Both the House and the Senate want to overhaul how the Defense Department evaluates contractors by getting rid of subjective performance ratings in the Contractor Performance Assessment Reporting System with a “negative-only” reporting system.
The House Armed Services Committee’s version of the 2026 defense policy bill includes a provision titled “Reforming of Contractor Performance Information Requirements,” which would require DoD to revise the Defense Federal Acquisition Regulation Supplement to create an “objective, fact-based, and simplified system for reporting contractor performance.”
The amendment, introduced by Rep. Elise Stefanik (R-N.Y.), would establish a system focused solely on “negative performance events that are measurable to reduce subjectivity and inconsistency in evaluations.”
By limiting contractor performance reports to major failures or poor performance, the amendment’s sponsor says the system would ease the workload for contracting officers, create standardized templates for documenting negative events and calculating composite scores, and give companies without extensive past performance records a better chance to compete for Defense Department contracts.
Specifically, the amendment would require DoD contracting officers to “only include negative performance events that have a material impact on contract performance or government interests in CPARS and shall exclude positive or neutral performance assessments, except as necessary to provide context for an included negative performance event.”
Each negative event would be categorized into one of five categories:
Failures in innovation, technical development or prototype delivery;
Failures in manufacturing, quality control or delivering products;
Failures in maintenance, logistics or support services;
Failures in professional, administrative or operational services;
Failures in software, hardware, cybersecurity or IT systems.
Contracting officers do not have to do annual or regular performance evaluations unless they have confirmed a negative performance event.
Cy Alba, a partner with the law firm PilieroMazza, said while the reform aims to make evaluations more objective, a system that only records negative issues and excludes positive performance reports would still leave room for interpretation.
“Especially when combined with case law suggesting the government has a lot of discretion in these and that limits contractor relief if there is misuse by government officials, I see this leading to more litigation over these and more improper retaliation by government personnel,” Alba said.
The amendment requires contracting officers to document negative performance events, such as late deliveries, failure to meet contract requirements, cybersecurity breaches and violations of safety or environmental regulations within 30 days of verifying them.
The Defense Department must create “a standardized scoring mechanism to normalize negative performance events of a contractor” based on how many transactions they have had and the total dollar value of those contracts.
Contractors will be able to see their score and the underlying data in CPARS, as well as submit comments or rebuttals to challenge negative entries.
Alba said these requirements do not account for situations where an issue is still being disputed.
“Oftentimes, CPARS are used against contractors even when there is an ongoing dispute or claim about the alleged failures in performance. So what should really be done here is that CPARS should not be released until all disputes are resolved as it can cause irreparable harm to contractors when the CPARS go unchecked. And they don’t address at all the guilty until proven innocent aspects to CPARS,” Alba said.
The amendment also requires the Defense Department to develop and provide training for contracting officers on identifying, verifying and reporting negative performance events and entering data correctly into CPARS so it can be used to generate contractor scores.
Within one year of enactment, DoD must update CPARS to automatically calculate composite scores from the data contracting officers enter and create a way for contractors to review and respond to reported events and scores.
For contracts awarded before the new rules take effect, contracting officers can keep using the old CPARS system until those contracts are closed or terminated.
The Senate version of the defense bill largely mirrors the House measure, also seeking to “eliminate subjective contractor evaluations from the [CPARS] and establish objective criteria for negative performance events.”
The measures now head to the full House and Senate for consideration, and the committees will have to merge their versions during the conference process.
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