Letter to the editor

Following is a response to an FCW.com poll question that asked: "Is it possible to have a fair competition between public and private groups bidding for the same work?"

Can bidding to provide outsourced contracts be fair?

While this is a hypothetical question, I can see several scenarios where the outsourcing provider desires a biased outcome.

First, let's assume that the extra overhead to prepare the bid is identical. Likely it won't be since the federal group will be required to provide statuses and report to many more stakeholders than an outside vendor would.

Now, let's look at reasons for deviations in the bid outcome (unfairnesses?):

* Secondary sell expectations. As an outsource supplier with large involvement in equipment, I may cut my project costs to a minimum in the expectation of selling equipment that my deliverables will dictate. Internal government staffs will not have that "advantage."

* Unrealistic low bids. I may bid the job low just to get the job of maintaining a system that I have delivered and have the only people skilled in its development and maintenance.

Or I may underbid to get my foot in the door, gambling that I will get follow-up work or the hiring agency will drop its internal capacity to do the work (thus being at my mercy in the future).

Or I may underbid because I have staff that I would retain and get bench pay otherwise.

Remember, the government group will be attempting to prepare an "honest" bid, while the outsourcers are attempting to get the job.

Finally, I may underbid to achieve a strategic victory over a competitor I'm either trying to buy or run out of business (to give two plausible reasons).

Kenneth Harvey U.S. Postal Service


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