Mark Amtower

OPINION

Take your pick: Plenty of contracting woes ahead

Fiscal 2012 left plenty of detritus in its wake and its still with us in 2013

 

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.”

Reader Comments

Fri, Oct 19, 2012

"A few years back a large business would not waste B&P dollars on a 1 or 2 person opportunity - today everything is fair game." --- Good point to mention because that phenomenon is hurting the small businesses as well. They can't compete on price when these larger companies are gobbling up the opps they used to feed on.

Mon, Oct 8, 2012 Brian Bartholomew Alexandria, VA

Another issue that small businesses have today is the fact that many large businesses are looking at any opportunity no matter what the size. A few years back a large business would not waste B&P dollars on a 1 or 2 person opportunity - today everything is fair game.

Thu, Oct 4, 2012 BoB

Can you tell me one large corporation that has eliminated virtually all its suppliers and saved money? Please give me names How in the world can you eliminate 18,000 vendors and replaced them with only a handful of suppliers? Has any software company been allowed to gather all 18,000 vendor products & prices and compare prices & products of the 15 FSSI vendors per schedule? Competition works - Federal Strategic Sourcing is a 1940's 20th Century Solution. At the end of the day there needs to be a visible cost savings procurement plan that works in a competitive envirenment These are my thoughts : I believe on an annual basis each company that holds a GSA Schedule Contract should be allowed to bid on each item so the government can obtain the lowest cost / highest quality per bidder. The winning BPA GSA vendor can be rewarded with 5% of the total sales of a particular item. The other vendors would be required to match or provide a lower item price provided by the winning GSA vendor. Also, the non-winning BPA vendors cannot upload given item(s) to gsaadvantage.gov or offer given item to the government unless they can provide a lower price or match the winning vendor item price. Wow! what a concept - Reward the winning bidder with 5% sales of a particular item (NOT THE ENTIRE SCHEDULE) but allow other competitors to offer a lower or same price. GSA never introduced an alternative to FSSI (Federal Strategic Sourcing Initiative). How can this be funded? Simple : Put secondary software projects on hold or lay off GSA employees or maintain current schedule fees

Wed, Oct 3, 2012 Eileen Kent

This article is right on. Great Job, Mark

Wed, Oct 3, 2012 Tina Bagapor-O'Harrow Washington, DC

Mark; as a small business owner - I gotta say, you are preaching to the choir. The small biz contracting % requirements are a joke, put them in the column marked mythical farce with the OSDBU moat dragon trolls. Our road is shaped like a mobius strip - punctuated only with pit stops at the SAM help desk of infernal time suck. If your core competency is "contracting" it is wrong that you have an advantage over a company that actually executes a deliverable. I'm just sayin...

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