Is FAPIIS the Business Equivalent of “Pick-Your-Poison?” (Part 1)

Have you heard about the Federal Awardee Performance and Integrity Information System ("FAPIIS")? According to ppirs.gov:

"The Duncan Hunter National Defense Authorization Act of 2009 (Public Law 110-417) was enacted on October 14, 2008. Section 872 of this Act required the development and maintenance of an information system that contains specific information on the integrity and performance of covered Federal agency contractors and grantees. The Federal Awardee Performance and Integrity Information System (FAPIIS) was developed to address these requirements. FAPIIS is a distinct application that is accessed through the Past Performance Information System (PPIRS) and is available to federal acquisition professionals for their use in award and responsibility determinations. FAPIIS provides users access to integrity and performance information from the FAPIIS reporting module in the Contractor Performance Assessment Reporting System (CPARS), proceedings information from the Central Contractor Registration (CCR) database, and suspension/disbarment information from the Excluded Parties List system (EPLS)."

According to OMBWatch, FAPIIS becoming publicly available is a wonderful thing.

“When President Obama signed this year's supplemental appropriations bill, he delivered a big win for the good government community, as a little known transparency amendment attached to the bill became law. The amendment, introduced by Sen. Bernie Sanders (I-VT), will require the General Services Administration (GSA) to make most of the Federal Awardee Performance and Integrity Information System (FAPIIS) publically available.

"Now, the public will have access to information on a contractor's past performance, specifically if the government has slapped them with any penalties, including non-responsibility determinations, terminations for default, administrative agreements over suspension or debarment, and criminal and civil proceedings."

The topic of the FAPIIS database being made publicly available on a government website pursuant to the above-mentioned amendment to the Defense Authorization Act last year is a topic for another day. Instead, I direct your attention to one small aspect of FAPIIS implementation found in subsection (c)(1) of section 872 of the Duncan Hunter National Defense Authorization Act of 2009 (the "ACT") where we are informed that the FAPIIS database will include information "in connection with the award or performance of a contract or grant with the Federal Government" such as the following:

"(B) In a civil proceeding, a finding of fault and liability that results in the payment of a monetary fine, penalty, reimbursement, restitution, or damages of $5,000 or more.

(C) In an administrative proceeding, a finding of fault and liability that results in—

   (i) the payment of a monetary fine or penalty of $5,000 or more ..."

Then in subsection (c)(7) of the same section 872 we are informed as follows:

"(7) To the maximum extent practical, information similar to the information covered by paragraphs (1) through (4) in connection with the award or performance of a contract or grant with a State government."

So fines or penalties of $5,000 or more in connection with any state or federal procurements or grants must be included in FAPIIS. Both the award context and the performance context are covered. To further complicate matters, in subsection (c)(1) of section 872, part (D) says:

"(D) To the maximum extent practicable and consistent with applicable laws and regulations, in a criminal, civil, or administrative proceeding, a disposition of the matter by consent or compromise with an acknowledgment of fault by the person if the proceeding could have led to any of the outcomes specified in subparagraph (A), (B), or (C)."

So actual imposition of a fine or penalty of $5,000 or more is not required. An acknowledgement of any fault coupled with the closing of a proceeding that could have led to a fine or penalty of $5,000 or more must also be included in the FAPIIS. Apparently it does not matter how minor the fault admitted may be so long as it was involved in a proceeding and sufficient to support a theoretical fine or penalty of $5,000 or more. And we should remember that the proceeding in question could be state or federal—information from both contexts must be included in the FAPIIS.

Why would a contractor ever acknowledge fault and pay a small fine? Take a situation where the contractor was slightly responsible for damage to supplies that was caused mainly by the negligence of officers, agents, or employees of the Government acting within the scope of their employment. The contractor may be very aware of FAR 52.246-16, Responsibility for Supplies, sitting in his contract, but he may also want to end the dispute and returm to a non-adversarial footing, believing that that condition is not good for business. This is but one of many possible examples.

In subsection (d)(2)(C) of section 872 of the ACT we are told that policies will be developed allowing contractors to "submit comments pertaining to information about such person for inclusion in the database"—in other words, in the FAPIIS database. We now have FARs implementing the ACT, and regarding policies allowing contractors to submit comments, FAR 52.209-8 tells us:

"(b)(1) The Contractor will receive notification when the Government posts new information to the Contractor's record.

(2) The Contractor will have an opportunity to post comments regarding information that has been posted by the Government. The comments will be retained as long as the associated information is retained, i.e. , for a total period of 6 years. Contractor comments will remain a part of the record unless the Contractor revises them."

Thus a contractor will have the capability to add explanatory and possibly protective comments to the FAPIIS database under certain circumstances. For example, some information might be added that attempted to support a responsibility finding by attempting to explain away, neutralize, or overcome negative data. To further illustrate, presumably a contractor could explain a decision to settle a civil case because, while blameless, the contractor was spending more in attorney fees than it would take to settle the case, and because the contractor realized there is always a risk of losing in court no matter how blameless he was. Alternatively, among many other reasons, a contractor might settle a case in order to avoid publicity, or to avoid giving competitors the opportunity to suggest the contractor was litigious, or to end some frivolous but distracting claim.

In subsection (e)(2)(A) of section 872 of the ACT we find an important process requirement imposed on government contracting personnel:

"Before awarding a contract or grant in excess of the simplified acquisition threshold under section 4(11) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(11)), the Federal agency official responsible for awarding the contract or grant shall review the database and shall consider all information in the database with regard to any offer or proposal, and, in the case of a contract, shall consider other past performance information available with respect to the offeror in making any responsibility determination or past performance evaluation for such offeror."

Here we see that all information included in the FAPIIS database, including any comments entered by the contractor, must be considered before awarding a contract or grant.

Part 2 of this post will explore further the implications and difficulties the FAPIIS database reporting poses for contractors, and will be posted on Friday, August 20.