IDIQs must work for everyone
Contracting shops across government should pay attention to how the Air Force's Desktop V contract was transformed— in less than two years— from hot commodity to hot potato.
Desktop V, the latest iteration of the Defense Department's flagship PC procurement vehicle, apparently has delivered lackluster revenues, leading prime contractor Raytheon Corp. to look for an interested buyer. A low-margin PC contract does not make sense for Raytheon, which specializes in profit-rich, labor-intensive programs in the defense and aerospace industries.
Air Force officials may have persuaded Raytheon not to sell the business. However, the lack of enthusiasm of several major vendors over a possible purchase of the Desktop V business is in sharp contrast to the fierce competition that preceded the contract's award in May 1996.
By most accounts, the problem is more than a case of contractors being squeezed to sell products with microscopic profit margins. Desktop V simply cannot compete with the plethora of vehicles now available to PC buyers, including increasingly popular blanket purchase agreements based on the General Services Administration schedule.
BPAs, which are among the most tangible products of procurement reform, make it easy for industry vendors to bring their latest wares to market and to offer leasing, spot pricing and other attractive incentives and options. Such flexibility is a boon to contractors and customers.
Desktop V-style indefinite-delivery, indefinite-quantity contracts still have a place in the market. But federal procurement shops must realize that vendors and federal customers expect more from a vehicle than just low prices.
If agencies believe an IDIQ contract is necessary, they should give the contractor the flexibility and other tools necessary to make the contract successful.