Lisa Mascolo

OPINION

How to be exceptional in a low-price world

Sure, there are challenges, but it's worth doing

In a recent Washington Technology commentary, I discussed how low price/technically exceptional should replace low price/technically acceptable. I argued that we never should settle for “acceptable” and that today’s market conditions, more than ever, demand exceptional solutions.

But ‘exceptional’ does not equate with ‘high price.’ Smaller, smarter, faster solutions ought to drive cost down and quality up.

Reader posts about the commentary indicate that some are supportive of the concept; others are skeptical. Part of the skepticism clearly is because it’s not obvious how such a concept might be implemented.

Ours is a complicated and very nuanced environment and it mostly works okay on most days. But that’s not really good enough and we all know how hard substantive change is in this industry – both for government and contractor.

That said, how could we implement low price/technically exceptional?

Define ‘technically exceptional’: This is the government’s job

If an agency were to define a technically exceptional solution, it should exhibit these characteristics:

  • It would have a defined return on investment – in terms of dollars saved and/or costs avoided, and in terms of enhanced service levels.
  • It would be durable – that is, scalable over time (both up and down) and adaptable to changing requirements.
  • It would be rapidly deployed.

Part of the obstacle to LPTE is that ‘fair and reasonable’ pricing has been associated traditionally with products, not services. The fair and reasonable expectation is that the government should pay a fair and reasonable price – not necessarily the lowest price. However, it seems like the government isn’t even looking for fair and reasonable anymore; it’s looking for low. At a high level, I’m okay with this – provided the solution is exceptional.

Federal News Radio aired a story Nov. 12 about Gen. William Shelton’s perspective on the Air Force’s space junk tracker program. In addition to addressing what he called “careless” budget cuts, the general explained how a program originally slated to cost more than $1.2 billion and take nine years to deliver is now on track to provide an exceptional solution at half the original cost and in less than half the estimated time frame.

In this case, the answer to the jaw-dropping “how is that possible?!” question, according to Gen. Shelton, is open architecture.  Obviously, it’s not that simple…but the point remains: smaller, smarter, faster drives cheaper.

Drive low price: This is industry’s job

To make LPTE work, the government must define ‘technically exceptional.’ This is probably the more complicated task. And while industry’s part of the equation may be easier to intellectualize, it may be harder to execute.

To drive low price, industry must approach designing and pricing the governments’ requirements as though the government were spending industry’s money. Focus on streamlining internal operations and governance, and employ and invest in innovative technology, agile methodologies, and open source options. Smaller, smarter and faster solutions cost less – and can be priced accordingly.

Driving low price also means that industry must shine a light on profitability.

This is an elephant in the room, for sure. I’m not anti-profit – in fact, just the opposite. But I am intrigued by the idea of appropriate profitability in this market. It’s not a subject I’ve ever heard discussed. We’ve all benefited from being a part of this industry, and no doubt in many cases our countrymen have benefited from the technology solutions we’ve helped the government deploy. But perhaps it’s time to take a serious hard look at how to optimize the top line, the bottom line and the double bottom line.

LPTE obviously is better than LPTA. Let’s hope that the questions that must be asked and answered to get to LPTE aren’t too tough for both sides to consider.

Reader Comments

Fri, Feb 8, 2013

I agree in concept with your thoughts on how to combat LPTA. Unfortunately, what we're seeing are Best Value solicitations being evaluated like LPTA. So much B&P goes into competing these days only to be lost to the low price bidder. Even the debriefs are pointing to a cost only reason you didn't win. It would be interesting to hear your thoughts on how to compete on a Best Value opportunity that's unintentionally evaluated as an LPTA! It used to be that losing within 2-3% of the winning bid left you feeling less defeated than hearing everyone lost by 20%! The landscape has definitely changed....

Mon, Jan 21, 2013 Zipmaster

The columnist seems rather inexperienced with the mode of acquisition described. Doing something smaller or faster, for example, might take a lot more engineering and test, rather than less. Or is she expecting the companies to fully eat the cost of R&D, or figure out the problem for presentation in the proposal, rather than a deliverable after award? Advice such as hers would have a tendency to sink a company, not lead it to being more competitive. Help me out with a fair example, rather than take some general's word regarding cost savings. And from the AF at that. The AF has come to surpass the Navy in botched procurements over the past decade. Look at the F22, F35 and the MengTropo programs, for example.

Mon, Jan 7, 2013 Joseph Bestler Germany

Both Rick and DP in DC are right on the money. Government reluctance and a lack of definition drives the prices up instead of down. How can industry perform LPTE without understanding the requirements? The Govt is forcing LPTA due to this.

Fri, Jan 4, 2013 Rick in DC

Your opinion piece is extremely naive. Your example, the Air Force’s space junk tracker program, is a very simple service that has extremely well defined requirements and tasks (i.e. track n items of x size randomly moving in low-earth orbit), therefore it is easy to build and deliver. The tricky services are those that the government employees do not have well defined requirements and tasks, or are moving targets, or are changed at the whim of politicians (such as cyber security efforts or electronic health records, two hot button services). If it cannot be well defined then expect cost overruns and delays. That is the real world in which we operate.

Fri, Jan 4, 2013 dp dc

Another problem is that Govt tends to be very reluctant to interact closely w/ industry before projects are internally solidified. RFPs are often devoid of useful information. Govt too often requires FFP, but wants to dictate the people and hours put on the project. The LPTE could be a step in the right direction, but it requires far more than a definition.

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