Responsibility Determinations for Software Companies: How a Contracting Officer Decides

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By — Founder of GovExpress; prior domain experience at Bloomberg Government and GovWin IQ.

A software company can submit the best-rated proposal and still not get the contract. Before any award, the contracting officer has to decide that your company is responsible, meaning able and willing to perform. That decision is separate from how your proposal scored, and it looks at the company rather than the offer.

This guide covers what responsibility means under FAR Subpart 9.1, the standards a contracting officer applies, where a young software company is most likely to come up short, and what a small business can do when it is found nonresponsible. The rules cited here are from FAR Subpart 9.1, Responsible Prospective Contractors, and FAR Subpart 19.6, Certificates of Competency and Determinations of Responsibility.

Responsibility is a precondition of award

FAR 9.103 says contracts are awarded to responsible prospective contractors only. No award may be made unless the contracting officer makes an affirmative determination of responsibility, and when the information on hand does not clearly show the offeror is responsible, the contracting officer makes a determination of nonresponsibility.

Two features of the rule matter most for a newer company:

  • The burden is on you. FAR 9.103(c) says the prospective contractor must affirmatively demonstrate its responsibility, including, when necessary, the responsibility of its proposed subcontractors.
  • The award is the determination. Under FAR 9.105-2, the contracting officer’s signing of a contract is the determination that the contractor is responsible. A company that is not found responsible usually learns why only when the award goes elsewhere.

Responsibility is also different from proposal evaluation. Source selection compares offers against the solicitation’s evaluation factors. Responsibility asks a yes-or-no question about the company itself. A strong technical score does not settle it.

The general standards in FAR 9.104-1

To be found responsible, FAR 9.104-1 says a prospective contractor must:

  • Have adequate financial resources to perform the contract, or the ability to obtain them.
  • Be able to meet the delivery or performance schedule, taking into account all its existing commercial and government commitments.
  • Have a satisfactory performance record. FAR 9.104-1(c) also says a company is not to be found responsible or nonresponsible solely because it lacks relevant performance history, except where a special standard requires it.
  • Have a satisfactory record of integrity and business ethics.
  • Have the necessary organization, experience, accounting and operational controls, and technical skills, or the ability to obtain them.
  • Have the necessary equipment and facilities, or the ability to obtain them.
  • Be otherwise qualified and eligible to receive an award under applicable laws and regulations.

FAR 9.104-2 lets an agency add special standards for a particular acquisition when unusual expertise or facilities are needed. Those appear in the solicitation, so read Sections L and M with them in mind. Our guide to RFP Sections L and M covers where they show up.

Where software companies tend to come up short

Financial resources. A venture-funded company may have strong backing but thin operating history. FAR 9.104-3(a) says the ability to obtain resources is normally shown by a commitment or explicit arrangement that will be in place at the time of award, such as a line of credit or a written financing commitment. A pitch deck is not that evidence. If a contract is large relative to your balance sheet, be ready to show how you will carry costs until invoices are settled. Our guide to federal invoicing and prompt payment explains the timing.

Capacity. The schedule standard counts all your existing commitments. A small team that is already stretched across commercial customers can be asked how it will staff the federal work.

Performance record. A lack of history does not make you nonresponsible by itself, but a seriously deficient recent record can. FAR 9.104-3(b) presumes a contractor that is or recently has been seriously deficient in contract performance is nonresponsible, unless the contracting officer finds the problem was beyond its control or that it has taken corrective action. Our guide to past performance covers how that record is built and read.

Accounting controls. Most software and SaaS sales use fixed-price arrangements, where an approved cost accounting system is usually not at issue. A cost-reimbursement contract is different: FAR 16.301-3 allows one only when the contractor’s accounting system is adequate for determining costs. If you pursue cost-type work, our guide to federal contract types explains what changes.

Subcontractors. FAR 9.104-4 says the prime is generally responsible for determining the responsibility of its prospective subcontractors, and the contracting officer can look at them directly. If your offer leans on a partner for hosting, integration or staffing, their capability is part of your case. See our guide to teaming and subcontracting.

How the contracting officer gets the information

FAR 9.105-1 has the contracting officer gather enough current information to decide, and lists the usual sources:

  • Exclusions and integrity records. FAR 9.405 bars award to a contractor listed as excluded in SAM.gov. FAR 9.104-6 requires the contracting officer, before an award above the simplified acquisition threshold, to review the performance and integrity information in the Federal Awardee Performance and Integrity Information System (FAPIIS), which is now accessed through SAM.gov.
  • Your representations. FAR 52.209-5, Certification Regarding Responsibility Matters, asks offerors about debarment, recent convictions or civil judgments for specified offenses, indictments, delinquent federal taxes and recent default terminations. FAR 52.209-7 asks offerors with large federal contract and grant totals to report certain proceedings in SAM.
  • Your own records. Financial statements, commitment letters, staffing plans and references, requested from you directly.
  • A preaward survey. FAR 9.106 lets the contracting officer request an on-site or desk survey when the information on hand is not enough to decide.

Keep your SAM.gov registration current. It is where several of these checks start, and stale or inconsistent data invites questions.

If you are a small business: the Certificate of Competency

A small business found nonresponsible has a remedy that a large business does not. Under FAR 9.103(b) and Subpart 19.6, when a contracting officer finds an apparent successful small business offeror nonresponsible, the contracting officer must refer the matter to the Small Business Administration rather than simply award to the next offeror.

  • SBA notifies the company and invites it to apply for a Certificate of Competency (COC). The window is short. FAR 19.602-2 gives SBA 15 business days from receiving the referral to decide, unless SBA and the agency agree to a longer period, so have your financial and capability evidence ready before you need it.
  • The COC covers every element of responsibility. FAR 19.601 lists capability, competency, capacity, credit, integrity, perseverance, tenacity and limitations on subcontracting.
  • A COC is conclusive. Under FAR 19.602-4, if SBA issues a COC, the contracting officer awards the contract to that company without requiring it to meet any other responsibility requirement.

If you are relying on small business set-asides, the COC process is part of the protection that status gives you. It also means a capacity question raised about your company is reviewed by SBA rather than settled by the contracting officer alone.

What this means for a software company

  • Assemble a responsibility file before you bid. Recent financial statements, a line of credit or financing commitment, a staffing plan and a short list of references. You may not be asked for it, but if you are, you will be asked on a short clock.
  • Size each opportunity against your capacity. Count your commercial commitments the way the contracting officer will.
  • Answer the representations carefully. FAR 52.209-5 and the SAM representations are certifications. Inconsistencies there become integrity questions.
  • Vet your partners. A subcontractor’s weakness can become yours.
  • Ask in the debriefing. If you lose an award you expected, a debriefing is where to ask whether responsibility, rather than evaluation, was the reason.
  • Read the current rule text. The FAR is being rewritten under the Revolutionary FAR Overhaul, and agencies have been adopting revised part text through class deviations. Confirm the section numbers in the version your contracting officer applies.

Where this fits

Responsibility is the check federal buyers run on the company behind the proposal. For a software company, it comes down to showing financial footing, capacity, a clean record and partners that can deliver, all documented before the question is asked. Small businesses also have SBA’s Certificate of Competency as a backstop.

Score your company’s federal readiness to see how your registration and compliance profile look next to the other categories federal buyers review.

The CMMC brief

What the Phase 2 suspension changed and what it did not — the obligations that still bind, the assessment path a contract puts you on, the scoping decision that drives the cost, and the sequence that fits inside a pipeline. Sourced from the primary record.

The brief is not open for requests yet. Email us and we will send it the moment it is.