How to be exceptional in a low-price world
Sure, there are challenges, but it's worth doing
- By Lisa Mascolo
- Jan 02, 2013
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.
Lisa Mascolo is managing director of U.S. Public Service at IBM Global Business Services.