Responsibility Determinations Under the Federal Acquisition Regulation: Legal Standards and Procedures

This report discusses the standards and procedures that federal agencies use in making responsibility determinations under the Federal Acquisition Regulation (FAR). As a general rule, government agencies contract with the lowest-priced (or best-value) qualified responsible bidder or offeror. Responsibility is an attribute of the contractor, while price and qualifications are attributes of the bid or offer. Under the FAR, “[n]o purchase or award shall be made unless the contracting officer makes an affirmative determination of responsibility.”

To be determined responsible, prospective contractors must meet general standards, which include so-called “collateral requirements.” These standards apply to all procurement contracts, even if they are not incorporated into the solicitation. They include the following seven criteria related to contractors’ capabilities and conduct: (1) adequate financial resources; (2) ability to comply with the delivery or performance schedule; (3) satisfactory performance record;
(4) satisfactory record of integrity and business ethics; (5) necessary organization and experience; (6) necessary equipment and facilities; and (7) otherwise qualified and eligible. The seventh criterion—“otherwise qualified and eligible”—encompasses collateral requirements, or other provisions of law specifying when contractors are disqualified from or ineligible for awards.

Under current collateral requirements, contractors must be found nonresponsible when, among other things, they (1) do not comply with federal equal employment opportunity requirements; (2) fail to agree to an acceptable plan for subcontracting with small businesses; (3) are known government employees; (4) are quasi-military armed forces; or (5) have unavoidable and unmitigated organizational conflicts of interest. Unlike performance standards, which assess whether prospective contractors can be expected to complete the contract work in a timely and satisfactory manner, collateral requirements ensure that the government’s dealings with contractors promote socioeconomic goals.

In addition to the general standards, contractors may have to meet special standards, also known as “definitive criteria,” which apply only to specific acquisitions. Special standards must be expressly included in agencies’ solicitations. They are used when unusual expertise, special facilities, or specific experience or equipment are necessary to ensure that the government’s needs are satisfied.

Contracting officers determine prospective contractors’ responsibility prior to each contract award by considering information submitted by the contractor or otherwise acquired by the agency. When they lack sufficient information to determine that the contractor is responsible, they must make a determination of nonresponsibility. Contractors are generally not entitled to due process when contracting officers make a responsibility determination, meaning that they typically do not get notice of nonresponsibility determinations or an opportunity to present evidence regarding their responsibility.

Contracting officers have substantial discretion in making determinations, and judicial or other tribunals will generally hear protests regarding responsibility determinations only in limited circumstances. The Government Accountability Office, in particular, will only hear protests which allege that special standards (i.e., definitive criteria) were not met, or that identify evidence raising “serious concerns” that the contracting officer unreasonably failed to consider available relevant information or otherwise violated statute or regulation.