CPARS Evaluations: Are You Stuck with What You Get?Part 42.15 of the FAR entitles federal contractors to submit comments and receive agency review of an unfavorable performance evaluation in the Contractor Performance Assessment Reporting System (CPARS). If the contractor’s rebuttal is unsuccessful, the contractor may challenge the CPARS rating by submitting a claim to the contracting officer (CO) under the Contract Disputes Act. If the CO denies the claim, the contractor can then appeal the CO’s decision to the appropriate Board of Contract Appeals or the United States Court of Federal Claims. Two recent ASBCA decisions shed light on how boards will evaluate contractor appeals of CPARS ratings.

In Cameron Bell Corp. d/b/a Gov’t Solutions Grp., the Armed Services Board of Contract Appeals (ASBCA) confirmed that it has jurisdiction to “determine whether the government acted arbitrarily and capriciously in assigning an inaccurate and unfair performance evaluation.” The ASBCA held that while it does not have the jurisdiction to require the government to issue a specific rating, it can remand the matter to the CO and direct the government to conduct a “fair and accurate” evaluation of the contractor’s performance in accordance with law and regulation.

In PROTEC GmbH, the ASBCA addressed the merits of a CPARS evaluation and the contractor’s claim that the government had failed to perform a CPARS review at a level above the CO as required by FAR 42.1503(d). The contractor challenged several statements the government made in the contractor’s CPARS evaluation. The ASBCA performed a substantive assessment of the record to determine whether each of those statements was fair and accurate and found that the contractor failed to show that the CPARS evaluation was unfair or inaccurate. The contractor also claimed that the procedures used by the government were not fair because a review was not performed at a level above the CO as required by FAR 42.1503(d). In denying that claim, the ASBCA reasoned that “[g]enerally, in order for a contractor to have standing to raise a procedural claim, the contractor must show prejudice.” The ASBCA found that the contractor did not show prejudice because it did not show that the CPARS assessment would have been different but for the purported procedural errors.

Thus, before appealing an unfavorable CPARS rating, a contractor should consider both the limitations on courts’ and boards’ authorization to review such a matter and the difficulties it may face in proving its claims on appeal. As demonstrated in Cameron Bell, an order remanding a CPARS rating for reevaluation may result in no or only partial relief for the contractor. For example, the agency may only need to provide a more specific explanation as to why it assigned a low rating. In other cases, however, such an order may require the agency to reexamine the rating based on the contractor’s record of performance, the objective guidelines in the FAR (i.e., the specific ratings defined in FAR 42.1503 and the information the government must provide to justify the rating), and the particular challenges raised by the contractor on appeal. Also, as demonstrated in PROTEC, to succeed on a claim that the government’s evaluation was unfair or inaccurate, the contractor must present contemporaneous documents and other substantive evidence to prove that the government’s assertions in the assessment were inaccurate. The contractor should be equally prepared to show prejudice if its claim is based on a procedural violation.

The Small Business Administration (SBA) began accepting applications for the All Small Mentor-Protégé Program (ASMPP) in 2016 and has seen a surge in applications in each subsequent year.

Under the ASMPP, any small business – including 8(a) small businesses, Historically Underutilized Business Zone (HUBZone) small businesses, veteran-owned and service-disabled veteran-owned small businesses (VOSB/SDVOSBs), woman-owned and economically disadvantaged woman-owned small businesses (WOSBs/EDWOSBs) – may enter into an agreement with a large business under which the large business will provide mentorship and assistance. In return, the large and small businesses are permitted to joint venture to perform federal small business set-aside contracts.

As of mid-year 2019, below are some fast figures about the ASMPP, as reported by the SBA, that both large and small businesses need to know:

807

At least 807 different ASMPP agreements have been approved.

174

At least 174 of the 807 SBA-approved ASMPP agreements were approved under the protégé’s secondary – rather than primary – North American Industry Classification System (NAICS) code.

280

At least 280 of the ASMPP participants are 8(a) small businesses.

313

At least 313 of the ASMPP participants are SDVOSBs.

109

At least 109 of the ASMPP participants are HUBZone companies.

138

At least 138 of the ASMPP participants are EDWOSBs.

132

At least 132 of the ASMPP participants are small businesses without any other set-aside status.

114

The approved ASMPP agreements encompass at least 114 unique primary or secondary NAICS codes within 15 industry sectors.

49

ASMPP participants are based or incorporated in 49 different U.S. states and territories.

Number of SBA-Approved ASMPP Agreements by Year

Number of SBA-Approved ASMPP Agreements by Year

 

Distribution of Unique NAICS Codes in SBA-Approved ASMPP Agreements by Industry Sector

Distribution of Unique NAICS Codes in SBA-Approved ASMPP Agreements by Industry Sector

 

Geographical Distribution of SBA-Approved ASMPP Agreements

Geographical Distribution of SBA-Approved ASMPP Agreements

 

Please do not hesitate to contact Aron Beezley if you have any questions about the ASMPP or any related issues.

 

Special thanks to summer associate Gabby Sprio who assisted in the authorship of this blog post and the graphs found in the blog post.

Whether you are the owner or the general contractor, dealing with mechanic’s liens filed by subcontractors or suppliers can be frustrating and, in some cases, present the very real threat Creative Legislative Solutions To Bond Off Mechanic's Liensof having to pay twice for work or materials. Most, if not all, states’ lien laws provide that prior payment, whether by owner to contractor or contractor to subcontractor, are not a legal defense to a lien filed by a lower tier subcontractor or supplier who has not been paid. While there may be legal penalties for filing improper or exaggerated liens, when a lien is filed, it causes a ripple effect “upstream.” First, it is almost certainly a violation of the owner’s mortgage. The failure to pay that led to the lien is a default under the owner/contractor and contractor/subcontractor agreement. It makes no difference if the lien is legitimate or illegitimate because once filed it is a cloud on title and will delay or preclude refinancing, sale, or the approval by a lender of the owner’s next construction draw (which can then delay payment and cause more filed liens).

Most states have statutes that allow such liens to be “bonded over,” but that means going to a surety company for the bond, which may require full cash collateral. Bonds not only cost money, but also absorb bond capacity that is then no longer available for other projects until the liens are released. If an owner has to bond off a lien, it normally does not have a relationship with a surety company and has to go through a complete financial disclosure process to qualify for a bond. Finally, some states (Texas and Arkansas, for example) mandate that the amount of the lien bond has to be twice the amount of the filed lien. Obviously, such a requirement can cause serious issues particularly where the underlying lien is arguably invalid.

But…what if there is an existing payment bond already in place for the  project, normally provided by the prime contractor (the costs of which were passed through to the owner)? That bond does not prevent the filing of liens, but simply gives the lien claimant another “legal” way to try to get paid.  Most claimants will make a formal claim against the bond but also assert liens. One answer: Most states should follow the lead of Tennessee, which allows a copy of an existing payment bond, if it meets certain criteria, to be filed of record in the same place as the filed lien, and the filing of the bond automatically “discharges” the lien of record, just like a separate filed lien bond. No separate lien bond from a surety is needed. While the underlying dispute must still be resolved, at least the cloud on the title to the real property of the project is removed. The owner is happy. The payments continue to be made.  The claimant is normally very happy to now be able to sue on the payment bond. The Tennessee statute is located at T.C.A. 66-11-142(b).

If your state does not have such a statute, consider “lobbying” for a change. The local chapters of the various construction trade associations, such as ABC and AGC, may be willing to provide legislative support.