Publicly Available Information Should Be Promptly Reviewed
In 2010, the government implemented the system to improve contracting officer access to information and to facilitate evaluation of the integrity and performance of prospective contractors. To implement these requirements, the Federal Acquisition Regulation requires contractors submitting proposals expected to exceed $500,000 — and who have current active federal contracts and grants totaling over $10 million — to report via the Central Contractor Registration database information relating to civil, criminal, or administrative proceedings, and certain settlements relating to those matters. Contractors must certify their information is current, accurate and complete as of the date of their offers, and must update this information semi-annually by posting the required information in the database.
Federal agencies also post information in the system, including: final and revised defective cost or pricing data determinations; “for cause” terminations; administrative agreements to resolve suspension or debarment; and nonresponsibility determinations based on lack of satisfactory performance or record of integrity and business ethics.
In making the determination of a contractor’s responsibility, contracting officers must consider links to the Excluded Parties List System, the Past Performance Information Retrieval System and any other relevant past performance information.
Section 3010 of the 2010 Supplemental Appropriations Act required that all information posted in the system after April 15, 2011 — except past performance reviews — be publicly available. This created a storm of controversy over whether publicly posting such information in FAPIIS unduly risks the release of confidential and proprietary information.
In addressing this risk, FAR 52.209-9, Updates of Publicly Available Information Regarding Responsibility (Jan. 2012), now grants a seven-day review period for contractors to determine if FAPIIS-posted information is covered by a Freedom of Information Act disclosure exemption. A contractor must be notified when the government posts new information in the non-public database. If within seven days of notification the contractor asserts an applicable Freedom of Information Act exemption, the government official who posted the information has the next seven days to remove the information and resolve the issue through agency FOIA procedures before any reposting. Absent a timely contractor-asserted exemption, the information will move from the non-public segment to the publicly available database.
Contractors therefore need an internal mechanism for monitoring and addressing FAPIIS-posted information within the short seven-day time period. Contractors also should implement procedures to ensure that their report is current, accurate and complete, and that someone is assigned responsibility for promptly responding to newly posted information. Notification of new postings will be sent to the contractor’s past performance point of contact or the contractor’s government business point of contact, which are both identified in the contractor’s Central Contractor Registration.
These and other employees assigned to review notifications must be familiar with government contracting, FOIA and its exemptions, and also be able to quickly access and consult with senior management and experts for guidance to ensure that optimal measures are undertaken to protect the company’s proprietary information and reputation. Because the new Federal Acquisition Regulation clause does not address situations where an agency disagrees with the contractor’s designation of FOIA-exempt information, contractors should be prepared to seek an appeal or file a “reverse FOIA” lawsuit to block disclosure.
Freedom of Information Act Exemption 4, which protects trade secrets and confidential commercial or financial information, can be an important safeguard against the public release of contractor information through the system. Agencies and courts have found that the release of certain information that contractors are required to submit to the government could cause substantial competitive harm because, for example, it could allow competitors to underbid the contractor on future procurements.
Disclosure might also actually affect the government’s ability to obtain the information in the future. Courts also have found that the Trade Secrets Act, which makes it a criminal offense for federal employees to publish or divulge trade secrets and other confidential information, is at least coextensive with Exemption 4.
Contractors still have an opportunity to add comments in FAPIIS. Under the FAR, information will be retained in the system for six years, so adding comments to explain or dispute data is crucial. For instance, comments could be posted to explain the circumstances of a past debarment or suspension that expired or was settled. A contractor also could note that it is seeking to have a termination for default converted to a termination for convenience, or provide other reasons why information appearing in the system should be taken in context and not adversely affect a contracting officer’s responsibility determination.
Contracting officers, agency officials, competitors and public interest groups will be closely watching the Federal Awardee Performance and Integrity Information System as more information becomes available. Every contactor must therefore not only continue to perform with the highest degree of integrity, but must also act quickly to review postings, identify and protect FOIA-exempt information and ensure that the system provides fair and accurate reports.
Dorn C. McGrath III (email@example.com) is a shareholder and William M. Jack is a senior associate in Greenberg Traurig LLP’s government contracts practice group. The views expressed are solely those of the authors.