There is no doubt that contractors have the power to challenge an erroneous assessment of their performance on a government contract. FAR 42.1503 requires the government to issue past performance reviews in draft. Contractors are entitled to rebut any inaccuracies in the draft. Even if the government declines to make a requested change, contractors are entitled to have their comments included in the final report. Under the FAR disputes clause, contractors may submit a claim challenging a faulty past performance assessment. Denial of such a claim can be appealed to a Board of Contract Appeals or the United States Court of Federal Claims.

Of course getting a court decision reversing a poor past performance assessment presents a number of hurdles. One such hurdle is the requirement that a contractor submit a “claim” and that the contracting officer issue a final decision denying it. Without a claim and a final decision or sufficient passage of time to establish a “deemed denial,” there would be no jurisdiction allowing a Board or the Court to consider a contractor challenge to a poor past performance assessment.

But what happens when a negative past performance assessment is linked to unresolved disputes over delays, change orders, or government backcharges? Wouldn’t a resolution in the contractor’s favor necessarily require a reassessment of the contractor’s performance? As a matter of common sense, yes. Unfortunately common sense doesn’t create Contract Disputes Act jurisdiction. The recent decision in Extreme Coatings, Inc. v. United States, No. 11-895C (Fed. Cl. Oct. 3, 2012), concludes that a claim involving affirmative contractor claims or government counterclaims does not meet the jurisdictional requirement for a claim challenging past performance.

A look at the facts

The facts of the case shed more light on the problem. The contract involved repair of the dam at Fort Peck, Montana. The Corps of Engineers was unhappy with the work, noting “unacceptable deficiencies” in its Contractor Performance Assessment Reviews. A “draft interim CPAR” assigned “unsatisfactory” ratings for “Quality of Product or Service” and “Management of Key Personnel.” A “draft final CPAR” assigned “unsatisfactory” ratings in four categories—“Quality of Product or Service,” “Schedule,” “Business Relations,” and “Management of Key Personnel.”

Extreme Coatings tried to address the criticism. It met with the Corps within a week of the draft interim report. It submitted a claim seeking payment for additional work on the project and specifically challenging the draft past performance assessments.

In May 2011, the contracting officer issued a final decision rejecting the contractor’s monetary claim and asserting a government claim for the costs of correcting deficiencies in the work. The contracting officer declined to issue a final decision addressing the past performance assessment, concluding that it would be premature because the CPARs were still in draft. The contracting officer finalized the two draft CPARs in August 2011.

The contractor brought the case to the Court of Federal Claims in December 2011 without submitting a new claim challenging the final CPARs. The Corps moved to dismiss the challenge to the past performance assessments, arguing that the Court had no Contract Disputes Act jurisdiction because no claim challenging the final CPARs had been submitted. In the Corps’ view, the claim challenging the draft CPARs, the claim for additional compensation, and the government’s backcharge were insufficient to establish jurisdiction allowing the court to address the contractor’s challenge to the final CPARs.

A practical solution

Obviously the court agreed with the Corps on the basic jurisdictional point—there was no jurisdiction to challenge the final CPARs because no formal claim challenging them had been submitted. But the court also recognized the practicality of the situation. The court rejected the government’s effort to derail consideration of the past performance issue entirely. In the court’s view, Extreme Coatings properly addressed the jurisdictional problem by submitting a formal claim challenging the final CPARs in September 2012—well after it filed suit in the Court and after receiving the Corps’ motion to dismiss. The Court stayed the litigation for 30 days to allow the contracting officer to issue a final decision.

Even though the monetary claims and counterclaims were already in litigation, the Court held that the contracting officer retained power to consider the claim challenging the CPARs because they were not “identical” to the monetary claims. Presumably, the contracting officer will reject the past performance claim and litigation of all the related issues will proceed from there.