Federal procurement statutes and regulations establish largely uniform policies and procedures applicable to government contracts "to deliver on a timely basis the best value product or service to the [government], while maintaining the public's trust and fulfilling public policy objectives." To meet these ends, federal agencies have a number of legal tools at their disposal to help ensure a contractor adequately performs a contract or, if warranted, to hold a contractor accountable for performance failures or misconduct. These standard "inspection clauses" authorize procuring agencies to require contractors to remove, correct, replace rejected goods, or reperform services, (together, to take "corrective actions") for failing to conform to contract specifications and requirements. Relatedly, inspection clauses often provide agencies with the authority to make equitable cost reductions or seek repayment to account for all of the costs associated with deficient services that cannot be reperformed or goods the agency receives and accepts despite the deficiencies. Incentive Fees

Under certain circumstances, procuring agencies are permitted to incentivize contractors with performance-based payments "to . Incentive fees can be an effective contractor accountability measure because they can be paid to reward contractors for meeting or exceeding goals or standards contemplated in the contract or withheld or reduced when contractors fail to meet or exceed those goals or standards. In the government contract context, a bond is a security instrument in which a third-party surety promises to assume a contractor's responsibilities in the event that the contractor fails to meet specified contractual obligations. While the primary purpose of a surety bond is to protect the government, a bond also arguably serves as a contractor accountability measure because it subjects a contractor to potential additional costs. These could include, for example, liability expenses under indemnity agreements with the surety. Payment bonds . Liquidated Damages

Liquidated damages are predetermined sums a contractor must pay the procuring agency for specified contract breaches or performance failures. By predetermining the costs associated with a breach or failure to perform, liquidated damages clauses hold contractors accountable for noncompliance, while "sav[ing] the time and expense of litigating the issue of damages." Contract Termination for Default

Termination of a contract because of a contractor's default is arguably the most consequential and dramatic contract-based contractor accountability tool at the government's disposal. By terminating a contract, in whole or in part, for default, a procuring agency is informing a contractor that its failure to meet contract requirements "discharges government duties under the contract while exposing the contractor to potential liability for the consequences of its breach." Contractor Performance Evaluations

When selecting contractors, procuring agencies often must consider various contractor accountability issues, notably including the contractor's performance under other contracts, through (1) "responsibility determinations" to assess whether the contractor is capable of performing on the contract; and (2) source selections under negotiated contracting. Evaluating Contractors During Contract Performance

To facilitate agency evaluations of a prospective contractor's likelihood of success on future contracts, the FAR generally requires procuring agencies to conduct and document performance evaluations of contractors shortly after a contract is completed, as well as at least once each year. Other Legal Tools to Hold Contractors Accountable

		Exclusion Through Suspension & Debarment

The FAR also requires agencies to have policies and procedures in place to "suspend" and "debar" contractors—i.e., to exclude, except under limited circumstances —from being eligible to receive new federal contracts for some length of time because of various criminal convictions, civil judgments, serious contract performance failures, or specified grounds. These policies and procedures are designed to ensure that agencies award contracts to responsible contractors that are capable of successful performance. Three such laws frequently enforced against government contractors are the False Claims Act; the anti-fraud provision of the Contract Dispute Act; and the Program Fraud Civil Remedies Act.
Federal procurement statutes and the Federal Acquisition Regulation (FAR) establish largely uniform policies and procedures applicable to government contracts "to deliver on a timely basis the best value product or service to the [government], while maintaining the public's trust and fulfilling public policy objectives." To meet these ends, federal agencies have a number of legal tools at their disposal to help ensure a contractor adequately performs a contract or, if warranted, to hold a contractor accountable for performance failures or misconduct:
Corrective Actions. In many instances, the FAR requires procurement contracts to include "inspection clauses" that explicitly authorize procuring agencies to require contractors to remove, correct, or replace rejected goods, or reperform services (together, to take "corrective actions") for failing to conform to contract specifications and requirements. Relatedly, inspection clauses often authorize agencies to make equitable cost reductions or seek repayment to account for all of the costs associated with deficient services that cannot be reperformed or goods the agency received and accepted despite the deficiencies.
Incentive Fees. Under certain circumstances, procuring agencies are permitted to incentivize contractors with performance-based payments. These "incentive fees" can be an effective contractor accountability measure because they can be paid to reward contractors for meeting or exceeding goals or standards contemplated in the contract or withheld or reduced when contractors fail to meet or exceed those goals or standards.
Performance and Payment Surety Bonds. Under certain circumstances, government contractors are required to acquire a surety bond, through which a third-party surety promises to assume a contractor's responsibilities in the event that the contractor fails to meet specified contractual obligations. A bond can serve as a contractor accountability measure because it subjects a contractor to potential additional costs, which could include liability expenses under indemnity agreements with the surety and increased costs of acquiring a bond for future contracts.
Liquidated Damages. Liquidated damages are predetermined sums a contractor must pay the procuring agency for specified contract breaches or performance failures. By predetermining the costs associated with a breach or failure to perform, liquidated damages clauses hold contractors accountable for noncompliance, while saving time and litigation costs.
Contract Termination for Default. Termination of a contract because of a contractor's default is arguably the most consequential and dramatic contract-based contractor accountability tool at the government's disposal. A default termination "discharges government duties under the contract while exposing the contractor to potential liability for the consequences of its breach." In addition to other potential repercussions, the cause of the default could serve as grounds for suspending or debarring a contractor from future contracts.
Contractor Performance Evaluations. When selecting contractors, procuring agencies often consider various contractor accountability issues, notably including the contractor's performance under other contracts, through (1) responsibility determinations and (2) source selections under negotiated contracting. To facilitate agency evaluations of a prospective contractor's likelihood of success on future contracts, the FAR generally requires procuring agencies to conduct and document performance evaluations of contractors in federal databases and to review these databases before awarding contracts.
Suspension and Debarment. The FAR requires agencies to have policies and procedures in place to "suspend" and "debar" contractors—i.e., to exclude, except under limited circumstances—from being eligible to receive new federal contracts for some length of time due to various criminal convictions, civil judgments, serious contract performance failures, or other specified grounds. These policies and procedures are designed to ensure that agencies award contracts to responsible contractors that are capable of successful performance.
Civil Fraud Enforcement. Procuring agencies may hold contractors liable for acquiring contracts by fraud pursuant to the False Claims Act, the anti-fraud provision of the Contracts Dispute Act (CDA), and the Program Fraud Civil Remedies Act.