role to evaluate subcontractor claims to ensure that they are properly asserted against the government and made in good faith.

Key Takeaways for Subcontract Drafting and Review

Contractors may not have future disputes in mind when drafting or reviewing subcontract agreements – but they should.  Seemingly routine subcontract provisions can have a major impact on a subcontractor’s ability to recover future damages.

Most notably, under the Severin Doctrine, a broad exculpatory clause included in a subcontract can negate the contractor’s ability to sponsor an otherwise valid subcontractor claim.  If the subcontract makes the contractor immune from any liability to the subcontractor, then Courts and Boards hold that there is no harm to the contractor (and therefore no controversy to litigate against the government under the CDA). 

The Severin Doctrine has some notable limitations, so it is important for subcontractors to carefully review all subcontract provisions.  An appropriate initial review of the subcontract can help facilitate the pass-through claim and dispute resolution process in the future.

Come back next Tuesday (December 13) when I’ll discuss the role of the CDA in CPARS performance evaluations.

Nick Solosky is a Partner in Fox Rothschild’s Government Contracts Practice Group.  You can reach Nick directly at NSolosky@FoxRothschild.com or 202-696-1460.

A newly published Small Business Administration Final Rule provides small businesses with two new ways to satisfy Past Performance requirements when competing for federal prime contracts. The Rule takes effect on August 22, 2022.

The Rule is a slam dunk for small business contractors that will open the door to increased contracting opportunities. But, as so often happens, small business rules and regulations do not exist in a vacuum. Other-than-small (or large) contractors with contracts requiring subcontracting plans must be on notice of new compliance requirements created by the Final Rule.

Let’s start by looking at the new Past Performance avenues created by the Final Rule and soon-to-be available for small business contractors.

First, a small business that “previously participated in a joint venture with another business concern (whether or not the other concern was small) may use the past performance of the joint venture with the small business’ offer on a prime contract.” The Rule requires the small business to identify the relevant contract(s) performed by the JV and the duties/responsibilities of the small business in performing the work. Once established, the contracting officer must “consider the past performance of the joint venture when evaluating the past performance of the small business concern, giving due consideration to the information submitted about the duties and responsibilities that the small business carried out.”

Second, small businesses can rely on Past Performance based on performing as a first-tier subcontractor on a prime contract that required a subcontracting plan. The small business must request the Past Performance rating directly from the prime contractor and provide it to the contracting officer as part of its proposal.

It is this second part of the Final Rule that creates additional compliance obligations for large prime contractors.

Once requested, the prime contractor must provide the Past Performance rating to the small business within 15 calendar days. The rating must utilize the default five-scale CPARS ratings system found at FAR 42.1503 (Exceptional to Unsatisfactory) and must evaluate (at a minimum) the small business’s performance in terms of (1) Technical, (2) Cost Control, (3) Schedule/Timeliness, (4) Management, and (5) Other (as applicable).

The Final Rule also puts teeth in the prime contractor’s new compliance requirement. The obligation to respond to a proper request for a Past Performance rating must be included in the prime contractor’s subcontracting plan. As such, there are consequences for failing to comply, including termination for default, negative CPARS ratings, and liquidated damages for failure to make a good faith effort towards compliance. The Rule even goes so far as to encourage subcontractors to notify the contracting officer in the event that the prime contractor fails to submit the requested rating within the prescribed timeframe.

Not surprisingly, the Final Rule results in two sets of takeaways:

For small businesses, become familiar with the new options for showcasing Past Performance on federal contracts.

Large contractors, act now to update your compliance program to include this new requirement as part of your small business subcontracting plan.

Nick Solosky is a Partner in Fox Rothschild’s Government Contracts Practice Group.  You can reach Nick directly at NSolosky@FoxRothschild.com or 202-696-1460.

Government contractors may face performance evaluations by federal agencies that erroneously or capriciously capture the  efficacy of their work,  at times by seemingly arbitrary standards. These evaluations can hobble key abilities to gain new projects — the lifeblood of federal contractors.

In his article for Modern Contractor Solutions, Federal Government Contracts and Procurement Partner Nicholas Solosky details how the Contract Disputes Act (CDA) creates the framework for handling “claims” against the government on Federal contracts and discusses key evaluation issues, including: 

  • Past Performance
  • Ratings and Narratives
  • CPARS Procedure/Timeline
  • Practical Resolution Strategies

Read the full article.