Do longer competitions bring better prices?

Defense Department contracting officers haven't had enough competition to get a good price if a solicitation gets only one bid, according to a new proposed policy.

That's how defense procurement officials are viewing solicitations for work that only receive one bid. They aim to tighten the Defense Federal Acquisition Regulation Supplement’s rules on how DOD gets a fair or reasonable price from a company. The proposal was in the July 25 Federal Register. Read the proposal.

The overall rulebook, the Federal Acquisition Regulation, leaves decisions on price competition up to the contracting officer. The standard of competition is fulfilled, if he or she “can reasonably conclude that the offer was submitted with the expectation of competition.”

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Under DOD’s proposal, its contracting officers would no longer use that standard.

Contracting officers instead would have to re-compete the solicitation for at least another 30 days if they waited less than a month to receive bids and got only one.

If a competition was open for at least 30 days, the officers would have to determine prices to be reasonable through price or cost analysis or they can enter negotiations with the company that made the bid.

Officials wrote that they are pressing for the best price available.

“The purpose and effect of this rule is to promote real competition by ensuring that adequate time is allowed for receipt of offers, and ensuring that prices are fair and reasonable when adequate time has been allowed but nevertheless only one offer is received in response to a competitive solicitation,” they wrote.

The plan is based on recent memos from senior defense acquisition officials. DOD should not pay the contractor’s proposed price, even if the cost seems reasonable based on market research and having hosted a fair competition, according to an April memo from Shay Assad, then the director of defense procurement and acquisition policy and the current director of defense pricing.

DOD is under pressure to cut costs. Competition for contracts is one of the key points of major reforms laid out in the past year, along with controlling growth in costs, improving acquisition workforce's know-how of buying services, and launching affordable projects.

Defense officials are taking comments on the proposal through Sept. 23.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

Reader Comments

Sun, Jul 31, 2011 Jaime Gracia Washington, D.C.

One bid is often a sign of poorly written requirements, or the desire to have "competition" if the incumbent is the desired awardee. I would agree that if a requirement is solicited for a short period of time it may be difficult to get real competition, but price is a different story. If companies are choosing not to bid, then it is usually a matter of capture management and a decision to not bid because the chances of winning are small, or risk is too high. Rebidding another 30 days may ultimately lead to the same issue. What is the definition of madness again? Better requirements are critical to helping this problem, but those requirements should be focused on needs, outcomes, and missions to allow for innovation and leveraging industries IT capabilities. This proposal is counterintuitive to what the real problems are.

Tue, Jul 26, 2011

Within my field competing for DOD contracts (particularly services contracts). It becomes easy to see when an opportunity is "wired". (expectation of a predetermined winner - usually the incumbent) While I know I may be able to compete and even give a lower cost - should I risk my "precious" Bid and Proposal dollars on a proposal that the requirments language is so specific that only the incumbent can meet 100%? Talking to the customer and offering to meet 90+% at significantly lower cost will usually get them to say "YES Please bid", but it has been my experience that they just want the competition and I spend my B&P to be a "stalking horse". Budgets are smaller to play this role - we are forced into not bidding a competitive bid - because it is truly NOT competitive. Therefore the government has limited the pool of bidders. Government Employees need to write their requirements in a fair and unbiased manner (without the incumbents words that restrict competition) and then evaluate on those fair competitive factors. More companies would be likely to bid. ER

Tue, Jul 26, 2011 Peter G. Tuttle, CPCM, NCMA Fellow

There are many legitimate reasons that a company will not submit an offer. Two of the big ones are simply: 1) too much risk being inappropriately placed onto the contractor and 2) poorly written (or skewed) requirements. When an acquisition program starts to fall apart, its demise usually begins with the activities that occur (or that do not occur) in the pre-soliciation phase.

Tue, Jul 26, 2011

Just read the article about the Defense Department contracting officers haven't had enough competition to get a good price if a solicitation gets only one bid. Wow, could this be because the winning candidate was pre-selected and any competition was set-up for failure to begin with. Politics, we all know how this game works. PLEASE

Tue, Jul 26, 2011

In my field, vendors compete for the privilege to bid. When they win that privilege, they need to bid. I see the ones who go after work really do well while the ones who do not complain. They should go after the ones who complain.

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