Procurement Process Problems: Satisfactory Value At Lowest Price

Criterion | Blog

Procurement Process Problems: Satisfactory Value At Lowest Price

By Joe Scott, Senior Vice President, Contracts and Pricing

This is the first in a series of articles highlighting problems in federal government procurement, with the goal of presenting possible solutions.

In the world of cybersecurity, “satisfactory” is not a word that applies. Satisfactory is acceptable. Satisfactory is good enough. Satisfactory is passable. But when you are protecting and defending critical infrastructure, citizens’ personal data, or nuclear weapons, “satisfactory” doesn’t come close. What is needed is something unbeatable, innovative, and as close to perfect as possible. And yet, the procurement process for IT systems for the federal government continues to drive decisions based on a check-box, simple-is-better methodology that privileges low-cost over best value. This results in a pernicious cycle where contractors offer the lowest technically acceptable – satisfactory – solutions, depriving the government of the innovative, value-rich approaches and technology that, while more expensive, will offer a better return on investment.

The debate about lowest price (LPTA) vs best value procurement is not a new one. On the surface, there has been progress. The FITARA bill contains provisions related to solicitations. The Office of American Innovation has explicitly recognized issues with government acquisition approaches. The GSA has added special item numbers to its Schedule 70 in the area of cybersecurity. However, we have yet to see the impact of these on any solicitations to date. Unfortunately, there is a disconnect between what may be done and what is actually done.

This is a problem that goes deeper than rules and regulations. The incentives driving behavior on both the part of procurement officers and government contractors still steer us in the wrong direction. Making decisions based on best value is complicated, time-consuming, and risky as it opens up a greater possibility of the decision-maker being grilled about why a decision was made during an often-protracted protest process. People are not rewarded for using best-value – in contrast, they open themselves to potential punishment!

The government contractors have adapted their business strategies to this situation. They don’t trust the government to stand up for the best value. Therefore, they follow the technically-acceptable-solution-at-a-lower-price route in their proposals. And with the risk of protests higher than ever, no one wants to take the risk of offering an innovative, superior solution. Why waste the time and energy on something that has no chance of being accepted?

Unfortunately, there is no simple solution to this problem. Adding provisions to Acts and adjusting regulations does not address the core issue of the lack of incentives to actually change behaviors. I think you would see better decisions, and more decisions, if federal employees were compensated based on performance and other metrics, as opposed to years of service. Inefficiencies and under performance are not only tolerated, but in some cases encouraged by a system based on rules and regulations that are not focused on results. If we could create a system incentivized by results, government contractors would respond with proposals that offer the best solutions that our innovative technology workforce can create. Imagine the efficiency, productivity, safety, and positive citizen experience that would be unleashed by such an approach!

Next up: The problems of protests.