This analysis covers FAR Subpart 9.1 - Responsible Prospective Contractors, which dictates the standards and procedures the government uses to ensure it only does business with reliable, capable, and ethical entities.
Overview
FAR Subpart 9.1 establishes the requirement that no contract award shall be made unless the Contracting Officer (CO) makes an affirmative determination of the contractor's responsibility. It provides specific general and special standards—such as financial capability, past performance, and integrity—that a prospective contractor must meet to receive a federal contract.
Key Rules
- Affirmative Determination Required: A "non-determination" defaults to a finding of nonresponsibility. The CO must proactively find evidence that a contractor is responsible before signing a contract.
- General Standards of Responsibility: To be found responsible, a contractor must:
- Have adequate financial resources.
- Be able to comply with delivery/performance schedules.
- Have a satisfactory performance record and a satisfactory record of integrity/business ethics.
- Possess the necessary organization, experience, accounting controls, and technical skills.
- The "False Economy" Principle: The government is not required to award to the lowest bidder if that bidder is not responsible. Awarding to a low-priced but incapable contractor is considered "false economy" due to the risk of default or late deliveries.
- Small Business Referral: If a CO finds a small business nonresponsible, they cannot simply disqualify them; they must refer the matter to the Small Business Administration (SBA) for a possible Certificate of Competency (COC).
- FAPIIS Review: For awards exceeding the Simplified Acquisition Threshold (SAT), COs must review the Federal Awardee Performance and Integrity Information System (FAPIIS) to check for criminal convictions, civil judgments, or terminations for cause.
- Subcontractor Oversight: Prime contractors are generally responsible for determining the responsibility of their subcontractors, though the CO may intervene in specific high-risk scenarios (e.g., medical supplies).
Responsibilities
- Contracting Officer (CO):
- Makes the final affirmative determination of responsibility.
- Documents nonresponsibility determinations in FAPIIS within three working days.
- Requests preaward surveys when existing information is insufficient.
- Prospective Contractor:
- Must affirmatively demonstrate their responsibility.
- Provides "acceptable evidence" of the ability to obtain resources (personnel, equipment, facilities) not currently in hand.
- Discloses tax delinquencies, felony convictions, or adverse legal proceedings via representations and certifications.
- Surveying Activity (Contract Administration Office):
- Conducts preaward surveys (SF 1403) to evaluate a contractor’s financial and technical competence when requested by the CO.
- Small Business Administration (SBA):
- Holds the authority to issue a Certificate of Competency, which overrides a CO’s nonresponsibility determination for a small business.
Practical Implications
- The Importance of "Past Performance": A lack of past performance history is not grounds for a nonresponsibility determination (except in specific cases), but a bad performance record is a primary reason for disqualification. Contractors must actively manage their CPARS/FAPIIS records to avoid "presumed nonresponsibility."
- Due Diligence on Subcontractors: Prime contractors must perform "mini-responsibility" checks on their subs. If a sub fails, it can lead the government to find the prime nonresponsible by extension, especially if the sub is performing a critical portion of the work.
- Preaward Surveys as a Hurdle: For new entrants to the federal market, a Preaward Survey (SF 1403) can be an intense audit of their accounting systems and production facilities. Companies must be "audit-ready" before bidding on complex requirements.
- Documentation and Protests: Because the signing of a contract is the determination of responsibility, COs must be meticulous in documenting the contract file. If a high-value contract is awarded to a firm with known issues, the file must contain the CO's justification for why the firm was still deemed responsible to withstand legal protests from losing bidders.