Determining Contractor Responsibility

Q. What are the components of a responsibility determination?

A. 49 U.S.C. 5325(j) provides:

"AWARDS TO RESPONSIBLE CONTRACTORS.—

  1. IN GENERAL.—Federal financial assistance under this chapter may be provided for contracts only if a recipient awards such contracts to responsible contractors possessing the ability to successfully perform under the terms and conditions of a proposed procurement.
  2. CRITERIA.—Before making an award to a contractor under paragraph (1), a recipient shall consider—
    1. the integrity of the contractor;
    2. the contractor's compliance with public policy;
    3. the contractor's past performance, including the performance reported in the Contractor Performance Assessment Reports required under section 5309(l)(2); and
    4. the contractor's financial and technical resources."

To designate a prospective contractor "responsible" as required by 49 U.S.C. Section 5325, FTA expects the recipient, at a minimum, to determine and ensure that the prospective contractor satisfies the following criteria described herein. In addition to being otherwise qualified and eligible to receive the contract award under applicable laws and regulations, a responsible contractor:

  1. Integrity and Ethics. Has a satisfactory record of integrity and business ethics, in compliance with 49 U.S.C. Section 5325(j)(2)(A),
  2. Debarment and Suspension. Is neither debarred nor suspended from Federal programs under DOT regulations, “Nonprocurement Suspension and Debarment,” 2 CFR Parts 180 and 1200, or under the FAR at 48 CFR Chapter 1, Part 9.4,
  3. Affirmative Action and DBE. Is in compliance with the Common Grant Rules’ affirmative action and FTA’s Disadvantaged Business Enterprise requirements,
  4. Public Policy. Is in compliance with the public policies of the Federal Government, as required by 49 U.S.C. Section 5325(j)(2)(B),
  5. Administrative and Technical Capacity. Has the necessary organization, experience, accounting, and operational controls, and technical skills, or the ability to obtain them, in compliance with 49 U.S.C. Section 5325(j)(2)(D),
  6. Licensing and Taxes. Is in compliance with applicable licensing and tax laws and regulations,
  7. Financial Resources. Has, or can obtain, sufficient financial resources to perform the contract, as required by 49 U.S.C. Section 5325(j)(2)(D),
  8. Production Capability. Has, or can obtain, the necessary production, construction, and technical equipment and facilities,
  9. Timeliness. Is able to comply with the required delivery or performance schedule, taking into consideration all existing commercial and governmental business commitments, and
  10. Performance Record. Is able to provide a:
    1. Current Performance. Satisfactory current performance record, and
    2. Past Performance. Satisfactory past performance record in view of its records of long-time performance or performance with a predecessor entity, including:
      1. Sufficient Resources. Key personnel with adequate experience, a parent firm with adequate resources and experience, and key subcontractors with adequate experience and past performance,
      2. Adequate Past Experience. Past experience in carrying out similar work with particular attention to management approach, staffing, timeliness, technical success, budgetary controls, and other specialized considerations as described in the recipient’s solicitation, and
      3. Any Past Deficiencies Not the Fault of the Bidder or Offeror. A prospective bidder or offeror that is or recently has been seriously deficient in contract performance is presumed to be nonresponsible, unless the recipient determines that the circumstances were properly beyond the bidder or offeror’s control, or unless the bidder or offeror has taken appropriate corrective action. Past failure to apply sufficient tenacity, perseverance, and effort to perform acceptably is strong evidence of nonresponsibility. Failure to meet the quality requirements of a contract is a significant factor to consider in determining satisfactory performance. FTA expects the recipient to consider the number of the bidder or offeror’s contracts involved and the extent of deficient performance in each contract when making this determination.

    Before entering into a full funding contract for a fixed guideway project, the recipient must now consider the prospective contractor's past performance in estimating costs and ridership as reported in the Contractor Performance Assessment Reports, as required by 49 U.S.C. Section 5325(j)(2)(C).

Certain procurements may require special standards of responsibility requiring contractors to have specialized expertise or facilities in order to perform the contract adequately. These special standards of responsibility must be set forth in the solicitation. Failure to meet the special standards will disqualify a bidder from consideration for award. An example of a special responsibility standard would be the special quality assurance requirement concerning measuring and testing facilities and manufacturing controls which must be met by prospective bus manufacturers. (Revised: September 9, 2009)

Q. What is the Dollar Threshold for making a written Determination of Contractor Responsibility? Does it apply to Purchase orders? How detailed must it be? Must it be in writing regardless of the threshold?

A. The Federal Transit Administration does not require its grantees to make a written determination of contractor responsibility for small purchases (those under $100,000).

In reviewing the FAR Subpart 9.1, it would seem that a determination of contractor responsibility is required for "purchases" as well as "awards" - 9.103 (b). It is not clear, however, that FAR requires a written determination for small purchases. 9.103 (b) does require an "affirmative determination" of responsibility. FAR Subpart 13.101 deals with procedures for small purchases and envisions a scenario when a CO determines a contractor to be nonresponsible, in which case the CO is to comply with Subpart 19.6 with respect to Certificates of Competency before rejecting a quotation. Once again, however, this does not clearly require a written determination of responsibility for small purchases, only the CO's decision as to responsibility or nonresponsibility. We would conclude from these FAR references that the FAR does envision the CO making a responsibility determination but the FAR leaves a great deal of discretion in how the decision is made and to what extent it is documented. (Reviewed: September 9, 2009)

Q. Can project-related experience be a condition of contract award? Can project-related experience be an evaluation factor? We are requiring vendors to submit examples of at least three contracts of comparable size and type as part of their proposals. We feel that previous experience is a necessary factor of project award. A Contractor states that the minimum experience requirement indicated above is in conflict with FTA guidance that prohibits grantees from requiring "unnecessary experiences" in all procurement transactions.

A. Project-related experience should be a factor related to the capability of the offeror to perform the contract; i.e., a factor for determining the offeror's responsibility, not responsiveness. As a responsibility issue, past experience may be discussed with the company after proposals are submitted. For further guidance on determining contractor responsibility, see the Best Practices Procurement Manual (BPPM), Section 5.1 - "Responsibility of Contractor."

We would think that requiring three previous projects of the same size as the present procurement would be an excessive experience requirement. And to insist on this as a condition of bidding would seem unreasonable. Our opinion would be that to require one project of similar size, successfully completed, with perhaps several more of smaller size would be sufficient to demonstrate that the offeror has the capability to perform your contract. In any case, we would advise you to be flexible about the number of past projects completed and their size. It may be virtually impossible, for example, for a supplier to have completed three projects of the size you are now procuring. (Reviewed: September 9, 2009)

Q. Is there a requirement that a request for financial statements be made of all proposing contractors (to be used to help determine financial responsibility) and be included in the RFP, or can they be requested prior to award from the selected contractor only? This is for a T&M master contract where prices are being considered as part of the evaluation criteria.

A. The topic of Contractor Responsibility is covered in the Best Practices Procurement Manual, Section 5.1 - Responsibility of Contractor. Any issue related to the determination of responsibility may be discussed with the apparent low bidder or winning offeror prior to award. Thus you may ask for financial statements from the apparent winning contractor after proposals have been evaluated. You need not request this information from all offerors in the RFP. The types of information that may prove useful in the responsibility determination are discussed in the BPPM section 5.1.3 - Obtaining Information for Determination of Responsibility. All of this information may be obtained after proposals are evaluated and need not be included in the RFP. (Reviewed: September 9, 2009)

Q. (1) In a recipient's determination of responsibility or capacity to deliver, may a recipient require a dealer's license (versus an in-state dealer's license) as proof that a bona fide relationship exists between a dealer and a specific manufacturer? (2) In a recipient's determination of responsibility or capacity to deliver, may a recipient consider the fact that state enforcement actions (as permitted in 4220.1F, ch. VI.2.a.4.2) may prevent delivery? 4220.1F stipulates that awards may only be made to responsible contractors, specifically, that awards may be made only to contractors who are capable of successfully performing under the terms of a proposed contract, generally known as "delivery." VI 2 a (4)(g) says recipients may not specify geographic preferences and may not limit bus purchases to in-state dealers, but provides an exception in VI 2 a 4 2 that state licensing laws may be enforced. Licensing enforcement actions include fines and issuance of cease and desist orders that would prevent a delivery.

A. Answers are as follows:

  1. It is reasonable in connection with a responsibility determination, for a grantee to request proof of a dealer's eligibility to distribute a particular manufacturer's products.
  2. A grantee may consider that a state's enforcement actions may prevent delivery, however, state enforcement actions cannot unduly hinder or burden interstate commerce. In other words, a state may not impose requirements on out-of-state vehicles that are not similarly imposed on in-state vehicles. If the potential of state enforcement or licensing actions affect a grantee's ability to comply with the Common Grant Rule's ban on geographic preferences, the grantee should immediately contact the appropriate FTA Regional Office. (Posted: March 2009)