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DoD is issuing a final rule to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement section 823 of the National Defense Authorization Act for Fiscal Year 2019, which establishes a requirement for use of the best available information regarding past performance of subcontractors and joint venture partners when awarding DoD construction and architect-engineer (A&E) contracts. Section 823 requires annual performance evaluations for first-tier subcontractors and individual partners of joint venture construction and A&E contracts valued at either $750,000 or more, or 20 percent of the value of the prime contract (whichever is higher), in accordance with specified conditions. In addition, processes for exceptions from the annual evaluation requirement will be established for construction and A&E contracts where submission of annual evaluations would not provide the best representation of the performance of a contractor, including subcontractors and joint venture partners under specified conditions. This rule will amend DFARS part 242 to incorporate these new requirements and processes.

Statement of Need:

This rule is necessary to implement section 823 of the National Defense Authorization Act for Fiscal Year 2019 (Pub. L. 115-232), which establishes a requirement for use of the best available information regarding past performance of subcontractors and joint venture partners when awarding DoD construction and architect-engineer contracts. Section 823 requires annual performance evaluations for first-tier subcontractors and individual parties to joint ventures performing construction and architect-engineer contracts valued at either $750,000 or more, or 20 percent of the value of the prime contract (whichever is higher), in accordance with specified conditions. In addition, processes for exceptions from the annual evaluation requirement will be established for construction and architect-engineer contracts where submission of annual evaluations would not provide the best representation of the performance of a contractor, including subcontractors and joint venture partners under specified conditions.

Summary of the Legal Basis:

The legal basis for this rule is 41 U.S.C. 1303 and section 823 of Public Law 115-232.

Alternatives:

There are no alternatives that would meet the requirements of section 823 of Public Law 115-232.

Anticipated Costs and Benefits:

This rule will make it easier for subcontractors and individual parties to joint ventures to establish a record of their past performance. These entities will be able to take credit for the work they performed on contracts and subcontracts, which will help them be more competitive when bidding on future DoD contracts. This will help increase competition for DoD contracts.

Risks:

Due to the difficulty of establishing a record of past performance on DoD contracts, there is a risk of reduced competitiveness for subcontractors and individual parties to joint ventures.