Take your pick: Plenty of contracting woes ahead
Fiscal 2012 left plenty of detritus in its wake and its still with us in 2013
- By Mark Amtower
- Oct 02, 2012
Fiscal 2012 left a ton of detritus in its wake, and guess what? It’s still here.
Ever feel like Dorothy walking through the woods with Toto in The Wizard of OZ? LPTA, selective sourcing, firm-fixed price, oh my! And then add sequestration.
Low price, technically acceptable (LPTA): begs the line from the movie Armageddon when Rockhound (Steve Buscemi) tells Harry (Bruce Willis) as their rocket takes off: “You know we're sitting on four million pounds of fuel, one nuclear weapon and a thing that has 270,000 moving parts built by the lowest bidder. Makes you feel good, doesn't it?” Various forms of LPTA have been tried in the past (the Desktop contracts from the early 1990s come to mind) and abandoned.
Selective sourcing: Reducing the number of vendors by driving margins down to the point that only the largest contractors have a chance of bidding and surviving. In the current iteration, this was applied to Schedule 75 and the results for the 500+ business that did not win part of the FSSI BPA are catastrophic. And what happened to the “on ramp” for new contractors on the Schedule 75 BPA?
Firm, fixed price contracts: As Larry Allen of Allen Federal has stated several times, firm, fixed price contracts has a place in the market, as do the other types of contracts, but one size does not fit all situations. Bad idea.
Sequestration: Yet another manifestation of Congress’s inability to do the one job mandated by the Constitution -- pass a budget every year.
Small business: Oh, and add to this mix of all the lip service that has been aimed at the small business community, the “backbone of the economy.” Everyone is in favor of small business -- the Obama administration, Mr. Romney, everyone in Congress who bothers to mention it, especially in an election year. Several pieces of legislation are still pending, including raising the small- business set aside target from 23 percent to 25 percent. It’s easier to raise a limit and not make it than to make it mandatory to actually reach the current 23 percent limit.
What does all this mean for government contractors in general, and small business in particular?
The government is trying to save money, and we should support the intent of this effort. But we need to find a way that makes sense for the government, the contracting community and the economy. Little if any industry input was sought prior to these initiatives. Few of the people who came up with these ideas have been on the contractor side of the fence. They need industry input.
Can small business play in this scenario? Possibly, but larger firms with more sophisticated bid shops will be focusing on smaller and smaller contracts as federal spending shrinks.
Federal spending represents 25 percent of domestic spending, and yes, the feds should be responsible in how that money is spent, but let’s define responsible before we set the spending rules.
If government contracting was a highway, what sign would be in front of you right now? Lane ends, form single lane? Dead end?
The best scenario is “reduce speed, construction zone.”