9.104-3 Application of standards
Source: FAR 9.104-3 on acquisition.gov
Contractors must demonstrate adequate resources and a satisfactory performance record, while small businesses have special procedures for nonresponsibility and must comply with subcontracting limitations.
Overview
FAR 9.104-3 details how contracting officers should apply the standards of responsibility when evaluating prospective contractors. It outlines the evidence required to demonstrate a contractor’s ability to obtain necessary resources, how to assess satisfactory performance records, and the treatment of affiliated concerns and joint ventures. The section also provides special procedures for small business concerns, including referrals to the Small Business Administration (SBA) for nonresponsibility determinations and compliance with limitations on subcontracting. The regulation ensures that only responsible contractors, with adequate resources and a history of satisfactory performance, are eligible for government contracts, with additional protections and procedures for small businesses.
Key Rules
- Ability to Obtain Resources
- Contractors must provide acceptable evidence (e.g., commitments or arrangements) that they can obtain required resources by contract award, unless they already possess them or will subcontract.
- Satisfactory Performance Record
- Contractors with a history of serious performance deficiencies are presumed nonresponsible unless extenuating circumstances or corrective actions are demonstrated.
- Affiliated Concerns and Joint Ventures
- Affiliates are generally considered separate, but their past performance and integrity may affect responsibility; joint ventures are evaluated on their own or, if lacking history, on the performance of their members.
- Small Business Concerns
- Nonresponsibility determinations for small businesses must be referred to the SBA for a Certificate of Competency; failure to comply with subcontracting limitations can result in nonresponsibility or nonresponsiveness.
Responsibilities
- Contracting Officers: Must verify resource commitments, assess performance history, consider affiliate/joint venture records, and refer small business nonresponsibility to the SBA.
- Contractors: Must demonstrate resource availability, maintain satisfactory performance, and (if small businesses) comply with subcontracting limitations.
- Agencies: Oversee compliance and ensure proper referrals to the SBA for small businesses.
Practical Implications
- Ensures only capable and reliable contractors are awarded contracts.
- Small businesses have recourse through the SBA if found nonresponsible.
- Contractors must be proactive in documenting resources and performance history.
- Failure to comply with subcontracting limitations can jeopardize eligibility, especially for small businesses.
(a) Ability to obtain resources. Except to the extent that a prospective contractor has sufficient resources or proposes to perform the contract by subcontracting, the contracting officer shall require acceptable evidence of the prospective contractor’s ability to obtain required resources (see 9.104-1(a), (e), and (f)). Acceptable evidence normally consists of a commitment or explicit arrangement, that will be in existence at the time of contract award, to rent, purchase, or otherwise acquire the needed facilities, equipment, other resources, or personnel. Consideration of a prime contractor’s compliance with limitations on subcontracting shall take into account the time period covered by the contract base period or quantities plus option periods or quantities, if such options are considered when evaluating offers for award.
(b) Satisfactory performance record. A prospective contractor that is or recently has been seriously deficient in contract performance shall be presumed to be nonresponsible, unless the contracting officer determines that the circumstances were properly beyond the contractor’s control, or that the contractor has taken appropriate corrective action. Past failure to apply sufficient tenacity and perseverance to perform acceptably is strong evidence of nonresponsibility. Failure to meet the quality requirements of the contract is a significant factor to consider in determining satisfactory performance. The contracting officer shall consider the number of contracts involved and the extent of deficient performance in each contract when making this determination. If the pending contract requires a subcontracting plan pursuant to subpart 19.7, The Small Business Subcontracting Program, the contracting officer shall also consider the prospective contractor’s compliance with subcontracting plans under recent contracts.
(c)
(1) Affiliated concerns. Affiliated concerns (see "Concern" in 19.001 and "Small business concern" in 2.101 ) are normally considered separate entities in determining whether the concern that is to perform the contract meets the applicable standards for responsibility. However, the contracting officer shall consider the affiliate’s past performance and integrity when they may adversely affect the prospective contractor’s responsibility.
(2) Joint ventures. For a prospective contractor that is a joint venture, the contracting officer shall consider the past performance of the joint venture. If the joint venture does not demonstrate past performance for award, the contracting officer shall consider the past performance of each party to the joint venture.
(d)
(1) Small business concerns. Upon making a determination of nonresponsibility with regard to a small business concern, the contracting officer shall refer the matter to the Small Business Administration, which will decide whether to issue a Certificate of Competency (see subpart 19.6).
(2) Limitations on subcontracting. A small business that is unable to comply with the limitations on subcontracting may be considered nonresponsible (see 52.219-3, Notice of HUBZone Set-Aside or Sole Source Award; 52.219-4, Notice of Price Evaluation Preference for HUBZone Small Business Concerns; 52.219-14, Limitations on Subcontracting; 52.219-27,Notice of Set-Aside for, or Sole-Source Award to, Service-Disabled Veteran-Owned Small Business (SDVOSB) Concerns Eligible Under the SDVOSB Program; 52.219-29, Notice of Set-Aside for, or Sole-Source Award to, Economically Disadvantaged Women-Owned Small Business Concerns; and 52.219-30, Notice of Set-Aside for, or Sole Source Award to, Women-Owned Small Business Concerns Eligible Under the Women-Owned Small Business Program). A small business that has not agreed to comply with the limitations on subcontracting may be considered nonresponsive.