Inside the pain and peril of procurement delays
When we started working on our latest Washington Technology Insider Report on procurement delays, we already knew the delays were causing problems in the market.
But the severity of the problem was surprise. So, we had to call this one the Pain and Peril of Procurement Delays.
As the top chart shows, the delays are hitting the majority of government contractors. No one, it seems, is immune from delays.
For more than a third, 76 percent to 100 percent of their contracts are experiencing delays. More than a quarter are seeing 51 percent to 75 percent of their contracts delayed.
A measly 1.4 percent of respondents saw no delays.
As the middle chart shows, only 11.4 percent are seeing 1 percent to 25 percent of their contracts delayed.
It’s a huge problem, and as the last chart shows, the delays are for significant periods of time, though most are back on track within a year.
This is just a sampling of the findings we have in our new Insider Report. The entire report is available to WT Insiders. Click here if you want more information on how to join.
Here are some other highlights you’ll find in the report:
Most of the delays occur during the pre-solicitation and source selection phases of a procurement. Post-award delays – i.e. bid protests – only accounted for 15.3 percent of the delays.
Trouble developing project requirements was the most common reason given for delays, followed closely by the budget and mismanagement. Bid protests were at the bottom, but still were named 13.7 percent of the time as the primary reason for the delay.
More telling is that a significant number of the written comments with this question said that government customers never gave them a reason for the delay.
The report goes on to explore what parts of the business suffer the most when contracts are delayed as well as the actions companies are taking to mitigate delays.
A telling comment was how little government customers realize the delays have a negative impact. “Our customers rarely act as if the delays have consequences for the government or the supplier,” one person wrote.
People issues are often the biggest challenge for managing through contract delays, especially the question of how to balance costs and keep valuable employees. Hiring also is much more difficult when you don’t know when a contract will get underway. Companies face the risk of losing good employees as well as missing out on valuable new hires.
Sadly, an overwhelming majority see the delays increasing with budget concerns driving most delays going forward.
“The instability of budgets and yearly inability of Congress to pass a defense budget prevents new starts from occurring until late in the fiscal year,” one person wrote.
The report also offers some advice and examples of how to mitigate the risks posed by procurement delays.
Bottom line: The best approach is to let go of what you can’t control and focus on what you can: customers, partners and process.
Click here to download the report.
Posted by Nick Wakeman on Jan 22, 2015 at 9:34 AM