"Past performance may not be indicative of future results and returns."

The above statement can often be heard on television and radio advertisements offering investment opportunities. Usually in this context it is used as a disclaimer, warning investors that the promising returns advertised are not guaranteed, and actually, could be quite lower.

Not all businesses, however, are afforded the opportunity to make such a statement. In fact, investors in businesses other than commodities and financial markets are more likely to adopt the philosophy that past performance is indicative of future results and returns. The most notable investor and subscriber to this philosophy is the Federal Government.

Role of Past Performance in Federal Procurement

For several years, under the Federal Acquisition Regulations, federal acquisition officers have been allowed to consider contractor past performance in their selection criteria. In recent years, however, changes brought about by the Federal Acquisition Streamlining Act (FASA) and the Federal Acquisition Reform Act (Clinger-Cohen Act) have increased the role of past performance in the acquisition process. In fact, the desire to select quality suppliers has resulted in a contractor's past performance representing up to 50% of the source selection criteria in some instances.

The emphasis placed on a contractor's past performance is not expected to decline as many acquisition officials have indicated that the inclusion of past performance information in the decision matrix is accomplishing its purpose. On January 27, 1997, the Office of Federal Procurement Policy (OFPP) issued a memorandum to senior agency procurement executives reporting that a three year program proved the hypothesis that the increased use of past performance as an evaluation factor in the contract award process can improve the procurement system's ability to select quality suppliers. Such praise from the OFPP indicates that contractors should become more aware of the past performance factor in the selection process.

Past Performance Elements

The factors to be considered in the past performance evaluation can vary from agency to agency and from contract to contract. The OFFP, however, has established some general considerations that should be taken into account in evaluating past performance. These general considerations are:

The importance of each factor also varies from contract to contract. Some studies have been conducted, however, that quantify the importance of these factors. The results of one such study, conducted by IDC Government Market Research for Federal Computer Week, are shown below.

Most Important Past Performance Elements

Strategy to Maximize Past Performance: Customer Surveys

While the relevance of the individual past performance elements will vary from contract to contract, guidelines supplied to federal procurement officials recommend that past performance, as a whole, should be considered at least equally important to any other non-cost factor, and in most cases should be rated at 25% or more. For example if there were five non-cost factors including past performance, at a minimum, past performance should be rated at 25% and the other four factors a total of 75%.

The increased emphasis placed on past performance challenges organizations to maximize the contracting team's evaluation of this factor, as it could easily be the difference between winning or losing a contract. One tool that has proved extremely beneficial in maximizing the results of a past performance evaluation is the use of customer surveys to identify both success and caution areas.

Quality of products or services and end-user satisfaction - two of the most important elements of past performance - can easily be assessed though customer surveys. Obtaining customer feedback on these elements allows an organization to monitor and respond to all deficiencies, complaints and criticisms that could adversely affect a past performance rating, and ultimately result in lost business opportunities. Many times organizations are not made aware of potentially damaging testimonies until someone else uncovers them. Through customer surveys, organizations can know, with confidence, what each of their clients are likely to communicate when contacted to evaluate past performance.

Well-constructed survey instruments can obtain valuable data that can be used throughout the proposal process and aid in the assessment of past performance. Areas of high customer satisfaction, as well of areas of dissatisfaction, can be used to an organization's advantage - provided that the information is known ahead of proposal submission.

Customer surveys identify product or service qualities that elicit high satisfaction from an organization's customers. These positive findings can then be advertised throughout the proposal. Since the advertised service areas are derived from actual customer input, the statements will be supported during the evaluation of past performance. Proposal statements that are independently confirmed during the past performance evaluation contribute immensely to the desired perception of a defensible and honest proposal from an organization that is truly knowledgeable about its customers. Furthermore, sub-contractors can advertise their positive survey findings to prime contractors, increasing their importance in the contract.

Customer dissatisfaction can also be used to an organization's advantage. Many times a source of dissatisfaction can be common to several organizations within an industry. Areas of customer dissatisfaction, that are likely to be uncovered in a past performance evaluation, can be addressed in the proposal by identifying mitigating circumstances or cure measures. Taking a proactive stance in the proposal can minimize the affect of poor past performance evaluations.

Additionally, customer survey findings can be disseminated to the entire organization creating a more efficient and effective proposal writing process. The absence of information sharing among team members can lead to surprising past performance evaluations. Situations have occurred where an uninformed proposal writer cited success with a past client even though there were others in the organization that knew of that client's dissatisfaction. Only after the contracting team performed a past performance evaluation did the proposal writer become aware of the dissatisfaction.

And perhaps most important of all, customer surveys provide the information needed to develop strategies and actions that affect future customer satisfaction.

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T.E. Systems, Inc. (TES) has extensive experience in conducting customer surveys to evaluate an organization's past performance and assist in identifying solutions for improved performance. Surveys can be designed to meet a magnitude of time and budgetary constraints, while continually focusing on the overall goals and objectives. TES develops surveys conducted via postal mail, electronic mail, telephone, personal interview, Internet, or through a self-contained application on a diskette. TES utilizes the latest survey research technology and efficiently collects and analyzes both quantitative and qualitative data.

For more information on how customer surveys can assist your organization in maximizing its past performance evaluations, please contact us.