How to Challenge a Bad Performance Rating

Photo: iStock

While you might not be able to fight City Hall, you can fight a Contractor Performance Assessment Reporting System rating. The Armed Services Board of Contract Appeals recently confirmed it has jurisdiction to annul an inaccurate and unfair government evaluation of a contractor’s performance — a potent form of relief available to companies who believe the government has improperly rated them.

In a published opinion — Cameron Bell Corporation d/b/a Government Solutions Group, ASBCA No. 61856 (May 1, 2019) — the board said that while it cannot require the government to issue a specific rating, it can remand the matter to the contracting officer with instructions to redo the evaluation.

By regulation, companies have a right to rebut a negative evaluation of their performance in the Contractor Performance Assessment Reporting System, or CPARS. A contractor’s rebuttal submission typically is due within 14 calendar days of the date the agency invites the contractor to respond. If this proves unsuccessful, a contractor may challenge the CPARS rating by submitting a claim with the contracting officer under the Contract Disputes Act, or CDA. Then, if the contracting officer denies the claim, the contractor can appeal the decision to an appropriate Board of Contract Appeals or the United States Court of Federal Claims.

That is precisely what the contractor did in Cameron Bell. There, a contractor challenged a less-than satisfactory rating of its performance in a CDA claim. After the contracting officer denied the claim, the contractor appealed to the ASBCA seeking various forms of relief, including injunctive relief, breach of contract damages, and a request that the board “return [the] matter to the government with guidance indicating that the government should have rated appellant satisfactory, or better.”

The government moved to dismiss the appeal for lack of jurisdiction. The board denied the motion in part, finding that it has jurisdiction to “assess whether the contracting officer acted reasonably in rendering the disputed performance rating or was arbitrary and capricious and abused his discretion.” The board also noted that, while it lacks authority to order the government to revise a CPARS rating, it “may remand to require the contracting officer to follow applicable regulations and provide [the contractor] a fair and accurate performance evaluation.”

The Cameron Bell decision provides a few helpful reminders to contractors who are considering whether to challenge a negative rating. First, the governing regulations provide contractors a basis for establishing that the government has issued a rating in an arbitrary and capricious manner. The Federal Acquisition Regulation defines each rating (i.e., exceptional, very good, satisfactory, marginal, unsatisfactory) and outlines the information the government must provide to justify the rating it assigns (See FAR 42.1503 and Table 42-1).

For example, the FAR defines “marginal” as: “Performance [that] does not meet some contractual requirements. The contractual performance of the element or sub-element being evaluated reflects a serious problem for which the contractor has not yet identified corrective actions … [or] [t]he contractor’s proposed actions appear only marginally effective or were not fully implemented.”

These objective guidelines allow contractors to challenge a negative rating if, for example, the government’s determination is based on inaccurate, incomplete, inconsistent or otherwise unsupported information or statements. A viable challenge also could be mounted if the government failed to notify the contractor during performance of a purported contractual deficiency.

Second, contractors should remember that, while the ASBCA cannot order an agency to issue a higher rating, the board can direct the government to conduct a “fair and accurate” evaluation of the contractor’s performance in accordance with law and regulation. In many cases, an order remanding a rating for re-evaluation will result in only partial relief for the contractor (e.g., where the agency must simply do a better job of explaining why it assigned a low rating). But in other cases, such an order will require the agency to meaningfully reexamine the rating in light of the contractor’s overall record of performance, the objective guidelines in the FAR and the particular challenges raised by the contractor on appeal.

Third, contractors also should keep in mind that in some cases they may be entitled to recover monetary damages if they can show the government’s arbitrary and capricious performance evaluation “constituted bad faith and a breach of the [agency’s] duty of good faith and fair dealing.” Though it can be challenging to prevail on a claim for breach of the duty of good faith and fair dealing, it will be a viable theory of recovery in many CPARS rating cases, particularly those where there is clear evidence of government bias or overreach that can be developed further through discovery.

The board’s decision in Cameron Bell is a helpful reminder that contractors have recourse when they are assigned a less-than positive rating. Companies should familiarize themselves with the CPARS process ahead of time so that they can quickly identify the evidence needed to rebut a negative rating and, if necessary, challenge the rating in a Contract Disputes Act claim. 

Alex Sarria is a special counsel and Kevin Barnett is a senior associate at Covington & Burling LLP.

Topics: Defense Contracting