Are you a Responsible Contractor? Everyone would answer yes to this question. However, we are talking about government contracting and how the government determines if you are a responsible contractor. First, you need to address this in your business strategy. To do so we must look at the Federal Acquisition Regulation (FAR) 9.1.
A contracting officer has to determine if a contractor is responsible. Therefore, he must rely on the FAR to make this determination. According to the FAR, responsible contractors applies to contractors in the United States or its outlying areas. Let’s look at the FAR and see what it says.
Federal Acquisition Regulation (FAR)
Most importantly, FAR 9.1 is not applicable to proposed contracts with
- Foreign, State, or local governments;
- Other U.S. Government agencies; or
- Agencies -Blind or severely disabled.
So, the FAR states that contracting officers will look at the lowest price and determine if the contractor can perform the contract. (Responsible contractor) The contracting officer decides if the contractor is non-responsibility. If the prospective contract is a small business, the contracting officer has to comply with a different part of the FAR. FAR 19.6, covers Certificates of Competency and Determinations of Responsibility that apply to small businesses. We will discuss Certificates of Competency and percentage of work requires in a later post.
Because the FAR requires the Contracting Officer to review not only price but contractor performance it is up to you to ensure that you meet the requirements for a responsible contractor. The contracting officer has to research the contractor to see if they have defaulted on a previous contract, had late deliveries, or other unsatisfactory performance resulting in additional contractual or administrative costs.
Government looks at other things besides the lowest cost.
As you can see the lowest cost is not the only consideration that the contracting officer must determine. If you plan on providing the government with the lowest price just to win a few contracts, you will want to ensure that the government will find you a responsible contractor. How will this impact your business strategy? The contracting officer can award to the next lowest offeror when he has decided that the lowest contractor is non-responsible. The Government mandate is to make awards to the lowest price, but they must also determine if the contractor is responsible.
Are You a Responsible Contractor?
They also have to make sure that the contractor is responsible. It is essential for the Government to make purchases at the lowest price but only if the contractor can deliver the products or services. A big misconception with the public is that the government looks at the lowest offer and nothing else. A contractor must demonstrate that it is responsible, including, when necessary, the responsibility of its subcontractors.
How does the Contractor Prove He is Responsible?
A contractor must demonstrate the following:
- Have sufficient financial resources, or the ability to obtain them;
- Be able to meet the proposed delivery or performance schedule, taking into consideration all existing commercial and governmental business commitments;
- Have a satisfactory past performance record. However just because a contractor does not have past performance will not result in a non-responsive decision.
- Have integrity and business ethics; (See podcast Number 22 “Ethics for Government Contractors” for more information.
- Have the organization, experience, accounting, and operational controls, and technical skills. If they do not, then they must be able to obtain them before contract award.
- Be qualified and eligible to receive an award under applicable laws and regulations.
What can you do now to make sure that the contracting officer will find you a responsible contractor? How will this impact your business strategy? These are things that you are going to need to consider.
Ability to Obtain Resources
The Contracting Officer will ask the contractor to provide evidence of the sufficient resources to perform the contract. If the small business is proposing to complete the requirement by subcontracting, the contracting officer will require proof of the contractor’s ability to obtain the necessary resources. The contracting officer will accept the rental agreement, purchase agreement or staffing agreement, or other documents that prove that the contractor can perform the contract. Consideration of a prime contractor’s compliance with the limitation on subcontracting doe the contract period or quantities plus option periods or amounts.
Satisfactory performance record
A contractor that is or recently has been seriously deficient in contract performance will be automatically considered to be not responsible. However, the contracting officer can see if the situation was beyond the contractor’s control, or that the contractor has implemented corrective actions. The contracting officer will look at the number of contracts involved and the extent of deficient performance in each contracting when making the determination. If the pending deal requires a subcontracting plan, the contracting officer will also consider the contractor’s compliance with subcontracting plans under recent contracts.
Related businesses are typically considered separate companies when applying the standards for responsibility. The government will review the related business past performance and business integrity when evaluating the contractor’s responsibility.
Small Business Concerns
Upon deciding of non-responsibility about small business, the contracting officer will refer the matter to the Small Business Administration (SBA), which will determine whether to issue a Certificate of Competency.
Lastly, a small business that is not in compliance with limitations on subcontracting is non-responsible.
Prime contractors are responsible for determining if their subcontractors are responsible. Determinations of subcontractor responsibility may affect the Government’s decision of the prime contractor’s responsibility. A contractor may have to provide written evidence of a proposed subcontractor’s responsibility.
I can already hear the responses that you are thinking. Nancy, how can I be held responsible for my subcontractor? Well, that is what the government will do. So it is a good idea to make sure that your subcontractors have performed federal work and have completed jobs of the same or more significant than the one you are going after. Have you added this to your business strategy?
When it is in the Government’s interest to do so, the contracting officer may directly determine a subcontractor’s responsibility when the contract involves medical supplies, urgent requirements or substantial subcontracting. In this case, the same standards apply to determine the subcontractor responsibility.
You will want to add a section to your business strategy that covers who within your organization will provide the requested information to the contracting officer or other government officials. The person selected may be different from the person that interacts with the government. It could be your Chief Financial Officer for anything to do with financials, or you can say only you the owner will respond. Therefore, you need to define it in your business strategy. Before making a decision, the contracting officer will obtain information to satisfied that the contractor currently meets the applicable standards in FAR 9.104.
The contracting officer will obtain information regarding the responsibility of contractors, including requesting pre-award surveys when necessary, promptly after a bid opening or receipt of offers. However, in negotiated research and development contracts the contracting officer may obtain this information before issuing the request for proposals. There is a limit to the information requested:
- The low bidder; or
- Those offerors in range for an award.
- The surveying activity will manage and conduct the Preaward surveys.
- If the surveying activity is a contract administration office:
- That office will advise the contracting officer on contractors’ financial competence and credit needs; and
- The administrative contracting officer shall obtain from the auditor any information required concerning the adequacy of contractors’ accounting systems and these systems’ suitability for use in administering the proposed type of contract.
- Financial resources and performance capability will be current to the award date.
- If the surveying activity is a contract administration office:
- In deciding on responsibility, the contracting officer will consider the information available through the FAPIIS. FAPIIS is a web-enabled application used to collect contractor and grantee performance information including Terminations for Cause or Default. They will look at any other relevant past performance information on the offeror.
As you can see, it is essential that you not only win a government contract but to also perform the contract to the best of your abilities. Your business strategy will need to address these issues. You can review your past performance and make sure that it is at least satisfactory if not exceptional. The better you perform, the better, the government will love you.
As you work on your business strategy, please define how you will show contracting officers that you are a responsible contractor. Because being a responsible contractor will become more and more critical as you. Here is the link to the FAR for you to research. Remember it is FAR 9.104.