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Contractors Must Begin to Update Integrity Database

April 20, 2010 By ei2admin

Since 2007, government contractors have seen a series of new provisions added to the Federal Acquisition Regulation to promote business ethics and contractor compliance.

The National Defense Authorization Act of 2009 added yet another feature, which now requires the government to develop and maintain an information system containing specific information on the integrity and performance of federal contractors and grantees.

This database system will be known as the Federal Awardee Performance and Integrity Information System (FAPIIS). The proposed rule for FAPIIS (74 Fed. Reg. 45,579) discusses additional obligations for contractors and government contracting officers. Many contractors this year must prepare information for the database, and certify compliance with FAPIIS requirements for bids and proposals. Contracting officers will review FAPIIS when making the key “responsibility determination” for all contract awards, including delivery or task orders.  

The proposed rule provides that FAPIIS will cover essentially all significant government contracts, including those for commercial and commercially available off-the-shelf items.

The FAPIIS database will incorporate information from existing government sources, such as the Excluded Parties List System of suspended or debarred contractors. The Past Performance Information Retrieval System and Contractor Performance Assessment Reporting System, both contain past performance reports from federal agencies, and will provide information for the database. Contracting officers will be asked to report non-responsibility determinations and default terminations to FAPIIS. Suspension/debarment officials will be sending information on any administrative agreements with contractors that resolve compliance issues. Finally, the proposed rule requires larger contractors to report their own information to FAPIIS relating to criminal, civil and administrative proceedings.

To protect against misuse of the information, the rule proposes that only government personnel will view FAPIIS data. However, a contractor can see its own information. Data is accessible for a period of five years and thereafter will be archived for another year to allow an audit trail. Significantly, a contractor can post comments regarding its FAPIIS listings and these explanations will remain part of the database unless the contractor revises them. The intent also is to provide an automatic notification to a contractor when new information is posted to the contractor’s record.

A FAPIIS provision will appear in solicitations where the contract value is expected to exceed $500,000. The proposed rule also would require any contractor with federal contracts and grants totaling over $10 million to add information. This includes whether the contractor and its principals have within the past five years, been involved in criminal, civil or administrative proceedings in connection with the award or performance of a federal or state contract or grant, which resulted in a conviction, or payment of a fine or penalty of $5,000 or more, or reimbursement, restitution or damages in excess of $100,000.

Even absent a contractor payment, settlements with acknowledged fault would be reportable to FAPIIS. Knowing that a wide range of matters might end up in FAPIIS, contractors will need to take this into account when resolving any criminal, civil or administrative matters. Also, what constitutes an “administrative proceeding” subject to reporting may not always be clear, particularly where all federal and state proceedings potentially are covered.

Since FAPIIS will contain information covering a five-year period, some of that information may no longer be relevant. One example is a prior administrative action such as debarment or suspension that has expired or otherwise been resolved. One recommendation is that a statement be posted on the FAPIIS screen that might read: “Certain past performance in FAPIIS may no longer be relevant.” A contracting officer also should consider the magnitude and seriousness of any reported matters in FAPIIS, as well as the contractor’s corrective actions and comments. Moreover, contracting officers obtaining relevant adverse FAPIIS information are required to request additional information from a contractor demonstrating its responsibility, and document each contract file at to how the FAPIIS information was considered.

Although contracting officers must consider the FAPIIS information when making the responsibility determination for a contract award, the proposed rule is not clear on using FAPIIS for past performance as a competitive evaluation factor, or for periodic past performance evaluations as contract work is completed.

The proposed rule creates a new contract clause requiring larger contractors to update their FAPIIS information semi-annually throughout the life of contracts that are expected to exceed $500,000. As noted, contractors with over $10 million in contracts and grants must self-report, but the rule does not specify what information goes into the database for smaller businesses. The proposed rule does not prescribe penalties for contractors that fail to comply with FAPIIS reporting, although as a contract term and indicator of responsibility, it is difficult to ignore. But at a minimum those contractors with legal troubles that end up in FAPIIS will have a harder time winning contracts. Contractors can attempt to manage the FAPIIS database entries to provide context and a fair report. The proposed rule does not address a government contractor’s private sector work.

FAPIIS is requiring the government to collect information from multiple databases, as well as information that never before has been collected and centralized. There are many questions left unanswered with the proposed FAPIIS system, but because this is a statutory requirement, it will be implemented in one form or another.

by Dorn C. McGrath – National Defense magazine – May 2010 – Dorn C. McGrath is a shareholder in the Greenberg Traurig, LLP government contracts practice group.  The views expressed are solely those of the author.

Filed Under: Contracting Tips Tagged With: contractor performance, FAR, government contracting

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