…Generally speaking, he said industry likes best-value
procurements. They allow companies to propose higher prices, since
officials will consider other evaluation criteria beyond price. On the other
hand, the government is pushing low price and not always fully analyzing the
entire lifecycle of a project, Jordan said. Both sides have good arguments, so
the contracting officer's judgment is the final arbiter….
Due to the intense focus on budget cuts, and sequestration
still casting a very ominous shadow on the federal government, price has become
the most important factor in any source selection, and will remain so for the foreseeable
future.
Any talks of best value are out the window, so agencies should
state as such in their solicitations. The issue really is about how do
determine technical acceptability, given the foundations of what are normally poorly
defined requirements.
Firstly, requirements for proper use of Lowest Price,
Technically Acceptable (LPTA) should be very standardized, commodity based
purchases that require no other factors other than price. That means just the
commodity itself through very rigid, specific, and accurate requirements. No opportunities
for customer service, shipping, transport, customization, etc. These
requirements require the use of best value, and the ability to offer better
service.
You get what you pay for. There lies the rub.
Often
times, the government simply does not know what it wants. It thinks it does, so
it puts horribly written Requests for Proposal on the street, that result in
dozens and dozens of questions, since the requirements are either redundant,
confusing, circular logic, not achievable, unrealistic, boilerplate and not
applicable, etc. Further exacerbating the problem is the lack of engagement
with industry during the pre-acquisition phase, assuring poor requirements.
Lack of leadership, poor capabilities, and the excuse of lack of time are the
usual suspects.
The
pressures to save money are overwhelming, so prices are driven downward to
unrealistic levels. Is anyone still doing cost realism assessments? You know
the answer.
How
often does the Government Accountability Office sustain a protest where the
losing offeror, and often an incumbent, claims they lost to a competitor who
underbid them by 40%, even though the incumbent knows exactly what the real cost
of doing, at a satisfactory level, entails?
This
vicious circle ensures performance will fail, and it is the lack of a long-term
focus that is troublesome. Poor leadership, combined with continued declines in
the skills and capabilities of the acquisition workforce (I include PMs in that
bunch) have created a perfect storm of continued poor performance and waste.
Just look at the fiasco that is the System for Award Management (SAM) for a
perfect example of this.
The
General Services Administration can claim SAM was best value, but price is
kingmaker. “Buying In” is seen as an improper business practice per Federal
Acquisition Regulation 3.501, but it seems to be standardized now.
Investment
analysis is a foreign concept, since saving a few bucks today will lead to inevitable
rise in costs tomorrow, failed programs, and poor performance.
Awarding
to the lowest bidder is a disaster waiting to happen. Only when innovation is
desired, through the use of performance-based contracting, combined with
properly written requirements and effective contract management and execution,
can best value be realized.
That
is the best outcome for the taxpayer. Easier said than done.
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