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Because the term "unacceptable performance" is defined in statute and has specific statutory authorizations associated with it (i.e., to take performance-based actions), the regulations implementing those statutes use Unacceptable, rather than Fail:
Likewise, because of these statutory and regulatory references, agencies are expected to use Unacceptable. However, programs that insist on using the term "Fail" may do so provided the following conditions are met:
Technically, there's no reason why the term "Pass" cannot be used to describe performance that is not unacceptable.
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