The Pending CPARS Overhaul: What Contractors Should Know
Congress is poised to overhaul the Contractor Performance Assessment Reporting System as it applies to Department of Defense contracts. The new DoD CPARS will eliminate subjective performance assessments and focus exclusively on negative performance events.
The pending DoD CPARS overhaul will significantly impact the defense contracting landscape. Here's what contractors should know about this major upcoming change.
The 2026 National Defense Authorization Act
The DoD CPARS overhaul is part of both the House and Senate versions of the 2026 National Defense Authorization Act. On the Senate side, the overhaul is set forth at Section 867. In the House bill, the provision is found in Section 836. While Sections 867 and 836 differ somewhat in their wording, the substance is largely the same.
The House and Senate bills have both been passed by their respective chambers. The differences between the bills must be worked out by a House-Senate conference committee, meaning that the final wording is still unknown. However, given that Sections 867 and 836 impose substantively similar requirements, I can say, with a high degree of confidence, that a DoD CPARS overhaul is coming soon--and confidently predict what it will include.
"Negative Performance Events"
Sections 867 and 836 will require the DoD to amend the Defense Federal Acquisition Regulation Supplement to "establish an objective, fact-based, and simplified system for reporting contractor performance."
The new system will, in the words of Section 867*, "focus exclusively on negative performance events that are verifiable and measurable to reduce subjectivity and inconsistency in evaluations." To achieve this goal, the DoD will be required to "eliminate subjective performance evaluations". Instead, "[p]erformance evaluations shall be limited to the reporting and scoring of negative performance events."
Sections 867 and 836 then define the following as negative performance events subject to mandatory reporting in the system:
(A) Delivery of defective products.--Delivery of products failing to meet contract requirements, as verified by government inspection reports, quality assurance records, or testing results.
(B) Delinquent deliveries.--Failure to meet contract delivery schedules, as documented in contract milestones, delivery orders, or government correspondence.
(C) Improper markings or rights assertions on technical data deliveries.--Incorrect or unauthorized markings on technical data or software, or improper assertions of restrictive rights, as verified by government review or legal findings.
(D) Defective pricing.--Submission of inaccurate, incomplete, or misleading cost or pricing data, as identified through audits by the Defense Contract Audit Agency (DCAA) or other authorities.
(E) Failure to flow down required clauses to subcontractors.--Failure to include mandatory contract clauses in subcontracts, as verified by contract reviews or audits.
(F) False claims or misrepresentations.--Submission of false claims, fraudulent invoices, or misrepresentations, as substantiated by investigations, legal findings, or government records.
(G) Non-compliance with safety or regulatory requirements.--Failure to comply with safety, environmental, or other regulatory requirements, as documented by government inspections or citations.
(H) Significant cybersecurity breaches or failures.--Failure to meet cybersecurity requirements or significant breaches caused by contractor negligence, as verified by government assessments or incident reports.
The 2026 NDAA also will allow the DoD to establish other negative performance events, provided they are "based on verifiable data or objective evaluations" and published in the DFARS with "clear criteria for identification and reporting."
Scoring & Contractor Responses
Once the list of negative performance events is available, the 2026 NDAA will require the DoD to establish "a standardized scoring mechanism" to "normalize negative performance events based on the number of transactions and the dollar volume of contracts performed by the contractor."
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Under the new system, "[t]he composite score shall be reported in CPARS alongside the negative performance events and used in source selection to assess past performance risk." To further eliminate opportunities for potential subjectivity, "[s]cores shall be calculated automatically by the CPARS system based on data entered by contracting officers, including the number of transactions and contract dollar value."
Sections 867 and 836 specify that "[c]ontractors shall have access to their composite scores and the underlying data (number of events, transactions, and dollar volume) through CPARS." Additionally, "[c]ontractors may submit comments or rebuttals to reported events or scores, which shall be maintained in CPARS for consideration in source selection."
Rationale & Potential Problems
Why engage in such a dramatic overhaul of the past performance system? The House bill offers several rationales, including to "reduce subjectivity and inconsistency in evaluations," "create a level playing field for commercial entities, subcontractors, and new entrants that do not have extensive past performance records to compete for Department of Defense contracts," and "reduce the administrative burden on contracting officers by limiting reporting to significant failures or poor performance."
These are laudable goals, and I understand why policymakers on both sides of Capitol Hill have gravitated toward this overhaul as a means to reach them. In my view, however, adopting this system could cause problems, such as:
- A "good enough for government work" mentality among defense contractors unable to obtain positive past performance ratings.
- An increased reliance by contracting officials on less-transparent means of discovering more information about a contractor's performance, like calls with peers in another contracting office.
- A competitive disadvantage for DoD contractors bidding non-DoD work, which will remain subject to the current CPARS system. For non-DoD bids, the DoD contractor may be unable to show anything other than "no negative performance events," whereas a competitor with similar past performance at a non-DoD agency may be able to show positive scores.
As I see it, the jury's out as to whether this pending change will ultimately be a positive or a negative for the contracting community. In the end, it may depend on one's circumstances.
Implementation Timeline & Applicability
Sections 867 and 836 call for the DoD to amend the DFARS to implement these changes within 180 days after the 2026 NDAA becomes law. Assuming the 2026 NDAA is enacted before January 1, contractors should expect to see the revised DFARS sometime in mid-2026. Within the same time frame, the DoD will be tasked with developing training and guidance for its Contracting Officers regarding the new system.
Sections 867 and 836 state that contracts awarded before the date of the revised DFARS regulations may be evaluated on the basis of the "old" CPARS system. On the other hand, the bills confirm that contracts awarded after the DFARS amendments must be evaluated using the overhauled system.
I will keep my eyes on the progress of the 2026 NDAA and the DFARS implementation of Sections 867 and 836. Stay tuned.
* Except as otherwise specifically provided, all quotes in this article are from the Senate bill. The wording of the House bill varies in certain respects. Keep in mind that that the final wording of the bill will depend on the outcome of House-Senate negotiations over the 2026 NDAA.
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Boring but important disclaimers: The information in this article is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. The opinions expressed in this article are solely those of the author.
Great writeup. It’ll be interesting to see how this is implemented and the outcomes it generates. I agree that the goal is laudable, since these ratings are sometimes applied inconsistently across the customer base. I think you did a good job also listing possible unintended outcomes such as more informal channels being used to assess past performance. I hope it doesn’t lead to a degradation in quality of services provided to Government customers, since there will be no formal way to identify exceptional performance. As someone who will likely be delivering training on the new system, I’ll be following for more info. Thanks so much!
Really helpful breakdown, Steven. A few takeaways we’re watching at BAR Transportation (WOSB • WBENC • HUBZone): • Negatives-only scoring (Secs. 867/836): Objectivity is good, but removing positive context can brand a small prime/sub by a single event—even after corrective action. • Normalization + auto-scoring: Fair in theory, but only if the underlying data is accurate and timely. What’s the dispute process when KO-entered data is wrong or incomplete? • Contractor rebuttals: Glad those will live in CPARS, but will source selections actually read them? • Cross-agency impact: DoD-only system may disadvantage firms competing at civilian agencies that still see positive CPARS narratives. • Timeline: If NDAA passes on schedule, we’re looking at mid-2026 DFARS changes—training for KOs will be critical. Appreciate you keeping smalls informed. We’ll be ready—but we’d love to see due process, data-quality safeguards, and credit for remediation baked in. — JR Elrod | BAR Transportation
This is a major development for GovCons. By removing subjective CPARS assessments and focusing only on negative performance events, DoD is essentially shifting toward a “risk-triggered” evaluation model. Contractors will need stronger internal controls, documentation, and contract compliance procedures and, by extension, tighter risk management frameworks to prevent those events in the first place. This could redefine how GovCons approach both operational and insurable risk.
Steven — this is such a sharp breakdown of the CPARS overhaul. 👏 Love how you framed it around *“eliminating subjectivity”* — but the ripple effect on PPQs, past performance weighting, and low-ball pricing strategy could be massive. The pendulum between “bias” and “context” always seems to swing hard in GovCon. Appreciate how you distill policy shifts into practical implications. Sending a connect — would love to stay in the loop as this develops.
A massive help to the overall process is for the federal government to allow contractors to also review the Contracting Officer and the COR on projects. Having a more two way rating system to improve government employee performance would increase efficiency and reduce taxpayer waste.