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importance placed upon the various subfactors listed below should be done in such a way as to motivate the contractor to improve his performance. For instance, it might be pointless, in evaluating the performance of an autonomous division of a multidivisional contractor, to place emphasis on the performance of another autonomous division. Under such circumstances, management of the division being evaluated might have no means of controlling the performance of the other division; therefore, emphasis on this performance by assigning a plus or minus rating to this factor might have a negative affect upon motivation to improve.

(iii) The weight to be assigned to this factor is arrived at on a judgment basis rather than an arithmetical averaging of weights assigned to all factors, depending upon the particular procurement situation, and the relative importance of the various factors. For example, an evaluation of a particular contractor may indicate that his performance was satisfactory in most areas, except that he showed a preference for doing all work in-house and a disinclination to support Government small business objectives. In such a case the contracting officer may feel that the importance of these factors might justify the assignment of a lower overall rating for the record of past performance.

(iv) As stated above, the purpose of this factor is to reward a contractor for excellent past performance and penalize him for poor performance. Therefore, performance which is rated as merely satisfactory should generally be assigned to weight of zero. However, a contractor who has consistently met contractual requirements may be awarded a plus.

(v) The following factors are to be considered in evaluating a contractor's performance record:

(a) Cost efficiency: Low cost performance reflecting economic use of facilities and manpower, sound purchasing methods and subcontracting procedures, and effective inventory control are criteria for consideration. Improvement in efficiency through investment in plant modernization, past efficiencies, or lack thereof, effectiveness of the contractor's make-or-buy program, purchasing and

subcontracting system and inventory control should be evaluated.

(b) Management: Stability and competence of management personnel, their willingness and ability to adjust company resources to meet peculiarly difficult and changing control requirements are criteria for consideration. The degree of cooperation by the contractor, both business and technical, with the objectives of the Government should be considered.

(c) Extent of the contractor's investment: The extent of a contractor's total investment (i.e., both equity and borrowed capital) in the performance of the contract will be taken into consideration in determining the amount of the fee or profits.

(d) Reliability of cost estimates: Accuracy and reliability of previous cost estimates should be considered. Where substantial overruns have occurred, the contracting officer should attempt to determine the reasons.

(e) Inventive and developmental contributions: Extent and nature of contractor-initiated and financed research, development, design work, product engineering, quality control, and manufacturing processes and techniques in the areas of concern to the EPA should be analyzed.

(f) Timely performance: The contractor's performance record, considering excusable delays and the contractor's efforts to overcome delays, should be analyzed.

(g) Small business participation: The contractor's policies and procedures which energetically support Government small business programs pursuant to § 1-1.710-1 of this title should be given favorable consideration. Any unusual effort which the contractor displays in subcontracting with small concerns, particularly for development type work likely to result in later production opportunities, and overall effectiveness of the contractor in subcontracting with and furnishing assistance to small concerns should be considered. Conversely, failure or willingness on the part of the contractor to support Government small business policies should be viewed as evidence of poor performance for the purpose of establishing a profit objective.

(h) Labor surplus area participation: A similar review and evaluation (as re

quired in (g) of this subdivision) should be given to the contractor's policies and procedures supporting the Government's Labor Surplus Area Program pursuant to $ 1-1.805–1 of this title. Particular favorable consideration should be given to a contractor who (1) makes a significant effort to help find jobs and provide training for the hardcore unemployed, or (2) promotes maximum subcontractor utilization of certified-eligible concerns, as defined in § 1-1.801-1 of this title.

() Extent of Government assistance: The Government encourages its contractors to perform their contracts with the minimum of financial, facilities, or other assistance from the Government. Where extraordinary financial, facilities, or other assistance must be furnished to a contractor by the Government, such

extraordinary assistance should have a modifying effect in determining what constitutes a fair and reasonable profit or fee.

(j) Effect of competition: When competition is effective and proposals are on a firm-fixed-price basis, the contracting officer normally need not consider in detail the amount of estimated profit included in a price. When effective competition is lacking, and in all cases where cost analysis is performed in accordance with § 1-3.807–2(c) of this title the estimate for profit, target profit or fee, or the proposed fixed fee should be analyzed in the same manner as all other elements of price. (Sec. 205 (c), 63 Stat. 377, 40 U.S.C. 486 (c)) 136 F.R. 21192, Nov. 4, 1971)


A list of current CFR volumes, a list of superseded CFR volumes, and a list of CFR titles, subtitles, chapters, subchapters and parts are included in the subject index volume to the Code of Federal Regulations which is published separately and revised annually.

Table of CFR Titles and Chapters
Alphabetical List of CFR Subtitles and Chapters
List of Sections Affected


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