The following article was prepared by Mike Taylor, C.P.M.
I was just wondering.
How do you evaluate potential contractors? Kind of a tricky question isn’t it. I know, I’ve been there. Sometimes just finding any contractor is a good thing. However, we all know how bad it can get when the selected contractor has a bad history. When contract problems arise, it’s too late to start checking references and reviewing a contractor’s past performance history.
A recent General Accounting Office decision highlighted the problem for those fortunate enough to work in the government-contracting arena.
Hold it! Don’t change that channel! The general principle applies to non-government buyers as well. [Example: I’d hate to be the buyer who inadvertently hired Charles Manson to run the company day care center].
Read the GAO case; http://www.gao.gov/decisions/bidpro/292476.htm
In this award, the buyer made two mistakes:
1- Failure to equally evaluate the past performance of all offerors and document the rationale for the evaluation.
2- Failure to adequately determine responsibility.
Under government rules, the buyer lost before the contract was awarded. However, absent the government rules any one of us could have awarded the contract and had performance problems develop later.
That’s the point. We need to make sure the recommended contractor has a good history and can reasonably be expected to perform well. This general principle required by Federal regulations would probably be expected of buyers in most companies.
So what should we do?
Consider a contractor’s past performance before awarding a new contract.
Determine if the recommended contractor is ‘responsible’.
Here are some suggestions about how to do that:
1- Check with everyone you can think of who might have some knowledge. Do the same kind of a review you might do before hiring a contractor to build a house.
2- Is this contractor licensed in the state, city, and county?
3- Is this contractor a member of local community groups and organizations?
4- Is this contractor proud of his work? Does he want to provide previous customer references? Do those customers know of any other customers?
5- Have there been any claims filed with the BBB or FTC? http://www.bbb.com/ www.ftc.gov
6- Run the contractor’s name in an Internet search engine? Are there newspaper articles, stories, reports, complaints, praise, and kudos?
7- If the anticipated contract is huge or foreign, hire a professional Due Diligence company to do some research. http://www.mltweb.com/tools/diligence.htm
8- Check the legal name of the contractor? Does the contractor have a Tax ID or EIN number (www.irs.gov) and/or a DUNS number? http://www.dnb.com/us/. If not why (since they are free to get)?
9- Check the Federal Government’s Excluded Parties List. If the Fed doesn’t like this contractor and/or some of the principals, why? www.sam.gov/ . I think it would be a fair question to ask a potential contractor to explain the listing.
10- Before each award, consciously consider the question, "Is this a responsible contractor?”
11- Ask the contractor to help. “Gee, I’d really like to recommend you for the contract, but I need help proving you are a reputable, experienced and responsible contractor. Can you help me find some information to prove if?”
As part of our process we require offerors to complete a representation and certifications form. We also check to make sure contractors are not on the GSA Excluded Parties List before adding them to our active vendor file. Buyers are also asked to make a responsibility determination before award.
When any professional buyer makes an award, I think they are doing the same thing. “This is the right contractor for the job! I know, because I am a professional buyer and it’s my job to make sure we buy from the right source.”
Here is what the Federal Acquisition Regulation says on the subject.
(a) Purchases shall be made from, and contracts shall be awarded to, responsible prospective contractors only. (b) No purchase or award shall be made unless the contracting officer makes an affirmative determination of responsibility. In the absence of information clearly indicating that the prospective contractor is responsible, the contracting officer shall make a determination of nonresponsibility. If the prospective contractor is a small business concern, the contracting officer shall comply with Subpart 19.6, Certificates of Competency and Determinations of Responsibility. (If Section 8(a) of the Small Business Act (15 U.S.C. 637) applies, see Subpart 19.8.) (c) The award of a contract to a supplier based on lowest evaluated price alone can be false economy if there is subsequent default, late deliveries, or other unsatisfactory performance resulting in additional contractual or administrative costs. While it is important that Government purchases be made at the lowest price, this does not require an award to a supplier solely because that supplier submits the lowest offer. A prospective contractor must affirmatively demonstrate its responsibility, including, when necessary, the responsibility of its proposed subcontractors.
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|MLTWEB is assembled and maintained by Michael L. Taylor, C.P.M.|
|Materials and articles prepared by Mike may be shared for purchasing education provided that this source is cited and no fee is charged. The rights for any other use are withheld.|
|Copyright; Michael L. Taylor, C.P.M.|
|Last Updated: 11/26/2016|