Under Federal Acquisition Regulation (FAR) 9.103, government contracts may be awarded only to responsible prospective contractors, and contracting officers (COs) are required to make an affirmative determination of financial responsibility before contract award. To be deemed financially responsible under FAR 9.104-1(a), a prospective contractor must either have adequate financial resources to undertake performance or be able to obtain them. While financial responsibility is an important prerequisite for awarding federal contracts, the FAR does not provide specific techniques to make this determination. Thus, depending on the procurement’s needs and circumstances, COs may use various criteria, analyses, and techniques to assess a prospective contractor’s financial responsibility. Such methods may include reviewing cash flow statements, forward projections, working capital, profit and loss, and other financial information. As with other responsibility criteria used to determine a prospective contractor’s ability to perform, when reviewing financial responsibility, the CO must consider all relevant information available at the time of making the determination. Furthermore, any calculations or analyses assessing a prospective contractor’s financial capabilities must be accurate and rely on information available to the CO from the proposal and other relevant sources.

Past performance evaluations play an integral role in determining the capability of competing offerors to perform. Solicitations describe the government’s intended approach for evaluating past performance, and an offeror’s past performance is typically evaluated by reviewing performance histories on individual procurements. As long as the evaluations are consistent with the solicitation and all proposals are evaluated on an equal basis, it is within the procuring agency’s discretion to determine the scope of the offerors’ performance histories to be considered. There are situations where a contractor contests a recently assigned past performance rating by disputing the government’s interpretation of the facts relating to its performance. However, even when a past performance rating is being disputed, a procuring agency may base its evaluation upon a reasonable perception of inadequate past performance. The contractor’s efforts to dispute the past performance rating, or its continued disagreement with the agency that assigned the rating, may be disregarded by the procuring agency when conducting the past performance evaluation.

In B-423103, a bid protest decision issued on January 15, 2025, the Government Accountability Office (GAO) found the procuring agency’s past performance evaluation fair and reasonable despite the protester’s assertion that a past performance rating considered during the evaluation was a matter of an unresolved and ongoing dispute. The Defense Logistics Agency (DLA) issued a request for quotation (RFQ) to acquire 85 commercial piston seals for the Apache and Black Hawk helicopters. The piston seals were deemed critical application items, with the awardee and the protester designated as the only approved sources. The awardee’s quotation was evaluated as acceptable. Meanwhile, the contracting officer (CO) noted the protester’s recent performance under a contract for the same items as having quality issues, following issuance of a stop-work order for supplying non-conforming material. Based on this evaluation, the contract was awarded to the awardee, and the protester filed its protest.

The General Services Administration (GSA) Federal Supply Schedule (FSS) program provides federal agencies with a streamlined process for acquiring commercial goods and services. The GSA awards indefinite-delivery contracts after following the contractor responsibility requirements outlined in the Federal Acquisition Regulation (FAR). Under FAR 9.1, contracting officers (COs) must determine a prospective contractor’s responsibility, or capability to perform, before awarding a contract. The requirement for an affirmative responsibility determination applies to the award of the FSS contract, not to orders placed under it. This is because responsibility determinations must be made for prospective contractors rather than existing ones, and the GSA makes an affirmative responsibility determination before the contractor’s overarching indefinite-delivery FSS contract is awarded. This approach is consistent with the regulatory framework governing responsibility determinations, which renders the concept of responsibility inapplicable once a contract has been awarded. However, if the CO nevertheless elects to make a responsibility determination before placing an FSS order, he must do so in a reasonable manner.